EQUITY UPDATE – 20 JULY 2012

ASIA

According to KPMG, China’s imposition of restrictions on borrowing through trust companies and property sales could affect property and real estate developers in the region. The report came on the back of data which showed a decline in new funding available to developers as loans declined to 5.7 percent for the 1HY12 period. Additionally, home sales also declined 6.5 percent as the government maintains restrictions on property prices and purchases. Funds channelled through real estate funds declined more than 50 percent to RMB 84.6 b. (Bloomberg)

Chinese President approved a USD 20 b to various African countries in the coming three years, to boost ties with nations in the continent. (Reuters)

Hong Kong’s government warned that unemployment would continue to rise in the near term , affecting more graduates, as the economic crisis begins to tighten its effect on the country.  Unemployment rate for 2Q12 period ended June was unchanged at 3.2 percent, below expectations of 3.3 percent. The government stated that inspite of the encouraging data, the rate would rise to 4 percent by the end of 2012. (Bloomberg)

Temasek Holdings and China Investment Corp and two other firms have expressed interest in RCom’s IPO which would be launched in Singapore. RCom’s undersea cable unit Global Telecommunication Infrastructure Trust (GTIT) is to be listed on the Singapore Stock Exchange. Investors have proposed to invest a total of USD 250 to 300 m in the IPO. (Business Standard)

Australia’s index of business conditions for the next three months declined to 5, its lowest since 2Q09 and its confidence index for the same period declined to -2. Near term optimism on business dimmed as analysts and managers expect the Reserve Bank of Australia to cut its benchmark cash rate by atleast 25 basis points. (Bloomberg)

INDIA

According to a Reuter’s poll, India’s gross domestic product is expected to grow 6.3 per cent during FY12-13 vs. previous estimate of 7.1 per cent and 7 per cent in FY13-14 vs. precious estimate of 8 per cent. (FirstPost/Reuters)

Based on provisional details, DII’s made gross purchases of INR 924.56 cr vs sales of INR 1153.40 cr, making them net sellers of INR 228.84 cr. Meanwhile, FII’s conducted gross purchases of INR 2021.60 cr vs gross sales of INR 1895.82 cr, making them net buyers of INR 128.78 cr. (Business Standard)

According to Barclays, the Reserve Bank of India to slash policy rates by 0.25 percent in the upcoming policy meeting. (FirstPost/PTI)

Exports of Indian garments to non-traditional markets such as Latin America and Africa rose by 16 percent to touch USD 3.15 b in FY11-12. Slowdown in demand from Europe and Asia made exporters look for newer markets, stated the industry body, Apparel Export Promotion Council. (Economic Times)

Maruti Suzuki – Shares of co. dropped 9 per cent as violence between workers and management erupted at its Manesar plant. According to co.’s management the plant has been shut down. (Business Standard/PTI)

Sail – Indian government has approved the disinvestment of 10.82 per cent in co.; which at current price of INR 93.40 would fetch USD 750m. (FirstPost/Reuters)

Indian Overseas Bank – Co. plans to raise around INR 1500 cr in capital from the Indian government. (Economic Times)

Cairn India – Co. stated that output at its Rajasthan’s oil fields could rise by over 70 percent if the government does not block or delay its investment approvals. Output could rise to 300,000 barrels a day, totalling 15 m tonnes annually vs current output of 175,000 barrels a day. (Economic Times)

INDIAN EARNINGS

Hero MotoCorp – Co. declared net profits of INR 615 cr vs INR 558 cr from a year ago for its 1Q12 earnings. Revenues rose 10 percent to INR 6351.7 cr vs INR 5775.5 cr on a y/y basis. Co. sold around 1640,000 units for the quarter. (Business Standard)

Dr Reddy’s Laboratories – Co. reported 1Q12-13 net profit of INR 335.98cr vs. previous 1Q11-12 net profit of INR 262.74cr. Net income at INR 2,541cr vs. previous INR 1,978cr. (Financial Express)

NIIT Technologies – Co. reported 1Q12-13 net profit at INR 57.5cr vs. previous INR 41.2cr in 1Q11-12.  Revenue at INR 496.6cr vs. previous INR 328.8cr. (Financial Express)

BOC India Ltd – Co. reported 1Q12-13 net profit at INR 20.3cr vs. previous INR 27cr. (The Hindu Business Line)

EUROPE

France conducted an auction of about EUR 8.96 b (USD 3.68 b) at the top end of its target inspite of demand weaker than the previous period. Bond yields declined as compared to Spain’s auction, which saw a rise during their auction. Yields on French bonds due 2014 came in at 0.12 percent vs 0.83 percent previously. 4 yr BTAN’s yielded at 0.53 percent, down from 1.05 percent. 5 yr bonds had yields of 0.86 percent vs 1.43 percent previously. (Reuters)

Czech Republic auctioned around 6 b koruna (USD 292 m) of bonds due 2017 and 2021 for record low yields.  Yields on the 2021 nots declined to 2.316 percent vs 3.109 percent from its previous auction. Investors bid more than three times the amount offered. The effect of Moody’s previously upgrading the sovereign rating of to A1 boosted sentiment in the region saddled by nations with rising yields. (Bloomberg)

Credit Suisse – Co. to lay-off another 138 employees in the United States, co. said in its filings. (Reuters)

EUROPEAN EARNINGS

Nokia – Co. reported 2Q12 loss of EUR 1.41b vs. estimated EUR 654m vs. previous loss of EUR 368m. However co.’s sales of its flagship Lumia phone double to 4m units and also co.’s reserve cash improved by EUR 306m. (Fox Business)

NORTH AMERICA

Textron Inc – Co. an industrial conglomerate, would consider bidding for Hawker Beechcraft, to counter a deal proposed by China’s Superior Aviation Beijing Co. (Bloomberg)

Oracle Corp – Co. to acquire privately held Skire Inc for an undisclosed amount. (Yahoo/Reuters)

NORTH AMERICAN EARNINGS

Southwest Airlines – Co. saw its 2Q12 profits rise by 42 percent on record revenues offsetting the higher expenditure on fuel. Profit came in at USD 228 m vs USD 161 m a year ago. Earnings came in at 30 cents vs 21 cents a year ago. Adjusted earnings, which excluded USD 45 m in one time charges, came in at 36 cents a share, exceeding analyst’s forecasts of 33 cents. Revenues rose 4.7 percent to USD 4.62 b vs expectations of USD 4.59 b. The co. is monitoring the ongoings of the economy while it reported that demand hasn’t declined, it stated. (Bloomberg)

Freeport McMoRan – Co. reported 2Q12 net profit at USD USD 710m vs. previous 2Q11 at USD 1.37b. EPS at USD 74 cents a share vs. estimated USD 75 cents vs. previous USD 1.43 a share. Revenue at USD 4.48b vs. previous USD 4.43b. (FoxBusiness)

Fifth Third Bancorp – Co. reported 2Q12 EPS at USD 40 cents vs. estimated 1Q11 at USD 35 cents. Revenue at USD 1.58b vs. estimated USD 1.54b. (Fox Business)

BB&T – Co. reported 2Q12 EPS at USD 72 cents vs. estimated 1Q11 at USD 69 cents. Revenue at USD 2.47b vs. estimated USD 2.41b. (Fox Business)

COMMODITIES

Brent Crude Oil prices rose to USD 107 a barrel on crisis in Syria and Iran. (Reuters)

GLOBAL

Regulators in Sweden, Japan and South Korea are examining their respective interbank lending or benchmark borrowing rates amid concerns of them being susceptible to manipulation like the Libor. The main premise being that these rates are set based on estimations of banks rather than actual trade could make it easier to manipulate. (Bloomberg)

 

 



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