World
US stocks decline after China cuts bank reserve ratio

The move of the People's Bank of China (PBOC), the first of its kind this year, aims to ensure reasonably ample liquidity in the financial system.

 

US stocks ended lower on Monday after volatile trading, as China's central bank announced a cut in its reserve requirement ratio (RRR) for commercial banks by 0.5 percentage points.
 
The Dow Jones Industrial Average fell 123.47 points, or 0.74 percent, to 16,516.50. The S&P 500 lost 15.82 points, or 0.81 percent, to 1,932.23. The Nasdaq Composite Index was down 32.52 points, or 0.71 percent, to 4,557.95, Xinhua reported.
 
The move of the People's Bank of China (PBOC), the first of its kind this year, aims to "ensure reasonably ample liquidity in the financial system; guide a stable and appropriate growth in credit; and create a favourable financial environment for supply-side structural reform," said China's central bank Monday in a statement.
 
Chinese shares ended sharply lower on Monday before the PBOC's announcement. The benchmark Shanghai Composite Index plunged 2.86 percent to close at 2,687.98 points.
 
In Europe, German benchmark DAX index at Frankfurt Stock Exchange inched down 0.19 percent, while French benchmark index CAC 40 rose 0.90 percent. The CBOE Volatility Index, often referred to as Wall Street's fear gauge, rose 3.74 percent to end at 20.55.
 
In other markets, oil prices saw a rise after the PBOC announced to lower its reserve requirement ratio to support the economy.
 
The US dollar decreased against most major peers as the housing data from the country came out negative.
 
In late New York trading, the euro dropped to 1.0883 dollars from 1.0928 dollars in the previous session, while the dollar bought 112.83 Japanese yen, lower than 113.91 yen of the previous session.
 
Gold futures on the COMEX division of the New York Mercantile Exchange rose on Monday as the G20 meeting ended with no tangible plan for growth, giving support to the precious metal.

 

Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

 

 

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Central government may list/divest only the top general insurers: Experts

The central government owns seven general insurers - GIC, New India Assurance, National Insurance Company, Oriental Insurance Company, United India Insurance Company, Export Credit Guarantee Corporation and Agriculture Insurance Company of India

 

The central government may list not more than two of six general insurance companies owned by it or may divest its holding, said industry experts on Monday referring to union Finance Minister Arun Jaitley's announcements in his 2016-17 budget speech.
 
Presenting the budget, Jaitley said: "Public shareholding in government owned companies is a means of ensuring higher levels of transparency and accountability. To promote this objective, the general insurance companies owned by the government will be listed in the stock exchanges."
 
The central government owns seven general insurers - GIC, New India Assurance, National Insurance Company, Oriental Insurance Company, United India Insurance Company, Export Credit Guarantee Corporation and Agriculture Insurance Company of India.
 
Jaitley did not reveal any names.
 
However, industry experts told IANS that the government might be looking at General Insurance Corporation of India (GIC), the national re-insurer, and New India Assurance Company Ltd and would probably ask Life Insurance Corporation of India to buy out its divested stakes.
 
Jaitley did not mention the names of the companies that the government is looking at listing, there are speculations as to the probable candidates.
 
A senior official in a government owned insurer told IANS that there were discussions on listing of the general insurers. It is also speculated that GIC and the country's largest general insurer could be the possible candidates for listing/divestment.
 
"Insurance Amendment Act 2015 amended General Insurance Business Nationalisation Act and introduced a new section 10B providing that GIC and the public sector general insurers may raise their capital for increasing their business in rural and social sectors, to meet solvency margin and such other purposes as the Central Government may empower," K.K. Srinivasan, former member, Insurance Regulatory and Development Authority of India (IRDAI), told IANS.
 
He said the amendment also clarified that the shareholding of the central government shall not be less than 51 percent anytime, thus setting the stage for partial divestment of GIC and other general insurers.
 
"With continued underwriting losses, the PSUs have been resorting to sale of investments to show profits and pay dividends to government. But this cannot last long since the PSUs will run of their stock of age old investments acquired at low prices sooner or later and the new investments will yield very little on sale," Srinivasan said.
 
Thus from the government viewpoint, the listing of PSU insurers in the Stock Exchanges and gradually divesting government holdings is a smart move.
 
Srinivasan however said the question is who will buy and at what prices the government owned insurers would fetch in the stock market.
 
He said all the insurers do not command equal respect.
 
As on now, New India and United India may have relatively better valuations than Oriental, National and others, Srinivasan said.
 
"The most likely scenario is for the government to nudge LIC or direct LIC to buy stakes in the public sector insurers using the absolute powers that the government has under (section 21 and 43 amongst others) of the LIC Act, till the market becomes favourable," he said.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
 

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India's core industry index shows positive growth in January

The index representing major infrastructure sectors had also recorded growth in December 2015

 

The industrial output index for India's eight core industries registered growth in January, pushed up by higher coal, refinery products, fertilizers, cement and electricity output, an official statement said.
 
The index representing major infrastructure sectors had also recorded growth in December 2015.
 
The index showed a rise of 2.9 percent in January 2016 on a month-on-month basis, compared to the 0.9 percent marginal growth in December 2015, official data showed on Monday.
 
The core industries fell by 1.3 percent in November last year.
 
The select factory output index for January is more than the growth of 2.3 percent achieved during the corresponding month in 2015, a commerce ministry release said.
 
This index comprises 38 percent of the total weightage of items included in the Index of Industrial Production (IIP).
 
Its cumulative growth from April to January 2015-16 stood at 2 percent, as compared to 5.3 percent during the corresponding period of 2014-15.
 
Out of the eight core industries, coal and cement reported healthy output numbers. However, production of oil, natural gas, and steel dipped in the period under review.
 
Electricity recorded 6 percent change in January 2016 as compared with 3.3 percent in January 2015. Its cumulative index during April to December 2015-16 rose by 7.6 percent over the corresponding period of previous year.
 
Distilling of refinery products, the third most important component as per weightage, increased by 4.8 percent in January.
 
Extraction of crude oil, which has a 5.21 percent weightage in IIP, fell by 4.6 percent during the month under review in comparison with 2.3 percent decline of January 2015.
 
Coal mining, with a 4.38 percent weightage, increased by 9.1 percent.
 
The sub-index for natural gas output, with a weightage of 1.71 percent, slipped by 15.3 percent in the month under consideration.
 
The fertilisers manufacturing with a weightage of only 1.25 percent rose by 6.2 percent.
 
Steel declined by 2.8 percent in January 2016.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
 
 

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