Midnight News Update – Jul 18th 2017
Even as the proposed merger between HDFC Life and Max Life is facing delays, two leading insurers have decided to go ahead with their IPO plans. SBI has already filed the DRHP for its proposed IPO wherein it will be selling 12 crore shares to the public. This will be the second insurance IPO after ICICI Pru Life. In the meanwhile, HDFC Life has changed strategy and will now come out with an IPO first before proceeding with the merger with Max Life. Credit Suisse and Morgan Stanley are expected to be the BRLMs for the public issue. HDFC Life will continue to focus on the merger post the IPO.
For the year ended June 30th 2017, the RBI has refrained from disclosing its assets and liability numbers. June 30th, incidentally, was the last date for the NRIs also to deposit old currency notes with the RBI. Dr. Urjit Patel has already expressed the RBI’s inability to disclose the full details of demonetized currency as the counting is apparently still in progress. While the RBI had stated that nearly 85% of the demonetized currency was already remonetised, the full picture is still far from clear. The government had undertaken demonetization of Rs.1000 and Rs.500 notes in November last year.
In a historic landmark move, the market cap of Reliance Industries crossed Rs.5 trillion. RIL is the second Indian company after TCS to scale that psychological barrier. The stock of RIL has been in the midst of a frenetic rally after the launch of the Reliance Jio telecom service. It was a disruption both in terms of the quality of service and the price points. Additionally, the core business of oil refining and petchem continue to report record margins quarter after quarter. The growth of Jio puts to rest the worries that shareholders had over the wisdom of sinking billions of dollars into the telecom business.
With the voting for the next presidential elections closing on Monday evening, it is already a foregone conclusion that the NDA candidate, Ram Nath Kovind, will sail through. He is estimated to enjoy the support of nearly 65% of the electoral-college consisting of MPs and MLAs. The opposition has propped up former speaker, Meira Kumar, as the opposition candidate for the post of President. The NDA also put forth Venkaiah Naidu as their candidate for the post of Vice President. Mr. Naidu is a BJP veteran and has been a known party man for the last many decades.
In a very quiet and discreet manner, the Chinese economy has been showing signs of the return of growth. For the second quarter ending June 2017, the GDP growth came in at 6.9%, which is marginally higher than what most analysts and economists were expecting. The bigger surprise came from China came in on the industrial production front with IIP growth coming in at 7.6% compared to 6.5% last year. Retail sales for the quarter jumped by 11% compared to just 10% last year. Over the last few years, China has been struggling to adjust itself from a producing economy to a consuming economy. While the peak growth rates of the 1990s and 2000s obviously cannot be sustained, China will be careful to not let their GDP growth fall way below that of India as that could lead to reversal of capital flows.
For a government that was trying to curb the smoking habit among people, the GST had resulted in a negative skew wherein cigarettes actually became cheaper after considering the input tax credit benefit under GST. The government has therefore decided to rectify this anomaly by announcing that the 5% ad valorem cess over and above the 28% GST will continue as before. Additionally, the FM also announced that a specific cess based on the length of the cigarette will also be effective from the night of 17th July. The entire exercise will net the government an additional Rs.5000 crore in tax collections.
