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RBI Deputy Governor Resigns, US Dollar Falls As G20 Summit Looms & Other Top Business News Today

Professor of Financial Economics and Part-time Value Investor, Transfin.
Jun 24, 2019 1:19 PM 5 min read

RBI Deputy Governor Viral Acharya resigns. Flipkart may file for IPO in the US. Binny Bansal sells Flipkart shares worth $76m to Walmart. Tata set to build its own apparel empire to take on Zara; retail arm Trent plans to open 40 outlets of its flagship Westside chain every year. US considers pushing for development of 5G equipment outside China. Bond yields around the world continue to plunge. European stocks and the Dollar tumble ahead of G20 meet.


Moving on to the top Business news today: 



RBI Deputy Governor Viral Acharya resigns.


Adios, Acharya: RBI Deputy Governor Viral V Acharya has resigned from his post and is set to leave office six months before the scheduled end of his term. 


The RBI is now left with three deputy governors - N S Vishwanathan, B P Kanungo and M K Jain.


History Repeats Itself: Acharya is the second high-profile resignation in the past six months at the Central Bank. In December last year, governor Urjit Patel had resigned nearly nine months before the end of his schedule term, allegedly over differences with the government.


Sanjeev Sanyal, Principal Economic Advisor in the Ministry of Finance, and Dr. Michael Patra, a member of the Monetary Policy Committee (MPC), have emerged as the two possible contenders to replace Dr. Acharya, as per reports.


Comments, Please: While Dr. Acharya’s resignation has evoked mixed reactions from critics, it is believed that with his exit the composition of the MPC will likely become incrementally more dovish as Dr. Acharya stood on the more hawkish side of the policy spectrum. In fact, analysts at Nomura expect the RBI to cut repo rate by 25 bps in its next meeting in August, which could result in a cumulative 100 bps, or 1 per cent, cut in 2019.



Flipkart may file for IPO in the US. Binny Bansal sells Flipkart shares worth $76m to Walmart.


Flipkart Moving Out: Walmart-owned Indian e-commerce giant Flipkart will reportedly file for an initial public offering in the US by 2022.


Gearing Up: Flipkart CEO Kalyan Krishnamurthy is said to have informally discussed the IPO timeline with the company’s top executives and is pushing the platform to tighten its compliance and achieve profitability by 2022.


With this development, Walmart might be looking to partially or fully exit Flipkart. Walmart had acquired 77% stake in Flipkart in 2018. Later in November 2018, it raised its stake to 81.3%. 


Letting Go: Flipkart co-founder, Binny Bansal has transferred 5,39,912 equity shares to FIT Holdings SARL, a Luxembourg entity owned and operated by Walmart, for $76.4m, reducing his stake in Flipkart to 3.52%.


Previously: Binny Bansal had earlier sold a small portion of his minority holding in Flipkart while keeping a 3.85% stake when Walmart bought Flipkart in 2018.



Tata set to build its own apparel empire to take on Zara; retail arm Trent plans to open 40 outlets of its flagship Westside chain every year.


The What: Tata Group is set to build its own apparel empire with its retail arm Trent planning to open 40 outlets of its flagship Westside chain every year, along with hundreds of its mass market Zudio stores.


The Plan: Trent has fine-tuned its local supply chain to be able to match apparel retailer Zara, which is known for its lightning-quick product turnarounds and bringing in new designs from the drawing board to store shelves within weeks.


Roadblocks: However, Trent's ambition to be like Zara may be hindered by India-specific challenges, including finding space for new stores.


For nearly a decade, Tata Group has been running Zara stores in India in partnership with Zara’s parent Inditex. 


Bonus Read: Oyo, which has remade India’s hospitality industry, is now looking to go global. However, in Western countries where owners need less advice and have more options to upgrade facilities or go online to sell rooms, it is likely to be staring at gigantic challenges.


A deep dive into the Indian unicorn and the challenges it faces as it struggles to expand beyond its home market can be read here.



US considers pushing for development of 5G equipment outside China. 

5G Sans China: In a move which could reshape global manufacturing and potentially exacerbate ongoing trade tensions between China and the US, the Trump administration is examining whether to require that next-generation 5G cellular equipment used in the US be designed and manufactured outside China.


The discussions were part of a 150-day review regarding cybersecurity concerns in the US.


What You Need to Know: Last month US President Donald Trump signed an executive order that enabled the US to ban telecommunications network gear and services from “foreign adversaries.” 


While the order did not name any countries or companies, officials and industry executives believe that its targets included Huawei and its Chinese rival ZTE Corp., who US officials believe are beholden to the Chinese government.


Shortly afterward, the Department of Commerce said it had put Huawei and 70 affiliates to its so-called “Entity List” - a move that bans the telecom giant from buying parts and components from US companies without US government approval, essentially forbidding it from doing business with American companies.


Real and Lightning Fast: Both Verizon and AT&T have launched their mobile 5G networks. Sprint turned to 5G alongside the launch of the LG V50 ThinQ 5G phone in June. UK carrier EE was the first in its country to turn on 5G. 


Of late, more and more carriers are turning on their 5G networks, even if the coverage is still limited.


Here's everything you need to know about the exciting new technology the world is rapidly adopting.



Bond yields around the world continue to plunge. European stocks and the Dollar tumble ahead of G20 meet


Good Things Don’t Last Forever: Since the Great Recession hit world markets in 2008, a policy of easy money, quantitative easing and low interest rates have buoyed the global economy and returned some sense of normalcy to markets.


But more than a decade later, bond yields are still decreasing. Ten-year bond yields in the US, for example dropped below 2% for the first time since 2016 while yields in Germany and France are at record lows.


This trend is confounding economists. The US economy is more or less healthy when it comes to economic indicators, the S&P 500 is at a record high, and the Fed recently hinted at an interest rate drop in the near future. But bond yields continue to plummet.


Perhaps the blame lies on the threat of a recession and inflation. Or the ageing population in developed countries, which means more saving and less investing. Or concerns over a slowing Chinese economy and the infinite tariffs flying around.


Whatever the reason, if bond yields collapse, it will restrict monetary policy and spark more interest rate cuts.


Plenty to do for the 20: This week, members of the Group of 20 will assemble in Osaka, Japan. They will be welcomed by temperate, humid weather and falling economic numbers.


European stocks have stumbled and the Dollar breached a three-month low even as gold and oil rose.


Rising tensions between the US and Iran and worries that the Trump-Xi meet along the G20 sidelines will be fruitless have contributed to this depressing atmosphere.


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