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Global Economy Stumbling, Social Media Platforms To Experience 150% Rise in Ad Revenue, Aditya Birla, HDFC and UTI Mutual Fund Downgraded et al.

Professor of Financial Economics and Part-time Value Investor, Transfin.
Jan 23, 2019 1:52 PM 4 min read
Editorial

The global economy is stumbling but not falling over. ICRA downgrades Aditya Birla Mutual Fund, HDFC Mutual Fund and UTI Mutual Fund. Govt plans incentives for small businesses. Social media giants gear up ahead of the General Elections.

 

Now to Today's Top Business News Stories in Our End Of Day Wrap Up:

DAVOS

The world economy may be expanding at a slower pace, but it does not foresee a global recession, as per policy makers at Davos.

 

The Glass is Half Full: As per analysis of investors, bankers and former policy makers at the World Economic Forum in Davos, the global expansion is weakening but not by enough to generate a recession.“We’re slowing, but we’re still growing…The chances of a recession short of a major mistake or accident this year are limited."

 

Upbeat, But...: While the tone was largely upbeat at the forum, some concerns outlined were:

 

  • China recording the slowest expansion since 1990 as the government tries to rely less on investment and debt, fight ongoing trade war
  • Central banks tightening monetary policy too aggressively

 

Explainer: Click here to read 7 things you might not know about Davos. 

Always Cheered Up: “The mood at Davos was the most upbeat for over a decade”. Here’s a look at the Davos 2018.

 

BUDGET

Falling short of revenue collections, IT dept sends notices to mutual fund houses asking them to pay the dividend distribution tax. Government considers offering cheap loans and free accidental insurance coverage to small businesses. 
 

The What: In face of a shortage in revenue, the Income Tax dept has sent out notices to multiple private and public sector firms, including mutual fund houses asking them to pay the dividend distribution tax.
 

Zoom Out: At present, if a domestic company gives dividend to its shareholders, it has to pay a dividend tax of 20.36%. Tax, including surcharge and cess, on debt-oriented funds and equity-oriented funds is 29.12% and 11.6%, respectively.

Also, this: As per a Financial Express report, the government is planning to offer a discount of 2% on loans for small businesses with annual sales of less than INR5cr. It is also planning to provide free accidental insurance coverage of up to INR10L to small businesses with annual sales of up to INR10cr.

 

IL&FS

Govt seeks deferment of provisioning requirements for bank loans extended to IL&FS Group. ICRA downgrades mutual funds with increased exposure to IL&FS SPV debt.

A Special Dispensation: The government is set to approach the RBI to seek a special dispensation for deferment of provisioning requirements for bank loans extended to some IL&FS group firms. 
 

Background: The development comes in light of the ongoing asset monetization efforts made by the beleaguered company. The IL&FS group companies are estimated to have borrowed about INR60,000cr from banks and financial institutions, while the total debt is over INR91,000cr.  

 
Under the Lens: Rating agency ICRA has downgraded one scheme of Aditya Birla Mutual Fund and put five other schemes of HDFC Mutual Fund and UTI Mutual Fund due to their increased exposure to the special purpose vehicles of debt-ridden IL&FS. 

ELECTIONS

Social media platforms likely to experience a 150% increase in advertising revenue ahead of the 2019 General Elections vs 2014. Google to verify political ads. 
 

What's That?: As per an Economic Times report, advertising spends on social media is likely to witness a jump of c. 150% ahead of General Elections this year vs 2014. 
 

Facebook is expected to lead, with the social media giant pocketing c. INR10,000cr ad money, and the rest getting about INR2,000cr. 
 

Google Gears Up: As per Google’s updated election ads policy, advertisers will be required to provide a "pre-certificate" issued by the Election Commission of India (ECI) or anyone authorised by the ECI, for each ad they wish to run.
 

Twitter Follows Suite: CEO Jack Dorsey noted that Twitter was taking apposite steps to fight the spread of fake news and misinformation on its platform ahead of the elections.

 

FINTECH

Investment platform Groww raises $6m in Series A funding. Fintech startup ZestMoney raises funds from Alteria Capital. 

Groww: Bengaluru-based data science based investment platform Groww raises $6m in Series A funding round led by Sequoia India, Propel Venture Partners, Kauffman Fellows and Y Combinator. 

What's the Plan?: The proceeds will be used to launch new products, and build the platform's technology. Groww currently offers direct mutual fund investment plans and proposes to roll out other investment products including stocks.
 

ZestMoney: Bengaluru-based digital lending startup ZestMoney has raised an undisclosed venture debt funding from Alteria Capital. Other investors of ZestMoney, include PayU (Naspers), Ribbit Capital and Omidyar Network.
 

Flashback 2018: Read this report by TechCircle to know how the fintech segment enjoyed the purple patch last year.

 

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