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Fitch: IFRS 9 Poses Implementation Challenges for APAC Banks
Oct 05,2016

Migration to International Financial Reporting Standard (IFRS) 9, or its local equivalent, is likely to create operational challenges across many of Asia-Pacifics (APAC) banking systems. These issues would have a negative initial effect on capital, and potentially raise the volatility of earnings and regulatory capital ratios, says Fitch Ratings.

IFRS 9 is one of the more significant accounting changes that banks are facing, and will be implemented in 2018 for most major APAC markets. It requires banks to switch to recognising and providing for expected credit losses (ECL) on financial assets, rather than the current practice of providing only when losses are incurred. IFRS 9 will also change the way that banks account for a wide range of financial assets. Fitch expects the adoption of the new standard to lead to greater provisioning and earlier recognition of credit losses, which will have an impact on banks financial statements and regulatory capital.

Moving to an expected-loss approach will require significant process changes, including greater integration of credit risk management and internal accounting systems. Banks will also need more data on how portfolios perform though the credit cycle, and will need to build complex models of expected losses. The transition is likely to be more operationally manageable in sophisticated banking systems where there is better access to robust data.

It is too early to estimate the full effects of IFRS 9 on provisions, profitability and capital, as banks have been reluctant to disclose much beyond acknowledging that provisioning will need to be raised. For some markets, the change in accounting standards is happening at a time when banks are struggling to meet progressive increases in minimum capital requirements as Basel III is phased in.

In India, for example, it is possible that the local equivalent of IFRS 9 could be delayed. This is due to challenges faced by the banking system in meeting the capital required by end-March 2019 relating to the Basel III standards - currently estimated at around USD90bn. Banking systems that have been characterised by under-reporting of impaired assets also look vulnerable to the potential rise in provisioning. In China, banks are required to make provisions on reported loans at rates higher than in most other jurisdictions, but IFRS 9 could still expose asset-quality problems that Fitch has long highlighted - given the amount of non-loan credit disguised as financial assets.

In contrast, there are some countries in the region where the financial impact of IFRS 9 for banks could be softened by regulatory framework practices. These include Australia, Hong Kong, Korea, Malaysia, the Philippines, Singapore and Taiwan. Banks will still face provisioning pressures in these markets, but their current regulatory frameworks either already involve elements of the expected-loss approach or banks hold reserves that regulators did not allow them to fully release when IAS 39 was introduced. Regulators in most of these countries have also been progressively forcing banks to hold higher reserves, which will provide a buffer against potential losses. Nevertheless, the impact from moving to ECL is likely to vary from bank to bank even in the most prepared systems, reflecting the underlying riskiness of their assets and their own internal system capabilities.

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RInfra, Adani Transmission edge higher
Oct 05,2016

The announcement was made during market hours today, 5 October 2016.

Reliance Infrastructure (up 1.63% at Rs 599.35) and Adani Transmission (up 7.11% at Rs 42.95) edged higher.

Meanwhile, the S&P BSE Sensex was down 48.39 points or 0.17% at 28,286.16.

Reliance Infrastructure (RInfra) said that the transaction is in line with the strategic plan of monetizing non-core business and focus on major growth areas like defence and EPC business. The entire sale proceeds shall be utilized for debt reduction, it added.

RInfra is one of the largest infrastructure companies, developing projects through various special purpose vehicles (SPVs) in several high growth sectors such as power, roads and metro rail in the infrastructure space and the defence sector. The companys consolidated net profit rose 7.2% to Rs 438.80 crore on 2.6% rise in net sales to Rs 7032.83 crore in Q1 June 2016 over Q1 June 2015.

Adani Transmission is into power transmission business and is a part of business conglomerate Adani Group. The companys consolidated net profit jumped 297.2% to Rs 122.71 crore on 35% growth in net sales to Rs 632.01 crore in Q1 June 2016 over Q1 June 2015.

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Board of K P R Mill approves sub-division of shares
Oct 05,2016

K P R Mill announced that the Board of Directors at their Meeting held on 05 October 2016, have decided as follows:

1. Subdivision of One Equity Share of Rs.10/- each in the Company into Two Equity Shares of Rs.5/- each.

2. Amendment to the Capital Clause of Memorandum of Association to give effect to the above.

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Fitch: Political Risks Threaten Global Growth Outlook
Oct 05,2016

Downside risks to advanced country economic growth have risen in recent months, according to Fitch Ratings latest bi-monthly Global Economic Outlook (GEO) report. With populism gaining traction in many countries, the risk of political shocks adversely affecting the outlook for private investment has increased. At the same time, the capacity of central banks to engender stronger growth appears to be diminishing.

Fitch has revised down its forecast for US growth in 2016 to 1.4% in todays GEO from 1.8% in the July GEO.

This year is likely to see the lowest annual growth rate for US GDP since 2009 as oil sector adjustments, weak external demand and the earlier appreciation of the dollar take their toll on industrial demand, said Brian Coulton, Chief Economist at Fitch.

With eurozone growth looking likely to have peaked in early 2016 and no significant changes to Fitchs UK and Japanese growth forecasts - despite significant monetary policy moves - the outlook for the advanced countries is best described as a low-growth, muddle-through path. Advanced country growth over 2016 to 2018 will be hardly any better than the lacklustre 1.5% annual average growth rate seen over 2011 to 2015. Moreover, downside risks to advanced country growth have increased.

The rise in populism seen in many advanced countries could be a precursor to increased trade-protectionism and growing fragmentary tensions in the eurozone, both of which would increase uncertainty and damage prospects for private sector investment, added Coulton.

Meanwhile, the capacity of central banks to counter adverse growth shocks may be falling. The implications of low and negative interest rates for bank profitability, the increasing complexity of central bank easing announcements, reductions in interest income for savers and market distortions are complicating the transmission of unconventional monetary easing to the economy. Furthermore, the historically unprecedented nature of negative nominal interest rates may be limiting the benefits of central bank easing announcements on inflation expectations.

Rising political pressures and concerns about the effectiveness of monetary easing have contributed to growing support among policy makers for fiscal stimulus as a means of restoring growth. A wider shift to fiscal easing is increasingly apparent in the numbers and while its effectiveness may be hindered in some countries by high and rising public debt levels, a co-ordinated fiscal reflation is likely to have growth benefits, at least in the short term.

The Fed is likely to be the only major central bank tightening monetary policy in the near term as it lays the groundwork for a December rate rise. With unit labour costs and core inflation measures suggesting underlying inflation close to the Feds target and the labour market holding up, the conditions look to be in place for a continuation of gradual normalisation in the Federal Funds Rate. The ECB is expected to extend its quantitative easing programme beyond its current scheduled end-date of March 2017, and will likely need to adjust the limits on bond purchases. The new monetary policy approach adopted by the Bank of Japan (BOJ) opens the door for further cuts in the policy rate, taking it deeper into negative territory. This will allow the BOJ to steepen the yield curve while it varies its asset purchases to hold 10-year JGB yields flat at around 0%. We now forecast the BOJ policy rate will fall to -0.5% by end-2017.

In the UK, the Bank of Englands (BoE) aggressive easing package in early August has had a positive impact on sentiment. With recent UK data slightly better than expected, the BoE is unlikely to follow through on forward guidance to cut rates again before year-end.

Having been the main source of downside risk for global growth over the last couple of years, emerging market growth pressures have eased somewhat recently.

It is too soon to say the BRICs are back, but the macro picture in the big emerging markets is certainly steadying, said Coulton.

Most importantly, Chinas efforts to stabilise growth in the face of a sharp slowdown in exports and private-sector investment look to have gained traction. Russias economy looks to be stabilising after massive import compression, real wage adjustment and fiscal tightening saw domestic demand plummet in 2015. In Brazil, the impeachment of President Rousseff and installation of a new leadership team have renewed focus on fiscal reforms, which should support confidence and help the economy stabilise by year-end.

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Redington (India) announces resignation of director
Oct 05,2016

Redington (India) announced that R.Jayachandran, Non Executive Director of the Company vide letter dated 30 September 2016 expressed his willingness to resign from the Board of Directors of the Company.

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Quess Corp allots equity shares
Oct 05,2016

Quess Corp announced that that the Nomination and Remuneration Committee of Board of Directors, vide resolution dated 04 October 2016 allotted 7,95,398 Equity Shares under the Quess Corp Employees Stock Option Scheme 2009 (Amended).

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Canara Bank partners with Ministry of HRD, GoI
Oct 05,2016

Canara Bank announced that the Ministry of Human Resources Development, Government of India (MHRD, GOI) has decided to set up an Higher Education Financing Agency (HEFA) to give a major push for creation of high quality infrastructure in premier institutions viz., IITs, IIITs, NIITs, IISERs, Central Universities etc.,

Consequent upon completion of the process of inviting, examining and selection based on the Notice of Expression of Interest for identifying a Joint Venture partner for establishment of HEFA, the MHRD has appointed Canara Bank for establishment of Higher Education Financing Agency (HEFA).

Accordingly, the Bank has initiated steps in this direction to operationalise the Higher Education Financing Agency (HEFA) subject to necessary approvals / permissions from the Regulator/s and the Government of India.

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Sharad Fibres & Yarn Processors allots equity shares
Oct 05,2016

Sharad Fibres & Yarn Processors announced that the Board of Directors of the Company at its meeting held on 05 October 2016, inter alia, has considered and approved the allotment of 3,60,000 Equity shares of Rs. 10/- issued at par on preferential basis.

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Asian Paints revises record date for interim dividend
Oct 05,2016

Asian Paints has fixed 02 November 2016 as the Revised Record Date for the purpose of payment of interim dividend, if declared, for the financial year ending 31 March 2017.

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Premier Explosives secures new order for supply of booster grains
Oct 05,2016

Premier Explosives has secured an order worth Rs 27.79 crore from Bharat Dynamics for supply of booster grains.

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Tourism Finance Corp spurts as Jhunjhunwala buys stake
Oct 05,2016

Meanwhile, the BSE Sensex was down 49.87 points, or 0.18%, to 28,284.68.

On BSE, so far 24.58 lakh shares were traded in the counter, compared with average daily volume of 2.17 l shares in the past one quarter. The stock hit a high of Rs 70.50 so far during the day, which is also a 52-week high for the counter. The stock hit a low of Rs 65.80 so far during the day. The stock hit a 52-week low of Rs 34.75 on 24 May 2016. The stock had outperformed the market over the past 30 days till 4 October 2016, rising 41.12% compared with 0.69% decline in the Sensex. The scrip had als outperformed the market in past one quarter, rising 47.02% as against Sensexs 4.30% rise.

The small-cap company has equity capital of Rs 80.72 crore. Face value per share is Rs 10.

Data showed Insync Capital Partners bought 4.25 lakh shares, or 0.53% stake, in Tourism Finance Corporation of India at an average price of Rs 56.22 on NSE yesterday, 4 October 2016.

Insync Capital Partners has ace investor Rakesh Jhunjhunwala and his wife Rekha among its designated partners.

Net profit of Tourism Finance Corporation of India rose 22.5% to Rs 20.16 crore on 14.7% rise in operating income to Rs 50.47 crore in Q1 June 2016 over Q1 June 2015.

Tourism Finance Corporation of India provides financial assistance by way of rupee loan, subscription to equity / debentures and corporate loans mainly to hotel projects, amusement parks, ropeways, multiplexes, restaurants etc. With a view to diversify in other related areas, TFCI has expanded the scope of its activities by including financing of infrastructure projects, real estate projects and manufacturing projects to a limited extent, within the scope of its activities.

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Reliance Infrastructure signs binding term sheet with Adani Transmission
Oct 05,2016

Reliance Infrastructure announced the signing of a binding Term Sheet with Adani Transmission (ATL) for 100% stake sale of its Transmission Assets.

RInfra owns the countrys first 100% private sector transmission project - Western Region System Strengthening Scheme (WRSSS) - B & C projects located in the state of Maharashtra, Gujarat, Madhya Pradesh and Karnataka. RInfra owns 74% in Parbati Koldam Transmission Company (PKTCL) located in the state of Himachal Pradesh and Punjab in joint venture with Power Grid Corporation of India (PGCIL). All three transmission projects are completed and revenue generating.

The entire sale proceeds shall be utilized for debt reduction.

The transaction is in line with the strategic plan of monetizing non-core business and focus on major growth areas like Defence and EPC business. Monetisation of Cement business has been completed and monetisation of Roads & Mumbai Power businesses are in advanced stage.

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Indo Count gains after CARE upgrades credit ratings
Oct 05,2016

The announcement was made after market hours yesterday, 4 October 2016.

Meanwhile, the S&P BSE Sensex was down 55.46 points or 0.2% at 28,279.09.

On BSE, so far 18,000 shares were traded in the counter as against average daily volume of 25,072 shares in the past one quarter. The stock hit a high of Rs 758.05 and a low of Rs 721.05 so far during the day. The stock had hit a record high of Rs 1,248.45 on 8 February 2016. The stock had hit a 52-week low of Rs 700 on 29 September 2016. The stock had underperformed the market over the past one month till 4 October 2016, sliding 10.57% compared with 0.69% fall in the Sensex. The scrip had also underperformed the market in past one quarter, declining 28.37% as against Sensexs 3.87% rise.

The small-cap company has equity capital of Rs 39.48 crore. Face value per share is Rs 10.

This upgradation in the long term bank facilities (term loan) and short term bank facilities (fund & non-fund based bank facilities) ratings reflects the companys consistent cash accruals generated in the business and its strengthened leading position in the niche home textiles segment which has led to a healthy debt coverage metrics and liquidity position for the company, CARE said.

Indo Count Industries net profit rose 15.6% to Rs 60.29 crore on 6% growth in net sales to Rs 476.68 crore in Q1 June 2016 over Q1 June 2015.

Indo Count Industries is a specialized end-to-end bedding provider. The company makes bed sheet sets, pillow cases, duvet covers, bed skirts, comforters and window covering, etc.

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Indias gross domestic product is projected to expand 7.6 percent this year and next, the fastest pace among the worlds major economies-IMF
Oct 05,2016

Global economic growth will remain subdued this year following a slowdown in the United States and Britains vote to leave the European Union, the IMF said in its October 2016 World Economic Outlook.

n++Taken as a whole, the world economy has moved sideways,n++ said IMF chief economist and economic counsellor, Maurice Obstfeld. n++We have slightly marked down 2016 growth prospects for advanced economies while marking up those in the rest of the world,n++ he said.

The report highlighted the precarious nature of the recovery eight years after the global financial crisis. It raised the specter that persistent stagnation, particularly in advanced economies, could further fuel populist calls for restrictions on trade and immigration. Obstfeld said such restrictions would hamper productivity, growth, and innovation.

n++It is vitally important to defend the prospects for increasing trade integration, Obstfeld, said. n++Turning back the clock on trade can only deepen and prolong the world economys current doldrums.n++

To support growth in the near term, the central banks in advanced economies should maintain easy monetary policies, the IMF said. But monetary policy alone wont restore vigor to economies dogged by slowing productivity growth and aging populations, according to the new report. Where possible, governments should spend more on education, technology, and infrastructure to expand productive capacity while taking steps to alleviate inequality. Many countries also need to counteract waning potential growth through structural reforms to boost labor force participation, better match skills to jobs, and reduce barriers to market entry.

The world economy will expand 3.1 percent this year, the IMF said, unchanged from its July projection. Next year, growth will increase slightly to 3.4 percent on the back of recoveries in major emerging market nations, including Russia and Brazil (see table).

Advanced economies: U.S. slowdown, Brexit

Advanced economies will expand just 1.6 percent in 2016, less than last years 2.1 percent pace and down from the July forecast of 1.8 percent.

The IMF marked down its forecast for the United States this year to 1.6 percent, from 2.2 percent in July, following a disappointing first half caused by weak business investment and diminishing pace of stockpiles of goods. U.S. growth is likely to pick up to 2.2 percent next year as the drag from lower energy prices and dollar strength fades.

Further increases in the Federal Reserves policy rate n++should be gradual and tied to clear signs that wages and prices are firming durably,n++ the IMF said.

Uncertainty following the n++Brexit referendum in June will take a toll on the confidence of investors. U.K. growth is predicted to slow to 1.8 percent this year and to 1.1 percent in 2017, down from 2.2 percent last year.

The euro area will expand 1.7 percent this year and 1.5 percent next year, compared with 2 percent growth in 2015.

n++The European Central Bank should maintain its current appropriately accommodative stance,n++ the IMF said. n++Additional easing through expanded asset purchases may be needed if inflation fails to pick up.n++

Growth in Japan, the worlds number 3 economy, is expected to remain subdued at 0.5 percent this year and 0.6 percent in 2017. In the near term, government spending and easy monetary policy will support growth; in the medium term, Japans economy will be hampered by a shrinking population.

Emerging market growth expected to accelerate

In emerging market and developing economies, growth will accelerate for the first time in six years, to 4.2 percent, slightly higher than the July forecast of 4.1 percent. Next year, emerging economies are expected to grow 4.6 percent.

However, prospects differ sharply across countries and regions.

In China, policymakers will continue to shift the economy away from its reliance on investment and industry toward consumption and services, a policy that is expected to slow growth in the short term while building the foundations for a more sustainable long-term expansion. Still, Chinas government should take steps to rein in credit that is n++increasing at a dangerous pace and cut off support to unviable state-owned enterprises, n++accepting the associated slower GDP growth,n++ the IMF said.

Chinas economy, the worlds second largest, is forecast to expand 6.6 percent this year and 6.2 percent in 2017, down from growth of 6.9 percent last year.

n++External financial conditions and the outlook for emerging market and developing economies will continue to be shaped to a significant extent by market perceptions of Chinas prospects for successfully restructuring and rebalancing its economy, the IMF said.

Growth in emerging Asia, and especially India, continues to be resilient. Indias gross domestic product is projected to expand 7.6 percent this year and next, the fastest pace among the worlds major economies. The IMF urged India to continue reform of its tax system and eliminate subsidies to provide more resources for investments in infrastructure, education, and health care.

Sub-Saharan Africas largest economies continue to struggle with lower commodity revenues, weighing on growth in the region. Nigerias economy is forecast to shrink 1.7 percent in 2016, and South Africas will barely expand. By contrast, several of the regions non-commodity exporters, including Cn++te dIvoire, Ethiopia, Kenya, and Senegal, are expected to continue to grow at a robust pace of more than 5 percent this year.

Economic activity slowed in Latin America, as several countries are mired in recession, with recovery expected to take hold in 2017. Venezuelas output is forecast to plunge 10 percent this year and shrink another 4.5 percent in 2017. Brazil will see a contraction of 3.3 percent this year, but is expected to grow at 0.5 percent in 2017, on the assumption of declining political and policy uncertainty and the waning effects of past economic shocks.

Countries in the Middle East are still confronting challenging conditions from subdued oil prices, as well as civil conflict and terrorism.

Overarching policy challenge

Given the still weak and precarious nature of the global recovery, and the threats it faces, the IMF underscored the urgent need for a comprehensive, consistent, and coordinated policy approach to reinvigorate growth, ensure it is distributed more evenly, and make it durable. By using monetary, fiscal, and structural policies in concertn++within countries, consistent over time, and across countriesn++the whole can be greater than the sum of its parts,n++ Obstfeld concluded.

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Volumes jump at Redington India counter
Oct 05,2016

Redington India clocked volume of 1.43 crore shares by 13:11 IST on BSE, a 481.24-times surge over two-week average daily volume of 30,000 shares. The stock rose 4.36% to Rs 112.55.

S H Kelkar and Company notched up volume of 5.52 lakh shares, a 14.98-fold surge over two-week average daily volume of 37,000 shares. The stock fell 2.09% to Rs 304.50.

Shree Cement saw volume of 8,178 shares, a 14.71-fold surge over two-week average daily volume of 556 shares. The stock rose 0.11% to Rs 17,700.

ACC clocked volume of 2.11 lakh shares, a 14.08-fold surge over two-week average daily volume of 15,000 shares. The stock rose 0.51% to Rs 1,644.55.

Eveready Industries India saw volume of 4.06 lakh shares, a 12.26-fold rise over two-week average daily volume of 33,000 shares. The stock rose 0.65% to Rs 246.90.

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