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MHA Issues Fresh Guidelines for Lockdown Till May 3rd

Professor of Financial Economics and Part-time Value Investor, Transfin.
Apr 15, 2020 8:10 PM 5 min read
Editorial

RBI likely to increase liquidity measures. MHA issues fresh guidelines for lockdown till May 3rd. Global economy is expected to shrink by 3% during 2020. Trump halts funding to WHO.

 

 

COVID RELIEF

 

RBI likely to increase liquidity measures.

A Helping Hand

The RBI is likely to step up its liquidity measures to calm market anxiety and facilitate smooth Government borrowing in the wake of increasing bond yields despite a 75 basis points cut in interest rates. 

 

The RBI may have to raise the amount it lends through the Targeted Long Term Repo Operations (TLTRO), and step up bond purchases, including purchases of corporate bonds for the first time ever.

 

The Central Bank may also raise the ceiling on central and state Governments’ borrowing through the Ways and Means Advances, a short term borrowing programme. [ET Markets]

 

MHA issues fresh guidelines for lockdown till May 3rd. 

Of Law & Order

The Ministry of Home Affairs has issued national directives on lockdown measures till May 3rd identifying select activities that will be allowed from April 20th. [BS]

 

 Activities that are allowed from April 20th:

  • Transportation of all goods without the distinction of essential and non-essential
  • Services provided by electricians, plumbers, IT repairs, motor mechanics and carpenters
  • All agriculture, horticulture and allied services
  • RBI, banks, ATMs, capital and debt markets as notified by SEBI and insurance companies

 

What Remains Suspended Till May 3rd:

  • Educational institutions, coaching centres
  • Travel by air, rail, metro, public buses, taxis, cab aggregators
  • Public places like cinema halls, malls, shopping complexes, gymnasiums, sports complexes, swimming pools, bars
  • All social, political, sports, religious functions, religious places, places of worship

 

View the consolidated guidelines here. [PIB]

 

DOWNWARD SLUMP

Global economy is expected to shrink by 3% during 2020. 

Caught Off Guard

The International Monetary Fund in its 2020 World Economic Outlook has said that the global economy is expected to shrink by 3% during 2020 on the back of the coronavirus pandemic and the following collapse of activity.

 

This would be the steepest downturn since the Great Depression of the 1930s.

 

However, the organisation also predicted a partial rebound in 2021, with the world economy growing at a 5.8% rate, but said its forecasts were marked by “extreme uncertainty” and that outcomes could be far worse, depending on the course of the pandemic. [Reuters]

 

Profits of JPMorgan, Wells Fargo plummet as the banks prepare for defaults linked to COVID-19. 

Sparing No One

Top banks, including JP Morgan and Well Fargo, have reported a slump in their profits as they set aside billions of additional Dollars to prepare for defaults owing to the coronavirus pandemic that has gutted the global economy.

 

JPMorgan, America's largest bank by assets, earned $2.87bn, down 69% from $9.18bn a year earlier. Revenue was down 3% to $28.25bn. It has set aside $6.8bn worth of reserves to insulate itself from loan defaults.

 

Wells Fargo reported deeper-than-expected 89% plunge in Q1 profit, driven largely by a $3.1bn reserve build to protect against bad loans.

 

Revenue fell 18% to $17.72bn. [CNN Business]

 

Extra Crunch

As oil prices near the $20 mark, it seems like OPEC and its partners have failed to inject bullish sentiment into oil markets with their historic production cut deal.

 

Here are some expert forecasts on where oil will go from here. [OilPrice.com]

 

COMING TOGETHER

Offline retailers build omnichannel models to cater to online demand. 

Staying Relevant 

Large format offline retailers and wholesalers, including Future Group, Spencer’s Retail, Metro Cash and Carry and Walmart’s Best Price, have stepped up efforts to cater to rising online demand, building omnichannel models to deliver goods and groceries amid the nationwide lockdown. 

 

For instance, Future Group, which serviced online orders for groceries only from its Easy Day stores in Delhi NCR, has extended that capability to 250 of its Big Bazaar stores across the country. [ET Tech]

 

Government pushes for collaboration between ecommerce players and kirana stores. 

In This Together

The Government is pushing for a collaboration of sorts between ecommerce companies and kirana stores to maintain supply of essential goods during the extended lockdown.

 

While the ecommerce players were already sourcing from cash and carry companies, officials said collaboration with small retail stores is ideal in the current situation.

 

In addition to this, the Government will also review the definition of ‘essentials’ and widen it to include work-from-home essentials such as routers, chargers and even stationery, laptops and tablets as students across the country take online classes and need these to support their education. [ET Tech]

 

CHINA

Trade slump eases but outlook remains grim. 

The Good, the Bad and the Ugly

China’s exports and imports continued to plunge in March, but at a pace slower than expected. Economists had forecast shipments to drop 14% from last year. Instead, customs data showed on Tuesday that overseas shipments fell 6.6% in March Y-o-Y, improving from the previous month’s 17.2% slide.

 

However, while the numbers seem to suggest improvement, the trade outlook remains dire as the pandemic brings business activity across the world to a standstill, which will invariably have an effect on Chinese exports. [Investing.com]

 

Government to give out cash to encourage car sales. 

Yuan a Car?

As in India, China’s auto industry has been battling a slowdown for a long time now. In 2018, total car sales slid 3%, the first contraction since the 1990s. In 2019, sales fell 8%. And in Q1 2020, car sales have declined 42% Y-o-Y...As in India, the slowdown was aggravated by the coronavirus.

 

The Chinese government seems to have a remedy – cash subsidies as high as $1,400 per vehicle to encourage people to buy cars. [CNN Business]

 

GLOBAL

Trump halts funding to WHO. 

WHO Let the Dogs Out?

US President Donald Trump sent jitters around the world today after halting funding for the World Health Organisation (WHO) for 60 to 90 days pending a review of the global health body’s conduct in response to the coronavirus pandemic and its dealings with China.

 

The US contributed $400m to the WHO last year, making it its biggest contributor. The organisation’s annual budget is $4,8bn.

 

The WHO has increasingly come under fire for not taking the coronavirus seriously when it was still an epidemic in China. Despite repeated warnings by scientists about the possibility of human-to-human transmissions and stifling of information by China, where the pandemic began, the WHO downplayed the global threat of the virus by calling bans on international travel from China “ineffective” and praising Beijing for its response to the virus.

 

At the same time, critics have warned against abandoning the WHO at this point in time when global coordination is vital. [Politico]

 

 IMF approves debt relief for 25 poor countries. 

Grounded with a Rescue Package

The US government has reportedly approved a $25bn rescue package for 10 of the country's biggest airlines. American Airlines, United, Delta and Southwest are among the recipients. [BBC News]

 

Debt Relief

The International Monetary Fund has announced immediate debt relief for 25 poor countries to help them free up funds to fight the coronavirus pandemic. The move is expected to help Afghanistan, Yemen, Nepal, Haiti and many countries in Africa. [ET Business]

FIN.

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