Finally, the oil prices relented on Monday. In fact, Brent crude snapped a 3 day rally and eased lower to close at $60.21/bbl. The fall in crude prices represents a 2.32% fall in crude prices over the previous day. This was largely led by a sharp rise in the number of active rigs in the US. With the Chinese industrial profits slowing and uncertainty over the trade war negotiations, oil has been taking it easy preparing for weak demand if China slows down. Oil prices had bounced from lower levels of $51/bbl on hopes that the trade war would get sorted out and the China stimulus will also help.
Emerging market debt has been long talked about in hushed terms and now Fitch has warned of more emerging market downgrades this year. The rating agency has warned that the sharp rise in dollar debt in the last few years, could come back to haunt the emerging markets in the current year. Most emerging markets have seen a sharp rise in dollar debt which runs into trillions of dollars and any dollar appreciation could push the emerging markets into deep financial trouble. A lot will predicate on the dollar index (DXY), which in turn will depend on the Fed policy outlook.
It could be called a case of stealing the thunder but that is what the Congress attempted when it promised Minimum Income Guarantee to BPL families. Even as the discussions on the Minimum Income Guarantee (MIG) have been going on for some time, Rahul Gandhi announced the MIG as his party’s commitment if voted to power. Gandhi also added that they would implement the MIG plan state-wise and the financial specifics would be presented in the Congress manifesto. MIG is about doing a cash transfer of a minimum income to each family that is below the poverty line.
Indian steel industry is finally coming of age and attaining global scale. Indian steel production crossed Japan for the first time in 2018. With annual steel production of 106.5 MT in the year 2018, India has emerged as the world’s second largest steel producer, ahead of Japan which produced 104.3 MT in the year. Indian steel capacity is expected to more than double by the year 2030. China still dominated steel production with 928 MT manufactured in 2018 and accounting for 51% of the world steel production. Most steel companies are investing heavily in additional capacities at this point of time.
RBI governor, Shaktikanta Das, met bank chiefs to convey expectations from the RBI and assess the current situation with PSBs. The RBI also took stock of the liquidity situation in the financial markets as well as its expectations in terms of loan recoveries, NPA management, profit focus etc. Banks have also been apparently cautioned on the sharp rise in retail loans. Just to get a clearer picture, Indian household debt (debt by families) rose from Rs.3.7 trillion in 2016-17 to Rs.6.7 trillion in 2017-18, a rise of nearly 80% in one year. This has been largely driven by a surge in casual borrowings by households through credit cards and personal loans. Ironically, the level of household debt had remained static for the previous four fiscal years. As a share of GDP, this is still low by Asian standards.
Ecommerce player, Snapdeal, has backed ecommerce curbs on Wal-Mart and Amazon. The new ecommerce rules prevent global ecommerce companies from selling products to companies in which they have an equity stake. This had led to widespread protests including the US government lobbying with the Indian government to soften this rule. Both Amazon and Wal-Mart will have to rethink their models after the new regulations go live on February 01st. With an election looming in the horizon, the government will be looking to placate the small and medium sized traders in India.
