US carries out air strikes against pro-Iran militant group in Iraq, Syria

Fifteen fighters were killed by the US strikes in western Iraq, while several were wounded, according to an official from the Tehran-backed Hashed al-Shaabi paramilitary force.

BS : The US has carried out air strikes against a pro-Iran militant group in Iraq, killing 15 fighters, two days after a rocket attack that killed an American civilian contractor.

A few hours after the strikes on Sunday, four rockets exploded near a base housing US troops close to Iraq's capital without wounding anyone, an Iraqi security official told AFP.

The US strikes, which also hit Syria, came after a barrage of 30 or more rockets was fired on Friday at the K1 Iraqi military base in Kirkuk, an oil-rich region north of Baghdad, killing a US civilian contractor and wounding four US service members as well as Iraqi security forces.

Fifteen fighters were killed by the US strikes in western Iraq, while several were wounded, according to an official from the Tehran-backed Hashed al-Shaabi paramilitary force.

"In response to repeated Kata'ib Hizbollah (KH) attacks on Iraqi bases that host... coalition forces, US forces have conducted precision defensive strikes against five KH facilities in Iraq and Syria," a Pentagon spokesman said in a statement.

The strikes against three locations in Iraq and two in Syria "will degrade KH's ability to conduct future attacks" against coalition forces, the statement added.

"KH has a strong linkage with Iran's Quds Force and has repeatedly received lethal aid and other support from Iran that it has used to attack" coalition forces, the Pentagon said, referring to the external arm of Iran's Revolutionary Guards.

The military spokesman for Iraq's outgoing prime minister Abel Abdel Mahdi decried "a violation of Iraqi sovereignty".

Another powerful pro-Iran faction, Assaib Ahl al-Haq -- whose leaders were recently hit with US sanctions -- called for Americans to withdraw from Iraq.

"The American military presence has become a burden for the Iraqi state and a source of threat against our forces," it said in a statement.

"It is therefore imperative for all of us to do everything to expel them by all legitimate means."

States likely to step up borrowing in 4th quarter for social expenditures

Almost all states have raised much more debt than at the same time last year, except Maharashtra.

Despite the lower availability of money from goods and services tax this year, key states have not significantly lowered their spending on social sector expenditure. In financial year 2019-20, when the growth rate of the Indian economy has come off the highs, this data is comfortable news for the poor. Millions of them depend on the spending by the states through various schemes as crucial income support. Any cut back here could have disastrous impact on their lives.

But for the markets, this could mean a rise in borrowings by the states in the last quarter of the year. Almost all states have raised much more debt than at the same time last year, except Maharashtra. Possibly due to the state election cycle, Maharashtra has hardly borrowed. This trend is likely to be reversed soon. If all states maintain their rate of spending on social sectors, which happens to be their largest spending category after interest payments and wages to government staff, there could be much larger draw on the markets by them, between January and March 2020. The numbers have a bearing on whether people are at risk of being pushed back into below poverty levels, because of the growth slowdown.

The data is from the progressive monthly accounts of income and spending of states for the period April to November (for a few states, the data has been finalised till October). It shows that compared with the level of expenditure made by the states for the past year, the numbers are holding up. This is impressive, since the states made no cut back in their budget estimates for expenditure for FY20. This means the comparisons hold across years.

Yet, as the data shows, there are massive shortfalls in the SGST and IGST shares the states have got. The shortages are quite large for Andhra Pradesh, West Bengal, Kerala, and Chhattisgarh where there are non-BJP governments, but also for states where they are in power including Uttar Pradesh and Gujarat. Surprisingly, while Punjab, too, has protested, data shows it is one of the rare states that have been over compensated.

The state budgets have fortunately been shored up by the impressive collections from state excise duties. Most of it is incidentally from liquor, which possibly explains why there are no inter-year variations. Where the states have enforced prohibition, their budgets have taken a hit. The only exception to this trend is Gujarat, since it has diversified its taxes into other areas over the past few decades.

Navy plans to build 24 submarines, 6 of them nuclear powered: Report

In its report tabled this month, the Navy stated that there are presently 15 conventional submarines and two nuclear submarines in its fleet.

To strengthen its underwater fleet, the Indian Navy plans to build 24 submarines, including six nuclear attack submarines, a parliamentary panel was told.

The Navy also told the panel that Medium Refit Life Certification (MRLC) of submarine Sindhuraj has been held up since the Russian side has not been able to submit bank guarantees and integrity pact due to sanctions imposed by the US.

In its report tabled this month, the Navy stated that there are presently 15 conventional submarines and two nuclear submarines in its fleet.

The Indian Navy has two nuclear submarines INS Arihant and INS Chakra, with the latter being leased from Russia.

Majority of the conventional submarines are over 25 years old. Thirteen submarines age between 17 and 32 years, it said.

“Eighteen (conventional) + six SSN (nuclear attack submarines) are planned...,” it stated.

The Indian Ocean Region, the area of operations of the Indian Navy has witnessed rising activities of the Chinese Navy.

On its part, the Indian Navy has been revamping its infrastructure, including procuring new ships.

Business Standard

Future is green: 2020 may see re-birth of electric vehicles, say experts

Recently, Union minister Prakash Javadekar told Parliament about 285,000 buyers of electric/hybrid vehicles had been supported by a subsidy of Rs 360 crore under FAME.

The year 2019 was a mix of ups and downs for the electric vehicle (EV) sales in the country. The coming year is expected to be better, with the entry of more electric cars and Chinese entities’ entry, bringing down the average cost.

The second phase of the Rs 10,000-crore scheme of the central government, termed Faster Adoption and Manufacturing for Hybrid and Electric vehicles (FAME II), offers higher incentives to higher powered products. It excludes lead acid battery-powered two-wheelers and mandates that e-scooters should have 80 km per charge and a minimum top speed of 40 kmph, with at least 50 per cent localisation in manufacturing. This has left a large share of two-wheelers out of the incentive, says CRISIL Research.

Recently, Union minister Prakash Javadekar told Parliament about 285,000 buyers of electric/hybrid vehicles had been supported by a subsidy of Rs 360 crore under FAME.

Sohinder Gill, director-general, Society of Manufacturers of Electric Vehicles (SMEV). said, “The year 2019 was full of turmoil for the EV industry. Sudden policy shock by the government in March 2019 led to a decline in sales of electric two-wheelers under FAME II. It has made companies becoming less dependent on government subsidies.”

The number of electric two-wheelers sold under FAME in the first six months of this financial year (April to September) saw a 94 per cent decline to around 3,000 units, from 48,671 units in the same period last year. The number sold without FAME incentive in the period went up to around 49,000 units, 2019, from around 10,000 during the same period last year, said SMEV.

Low-speed lithium battery vehicles without the FAME incentive cost around Rs 55,000. The high-speed electric two-wheeler costs around Rs 80,000 after the incentive applied, said sources.

Business Standard

Slowdown blues: Bank credit growth may fall to 6.5-7% in FY20, says Icra

According to ICRA, even in a high-growth scenario, wherein the second half of FY20 sees the incremental bank credit rise to Rs 6.5-7 trillion, there will still be a 40-45% year-on-year (YoY) decline.

Market News : With the Indian economy caught in a slowdown, bank credit is expected to expand at a muted 6.5-7 per cent in 2019-20 (FY20) from 13.3 per cent in FY19, rating agency ICRA said in a report. This will be the lowest in 58 years, mainly on account of lower working capital requirements by companies and risk aversion among lenders.

According to ICRA, even in a high-growth scenario, wherein the second half of FY20 sees the incremental bank credit rise to Rs 6.5-7 trillion, there will still be a 40-45 per cent year-on-year (YoY) decline.

As of December 6, 2019, incremental bank credit increased by Rs 80,000 crore, whereas banks disbursed Rs 5.4 trillion during the same period in FY 19 and Rs 1.7 trillion in FY18 (till December 2017).

Bankers said that with private investment practically coming to a halt, there was little demand for corporate credit. While activity may show an uptick in the second half, it will hardly compensate for the extended slowdown seen since the beginning of the year. Companies are battling stress and are deleveraging wherever possible. The retail segment is showing steady growth, but it is not in a position to make up for the slump in the industry segment.

According to ICRA’s assessment of 37 scheduled commercial banks, the YoY credit growth was 7.9 per cent as of September 2019. While credit growth in public sector banks was merely 4.4 per cent, private banks registered 15 per cent growth in the same period.

Dinesh Khara, managing director, State Bank of India, said, “The private sector investment and consumption has been impacted in the context of slow economic growth. This led to deceleration in credit growth in the current financial year. However, things are expected to change for better in the second quarter (July-September 2020) of the next financial year (FY21).”

Rajiv Kumar to Krishnamurthy Subramanian: The team behind FM's Budget 2020

A 1984 batch officer from the Jharkhand cadre, Kumar is known as the driving force behind the spate of mergers of state-owned banks.

Budget 2020 : Finance Minister Nirmala Sitharaman will present her second Budget a little more than a month from now. With growth at its lowest in more than six years and a long-lasting slowdown affecting demand and consumption across sectors, Sitharaman and her team are looking to announce measures to boost growth and activity.

Also, after a number of rollbacks following the last Budget, the political leadership is looking to seize back initiative as the government is being criticised by stakeholders for not being able to manage the slowdown, with multiple agencies, including the RBI, slashing growth forecasts for the year.

Like any other FM, Sitharaman will depend on her team of bureaucrats and advisors to frame and present the budget. Arup Roychoudhury compiles brief profiles:

Rajiv Kumar

(Finance and financial services secretary)

According to the norm, being the senior-most of the five secretaries in the Finance Ministry, Financial

Services Secretary Rajiv Kumar also holds the designation of finance secretary. A 1984 batch officer from the Jharkhand cadre, Kumar is known as the driving force behind the spate of mergers of state-owned banks. The ambitious Rs 2.1-trillion bank recapitalisation programme was also announced during his time. The biggest challenge that Kumar has had to deal with during his stint is the level of toxic assets in the banking system and the liquidity crisis in non-banking financial companies (NBFCs). The upcoming Union Budget 2020-21 will be his last, as he is expected to retire from the service at the end of February. Even if the financial services secretary gets an extension, it is likely to be for a few more months, till the Finance Bill is passed.

Ajay Bhushan Pandey

(Revenue secretary)

Replacing Hasmukh Adhia was never meant to be easy. And it hasn’t been for Pandey, who is also the chairman of the Goods and Service Tax Network and, till recently, was heading the Unique Identification Authority of India as well. Pandey has come in for heavy criticism for giving unrealistic tax revenue targets for the year. With growth faltering, all the direct and indirect tax projections are now coming undone, and the Centre is unlikely to meet the fiscal deficit target of 3.3 per cent of gross domestic product for 2019-20. It remains to be seen what sort of a positive impact the recent corporate tax cuts have on investment levels by the private sector.

Loans and advances of foreign banks operating in India grew 13% in FY19

The loan book of private banks grew at a much higher rate, of 25%

Loans and advances of foreign banks operating in India rose about 13% to nearly Rs 3.97 trillion in 2018-19 (FY19). 

This was slightly ahead of the 11% growth in this regard at scheduled commercial banks in general, comprising private, government-owned, foreign, and small finance banks (SFBs).

The loan book of private banks grew at a much higher rate, of 25%. Public sector banks expanded theirs by only 4%. SFBs, a group of recent origin, showed 70.5% growth in loans. Deposits at foreign banks rose 17% in FY19, to Rs 5.8 trillion, from Rs 4.95 trillion the previous year.

Their capital base increased to Rs 77,809 crore, from Rs 67,883 crore, a 15% increase, according to the RBI’s report on Trends and Progress of Banking in India 2018-19.

Foreign banks’ borrowings rose to Rs 1.51 trillion in FY19, from Rs 1.3 trillion — an 18% spike.

Other assets rose by 67% over the year, to Rs 1.47 trillion. The number of foreign banks did not rise, but the numbers of branches did, from 286 to 299.

The RBI adds that two more foreign lenders, SBM Bank and DBS Bank, were issued a licence in December 2017 and October 2018, respectively, and commenced operations as wholly owned subsidiary from December 1, 2018, and March 1, 2019, respectively.

Finance News

Indian start-ups raised a record $14.5 bn in 1185 funding rounds this year

The decade has seen an impressive 25x growth in terms of the total funding raised by the startups .

BS : As the decade is coming to an end, it has seen an impressive 25x growth from a tiny $550 million in 2010 to $14.5 billion in 2019 in terms of the total funding raised by the start-ups.

This year start-ups raised $14.5 billion in 1185 funding rounds out of which 459 were Series A and late-stage investments, according to the ‘India Tech Annual Factsheet - 2019’ compiled by data analytics firm Tracxn. This is a significant jump from $10.5 billion raised by young ventures in 2018 and $10.4 billion in 2017.

There are 24 ‘unicorns’ or startups valued at more than $1 billion (each) and 155 ‘soonicorns’ or firms which hold the potential to become unicorns in the near future in the country. Out of these 9 ‘unicorns’ and 60 ‘soonicorns’ were formed this year, according to Tracxn. The latest entrants into the unicorn club included Bengaluru-based online grocery retailer BigBasket, Gurugram-based logistics startup Delhivery and Delhi-based eye-wear firm Lenskart whose valuation recently crossed $1.5 billion with the SoftBank deal.

This year Masayoshi Son-led SoftBank made massive investments in the Indian startups. The biggest funding round was raised by Gurugram-based hospitality firm Oyo Rooms which received $1.5 billion in Series F financing led by investors such as SoftBank, Sequoia and Lightspeed Venture Partners. Across the city, SoftBank along with investors like Ant Financial and Discovery Capital also invested $1 billion in digital payments company Paytm. The Noida-based firm competes with Google Pay, Amazon Pay and Walmart-owned PhonePe to tap the booming digital payments market in the country.

Business to business e-commerce, logistics and mobility companies also attracted a lot of capital from investors. This year, Delhivery secured $413 million in a funding round led by SoftBank Vision Fund. SoftBank also pumped in $250 million in Ola Electric, the Bengaluru-based ride-hailing firm’s electric vehicle arm. The deal turned the company into a ‘unicorn’ almost overnight. Another Bengaluru-based firm Udaan, a business-to-business e-commerce platform raised $585 million in Series D financing round led by China’s Tencent, giving the firm a “post-money valuation in the range of $2.5 billion.

This year the fate of the e-pharmacy segment also hung in balance due to legal hurdles. However Mumbai-based online pharmacy startup PharmEasy secured $220 million in a fresh round of financing led by Singapore state investment firm Temasek.

India set to cross 100-GW renewable energy capacity mark in 2020

India's installed renewable energy generation capacity touched around 86 Gw by November-end. This includes solar, wind, small hydro, biomass, waste to energy and others.

India is set to cross the 100-Gw renewable energy capacity mark in 2020 and can make rapid strides towards the ambitious 175 Gw clean energy target by 2022 provided the government keeps a close eye on key issues and deals with those well in time.

The government, however, needs to promote storage to ensure 24x7 clean energy supply as coal fired thermal power still remains the base load in the country.

Presently, the issues hampering growth of renewables in India are lack of interest of financial institution to fund renewable energy projects, safeguard duty on imported solar panels, ambiguity over goods and services tax (GST) on solar equipment and low investor sentiment due to delayed or non-payment by discoms to clean energy developers.

India’s installed renewable energy generation capacity touched around 86 Gw by November-end. This includes solar, wind, small hydro, biomass, waste to energy and others.

Around 30 Gw renewable capacity, including 18 Gw solar and 10 Gw wind energy, is under implementation.

Besides, around 40 Gw including 36 Gw solar and 3.4 Gw wind energy, is being tendered.

“Together with other schemes being implemented by the government, I expect RE (Renewable Energy) sector to get a big boost in 2020 and the years thereafter. I expect our RE capacity to cross 100GW mark in 2020,” Power and New & Renewable Energy Minister R K Singh told PTI.

Business Standard

Airbus added to 'operational challenge': GoAir explains cancelled flights

The Wadia group-owned airline cancelled as many as 40 flights this week on account of shortage of staff and inclement weather.

Budget carrier GoAir, which cancelled multiple flights earlier this week, on Thursday said the delay in aircraft deliveries by Airbus has added to its operational challenge.

The Wadia group-owned airline cancelled as many as 40 flights this week on account of shortage of staff and inclement weather, among others issues.

"GoAir has placed order of 144 Airbus A320Neo aircraft and experienced delivery delays during the month of November and December, adding to its operational challenge," the airline said in a clarification issued on Wednesday.

It also said that due to inclement weather in North India, the airline experienced extensive flight delays and diversions leading to cancellations of flights as its crew approached its flight duty time limits (FDTL) in the last two-three days.

The cockpit and cabin crew duty and rest norms are governed by the aviation safety regulator, Directorate General of Civil Aviation.

The anti-Citizenship Amendment Act (CAA) protests wherein GoAir crew members were unable to report for duty further exacerbated the issue, the airline added.

Company News

China's first high-speed rail company launches IPO to raise over $5 billion

The listing adds to signs that China is pushing to further open industries dominated by state-owned companies.

International News : The operator of China’s high-speed rail line between Beijing and Shanghai kicked off its initial public offering, which will for the first time allow investors to buy shares in what is the world’s largest such network.

Beijing-Shanghai High-Speed Railway Co., a unit of state-owned China Railway Corp., plans to sell as many as 6.3 billion new shares, or 12.8% of enlarged capital, through the listing in Shanghai, according to its prospectus released Wednesday. Book building for the IPO will begin Jan. 6, it said. The company didn’t say how much it aimed to raise through the sale.

The listing adds to signs that China is pushing to further open industries dominated by state-owned companies. Beijing on Sunday outlined plans to allow private-sector businesses to enter industries including energy, telecoms and rail, and on Tuesday, Premier Li Keqiang pledged to give foreign investors greater access to service sectors including finance and health care.

Those steps have come as a campaign to rein in China’s shadow banking industry has sapped financing for many non-state firms and the trade war with the US has led some multinationals to reassess their investments. With economic growth at the slowest since the early 1990s, Beijing has sought to reassure these contingents and spur more capital spending.

Proceeds from Beijing-Shanghai High-Speed Railway’s IPO will be used to help finance the acquisition of a 65.1% stake in a domestic railway operator for 50 billion yuan ($7.1 billion), according to the prospectus. Bloomberg News reported in late 2018 that the company was planning to raise 30 billion yuan. That amount would make it the largest domestic offering since Postal Savings Bank of China Co.’s $4.8 billion listing earlier this month, according to data compiled by Bloomberg.

China Securities Co. is the lead underwriter with Citic Securities Co. and China International Capital Corp. as joint sponsors. The IPO was approved in a record 23 days by the country’s securities regulator.

China’s high-speed railway network, at 35,000 kilometers, is by far the world’s largest. The route between Beijing, the country’s political center, and Shanghai, its financial hub, is one of the highest margin lines. Beijing-Shanghai High-Speed Railway reported more than a 30% net margin for 2018, with annual profit of 7.9 billion yuan, 9 billion yuan and 10 billion yuan for the past three years, its prospectus showed.

Top Nissan exec Jun Seki announces exit abruptly, to join EV maker Nidec

The company's shares fell 3.1% to 633 yen, the lowest since 2011, as of the close Wednesday in Tokyo.

Nissan Motor’s third-highest-ranked executive is planning to leave the company to join a leading electric-motor company, an abrupt move that deals yet another blow to the scandal-plagued Japanese carmaker. The shares fell to their lowest in 8 years.

Jun Seki, the vice chief operating officer in charge of Nissan’s performance recovery, plans to join Japanese manufacturer Nidec Corp. as president and COO. The 58-year-old, who confirmed the move to Bloomberg News, was among the contenders to be Nissan’s chief executive officer in October, but missed out to Makoto Uchida, most recently the company’s China chief. Seki only took up his current position in December.

Nissan has seen its share of executive departures since last year’s shock arrest of former longtime chief Carlos Ghosn, but Seki’s exit stands out because he was part of a triumvirate set up to disperse leadership responsibilities at the automaker, Japan’s third largest by output. The defection marks yet another distraction for Nissan, which is struggling to recover from the chaos unleashed by Ghosn’s arrest and an industry downturn, with profits at a decade-low and relations tense with French partner Renault SA.

The departure of Seki, who spent most of his career in engineering and manufacturing at Nissan, comes at a precarious time for the company and the auto sector, with established carmakers seeking scale through consolidation as a way of splitting the billions of dollars in investments needed to keep up with the shift toward electric and self-driving cars.

The company’s shares fell 3.1% to 633 yen, the lowest since 2011, as of the close Wednesday in Tokyo. The shares have slid 28% this year, compared with a 19% gain in the Nikkei 225 Stock Average. Nidec climbed 0.3%.

Nissan has accepted Seki’s decision to leave the company, the carmaker said Wednesday in a statement, adding it will continue to focus on key areas including business transformation under the new management. Shiro Ikushima, a spokesman for Kyoto-based Nidec, declined to comment. Read More

Bombay Shaving Company raises Rs 45 crore in Series B funding round

The beauty and personal care (BPC) market in India, which stood at $16 billion in 2018, is expected to grow to $22.5 billion by 2022.

BS : Men’s skincare brand Bombay Shaving Company (BSC) has raised Rs 45 crore in Series B funding round led by Sixth Sense Venture Partners. Existing investor Colgate Palmolive Asia Pacific, a subsidiary of consumer goods giant Colgate-Palmolive, participated in the round too.

BSC said it has also created Rs 20 crore worth of exit opportunities for 30 angels and early employees. This fundraising has taken the total capital raised by BSC to Rs 80 crore.

“We are thrilled to have Sixth Sense join this journey. They are a top consumer fund with insight into public markets, which is invaluable for us,” said Shantanu Deshpande, founder, and CEO at Bombay Shaving Company. “We don’t believe in large fund infusions, however, exits for angels and early employees is an extremely positive outcome. Wealth creation is what drives us.”

Launched in 2016, BSC started as a direct-to-consumer premium experiential shaving regimen, but has quickly expanded into skin, beard and bath categories. The firm, which also sells its products on e-commerce platform Amazon, has a portfolio of over 45 SKUs (stock-keeping units) across shaving, bath and body, skin, and beard care categories.

The firm plans to use the newly-raised funds in brand building, expand its presence in the larger skincare category and penetrate deeper in shaving. As an omnichannel brand, BSC said it will focus on offline expansion with its current footprint of 3,000 stores to 10,000 stores in the coming months. BSC currently has more than 2.5 lakh customers and aims to become Rs 100-crore brand in the next 12-15 months.

"BSC team has impressed us with the portfolio, brand building, understanding of consumer and digital expertise," said Nikhil Vora, founder at Sixth Sense Venture Partners. “We love to invest in spaces where we believe we can grow with the sponsors for a long period. Shantanu (Deshpande) gives us that feel. Being digital-first is an exciting way of creating a market before exploiting the physical distribution model.”

The beauty and personal care (BPC) market in India, which stood at $16 billion in 2018, is expected to grow to $22.5 billion by 2022, according to the consulting firm RedSeer. 

According to experts, the increasing disposable income and a growing young working population are aiding the India men’s grooming products market. Besides traditional players such as Procter & Gamble (P&G) and Hindustan Unilever Limited (HUL), BSC is also competing with other startups like Beardo and Ustraa to tap this market.

Bad loans taken over by ARCs rose 17.4% in 12 months ended June 2019

The amount they bought of such NPAs in the 12-month period was less, at Rs 57,506 cr, from the Rs 67,830 cr they acquired in the previous such one-year period.

Market News : The total of loans classified as non-performing by lenders and acquired by asset reconstruction companies (ARCs) rose 17.4 per cent to Rs 3.8 trillion in the 12 months ended June 2019.

However, the amount they bought of such non-performing assets (NPAs) in the 12-month period was less, at Rs 57,506 crore, from the Rs 67,830 crore they acquired in the previous such one-year period.

According to the Reserve Bank of India (RBI) data, security receipts (SRs) redeemed by ARCs jumped to Rs 12,906 crore as on June 2019, from Rs 8,830 crore in June 2018.

This is payout to the investors in the SRs, says the report on Trend and progress on banking in India 2018-19, issued on Tuesday. Unredeemed SRs rose to Rs 114,615 crore in June, from Rs 98,118 crore a year ago.

As cases referred for recovery through legal mechanisms shot up, cleaning up of balance sheets via sale of stressed assets to ARCs decelerated on a year-on-year basis, and declined as a proportion to gross NPAs at the beginning of 2018-19.

However, the acquisition cost of ARCs as a proportion to the book value of assets increased further, indicating banks had to incur less of write-offs on account of these sales.

The share of subscriptions by banks to SRs issued by ARCs declined to 69.5 per cent by end-June, from 79.8 per cent a year ago. This was in line with the agenda to reduce their investments in SRs and to diversify the investor base in these, says the RBI.

Business Standard

Rise in defaults could make things even worse for India, China in 2020

Defaults in China will likely rise in both the onshore and offshore bond markets next year amid a tightening in funding.

Market News : Defaults across Asia may be headed even higher next year, with trouble seen especially in China and India. Many investors expect fewer bailouts by the Chinese government after it recently let commodities trader Tewoo Group default in the biggest failure on a dollar bond by a state-owned firm in two decades.

Companies in the region have been on a buying spree fueled by debt. Those factors could make things even worse in 2020 after China onshore defaults rose to a record in 2019.

As some economies in Asia slow, companies are left vulnerable to any tightening in liquidity. A rise in defaults would likely further weigh on investor sentiment, and raise the cost of borrowing for the riskiest firms.

Defaults in China will likely rise in both the onshore and offshore bond markets next year amid a tightening in funding, and weaker state-owned firms and local government financing vehicles may be at risk, according to Monica Hsiao, chief investment officer at hedge fund Triada Capital. The nation’s real estate firms, traditionally seen as the bulwark of the economy, could also be vulnerable.

“We should not assume that the China property sector is immune if conditions continue to tighten for small over-levered developers that do not have stakeholders with strong political ties, for example,” said Hsiao.

A wave of acquisitions has also prompted companies with overextended balance sheets to stumble. Shandong Ruyi Technology Group Co., which made a string of overseas purchases, including U.K. trench coat maker Aquascutum, has been struggling to repay debt. Singapore-headquartered MMI International Ltd., which was sold to a Chinese buyout group, has missed loan repayments.

Has India's growth slowdown bottomed out? Animal spirits indicate so

Despite the green shoots, the economy is set for another quarter of sub-par growth, and still in need of support from the government and the central bank heading into 2020.

India’s economy showed nascent signs it may be turning a corner after six straight months of anemic activity.

Two of the eight high-frequency indicators compiled by Bloomberg News came in stronger in November based on a three-month weighted average reading, although that wasn’t enough to move the needle on a gauge measuring overall activity.

The dashboard measures “animal spirits,” a term coined by British economist John Maynard Keynes to refer to investors’ confidence in taking action.

Despite the green shoots, the economy is set for another quarter of sub-par growth, and still in need of support from the government and the central bank heading into 2020. The focus will now turn to the government’s annual budget due Feb. 1, with Finance Minister Nirmala Sitharaman saying she’s working toward improving consumption.

The dominant services index rebounded last month, driven by higher orders and strengthening business confidence. The IHS Markit India Services Purchasing Managers’ Index rose to a four-month high of 52.7 in November, the first time in three months that the reading has been above the 50 mark, which indicates expansion. The index is still below its long-run average of 54.2.

The manufacturing sector activity also improved in November, resulting in the composite PMI index jumping to 52.7 from 49.6.

The surveys showed input cost inflation for the services sector quickened to a 13-month high, while manufacturing input prices rose marginally.

Read More

German IIT-M student asked to leave India for taking part in CAA protest

The student, Jacob Lindenthal, had one semester to do on the campus before scheduled return in May 2020.

A German student at the Indian Institute of Technology-Madras has said he was asked to leave India for protesting against the new citizenship law that has sparked unrest across the country.

“1933 to 1945; We Have Been There,” said a poster Jacob Lindenthal, carried when he joined other people in Chennai to protest against the Citizenship (Amendment) Act last week. Lindenthal had a semester left of his post-graduation in Physics and he was scheduled to leave India in May 2020

Lindenthal told news organizations IIT-Madras and immigration officials asked him to leave Chennai on Monday. “There were apparently administration issues with my visa. After ruling these out, I was extensively questioned by the immigration officer about my political opinions. Then I was informed about the decision (asking him to leave),” he was quoted by News18.com as saying.

He added that he would consult his lawyer and decide the next course of action.

A students' body, ChintaBar, tweeted in solidarity with Lindenthal.

Citing sources, The Indian Express reported that an IIT official had sent a report about Lindenthal’s participation in the protests to “higher-ups.” When contacted by the newspaper, IIT officials said they were unaware of the “incident” involving Lindenthal.

Reports said a foreigner participating in a political activity or protest is a violation of visa norms.

Business Standard

ByteDance weighs selling stake in TikTok after US claims security threat

ByteDance has emerged as the world's most valuable startup on the explosive popularity of TikTok, where more than a billion, largely young, users share short clips of lip-syncing and dance videos.

BS : China’s ByteDance Inc. created one of the country’s rare global hits with the addictive video app TikTok. Now the US government is threatening that success as officials in Washington warn the service presents a security threat.

The Beijing-based company, led by Chief Executive Officer Yiming Zhang, is weighing a range of options to address those concerns, according to people familiar with the matter. Advisors are pitching everything from an aggressive legal defense and operational separation for TikTok to sale of a majority stake, said the people, asking not to be named because the discussions are private. Selling more than half the business could raise substantially more than $10 billion, one person said.

ByteDance would prefer to maintain full control of the business if possible, given its soaring popularity and profit potential. It may argue that TikTok presents no security threat or that the US has no legal standing over the business.

ByteDance has considered selling a chunk of TikTok if necessary to protect the value of the business, the people said. The most likely sale scenario would be for the company to sell a majority stake to financial investors, one person said. Earlier investors include SoftBank Group Corp, Sequoia Capital and Susquehanna International Group.

Talks about TikTok’s future are preliminary and no formal decision has been made, the people said. A representative for the company said there have been no discussions about any partial or full sale of TikTok. “These rumors are completely meritless,” the representative said.

ByteDance has emerged as the world’s most valuable startup on the explosive popularity of TikTok, where more than a billion, largely young, users share short clips of lip-syncing and dance videos. But with escalating tensions between China and the US, American politicians have warned the app represents a national security threat and urged an investigation. The Committee on Foreign Investment in the US, better known as CFIUS, has begun a review of ByteDance’s 2017 purchase of the business that became TikTok, Bloomberg News reported in November.

“I remain deeply concerned that any platform or application that has Chinese ownership or direct links to China, such as TikTok, can be used as a tool by the Chinese Communist Party to extend its authoritarian censorship of information outside China’s borders and amass data on millions of unsuspecting users,” Senator Marco Rubio wrote in a letter to the Treasury Department, which chairs CFIUS.