China crisis set to worsen as Evergrande rival Fantasia misses payment

 Once China's top-selling property group, Evergrande is facing one of the country's largest-ever defaults as it struggles with more than $300 billion of debt

Debt-saddled China Evergrande is set to raise more than $5 billion by selling a majority stake in its property management arm, Chinese media said on Monday, a deal which would be the struggling giant's largest asset sale yet if it goes ahead.

Once China's top-selling property group, Evergrande is facing one of the country's largest-ever defaults as it struggles with more than $300 billion of debt. Its fate is also unsettling global markets wary about the fallout of one of China's biggest borrowers toppling.

Evergrande on Monday said it requested a halt in the trading of its shares in Hong Kong pending an announcement about a major transaction. Evergrande Property Services Group, a spin-off listed last year, also requested a halt and said it referred to "a possible general offer for shares of the company."

China's state-backed Global Times said Hopson Development was the buyer of a 51% stake in the property business for more than HK$40 billion ($5.1 billion), citing unspecified other media reports. Hopson also said it had suspended its shares, pending an announcement related to a major acquisition of a Hong Kong-listed firm and a possible mandatory offer.

Neither Hopson nor Evergrande responded to requests for comment on the Global Times report.

Analysts said the possible deal signals the company is still working to meet its obligations. But it also underscored concerns about the rest of China's property sector and the broader economy if there is a fire-sale of Evergrande's assets.

"Selling an asset means they are still trying to raise cash to pay the bills," said OCBC analyst Ezien Hoo. "Looks like the property management unit is the easiest to dispose in the grand scheme of things."

Starlink to focus on 10 rural constituencies for broadband connectivity

 Satellite company Starlink, led by the world's one of the richest entrepreneurs Elon Musk, will focus on 10 rural Lok Sabha constituencies to provide internet services, according to a top company official.

Satellite company Starlink, led by the world's one of the richest entrepreneurs Elon Musk, will focus on 10 rural Lok Sabha constituencies to provide internet services, according to a top company official.

The company is also looking to hold virtual conversations with Members of Parliament, ministers, and top government officials over the importance of broadband connectivity in changing lives in rural areas.

SpaceX's satellite broadband arm aims to start broadband service in India from December 2022, with 2 lakh active terminals subject to permission from the government.

Starlink Country Director for India Sanjay Bhargava on Sunday said, "In October I am also keen to have 30-minute virtual conversations with MPs, ministers, secretaries to GOI (government of India), or principal secretaries to states to see if they think 100 per cent broadband would help improve lives. We will probably focus on ten rural Lok Sabha constituencies for 80 per cent of the Starlink terminals shipped to India."

In an earlier social media post, Bhargava had said that the pre-order from India has crossed 5,000 and the company was keen to work in rural areas for providing broadband services.

However, he expressed uncertainty over the target number of terminals if the company does not get permission from the government to start satellite-based service in India.

The company is charging a deposit of USD 99 or Rs 7,350 per customer and claims to deliver data speeds in the range of 50 to 150 megabit per second in beta stage.

"The number of pre-orders from rural constituencies will be one factor that helps us select focus constituencies," Bhargava said.

Retail and MSMEs likely to see rise in slippages, say bankers

 The current level of NPAs masks the actual paint due to restructuring done under regulatory packages, both in 2020 and this year

Asset quality of lenders did not see a sharp uptick despite severe economic disruptions due to Covid-19 in 2020 and 2021 on timely regulatory steps like restructuring and liquidity support.

Now, owing to the present economic recovery phase, households and micro, small and medium enterprises (MSMEs) saw a rise in defaults due to the end of payment moratorium and delayed business payments, said, bankers.

Rating agency CRISIL has estimated that stressed assets — non-performing assets and restructured loans — in banks’ portfolios could touch 11 per cent by March 2022, up from 9 per cent in March 2021.

The current level of NPAs masks the actual pain due to restructuring done under regulatory packages, both in 2020 and this year. After the first wave, the Reserve Bank of India (RBI) allowed a blanket moratorium on payments. There was no dispensation this time, resulting in a spike in slippages during Q1 of FY22. There was a rise in NPAs in the retail and MSME segments, across public and private sector banks.

CARE Ratings review of Q1FY22 showed that gross non-performing assets (gross NPAs) in retail and MSME loan books of public sector banks rose to 7.28 per cent in June 2021 from about six per cent in June 2020. The incidence of bad loans was comparatively less intense for private banks with GNPAs at 3.32 per cent in June, up from 2.01 per cent a year ago.

The head of risk management at a private bank said stress is evident in the retail segment after the second wave, due to job losses and financial pressures. The auction of gold jewellery (kept as collateral for loans) has risen in the last four months, a sign of stress in borrowers of the lower-income strata.

India wants to be the next Taiwan in chips, but its dream is misguided

 Its government would be better off saving its money and luring more suitable partners in testing and assembly.

For more than two decades, India has maintained the fantasy that a major semiconductor manufacturer will set up shop on its shores, kicking off the nation’s journey along an inevitable path toward chip glory. It never happened, but there’s now a very clear script for how it might be done, if only government and industry leaders would take a more pragmatic approach.

In the latest incarnation of the dream, officials in India and Taiwan are apparently in talks to lure a new factory worth up to $7.5 billion. The local government is likely to foot half the bill to build and kit out such a project, Bloomberg News reported. While Taipei is eager to build closer ties with New Delhi, facilitating the construction of a chip fab in South Asia is not high on its priority list. That’s not due to Taiwan being particularly protectionist, but because it can’t see much point in the exercise given India's lack of expertise in the field.

Nevertheless, eager to continue the dialogue with an increasingly important partner, Taiwan may take the bait and start scouting for candidates.

What it’s likely to find is that the challenges facing the establishment of an Indian chip-making industry today are the same ones as the turn of the century. A reliable and stable electricity supply is the most crucial component of semiconductor manufacturing, but one which the nation struggles to provide. The process is so delicate that even the briefest blackout or power surge can trigger a halt that takes hours or days to reset. Abundant water supply, transport infrastructure, and experienced staff are among the other stumbling blocks.

India Glycols soars 19% as FPI buys stake, Ind-Ra upgrades credit ratings

 On Friday, October 1, 2021, WHV-EAM International Small Cap Equity Fund purchased 186,947 equity shares or 0.60 per cent stake of IGL at a price of Rs 830.22 on the NSE via a bulk deal

Shares of India Glycols (IGL) soared 19 per cent to Rs 999 on the National Stock Exchange (NSE) in Monday’s intra-day trade after the foreign portfolio investor (FPI) bought a stake in the company via the open market. Further, credit rating agency, India Ratings & Research (Ind-Ra), has also upgraded the company's long-term issuer ratings to 'IND A/Stable' from 'IND A-/Stable' while resolving the Rating Watch Positive (RWP).

The stock of commodity chemicals was trading at its record high level. In past one week, it has rallied 30 per cent, as against a 1.3 per cent rise in the Nifty50 index. At 10:15 am; the stock was trading 17 percent higher at Rs 986, as against a 0.98 per cent gain in the benchmark index.

On Friday, October 1, 2021, WHV-EAM International Small Cap Equity Fund purchased 186,947 equity shares or 0.60 per cent stake of IGL at price of Rs 830.22 on the NSE via bulk deal, the exchange data shows. The name of the seller not ascertained immediately.

IGL divested 51 per cent of its stake through the issuance of subscription share in its previously wholly-owned subsidiary Clariant IGL Specialty Chemicals Private Limited (CISCPT) to Switzerland-based Clariant International Limited (Clariant), which resulted in CISCPT becoming a joint venture (JV) in the ratio of 51:49.

As per the JV agreement, IGL has transferred its bio-ethylene oxide derivatives (bio-EOD) business, to CISCPT and Clariant has infused INR5.88 billion in CISCPT as a consideration for the same. Out of the total consideration received, CISCPT has paid Rs 450 crore to IGL upfront and the balance is held in the CISCPT as 10 per cent interest-bearing shareholders loan, which will be repayable to IGL in three years.

With a significant reduction in debt; recovery in demand in chemical segments and the limited impact of divestment on profits on account of income streams from the JV, Ind-Ra expects IGL’s credit metrics to improve over the near-term, despite the company’s ongoing capex of around Rs 320 crore over FY22-FY23 to set up two grain-based distilleries, Ind-Ra said in rating rationale.

Four platforms get IFSCA licence for factoring business at Gift City

 These in-principle licences were issued by the IFSCA last Friday to start working through sandbox facilities before formal business

The International Financial Services Centres Authority (IFSCA), the sole regulator of the Gift City-based International Financial Service Centre, has issued licences to four trade-financing platforms to tap the €2,724-billion international factoring business.

The supply chain finance potential in global trade is $17 trillion.

Indian-licensed trade-financing platforms, or TReDS (trade and receivables discounting system) platforms, use blockchain for checking bills submitted for discounting and they may be tested and used for Gift city ventures as well. However, this is not mandatory from the IFSCA point of view but entities coming up at the IFSC are contemplating the use of blockchain.

These in-principle licences were issued by the IFSCA last Friday to start working through sandbox facilities before formal business.

India’s two RBI-licensed TReDS platforms —M1xchange and RXIL —have got the licence. Two others are Kredex and Vayana, which are service providers for bill discounting and related facilities offered by banks. These platforms will enable exporters and importers to avail themselves of trade-finance facilities such as export and import factoring, reverse factoring, supply chain financing, and forfaiting transactions at competitive terms.

According to the McKinsey Global Payments Report 2020, the supply chain finance potential in global trade is $17 trillion. The IFSCA had released a framework for setting up and operating an international trade finance services platform (ITFS) in July. The licensee will have to use the sandbox facility proposed by the regulator, which will help them test programmes before the formal launch. These entities are expected to go live in the first or second quarter of next financial year.

M1xchange is planning a 100 per cent subsidiary for the IFSC business

Facebook put profit before public good 'over and over again': Whistleblower

 Frances Haugen identified as the woman who anonymously filed complaints with US law enforcement that Facebook's own research shows how it magnifies hate and misinformation.

A data scientist who was revealed Sunday as the Facebook whistleblower says that whenever there was a conflict between the public good and what benefited the company, the social media giant would choose its own interests.

Frances Haugen was identified in a “60 Minutes” interview Sunday as the woman who anonymously filed complaints with federal law enforcement that the company's own research shows how it magnifies hate and misinformation.

Haugen, who worked at Google and Pinterest before joining Facebook in 2019, said she had asked to work in an area of the company that fights misinformation, since she lost a friend to online conspiracy theories.

“Facebook, over and over again, has shown it chooses profit over safety,” she said. Haugen, who will testify before Congress this week, said she hopes that by coming forward the government will put regulations in place to govern the company's activities.

She said Facebook prematurely turned off safeguards designed to thwart misinformation and rabble rousing after Joe Biden defeated Donald Trump last year, alleging that contributed to the deadly Jan. 6 invasion of the U.S. Capitol.

Post-election, the company dissolved a unit on civic integrity where she had been working, which Haugen said was the moment she realized “I don't trust that they're willing to actually invest what needs to be invested to keep Facebook from being dangerous.”