E-commerce driving demand for warehousing space: CBRE

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E-commerce continues to drive demand for logistics and warehousing space in the country and has attracted a lot of interest from developers and private equity players, property consultant CBRE said.

“With the logistics and industrial segment witnessing significant development, there is a lot of interest from both developers and private equity investment,” CBRE South Asia Managing Director, Advisory and Transaction Services, Ram Chandnani said in a statement.

The government’s investor-friendly investment policies, improving domestic economy and progressive legislative reforms are all steps boosting the sector, he said at a conference here.

“India is yet to achieve its full potential when it comes to the logistics sector, even though the World Bank has ranked India 35th in logistics.

“China is ranked 27th but India is not too far behind,” said M T Murthy, Member (Operations) – India Post, Ministry of Communication and Information.

Stating that lack of adequate infrastructure has slowed down India’s economy in the past, Murthy said the government is committed towards capacity building.

E-commerce is playing a major role in driving up the demand in logistics that witnessed a growth of 57 per cent between 2009 and 2015, the statement said.

“India Post now has 700 e-commerce partners who rely on the government for their service delivery,” Murthy said.

According to CBRE, nearly 2 million sq ft of warehousing space was taken up by e-commerce firms in 2015, which is a significant jump, as the share of the sector rose from a meagre 2 per cent of the total warehousing demand in 2012, to around 22 per cent during 2015.

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

What’s India’s strategy to beat Brexit? Here’s a sneak peak

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India is considering recalibrating its strategy, including renegotiating its tariff offers, for the proposed free trade agreement (FTA) with the EU following Brexit, with demands from key sectors for a separate trade pact with the UK gathering pace, sources said. But with both the EU and the UK busy grappling with Brexit, serious trade negotiations are unlikely to start anytime soon.

Textiles secretary Rashmi Verma told FE: “Britain continues to be an important market for us, as it makes up for around 23% of the EU demand for Indian textiles and garments. We have requested the commerce ministry to look into the possibility of a bilateral preferential trade agreement (PTA) with the UK.”

The UK accounts for over a half of India’s software services exports to the EU, 23% of key engineering and electrical goods exports and 16% of jewellery, precious metal and stones exports. So, senior industry executives from these sectors endorse an FTA or PTA with the UK. Britain alone accounted for 3.4% of India’s goods exports in 2015-16, while the EU – including the UK – made up for 17%.

Nasscom president R Chandrashekhar said once the current storm settles down, the UK will also be looking to compensate itself for no longer being part of the EU trade bloc.

“At that time, a special trade arrangement or relation with India will become crucial to them. And for India, it will perhaps be a tad easier to negotiate with one nation instead of the entire EU,” he said. He, however, added that much will depend on the exact terms and conditions of Britain’s exit from the EU.

Meanwhile, sources said the government is open to a trade pact with the UK, but India also remains committed to taking the proposed EU FTA talks to its logical end. “The EU isn’t ignorable just because Britain has decided to be out of the bloc,” said one of the sources.

However, the Brexit has added to the workload of Indian negotiators as they have to deal with the UK separately now. As such, the FTA with the EU is still a work in progress, so there is a scope for renegotiation of offers in view of the Brexit reality, said the source. The government is closely monitoring the situation and a final call will be taken at an appropriate time, the source added.

With the depreciation of the pound, euro and Chinese yuan following the Brexit referendum, India’s export competitiveness to these regions has come under strain. If the situation persists, a trade pact with the UK or the EU will come handy, as fears of China pegging its currency to its advantage loom, said analysts. The pound, euro and the Chinese yuan have depreciated almost 12%, 2.3% and 1%, respectively, against the dollar while the rupee has appreciated 0.1% between the closing of June 23 and July 1.

But a foreign diplomat posted in New Delhi said: ”Their (the EU’s) job is already cut out. They have to first finalise the terms of the British exit, which is a mammoth and complex task. Both the parties have to recalibrate their strategy even at the WTO. In such a situation, starting another front of negotiations (with India) could take some time,” he said.

As such, differences already persist on the broad contours of the proposed FTA, including on EU’s insistence that India cut import duties on auto parts and wine and strengthen intellectual property rights regime and Indian demand for greater liberalisation in services.

Anwarul Hoda, a former deputy director general at the WTO and current chair professor for trade policy at Icrier, said the Brexit holds some potentially good news for India, apart from the obvious shocks. “The UK is more liberal than the rest of the EU. So, it could still be easier for India to clinch an FTEU-FTAA with the UK than with the EU.”

There is a fair amount of chance that an FTA with the UK, if talks are initiated simultaneously, will be sealed before such a deal with the EU, he said. In fact, Britain doesn’t have the same baggage as the EU. For instance, the UK may not stubbornly insist on the removal of tariff barriers in automobiles as the EU, as the former isn’t a major auto player.

The EU hasn’t yet given the dates for a resumption of the FTA talks, said the source mentioned earlier. Recently, commerce minister Nirmala Sitharaman had written to her EU counterpart, asking for dates to resume the negotiations.

Source: http://www.financialexpress.com/article/economy/after-brexit-vote-india-to-tweak-eu-fta-strategy/309181/

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

Paperless I-T assessment: CBDT plans to take project to more taxpayers

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After successfully completing over 1,000 scrutiny I-T assessments under a maiden taxpayer-friendly paperless inquiry system, CBDT is set to extend the initiative as it is mulling seeking taxpayers’ consent to opt for the scheme at ITR filing stage itself.

Central Board of Direct Taxes (CBDT), the policy-making body of the Income Tax department, had launched a pilot project last year to reduce taxpayers’ visit to the tax office and their interface with the taxman.

Under the project, the first set of e-communications were decided to be mailed to the assessees in DELHI, Mumbai, Bengaluru, Ahmedabad and Chennai region.

As per official data accessed by PTI, the department in these five cities has completed scrutiny assessments in 1,001 cases till now, after a total of 6,481 assesses were contacted of which 1,812 responded positively.

A senior official said the biggest “challenge” in achieving better success in this new project was obtaining the consent of the taxpayers.

The Assessing Officers (AOs) found that while in some cases the taxpayer could not be reached as their personal email ids were with their CAs or authorised representatives, in a few other cases the assessee withdrew his consent to join the scheme, the official said.

“It is now being mulled if the I-T department can print a footnote on the Income Tax Return (ITR) or on the scrutiny notice itself that the taxpayer is invited to participate in the exercise over email in a paperless manner.

“The results are encouraging and the CBDT wants to make this an institutional system for scrutiny assessments henceforth,” the official said, adding the scheme is expected to be widened and rolled out with new features within this financial year.
The success of the project, initiated last year, is evident from the fact that CBDT recently added two more cities (Hyderabad and Kolkata), to the existing five metros, under the paperless assessment system exercise.

With this project, CBDT aims to end corruption and bring hassle-free experience for the taxpayers who undergo a time-consuming scrutiny assessment procedure which entails production of a number of documents and financial statements.

The department, however, says it brings only about 1 per cent of cases under the said procedure.

An official notification had been issued earlier which spells out the procedure, formats and standards for ensuring “secured transmission” of emails between the AO and the assessee stating all communication between the two sides will be done in PDF file format and over bonafide email ids.

This followed an amendment in the I-T Act in December last year, which allowed emails to become the new mode of interaction between the AO and the tax-paying individual.

Under the new procedure, the taxman will send emails, for issuing notices and summons, through the government registered ‘@incometax.gov.in’ email domain and the attached PDF document will have his or her designation and signature.

In response to such I-T notice, taxpayers will have to submit the details called for, in a Portable Document Format (PDF) through their email id registered with the department.

The notification states, “Any email, in response to the notice issued by the AO, received from the primary email address of the assessee, shall be considered as a valid response to the notice.”

In the same notification, CBDT had also mandated that the taxman will maintain an audit trail of all e-communication with a taxpayer in the IT department’s central database for future reference and as record management of the entire transaction.

The new directives also allow a taxpayer to physically submit a reply to such e-notices in case of a technical problem in their email. “This shall be treated as adequate compliance,” it had said.

The project was launched after CBDT had asked the I-T department to “initiate the concept of using emails for corresponding with taxpayers and sending through emails the questionnaire, notice etc at the time of scrutiny proceedings and getting responses from them”.

“This would eliminate the necessity of visiting the Income Tax offices by the taxpayers, particularly in smaller cases, involving limited issues and where taxpayer is able to provide details required by the AO without necessitating his physical presence,” the order had said.

Source : http://economictimes.indiatimes.com/articleshow/53061801.cms