Yield hungry investors revive carry trade in emerging markets

- A + A KUALA LUMPUR (May 19): Nearly a third of rated nonfinancial companies in emerging markets would face heightened credit risks under a downside scenario in which, Russia’s invasion of Ukraine triggers a global recession and liquidity squeeze, Moody’s Investors Service said in a report on Thursday (May 19). The credit rating firm said under its baseline scenario, which assumed that commodity shocks and higher inflation and interest rates would result in lower global growth through 2023, the figure would be 8%. “Even if ceasefires are negotiated, sanctions on Russia will remain in place through next year at least. “The downside scenario assumes that a recession in Europe, potentially caused by a suspension of energy trade between Russia and Europe, triggers a global recession and severe liquidity squeeze and geopolitical risks remain high,” it said. Vice president/senior analyst Rachel Chua said most nonfinancial emerging market companies that the financial … [Read more...] about Moody’s: Russia-Ukraine conflict raises credit risks for emerging market companies

In first trades on listing, shares of the Life Insurance Corporation (LIC) of India traded at Rs 872 against issue price of Rs 949 . At this price, all investors — including policy holders, employees, and retail investors who got shares at a discount of Rs 40-60 per share — lost money. It would appear that someone started buying large quantities of LIC shares thereafter. It reached a high of almost Rs 919 per share. In the first 20 minutes, 20 million LIC shares, about 10 percent of IPO, got traded. Despite a firm market the entire day, LIC remained subdued trading at a near fixed price of Rs 875 for most of the day, and closed at Rs 875.25 . Soon we will know details of who sold and bought during the day. It looks quite likely that a good chunk of policy-holders, employees, and retail investors used this opportunity to exit. Was It Enough? Close LIC’s paid up equity capital is Rs 6,325 crore. The Government of India initially wanted to sell 5 percent of … [Read more...] about LIC | Will shares catch up with its true valuation?

Representative image The rupee on November 26 plunged by 37 paise against the US dollar as investors turned cautious in view of massive selloffs in domestic equities and worries over a new variant of COVID-19. At the interbank foreign exchange market, the local currency opened at 74.60 and witnessed an intra-day high of 74.58 and a low of 74.92 against the US dollar in day trade. The local unit settled at 74.89 a dollar, down 37 paise over its previous close of 74.52. The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.34 percent down at 96.44. "Rupee erased all the gains of the month following risk-off moods after worries over a new variant of COVID-19 surges. Month-end dollar demand and unwinding of carry trade in global forex markets also weighed on rupee," Dilip Parmar, Research Analyst, HDFC Securities. Close COVID-19 Vaccine Frequently Asked Questions View more How does a vaccine … [Read more...] about Rupee plunges by 37 paise against dollar on new COVID-19 variant worries

Representative image GoFirst, the budget airline previously known as GoAir, plans to launch its delayed initial public offering to raise Rs 3,600 crore in the second quarter of this financial year following a revival in market sentiment over aviation stocks. “Over 27 investors have shown positive interest. The company will make a fresh presentation soon,” a person aware of the airline’s plans said. Another person said GoFirst is optimistic about its IPO as domestic and overseas air travel opens up with no expectations of another Covid-19 wave. “Domestic air traffic rising to above the pre-Covid-19 levels, coupled with a recovery in the stocks of aviation companies, has once again increased the appetite of bankers,” another person said. Shares of InterGlobe Aviation, the operator of IndiGo, the country’s biggest airline, have jumped 8.1 percent over the past three days, while stocks of SpiceJet have rallied 7 percent in the same period. Close COVID-19 … [Read more...] about GoFirst may launch IPO in July-September as sentiment improves over aviation stocks

- A + A NEW YORK (May 19): Last fall, on the advice of a friend, Odosa Iyamuosa invested his life savings of US$4,000 in a cryptocurrency called Luna. The 28-year-old, who lives in Abuja, Nigeria, researched the coin himself online, and what he found seemed promising. Luna’s price was soaring, thanks to the success of another coin with which it was deeply intertwined, TerraUSD. Some of the crypto industry’s biggest names had already invested, including Galaxy Digital Holdings Ltd, the high-frequency-trading firm Jump Trading, and venture investment arms of the exchanges Coinbase Global Inc and Binance. For Iyamuosa, it seemed like his best hope to get out of Abuja, where he says many jobs pay just US$2 a day, or less. He’d scraped together a little money selling knockoff Nike and Adidas sneakers to local buyers he found on Instagram. He wanted to increase his savings to US$16,000 and enroll in a data-analytics programme at a college in Toronto so he could get a job … [Read more...] about A US$60 bil crypto collapse reveals a new kind of bank run

Despite the flourishing of work from anywhere during the pandemic , it still matters where a startup is located. That's because, as I wrote in Startup Cities , regions of the world differ in the vitality of their local Startup Commons -- a collection of regional resources that at best provide an irresistible attraction for capital and talent or at worst repel both. This comes to mind in considering the flow of venture capital around the world in 2021. A striking conclusion is that on a per capita basis, capital flows into Israel were a whopping 28 times more than those in the U.S. To be sure, 2021 venture capital flow into the U.S. was way larger than into Israel -- up at 154 percent in 2021 to $330 billion versus 136 percent higher to $25.4 billion, according to NoCamels But Israel's population of about nine million is a fraction of the U.S.'s 330 million people. Hence, Israel's $28,000 in venture capital invested per capita in 2021 is far above the … [Read more...] about Why Israel Drew 28 Times More Venture Capital Per Capita Than the U.S.

- A + A NEW YORK (May 19): A benchmark ESG stock index has removed Tesla Inc, sparking a debate about which companies do — and don’t — pass muster with socially aware investors. Tesla has grown into a US$735 billion company on the back of its breakthrough electric-vehicle engineering. Its own carbon footprint is a small fraction of its peers, and its success in the market has pushed the industry overall away from gas-powered vehicles. But the other components of ESG — the social and governance risks — give investors pause. Chief Executive Officer Elon Musk is an unconventional manager, prone to impulsive tweeting, and the company discloses very little information about its workforce or labour conditions. That split became material Wednesday after it emerged that Tesla was expelled from the ESG version of the S&P 500 Index. Musk responded by saying ESG is “a scam”. It added to an already bad day for the company, whose stock fell 6.8% amid a broad selloff in tech … [Read more...] about Tesla’s removal from S&P Index sparks debate about ESG ratings

KUALA LUMPUR: The ringgit closed lower today, hitting RM4.40 against the US dollar on global recession concerns, said an analyst. At 6 pm, the local note stood at 4.4030/4060 versus the greenback from Wednesday's close of 4.3960/3975. ALSO READ: Ringgit vs US dollar: What we need to understand SPI Asset Management managing partner Stephen Innes said although the US dollar was not so much in demand due to global economic growth concerns, sentiments for emerging currencies, including the ringgit, remained weak, triggering a wide sell-off. The ringgit hit a record low on March 23, 2020 when it reached RM4.447. "The next move will depend on the economic reopening in China. If China opens up, the ringgit will likely strengthen as export channels will open up and will likely reverse the narrowing trade surplus that fell lower than consensus (estimates),” he told Bernama. ALSO READ: Move by Bank Negara not to peg ringgit seen as pragmatic "Although US yields are falling, … [Read more...] about Ringgit hits RM4.40 to US dollar on global recession concerns