EQUITY UPDATE – 13 JULY 2012

ASIA

China’s job market is displaying signs of stress, according to analysts, which could prompt the government to increase fiscal spending to prevent a slowdown. The news comes as China is scheduled to report second quarter GDP data on Friday and median forecasts estimate the country to expand by 7.5 percent, its slowest pace in three years. One caveat in the jobless data for China is the 200 m migrant workers and labourers working in factories and construction industry. (Financial Times)

Taiwan Semiconductor Manufacturing Corp and Samsung are jointly in talks with semiconductor manufacturing co. ASML Holdings NV to acquire a 10 percent stake in it. Intel already has a USD 4.1 b investment in the co. which is why ASML is keen on divesting stake. ASML is keen on offering the co’s to purchase a 25 percent stake. (Financial Times)

INDIA

Reliance Industries – Co. conducted a roadshow in Singapore as it plans to raise USD 1.5 b in loans to expand it petrochemical plant in Jamnagar, Gujarat. (Economic Times)

Reliance Power – Co. has secured loans of USD 1.1 b from three Chinese lending firms to fund its 3960 megawatt project in Sasan, Madhya Pradesh. . (Economic Times)

According to data released by the RBI, bank’s loans and advances grew at a slower pace on lower corporate borrowing in the first quarter of FY12-13. Banks credit operations increased by 1.2 percent in 1Q12-13 while deposits also rose 1.9 percent. (Business Standard)

Jindal Group – Co. plans to construct a textile unit in Nashik, India. The project is expected to have an outlay of INR 1500 cr. (Economic Times)

EUROPE

European Banking Authority (EBA) stated that banks in Europe, which earlier had a shortfall in capital amounting to EUR 76 b, have now raised a combined capital of EUR 76 b before the deadline set for June. The EBA expressed its satisfaction over the capital raising, which was mostly done through equity and retained earnings, dividends,  convertible debt instruments. (Financial Times)

British Petroleum plc – Co. has decided not to go ahead with its USD 1.5 b offshore oil project in Alaska on the high costs associated with it. The Liberty field in Alaska is estimated to hold reserves of 100 m barrels and was expected to have an output of 40,000 barrels a day. (Financial Times)

BHP Billiton, Vale and Anglo American would be divesting stake in their non-core mining operations to lay focus reducing expenditure and shareholder backlash. (Financial Times)

Spanish government announces a slew of public spending cuts and increases in taxation totalling EUR 65 b until 2015 to reduce its fiscal deficit. Value added tax was raised to 21 percent from 18 percent and unemployment benefits would be reduced. Subsidies to coal mines have been reduced by 60 percent as well. The economic turmoil in the country saw 10 yr bond yields decline 14 basis points to 6.70 percent after it touched highs of 7 percent. (Financial Times(

NORTH AMERICA

Avenue Capital Group LLC, a hedge fund, raised USD 2.78 b in capital to launch its Europe centric distressed debt investment fund. The fund is expected to invest in UK, Germany, Ireland, Belgium and the Netherlands, amongst others. (Bloomberg)

U.S Wholesalers Inventories rose 0.3 percent in May vs a gain of 0.5 percent in April. Declining sales saw inventory levels decline the most since 2008. (Bloomberg)

COMMODITY

According to a report compiled by British Petroleum Plc and a report by the Organization of Petroleum Exporting Countries, Iraq overtook Iran in the production of crude oil for the first time in more than 20 years. Sanctions imposed on Iran have been the chief cause of the decline in Iran’s production. Iran’s output came in at 2.963 m barrels a day in June vs Iraq’s output of 2.984 m barrels a day. . The fall in Iran’s output also impacted OPEC’s production to 31.36 m barrels a day in June vs 31.47 m in May. (Bloomberg)



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