All Asian markets are trading in the green after the US markets rose sharply yesterday
The local market is likely to witness a strong opening. The US markets settled with smart gains yesterday, with the Dow and S&P 500 closing at multi-year highs on a surge in manufacturing growth and corporate earnings. The markets that are open in Asia today are trading in the green in early trade on signs of stability in the global economy. The SGX Nifty was up 65.50 points at 5,489.50 compared to its previous close of 5,424.
Yesterday, the market opened trade with decent gains, tracking the global markets. However, it soon lost steam on offloading by institutional investors and slid deep into the red. Despite upbeat economic data, the indices witnessed a free-fall in the morning session. There was no let up in the post-noon session as all the sectoral gauges were in negative territory. The decline resulted in the key benchmarks closing at the day's lows. The Sensex was down 306 points at 18,022 and Nifty 89 points down at 5,417.
Among the key US indices, the Dow and the S&P 500 closed at their highest points June 2008 on a rise manufacturing growth positive earnings reports. The Institute of Supply Management’s factory index rose to 60.8, topping analysts’ forecast and the highest level since May 2004. Readings greater than 50 signal growth. Meanwhile, US auto sales touched around 819,900 vehicles in January, matching the fastest pace in 17 months with a seasonally adjusted 12.6 million vehicle annual rate, according to research firm Autodata Corporation.
On the earnings front, Pfizer and UPS reported better-than-expected earnings resulting in the former gaining 5.5% and UPS rising 4.1%.
The Dow surged 148.23 points (1.25%) to close at 12,040.16. The index closed above the 12,000 level for the first time since June 2008. The S&P 500 gained 21.45 points (1.67%) to 1,307.57. It closed above 1,300 for the first time since August 2008. The Nasdaq added 51.11 points (1.89%) to 2,751.19.
Markets in China, Hong Kong, South Korea and Taiwan are closed for the Lunar New Year holiday. Among the markets that are open, most of them are trading in the green on positive signals from the global front and choosing to ignore the political turmoil in Egypt. Upbeat US auto sales supported Toyota Motor Corporation while Casio Computer Company and Mitsubishi Materials Company rose on higher profit figures.
The Jakarta Composite advanced 1.10%, the KLSE Composite surged 0.79%, the Nikkei 225 jumped 1.91% and the Straits Times gained 0.62% in early trade.
Back home, profitability of Indian steel producers may decline by 4%-5% in April-June as prices of coking coal, a key input in steel manufacturing, have gone up by $40-$50 per tonne due to floods in major producing region Queensland, Australia, according to a study by Crisil.
Queensland, which is badly hit by recent floods, accounts for 40%-45% of the world's exports of coking coal. The disruptions in supply due to floods have driven coking coal spot prices to $280-290 per tonne, the study stated.
The BFX would allow users to trade a wide range of multi-asset class instruments through a single exchange environment, which will be internationally accessible to trade, securities, structured products, Shariah-compliant financial instruments and derivatives.
Financial Technologies (FT) Group said it's wholly owned Bahrain Financial Exchange (BFX), the Middle East and North Africa's first ever multi-asset exchange, officially launched its operations on Tuesday. The official launch ceremony was hosted by Rasheed Mohammed Al Maraj, Governor of the Central Bank of Bahrain deputising for Prince Khalifa Bin Salman Al Khalifa, the Prime Minister of the Kingdom of Bahrain.
Rahul Bajaj underlines the need for clean corporate governance if a company has to retain the trust of its customers and shareholders
"If the top management, the chairman or chief executive officer of the company is downright corrupt then corporate governance is not possible," says Rahul Bajaj, chairman of Bajaj Auto Limited. He was speaking at the "Governance Series" organised by the Confederation on Indian Industry (CII) on Tuesday.
Mr Bajaj spoke at length on various aspects of corporate governance in India and the role of an independent director.
According to Mr Bajaj, if the culture of the company's board is not correct, but is tainted by corruption, then customers and shareholders would leave the company. He said that excessive regulation affects those who run an honest business, rather than punishing the fraudsters and the crooks who will find a way to commit fraud despite regulation.
Speaking on the role of independent directors in a company, Mr Bajaj underlined that an independent director should not be on the board of more than dozen of companies, as only then would he be able to do justice. He further said that "independent directors should be able to decide if they want to be led or want to lead."
In his speech Mr Bajaj touched on tenure, liability, remuneration and the panel of independent directors. He said, "The panel of independent directors as maintained by the ministry is fine as far as they don't tell me to pick my independent director from your panel. It would be independent of me and not of you."
A question was poised to Mr Bajaj as to how independent directors would survive in the 'shoot-the-messenger/ whistleblower' regime and to this he said that "it will only succeed if he has the confidence in the mechanism created. Most of the companies have the policy to support them."
Mr Bajaj also made some general remarks on the Indian corporate sector, saying there is much scope for growth and to compete with big giant companies. Much more research and development is needed, in order to sustain and grow, he pointed out.
Mr Bajaj said India Inc is growing and there has to be a certain amount of regulation, but at the same time there has to be confidence in good chairmen and CEOs.
"We have to have some regulations, but let entrepreneurship and innovation flourish. Let us trust that the majority of chairmen and CEOs are good, not just inherently, but because their wealth and reputation depends on how well they and the company do. Let's have faith in them and then have minimal regulation to catch the crooks," he said.
Also sharing the stage at the event was Neville M Dumasia, executive director and head of governance, risk and compliance services, KPMG in India, who spoke on how to build effective boards, and Zia Mody, chairperson, CII M&A Forum and managing partner, AZB and Partners, who introduced Mr Bajaj.