EQUITY UPDATE 14 JULY 2012

ASIA

According to Chinese Central Bank’s recent stress test, capital adequacy ratio to be maintained by the overall banking system dropped to 10.89 per cent versus 12.33 per cent. (FoxBusiness/Dow Jones Newswire)

INDIA

According to the Builders’ Association of India, cement companies continue to form a price cartel inspite of the CCI imposing fines on the co.’s. (Economic Times)

FII’s made gross purchases of INR 1957.01cr and made sales totalling INR 1675.88cr. DII’s made gross purchases of INR 611.04cr and made gross sales totalling INR 981.45cr. (Business Standard)

According to a senior RBI official, Reserve Bank of India could raise capital requirements for new banks to 10 billion rupees from the currently proposed 5 billion rupees. (Reuters)

Infosys – LIC has hiked its stake in co. to a record 6.3 per cent (from 4.9 per cent previously) with purchase of shares worth about INR 2000cr in 1Q12-13.  (The Hindu Business Line/PTI)

Tata Steel – Co.’s 1Q12-13 sales at 1.59 million tonnes versus 4Q11-12 sales at 1.79 million tonnes. Saleable steel production in 1Q12-13 at 1.74 million tonnes versus 1Q11-12 steel production at 1.75 versus 1.78 in 4Q11-12. However crude steel production at 1.82 million tonnes versus 1.79 million tonnes in 4Q11-12;  hot metal production at 2.05 million tonnes versus 1.94 million tonnes in 1Q11-12. (Business Standard/PTI)

Tube Investments – Murugappa Group’s subsidiary Tube, is to acquire a 44 percent stake in industrial power transmission firm Shanthi Gears. The co. signed a share purchasing agreement with Shanthi today. The total cost of the acquisition could rise to INR 464 cr. (Economic Times)

Adani Power – Co. is to raise INR 5000 cr in capital to fund its operations on receiving shareholder approval. The co. plans to issue depository receipts and convertible preference shares. (Economic Times)

Welspun Global Brands – Krishiraj Trading and Welspun Mercantile Limited co.’s promoters made an open offer to co. to acquire 14,50,000 equity shares representing 13.84 per cent at a price of INR 42 per share. (MoneyControl)

INDIAN EARNINGS

Sintex Industries Ltd – Co. reported standalone sales 1Q12-13 at INR 606.46cr vs. previous 1Q11-12 sales at INR 555.66cr. Net profit at INR 32.88cr vs. previous INR 69.13cr. According to co.’s management co. to redeem FCCB’s liability at the end of FY 13. (The Hindu Business Line)

EUROPE

The Bank of England provided confirmation that it had received a recommendations from US Treasury Secretary Timothy Geithner to make changes to the setting of the Libor rate. BoE passed on this letter to the British Bankers Association, which sets the Libor rate used globally by firms. (Reuters)

According to a survey conducted by ZDF-Politbarometer showed 63 per cent of German backed German chancellor Angela Merkel’s handling of euro crisis, which is up from 60 per cent in May. (Economic Times/Reuters)

Volkswagen – Co. reported 8.9 per cent jump in group sales in 1H12 to 4.45 million vehicles, putting the co. on track to beat last year’s record 8.3 million sales. (Reuters)

PSA Peugeot Citroen – Co. share prices declined 9 percent in trade to 23 year lows after the firm announced negative cash flows of EUR 200 m a month and job cuts. The share price touched lows of EUR 6.37 a share. (Financial Times)

NORTH AMERICA

Federal Reserve’s Dennis Lockhart stated that the central bank would have to conduct a fresh round of asset purchasing programme if weakness in the economy persisted. A failure of the economy to rise in the second half of the year and weaker economic data could point towards a fresh round of stimulus, as per his statements, revealed yesterday. (Bloomberg)

According to Morgan Stanley, a total of USD 22 b in fines could be imposed on twelve global banks involved in the Libor manipulation scandal.  Regulatory authorities are investigating the matter which was formed when banks formed a cartel to keep rates low. The co. added that fines would be about 10 percent of the bank’s turnover or 4 – 13 percent of their EPS for 2012. (Financial Times)

The University of Michigan-Thomson Reuters consumer sentiment index for July declined to 72 from 73.2 in the previous month. Median forecasts had predicted a gain of 73.5. The measure of expectations also declined to 64.8 for July from 67.8 in June. (Financial Times)

Wholesale Producer Price Index in the US rose 0.1 percent in June on a seasonally adjusted basis vs expectation of a decline of 0.4 percent. Lower energy prices were offset by an increase in food prices. Energy prices declined 0.9 percent on a m/m basis while food prices rose 0.5 percent on higher price of meat. Core producer prices excl food and fuel rose 0.2 percent for the fourth month in a row. (Financial Times)

Wells Fargo – US based mortgage provider reported a 17 percent rise in 2Q12 profits at USD 4.6 b. Earnings per share came in at 82 cents, marginally exceeding expectations of 81 cents vs 70 cents a year ago. Issuance of new mortgages combined with cosut cutting measures saw the profits of the co. rise even in a challenging market. Revenues also rose on the back of the U.S Government’s plan aimed at helping homeowners to refinance their mortgages. Net interest margin declined to 3.91 percent from 4.01 percent on a y/y basis. (Financial Times)

Canadian pension fund The Ontario Teacher’s Pension Plan is to acquire a 75 percent stake in Norwegian retailer Helly Hansen for around NKR (Norwegian Kronor) 2 b (USD 326 m). The pension fund will purchase the stake from private equity firm Altor, which purchased Hansen for one-fourth the current purchase price. (Financial Times)

Berkshire Hathaway Inc’s Chairman Warren Buffett stated that bankruptcies in municipal bonds could increase in the shorter term. His statement came on the back of three cities in California filing for bankruptcies in the span of a few weeks. City Council of San Bernardino filed for bankruptcy recently. Falling property tax revenues, rising costs of labour and the severity of the slowdown could all contribute to further defaults. (Bloomberg)

J P Morgan – Co.’s Chairman Jamie Dimon stated that the losses occurred on its derivatives trades could mount to USD 7.5 b. The results of the co. were declared today and Dimon blamed the losses caused by the trade as an isolated event. (Bloomberg)

Ford Motors – Co.’s June sales down 16.1 per cent on a Y-O-Y basis in its 19 western European markets. (Reuters)

Bain Capital and the Government of Singapore are in advanced talks to make a joint bid to acquire a 40 percent stake in Genpact for USD 1.5 – 2 b. (Reuters)



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