EQUITY UPDATE – 17 JULY 2012

ASIA

China’s FDI inflows declined 3 percent in the Jan-June 2012 period on a y/y basis. Slowing global economy lowered the inflow of capital into China. FDI data came in at USD 59.1 b for the said period. FDI in June came in at USD 12 b, a 7 percent decline on a y/y basis. (Reuters)

IMF warned that Chinese economy could still be destined for a ‘hard landing’, cut China’s growth forecast by 0.2 per cent to 8 per cent.  The global think-tank cited slowing down of investment spending due to overcapacity in some industries. (Economic Times/AP)

ZTE Corp – Shares of the co. declined 17 percent in trade to three year lows on lower profit forecast given by the co. The co. announced that profits would decline 80 percent on a y/y basis. Lower investment income, exchange rates and lower domestic revenues were the causes for the declining profit margin. (Financial Times)

INDIA

Rating agency Fitch stated that India’s infrastructure sector would see a slowdown in activity on delays, regulatory problems and sector specific challenges. Infra co.’s will be constrained by capital raising issues, higher interest rates, depreciation of the rupee and other fuel constraints. (Business Standard)

According to a report by Deutsche Bank India, India’s GDP for FY12 period is expected at 6.3 percent on consistent pressure from inflation which hampered policy measures. (Economic Times)

FII made gross purchases of INR 1639.72cr, and sales of INR 1382.55cr. DII’s made gross purchases of INR 683.29cr, sales of INR 723.88cr. (Business Standard)

IMF lowers India’s growth forecast by 0.7 per cent to 6.1 per cent for 2012; FY13 forecast cut to 6.5 per cent, citing deteriorating of global economic situation. (Economic Times/PTI)

State own oil firms hiked the prices of aviation turbine fuels by 1.7 percent to keep in line with global rates. (Economic Times)

Rashtriya Ispat Nigam Ltd – Co.’s initial public offering of INR 2500 cr has been deferred by the Indian government on account of weaker market conditions which saw a weaker response to the issue. (Economic Times)

Reliance Industries – Co. repurchased 3.51 cr shares totalling INR 2515 cr. The programme is part of the INR 10,440 cr buyback until January 2013. (Economic Times)

Lupin – Citi raises price target for co. to INR 640 from INR 570, maintaining a ‘buy’ rating. However FY13-14 EPS lowered by around 5 per cent due to higher effective tax rate assumptions. (Financial Express)

Gujarat Pipavav Port – Co. raised INR 350 cr through a qualified private placement and preferential share issue. Co. raised INR 199.5 cr through 3.41 cr of share sale and INR 152.52 cr of sale of 2.58 cr of preferred shares. (Business Standard)

INDIAN EARNINGS

Tata Coffee – Co. reported 1Q12-13 net profit at INR 31.84cr vs. previous 1Q11-12 net profit at INR 13.59cr. Consolidated total income from operations at INR 413.73cr vs. INR 334.82cr previously. (Financial Express)

DCB – Co. reported 1Q12-13 net profit at INR 18.9cr vs. previous 1Q11-12 net profit at INR 8.8cr. Income at INR 92cr vs. previously INR 76cr. NII at INR 64cr vs. previous INR 52cr. (Business Standard/PTI)

MindTree – Co. reported 1Q12-13 net profit at INR 89cr vs. previously INR 34.6cr in 1Q11-12. Revenue at INR 563cr vs. previous INR 413.1cr. (Financial Express)

Exide Industries – Co. reported 1Q12-13 net profit at INR 152.03crcr vs. previously INR 163.26cr in 1Q11-12. Revenue at INR 1551.08cr vs. previous INR 1243.28cr. (Business Standard)

EUROPE

European Central Bank President Mario Draghi declined to make a statement on reporting losses on holders of debt issued by Spanish banks severely affected by the crisis in Europe. (Reuters)

The Chairman of the European banking Authority Andrea Enria stated that banks would have to meet stringent capital requirements to prevent them from stalling on lending, to stop the crisis from spreading. The capital adequacy ratio, which was temporarily set to 9 percent, would be made a permanent requirement for banks. He stressed on conservation of capital for banks as a top priority. (Financial Times)

According to a recent IMF forecast Spanish economy is expected to contract 1.5 per cent in the current years and another 0.6 per cent in 2013 versus a previous expansion in 2013, citing lack of confidence in the Spanish economy despite the EU banking bailout and continued outflow of private-capital. (Economic Times)

GlaxoSmithKline – Co. is set to acquire Human Genome Sciences for around USD 2.8 b. The three-month hostile pursuit by GSK would come to an end as the co. rose its offer from USD 13 a share to USD 14 a share.  GSK would access the rights to market Benylsta, a drug treating immune system related diseases and other medicines related to heart disease treatment. (Reuters)

Nokia Oyj – Shares of the co. declined over 3 percent on the co. reducing the price of its Lumia 900 phone by 50 percent in the US for the weekend. With the co. also set to announce its 2Q12 results, investors exercised caution over the co.’s stock purchase. Shares of the firm neared its 16 yr lows at EUR 1.434 a share. (Reuters)

PostNL – Co. shares declined more than 5 percent after TNT Express announced that UPS would delay its EUR 5.15 b takeover of TNT until the fourth quarter 2012. PostNL owned a 29.9 percent stake in TNT Express. (Financial Times)

NORTH AMERICA

Citigroup Inc – Co.s second quarter profit declined on slowing economy. Net earnings came in at USD 2.9 b on a y/y basis, a 12 percent decline. Earnings excl partial stake sale of Akbank, declined to USD 1 a share vs expectations of 89 cents. Citi reduced its positions in troubled euro zone countries from USD 50.5 b to USD 20.1 b. Revenues declined 10 percent to USD 18.4 b on account of write downs of bas assets of Citi Holdings. (Financial Times)

Comcast Corp – Co. is to buy Microsoft’s 50 percent stake in MSNBC for about USD 300 m. (Reuters)

GLOBAL

According to a survey conducted by the National Association for Business Economics, only 23 percent of the co.’s participating, planned on hiring staff in the next six months vs previous number of 39 percent. Slowdown in hiring, on account of a slowing economy and the euro crisis, would all affect the job markets, the study revealed. It also revealed that hiring may have slowed down due to co.’s exercising caution rather than seeing a decline in operations. (Reuters)



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