Government disburses Rs 1,433 crore as interest subsidy to exporters

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Government has disbursed Rs 1,433 crore up to March under the interest subsidy scheme to exporters, the Commerce Ministry today said.

The Centre’s interest equalisation scheme, announced last December, reduces cost of capital by allowing 3 per cent interest subsidy on pre and post-shipment rupee export credit to eligible exporters.

“Indian exporters pay high rate of interest on the capital borrowed… all products manufactured and exported by SMEs (are) eligible. Up to March 2016, benefit to the tune of Rs 1,432.90 crore has been passed on to eligible borrowers,” the ministry said in a statement.

Enlisting steps to improve ease of doing business and boost exports, it said the ministry has taken several steps.

Number of mandatory documents required for exports and imports have been reduced to three for each segment. Earlier 7 documents were required for exports and 10 for imports.

“Exporter can now file online applications for IEC (import export code), Advance License, MEIS (merchandise exports from India scheme), SEIS (services exports from India scheme), pay application fee online and check status of their applications,” it said.

To spread awareness about benefits of free trade agreements, it said an ambitious outreach programme has been launched to reach out to exporters located in the 34 major export clusters/cities.

“The programmes focus on training exporters to utilise the FTAs, taking inputs from exporters on FTAs under negotiations for example Regional comprehensive economic policy (RCEP),” it added.

It said the efficacy of these initiatives is reflected in the fact the annual trade data  indicates the share of manufacturing sector in India’s total exports has increased from 64 per cent in 2014-15 to more than 69 per cent in 2015-16.

In terms of trading across borders, India is ranked at 133rd out of 189 economies, according to the World Bank’s report on ease of doing business.

Source:http://economictimes.indiatimes.com/articleshow/53178132.cms

 

Temasek scouts for more investments in India

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Temasek Holdings, Singapore government’s investment company, will continue to scout for investments across consumption-oriented segments in India this year, even as it’s open to opportunities from other sectors.

In the previous year, the company’s bigger investments were in consumption-oriented segments such as healthcare and pharmaceuticals, financial services (including insurance), technology (e-commerce or payment) and consumer (FMCG companies).

The investments were made across public and private companies.

“That trend is likely to continue, and that’s where we see most of the India story playing out, unless there are certain opportunities that come up from other sectors.

“We are always open to opportunities from other sectors too,” said R Venkatesh, Managing Director, Temasek Holdings Advisors India Pvt Ltd.

For the sector-agnostic investment firm, there is no preferred exit mode, and previously the company has exited through various modes such as strategic stake, secondary sales and IPOs.

On an average, the company has invested more than $1 billion every year in India across sectors such as consumer, financial services, new economy, healthcare and pharmaceuticals.

“We don’t have an industry allocation, a country allocation or any type of deal allocation. It’s entirely based on the deals that make the cart. Our investments are very much bottoms up, and depends on opportunities,” said Promeet Ghosh, also a Managing Director at Temasek Holdings Advisors.

Temasek, which started its Indian operations in 2004, has investments in companies such as Bajaj Corp, Crompton Greaves, Oberoi Realty, GMR Energy, Axis Bank, Glenmark Pharma and Sun Pharma.

India is one of the markets across the world the company is focusing on due to good macros, great demographics and a rising middle-income population, Ghosh added.

Dip in net portfolio value

Last week, Temasek posted a net portfolio value of S$242 billion for year ended March, lower from S$266 billion posted during the previous year.

This was the Singapore investment company’s first portfolio decline since the 2009 global financial crisis.

India’s exposure to that was about 5 per cent, which was a rise from 4 per cent last year.

“This is reflective of a mark-to-market fall in some of our listed portfolio companies across the world. About 60 per cent of our portfolio is listed and about two-thirds of these are exposed to markets in Hong Kong and Singapore stock exchanges, which have fallen between 15-26 per cent,” Venkatesh said.

Source: http://www.thehindubusinessline.com/companies/temasek-scouts-for-more-investments-in-india/article8840335.ece

Brexit to hit eurozone growth, says IMF

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The International Monetary Fund has cuts its economic growth forecasts for the eurozone in the wake of the UK’s vote to leave the European Union.

The eurozone is expected to grow by 1.6% this year and 1.4% in 2017. Before the referendum the IMF had predicted growth of 1.7% for both years.

The IMF also revised down its 2018 growth forecast to 1.6% from 1.7%.

It said medium-term growth prospects for the 19-member bloc were “mediocre” due to high unemployment and debt.

Mahmood Pradhan, deputy director of the IMF’s European Department, said the outlook could worsen if drawn-out negotiations between the UK and the EU led to a continuation of recent trends in financial markets – where investors have shunned riskier assets.

“If that risk aversion is prolonged, we think the growth impact could be larger and at this point, it is very difficult to tell how long that period lasts,” he said in a conference call.

The revised 2017 figure was the IMF’s “best case” scenario, assuming a deal was struck that allowed the UK to retain its access to the EU’s single market, Mr Pradhan said.

However, if the UK decided not to maintain close ties with the EU and chose to rely on World Trade Organization rules, there could be “major disruptions,” he said.

Mr Pradhan added it was “very, very early days to have any strong sense of confidence” about what the eventual relationship between the UK and EU would be.

In the medium-term, challenges such as high unemployment and persistent structural weaknesses in the euro area would continue to weigh on growth, the IMF said.

“As a result, growth five years ahead is expected to be about 1.5%, with headline inflation reaching only 1.7%,” the report said.

It also said that as the euro area was such a big player in world trade, any slowdown could have an impact on other economies, including emerging markets, but it expected this to be “limited”.

Source: http://www.bbc.com/news/business-36743862

No World Recession From Brexit But Risks High, Says IMF’s Lagarde

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International Monetary Fund chief Christine Lagarde said that Britain’s shock vote to quit the European Union has injected significant uncertainty into the global economy but is unlikely to cause a world recession.

But in an exclusive interview with AFP, she also said that Brexit underscores the need for the EU to do a better explaining how it benefits Europeans, amid “disenchantment” with the institution.

And she said that Britain’s move to cut corporate taxes to counter the expected economic fallout from its choice to break with the EU was just a “race to the bottom” that could hurt everyone.

Two weeks after the British referendum on cutting its EU ties, Ms Lagarde, speaking in her Washington offices at the beginning of her second five year term as IMF managing director, called the event a “major downside risk” for the world.

“We don’t think that a global recession is very likely. The immediate effects will be on the UK,” with some spillover into the euro area, she said.

Yet the longer the process for Britain’s withdrawal remains unclear, the worse the effects could be, she said. “The key word about this Brexit affair is uncertainty and the longer the uncertainty, the higher the risk,” she said.

“The sooner they can resolve their timeline and the terms of their departure the better for all. It needs to be predictable as soon as possible.”

But Ms Lagarde, who during her first five years leading the Fund has already endured a substantial amount of turmoil in Europe, said she remained positive over the outcome.

“There will be spillover effects on the euro area. But my optimistic approach of life tells me that Brexit could be a catalyst that could push the EU to deepen its economic integration.”

Source: http://profit.ndtv.com/news/global-economy/article-no-world-recession-from-brexit-but-risks-high-says-imfs-lagarde-1429092

Brexit offers lifeline on $800 billion emerging company debt

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Britain’s vote to exit the European Union (EU) has thrown a lifeline to emerging-market companies facing an $800 billion wall of maturing debt.

By hindering the Federal Reserve’s plan to raise interest rates, the referendum result has led to speculation borrowing costs will remain lower for longer as policy makers attempt to prevent Europe’s turmoil turning into a recession. This means developing-nation companies that borrowed when it was cheaper to do so won’t have to pay more to service those bonds, at least for now.

The prospect of fewer defaults shows how the so-called Brexit vote is proving a blessing for developing-nation companies that need to pay back about $200 billion per year from 2017 to 2020. Economists from the International Monetary Fund (IMF) to the Bank for International Settlements have been warning Fed monetary tightening may set off an increase in corporate failures in emerging markets. Defaults have been climbing since 2013 and reached a seven-year high in the second quarter.

“We might even see a decline in default rates again in the third and fourth quarters of this year,” said Apostolos Bantis, a Dubai-based credit analyst at Commerzbank AG, who recommends investing in Latin American company bonds. “The overall outlook now is more positive for emerging-markets corporates because the Fed is very unlikely to move any time soon following the Brexit.”

Uncertain outcomes

The policy uncertainty engulfing the developed world has boosted the appeal of emerging countries, usually viewed by investors as more vulnerable to political risk. Yields on a Bloomberg index tracking developing-nation corporate bonds have fallen 27 basis points to 5.19% since the UK vote, adding to a recovery that started when oil prices began rebounding from a 20 January low.

The sentiment shift means that defaults are probably past their peak, according to Kathy Collins, an analyst at Aberdeen Asset Management in London. By 28 June, S&P Global Ratings had recorded 10 emerging-market corporate defaults in the second quarter, the worst quarterly tally since mid-2009. The rating company’s 12-month junk-bond default rate climbed to 3.2% at the end of May from 2.9% at the end of April.

“Given where commodity prices are at the moment, we’re not expecting too many more defaults,” Collins said. “In the first six months of this year, we’ve seen a lot of companies be very proactive in terms of tenders and buybacks in the market.”

Buying back

Russia’s Novolipetsk Steel PJSC and shipping operator Sovcomflot OJSC have announced they intend to buy back debt totaling as much as $2 billion. Latin American bonds sales surged over the past week, which HSBC Holdings Plc partly attributed to an increased likelihood of “ultra-low global policy rates” for longer. Brazilian meat packer Marfrig Global Foods SA sold $250 million of securities to repurchase outstanding notes in a push it said would “lengthen its debt maturity profile and reduce the cost of its capital structure.”

The issuance boom may prove short lived if the prospect of Fed tightening re-emerges. The UK’s vote to end its 43-year association with the EU has also ushered in a period of uncertainty for global markets that may eventually turn investors off developing-world assets. In June, the BIS reiterated a warning that emerging market non-bank borrowers that have accumulated $3.3 trillion in dollar debt are coming under strain as their economies slow and currencies weaken.

“If we get some volatility in emerging markets, say from political noise coming from the EU, and there is no access to capital markets from some issuers, that could be really negative,” Badr El Moutawakil, an emerging-market credit strategist at Barclays Plc in London said.

Even after the Brexit dust settles, looming elections in the US, Germany, France and possibly the UK mean a lengthening list of potentially disruptive events, strengthening the hands of dovish central bankers. Emerging-market companies have raised $3.71 billion of international bonds since the UK’s referendum on 23 June.

“External factors are more supportive,” said Bantis from Commerzbank. “The default trend of the past quarter is unlikely to continue.” Bloomberg

Source: http://www.livemint.com/Politics/sCZ90ORt2l0cm0rnS0DIqJ/Brexit-offers-lifeline-on-800-billion-emerging-company-debt.html

PE exits set to see new record through IPOs this year

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With RBL Bank and Aster DM Healthcare planning to raise Rs 1,500 crore and Rs 1,600 crore, respectively, through initial public offerings (IPOs) this year, private equity investors are set to make a record exit using the primary market route.

According to Prime Database, a Delhi-based financial services firm providing research on IPOs, the first six months of the year saw PE investors exit stakes worth Rs 2,993 crore across six IPOs. These include small finance bank Equitas raising Rs 2,176 crore through IPO in April. Twelve PE investors including International Finance Corporation and Sequoia Capital sold stake worth Rs 1,454 crore in the issue, making part or full exit.

The first six months of the year has already seen more PE exits through IPOs than the annual record of Rs 2,346 crore across 12 IPOs in 2015.

“The value of exits is related to the size of the company looking to list and in recent times, we have seen larger companies coming to the market,” said Subhrajit Roy, executive director and head (equity capital markets origination) at Kotak Investment Banking. “Investors are increasingly focusing on post-listing liquidity, which is enhanced by a higher free float. The average deal size has been increasing to adhere to this requirement,” said Roy.

While Ratnakar Bank’s IPO will see PE funds Gaja Capital and Capvent India making part exits, that of DM Healthcare will see India Value Fund and Olympus Capital paring their stake. Another PE-backed company, Varun Beverages, has also planned to raise Rs 1,000 crore through an IPO this year by providing liquidity platform for its PE investors AION Global and Standard Chartered Private Equity. “The PE activity over the past few months was characterised by an increase in buy-outs, the restart of investments in infrastructure projects especially roads, PE-backed IPOs and continued robustness in fund raisinPE exits set to see new record through IPOs this yearg,” said Mayank Rastogi, partner and leader for PE at consulting firm EY.

“Owing to the strong listing performance of PE-invested firms in the past 12 months, a long list of IPOs is being lined up amongst PE-invested companies,” said Rastogi.

PE exits set to see new record through IPOs this year. Increasing PE exits through IPOs is also credited to the performance of secondary markets. Sensex, the benchmark index of the BSE, has risen four per cent to 27,167 this year. Also the average price-to-earnings ratio for 30 Sensex companies is 20.13 now, against five-year average of 17.93. This has given PE-backed companies an opportunity to provide their investors’ exit through the IPO route.

“As the broad secondary markets remain buoyant, we will see more and more PE-backed IPOs where the investor would make only partial exits,” says Pranav Haldea, managing director at Prime Database Group. “PEs want to keep their skin in the game as they expect secondary markets to do better from hereon.”

Source: http://www.business-standard.com/article/specials/pe-exits-set-to-see-new-record-through-ipos-this-year-116070600752_1.html

JPMorgan Chase & Co gets RBI approval to open 3 new branches

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JPMorgan Chase & Co today said it has received Reserve Bank’s approval to open three more branches in the country.

The bank will open new branches at New Delhi, Devanahalli (near Bengaluru) and Paranur (near Chennai) in the next few months, it said in a statement.

“We are seeing an increasing level of cross-location and cross-border activity among our clients as they capture business opportunities driven by the country’s economic growth.

These branches will further enhance our capability to better serve our clients in India and overseas,” JPMorgan Chase Bank India MD and CEO Madhav Kalyan said.

JPMorgan will provide all existing products and services through these new branches, including cash management, trade finance and foreign-currency payments.

At present, the bank serves its clients from Mumbai branch.

“Our strategy is to follow our clients’ priorities. The expansion endorses our long-term commitment to India, a key market for JPMorgan, as well as for many of our clients,” JPMorgan South & South East Asia CEO Kalpana Morparia said.

Source: http://economictimes.indiatimes.com/articleshow/53008936.cms