Why has the world suddenly turned underweight on emerging markets? It's because the belief in them as a growth story has disappeared after earnings growth became elusive. As Adrian Mowat of CLSA puts it, emerging markets are no longer the darling of investors now. "While India's earnings growth has been just over 7% compounded, US has delivered earnings growth of over 8%. I am at a stage where I am trying to reassure investors that emerging market stories is not dead. That is the starting point."
STREET PULSE: Where we stand Asian share markets got the week off to a muted start on Monday as jaded investors awaited real evidence on progress in the US-China trade dispute.
HERE'S WHAT TO WATCH  | SGX Nifty traded some 3 points lower at 7 am (IST), signalling indecisiveness on Dalal Street. MSCI index for Asia-Pacific shares outside Japan dipped 0.06% in very light volumes. Japan's Nikkei added 0.05%, but remained short of its recent 13-month top. |
| Wall Street's main indices closed at record levels on Friday, as S&P500 scored its sixth straight week of gains. The Dow ended 0.8% higher while the S&P500 made 0.77% and Nasdaq 0.73%. |
| Oil prices were little changed on Monday following steady gains in the previous week with investors awaiting fresh clues over prospects for a trade deal between the US and China, shrugging off concerns over steadily rising oil supplies. Brent crude futures were down 5 cents at $63.25 a barrel while WTI crude traded at $57.72 |
| The rupee appreciated by 18 paise to close at 71.78 against the American currency on Friday, extending gains for a second day on the back of easing crude oil prices and positive trends in equity markets. |
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IBC Booster... The Supreme Court judgement on Essar Steel has come as a breather for 535 other corporate debtors facing liquidation by December. These companies had crossed 270 days deadline for a resolution under the Insolvency and Bankruptcy Code. While the time limit for resolution is 330 days, if debts are not resolved within this timeframe, the only option left is liquidation. Under the new ruling, NCLT can grant an extension.
Read More Aramco IPO... Saudi Arabia put a valuation on state-owned oil giant Aramco of between $1.6 trillion and $1.71 trillion, well below the $2 trillion target sought by Crown Prince Mohammed bin Salman since he first mooted an initial public offering in 2016. Aramco will sell just 1.5% of its shares on the local stock exchange, the Tadawul, somewhat less than expected. At the lower end of the price range, the offer would fall short of a record, coming in just below the $25 billion raised Alibaba Group Holding's in 2014.The target valuation will still make Aramco the world's biggest public company by some distance, overtaking Apple.
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DHFL Stares at Bankruptcy... Mortgage lender DHFL stares at bankruptcy proceeding if its creditors are unable to sign on a resolution plan by January 7. The regulator or the government can initiate bankruptcy and insolvency proceedings under Section 227 of the bankruptcy code, which got notified on Friday, if there is no solution in sight within next 45 days. Bankers want mutual funds on board to ensure that no entity takes a unilateral decision. Of the about Rs 1 lakh crore exposure to the banking sector, 38% is in the form of bank loans while the rest through debt markets, mutual funds, insurance companies and deposits. Most banks have started making provision on their exposure to DHFL. While banks and NBFCs have signed the proposed resolution, some mutual funds have had reservations.
Read More Airtel Bond Hit… Global investors appear to have turned apprehensive about Bharti Airtel's ability to repay debt amid growing concern over stress in the local telecom sector. The company's offshore perpetual bond yields surged more than 200 basis points, pulling down prices from their October 7 launch levels as the debt papers changed hands in the secondary market. The bonds were sold with a coupon of 5.65% and now yield 7.73%, dealers said. Asset managers, insurance companies, pension funds and banks across Europe, Asia and the US picked up the bonds.
Read More Meanwhile... Vodafone Idea's estimated AGR-related dues of Rs 44,200 crore could rise sharply, entailing additional provisioning and stretching its balance sheet further, if the methodology adopted by the telecom department to compute such liabilities is different, said analysts. Voda Idea had indicated during an analyst call on Friday that it had "estimated its AGR liability through differential interest rates of 18% and 12.5%, and if it's done any other way, the same would increase significantly.
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