This document provides an annual fixed income outlook for 2019. It summarizes that global growth is expected to moderate from 2018 levels as major advanced economies see growth peak. Inflation remains low globally and commodity prices are expected to remain weak. Central banks are moving from quantitative easing to quantitative tightening. Volatility is expected to remain elevated given tightening financial conditions. US growth will slow but the labor market will stay tight, putting upward pressure on wages. Inflation remains contained despite labor market tightness.
The document provides an outlook for global and Indian markets in 2019. Some of the key points covered include:
- Global growth is expected to slow slightly in 2019 compared to 2018. The US is expected to see a soft economic landing as fiscal stimulus fades. China will see a calibrated slowdown.
- Emerging markets are in a better position to benefit from supportive macroeconomic conditions like stable oil prices and a weaker US dollar. However, they remain vulnerable to rising US interest rates.
- Indian GDP growth is forecast to remain robust in 2019 and 2020, supported by macroeconomic stability and various growth drivers. Earnings growth and valuations remain positive for Indian equity markets.
A more simplified and reader-friendly version of P.K Basu's - India Economic Outlook - 2014. It deduces from past trends and outlines the current economic scenario around the world and its implications on the Indian economy.
China and expectations over a Fed rate hike continue to dominate trading sent...Hantec Markets
The build up to Non-farm Payrolls is always much hyped and as we get ever closer to the point of which a rate hike could be announced, the focus on tier one US economic data is magnified even more. On the headline figure 215,000 jobs added with an upward revision of last month to 231,000 is solid if a little unspectacular. Unemployment remains at 5.3% just above the 5.0%/5.2% that the Fed deems to be “full employment”. All fine so far. However, the average hourly earnings fell to 2.1% on the yearly data which remains stubbornly low.
From the BPV Capital Management investment team comes our most recent update on capital markets. In this issue, we examine how the stabilizing global economy pushed equities, interest rates, and commodities higher in April.
The document provides a weekly market outlook report covering:
1) The Nifty index remained volatile and closed flat as traders awaited third quarter earnings and the upcoming union budget. It closed above 12,350 and formed a small bullish candle on the daily chart.
2) For the week, the Nifty traded in a range of over 100 points and formed a bullish candle on the weekly scale. Experts say the sideways trade will continue next week as traders watch the 12,300 level.
3) Among sectors, banking stocks rose led by State Bank of India and ICICI Bank, while the Nifty Pharma index gained over 3%. FII buying was seen for the week.
- The document is a daily report from CIMB Research analyzing trends in the Indonesian market. It includes commentary on market movements, corporate news briefs, and technical analysis on two stock picks: Waskita Karya (WSKT) and Gajah Tunggal (GJTL).
- Key points from interviews with government officials suggest infrastructure spending will increase in the coming months to boost economic growth. The report is optimistic on contractors and cement companies.
- WSKT and GJTL are recommended as buy picks based on technical indicators showing an uptrend and breaking above moving averages, with price targets above current levels.
The document provides a weekly market outlook report for the Nifty, Bank Nifty, and various sectors for the week of January 17, 2020. It notes that the Nifty closed flat after remaining volatile, above a key support level of 12,350. It remained range-bound for the week. Banking stocks rose while Yes Bank shares declined. The report also provides analysis on crude oil, gold prices, and the FTSE 100 and Dow Jones indexes. Sectors like pharma and FMCG saw gains for the week while banks declined slightly.
The document provides an outlook for global and Indian markets in 2019. Some of the key points covered include:
- Global growth is expected to slow slightly in 2019 compared to 2018. The US is expected to see a soft economic landing as fiscal stimulus fades. China will see a calibrated slowdown.
- Emerging markets are in a better position to benefit from supportive macroeconomic conditions like stable oil prices and a weaker US dollar. However, they remain vulnerable to rising US interest rates.
- Indian GDP growth is forecast to remain robust in 2019 and 2020, supported by macroeconomic stability and various growth drivers. Earnings growth and valuations remain positive for Indian equity markets.
A more simplified and reader-friendly version of P.K Basu's - India Economic Outlook - 2014. It deduces from past trends and outlines the current economic scenario around the world and its implications on the Indian economy.
China and expectations over a Fed rate hike continue to dominate trading sent...Hantec Markets
The build up to Non-farm Payrolls is always much hyped and as we get ever closer to the point of which a rate hike could be announced, the focus on tier one US economic data is magnified even more. On the headline figure 215,000 jobs added with an upward revision of last month to 231,000 is solid if a little unspectacular. Unemployment remains at 5.3% just above the 5.0%/5.2% that the Fed deems to be “full employment”. All fine so far. However, the average hourly earnings fell to 2.1% on the yearly data which remains stubbornly low.
From the BPV Capital Management investment team comes our most recent update on capital markets. In this issue, we examine how the stabilizing global economy pushed equities, interest rates, and commodities higher in April.
The document provides a weekly market outlook report covering:
1) The Nifty index remained volatile and closed flat as traders awaited third quarter earnings and the upcoming union budget. It closed above 12,350 and formed a small bullish candle on the daily chart.
2) For the week, the Nifty traded in a range of over 100 points and formed a bullish candle on the weekly scale. Experts say the sideways trade will continue next week as traders watch the 12,300 level.
3) Among sectors, banking stocks rose led by State Bank of India and ICICI Bank, while the Nifty Pharma index gained over 3%. FII buying was seen for the week.
- The document is a daily report from CIMB Research analyzing trends in the Indonesian market. It includes commentary on market movements, corporate news briefs, and technical analysis on two stock picks: Waskita Karya (WSKT) and Gajah Tunggal (GJTL).
- Key points from interviews with government officials suggest infrastructure spending will increase in the coming months to boost economic growth. The report is optimistic on contractors and cement companies.
- WSKT and GJTL are recommended as buy picks based on technical indicators showing an uptrend and breaking above moving averages, with price targets above current levels.
The document provides a weekly market outlook report for the Nifty, Bank Nifty, and various sectors for the week of January 17, 2020. It notes that the Nifty closed flat after remaining volatile, above a key support level of 12,350. It remained range-bound for the week. Banking stocks rose while Yes Bank shares declined. The report also provides analysis on crude oil, gold prices, and the FTSE 100 and Dow Jones indexes. Sectors like pharma and FMCG saw gains for the week while banks declined slightly.
The INR has been trading in a narrow range of 75.05-76.15 over the previous month due to low economic activity and trading volumes during the lockdown. While Reliance Jio secured $11 billion in investments, GDP growth fell to 3.1% for the first quarter and may decline by 11.5% for the full year. The fate of the rupee depends on the USD and oil prices, with the USD expected to decline due to large US deficits and economic problems, while oil prices remain volatile. The RBI may allow the rupee to fall to the mid-to-low 74s before engineering a climb back to 76 as economic recovery increases trading volumes.
In this week's Invast report, we discussed The Federal Reserve and the future of money printing, then we mentioned the quality of assets for Australian banks; particularly ANZ, Commonwealth Bank of Australia, National Australian Bank and Westpac. We also covered basic information on pivot points. Lastly, we answered a client question regarding stocks with very low liquidity.
« Market Perspectives » est notre revue mensuelle des marchés. Elle présente de la façon la plus synthétique possible :
- notre analyse des principaux faits marquants et indicateurs macro susceptibles de dessiner les marchés sur le mois.
- notre vision sur les différentes classes d’actifs
Cette revue sera continument enrichie avec nos indicateurs quantitatifs.
La plupart de nos analyses sont disponibles sur www.finlightresearch.com
Our monthly publication “Market Perspectives” presents a synthetic view of all the asset classes we cover.
The report is composed of six sections covering Macro, Equities, FI & credit, FX, Commodities and Alternatives.
Each section is preceded by a summary of our views on the related asset class.
Most of our publications are available on our web site www.finlightresearch.com
Indonesia strategy 2018 - many risks,few rewardsBambang Muliyadi
The report provides an analysis and outlook for Indonesian equities in 2018, setting a target of 6,500 for the JCI index, representing 8% upside. Key points:
- EPS growth is forecast at 13.5% for 2018, allowing for a target P/E multiple that represents a moderate de-rating from current levels.
- Valuations are elevated against historical standards, limiting upside potential absent an improvement in fundamentals. Stock picking will be important to outperform given risks.
- The terms of trade outlook is flat, limiting real GDP growth potential to around 5%, while policy rate hikes could pose a risk to valuations dependent on low sovereign yields.
- Consumption
This document provides an analysis of investment opportunities and risks in Indonesia for 2018. Some key points:
- Stock picking will be important for performance as certain sectors like public works spending and mining may outperform, while private consumption remains soft.
- Populist policies ahead of regional elections in mid-2018 are expected to support sectors like retail, telecoms, and state-owned contractors.
- However, valuations overall are high, and commodity prices and China's economic slowdown pose risks to Indonesia's terms of trade and growth outlook.
- State-owned enterprises continue increasing their role in driving infrastructure investment as private sector capex remains flat, which some argue crowds out private sector opportunities.
The document provides an analysis of the Indian economy and markets in light of recent volatility driven by expectations of tapering of US Federal Reserve stimulus. It summarizes that weakening of the rupee will increase fiscal deficits and hurt growth. GDP growth is projected to slow further in the short term. Downgrades are possible for both GDP and corporate earnings forecasts. Volatility is expected to continue until the Fed's policy decision is clear.
On 4th June 2015 the IBSA held a workshop on Developing Strategies for International Business.
Presentations: Global Economic Outlook; Treaty Access Limitations; Business Tax Incentives; Transfer Pricing & the Profit Split Method; The Post-Election Landscape for SMEs with Global Interests
Speakers: Jon Wingent (Close Brothers); Roy Saunders (IFS Consultants); Bernhard Gilbey (Squire Patton Boggs); Dr Emmanuel Llinares and Amanda Pletz (NERA Economic Consulting); Philip Baker QC (Field Court Tax Chambers).
This document discusses marketing trends in Indonesia for 2018. It outlines the rise of the leisure economy as the top economic trend, driven by 5 factors. First, consumption has become integrated into people's lifestyles. Second, consumption is shifting from goods to experiences. Third, people travel more to relieve stress. Fourth, the growth of low-cost tourism options like budget airlines and hotels has increased tourism. Fifth, platforms like Traveloka have made travel planning much easier. The document also notes the growing middle class in Indonesia and how Generation Y spends more on experiences than older generations. Infrastructure development is fueling economic growth, while retail and manufacturing sectors are slowing.
Will US stronger US relative economic performance continue? Hantec Markets
With the US Government shutdown coming to an end, delayed US data will begin to filter through and after the dovish shift from the Fed it will be interesting to see if US economic outperformance continues to show and how this impacts on the dollar. We look at the key factors impacting on forex, equities and commodities this week.
US consumer data to drive forex majors this weekHantec Markets
Has the time of finally been called for US dollar outperformance? We discuss the implications of recent moves impacting on forex markets, equities and commodoties. What is the outlook for the coming days and the key factors to watch?
The document provides an overview of various financial markets and economic indicators from an investment advisory perspective. It discusses recent performance and outlook for domestic and global equities, bonds, commodities, real estate and other asset classes. Some key points are: domestic inflation slowed while wholesale prices contracted, Indian GDP growth was 7.3% for the year, concerns around a weak monsoon may impact inflation, global markets remain sensitive to developments in Europe and potential US rate hikes.
Triggers to watch out for:
1. Our Equity Outlook
2. Market Cap Valuations
3. Our SIP Recommendations
4. Our Fixed Income Outlook
5. Investment Philosophy
Have a detailed insight into a monthly equity and fixed income market outlook.
Read the full document to know more.
A Tour of Inflation . . . . . .and why the world (& the UK) is not RosyRedington
This document discusses challenges facing the global and UK economies, including high unemployment, weak wage growth, fiscal tightening, and debt sustainability issues. Inflation is expected to remain low across developed economies due to slack in labor markets and weak wage demands. The UK faces particular challenges, such as a weak industrial production recovery despite currency depreciation, mixed retail sales, and high inflation expectations according to options markets. Deleveraging of private sector and bank balance sheets will constrain credit growth for years.
- The document is a 2016 outlook report from First National Bank's wealth management division.
- It predicts another year of low stock market returns and increased volatility as the Federal Reserve raises interest rates.
- The US economy is expected to continue expanding at a moderate 2.5% pace, supported by a strong job market but facing headwinds from weak business investment and slowing growth in emerging markets like China.
- Inflation is predicted to remain moderate due to factors like the strong dollar and low commodity prices.
- The Greek debt crisis was resolved for now as Greece made a 3.5 billion euro payment to the ECB, though the deal was similar to one rejected in a referendum previously.
- An Iranian nuclear deal was reached that will positively impact oil prices and countries like India. Oil is expected to remain around $50 per barrel.
- The Chinese stock market saw a large rally fueled by margin lending, but a 20-30% correction from highs may still occur as leverage is removed from the system.
- India's parliament session begins where implementation of GST by April 2016 looks unlikely due to delays. Monsoon rainfall is expected to increase after July 23rd.
1. The document provides forecasts and indicators on Bangladesh's macroeconomic performance. Forecasts show promising growth in GDP, exports, imports and remittances. However, political turmoil last year means targets may be revised down.
2. Current indicators show inflation, exports and imports declining slightly compared to the previous year, while foreign exchange reserves have grown substantially. Remittances have also decreased as the number of foreign workers falls.
3. Overall the forecasts present a positive outlook, but some indicators like remittances and exports show weaker performance suggesting the need for new export markets and workers overseas.
Fixed Income Monthly Outlook- August 2023.pdfUpasana742370
This document provides a monthly outlook on global and domestic fixed income markets from Mirae Asset for August 2023. Key points include:
- Global central banks continued aggressive rate hikes, with the US Fed raising rates to a 22-year high of 5.25%. However, US consumption remains resilient.
- In India, monsoon rains have improved crop sowing after a weak start. However, food inflation remains a key risk.
- With moderating inflation and real rates in India, domestic long-term yields may remain range-bound in the absence of further RBI policy action. Corporate bond spreads have stabilized.
- U.S. and Asian stock futures fell on Monday due to concerns about global growth and the outcome of Greece's debt restructuring. European stocks also dropped, with banks and resource stocks declining.
- In corporate news, Apple and Dell will join a Foxconn-led consortium bidding for Toshiba's chip unit. The USITC voted to continue its investigation into Bombardier's trade practices regarding its CSeries jets. GE announced that Jeff Immelt will step down as CEO.
- Economic data expected this week include CPI, retail sales, industrial production, housing starts and the FOMC rate decision.
Did you know the U.S. Census Bureau reported that the homeownership rate reached 64.6% at the end of 2018, the highest level since the third quarter of 2014? Increasing millennial demand was one of the biggest trends influencing the housing market. We complied an overview of US economic trends for Q1 2019.
The document discusses the state of the US and global economies. It provides statistics showing that while the US unemployment rate is slowly improving, the labor force participation rate remains low due to retirements and long-term unemployment from the Great Recession. The average duration of unemployment also remains elevated. The government shutdown cost the US economy $24 billion in lost GDP growth. Continued political brinksmanship around the debt ceiling undermines global investor confidence in US institutions. Housing markets are improving but may cool as the Fed tapers quantitative easing. The Eurozone is starting to recover and global GDP growth is forecast to increase to 3.6% in 2014. However, political risks from the US government remain the top threat to both the
The document provides an overview of global and domestic economic conditions and outlooks across various sectors in a monthly investment advisory. Some key points:
- Global equity markets saw declines in September due to ongoing weakness in China and fears of rising US interest rates. Domestic Indian markets were also impacted by foreign outflows.
- The RBI cut interest rates by 50 basis points to boost the Indian economy amid signs of recovery in industrial growth and moderating inflation. This was welcomed by markets.
- Sector outlooks varied with IT, healthcare and financials expected to outperform while metals and utilities faced challenges due to global and regulatory factors. Government policy changes could boost infrastructure.
The INR has been trading in a narrow range of 75.05-76.15 over the previous month due to low economic activity and trading volumes during the lockdown. While Reliance Jio secured $11 billion in investments, GDP growth fell to 3.1% for the first quarter and may decline by 11.5% for the full year. The fate of the rupee depends on the USD and oil prices, with the USD expected to decline due to large US deficits and economic problems, while oil prices remain volatile. The RBI may allow the rupee to fall to the mid-to-low 74s before engineering a climb back to 76 as economic recovery increases trading volumes.
In this week's Invast report, we discussed The Federal Reserve and the future of money printing, then we mentioned the quality of assets for Australian banks; particularly ANZ, Commonwealth Bank of Australia, National Australian Bank and Westpac. We also covered basic information on pivot points. Lastly, we answered a client question regarding stocks with very low liquidity.
« Market Perspectives » est notre revue mensuelle des marchés. Elle présente de la façon la plus synthétique possible :
- notre analyse des principaux faits marquants et indicateurs macro susceptibles de dessiner les marchés sur le mois.
- notre vision sur les différentes classes d’actifs
Cette revue sera continument enrichie avec nos indicateurs quantitatifs.
La plupart de nos analyses sont disponibles sur www.finlightresearch.com
Our monthly publication “Market Perspectives” presents a synthetic view of all the asset classes we cover.
The report is composed of six sections covering Macro, Equities, FI & credit, FX, Commodities and Alternatives.
Each section is preceded by a summary of our views on the related asset class.
Most of our publications are available on our web site www.finlightresearch.com
Indonesia strategy 2018 - many risks,few rewardsBambang Muliyadi
The report provides an analysis and outlook for Indonesian equities in 2018, setting a target of 6,500 for the JCI index, representing 8% upside. Key points:
- EPS growth is forecast at 13.5% for 2018, allowing for a target P/E multiple that represents a moderate de-rating from current levels.
- Valuations are elevated against historical standards, limiting upside potential absent an improvement in fundamentals. Stock picking will be important to outperform given risks.
- The terms of trade outlook is flat, limiting real GDP growth potential to around 5%, while policy rate hikes could pose a risk to valuations dependent on low sovereign yields.
- Consumption
This document provides an analysis of investment opportunities and risks in Indonesia for 2018. Some key points:
- Stock picking will be important for performance as certain sectors like public works spending and mining may outperform, while private consumption remains soft.
- Populist policies ahead of regional elections in mid-2018 are expected to support sectors like retail, telecoms, and state-owned contractors.
- However, valuations overall are high, and commodity prices and China's economic slowdown pose risks to Indonesia's terms of trade and growth outlook.
- State-owned enterprises continue increasing their role in driving infrastructure investment as private sector capex remains flat, which some argue crowds out private sector opportunities.
The document provides an analysis of the Indian economy and markets in light of recent volatility driven by expectations of tapering of US Federal Reserve stimulus. It summarizes that weakening of the rupee will increase fiscal deficits and hurt growth. GDP growth is projected to slow further in the short term. Downgrades are possible for both GDP and corporate earnings forecasts. Volatility is expected to continue until the Fed's policy decision is clear.
On 4th June 2015 the IBSA held a workshop on Developing Strategies for International Business.
Presentations: Global Economic Outlook; Treaty Access Limitations; Business Tax Incentives; Transfer Pricing & the Profit Split Method; The Post-Election Landscape for SMEs with Global Interests
Speakers: Jon Wingent (Close Brothers); Roy Saunders (IFS Consultants); Bernhard Gilbey (Squire Patton Boggs); Dr Emmanuel Llinares and Amanda Pletz (NERA Economic Consulting); Philip Baker QC (Field Court Tax Chambers).
This document discusses marketing trends in Indonesia for 2018. It outlines the rise of the leisure economy as the top economic trend, driven by 5 factors. First, consumption has become integrated into people's lifestyles. Second, consumption is shifting from goods to experiences. Third, people travel more to relieve stress. Fourth, the growth of low-cost tourism options like budget airlines and hotels has increased tourism. Fifth, platforms like Traveloka have made travel planning much easier. The document also notes the growing middle class in Indonesia and how Generation Y spends more on experiences than older generations. Infrastructure development is fueling economic growth, while retail and manufacturing sectors are slowing.
Will US stronger US relative economic performance continue? Hantec Markets
With the US Government shutdown coming to an end, delayed US data will begin to filter through and after the dovish shift from the Fed it will be interesting to see if US economic outperformance continues to show and how this impacts on the dollar. We look at the key factors impacting on forex, equities and commodities this week.
US consumer data to drive forex majors this weekHantec Markets
Has the time of finally been called for US dollar outperformance? We discuss the implications of recent moves impacting on forex markets, equities and commodoties. What is the outlook for the coming days and the key factors to watch?
The document provides an overview of various financial markets and economic indicators from an investment advisory perspective. It discusses recent performance and outlook for domestic and global equities, bonds, commodities, real estate and other asset classes. Some key points are: domestic inflation slowed while wholesale prices contracted, Indian GDP growth was 7.3% for the year, concerns around a weak monsoon may impact inflation, global markets remain sensitive to developments in Europe and potential US rate hikes.
Triggers to watch out for:
1. Our Equity Outlook
2. Market Cap Valuations
3. Our SIP Recommendations
4. Our Fixed Income Outlook
5. Investment Philosophy
Have a detailed insight into a monthly equity and fixed income market outlook.
Read the full document to know more.
A Tour of Inflation . . . . . .and why the world (& the UK) is not RosyRedington
This document discusses challenges facing the global and UK economies, including high unemployment, weak wage growth, fiscal tightening, and debt sustainability issues. Inflation is expected to remain low across developed economies due to slack in labor markets and weak wage demands. The UK faces particular challenges, such as a weak industrial production recovery despite currency depreciation, mixed retail sales, and high inflation expectations according to options markets. Deleveraging of private sector and bank balance sheets will constrain credit growth for years.
- The document is a 2016 outlook report from First National Bank's wealth management division.
- It predicts another year of low stock market returns and increased volatility as the Federal Reserve raises interest rates.
- The US economy is expected to continue expanding at a moderate 2.5% pace, supported by a strong job market but facing headwinds from weak business investment and slowing growth in emerging markets like China.
- Inflation is predicted to remain moderate due to factors like the strong dollar and low commodity prices.
- The Greek debt crisis was resolved for now as Greece made a 3.5 billion euro payment to the ECB, though the deal was similar to one rejected in a referendum previously.
- An Iranian nuclear deal was reached that will positively impact oil prices and countries like India. Oil is expected to remain around $50 per barrel.
- The Chinese stock market saw a large rally fueled by margin lending, but a 20-30% correction from highs may still occur as leverage is removed from the system.
- India's parliament session begins where implementation of GST by April 2016 looks unlikely due to delays. Monsoon rainfall is expected to increase after July 23rd.
1. The document provides forecasts and indicators on Bangladesh's macroeconomic performance. Forecasts show promising growth in GDP, exports, imports and remittances. However, political turmoil last year means targets may be revised down.
2. Current indicators show inflation, exports and imports declining slightly compared to the previous year, while foreign exchange reserves have grown substantially. Remittances have also decreased as the number of foreign workers falls.
3. Overall the forecasts present a positive outlook, but some indicators like remittances and exports show weaker performance suggesting the need for new export markets and workers overseas.
Fixed Income Monthly Outlook- August 2023.pdfUpasana742370
This document provides a monthly outlook on global and domestic fixed income markets from Mirae Asset for August 2023. Key points include:
- Global central banks continued aggressive rate hikes, with the US Fed raising rates to a 22-year high of 5.25%. However, US consumption remains resilient.
- In India, monsoon rains have improved crop sowing after a weak start. However, food inflation remains a key risk.
- With moderating inflation and real rates in India, domestic long-term yields may remain range-bound in the absence of further RBI policy action. Corporate bond spreads have stabilized.
- U.S. and Asian stock futures fell on Monday due to concerns about global growth and the outcome of Greece's debt restructuring. European stocks also dropped, with banks and resource stocks declining.
- In corporate news, Apple and Dell will join a Foxconn-led consortium bidding for Toshiba's chip unit. The USITC voted to continue its investigation into Bombardier's trade practices regarding its CSeries jets. GE announced that Jeff Immelt will step down as CEO.
- Economic data expected this week include CPI, retail sales, industrial production, housing starts and the FOMC rate decision.
Did you know the U.S. Census Bureau reported that the homeownership rate reached 64.6% at the end of 2018, the highest level since the third quarter of 2014? Increasing millennial demand was one of the biggest trends influencing the housing market. We complied an overview of US economic trends for Q1 2019.
The document discusses the state of the US and global economies. It provides statistics showing that while the US unemployment rate is slowly improving, the labor force participation rate remains low due to retirements and long-term unemployment from the Great Recession. The average duration of unemployment also remains elevated. The government shutdown cost the US economy $24 billion in lost GDP growth. Continued political brinksmanship around the debt ceiling undermines global investor confidence in US institutions. Housing markets are improving but may cool as the Fed tapers quantitative easing. The Eurozone is starting to recover and global GDP growth is forecast to increase to 3.6% in 2014. However, political risks from the US government remain the top threat to both the
The document provides an overview of global and domestic economic conditions and outlooks across various sectors in a monthly investment advisory. Some key points:
- Global equity markets saw declines in September due to ongoing weakness in China and fears of rising US interest rates. Domestic Indian markets were also impacted by foreign outflows.
- The RBI cut interest rates by 50 basis points to boost the Indian economy amid signs of recovery in industrial growth and moderating inflation. This was welcomed by markets.
- Sector outlooks varied with IT, healthcare and financials expected to outperform while metals and utilities faced challenges due to global and regulatory factors. Government policy changes could boost infrastructure.
- Globally, markets ended in positive terrain on renewed hopes of positive outcome from high level US-China trade talks scheduled this month.
- Indian Markets cheered the announcement of substantial cuts in the corporate tax rate.
- Sectors which may benefit from lower corporate taxes – Consumer, Energy, Finance, etc. ended on positive note
- Sectors like Healthcare, IT, etc. are likely to benefit relatively less as they have a lower effective tax rate due to export / investment related exemptions
Have a detailed insight into a monthly equity and fixed income market outlook.
Read the full document to know more.
Triggers to watch our for:
1. Global & Domestic Macro Scenario
2. Equity Valuations Update
3. Decoding Union Budget 2019-20
4. Why ICICI Prudential Accrual Funds
Have a detailed insight into a monthly equity and fixed income market outlook.
Read the full document to know more.
Ima India Asia Forecast 2009 Q1 (Outlooks & India Only)guest8370a
This document provides an overview and forecasts for the global and US economies from 2009-2015. It predicts a weak global economy over the next few years as advanced economies contract and emerging markets lead a gradual recovery from 2010 onward. The US will experience a significant decline in consumer spending and fixed investment that will last 3-4 years as households reduce debt. Global manufacturing output will decline sharply in 2009 due to falling demand. Asia's share of global manufacturing is expected to continue growing through this period of restructuring. Currency markets are predicted to be volatile in 2009 with a gradual strengthening of the US dollar and euro over the longer term.
Recent Developments in Global Financial Markets: Impact on TurkeyEren Ocakverdi
A concise background regarding the recent financial and regulatory developments in Europe and Turkey were provided from a practitioner’s point of view.
- US and European stock futures pointed lower, while Asian markets also fell, as concerns about global growth weighed on investor sentiment.
- In Europe, stocks dropped led by declines in banks and resource stocks, as Eurozone GDP contracted 0.3% in Q4 according to a report.
- In Asia, stocks fell sharply led by miners, following declines in global markets on growth worries. The Hang Seng shed 2.2% and Shanghai fell 1.4%.
- Aecon Group reported a 143% rise in quarterly earnings but revenue missed estimates, while its backlog was $2.39 billion.
Ukraine Monthly Economic Review, July 2017 DIXI Group
Highlights
On 13 July, the Ukrainian Parliament approved a draft of the pension reform in the first reading. Thus, Ukraine moved one step closer to the next IMF tranche, and in our base case scenario the fourth review may be accomplished and the fifth tranche be released this fall.
After the decline in industrial output earlier this year, recent development shows a return to growth. Retail sales dynamics remain strong. Nevertheless, the National Bank slightly cut its growth estimate for this year on the weak H1 and a weaker harvest estimate. We keep our conservative growth estimate of 1.5% yoy for the time being.
Inflation surprised to the upside to 15.6% on higher food prices in June. We now see growing risk that inflation may leave targeted for this year range (8% yoy +/-2 pp) from the upper bound, i.e. resulting in low double-digit inflation at year-end. So far, we keep our 2017 forecast at 9.5% yoy (eop).
UAH strengthened vis-a-vis the dollar in July, falling below the level of USD/UAH 26 and allowing the NBU to increase FX reserves to almost USD 18 bn. With inflation risks elevated, the NBU stopped cutting its key rate and kept it stable at 12.5% in July and August. However, some additional restrictions on the FX market were removed or may be removed soon.
Triggers to watch out for:
1. Breaking down GDP Numbers
2. Equity Valuations Update
3. Why ICICI Prudential Accrual Funds
4. Investment Philosophy
Have a detailed insight into a monthly equity and fixed income market outlook.
Read the full document to know more.
- US stock futures pointed higher ahead of the open as technology stocks attempt to rebound from recent declines.
- Most Asian markets closed cautiously higher after the Bank of Japan kept policy unchanged, while European markets were up as well as investors focused on wider political events.
- Among company headlines, Verizon expects a $500 million charge related to its Yahoo acquisition, while GE's large pension shortfall will be a challenge for its new CEO. Facebook is also starting to finance original video content for its platform.
These are noted economist Hugh Johnson's slides from his presentation to University at Albany MBA students, alums, and guests on May 28 regarding his forecast for the rest of 2014 and 2015.
The Evolution and Impact of OTT Platforms: A Deep Dive into the Future of Ent...ABHILASH DUTTA
This presentation provides a thorough examination of Over-the-Top (OTT) platforms, focusing on their development and substantial influence on the entertainment industry, with a particular emphasis on the Indian market.We begin with an introduction to OTT platforms, defining them as streaming services that deliver content directly over the internet, bypassing traditional broadcast channels. These platforms offer a variety of content, including movies, TV shows, and original productions, allowing users to access content on-demand across multiple devices.The historical context covers the early days of streaming, starting with Netflix's inception in 1997 as a DVD rental service and its transition to streaming in 2007. The presentation also highlights India's television journey, from the launch of Doordarshan in 1959 to the introduction of Direct-to-Home (DTH) satellite television in 2000, which expanded viewing choices and set the stage for the rise of OTT platforms like Big Flix, Ditto TV, Sony LIV, Hotstar, and Netflix. The business models of OTT platforms are explored in detail. Subscription Video on Demand (SVOD) models, exemplified by Netflix and Amazon Prime Video, offer unlimited content access for a monthly fee. Transactional Video on Demand (TVOD) models, like iTunes and Sky Box Office, allow users to pay for individual pieces of content. Advertising-Based Video on Demand (AVOD) models, such as YouTube and Facebook Watch, provide free content supported by advertisements. Hybrid models combine elements of SVOD and AVOD, offering flexibility to cater to diverse audience preferences.
Content acquisition strategies are also discussed, highlighting the dual approach of purchasing broadcasting rights for existing films and TV shows and investing in original content production. This section underscores the importance of a robust content library in attracting and retaining subscribers.The presentation addresses the challenges faced by OTT platforms, including the unpredictability of content acquisition and audience preferences. It emphasizes the difficulty of balancing content investment with returns in a competitive market, the high costs associated with marketing, and the need for continuous innovation and adaptation to stay relevant.
The impact of OTT platforms on the Bollywood film industry is significant. The competition for viewers has led to a decrease in cinema ticket sales, affecting the revenue of Bollywood films that traditionally rely on theatrical releases. Additionally, OTT platforms now pay less for film rights due to the uncertain success of films in cinemas.
Looking ahead, the future of OTT in India appears promising. The market is expected to grow by 20% annually, reaching a value of ₹1200 billion by the end of the decade. The increasing availability of affordable smartphones and internet access will drive this growth, making OTT platforms a primary source of entertainment for many viewers.
Building Your Employer Brand with Social MediaLuanWise
Presented at The Global HR Summit, 6th June 2024
In this keynote, Luan Wise will provide invaluable insights to elevate your employer brand on social media platforms including LinkedIn, Facebook, Instagram, X (formerly Twitter) and TikTok. You'll learn how compelling content can authentically showcase your company culture, values, and employee experiences to support your talent acquisition and retention objectives. Additionally, you'll understand the power of employee advocacy to amplify reach and engagement – helping to position your organization as an employer of choice in today's competitive talent landscape.
Implicitly or explicitly all competing businesses employ a strategy to select a mix
of marketing resources. Formulating such competitive strategies fundamentally
involves recognizing relationships between elements of the marketing mix (e.g.,
price and product quality), as well as assessing competitive and market conditions
(i.e., industry structure in the language of economics).
Industrial Tech SW: Category Renewal and CreationChristian Dahlen
Every industrial revolution has created a new set of categories and a new set of players.
Multiple new technologies have emerged, but Samsara and C3.ai are only two companies which have gone public so far.
Manufacturing startups constitute the largest pipeline share of unicorns and IPO candidates in the SF Bay Area, and software startups dominate in Germany.
Understanding User Needs and Satisfying ThemAggregage
https://www.productmanagementtoday.com/frs/26903918/understanding-user-needs-and-satisfying-them
We know we want to create products which our customers find to be valuable. Whether we label it as customer-centric or product-led depends on how long we've been doing product management. There are three challenges we face when doing this. The obvious challenge is figuring out what our users need; the non-obvious challenges are in creating a shared understanding of those needs and in sensing if what we're doing is meeting those needs.
In this webinar, we won't focus on the research methods for discovering user-needs. We will focus on synthesis of the needs we discover, communication and alignment tools, and how we operationalize addressing those needs.
Industry expert Scott Sehlhorst will:
• Introduce a taxonomy for user goals with real world examples
• Present the Onion Diagram, a tool for contextualizing task-level goals
• Illustrate how customer journey maps capture activity-level and task-level goals
• Demonstrate the best approach to selection and prioritization of user-goals to address
• Highlight the crucial benchmarks, observable changes, in ensuring fulfillment of customer needs
buy old yahoo accounts buy yahoo accountsSusan Laney
As a business owner, I understand the importance of having a strong online presence and leveraging various digital platforms to reach and engage with your target audience. One often overlooked yet highly valuable asset in this regard is the humble Yahoo account. While many may perceive Yahoo as a relic of the past, the truth is that these accounts still hold immense potential for businesses of all sizes.
The 10 Most Influential Leaders Guiding Corporate Evolution, 2024.pdfthesiliconleaders
In the recent edition, The 10 Most Influential Leaders Guiding Corporate Evolution, 2024, The Silicon Leaders magazine gladly features Dejan Štancer, President of the Global Chamber of Business Leaders (GCBL), along with other leaders.
Part 2 Deep Dive: Navigating the 2024 Slowdownjeffkluth1
Introduction
The global retail industry has weathered numerous storms, with the financial crisis of 2008 serving as a poignant reminder of the sector's resilience and adaptability. However, as we navigate the complex landscape of 2024, retailers face a unique set of challenges that demand innovative strategies and a fundamental shift in mindset. This white paper contrasts the impact of the 2008 recession on the retail sector with the current headwinds retailers are grappling with, while offering a comprehensive roadmap for success in this new paradigm.
Unveiling the Dynamic Personalities, Key Dates, and Horoscope Insights: Gemin...my Pandit
Explore the fascinating world of the Gemini Zodiac Sign. Discover the unique personality traits, key dates, and horoscope insights of Gemini individuals. Learn how their sociable, communicative nature and boundless curiosity make them the dynamic explorers of the zodiac. Dive into the duality of the Gemini sign and understand their intellectual and adventurous spirit.
Taurus Zodiac Sign: Unveiling the Traits, Dates, and Horoscope Insights of th...my Pandit
Dive into the steadfast world of the Taurus Zodiac Sign. Discover the grounded, stable, and logical nature of Taurus individuals, and explore their key personality traits, important dates, and horoscope insights. Learn how the determination and patience of the Taurus sign make them the rock-steady achievers and anchors of the zodiac.
Recruiting in the Digital Age: A Social Media MasterclassLuanWise
In this masterclass, presented at the Global HR Summit on 5th June 2024, Luan Wise explored the essential features of social media platforms that support talent acquisition, including LinkedIn, Facebook, Instagram, X (formerly Twitter) and TikTok.
At Techbox Square, in Singapore, we're not just creative web designers and developers, we're the driving force behind your brand identity. Contact us today.
Event Report - SAP Sapphire 2024 Orlando - lots of innovation and old challengesHolger Mueller
Holger Mueller of Constellation Research shares his key takeaways from SAP's Sapphire confernece, held in Orlando, June 3rd till 5th 2024, in the Orange Convention Center.
Event Report - SAP Sapphire 2024 Orlando - lots of innovation and old challenges
Annual fixed-income-outlook-2019
1. Aditya Birla Sun Life AMC Ltd. 1
Annual Fixed Income Outlook: 2019
2. Aditya Birla Sun Life AMC Ltd. 2
Index
Section 1: Macro outlook
Global Macro
India Macro
Spreads and asset allocation
Section 2: Credit outlook
Legal
Real Estate
NBFCs and HFC
Road and Infrastructure
4. World economic growth expected to slow, inflation low
Global GDP growth moderating from high level World CPI is expected to decline
Aditya Birla Sun Life AMC Ltd.
Source: IMF, OECD, Bloomberg, ABSLAMC Research
Global growth has entered a moderation phase after uptick that began from 2016. Bloomberg consensus and OECD forecast for world growth in
2019 is 3.5% compared to 3.7% in 2017 and 2018.
The slowdown expectation of world economy is on account of growth peaking in major advanced economies, negative effects of the trade war as
well as a weaker outlook for some key emerging market and developing economies arising from country-specific factors, less support from Central
Banks, tighter financial conditions, and geopolitical tensions. US-China trade talk is the key variable.
3.5
3.5
3.6
3.5
3.3
3.7 3.7
3.5
3.0
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
2012
2013
2014
2015
2016
2017
2018
2019E
World GDP growth (%y-y)
4
3.1
3.3
3.8
3.2
2.82.8
3.2
3.7
4.1
5.1
0
1
2
3
4
5
6
Dec-20
Dec-19
Dec-18
Dec-17
Dec-16
Dec-15
Dec-14
Dec-13
Dec-12
Dec-11
WorldCPI (% y-y)
5. Declining momentum amidst tightening financial condition
Global PMIs have been moderatingGlobal economy slowing amidst tightening financial conditions
Aditya Birla Sun Life AMC Ltd.
Source: Bloomberg, ABSLAMC Research
-1.5
-1
-0.5
0
0.5
1
1.5
2
2.5
0
1
2
3
4
5
6
7
Nov-10
Mar-11
Jul-11
Nov-11
Mar-12
Jul-12
Nov-12
Mar-13
Jul-13
Nov-13
Mar-14
Jul-14
Nov-14
Mar-15
Jul-15
Nov-15
Mar-16
Jul-16
Nov-16
Mar-17
Jul-17
Nov-17
Mar-18
Jul-18
Nov-18
GlobalCurrent Activity Indicator GlobalFinancial Conditions Index, RHS
48
49
50
51
52
53
54
55
56
Dec-15
Feb-16
Apr-16
Jun-16
Aug-16
Oct-16
Dec-16
Feb-17
Apr-17
Jun-17
Aug-17
Oct-17
Dec-17
Feb-18
Apr-18
Jun-18
Aug-18
Oct-18
Global PMI
Global current activity indicators have been declining amidst tightening financial conditions
Declining PMIs also pointing to declining momentum
5
6. EM-DM growth differential to rise on DM slowing
World trade moderatingEM-DM growth differential to rise on lower DM growth
Aditya Birla Sun Life AMC Ltd.
Source: Bloomberg, ABSLAMC Research
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
Jan-11
May-11
Sep-11
Jan-12
May-12
Sep-12
Jan-13
May-13
Sep-13
Jan-14
May-14
Sep-14
Jan-15
May-15
Sep-15
Jan-16
May-16
Sep-16
Jan-17
May-17
Sep-17
Jan-18
May-18
Sep-18
World Trade, y-y, 3mma
DM growth is set to decline with momentum peaking in US and EU. EM growth is expected to be stable but much depend on the
efficacy of policy stimulus in China and the US-China trade negotiations
World trade has so far been decent but faces uncertainty in 2019
6
7. Commodity prices under pressure
Industrial commodities inching downwards Global food prices have remained low
Aditya Birla Sun Life AMC Ltd.
Source: Bloomberg, ABSLAMC Research
70
80
90
100
110
120
130
140
150
Oct-15
Dec-15
Feb-16
Apr-16
Jun-16
Aug-16
Oct-16
Dec-16
Feb-17
Apr-17
Jun-17
Aug-17
Oct-17
Dec-17
Feb-18
Apr-18
Jun-18
Aug-18
Oct-18
Bloomberg industrial commodities index
50
70
90
110
130
150
170
190
210
230
250
Sep-01
Sep-02
Sep-03
Sep-04
Sep-05
Sep-06
Sep-07
Sep-08
Sep-09
Sep-10
Sep-11
Sep-12
Sep-13
Sep-14
Sep-15
Sep-16
Sep-17
Sep-18
FAO food price index
We expect commodities to stay weak through the year driven by weak global and in particular Chinese growth
We expect ferrous metals to see more weakness than non-ferrous metals. But broadly the complex remain weak
Low world food prices shall exert a benign influence on Indian food inflation as well
7
8. QE becomes QT…
Central Banks’ Balance Sheet Cash giving positive real returns
Aditya Birla Sun Life AMC Ltd.
Source: Bloomberg, ABSLAMC Research
With Fed turning to balancing sheet reduction, and QE by ECB coming to end, BoJ is the only major central that will be increasing
balance sheet in 2019. Overall QE by three major central banks would turn to QT in 2019, marking a watershed event for the global
economy and markets addicted to Central Bank support
However, we note that unlike rate normalization, the impact of balance sheet reduction is less clear on global markets and economy
Given the US Fed’s withdrawal of monetary stimulus, cash has once again started giving positive returns which shall have a profound
impact on global risk assets.
0
1000
2000
3000
4000
5000
6000
Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18
Central banks'balance sheetn(US$ bn)
BoJ ECB Fed BoE PBoC
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
Jan-06
Jul-06
Jan-07
Jul-07
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
Jan-16
Jul-16
Jan-17
Jul-17
Jan-18
Jul-18
US 3 month T Bill- PCE inflation
8
9. … volatility to stay elevated
EM currency VolsUS financial conditions have tightened and volatility staying higher
Aditya Birla Sun Life AMC Ltd.
Source: Bloomberg, ABSLAMC Research
-3
-2.5
-2
-1.5
-1
-0.5
0
0.5
1
1.5
0
10
20
30
40
50
60
Feb-10
Jun-10
Oct-10
Feb-11
Jun-11
Oct-11
Feb-12
Jun-12
Oct-12
Feb-13
Jun-13
Oct-13
Feb-14
Jun-14
Oct-14
Feb-15
Jun-15
Oct-15
Feb-16
Jun-16
Oct-16
Feb-17
Jun-17
Oct-17
Feb-18
Jun-18
Oct-18
VIX INDEX US FCI, RHS
With weakening of Central Banks’ policy put and global economy showing signs of weakness, market volatility to stay elevated in 2019
5
7
9
11
13
15
17
Nov-11
Feb-12
May-12
Aug-12
Nov-12
Feb-13
May-13
Aug-13
Nov-13
Feb-14
May-14
Aug-14
Nov-14
Feb-15
May-15
Aug-15
Nov-15
Feb-16
May-16
Aug-16
Nov-16
Feb-17
May-17
Aug-17
Nov-17
Feb-18
May-18
Aug-18
Nov-18
EM currency vols
9
10. Fed rate hike expectations come down
US 10 year rates decline sharplyUS rate hike expectations have come-off sharply
Aditya Birla Sun Life AMC Ltd.
Source: Bloomberg, ABSLAMC Research
Given the sell-off in global markets, contained inflation and rising indicators of growth slowdown, US rates and Fed rate hike
expectations has come down
We believe that tight labour market keep possibility of at least one Fed rate hikes alive in 2019 but much would depend on the health
of financial markets and outcome of US-China trade negotiations
1.7
1.9
2.1
2.3
2.5
2.7
2.9
Jan-18
Feb-18
Mar-18
Apr-18
May-18
Jun-18
Jul-18
Aug-18
Sep-18
Oct-18
Nov-18
Dec-18
Jan 2020 rate expectation Jan 2021 rate expectation
1.00
1.50
2.00
2.50
3.00
3.50
Mar-14
Jun-14
Sep-14
Dec-14
Mar-15
Jun-15
Sep-15
Dec-15
Mar-16
Jun-16
Sep-16
Dec-16
Mar-17
Jun-17
Sep-17
Dec-17
Mar-18
Jun-18
Sep-18
Dec-18
US 10yr
10
11. US GDP expected to slow
US GDP growth likely to slow from 2018 peak Fiscal thrust likely to be lower in 2019
Aditya Birla Sun Life AMC Ltd.
Source: US Federal Reserve, Bloomberg, ABSLAMC Research
1.8
-1.6 -1.7
-1.9
-0.6
-0.2
0.6
0.0
1.0
0.4
-0.4
-2.5
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
US fiscalthrust (%of GDP)
1.6
2.2
1.8
2.5
2.9
1.6
2.2
2.9
2.3
1.9
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
2011
2012
2013
2014
2015
2016
2017
2018
2019E
2020E
US GDP (% y-y)
US growth is likely to moderate from 2018 levels but still remain above potential at 2.3% y-y
The decline is likely due to lower fiscal thrust, interest rate rise feeding into economy , tighter financial conditions, lower
global growth, and capacity constraints of an economy running above its potential with a late cycle fiscal stimulus.
11
12. US: Rising interest rates to gradually feed into economy
Housing buying conditions lowest in a decade Mortgage fixed rate on uptick
Aditya Birla Sun Life AMC Ltd.
Source: Bloomberg, ABSLAMC Research
3.0
3.5
4.0
4.5
5.0
5.5
6.0
6.5
7.0
Jan-07
Jul-07
Jan-08
Jul-08
Jan-09
Jul-09
Jan-10
Jul-10
Jan-11
Jul-11
Jan-12
Jul-12
Jan-13
Jul-13
Jan-14
Jul-14
Jan-15
Jul-15
Jan-16
Jul-16
Jan-17
Jul-17
Jan-18
Jul-18
30Yfixed rate mortagge rate
100
110
120
130
140
150
160
170
180
Jan-05
Aug-05
Mar-06
Oct-06
May-07
Dec-07
Jul-08
Feb-09
Sep-09
Apr-10
Nov-10
Jun-11
Jan-12
Aug-12
Mar-13
Oct-13
May-14
Dec-14
Jul-15
Feb-16
Sep-16
Apr-17
Nov-17
Jun-18
Jan-19
Housing buying conditions
Rising US rates have started to gradually feed into US economy especially in interest rate sensitive sectors
12
13. US labour market to stay tight
Job openings more than unemployed workers US unemployment rate at multi decade low
Aditya Birla Sun Life AMC Ltd.
Source: Bloomberg, ABSLAMC Research
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
Feb-01
Oct-01
Jun-02
Feb-03
Oct-03
Jun-04
Feb-05
Oct-05
Jun-06
Feb-07
Oct-07
Jun-08
Feb-09
Oct-09
Jun-10
Feb-11
Oct-11
Jun-12
Feb-13
Oct-13
Jun-14
Feb-15
Oct-15
Jun-16
Feb-17
Oct-17
Jun-18
Unemployed workers Jobs opening
0
2
4
6
8
10
12
Dec-79
Dec-81
Dec-83
Dec-85
Dec-87
Dec-89
Dec-91
Dec-93
Dec-95
Dec-97
Dec-99
Dec-01
Dec-03
Dec-05
Dec-07
Dec-09
Dec-11
Dec-13
Dec-15
Dec-17
Dec-19
US uemployment rate
US labour market has become very tight with unemployment rate at multi decade lows and most indicators of labout market conditions
showing tightness
Surveys showing that employers finding difficult to get workers
With US economic growth expected to be still above potential we expect labour market tightness to continue
13
14. US: Wages rising, but inflation still contained
Aditya Birla Sun Life AMC Ltd.
Source: Bloomberg, ABSLAMC Research
1.0
1.2
1.4
1.6
1.8
2.0
2.2
2.4
2.6
2.8
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Mar-06
Oct-06
May-07
Dec-07
Jul-08
Feb-09
Sep-09
Apr-10
Nov-10
Jun-11
Jan-12
Aug-12
Mar-13
Oct-13
May-14
Dec-14
Jul-15
Feb-16
Sep-16
Apr-17
Nov-17
Jun-18
Jan-19
Aug-19
Employeecost index (% y-y) Quits rate 1year ahead, RHS
US wage rates are also rising and the rising quits rate suggests that employees are bullish about their growth prospects. This is also a
lead indicator of wage growth in upcoming months
Despite increasing signs of tightness in labour market and growth being above potential, US core inflation has so far remained well
contained and shall be an important factor in fed’s monetary policy as US is expect to witness even tighter labour market in 2019
US wages rising
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Oct-10
Feb-11
Jun-11
Oct-11
Feb-12
Jun-12
Oct-12
Feb-13
Jun-13
Oct-13
Feb-14
Jun-14
Oct-14
Feb-15
Jun-15
Oct-15
Feb-16
Jun-16
Oct-16
Feb-17
Jun-17
Oct-17
Feb-18
Jun-18
US PCE inflation US PCE core inflation
But US inflation still contained
14
15. US households in good shape
Household debt and debt servicing ability remains pretty comfortable
Aditya Birla Sun Life AMC Ltd.
Source: Bloomberg, ABSLAMC Research
8
9
10
11
12
13
14
80
90
100
110
120
130
140
Mar-04
Oct-04
May-05
Dec-05
Jul-06
Feb-07
Sep-07
Apr-08
Nov-08
Jun-09
Jan-10
Aug-10
Mar-11
Oct-11
May-12
Dec-12
Jul-13
Feb-14
Sep-14
Apr-15
Nov-15
Jun-16
Jan-17
Aug-17
Mar-18
US Houholde debt to disposable income (%)
US Household debt services
US household remains pretty comfortable in its debt servicing ability
Healthy wage growth, low inflation and comfortable debt servicing ability means that US consumer confidence remains close to highest
levels in about two decades
US consumer confidence close to highest in about two decades
0
20
40
60
80
100
120
140
160
Mar-00
Oct-00
May-01
Dec-01
Jul-02
Feb-03
Sep-03
Apr-04
Nov-04
Jun-05
Jan-06
Aug-06
Mar-07
Oct-07
May-08
Dec-08
Jul-09
Feb-10
Sep-10
Apr-11
Nov-11
Jun-12
Jan-13
Aug-13
Mar-14
Oct-14
May-15
Dec-15
Jul-16
Feb-17
Sep-17
Apr-18
Nov-18
US consumer confidence
Conference board University of Michigan
16. China: Managing the slowdown
Global GDP growth moderating from high level, base case is of soft landing Sharp China slowdown can be major risk for global economy
Aditya Birla Sun Life AMC Ltd.
Source: Bloomberg, ABSLAMC Research
9.5
7.9 7.8
7.3
6.9 6.7 6.9
6.6
6.2 6.1
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
2011
2012
2013
2014
2015
2016
2017
2018
2019E
2020E
China GDP (% y-y)
We expect China to continue decelerating. We expect the ongoing policy easing starts to give floor to its growth by middle of
2019.
However, we do not expect a major stimulus like in earlier episodes, since improving the quality of growth and steering it away
from excesses remains one of the policy goals.
17. China growth has been steadily declining
Steady decline in IP and FAI China current account moving to deficit territory, making China net
importer of global capital
Aditya Birla Sun Life AMC Ltd.
Source: Bloomberg, ABSLAMC Research
0
5
10
15
20
25
30
0
2
4
6
8
10
12
14
16
Jul-10
Nov-10
Mar-11
Jul-11
Nov-11
Mar-12
Jul-12
Nov-12
Mar-13
Jul-13
Nov-13
Mar-14
Jul-14
Nov-14
Mar-15
Jul-15
Nov-15
Mar-16
Jul-16
Nov-16
Mar-17
Jul-17
Nov-17
Mar-18
Jul-18
Nov-18
China: Industrial production (% y-y) China: fixed asset investment (% y-y), RHS
-300
-250
-200
-150
-100
-50
0
50
100
150
200
250
Sep-18
Sep-17
Sep-16
Sep-15
Sep-14
Sep-13
Sep-12
Sep-11
Sep-10
Sep-09
China BoP (US$ bn)
Current account CapitalAccount
Financial account ex-reserves Errors and ommissions
Change in reserve assets
Most high frequency Chinese data like industrial production, fixed asset investment and retail sales are showing a declining trend
We are also witnessing decline in China’s capital account which shall probably be in deficit in 2019, making China a net importer of
global capital
18. China: Credit growth declining, but overall credit remains high
Credit growth steadily declining Debt level still remain very high, credit gap positive
Aditya Birla Sun Life AMC Ltd.
Source: Bloomberg, BIS, ABSLAMC Research
0.0
10.0
20.0
30.0
40.0
50.0
60.0
May-07
Oct-07
Mar-08
Aug-08
Jan-09
Jun-09
Nov-09
Apr-10
Sep-10
Feb-11
Jul-11
Dec-11
May-12
Oct-12
Mar-13
Aug-13
Jan-14
Jun-14
Nov-14
Apr-15
Sep-15
Feb-16
Jul-16
Dec-16
May-17
Oct-17
Mar-18
Aug-18
China all system financial loans (% y-y) China M2 (% y-y)
While Chinese credit growth has slowed as authorities embark on reducing the high credit intensity, the debt level still remain very high
Credit gap which is a good indicator for crisis still remains high
High debt is a key reason why Chinese policy stimulus is expected to be de minimis
-15
-10
-5
0
5
10
15
20
25
100
120
140
160
180
200
220
240
Dec-02
Aug-03
Apr-04
Dec-04
Aug-05
Apr-06
Dec-06
Aug-07
Apr-08
Dec-08
Aug-09
Apr-10
Dec-10
Aug-11
Apr-12
Dec-12
Aug-13
Apr-14
Dec-14
Aug-15
Apr-16
Dec-16
Aug-17
Apr-18
Totalsocial financing (% of GDP) Credit-gap, RHS
19. China: Moderate stimulus is likely
There is room for fiscal easing More monetary stimulus is likely in 2019
Aditya Birla Sun Life AMC Ltd.
Source: Morgan Stanley Research, Bloomberg, ABSLAMC Research
1
2
3
4
5
6
7
12
14
16
18
20
22
24
Oct-09
Feb-10
Jun-10
Oct-10
Feb-11
Jun-11
Oct-11
Feb-12
Jun-12
Oct-12
Feb-13
Jun-13
Oct-13
Feb-14
Jun-14
Oct-14
Feb-15
Jun-15
Oct-15
Feb-16
Jun-16
Oct-16
Feb-17
Jun-17
Oct-17
Feb-18
Jun-18
Oct-18
RRR for major banks 3 month SHIBOR
Given the high debt levels and policymakers’ goal to make growth more sustainable, we expect policymakers to be comfortable with
gradual growth slowdown and provide a moderate stimulus which shall provide a floor to growth
We expect a combination of both fiscal and monetary stimulus in 2019
20. Europe: GDP expected to move lower
European GDP likely to moderate but remain above potential Fiscal stance is likely to be expansionary
Aditya Birla Sun Life AMC Ltd.
Source: OECD, Bloomberg forecast, ABSLAMC
Euro area economic growth is expected to moderate to ~1.6% in 2019 and 1.5% in 2020 (Bloomberg Consensus forecast)
Accommodative monetary policy, some fiscal easing and lower crude price shall support domestic demand, in particular private
consumption
2.1
0.9 0.7
2.2
1.7
3.2 3.1
0.4
-4.5
2.1
1.6
-0.9 -0.2
1.4
2.1 1.9
2.5
1.9 1.6 1.5
-3
-2
-1
0
1
2
3
4
Dec-01
Dec-02
Dec-03
Dec-04
Dec-05
Dec-06
Dec-07
Dec-08
Dec-09
Dec-10
Dec-11
Dec-12
Dec-13
Dec-14
Dec-15
Dec-16
Dec-17
Dec-18
Dec-19
Dec-20
Euro are GDP (% y-y)
21. Europe: Moderate stimulus is likely
European unemployment rate moving below potential More monetary stimulus is likely in 2019
Aditya Birla Sun Life AMC Ltd.
Source: OECD estimates, ABSLAMC Research
European labour market is improving and is expected to improve further in 2019 as economy continues to grow above potential
Inflation is projected to rise gradually, as stronger wage growth and dissipating slack translate into sustained increases in core inflation.
22. Summing up
Aditya Birla Sun Life AMC Ltd.
Global growth is showing signs of moderation amidst tightening financial condition and is expected to slow to 3.5% in 2019 compared
to 3.7% in 2017 and 2018.
The slowdown expectation of world economy is on account of growth peaking in major advanced economies, negative effects of the
trade war as well as a weaker outlook for some key emerging market and developing economies arising from country-specific factors,
less support from Central Banks, tighter financial conditions, and geopolitical tensions. US-China trade talk is the key variable.
Central banks proceed ahead with withdrawal of extraordinary monetary accommodation, quantitative easing turns to quantitative
tightening in 2019 even as Fed may turn dovish compared to 2018
Slowing economy and less support from Central banks keep volatility elevated in financial markets and financial conditions tight
Commodities stay under pressure on account of slowing global economy. Stronger than expected stimulus in China or quick resolution
of US-China trade negotiation are upside risk factor
US growth is likely to slow to 2.3%, but still remain pretty decent in 1H; risk of a sharper slowdown in 2H. Tight labour market keep
possibility of at least one Fed rate hikes alive in 2019 but much would depend on the health of financial markets and outcome of US-
China trade negotiations
China to continue decelerating to 6.3%, but the ongoing policy easing starts to give floor to its growth by middle of 2019
Euro area economic growth is expected to moderate to ~1.6% in 2019
EM-DM growth differential and valuation may result in relative EM outperformance. US-China trade discussion, sharp deterioration in
global liquidity and sharper than expected slowdown in China are key risk to EM outperformance
24. Growth momentum to inch-up, election and global growth key risk
GDP growth moderated in 3Q Nominal agricultural GDP witnessing sharp decline owing to low food prices
Aditya Birla Sun Life AMC Ltd.
Source: CEIC, ABSLAMC Research
-3.0
2.0
7.0
12.0
17.0
22.0
Sep-12
Dec-12
Mar-13
Jun-13
Sep-13
Dec-13
Mar-14
Jun-14
Sep-14
Dec-14
Mar-15
Jun-15
Sep-15
Dec-15
Mar-16
Jun-16
Sep-16
Dec-16
Mar-17
Jun-17
Sep-17
Dec-17
Mar-18
Jun-18
Sep-18
Nominalquarterlygrowth (%y-y)
GVA (% y-y) Agriculture, nominal (% y-y)
We expect marginal uptick in growth towards 7.2% to 7.5% level in FY20 (7.2% in FY19), in our base case assumption of stable
government post elections and only a moderate global growth slowdown
High capacity utilization should drive a nascent investment recovery. Moreover, lower crude price, peaking banking sector NPAs,
possibility of a rural stimulus and election related spending are other tailwinds.
NBFC slowdown, weak global growth and impact of political uncertainty on elections are likely to be key drags to growth
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
Sep-12
Dec-12
Mar-13
Jun-13
Sep-13
Dec-13
Mar-14
Jun-14
Sep-14
Dec-14
Mar-15
Jun-15
Sep-15
Dec-15
Mar-16
Jun-16
Sep-16
Dec-16
Mar-17
Jun-17
Sep-17
Dec-17
Mar-18
Jun-18
Sep-18
QuarterlyGDP (% y-y)
GDP (% y-y) PFCE GFCF, RHS
25. Fiscal targets drag on growth
Government expenditure has been a key component of GDP growth in
recent quarter
Aditya Birla Sun Life AMC Ltd.
Source: CEIC, ABSLAMC Research
24.3
55.3
68.7
86.5
94.7 95.3
103.9
114.8
0
20
40
60
80
100
120
April
May
June
July
Aug
Sep
Oct
Nov
Dec
Jan
Feb
Mar
Fiscal deficit (% of budgeted/annual)
FY19
FY15-18
Fiscal deficit running ahead of budgeted targets
5.6
7.3
6.36.35.9
3.7
4.4
5.6
6.6
7.2
8.7
6.6
7.27.37.8
3.7
7.57.8
6.86.3
7.6
4.55.0
6.8
6.1
1.5
0.9
1.5
0.7
0.5
1.9
1.7
1.2
1.0
0.9
0.5
0.7
1.00.4
-0.6
2.3
1.20.3
-1.5
0.2
-0.3
2.0
-0.7
-1.4
1.4
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
GDP ex GFCE GFCE GDP (% y-y)
We note that fiscal deficit is running ahead of budgetary targets and government has repeatedly reiterated its commitment to stock
to fiscal discipline
Given that government final consumption expenditure has been an important component of recent GDP numbers, possible
expenditure containment towards fiscal discipline would have a negative impact on growth in 4QFY19
26. High capacity utilization to sustain pick-up in investments
Capacity utilization at highest since 2012 Healthy growth in capital goods, infra and construction index in IIP
Aditya Birla Sun Life AMC Ltd.
Source: CEIC, ABSLAMC Research
70
72
74
76
78
80
82
84
Sep-08
Feb-09
Jul-09
Dec-09
May-10
Oct-10
Mar-11
Aug-11
Jan-12
Jun-12
Nov-12
Apr-13
Sep-13
Feb-14
Jul-14
Dec-14
May-15
Oct-15
Mar-16
Aug-16
Jan-17
Jun-17
Nov-17
Apr-18
Sep-18
India Capacity Utillisation India Capacity Utilisation, sa
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
Jun-13
Sep-13
Dec-13
Mar-14
Jun-14
Sep-14
Dec-14
Mar-15
Jun-15
Sep-15
Dec-15
Mar-16
Jun-16
Sep-16
Dec-16
Mar-17
Jun-17
Sep-17
Dec-17
Mar-18
Jun-18
Sep-18
IIP Capitalgoods Infra and construction
Given low investments in last few year, capacity utilization has risen to highest level since 2012
While public capex into infrastructure continue to drive investments, we are witnessing early signs of revival in private capex as well
If global sentiments doesn’t worsen significantly and we have a stable government in post General election, then we are set for a
further pick-up in investment cycle in 2019
27. Bank credit growth to stay healthy
Credit growth picking up Credit growth by sector
Aditya Birla Sun Life AMC Ltd.
Source: CEIC, ABSLAMC Research
9.14
15.11
0
5
10
15
20
25
30
35
40
May-05
Dec-05
Jul-06
Feb-07
Sep-07
Apr-08
Nov-08
Jun-09
Jan-10
Aug-10
Mar-11
Oct-11
May-12
Dec-12
Jul-13
Feb-14
Sep-14
Apr-15
Nov-15
Jun-16
Jan-17
Aug-17
Mar-18
Oct-18
Deposit growth (% y-y) Non-food credit(% y-y)
Bank credit growth has risen to a healthy rate of above 15% and we expect it to continue given the improvement in bank balance
sheet, lower rates and slowdown in NBFC credit disbursals
Sectoral breakdown of bank credit show the positive trend of rise in industrial credit growth from negative territory. Moreover
NBFCs continue to be an important segment driving bank credit growth
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18
Credit by sector (% y-y)
Agri Industry Services ex-NBFCS Personal NBFCs Overall credit growth
28. NBFC would be a drag on overall system credit growth
Overall system credit growth Share of NBFCs have risen
Aditya Birla Sun Life AMC Ltd.
Source: RBI, CEIC, ABSLAMC Research
44
55
34
45 39
19
7
20
24
27
10 8
14
7 8
17 18 19
17
10
7 9 6 9
-4
4 4 7
-1
20
-10
10
30
50
70
90
110
FY15 FY16 FY17 FY18 1HFY19
Flow of financial resources to commercial sectors (%)
Banks NBFC and HFC Pri. Placement Foreign CPs Others
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
Jun-12
Sep-12
Dec-12
Mar-13
Jun-13
Sep-13
Dec-13
Mar-14
Jun-14
Sep-14
Dec-14
Mar-15
Jun-15
Sep-15
Dec-15
Mar-16
Jun-16
Sep-16
Dec-16
Mar-17
Jun-17
Sep-17
Dec-17
Mar-18
Jun-18
Sep-18
Overall system credit growth (% y-y)
29. Inflation declines towards lower end of RBI target range
Headline inflation trending down, food inflation very benign Core remains elevated, but non-core very low
Aditya Birla Sun Life AMC Ltd.
Source: CEIC, ABSLAMC Research
Headline inflation consistently undershot RBI and consensus forecast through the year and trended towards lower end of RBI target
range story in 2018. Divergence between core and non-core inflation remained quite high
We expect the sharp decline in food inflation to at least partially normalize in 2019 and convergence in food and non-food
inflation in 2019 towards ~4.5% range. Crude price and fiscal stance in an election year will be key risk factors in 2019.
-7.0
-2.0
3.0
8.0
13.0
18.0
Sep-12
Dec-12
Mar-13
Jun-13
Sep-13
Dec-13
Mar-14
Jun-14
Sep-14
Dec-14
Mar-15
Jun-15
Sep-15
Dec-15
Mar-16
Jun-16
Sep-16
Dec-16
Mar-17
Jun-17
Sep-17
Dec-17
Mar-18
Jun-18
Sep-18
Headline inflation Food
-1.00
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
Apr-15
Jun-15
Aug-15
Oct-15
Dec-15
Feb-16
Apr-16
Jun-16
Aug-16
Oct-16
Dec-16
Feb-17
Apr-17
Jun-17
Aug-17
Oct-17
Dec-17
Feb-18
Apr-18
Jun-18
Aug-18
Oct-18
Non-core (Food, fuel and light, diesel, petrol) Core (Ex food, fuel, petrol, diesel)
30. Low inflation driven almost entirely by food disinflation
Lop-sided inflation breakdown
Disinflation entirely due to food
Aditya Birla Sun Life AMC Ltd.
Source: CEIC, ABSLAMC Research
-0.50
0.50
1.50
2.50
3.50
4.50
5.50
6.50
Mar-15
May-15
Jul-15
Sep-15
Nov-15
Jan-16
Mar-16
May-16
Jul-16
Sep-16
Nov-16
Jan-17
Mar-17
May-17
Jul-17
Sep-17
Nov-17
Jan-18
Mar-18
May-18
Jul-18
Sep-18
Inflationbreakdown
Core (Ex food, fuel, petrol, diesel) Food
Fuel and light (inc diesel and petrol) Headline inflation
-0.8
0.2 0.2
0.6
0.5
1.6
2.3
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
Foods and
beverages
(45.9%)
Pan tobacco and
intox (2.4%)
Clothing and
footwear (6.5%)
Housing (10.1%) Fuel and light
(6.8%)
Miscellaenous
(28.3%)
Overall CPI
(100%)
Headline inflationcontributionNov
Inflation story in 2018 is lop-sided, with very low food inflation driving down overall headline inflation, even as core inflation stayed
elevated
31. Government food management has been important factor
Food vs Core inflation: Government food management policy has
likely been an important factor in low food inflation MSP increases have been relatively restrained in current dispensation
Aditya Birla Sun Life AMC Ltd.
Source: CEIC, ABSLAMC Research
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
25.0
Jan-98
Jan-99
Jan-00
Jan-01
Jan-02
Jan-03
Jan-04
Jan-05
Jan-06
Jan-07
Jan-08
Jan-09
Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Jan-16
Jan-17
Jan-18
Food Core Govt change
6.2
10.9
5.2
9.59.5
0
5
10
15
20
25
2019*
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
MSP, % y-y(wheat, rice, pulses)
32. Food availability has improved significantly
Food availability has improved significantly Broadbased food deflation
Aditya Birla Sun Life AMC Ltd.
Source: CEIC, ABSLAMC Research
1.5
2.1
3.8
4.0
3.4
5.0
5.9
5.5
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
Population Foodgrain Horticulture Fruits Vegetables Milk Egg Pulses
10 year CAGR
Very low food inflation has been quite broad-based and driven by strong supply response across food products
Supply response has been especially strong in horticulture and protein items which have witnessed the sharpest decline in inflation
-4.0
1.0
6.0
11.0
16.0
Food inflationbreakdown
Vegetables Pulses
Cereals Egg, milk, fish, oil, fats
Others Food and bev
33. Horticulture has seen remarkable jump in output
Steady increase in per capita production
Aditya Birla Sun Life AMC Ltd.
Source: CEIC, ABSLAMC Research
140 137
143
153
165
171
186 186
191
203
211
218
222 222 223
231 233
100
120
140
160
180
200
220
240
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
Per capita, horticulture Per capita, foodgrain
146
306
213
284
120
140
160
180
200
220
240
260
280
300
320
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
2017-18
Production(MMT)
Horticulture Foodgrains
Horticulture output rises above foodgrain production
34. However, there is demand side story as well
Number of undernourished in India remains high Lower rural wage growth maybe indicating low rural demand
Aditya Birla Sun Life AMC Ltd.
Source: FAO, CEIC, ABSLAMC Research
2.00
3.00
4.00
5.00
6.00
7.00
8.00
May-15
Jul-15
Sep-15
Nov-15
Jan-16
Mar-16
May-16
Jul-16
Sep-16
Nov-16
Jan-17
Mar-17
May-17
Jul-17
Sep-17
Nov-17
Jan-18
Mar-18
May-18
Jul-18
Rural wage growth rate
Agri (% y-y) Non-agri (% y-y)
14.5
109
52
11.7
118
71
10.7
120
80
0
20
40
60
80
100
120
140
Under-nourishment (%) Energy supply Protein supply
India Asia World
While strong supply response has been a key factor for low food inflation, we note that under-nourishment level in India is still high
and weak demand and low rural wage growth could also be one of the reason for low food inflation.
35. Lower crude to drive improvement in current account
BoP to return to surplus
Aditya Birla Sun Life AMC Ltd.
Source: CEIC, ABSLAMC Research
-2.9-2.4-1.9-2.1
-1.1
-2.5
-0.4
-1.4
-0.6-0.1-0.1
-1.4-1.7-1.2
-0.1
-1.5
-2.2
-1.5
-0.3-0.9-1.2
-4.7
-3.6
-6.8
-4.9
-4.0-4.5-4.5-4.3-3.8
2.5
0.8
3.63.4
2.7
4.5
1.71.1
2.3
1.3
0.6
2.11.6
3.6
5.6
4.4
3.53.9
1.9
5.0
-1.1
4.54.1
6.7
4.8
3.93.4
1.7
4.4
5.2
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
Sep-18
Jun-18
Mar-18
Dec-17
Sep-17
Jun-17
Mar-17
Dec-16
Sep-16
Jun-16
Mar-16
Dec-15
Sep-15
Jun-15
Mar-15
Dec-14
Sep-14
Jun-14
Mar-14
Dec-13
Sep-13
Jun-13
Mar-13
Dec-12
Sep-12
Jun-12
Mar-12
Dec-11
Sep-11
Jun-11
Balance of Payment(% of GDP)
Current account Capital account Overall BoP
Indian BoP has been in deficit 1H FY19 given the rise in current account deficit due to higher trade deficit (crude an important reason) as well as decline in
capital account surplus due to FII outflows
While the recent increase in CAD is largely due to higher oil deficit, there has been a steady decline in current account ex-oil, gold reflecting deterioration
in competitiveness.Assuming average crude of 65, we expect current account deficit to be around 2.2% of GDP.
The improvement in net-IIP liabilities reflect capital outflows in 2Q and 3Q CY18
Net IIP liabilities has declined
-998-1,020-1,053-1,035-998-983-958
-905-934-905-911-894-887-896-887-848-849-847-824
-392-410-420-422-397-401-389-361-367-351-359-362-357-362-364-356-361-355-341
606609633613601582570543567555552533530535522492488492484
-1,200
-1,000
-800
-600
-400
-200
0
200
400
600
800
Sep-18
Jun-18
Mar-18
Dec-17
Sep-17
Jun-17
Mar-17
Dec-16
Sep-16
Jun-16
Mar-16
Dec-15
Sep-15
Jun-15
Mar-15
Dec-14
Sep-14
Jun-14
Mar-14
IIP: Liabilities IIP: Assets Net IIP
36. INR over-valuation has corrected
INR REER declines to average level
Aditya Birla Sun Life AMC Ltd.
Source: CEIC, ABSLAMC Research
90.0
95.0
100.0
105.0
110.0
115.0
120.0
125.0
130.0
135.0
Oct-03
May-04
Dec-04
Jul-05
Feb-06
Sep-06
Apr-07
Nov-07
Jun-08
Jan-09
Aug-09
Mar-10
Oct-10
May-11
Dec-11
Jul-12
Feb-13
Sep-13
Apr-14
Nov-14
Jun-15
Jan-16
Aug-16
Mar-17
Oct-17
May-18
REER 10 year average
The recent fall in INR has reduced its over-valuation in real exchange terms (REER) and should help in improving competitiveness and
current account balance
Note the steady declining in current account ex-oil ex-gold, which reflect steady weakness in competitiveness, partially due to an over-
valued exchange rate
We expect 68-75 range in INR through the year
Non-oil, non-gold current account has steadily weakened
2.02.32.32.22.11.9
3.9
2.72.42.92.52.73.23.54.04.44.34.8
6.3
5.54.9
4.24.7
2.2
3.84.2
5.1
3.43.7
4.9
-3.6-3.5-3.2-2.9-2.3-2.5-2.7-2.4-2.3-2.3
-1.5
-2.4-2.9-3.2
-2.5
-3.7
-5.0-4.8
-5.5-5.7-5.2-5.4-5.2-5.2
-6.2-6.1-6.3
-5.0-5.0-5.3
-1.4-1.3
-1.0-1.5
-0.9
-1.9-1.6-1.7
-0.7-0.7
-1.0
-1.7
-1.9-1.5
-1.6
-2.2
-1.5-1.5
-1.1-0.7
-0.9
-3.6
-3.1
-3.8
-2.6
-2.1
-3.4
-2.9-2.9
-3.5
-10.0
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
6.0
8.0
Sep-18
Jun-18
Mar-18
Dec-17
Sep-17
Jun-17
Mar-17
Dec-16
Sep-16
Jun-16
Mar-16
Dec-15
Sep-15
Jun-15
Mar-15
Dec-14
Sep-14
Jun-14
Mar-14
Dec-13
Sep-13
Jun-13
Mar-13
Dec-12
Sep-12
Jun-12
Mar-12
Dec-11
Sep-11
Jun-11
Current account (% of GDP)
CA ex-Oil, Gold (Surplus) Net oil deficit Gold deficit Current account
37. Low crude price is quite positive for India external account
Sharp rise in shale oil production drives down crude oil prices Crude price sensitivity has increased through the years as imports increase
Aditya Birla Sun Life AMC Ltd.
Source: CEIC, ABSLAMC Research
0.59
0.54 0.56
0.59 0.62
0.78
0.84
0.74
0.86
0.93 0.94 0.95
1.10 1.13
1.24
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Per dollar crudesenstivity to annual trade deficit
5500
6500
7500
8500
9500
10500
11500
12500
May-12
Aug-12
Nov-12
Feb-13
May-13
Aug-13
Nov-13
Feb-14
May-14
Aug-14
Nov-14
Feb-15
May-15
Aug-15
Nov-15
Feb-16
May-16
Aug-16
Nov-16
Feb-17
May-17
Aug-17
Nov-17
Feb-18
May-18
Aug-18
Nov-18
Crude production('000 bbl/day)
US crudeproduction Saudi crudeProduction
Russia crude production
Sharp fall in crude price, driven by strong growth in US shale output, is the key reason for our benign outlook on external account
Per dollar movement in crude price has ~1.25 bn annual impact on trade deficit
38. Forex reserve cover has depleted following heavy RBI intervention
Import cover of forex moves below 10 year average Forex reserve cover has marginally declined despite lower external debt
Aditya Birla Sun Life AMC Ltd.
Source: CEIC, ABSLAMC Research
0.0
50.0
100.0
150.0
200.0
250.0
300.0
350.0
400.0
450.0
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
May-99
May-00
May-01
May-02
May-03
May-04
May-05
May-06
May-07
May-08
May-09
May-10
May-11
May-12
May-13
May-14
May-15
May-16
May-17
May-18
Forex cover ofimports (no. ofmonths) Average import cover
Forex reserves
78.9
60
70
80
90
100
110
120
130
140
150
100
150
200
250
300
350
400
450
500
550
600
Dec-06
Jun-07
Dec-07
Jun-08
Dec-08
Jun-09
Dec-09
Jun-10
Dec-10
Jun-11
Dec-11
Jun-12
Dec-12
Jun-13
Dec-13
Jun-14
Dec-14
Jun-15
Dec-15
Jun-16
Dec-16
Jun-17
Dec-17
Jun-18
External debt (US$ bn) Forex reserve(US$ bn)
Forex cover ofExternal debt (%), RHS
Heavy intervention by RBI in the currency market- above 31bn USD in spot, besides 23bn in forwards- has lead to forex reserve falling to
US393 bn
Consequently the forex import cover has declined to below 10 year average and external debt cover has also declined. RBI would ideally
like to recoup its forex reserves should there be a BoP surplus
39. Foreign flows likely to remain under pressure
Aditya Birla Sun Life AMC Ltd.
Source: CEIC, ABSLAMC Research
2018 has witnessed highest FII outflow on record FDI flows albeit decent have also trended lower
-4.6
8.0
2.93.3
16.2
19.8
24.5
-0.5
29.3
17.6
-12.9
18.5
8.3
10.9
-6.7
23.0
-6.5
7.6
26.3
-8.5
6.9
8.5
10.1
1.1
2.72.4
0.9
-1.2
-15
-10
-5
0
5
10
15
20
25
30
35
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
Equity Debt
0
0.5
1
1.5
2
2.5
0
5
10
15
20
25
30
35
40
45
Dec-04
Jun-05
Dec-05
Jun-06
Dec-06
Jun-07
Dec-07
Jun-08
Dec-08
Jun-09
Dec-09
Jun-10
Dec-10
Jun-11
Dec-11
Jun-12
Dec-12
Jun-13
Dec-13
Jun-14
Dec-14
Jun-15
Dec-15
Jun-16
Dec-16
Jun-17
Dec-17
Jun-18
FDI inflows (4Q, rolling) FDI (% of GDP), RHS
Given the global backdrop of sell-off in EM assets, India also witnessed outflows by foreign investors
In 2019 foreign flows shall remain under pressure unless there is clarity on government formation post General election.
Beside the India specific political risk, EM outlook, especially with respect to US-China trade negotiations and general global growth
outlook shall be key variable determining foreign flows picture
40. Summing up
Aditya Birla Sun Life AMC Ltd.
We expect marginal uptick in growth towards 7.2% to 7.5% level in FY20 (7.2% in FY19), in our base case assumption of stable
government post elections and only a moderate global growth slowdown
High capacity utilization should drive a nascent investment recovery. Moreover, lower crude price, peaking banking sector NPAs,
possibility of a rural stimulus and election related spending are other tailwinds.
Given low investments in last few year, capacity utilization has risen to highest level since 2012
While public capex into infrastructure continue to drive investments, we are witnessing early signs of revival in private capex as well
If global sentiments doesn’t worsen significantly and we have a stable government in post General election, then we are set for a
further pick-up in investment cycle in 2019
We expect the sharp decline in food inflation to at least partially normalize in 2019 and convergence in food and non-food inflation
in 2019 towards ~4.5% range
Assuming average crude of 65, we expect current account deficit to be around 2.2% of GDP.
We believe 10year is at neutral zone currently and we expect a range of 7.10 to 7.70 in 1H.
The key risk in 1H are Indian general election, evolution of Fed monetary policy, US-China trade talks, slowing global growth and
turbulent financial markets. Given the sharp decline in food inflation we expect policy bias to change to neutral in Feb policy.
2H will be determined by the election outcome and extent of global slowdown and unwind of Fed interest rate expectation.
Shorts term rates have peaked for this cycle so have AAA Corp spreads. 1-3 year bonds wind-down the extra spread in the run up to
Mar/Apr as huge OMOs start to improve ICD’s.
42. India spread at elevated levels
India Vs US real spread at elevated levels India Vs EM 10 year rates
Aditya Birla Sun Life AMC Ltd.
Source: Bloomberg, ABSLAMC Research
-12
-10
-8
-6
-4
-2
0
2
4
6
8
Feb-07
Aug-07
Feb-08
Aug-08
Feb-09
Aug-09
Feb-10
Aug-10
Feb-11
Aug-11
Feb-12
Aug-12
Feb-13
Aug-13
Feb-14
Aug-14
Feb-15
Aug-15
Feb-16
Aug-16
Feb-17
Aug-17
Feb-18
Aug-18
India -US 10 year Nominal India -US, 10 year Real
-1.5
-1.0
-0.5
-
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Apr-09
Aug-09
Dec-09
Apr-10
Aug-10
Dec-10
Apr-11
Aug-11
Dec-11
Apr-12
Aug-12
Dec-12
Apr-13
Aug-13
Dec-13
Apr-14
Aug-14
Dec-14
Apr-15
Aug-15
Dec-15
Apr-16
Aug-16
Dec-16
Apr-17
Aug-17
Dec-17
Apr-18
Aug-18
Dec-18
India-EM, 10 year
43. Aditya Birla Sun Life AMC Ltd. 43
Corporate spreads at elevated levels
AAA PSU Spreads at Multi Year High Short End looks attractive
Tight liquidity caused spreads to go up, but now with RBI aggressively providing durable liquidity, we find short end corporate spreads to
be attractive
Source: CEIC, ABSLAMC Research
44. Aditya Birla Sun Life AMC Ltd. 44
Short end AAA Spreads are at 5yr High
Source: Bloomberg, ABSLAMC Research
45. Aditya Birla Sun Life AMC Ltd. 45
… so are AA Spreads
Source: Bloomberg, ABSLAMC Research
46. Aditya Birla Sun Life AMC Ltd. 46
Asset allocation
Investor type Fund proposition (Duration)
Conservative investors Low Duration Fund, FMPs
Active Investors-
Moderate Volatility and low credit risk
(Predominantly AAA papers)
Banking and PSU fund, Corp bond Fund
Active Investors-
Moderate Volatility and credit risk (Mix of
accrual and AAA funds)
Credit Risk Fund
48. Aditya Birla Sun Life AMC Ltd. 48
Legal – Developments and Outlook
49. Aditya Birla Sun Life AMC Ltd. 49
Legal Outlook
The legal reforms (implemented and in pipeline) have created a very positive outlook for lending business since the creditors have
been provided with a potent tool for recovery from defaulting corporates in the form of Insolvency and Bankruptcy Code, 2016.
NCLTs (under the IBC) have helped resolve insolvency and bankruptcy proceedings and recover debt of more than ₹80,000 crore in
2018 and is expected to resolve insolvency cases amounting to more than ₹1 trillion in 2019.
It has been reported that many promoters have settled the dues out of the court for the fear of losing control over their
companies running their flagship business.
118
(10%)52
(4%)
212
(18%)
816
(68%)
Status of CIRPs (1198)
Closed on Appeal / Review Closed by Resolution
Closed by Liquidation Ongoing CIRP
4.3
1
P RE - IBC RE GIME IBC RE GIME
AVERAGE TIME TAKEN
FOR RESOLUTION OF
DEBT (YEARS)
110000
80000
100000
0 40000 80000 120000
Amounts repaid for the fear of insolvency
till October 2018
Amounts resolved under IBC in 2018
Amounts expected to be resolved under IBC
in 2019
Recovery Amount (Rs. In Crore)
Source: Times of india, business standard, mint source: ibbi.gov.in source: Financial express
50. Aditya Birla Sun Life AMC Ltd. 50
Legal Outlook
The courts have laid down many important legal principles under IBC boosting the recovery process by creditors (in some cases
settling the legal positions). Following are some recent principles (subject to final adjudication by Supreme Court in a few cases):
NCLT, Delhi bench considered put-option agreement as a guarantee and thus a ‘financial debt’ enabling the lender to recover
money from the purchaser as its financial creditor;
The Supreme Court allowed invocation of personal guarantee holding that the moratorium under section 14 of IBC will not apply
to the guarantors which has since been clarified vide an ordinance.
The Supreme Court held homebuyers to be ‘financial creditors’ which has since been clarified vide an ordinance.
25%
60%
0% 10% 20% 30% 40% 50% 60% 70%
PRE-IBC
POST-IBC
Percentage of Recoveries vis-à-vis
Claimed Amount
4
4
15
5
10
1
13
0 2 4 6 8 10 12 14 16
REALISATION (0-10% OF CLAIMS)
REALISATION (10-25% OF CLAIMS)
REALISATION (25-40% OF CLAIMS)
REALISATION (40-50% OF CLAIMS)
REALISATION (50-80% OF CLAIMS)
REALISATION (80-100% OF CLAIMS)
REALISATION (> 100% OF CLAIMS)
Range of Realisation by Financial
Creditors in cases closed by
Resolution (52 cases)
Source: economic times, financial express, ibbi.gov.in Source: ibbi.gov.in
51. Aditya Birla Sun Life AMC Ltd. 51
Legal Outlook
NCLAT has held that the resolution plan cannot discriminate between similarly placed creditors (whether operational or financial).
NCLAT has held the personal guarantor has no right against the corporate debtor effectively permitting a guarantor’s right of
subrogation being taken away under a resolution plan.
The Government’s plan to de-clog NCLTs by amending the Companies Act, 2013 to do away with minor offences, divest NCLTs of its
responsibility to approve M&A transactions and to add additional NCLT and NCLAT benches increasing their bench strength will
result in NCLTs getting more time and manpower to resolve insolvency and bankruptcy cases.
Apart from the aforesaid, the fast paced legal reforms under legislations such as Fugitive Economic Offenders Act, 2018, The
Companies (Amendment) Ordinance, 2018, The Negotiable Instruments (Amendment) Act, 2018, The Commercial Courts,
Commercial Division and Commercial Appellate Division Of High Courts (Amendment) Act, 2018, Insolvency and Bankruptcy Code
(Amendment) Act, 2018 and pending bills such as, The Arbitration and Conciliation (Amendment) Bill, 2018 and the Insolvency and
Bankruptcy Code (Amendment) Bill, 2018 are aimed at expediting debt recovery and will play an instrumental role in providing
additional ammo to the creditors.
53. Aditya Birla Sun Life AMC Ltd. 53
Real estate: Residential – 1st Half 2018.
Strong Absorption vs falling new launches Inventory overhang getting reduced
46,000
48,000
50,000
52,000
54,000
56,000
58,000
60,000
62,000
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
Q4-2016 Q1-2017 Q2-2017 Q3-2017 Q4-2017 Q1-2018 Q2-2018 Q3-2018
New Launch Vs Absorption
Top 6 Cities Last 8 Qtrs
New Launch Absorption 720,000
740,000
760,000
780,000
800,000
820,000
840,000
860,000
880,000
Q4-2016 Q1-2017 Q2-2017 Q3-2017 Q4-2017 Q1-2018 Q2-2018 Q3-2018
Unsold Inventory
Top 6 Cities Last 8 Qtrs
New Residential absorption bottomed in Q42017. However, there has been a steady uptick over last 3 quarters.
Launches, which are best indicator of developer and buyer sentiment, had tapered off from 65k units in FY16 to 15k units in
Sept 2018. Sentiment continues to be poor but demand had stabilized and improved – with increased affordability.
Slowing down of new launches has lead to reduction in inventory and developers focusing on ongoing project execution.
Strong demand in affordable housing has lead to developers increasingly launching and re-pricing projects at lower ticket sizes
that cater to the needs of bulk home buyers.
Affordable housing is expected to lead the demand for housing in 2019 with consumers preferring ready-to-move in inventory,
and gated communities vs standalone buildings.
54. Aditya Birla Sun Life AMC Ltd. 54
Real Estate Way Forward: Q3 2018; impact on supply & demand
In light of the recent liquidity crisis, funding to RE developers
from non-banking financiers have slowed considerably. In
addition to developer finance, this slowdown has extended to
mortgage finance as well.
Effects of recalibration of interest rates should take a toll on
demand over next 6-9 months as both legs of the financing
cycle – developer to project (CF) and project to consumer
(mortgage) re-settle – and a new lending rate environment
emerges.
Banks are expected to make use of this opportunity to gain
market share. Non-bank’s ability to finance will likely remain
constrained in 2019. The slowdown in financing of mortgages
would also reduce affordability & demand to take 10-20% hit
in first 6-9 months of 2019.
Opportunity
- Real estate opportunity in 2019: We expect Real Estate sector
likely to have a subdued 2019. Opportunity could be in piggy
backing with consumer equity (as opposed to developer
equity) in projects. Pre-sold projects/Mortgage finance/Rental
re-pricing could be the play for 2019.
Real Estate lending has grown at 20% CAGR in last 5 years – led by
NBFCs
55. Aditya Birla Sun Life AMC Ltd. 55
Real Estate Commercial
A steady demand scenario in the face of consistently low supply has pushed down vacancy levels from 21% in 2013 to 13.5% in
2018
Leasing crossed 32 Mn sqft in first three quarters of 2018, an increase of 7% Y-o-Y. Transactions crossed 10.9 Msqft in Q3 2018
alone. Bangalore, followed by Mumbai, Hyderabad and NCR led leasing activity.
On the Commercial Real estate the rental growth story remains intact as supply continues to lag demand. Tier 2 developers will
find it difficult to compete as the commercial segment is seeing a steeper upgradation of work areas/space than the residential
segment.
Demand Still running ahead of supply. Disruption to delay
supply further
Key Commercials markets in India offer significantly cheaper rentals
compared to global commercial hubs
Source:CBRE
57. Aditya Birla Sun Life AMC Ltd. 57
2018: Liquidity shocks largely abated, flow towards quality
176.6 179.7
205.2
136
78.6
133.9
0
50
100
150
200
250
June July August September October November
CP Issuances in 2018 (Rs '000 cr)
52%
68%
34%
74% 72% 76%
0%
20%
40%
60%
80%
Overall Rollover % Rollover for bluechip
financiers %
Rollover for other
financiers %
CP Rollover %age for financiers
15th -29th Oct 2018 1st-19th Nov 2018
‘Flight to safety’ and risk aversion have widened differences
between issuers who are perceived to be of good quality vs the rest
Concentration of MF Funding to
NBFCs
Sep-18 Nov-18
Top 5 issuers as % of Total funding 25% 32%
Top 10 issuers as % of Total
funding
44% 49%
Credit growth to NBFCs had accelerated substantially (yoy%) Before liquidity from capital markets was tightened in
Sep/Oct
Liquidity to sector started opening up in November
Source: RBI, Industry Research
58. Aditya Birla Sun Life AMC Ltd.
2019: Asset quality pains could start to emerge for some players
2015 2016 2017 2018
3 yr CAGR
(%age)
Non Banks (%age share) 29.7% 38.3% 44.6% 51.2% 40.5%
Banks (%ge share) 70.3% 61.7% 55.4% 48.8% 3.7%
Total (Rs lakh cr) 2.37 2.88 3.35 3.81 17.1%
0.00%
0.50%
1.00%
1.50%
2.00%
March 2016 March 2017 March 2018
2 year lagged NPA - Top 5 HFCs
HFC 1 HFC 2 HFC 3 HFC 4 HFC 5
Sales in Real Estate have still not picked up meaningfully
But Non-Banks have been financing almost all incremental debt in the
sector, essentially doubling down on near term RE sector revival
Asset quality is slowly worsening for the largest mortgage financiers And the micro data for nation-wide mortgage asset quality is showing a
worsening trend too
Source: Company, Industry Research, CIBIL
59. Aditya Birla Sun Life AMC Ltd.
2019: Retail asset classes expected to perform well
13.0%
9.0% 9.0%
4.5%
2.9% 2.8%2.0%
1.3% 1.8%
0.0%
5.0%
10.0%
15.0%
Sep 2017 March 2018 Sep 2018
GNPA % of vehicle financiers have stabilized
Player 1 Player 2 Player 3
State PAR 30
Month Mar-18 Jun-18 Sep-18
1 Uttar Pradesh 10.80% 6.34% 5.89%
2 Maharashtra 10.40% 8.37% 4.97%
3 Madhya Pradesh 6.30% 5.22% 3.58%
4 Karnataka 3.70% 3.41% 2.04%
5 Jharkhand 3.40% 2.37% 2.49%
6 West Bengal 1.10% 0.98% 0.65%
7 Tamil Nadu 1.50% 1.36% 1.09%
8 Orissa 0.60% 0.49% 0.48%
9 Bihar 0.80% 0.36% 0.51%
10 Kerala 2.70% 2.62% 2.89%
Total 4.44% 3.20% 2.40%
Rs cr Sep-17 Mar-18 Sep-18
Debt 29451 39902 44273
Equity 7432 11109 12876
D/E 4.0 3.6 3.4
As an asset class, auto loans have shown a secularly positive trend. All vehicle
financiers have migrated to the 90dpd convention, and asset quality is expected
to remain stable at current levels
Microfinance asset quality continues to be very good, and with a stable to
positive outlook for the rural economy, the asset class is expected to continue
doing well
Equity infusion in the sector over the last 12-18 months have strengthened the
sector’s capital base – increasing its resilience to face election year shocks (if any)
Source: Company, CIBIL, MFIN
60. Aditya Birla Sun Life AMC Ltd. 60
2019: SME financiers could face headwinds
But some granular ticket sizes (<10 Lakh ticket size) have
not performed well.
SMEs as a sector have historically continued to perform
well versus large commercial lending (>100 crores)
Given that
a) large amount of capital deployed by various Banks/NBFCs in the SME segment over the last 1 year has
somewhat loosened credit standards and;
b) LAP funding (another route for SME financing) is going to be much more subdued going forward,
We expect to see some SME financiers face asset quality issues over the next 12-18 months
Source: CIBIL
61. Aditya Birla Sun Life AMC Ltd. 61
2019: NBFC/HFC Intra - Sector allocation
Asset Class
Prefer: Retail Loan NBFCs, Asset Financier
Cautious: Real Estate Financing, Mortgage Financing
Preferred Issuer Characteristics
a) Long vintage, high pedigree NBFCs with healthy profitability. Issuers which have high rating (AAA/AA+) from rating agencies as well
as through in-house credit research
b) NBFCs with loan assets that are bankable/securitizable, and where repayment is cash-flow backed
c) Well capitalized balance sheets with demonstrated ability of promoter to raise additional equity capital
Sector Exposure Approach
a) Portfolio Concentration: Defensive in terms of both NBFC sector concentration and Issuer concentration for all non-AAA Issuers
across portfolios.
b) Credit Opportunity: Continue to seek out idiosyncratic opportunities with a specific focus on smaller, less discovered NBFCs such
that there is a sufficient margin in the risk-reward ratio.
63. Aditya Birla Sun Life AMC Ltd. 63
Road Sector
Recent Trends
Projects in the Road sector have an increasing share of EPC and HAM models,
with a minimal share of BOT (Toll) segment;
During H1’FY19, the Govt. missed its project award target and awarded only 268
k.m against its target of ~3000 k.m. This was mainl due to (i) delay in finalising
DPR and (ii) increase in Land acquisition costs, which delayed land acquisition;
For FY’19, ~ 4000 k.m of roads as expected to be completed(target of 6000
k.m);
New projects have been largely won by ~6 co. in FY’18 (6 out of 30 projects yet
to achieve Financial closure in BOT (HAM) space);
Subdued Investors’ interest for TOT project has compelled NHAI to extend
deadline for 3 times; bid value of highest bidder in ToT 2 was ~15% lower than
IECV as compared to 1.5x higher during ToT1.
The new project award activity is expected to be slower in Q4’FY’19 due to (i)
General Elections in May 2019 (ii) few HAM projects are yet achieve F.C. (iii)
worsening fiscal deficit of centre (reached 95% of Full year target in H1 of
FY’19)
View / Outlook
Companies with EPC projects are expected to do well as Banks would be
comfortable lending for their working capital requirements;
Banks are expected to remain cautious with funding HAM projects as (i) many
PSU banks are under PCA and don’t have the appetite to take further Infra
exposure; (ii) Some Private Sector banks and NBFCs would take exposure
selectively considering non-levered Balance sheets and risk return trade offs;
More HAM projects are expected to hit the market to refinance existing debt at
lower cost.
Source: Spark Capital, ABSLAMC Research
64. Aditya Birla Sun Life AMC Ltd. 64
Power-Thermal showing sign of improvement
57%
65%
63%
59%
54%
56%
58%
56.95%
54.47%55.22%
53.22%
54.40%
56.49%
-
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
40%
45%
50%
55%
60%
65%
70%
2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19
Private Sector PLF (%) Merchat Price (Rs/kwh) (RHS)
Private IPP [coal based] PLFs saw improvement in Q2 2019 due to increase in demand coupled with no new addition of capacity.
Daily/monthly merchant prices remain volatile (reached ~Rs.6/kWh in October 2018) although average quarterly price remains
below ~Rs.4/kwH.
Price of imported coal has increased sharply in H12018 which, coupled with the rupee depreciation has impacted the viability of
imported coal based power plants. However, imported coal prices have started moderating, providing some breather to power
producers.
Source: ABSLAMC Research, Industry Research
40
60
80
100
120
Nov-15
Jan-16
Mar-16
May-16
Jul-16
Sep-16
Nov-16
Jan-17
Mar-17
May-17
Jul-17
Sep-17
Nov-17
Jan-18
Mar-18
May-18
Jul-18
Sep-18
Nov-18
Coal (US$/ton) USD:INR(Rs)
Thermal coal PLF and merchant price increasing Imported coal price showing sign of mdoeration
65. Aditya Birla Sun Life AMC Ltd. 65
Renewable –capacity addition surpass coal; returns under pressure
0
2500
5000
7500
10000
12500
15000
17500
20000
22500
FY14 FY15 FY16 FY17 FY18 YTD Nov
2019
Thermal vs renewable capacity additions
Coal Renewables
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
5.5
0.00
0.05
0.10
0.15
0.20
0.25
0.30
0.35
0.40
0.45
0.50
0.55
0.60
Solar module price vs solar bid tariff
Solar module [USD/Wp] Tariff [Rs./kwh] RHS
Only 165 MW [net capacity] was commissioned in coal based capacity till Nov. 2018.
Capacity addition in FY2019 has primarily been in the renewable segment at 6.5 GW. However, the same is ~60% short of the
target [16 GW].
Capacity addition FY 2019 was impacted due to (i) arbitrary ceiling tariff & in tender/bidding impacting returns of bidders (ii)
constraint in Transmission capacity; (iii) high cost of land acquisition and (iv) slow auction of renewables in FY18 for solar and
Wind commissioning is also delayed by 6 – 8 months under various auction.
At current bidding levels, renewable players are likely to make low returns. The subdued interest from bidders has resulted in
increase in solar tariff recently to Rs.3.2 in Gujarat bid in December 2018.
Source: ABSLAMC Research, Industry Research
66. Aditya Birla Sun Life AMC Ltd. 66
Power –overall demand to increase; coal PLFs to increase
151
159
162163
173
171 170 171
177
173
162
130
135
140
145
150
155
160
165
170
175
180
Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
FY15 FY16 FY17 FY18 FY19
60
61 61
62
64
56 55
55
56
58
50
52
54
56
58
60
62
64
66
-
500
1,000
1,500
2,000
2017 2018 2019 2020 2021
Energy requirement,availability and All India & private coal PLF
Requirment (BU) Availability (BU)
All India Coal PLF % RHS Private Coal PLF % RHS
Increasing power demand
Average Power demand is expected to see positive growth given
the pre-election season.
Merchant tariff is expected to remain moderated considering SEB
health, reluctance of SEB to sign long term PPA and demand supply
balance.
~35 GW out of 197GW of coal-fired power plants are > 25 years old
and have outlived their useful life, thereby limiting supply.
We don’t expect coal PLF to see a steep increase since increasing
renewable integration will require thermal to recede. PLFs to
increase to 60-64% by FY 2022.
Coal capacity addition to be almost equal to retirement of old plants
10 11 12 12
-7 -8 -8 -8-10
-5
0
5
10
15
2019 2020 2021 2022
Capacity Additions [GW] Retirement/decommisioing [GW]
Source: ABSLAMC Research, Industry Research
67. Aditya Birla Sun Life AMC Ltd. 67
Transmission –continue to attract private investments
Improving transmission connectivity making it an attractive
proposition over coal transport despite increasing per unit
cost
Source: ABSLAMC Research, Industry Research
Private sector has stepped up participation in transmission in
recent times Private transmission capacity, March fiscal year-
ends (‘000 cktkm)
Over FY18-22, investments in the transmission segment are envisaged at INR2.5tn, a whopping 1.5x jump over FY12-16. We
estimate ~INR0.75n of projects to be awarded on tariff-based competitive bidding (TBCB) basis, an opportunity for the private
sector, though PGCIL also bids under this mode.
68. Aditya Birla Sun Life AMC Ltd. 68
Outlook
Power sector is expected to move to a relatively balanced position considering slowing capacity additions, capacity retirement and elevated demand.
We expect merchant price would remain moderated at ~3.5/Kwh levels and coal PLF to be in the range of 62-64% by FY 2021.
With the recent development including positive Supreme Court order for the imported coal based power plants, positive CERC norms for regulated
business, thermal power projects are expected to benefit. Regulated utilities are expected to have strong growth visibility.
Govt focused approached towards the revival of stressed power plants including Samadhan Scheme [11 plants with 12 GW capacity is expected to
result in consolidation in the sectors with large players eying to acquire assets at substantially low price. However, we expect that the progress will be
slow due to large number of lenders involved with many of them under PCA, and difficulty in reaching consensus on the amount of haircut proposed
(~55-60%).
Coal allocation under Shakti and medium term PPA [PTC scheme] is likely to revive stressed capacities without FSA/PPAs.
Power transmission sector is expected to attract private investment considering its better returns, low O&M risk and counterparty risk. We expect that
while Intra-state would continue to led by state transmission companies, inter-state segment would have tariff based bidding for projects for ~Rs.0.75
trillion. Considering the past trend [38 out of 47won by private players], private transmission companies would have large pipeline for inter-state
projects. The companies specialised in executing transmission projects are also expected to do well. Sector is witnessing consolidation and is currently
an oligopoly of three players.
On the renewable front, a sharp reduction in the tariff has led to a question mark on project viability and feasibility. Considering the high variability in
generation, uncertainty on cash flow receivable, and availability of long tenure debt at competitive rates , we continue to remain selective for the
renewable projects.
As an asset class, we would continue to be positive for transmission, neutral for thermal and cautious for renewables.
70. Aditya Birla Sun Life AMC Ltd. 70
Telecom – Current Trends
260 266 274 281 282 290 304
336 330
380 390 399 401 389 402 416
435 422
16
72
109 123
139
160
187
215
252
0
50
100
150
200
250
300
350
400
450
500
Sep-16
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-17
Oct-17
Nov-17
Dec-17
Jan-18
Feb-18
Mar-18
Apr-18
May-18
Jun-18
Jul-18
Aug-18
Sep-18
Wireless Subscribers (mn)
Bharti Vodafone Idea R-Jio
188
172
158 154
146
123
116
105 100
172
157.5
142 141
132
114
105
92 88
156 154
137 135 132
0
20
40
60
80
100
120
140
160
180
200
Sep-16
Oct-16
Nov-16
Dec-16
Jan-17
Feb-17
Mar-17
Apr-17
May-17
Jun-17
Jul-17
Aug-17
Sep-17
Oct-17
Nov-17
Dec-17
Jan-18
Feb-18
Mar-18
Apr-18
May-18
Jun-18
Jul-18
Aug-18
Sep-18
Wireless ARPU (Rs./Month)
Bharti Vodafone Idea R-Jio
R-jio entered the Indian Telecom market in Sept 2016 and reached Subscriber base of 252 mn in just 25 months;
ARPU witnessed downward trend of all players for the past 2 years (i) aggressive pricing strategy adopted by Reliance Jio
(ii) Regulatory changes –reduction in Interconnection Usage Charges (IUC) and International Termination Charges (ITC) by
TRAI..Industry Adjusted Gross Revenue (AGR) fell from 44570 Cr. in Q1 of Fy’17 to Rs. 25580 Cr. in Q1 of FY’19;
This forced other Telecom Players to offer discounts to retain market share, however this led to fall in profitability
margin and consider sell of other non core assets to raise Equity to fund capex and protect capital structure;
Source: ABSLAMC Research, Industry Research
71. Aditya Birla Sun Life AMC Ltd. 71
Telecom – Current Trends
143
1256
3216
0
500
1000
1500
2000
2500
3000
3500
Jan-16 Jan-17 Jan-18
Data in MB GSM Users Industry witnessed consolidation with Top 3 Pvt Sector Players account for
84% Subscribers market of the Country;
R-jio’s Revenue Market share surpassed Vodafone Idea and Bharti in Sept
2018 and became No.1 with 33.70%;
Bharti and Vodafone Idea yet to make substantial progress to broaden their
Broadband Subscriber base before they became ready for 5G;
Meanwhile, Data consumption registered 375% CAGR growth in the past 3
years and is going to be a revenue driver in years to come;
28.80% 28.00% 29.10% 28.00% 27.40%
37.80% 38.00% 37.50%
34.20%
30.70%
13.90%
19.70%
25.50%
29.60%
33.70%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
Rev Mkt Share
Bharti Vodafone Idea R-Jio
Broadband Subscriber Base Sep-17 Dec-17 Mar-18 Jun-18 Sep-18
Bharti (mn) 60 69 83 93 99
% 21% 24% 27% 28% 30%
Vodafone Idea (mn) 76 87 97 106 100
% 20% 22% 23% 24% 24%
R-Jio (mn) 139 160 187 215 252
% 100% 100% 100% 100% 100%
Source: ABSLAMC Research, Industry Research
72. Aditya Birla Sun Life AMC Ltd. 72
Telecom
View
Outlook for the Sector is expected to remain “Negative” with strong competitive headwinds as most operators will
look for greater entrenchment or push for higher market share;
ARPU is expected to remain under pressure until Reliance Jio captures significant Subscribers Market Share;
With data being available at cheap / very affordable prices, broadband wireless users are expected to reach ~520-
530 mn by March 2019;
APRU is expected to increase gradually with introduction of minimum recharge pack and simplification of tariff
structure to reduce the inactive users;
Companies are not expected to bid for 5G spectrum atleast for 1-2 years due to (i) stretched Balance sheets (ii)
pressure on profitability (iii) yet to expand 4G network fully;
73. Summing up
Aditya Birla Sun Life AMC Ltd.
Liquidity issues facing NBFCs is now behind us. Targeted lending has commenced to those NBFCs who have good lineage, good asset
quality and long seasoning
2019 shall see asset quality issues emerge for NBFCs – particularly those in the housing and real estate space. We prefer NBFCs who are
in the retail space.
Real Estate developers particularly those in residential space shall face headwinds with the liquidity issues being faced by NBFCs having
transcended to this area.
Commercial RE shall continue to be robust till such time as supply lags demand
EPC companies shall continue to do well but renewable companies will remain under pressure
Telecom sector shall remain sluggish till such time as competitive pressures remain and predatory pricing continues
2019 should see many proceedings under IBC concluding and settling points of law which till now are still ambiguous. With the law
getting settled, the hands of creditors shall be strengthened.
74. Disclaimer
Aditya Birla Sun Life AMC Ltd (“ABSLAMC”) /Aditya Birla Sun Life Mutual Fund is not guaranteeing/ offering/ communicating
any indicative yield/returns on investments.
The document is solely for the information and understanding of intended recipients only. If you are not the intended
recipient, you are hereby notified that any use, distribution, reproduction or any action taken or omitted to be taken in
reliance upon the same is prohibited and may be unlawful. Wherever possible, all the figures and data given are dated, and
the same may or may not be relevant at a future date. In the preparation of the material contained, ABSLAMC has used
information that is publicly available including information developed in-house. Information gathered and material used in this
document is believed to be from reliable sources. Further the opinions expressed and facts referred to in this document are
subject to change without notice and ABSLAMC is under no obligation to update the same. While utmost care has been
exercised, ABSLAMC or any of its officers, employees, personnel, directors make no representation or warranty, express or
implied, as to the accuracy, completeness or reliability of the content and hereby disclaim any liability with regard to the
same. Recipients of this material should exercise due care and read the scheme information document (including if necessary,
obtaining the advice of tax/legal/accounting/financial/other professional(s) prior to taking of any decision, acting or
omitting to act. Further, the recipient shall not copy/circulate/reproduce/quote contents of this document, in part or in
whole, or in any other manner whatsoever without prior and explicit approval of ABSLAMC.
MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY
Company Name 74