EQUITY UPDATE – 27 JUNE 2012

ASIA

China and Chile plan to increase their bilateral trade to USD 60 b by 2015. Demand for commodities and China’s supply of renewable solar energy plan to foray into the Latin – American markets as part of the trade agreements. (Reuters)

Malaysian firm Kuok Group is in talks to acquire a majority stake in Drydocks World, a Dubai-based shipbuilder. Drydocks is currently restructuring debt worth USD 2.2 b as it sought bankruptcy protection in April. Drydock’s Singaporean and Indonesian operations could be a part of the acquisition. (Reuters)

INDIA

Nomura cut Indian GDP forecast for FY 13 to 5.8 per cent versus a previous 6.7 per cent. FY 13-14 forecast at 6.6 per cent versus 6.9 per cent. (Financial Express)

BHEL – Co. won an INR 950cr contract for supplying equipment for 1020 MW hydel project in Bhutan. (Economic Times)

Sugar Co. – Indian sugar co.’s at a added advantage to sluggish start to Brazilian cane harvest due to poor weather conditions. (The Hindu Business Line/PTI)

Kingfisher Airlines – Lessors of aircrafts have taken back 34 aircrafts due to nonpayment of rental fees of INR 1000cr. Additionally another 15 aircrafts have been grounded due to spare-parts requirements. Co. is just left with 15 aircrafts (8 ATRs, 1 A319, 4 A320s and 2 A321s). (Money Control/PTI)

Shyam Telecom Ltd – Fitch lowered outlook on co. to negative from stable; rating affirmed at BBB-(ind); on back of license cancellation of its JV firm Sistema Shyam TeleServices Ltd. (Business Standard/PTI)

McNally Bharat Engineering Ltd – Co. to won an order from Gammon India worth INR 63.85cr. (The Hindu Business Line)

Emmbi Polyarns – CRISIL maintains valuations at 5/5; with current revised fair value of INR 21 from INR 23. (Money Control)

Dhanuka Agritech – CRISIL maintains valuations at 4/5; with current revised fair value of INR 117 from INR 109. (Money Control)

 EUROPE

Spain could be downgraded to ‘junk’ credit rating by Moody’s Investors Service as investors drive up the cost of credit-default swaps, instruments used as insurance against issuer default. CDS on Banco Santander SA rose 23 percent to 4.54 percent, near its all time high of 4.74 percent. Banco Bilbao Vizcaya Argentaria (BBVA) also saw its CDS rise to 477 basis points, closer to its high of 516 bps. The yield spread on Spanish bonds compared to German bonds of similar maturities rose 6.48 percent on rising concern about Spanish economy. (Bloomberg)

Spanish Treasury Auction – EUR 3.1b:

  • 3 month bills at 2.36 per cent versus 0.85 in May.
  • 6 months bills at 3.24 per cent versus 1.7 in May. (Boston.com/AP)

 European Union’s proposal for the next 10 years saw immediate criticism by Germany as it focused more on debt sharing initiatives rather than laying emphasis on individual national budgets. EU President Herman Van Rompuy revealed that the policies would hinge on join debt issuance, common central banking supervision and deposit insurance.  Angela Merkel dismissed the possibilities of having a shared European debt liability. (Bloomberg/Fox Business/Reuters)

Demand for ECB’s limit-free 7 day loans at interest rates of 1 percent saw more than expected demand yesterday. Loans exceeded to EUR 180 b (USD 225 b) drawn out by 105 banks, vs EUR 167 b drawn by 101 banks a week ago. (Reuters)

Nomura reduced its ratings on Greece’s banks: Greece SA and Eurobank to reduce from neutral; Alpha Bank SA to neutral from buy. Nomura expects a capital shortfall of EUR 22 to EUR 24b for the current year and the next.(Reuters)

Roche – Swiss drug manufacturer announced 1000 job cuts at its plant in the U.S to ramp up operations of its research unit. (Reuters)

Banca Monte dei Paschi di Siena – Italian government injected USD 2.49b in co. to cover capital shortfall. (Economic Times)

 NORTH AMERICA

According to the economic organization Organization for Economic Cooperation and Development (OECD), long-term unemployment in the US could have long lasting impact on the US economy and the nation would require training programmes to keep its workforce from feeling the effects of structural unemployment. It was believed that the rate of structural unemployment was at around 5 percent in the 2007-09 period, but could now be amongst the 5.2 – 6 percent range in the current period. (Economic Times)

Rating agency S&P stated that the U.S could face a 20 percent chance of suffering a double-dip recession. Slower recovery has hampered growth in the economy and lack of policy could cause the country to further slip into recession in the coming periods. (Reuters)

The S&P/Case-Shiller Index of US home prices declined in April by the slowest pace since November 2010, indicating a slight turnaround in the property markets. The Index tracking prices in 20 cities declined 1.9 percent in April 2012 on a y/y basis vs decreasing 2.6 percent on a m/m basis. Median forecasts came in at a decline of 2.5 percent. The index is based on a three-month average price. (Bloomberg)

The Conference Board’s index of consumer sentiment declined to a five-month low of 62 for June vs a revised number of 64.4 for May. Median forecasts came in for a decline at 63. Concerns over the job market in the US and income have reduced consumer’s spending pattern. (Bloomberg)

Coca-Cola – Co. to double investment in India to USD 5b by 2020. (Financial Express)

 



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