A round-up of the biggest articles from newspapers.
Sebi board to discuss M&A rules, setting up of gold exchanges
The Sebi board is planning to give a nod for several investor-friendly measures when it meets tomorrow, reports The Economic Times.Why it’s important:
- Some of the measures expected to get approval are easier steps for mergers and acquisitions and a rejig for new-age technology companies promoters’ superior voting rights.
- Plans are also afoot for the establishment of social stock exchanges and gold exchanges.
- The plan for making delisting after an open offer will also be discussed.
Tatas mulls bringing all airlines under single umbrella
If its bid for Air India succeeds, the Tata Group plans to bring all its airlines activities under one roof, reports The Economic Times.Why it’s important:
The move will ensure synergies and eliminate duplication.
- The integration will scale up the air game and be the number one player in the space.
- The first plan is to bring low-fare AirAsia India under the Air India wing.
- Later, plans are for bringing full-service carrier Vistara also under this if Vistara partner Singapore Airlines agrees to it.
- Malaysia’s AirAsia Bhd will exit AirAsia India by March 2022, selling its remaining around 16% stake for $18 million.
‘If it's 60,000 now, it can definitely be at 100,000 within five years’
Christopher Wood, global head of equity strategy at Jefferies, in an interview with The Economic Times said that there is a possibility of correction risk in the short term but it’s an opportunity to buy.What he says:
- India is seeing signs of a cyclical rebound.
- Small-caps will be a bigger casualty in case of a global correction.
- Valuations are very high, but it looks like the economy is reaching an inflection point in earnings.
- If it's 60,000 now, it can definitely be at 100,000 within five years.
- The bull run can go a lot longer because the property markets have just started to pick up.
- We are at the beginning of a new 5–7-year residential property cycle.
‘Insurance industry taken a hit of ₹30,000 crore just on Covid’
Bhargav Dasgupta, CEO, ICICI Lombard General Insurance Company, in an interview with The Economic Times said that they were hit really badly with the sudden spike in Covid numbers.What he says:
Last year, the firm got 9.8 lakh claims and this year in Q1, as an industry, they got over 10 lakh claims.
- The industry has taken a hit of ₹30,000 crore just on Covid.
- The company took a ₹600 crore provision on Covid.
- Received the final approval for the acquisition of Bharti Axa General Insurance.
- The reason for this transaction is that the Indian insurance industry is ripe for some consolidation to create synergy benefits and capture value.
Sebi likely to allow PE firms to own asset managers
The Sebi may give a nod to allow private equity funds to own local asset management companies, reports Mint.Why it’s important:
The main reasons for this move are the growing popularity of mutual funds and booming stock markets.
- New rules will allow global PEs to buy AMCs.
- This will bring more funds as several existing sponsors and trustees are facing a cash crunch due to the Covid squeeze.
Banks join hands with fintechs to grow businesses
Some of the small and mid-sized lenders are collaborating with fintech firms for more businesses and growth, reports Mint.Why it’s important:
The move will allow the banks and smaller private lenders to expand their reach and tap new customers.
- It will also save costs and time to expand their retail network.
- The method is easier for them to onboard new customers.
- The smartphone boom, as well as low-cost data, have given banks an opportunity to build businesses without new physical branches.
Banks’ spread on loans down amid intense competition
Banks and other lenders are witnessing a cut in bank spreads across their loan portfolios, reports Mint.Why it’s important:
The main reasons are that the markets are flush with liquidity and increased competition.
- State-run lenders got the upper hand in loan pricing, but other banks are trying to catch up.
- Due to this, the banks are facing significant margin pressures.
‘Expect the current positive momentum to continue’
Sumit Jalan, co-head of India Investment Banking & Capital Markets at Credit Suisse, in an interview with Business Standard said the past several years of PE investments are finding their way to exit this year with the IPOs.What he says:
- IPO activity we are seeing this year is more secondary-oriented, unlike in the past phases when it was more primary-oriented.
- Expect the current positive momentum to continue.
- India has benefitted from the tsunami of liquidity created by the monetary expansion undertaken by the Fed and other central banks.
- Expect a further boost as liquidity is moving away from China to other large and high-growth countries like India.