The chances of Jet Airways finding a buyer to bail the company out, now looks increasingly remote as more potential bidders have now backed out. The sale of Jet Airways now looks increasingly difficult as key potential bidders have been backing out one after another. Etihad has already indicated that it would not be interested in anything more than a minority interest. Hinduja Group has already demanded a very steep haircut for banks. In the latest development, the Agarwal backed Volcan Group has also backed out from buying into Jet. SBI is still left holding on to the shares of Jet Airways.
India is consuming more fuel and that may be the good news from the perspective of the auto industry. In fact, India’s fuel demand saw the biggest growth in the last 6 months. According to data released by the Oil Ministry, India’s fuel demand grew by 3.3% in the month of July on YOY basis to 17.58 million tonnes. While the sales of petrol were up by 8.8%, sales of diesel were up by 3.3%. The third major component, liquefied petroleum gas (LPG) also reported 9% increase in sales in July. Only Naphtha sales recorded negative growth in the month of July. These four account for 80% of fuel sales.
Nirmala Sitharaman’s delay in addressing the concerns of foreign investors is not really helping matters. As per F&O data indicators, FPIs are currently holding on to bearish bets on the Indian equity markets. After selling $4 billion worth of equities since the Union Budget announcement on July 05th, the foreign portfolio investors have remained bearish on India. FPIs were expecting some clarity on the FPI tax from the finance minister or some LTCG relief but nothing concrete has been forthcoming yet. The long/short positions are reported to be around 33 which is clearly a bearish signal as per F&O data indicators.
After IL&FS, Jet Airways and Dewan Housing, CCD may be the latest headache for Indian MFs. In fact, mutual funds have a total exposure of Rs.200 crore to the Café Coffee Day group. According to data compiled by Morningstar, the total exposure of mutual funds to the equity and bonds of V G Siddhartha’s CCD group could be Rs.200 crore. After the promoter committed suicide two weeks ago, the company has been continuously on lower circuit. BOI AXA, DSP MF and Indiabulls have a significant exposure to CCD. DSP has already written of 50% of its exposure and others may follow suit.
Morgan Stanley has warned that global markets could enter recession in 3 quarters. According to a study put out by Morgan Stanley Worldwide, the global economy could enter into a recession in the next 3 quarters due to the worsening trade war situation. According to Morgan Stanley, while BREXIT will be a sentiment dampener, the biggest concerns is the rising trade tensions between the US and China. Meanwhile the dollar squeeze in swaps is also indicative of troubles at a global macro level. According a Bloomberg article, the dollar may be showing strength but the real problem may lie in dollar swaps. A currency swap is an exchange of currencies. The spread measures how much more one has to pay in dollars over the LIBOR spread and is now indicating dollar shortage; a sign of market panic.
Long considered to be one of the few 24X7 cities in the world, Hong Kong may be getting deeper into a mess. HKIA, one of the busiest airports in the world, ground to a halt as over 500 protestors took over the airport premises as part of anti-China protests. Anti China protests have been sweeping across Hong Kong since the last 2 months. Lawyers fear that China could come down heavily on these protesters and even apply anti-terror laws to break the back of these protests targeted at Chinese interference. Ironically, 2019 marks the 30th anniversary of the Tiananmen Square protests by students.
