Mistry family says it’s ‘time to separate’ from Tata Group
The billionaire Mistry family, the largest minority shareholder of the Tata Group, said it needs to separate its interests after the conglomerate took steps to block the family’s attempt to borrow money against Tata shares. Tata Sons Pvt informed the SC on Tuesday said that it is open to buying out the 18% stake owned by the family’s cash-strapped Shapoorji Pallonji Group.
'Labour reforms to improve India's ease of doing biz'
The government aims to catapult India to among the top 10 countries in World Bank's ease of doing business rankings with the comprehensive labour reforms which are likely to be completed after Parliament approves three draft codes in the ongoing session, a senior official said on Tuesday.
Post-paid tariff war: Jio unveils JioPostpaid Plus
After unleashing a price war in mobile tariffs and fibre-broadband services, billionaire Mukesh Ambani-led Reliance Jio on Tuesday unveiled postpaid plans, bundling up to 500 GB of data and subscription to Netflix, Amazon Prime and Disney + Hotstar.
Apple CEO Tim Cook impressed by remote work
Apple Inc chief executive officer (CEO) Tim Cook said he’s been impressed by employees’ ability to operate remotely and predicted that some new work habits will remain after the pandemic. Cook said he doesn’t believe Apple will “return to the way we were because we’ve found that there are some things that actually work really well virtually."
Documents suggest international banks made $2T in profit from business they knew was suspicious
News/Business: The financial sector was rocked this week by a report alleging that a number of banks — JPMorgan, HSBC, Standard Chartered Bank, Deutsche Bank and Bank of New York Mellon among them — have continued to profit from illicit dealings with disreputable people and criminal networks despite previous warnings from regulators.
Par passes bill to bring co-op banks under RBI
Parliament on Tuesday passed amendments to the Banking Regulation Act to bring cooperative banks under the supervision of the RBI, a move aimed at protecting the interest of depositors. The Banking Regulation (Amendment) Bill, 2020, which replaces an ordinance that was promulgated on June 26, was passed by a voice vote in Rajya Sabha.
Strange new orange or green dot on your iPhone? It's not a bug
What investors with $3.4 trillion are buying during Covid
Hotels, pipelines, convenience stores and automaker bonds are among the assets being bought by some of the world’s biggest asset managers as they look for value amid coronavirus pandemic. In interviews with sovereign wealth funds, pension firms and asset managers that collectively manage about $3.4 trillion, one thing was clear: many of them are avoiding the overheated stock market.
Passengers on international flights should go through systematic testing, says IATA
Aviation|: Dubai: All passengers on international flights should go through a systematic testing procedure before departure, according to the International Air Transport Association (IATA). “This should enable governments to safely open borders without quarantine," said Alexandre de Juniac, IATA's CEO. "And it will provide passengers with the certainty that they can travel without having to worry about last minute change in government rules. See More UAE: 10 natural hidden gems in the country Photos: Stand Up Paddle Surfing festival in Moscow Picturesque terraced rice fields of Mu Cang Chai, northern Vietnam Photos: Palestinian female travel bloggers promote local tourism “We did not come to this decision lightly – the integration of systematic testing to the travel process will present logistical challenges. It leads manufacturers to develop a test that can be deployed that is fast, accurate, scalable, affordable and easy to operate.” More to follow...
Insurance stocks are ruling on UAE indices, with Salama leading the pack
Markets|: UAE investors widely share the view that insurance sector shares have performed oustandingly this year. An analysis of the sector will however throw some interesting findings. Among insurance companies with a market capitalization higher than Dh300 million and a Trailing Twelve Month (TTM) revenue greater than Dh200 million and net profit margin higher than 10 per cent, only two companies delivered 30 per cent plus price gains in the year-to-date (YTD). Or to be precise, a majority did not even give a positive YTD performance.. See More UAE: 10 natural hidden gems in the country Photos: Stand Up Paddle Surfing festival in Moscow Picturesque terraced rice fields of Mu Cang Chai, northern Vietnam Photos: Palestinian female travel bloggers promote local tourism It must be noted that a total of 29 insurance sector companies were studied for this purpose and the two companies which came out on the top are Abu Dhabi National Insurance Company (ADNIC) and Islamic Arab Insurance company (Salama). It can be said these two companies are fundamentally strong and one good feature is they have zero long term debt as per their latest financial statements. Net gains Salama has improved its liquidity position significantly and recently sold 4.5 million shares of Salama Cooperative Insurance Company, a Saudi joint stock company, to raise nearly 66 million riyals. This amount will be used to issue dividends as well as pursue investment opportunities in the UAE insurance market. Salama currently has an annual dividend yield of 3.66 per cent. The strong fundamentals of Salama is reflected in its valuation as well. When compared to Salama’s TTM revenue of Dh225 million, RAK National Insurance has Dh416 million and Al Ain Ahlia Insurance company has Dh399 million. Nonetheless, when it comes to market capitalization, Salama is a clear winner with Dh966 million, while RAK National Insurance and Al Ain Ahlia have Dh363 million and Dh527 million, respectively. It’s pretty evident that investors have a big liking for Salama which has assets to the tune of Dh4.4 billion. Heavy hitter Make no mistake, Abu Dhabi National Insurance Company is no slouch. With TTM revenue of Dh1.68 billion, it is the second largest, behind Oman Insurance which has Dh1.98 billion. The revenue of ADNIC has grown from Dh1.32 billion in 2017 to Dh1.69 billion in 2019. ADNIC has in fact doubled its revenues from 2010. Investors in ADNIC are rewarded with a dividend yield of 7.79 per cent. Total assets amount to Dh8.4 billion. One factor supporting UAE insurance industry is the demographic growth. Unlike Saudi Arabia which has adopted a restrictive labor policy, UAE is liberal. Once the pandemic crisis is over, UAE should again see population growth that would support the industry. - Vijay Valecha is Chief Investment Officer at Century Financial.
Mubadala and Barings in alliance to offer financing for mid-market European businesses
Business|: Dubai: Mubadala has partnered Barings, the financial services firm, to launch a new company that will provide financing solutions to mid-market businesses in Europe. The Barings Mubadala Enterprise (BME) and its capital partners aim to provide $3.5 billion in financing over the next 18 months. BME will focus particularly on opportunities in the United Kingdom, France, Benelux and the Nordics. Waleed Al Mokarrab Al Muhairi, Mubadala’s Deputy Group CEO and CEO of Alternative Investments & Infrastructure said: “Mubadala has a long history of establishing strong, value-creating partnerships with leading global organizations. The partnership with Barings is consistent with this approach." The partners reckon there is "growing corporate demand for flexible capital solutions" in Europe. The partnership is anchored by Mubadala Investment Company (Mubadala) and will invest alongside MassMutual and Barings’ capital. Barings’ Chairman and CEO, Tom Finke, said: “This partnership will leverage our significant capabilities in origination and alternative credit to help strategic capital partners such as Mubadala invest with scale. We are looking to take advantage of middle-market direct lending opportunities, focusing on senior secured loans as borrowers shift focus from traditional bank financing to institutional capital providers to fund acquisitions and growth projects.”
Investors should time their switch back to cyclical stocks
Analysis|: The pandemic has created an unprecedented scenario in global capital markets that cannot be compared to any other crisis known in modern times. Unlike in 1929 and 2008, this is not a financial crisis but a pandemic that directly affects supply channels, consumption capacity and domestic demand. Unlike earlier financial crises, central banks and governments have reacted quickly and effectively by implementing policies that uphold the functioning of the financial system by flooding the market with liquidity. This enormous amount of liquidity was the main cause of the spectacular rally in stocks that, in some cases, have surpassed the highest levels reached prior to the crisis. See More Dubai’s five-year Retirement Visa: It just got easier to apply COVID-19: Wedding, funeral protocols that need to be followed in the UAE COVID-19: The guidelines you need to follow for desert safari, camping in Abu Dhabi UAE: Can my employer enforce a non-compete clause against me? The stocks that have especially benefited from this meteoric rise are tech stocks, the so-called FAANGs (Facebook, Amazon, Apple, Netflix and Google) the weighting of which in the S&P500 index is greater than 20 per cent. The increase in the use of technologies in an environment of social distancing is the reason why these companies have seen their earnings increase during the crisis, causing their performance to diverge sharply from cyclical stocks that depend to a greater extent on economic growth. The stocks most negatively impacted by the social distancing protocols mainly operate in services, retail, travel and tourism, and fast moving consumer goods. They have been relegated from this upward wave with stocks of airlines and hotel chains struggling to rebound from levels brought about by the March crash, which, in many cases, reduced their value by more than 50 per cent. Go counter? Is it time to buy the stocks hardest hit by the crisis? There are some considerations to examine before we jump on this bandwagon. First, from a risk management point of view, diversification of investment portfolios is always advisable. Maintaining a high percentage of the portfolio in just one sector exponentially increases its vulnerability, even more so when this sector has experienced an atypical performance, as is the case with tech stocks - and which is beginning to show signs of exhaustion. In fact, the market has experienced abrupt corrections in the Nasdaq100 index motivated by an excess of institutional long positioning - through financial derivatives such as options - that threaten a downward movement precipitated by forced closures of positions. Second, the investment rotation process that investors will begin to carry out sooner or later will obviously be directed towards those securities that have lagged behind in this latest purchase flow, balancing market behavior and erasing differences between stocks. Stick with stocks? This move would only occur in a generally positive or bullish environment on the stock markets. Is this environment a realistic possibility? From a point of view of monetary and fiscal policies, the circumstances could not be more favorable. The large amount of liquidity in the market is an unparalleled boost for markets to rise, but we must also add the historically low interest rate factor, especially in the US. It makes company valuations more attractive due to low financing costs. These exceptionally low interest rates make the investment alternative to the stock markets, which is fixed income, a more attractive proposition for investors. For instance, if we analyze a 10-year US government bond in terms of price-earnings ratio, we reach up to 180x, which is well above the better performing stocks. There is only one unknown in the equation to be solved, this is the evolution of the pandemic. For stocks hardest hit by the crisis to gain ground again, domestic consumption needs to return to previous levels or at least begin to show signs of growth. And for this, the epidemiological situation must improve. Despite the fact that the numbers of infected have worsened again in what is considered a second wave, we have seen a more cautious policy responses to prevent closing down economies once again. Meanwhile, given the number of vaccine trials, the moment when at least one vaccine against the disease will be proven as safe and effective is getting closer. These two aspects are fundamental for the gradual recovery of consumption, the improvement of the labor market and the end of the social distancing measures. In conclusion, it is quite reasonable to think that an increase in the exposure of portfolios to cyclical stocks - the ones most hit by the crisis - is in line with both fundamental assessment and risk management criteria. - Miguel A. Rodriguez, Chief Market Analyst at Capex.com.