EQUITY UPDATE – 6 JULY 2012

ASIA

China’s central bank, People’s Bank of China cut its benchmark one-year lending rates by 31 basis points to 6 per cent and its one year deposit rates by 25 basis points to 3 per cent. In other news Reuters poll showed that the Chinese economy grew by 7.6 per cent in 2Q12 versus 8.1 per cent in 1Q12, registering a straight six quarters of slowing growth. (Financial Times/Telegraph UK)

Banks in China saw heightened lending activity in May, exceeding expectations, but new loans issued in 2012 fell short of the targeted range of RMB 8 – 8.5 t. Banks gave fresh loans in the range of RMB 7.3 – 7.5 t. Chinese banks lent a total of RMB 793.2 b (USD 125 b) vs forecasts of RMB 700 b vs RMB 681.8 b in April. (Bloomberg)

China could attempt to put a maximum limit or a cap on loans at 75 percent of deposits  on top of imposition of additional requirements. A senior banking official quoted on behalf of the regulator that liquidity risk-management rules would lay more focus on the loan-to-deposit ratio as one of its measures. (Bloomberg)

Nissan Motors – Moody’s raised co.’s ratings to A3 from Baa1 with stable outlook, on back of launch of new models and rising profit margin. (Boston.com/AP)

INDIA

The Reserve Bank of India would continue to buy back FCCBs issued by Indian companies through the approval route. RBI will consider proposals from companies in the case of buyback value being at minimum discount of 5 per cent of accreted value. The central bank will conclude the buyback process by 31March 2013. (Money Control/Reuters)

FII made gross purchases of INR 2659.08cr and gross sales of INR 2229.86cr. DII gross purchases at INR 995.17cr and gross sales at INR 1198.20cr. (Business Standard)

According to Credit Suisse, RBI could cut interest rate by another 125 basis points by March 2013. The bank expects RBI to start cutting rates in October and also expects WPI to drop below 6 per cent by end of March 2013. Credit Suisse also stated that yields on 10-year government bonds to fall to 7.5 per cent next year and expects the rupee to strength to 50. (Economic Times/Reuters)

ONGC – Co is to conduct a sale of its stake in four of its coal- bed methane (CBM) blocks. The co. plans to divest around 35 percent of its stake in the blocks it owns. (Business Standard)

Retail Co.’s – Shares in co. soared after a market report that government may allow foreign direct investment in multi brand retail, after the new presidential elections later this month. (Financial Express)

Grasim Industries – Aditya Birla group to acquire Terrance Bay Pulp Inc for USD 110m. Co. would acquire a 40 per cent stake in a special entity, while the reminder would be held by Thai Rayon Public Company.  (The Hindu Business Line)

Eicher – Co. got an order for 1019 bus chassis from Gujarat State Road Transport Corporation. (The Hindu Business Line)

Kingfisher Airlines – Debt ridden airline firm won an additional grace period from lenders to come up with plans to restructure its debt and to come up with a restructure its operations. Co. to raise funds by selling non-core asset which includes its corporate headquarters in Mumbai and a villa in Goa. (NDTV Profit/Reuters/Yahoo)

 EUROPE

The European Central Bank cut interest rates to all time low of 0.75 per cent, the decision to cut rates was unanimously taken by the 23 ECB governing council members. However ECB president Mario Draghi did not discuss any ‘non-standard’ measures to counter the crisis. According to Mario Draghi the funds under ESM and EFSF were enough to cope up with the risks.  The euro declined 1.1 percent to 1.2386 to the US Dollar after the news of the rate cut. The yields on Spanish and Italian bonds increased by 21 basis points on the news today as the ECB did not convince investors by announcing more stimulus measures for Spain and Italy. (Economic Times/AFP/Bloomberg)

Bank of England increased its asset purchase program by GBP 50b, the will hike its QE stimulus policy to a total of GBP 375b over the next four months. The bank maintained interest at 0.50 per cent. (Economic Times/AFP)

Denmark’s central bank cut its interest rates to record lows to test uncharted territories. The benchmark rate was cut to 0.2 percent from 0.45 percent and the deposit rates were reduced to -0.20 percent from 0.05 percent. (Reuters)

EADS – Airbus delivered 109 737 planes in 2Q12 versus 94 in 2Q11. (Reuters)

Barclays – S&P rating agency downgraded the outlook on the co. to negative from stable, dude to the ongoing interest rate rigging scandal. (Economic Times/AFP)

 NORTH AMERICA

US Initial Jobless Claims for week ended 30 June declined by 14,000 to touch 374,000 which exceeded estimates forecast by analysts. Private sector payroll data rose by 176,000 in June over May. (Bloomberg)

The Institute for Supply Management’s index for services in the U.S declined to 52.1 in June vs 53.7 in May.  The data came below forecasts which predicted the index to decline to 53. Even though activity in the services industry grew at a slower pace, the decline would be a cause of concern, which could affect the economy. (Bloomberg)

Boeing – Co. delivered 150 planes in the 2Q12 versus 118 in 2Q11. Co. delivered 22 777 palnes, seven 747 jumbo jets, six 767s and six 787 planes. The co. also delivered 36 defense and space products in 2Q. (Reuters)



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