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US Crude Oil Prices Tumble, SEBI Announces Rules to Lower Mutual Funds Cost et al

Professor of Financial Economics and Part-time Value Investor, Transfin.
Oct 24, 2018 12:38 PM 3 min read
Editorial

Good evening reader,

 

Its earnings season in the US, with more than 30% of S&P 500 reporting quarterly numbers this week.

 

Though tech stocks viz. Alphabet, Amazon, Microsoft, Twitter, and Snap were expected to create all the noise, underwhelming results from industrials, namely Caterpillar Inc. and 3M was what really shook the markets.

 

By the time the dust settled, DJIA was down 6.1% from its October 3 peak...

 

Why?

 

Un-glamorous manufacturing names that they are, it seems investors were keenly watching Caterpillar and 3M's outlook as early signs of whether Trump's ongoing trade war with China is a success or not. As soon as words blaming higher production costs due to steel tariffs etc. were spoken, the Bears took over.

 

Trade wars have super complex intermingling impacts. While the President gloats on how he is saving US Steel producers, companies higher up in the value chain who use the same steel to create capital goods are losing out. And with the US government's deficit growing fast thanks to corporate tax cuts, their ammunition to deal with an upcoming recession is treading on thin ice. No wonder the President is busy tweet bullying the Fed to calm down on rates.

 

Let's now head east to view today's Top 6 Business Stories through our End Of Day Wrap Up:

 

INDIA

 

Reliance begins beta tests for Jio Payments Bank among employees before launch.

According to a report by Livemint, Reliance Industries Limited (RIL) is testing Jio Payments Bank services among its employees, similar to the testing process of Jio prior to its launch. The new project is a 70:30 joint venture between RIL and State Bank of India (SBI) formed in April this year.

RIL will move its customers from JioMoney, its prepaid mobile wallet, to Jio Payments Bank.

 

SEBI announces new rules to lower mutual funds (MF) cost, fill MF industry gaps.

New rules have been rolled out by the Securities and Exchange Board of India (SEBI) to manage loopholes in the MF industry.

Mutual funds can now pay commissions only from scheme accounts, unlike the initial practice of using wider profits to pay commissions to distributors. A ban has been put on upfront commissions, excluding certain exceptions for SIPs. Expenses for a direct plan shouldn't exceed expenses for a regular plan.

 

Airtel Africa to receive funding of $1.25bn from six international investors.

In a bid to expand business and lower Airtel Africa’s debt from $5bn, six global investors including SoftBank Group, Singtel, Warburg Pincus and Temasek etc. will invest $1.25bn through a primary equity issuance.

 

TPG-Manipal pursues Medanta after failed Fortis bid.

Manipal and TPG Capital are in conversations to acquire a majority stake in Medanta after their failed attempt to acquire Fortis Healthcare.

The combination may offer a valuation of INR6,000cr for Medanta, as reported by Livemint. Medanta under pressure due to National Pharmaceutical Pricing Authority's price controls on knee implants, cardiac stents etc.

 

US/INTERNATIONAL 

 

US Crude Oil prices fall c. 5% after Saudi Arabia’s declaration to meet market supply gaps.

Price for West Texas Intermediate (WTI) Crude Oil tumbled to $66.40/bbl after Saudi Energy Minister assured to fill supply gaps due to Iranian sanctions, in an announcement at the Future Investment Initiative conference in Riyadh.

 

Ford China becomes an independent business unit to improve performance.

In an attempt to freeze losses in the world’s largest car market, Ford has created a stand-alone unit for its Chinese division. Anning Chen, a former Ford manager, is named the Chief Executive Officer of Ford China.

The company plans to introduce 50 new vehicles in the Chinese market by 2025 to level up competition.

 

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