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Saturday, October 24, 2009
China's economy roaring again...may trigger tightening
China’s economy expanded at the fastest pace in a year in the third quarter on the back of the government's massive stimulus spending and record bank lending. Gross domestic product (GDP) grew by 8.9% in the third quarter compared to the same period a year ago, according to data released by the National Bureau of Statistics. For the first nine months of 2009, GDP gained 7.7 percent from a year before. The increase was greater than the 7.9% expansion in the second quarter, and was broadly in line with estimates. A string of other economic data released this week added to growing speculation that Beijing could begin to unwind its unprecedented expansionary policies next year. But they will have to ensure that the withdrawal of record fiscal and monetary stimulus doesn't lead to a slowdown in the world’s third-biggest economy.
Urban fixed-asset investment rose 33.3% in the first three quarters, edging up from 33.0% growth in the first eight months of the year, the Statistics Bureau said. Industrial production in September rose 13.9% year on year, higher than expectations of a 13.3% rise and above August's 12.3% gain. For the first nine month of the year industrial production is up 8.7%. Data also showed that the consumer price index (CPI) fell for an eighth successive month in September from a year-earlier, by 0.8%, but this marked a slowing of deflation after August's 1.2% contraction. The producer price index (PPI) dropped 7.0% for the month, easing from a 7.9% fall in August.
Narayana Murthy turns Venture Capitalist
Infosys co-founder and chairman N.R. Narayana Murthy sold company shares worth around US$37mn to set up a venture capital fund for incubating Indian start-ups. Murthy will use the money as seed capital for a venture capital fund which he plans to set up in India. A statement issued by Infosys said that the proposed venture capital fund would encourage and support young entrepreneurs having brilliant business ideas. "The fund will primarily invest in India and may, on a case-to-case basis, consider investing overseas," Infosys said. In a statement issued to the stock exchanges on Thursday, Infosys said that Murthy had sold eight lakh shares, some 0.13% of the company's equity capital, on October 21 and October 22, raising around Rs1.74bn. After the transactions, Murthy holds 2.38mn shares in Infosys.
Govt approves 26 FDI proposals worth Rs13.6bn
The Government deferred a proposal by Jet Airways to raise US$400mn. The airline had planned to raise the funds from FIIs as the appetite for domestic investment in the aviation sector in India is not that strong. The Centre approved 26 proposals of Foreign Direct Investment (FDI) amounting to Rs13.61bn approximately based on the recommendations of the Foreign Investment Promotion Board (FIPB) in its meeting held on October 9. In total, 14 proposals were deferred. A plan by Opto Circuits (India) Ltd., Bangalore to issue Convertible Warrants on a preferential basis was also put on hold. UTV Software Communication Ltd.'s proposal to issue and allot equity shares pursuant to the Scheme of Arrangement approved by the Bombay High Court was also deferred. The proposed Joint Venture between EADS Deutchland GmbH (EADS), Germany and Larsen & Toubro Ltd. (L&T), Mumbai was rejected yet again. The two companies plan to incorporate a manufacturing JV company to undertake the production of defence equipment. Four proposals were rejected, including that of ByCell Telecommunication Pvt. Ltd. One proposal has been advised to access automatic route.
New 2G licences...DoT comes under CBI scanner
The Central Bureau of Investigation (CBI) raided the offices of the Department of Telecommunications (DoT) on suspicion that wireless mobile phone network licences were awarded below the market price last year. The CBI has registered criminal cases against unnamed officials working in the DoT and company executives for colluding to keep prices down, CBI spokesperson Harsh Bhal said. He said investigations had revealed the sale of the 2G licences in 2008 was conducted on a first come, first served basis at 2001 prices without competitive bidding or an auction. The DoT also put a cap on the number of applicants, which was against the regulator TRAI's recommendations, he said. But, Telecom Minister A. Raja denied any corruption in the awarding of new 2G licences to telecom companies last year after the CBI raids. "Licences were issued in accordance with the law. I had no external pressure to deviate from the law," he said. Raja said that the allocation of new 2G licenses conformed with a long-standing telecom policy. The BJP demanded that Raja be sacked and the CBI be given a free hand in the investigations.
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