EQUITY UPDATE – 29 JUNE 2012

GLOBAL

Dealmaking activity declined by 2 percent in the January – March period for FY2012 on account of the euro debt crisis and volatility in the equity markets. M&A deals worth USD 450 b have taken place in the said period with European dealmaking declining 20 percent. Asia showed a 3 percent rise in activity. (Bloomberg)

ASIA

According to Jia Kang, the director of the China’s Research Institute for Fiscal Science at the Ministry of Finance, a 7.5 per cent growth for the year was attainable. As the Chinese economy could stabilize in the third quarter. (Reuters)

INDIA

According to the Reserve Bank of India (RBI), banking institutions’ borrowings from overseas sources could be affected if the country’s rating suffered a downgrade. Rating cuts of 1-in-3 was forecasted by S&P, while Moody’s and Fitch also have lowered their outlook on the country from stable to negative.  In other news RBI approved FII to invest 23 per cent in commodities exchange without seaking prior approval. (Economic Times)

The Indian Government is to publish a draft regarding the rules of the General anti-avoidance rule (GAAR), according to Finance Secretary R.S Gujral.  The Prime Minister Manmohan Singh is expected to take two or three weeks to interpret the rules of the GAAR policy. (Business Standard)

India looks to export 2 m tonnes of surplus wheat to 17 nations which include Netherlands, Japan and Iraq. (Business Standard)

Coal India – Co. received 2 of NTPC’s de-allocated mines and another in India to commence coal extraction operations. (Business Standard)

PowerGrid Corp – Co. raised a total of around INR 4000 cr in bond issues at a coupon rate of 9.30 percent which is due in 2027. The co. plans to utilize the proceeds of the issue to finance part of its INR 20,000 cr capital expenditure plans. (Economic Times)

Cairn India – Cairn Energy is selling 66m shares in co. at a price range of INR 307.40 to 317.50, according to a source. (Reuters/FirstPost)

Private Equity firm Sequoia Capital made an investment of INR 305 cr in local search engine services provision firm, Just Dial. The investment makes it Sequoia’s third investment in the co. (Economic Times)

Out of the 34 blocks offered to oil co’s under the New Exploration Licensing Policy (NELP), only 13 blocks succeeded in drawing bids worth USD 582.3 m. The offered included eight deepwater blocks, seven shallow water blocks and 19 land exploration blocks. (Economic Times)

Birla Corp – Co. plans to set up an overseas cement, the first of its kind, in Ethiopia. (Economic Times)

NCC – Rare Investments and its related entities have increased their stake in co. by acquiring  750,000 shares (0.3 per cent). Prior to this transaction Rare Investments and entities held 7.69 per cent stake in co. (The Hindu Business Line)

EUROPE

According to the German finance minister Wolfgang Schaeuble, Germany could agree on shared liability of euro-zone debt, if path for a centralized European control was irreversible and well coordinated.  (FoxBusiness/Dow Jones Newswire)

Germany’s think tank IMK said, Germany’s economic growth to slow to 0.3 per cent in 2013 from a 0.6 per cent in 2012, due to austerity measures impacting trade partners. (Economic Times/Reuters)

Italy conducted its bond auctions of EUR 5.4 b for 5 yr and 10 yr bonds. Yields on the 10 yr bonds rose to 6.19 percent vs 6.03 percent in the auction held in May.  The 5 yr bonds yielded at 5.84 percent vs 5.66 percent. The auctions were conducted with investors keeping one eye open on the EU Summit which takes place today. (RIA Novosti)

NORTH AMERICA

US conducted an auction of its 7 year notes at an average yield of 1.075 percent vs median forecasts of yields of 1.056 percent. Bid-to-cover ratio, a gauge of demand, came in at 2.64, the lowest since October 2011. Indirect bidders which include foreign central banks, purchased 42 percent of the notes vs an average of 40.6 percent in the past 10 auctions. (Bloomberg)

Pimco’s Bill Gross stated that it would take decades for the markets and the financial system to return to normalcy after the crisis. He also stated that U.S securities would still be considered the safest instruments in the advent of the ongoing crisis in the markets. (Bloomberg)

JP Morgan – Co. to announce about USD 5b losses related to its derivative trading, during the release of its second quarter earnings, according to people familiar. In other news Citi Research cut co.’s price target to USD 43 from USD 45. (FT/Reuters)

Goldman Sachs – Price target cut by Citi Research to USD 110 from USD 145. (Reuters)

BofA – Price target cut by Citi Research to USD 8 from USD 9. (Reuters)

Morgan Stanley – Price target cut by Citi Research to USD 16 from USD 20. (Reuters)



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