Six Pacific countries are at a high risk of debt distress due to government spending in response to the COVID-19 crisis, according to a report by the World Bank. Fiscal consolidation is needed in Kiribati, the Republic of the Marshall Islands, Federated States of Micronesia, Samoa, Tonga and Tuvalu. These countries lack access to domestic debt markets and international capital markets, the report said, meaning high debt levels could pose a problem. Vanuatu was rated as medium-risk, while Palau and Nauru’s debt was rated as sustainable. The report recommended improving tax collection and allocating more to social assistance and protection measures.
China's fiscal revenue rose 11.9% in the first four months of 2023, up from a 0.5% rise in January-March, as the country's economy continues to recover from COVID-19. Fiscal revenue was 8.32 trillion yuan ($1.20 trillion) in the first four months, while fiscal expenditure grew 6.8% to 8.64 trillion yuan over the same period. In April, fiscal revenue jumped approximately 70% from a year earlier, accelerating from a 5.5% rise in March. However, April data suggests a possible loss of momentum at the start of Q2 following the end of COVID-19 lockdowns last year. Analysts expect China's economy to grow almost 8% in the second quarter, partly due to a low base last year.
India's Zydus Lifesciences reports smallest qtrly profit in 14 qtrs
Reuters
23-05-18 10:56
Indian pharma company Zydus Lifesciences reported a 25% decline in Q4 consolidated net profit to INR2.97bn ($36.32m), extending profits floundering to its smallest returns since the second quarter of fiscal 2019. Despite revenues from sales jumping on strong demand, total profit before exceptional items, tax and shares of profit dropped from joint ventures surged 90% to INR10.87bn due to a goodwill impairment charge and costs incurred by closing operations at a production facility run by subsidiary Zydus Wellness Products. The company's shares slumped by 2% following the release of the results.
India's Ramco Cements posts near-23% rise in Q4 profit
Reuters
23-05-18 10:49
Indian cement maker Ramco Cements has seen a 23% rise in Q4 profits, to INR1.52bn ($18.6m), boosted by increased infrastructure spending in India. Sales rose 51%, to INR25.6bn, but expenses rose 53% as elevated petcoke and coal prices dented margins. The company said margins were expected to improve from Q2 in FY24 onwards.
Interglobe Aviation, the parent company of India's top airline IndiGo, has reported a second consecutive quarterly profit due to strong demand for air travel offsetting higher fuel expenses. The airline has been grappling with foreign exchange volatility and high fuel costs, which led to losses in two of the past four quarters. The carrier has benefited from a post-pandemic recovery in domestic air travel as well as the turmoil at its smaller rival Go First, which filed for bankruptcy earlier this month. IndiGo also faces increased competition from new entrant Akasa Air and Tata Group, which took over Air India.
Indian shares fell for the third consecutive session on Thursday, with the Nifty 50 ending down 0.28% and the S&P BSE Sensex falling 0.21%. This was driven by declines in the shares of State Bank of India and ITC, in addition to investors seeking to book profits. The benchmarks had opened with optimism, with many believing a US debt ceiling deal was imminent. However, traders later sold out, much like the previous two sessions, after a gain of nearly 4% since mid-April when the earnings season started.
Global markets have surged after optimism that US Democrats and Republicans are close to an agreement over raising the debt ceiling. This has seen the European and Asian shares rise, the dollar hold near a seven-week peak against a basket of major currencies and Wall Street stock futures hinting at a steady open after Wednesday's 1.2% gain by the S&P 500 Index. However, analysts have warned that while this relief could continue, the underlying problem of a sluggish global economy remains, and could create difficulties in the long-run.
Fourth-quarter profits for Dutch shoe company Bata BN’s Indian wing, Bata India, surpassed predictions as consumers sought out casual and comfortable footwear, boosting demand for the company’s Red Label, Comfit, North Star, Floatz and Hush Puppies brands. Amid the trend for non-occasion footwear, consolidated revenue from operations rose by 17% to INR7.79bn ($10.1m) for the first quarter of 2018.
India's Gland Pharma reports lower Q4 profit on soft demand
Reuters
23-05-18 13:51
Gland Pharma, the majority of which is owned by Shanghai Fosun Pharmaceutical, reported its Q4 2019 profit fell 56% due to weak sales in its key markets. Consolidated profits before tax and exceptional items fell to INR 1.68bn ($20.54m) from INR3.80bn from the previous year. The Indian company has a business-to-business model and depends on core markets including the US, Canada, Europe, New Zealand and Australia, which provide 70% of its revenue; access to capital markets for funding and the stability of these markets has therefore been key to success.
Most Gulf stock markets fell on concerns surrounding the US debt-ceiling negotiations, with Dubai's main share index dropping by 0.3%. Meanwhile, Saudi Arabia's benchmark index rose by 0.6%, and Abu Dhabi's index fell 0.2%. The Qatari benchmark finished 0.4% lower, and Egypt's blue-chip index declined by 0.5%. The stock market in Dubai may now be affected as traders shift to caution while US issues continue to weigh on expectations.
Russia's central bank has said it is essential to continue anchoring inflation expectations at a low level and has praised the effectiveness of its inflation-targeting regime in limiting the impact of shocks. It warned that supply shocks, which could occur more frequently as Western sanctions and structural transformation further impact the Russian economy, must be mitigated. Russia's annual inflation target is 4%, which the central bank believes will be achieved by 2024 following last year's double-digit price rises. However, despite gradually easing inflation pressures, households' inflationary expectations for the year ahead in Russia remained elevated at 10.4% in April.
China must level the playing field between state-owned and private companies to avoid "wasting a tonne of money" with its state-led growth model, Albert Park, chief economist of the Asian Development Bank, has warned. Park said there is a pressing need to create a dynamic private sector with open market competition and improve the business environment for sustainable development. The Manila-based lender has been raising the issue with China regularly, according to Park. The comments follow economic indicators indicating that China's post-Covid recovery is losing momentum.
Stronger-than-expected gross margins shown in the recent earnings reports of consumer-facing firms such as PepsiCo, Kraft Heinz, and Target can be attributed to lower input costs and inventories, as well as extended price hikes. This is being underpinned by a strong labour market and consumer spending. While investors saw a dip in margins due to high inflation and interest rates, quarterly margins for consumer discretionary components of the S&P 500 index are expected to increase year-over-year for every quarter this year, according to Refinitiv data.
NATO's Secretary General, Jens Stoltenberg, announced that he expects NATO members to agree to a new investment pledge to spend 2% of their GDP on defence at the upcoming alliance summit in Vilnius, Lithuania in July. Currently, only seven of NATO's 30 countries met the 2% of GDP goal in 2022. Stoltenberg has urged NATO countries to increase defence spending as the world has become "more dangerous" since Russia's invasion of Ukraine last year. At the Vilnius summit, the alliance intends to send a firm signal of support to Ukraine.
The inflation caused by the burst in demand during the COVID-19 pandemic and stretched supply chains persists, particularly in areas such as auto and data centre construction, and electrical equipment production, according to supply chain managers at several companies. Global supply chains have recovered to some extent, allowing businesses to access the stock they need, however, labour shortages and problems getting upstream supplies remain an issue. While the Fed's rate hikes have halted the most significant inflation, annual consumer price growth is still above its 2% target in the US.
India's civil aviation minister has said that the government wants troubled low-cost carrier Go Airlines (India) back in operation as soon as possible. The government's move comes a week after Go Airlines, now branded as Go First, filed for bankruptcy protection, citing the high cost of maintenance due to "faulty" Pratt & Whitney engines that grounded 54 A320neo aircraft. The US engine maker has said that the claim against it was unfounded.
RBNZ to hike rates one last time by 25 bps on May 24: Reuters poll
Reuters
23-05-18 20:06
The Reserve Bank of New Zealand is expected to increase interest rates by 25 basis points before breaking off its aggressive tightening cycle. The bank surprised markets with a 50 basis point hike to 5.25% in April but is under pressure to ease back on its tightening as the economy drifts toward a recession. Over 80% of economists quizzed expected the RBNZ to increase rates to 5.5%, while only a handful of analysts predicted no changes, with 30% suggesting a quarter-point cut by 2023. The RBNZ is expected to start loosening policy in Q4 2022.
The Indian rupee is set to decline on Friday as the US dollar index and US yields rise. Non-deliverable forwards predict the rupee will open at around 82.70-82.75 to the US dollar, close to a two-month low. Automated intervention by the Reserve Bank of India is expected right at the open, according to a forex spot trader. Asian currencies fell, with the offshore yuan dropping to a level last seen in December, caused by rising US yields and a rising dollar index. The odds of a Fed rate hike in June rose over 30% due to recent US employment data.
European Council President Charles Michel has warned G7 leaders that China has a special responsibility to play by international rules and has urged it to use its influence over Russia to end military aggression in Ukraine. The G7 leaders have convened in Japan to consider China's economic coercion and other related topics and are expected to issue a statement about a section on China covering a wide range of concerns revolving around supply chain threats and economic security; the EU are keen to de-risk and diversify trade so that over-dependencies and unfair practices, particularly by China, can be addressed.
Asian stocks fell on concerns of a slowing Chinese economy, with Hong Kong tech stocks hit particularly hard after Alibaba Group reported lower revenue growth than anticipated. China and Hong Kong stocks dropped 0.61% and 1.8% respectively causing a dip in MSCI's broadest index of Asia-Pacific shares outside Japan, with the index ultimately settling with a 0.19% gain for the week. In contrast, Japan's Nikkei rose to a new 33-year peak. Negotiations over US debt (with hopes high for a deal once President Biden returns from the G7 meeting in Japan on Sunday) kept attention on the American markets, while hopes for a quick interest rate hike dwindled further after the number of Americans filing for initial jobless claims fell below expectation.
