US to Terminate Preferential Trade Agreement with India, US and China Close to Finalizing A Trade Deal, Huawei Sues US, Facebook to Focus on Private Messaging et al.

US to terminate preferential trade agreement with India,  India may retaliate with threats of its own. US and China close to finalising a trade deal. Huawei sues US over ban on its products. Paytm launches loyalty program, Paytm First. Newmont rejects Barrick’s takeover bid. ED links INR500cr kickback to Kochhar and family. 

 

Moving on to the top Business stories of the week. 

 

TRADE

 

US to terminate preferential trade agreement with India. India may retaliate to US tariffs with threats of its own. US and China close to finalising a trade deal. 



You May Leave: US President Donald Trump may terminate India’s designation as a beneficiary of the Generalized System of Preferences (GSP), which allows $5.6bn worth of Indian exports to enter the US duty free. 



Clash of Interests: The development comes under allegations that India failed to provide assurances that it will give the US equitable and reasonable access to its markets in numerous sectors. Trump insisted that India had implemented a wide array of trade barriers that could create serious negative effects on US trade.



The US goods and services trade deficit with India was $27.3bn in 2017.

 

Eye for an Eye: India might impose retaliatory tariffs on $10.6bn worth of goods imported from the US, in response. 

 

A Truce: US and China may finally be inching closer towards finalizing a trade deal that could lift most or all US tariffs on Chinese good worth $200bn.
 

Barter Trade: In return, China is offering to lower tariffs on US farm, chemical, auto and other products and ramp up purchases of American goods by $1.2tr over the next six years. China would also buy $18bn in natural gas from Houston. 
 

However, it remains to be seen whether the tariffs would be lifted immediately or over a period of time that would allow the US to monitor whether China is meeting its obligations. 

A formal agreement could be reached at a summit between US President Trump and Chinese President Xi Jinping around March 27.

 

MACRO

ECB acts to boost struggling Eurozone. China lowers GDP target to 6-6.5% amid trade war, economic slowdown.

 

Back to Life: The ECB has rolled out a round of fresh stimulus, offering banks cheap loans in an attempt to revive the economy. The unexpected move came as the Central Bank made sharp cuts to its forecasts for both growth and inflation this year.

Holding Steady: ECB, acting less than three months after it phased out a $2.9tr bond-buying program, said it would hold interest rates at their current levels at least through the end of this year, longer than what it had previously signaled.

 

 

Less than Expected: China lowered its economic growth target this year to between 6% - 6.5%, from the 2018 target of c. 6.5%, on back of lowering global and domestic demand, ongoing trade war with the US and a continued economic slowdown.
 


Opening the annual session of China’s legislature on Tuesday, Premier Li Keqiang said that China’s fiscal policy would become “more forceful”, with planned cuts of nearly 2 trillion yuan in taxes and fees for companies.
 


China’s GDP last year expanded at its slowest pace since 1990 due to the trade war and Beijing’s crackdown on financial risks, which raised corporate borrowing costs and hurt investment.

 

 

COMPANIES

Newmont rejects Barrick’s takeover bid. Report by Grant Thornton India uncovers INR13,000cr of potentially irregular transactions at IL&FS. SEBI probes Sun Pharma over fund diversion worth INR42,000cr. ED links INR500cr kickback to Kochhar and family. 


 
No Thanks: Newmont Mining has rejected rival Barrick Gold’s c. $18bn takeover offer, stating that the proposal is inferior to its own deal with Goldcorp.


 
Throwback: Last week, Canada-based Barrick Gold made a $17.85bn bid for US rival Newmont Mining in an all-share deal that would combine the world’s biggest gold miners, valuing the merged entity at c. $42bn.


 
But Wait: However, a deal is not completely out of question. Newmont’s Chief Executive Gary Goldberg has said that both companies can cuts costs up to $7bn in Nevada by forming a joint venture.
 

Conflicting Interests: As per a report by audit firm Grant Thornton India, transactions worth more than INR13,000cr at IL&FS could be linked to irregularities such as conflicts of interest, inadequate risk assessment and deviation from banking norms.  

Doomed: As per the same report, IL&FS extended huge loans to certain entities even after internal risk assessment clearly showed that the borrowers were under financial stress.

The List Goes On...: Furthermore, multiple instances have been found wherein the Committee of Directors of IL&FS extended loans at a negative spread to borrowers facing liquidity issues. Click here to read how the financier ignored risk assessment reports while extending loans.

 

Asking Questions: Indian Pharmaceutical giant Sun Pharma has been put under the scanner by the markets regulator following allegations of diversion of funds worth INR42,000cr through its distributor, Aditya Medisales (AML).

The Leak: The development comes on back of allegations made by a whistle blower who accused Sun Pharma of mis-governance and tax-related offenses along with fraud, specifically complaining of a fund diversion amounting to INR42,000cr, and personal profit accumulation worth INR10,000cr.
 

In Denial: Sun Pharma has denied all allegations of wrongdoing, discrediting them as baseless and false.

 

Kick Money: The Enforcement Directorate has reported that Chanda Kochhar and her family had received kickbacks worth INR500cr in the Videocon-ICICI loan case.

Investigators reported of having clear evidence of a "quid pro quo” in the loans cleared by ICICI Bank under Chanda Kochhar's leadership.

What Now?: The probe agency will seize the Kochhar family's assets created out of the proceeds of the fraud.

 

TECH

Huawei sues US over ban on its products. Facebook to focus on private messaging.
 

In Court: Huawei has sued the US government over ban on its products.
 

Huawei commented that the ban besides being unlawful, also restricts Huawei from engaging in fair competition, ultimately harming US consumers.
 

Huawei is pushing back at a provision in the 2019 National Defense Authorization Act which bars any executive agency, government contractor or company that receives a government loan or grant from using Huawei and ZTE equipment.
 

 

Shifting Stance: Facebook, which became the world’s biggest social network by encouraging people to share photos and messages publicly is now betting on private messaging and small-group chats.
 

Know what caused this drastic shift in ideology here.

 

STARTUP

Zomato sells UAE business to Delivery Hero. Paytm launches loyalty program, Paytm First. Hyundai may invest up to $300m in Ola.

 

Moving On: Online food technology giant Zomato has sold its food delivery business in the UAE to the Delivery Hero Group for around $172m. 

 

Growing Influence: The acquisition will add 1.2m monthly orders and $2m monthly revenue to Delivery Hero’s Far East and North Africa business and will strengthen its leadership position in the UAE.



Delivery Hero is also set to participate in Zomato’s latest $1bn funding round, investing c. $50m, making it one of the top 10 shareholders.



Get Rewarded: Paytm has announced the launch of its premium subscription-based rewards and loyalty program - ‘Paytm First’.



Paytm First subscription is priced at INR750 per year and will include annual memberships for Zomato Gold, Gaana, Sony LIV, Viu Premium, Eros Now and Uber, amongst others.

 

Many Benefits: Through this program, the company aims to retain customers by rewarding them for their repeat purchase behaviour, while looking to promote further usage and to increase customer retention.

 

Keep it Moving: As per an Entrackr report, Hyundai is in talks to invest up to $300m in the home-grown ride-hailing giant Ola. The deal would be a part of Ola's ongoing Series J round of funding estimated at $1bn.
 

Ola had last month acquired INR650cr from Flipkart co-founder Sachin Bansal.
 

Not the First: Hyundai has previously invested $250m in Grab and INR100cr in car-sharing startup Revv.
 

Bonus Read: Fewer Indian firms are raising through IPOs, with a majority opting to stay private amid rich valuations, abundance of private capital and somewhat pressured public market valuations. Read this article to know more.

 

 

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