China's mountain of maturing debt puts a fear that nobody's talking about

For all the talk of China’s mountain of debt, defaults and deleveraging, there’s a chasm nobody is talking about. Here’s an alarming and frequently cited statistic: Chinese industrial companies have at least $124 billion of debt maturing over the next two years. Actually, it’s worse. 

They have another $34 billion of bonds with put options – giving creditors the right to sell back their securities or get a higher coupon – that can be exercised within the next two years. Lenders could be asking for their money back much sooner than companies and investors expect. Whether bondholders cash in is anyone’s guess. But they have an incentive to do so, given rising market rates. For borrowers, puts effectively bring forward the maturity date: In July-September this year, about $3 billion of such options can be exercised for the first time on debt that’s due two years later, in 2020.

News Digest: Hard time for Tata Nano, robust FPI inflows, and more

India-focused funds continue to see robust inflows
After sharp outflows in August and September, the Indian market is once again experiencing a positive investment spell from overseas investors. Foreign portfolio investors (FPIs) have poured nearly $3 billion into domestic stocks since August. A large part of these flows have come from India-focused offshore funds. These are actively managed funds that exclusively invest in select Indian securities, unlike exchange-traded funds (ETFs) which track indices such as the Nifty 50 or the S&P BSE Sensex.
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Dealers stop placing orders for Tata Nano

Tata Motors’ Nano, the cheapest car launched in recent times, is now also among models clocking lowest monthly production and sales volume (in double digits to be precise). The average daily production of just two Nano cars at the company’s Sanand plant is indication enough that this vehicle is now as good as obsolete. Dealers of Tata Motors in most parts of the country have stopped placing orders for this small car in the last three-four months and the showrooms are displaying contemporary models such as Tiago, Tigor, Hexa and Nexon. Read more

Tyremakers to invest Rs 35,000 crore in 5 years

During the same time last year, the capacity utilisation of the tyre industry was 65-70 per cent. It is not only growth in the automobile industry that has helped the tyre segment. Growth has been aided by government policies also, said Satish Sharma, chairman, Automotive Tyre Manufacturers’ Association (ATMA), which claims to represent about 90 per cent of tyremakers. Read more

Are you a credit risk? Banks dig deep in your phone to find out

Indian banks have started mining data on customers’ smartphones for fast loan approval, testing out cutting-edge but controversial technology in what is potentially a huge market for such products. Long hampered from lending to the hundreds of millions of Indians without credit histories, banks are hoping to slash risk-assessment costs and trigger a new wave of consumer lending with apps that look at everything from Facebook connections to online shopping habits to rate potential borrowers. Read more 
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How diamonds can become 'the new gold' for investors

Diamonds can at last be an investor's best friend, the Singapore Diamond Investment Exchange (SDIX) said on Tuesday, as it launched a new standardised form of the precious stones to rival gold ingots as a safe-haven alternative to cash.

The industry says diamonds are the world's most concentrated form of wealth, but investors have long viewed them as less useful as a store of value than gold because each stone is different, making its value subjective and trading difficult.

Alain Vandenborre, chairman and founder of SDIX, says technology has solved that problem and diamonds can now become "the new gold".

Diamond Bullion, produced by the Singapore Diamond Mint, is a collection of investment grade diamonds whose value can be quickly checked. Denominations will initially range between $100,000 and $200,000, with higher and lower values possible in future.

The diamonds are stored in a credit card-sized device containing a chip that allows immediate valuation based on exchange trading and instant authentication, which is crucial as synthetic diamonds have no resale value.
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S&P, Dow dip as Irma approaches US; Disney also weighs

The Dow and the S&P were slightly lower in late morning trading on Thursday as investors kept a close watch on Hurricane Irma, which was barreling toward Florida.

Indexes were also weighed down by a 3.1 per cent fall in Walt Disney shares, after the company said its Marvel and Star Wars titles would go exclusively to its planned streaming service.

Irma plowed past the Dominican Republic on Thursday after devastating a string of Caribbean islands and killing at least 11 people as one of the most powerful Atlantic storms in a century took aim at Florida.

"As the hurricane moves, investors are looking for a better grip on the damage that can be done. There are far-reaching implications now that we have back-to-back ones," said Andre Bakhos, managing director of Janlyn Capital in Bernardsville, New Jersey.

Hurricane Harvey, which hit Texas and Louisiana more than a week ago, had claimed 60 lives and caused property damage estimated as high as $180 billion.

Worries about the impact of hurricanes and weak U.S. jobless claims data sent the benchmark 10-year Treasury yields to their lowest since Nov. 10.

What is on investors' minds is that yields continue to move lower. It gives you an indication that people are still a little bit nervous - about North Korea and what the future holds for the (Trump) administration as far as what it is going to accomplish," said Robert Pavlik, chief market strategist at Boston Private Wealth in New York.
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Amazon's big profit miss spooks investors, but analysts stay bullish

A steeper-than-expected drop in quarterly profit rattled some Amazon.com investors, but Wall Street analysts remained largely bullish about the company's aggressive spending plans.

Shares of the e-commerce juggernaut, which have risen 40 per cent this year, were down 4.3 per cent at $1,001 in early trading on Friday, wiping out $21 billion from its market value.

The stock touched a record high on Thursday, helping CEO Jeff Bezos briefly unseat Microsoft Inc co-founder Bill Gates as the world's richest person.

"The overall story coming out of Amazon's second quarter print feels a lot like it did three months ago - accelerating growth, stepped-up investments, lower near-term profitability," JP Morgan analyst Doug Anmuth said.

"But will anyone care about profit when Amazon is taking bigger chunks of market share?"

The world's largest online retailer reported a better-than-expected rise in revenue, but operating profit came in well short of analysts' estimate as the company continued to pump in money to expand in international markets such as India.
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Nestle capital plan only the start of new leadership's larger shake-up idea

Nestle's plan to shore up its capital structure, announced only days after being thrust into the spotlight by activist shareholder Third Point, was received by investors as a precursor to bigger changes under the company's new leadership.

Shares in the world's largest foodmaker rose as much as 2 percent on Wednesday, close to the record high touched on Monday after the New York-based hedge fund disclosed a $3.5 billion stake and urged Nestle to buy back shares, set a target for margin growth and shed non-core assets including its stake in L'Oreal.

Investors did not have to wait long for a response, with Nestle announcing late on Tuesday that it would launch a 20 billion Swiss franc ($20.8 billion) share buyback programme while leaving room for near-term acquisitions.

Nestle also said it would continue adjusting its portfolio and assess opportunities to boost profit margins, stopping short of setting a firm target. It added that the measures were the result of a review instigated at the start of the year after Mark Schneider took over as chief executive.

The moves were welcomed by stakeholders large and small.

"This is a new era for Nestle and I'm extremely positive on the prospects for internal and external growth," said Carine Menache, who runs a Monaco investment firm that owns Nestle shares. She and UBS analysts said the buyback should lift earnings by 6 percent, while increased merger and acquisition (M&A) activity could provide a further boost.

"Nestle may have a poor track record for M&A, but the new CEO, Schneider, is now in charge and he has a great track record," she added.

Reaching a 19 percent operating margin, the midpoint of Third Point's recommendation, would lift earnings by another 8 percent, according to UBS, which said Nestle shares now offered the greatest opportunity for growth of all the European packaged goods companies it covers, bolstering its "buy" rating.
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Sensex hovers on a flat line ahead of RBI policy; broader markets outpace

Latest News - The benchmark indices on Wednesday were trading flat ahead of Reserve Bank of India (RBI)'s monetary policy meeting due later in the day. Globally, Asian markets dipping below their four-month highs also sapped investor confidence.
At 10:10 am, the S&P BSE Sensex was trading at 28,329, down 6 points, while the broader Nifty50 was ruling at 8,770, up 2 points.
In the broader market, the BSE Midcap and BSE Smallcap indices outperformed the frontline indices to quote 0.5% and 0.4%, respectively.
"Nifty has to sustain above 8,740 zones to witness buying interest towards 8,820 and then 8,880 zones, while on the (Read More)