A twist in the auto slowdown tale: Rajiv Bajaj says no need for GST cuts. Overproduction and stocking greatly responsible for crisis. HDFC considers linking loans to external benchmarks. SoftBank urges WeWork to stall IPO. Hong Kong Exchange makes unsolicited bid for London Stock Exchange. Apple announces new iPhones, iPads, Watches and launch dates for Apple TV+ and Apple Arcade.
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A Twist in the Tale: Rajiv Bajaj, Managing Director, Bajaj Auto recently opined that the slowdown in the auto sector was largely due to “overproduction and stocking” by companies. Economic slowdown, which was considered the primary driver, in fact, has a very small factor to play. Subsequently, he goes on to say, that there is no need for a cut in GST rates.
Bajaj goes on to say that the industry is now rapidly correcting the stock levels for Bharat Stage-VI emission norms and the problem will be sorted by November.
The statement comes days before the GST Council is scheduled to meet on September 20 when it is expected to take a call on the industry’s demand for a cut in goods and service tax on automobiles.
Automobile sales have declined by over 30% in certain categories during July and August.
Nodding in Agreement?: Along similar lines, a report by Swarajya argues why GST cut may not be the answer for the slump in the auto sector. Read the report here know wherein lie the real problem and what can be done to boost growth.
The What: India’s largest mortgage lender, Housing Development Finance Corp (HDFC) is considering linking its loans and liabilities to external benchmarks.
The Why: The move is likely to protect interest margins, noted Vice Chairman Keki Mistry. For liabilities, it may engage in aggressive trades in interest-rate swaps, a market mechanism in which a trader exchanges fixed-rate payments for floating rates.
Zooming Out: The development comes shortly after the Central Bank last week mandated that banks should link home, auto and micro, small and medium enterprise (MSME) loans to external benchmarks such as the repo rate. Interestingly, however, the RBI has made no such announcement for housing finance companies.
The RBI recently released a Committee report on recommendations for enhancing efficiency and transparency of securitisation transactions. Read the document here.
We’re Not Working Out, WeWork: Softbank is reportedly urging WeWork to shelve its plans for an IPO. The office-space rental company’s valuation was recently more than halved and reception from investors has been frosty. The We Company wants to go public: having lost $900mn in the first half of 2019, it desperately needs to raise new capital.
But Softbank, which is WeWork’s biggest investor, is skeptical. Not only because of the less-than-enthused response but also because of the Japanese conglomerate’s previous experiences with its investments going public. Uber’s listing was a disaster and its stock is down nearly 30% from its IPO price. And Slack has also struggled as a public company. Softbank is likely hesitant to get onboard with another listing experiment, lest it turn into a loss-inducing fiasco.
Glance At The Cash: Content platform Glance has closed a $45mn investment from Mithril Capital. The company said it would use the funds to launch new platforms including those in TV, gaming and shopping. It is also planning to expand into Southeast Asia in the coming months.
This Just In: The Hong Kong Stock Exchange said it had approached the London Stock Exchange with a $36.56 cash and share offer. A merger, the former said, would be a “highly compelling strategic opportunity to create a global market infrastructure leader.” More details here.
Apple’s annual iPhone-announcement gala saw the unveiling of three models of iPhone 11. It also a slew of announcements on the tech giant’s other products – including iPads, Apple Watches, and launch dates for Apple Arcade and Apple TV+. Here’s everything that was announced by Apple yesterday.
Stream Team: As iPhone sales have been plummeting, Apple has long sought to diversify its products, and a cornerstone of this diversification has been its upcoming streaming service. And it’s being aggressive on pricing – TV+ video streaming services and Arcade videogame-streaming service begins at $4.99/month. And if you purchase a new iPhone, iPad or Mac, TV+ comes free for a year. Undercutting rivals’ prices will be important for Apple as it prepares to enter the streaming market this November.
FYI: The new iPhone 11 will be sold in India at a starting price of INR64,900. The iPhone 11 Pro and Pro Max, meanwhile, will start at INR99,900 and INR1,09,900 respectively.
Bullish Bonds: India and South Korea secured the most foreign bond inflows in the Asian region last month, even as other economies saw outflows. Overseas investors purchased $1.69bn worth of Indian bonds and $1.44bn of South Korean bonds in August, attracted by the former’s returns and expecting more monetary easing by the latter’s Central Bank this year.
Elsewhere, Thailand, Malaysia and Indonesia saw outflows, owing to trade tensions between US and China, the Yuan weakening beyond 7-to-a-Dollar, and concerns about the global economy.
Green Arrow, Pointing Up: Corporate bond issuances in the first eight months of 2019 have been the highest ever. They have reached INR5.45tr, including those issued by NBFCs, PSUs and private corporates. This represents a 38.7% increase from the same period last year. Reasons for this upsurge could be banks’ reluctance to lend, tightened group borrower exposure limits, and liquidity.
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