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Most Asian markets rise as investors weigh China-US trade row

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Hong Kong | Asian markets mostly rose Monday but investors were keeping a close eye on the China-US trade row after Donald Trump’s optimistic comments on a possible deal were offset by a war of words between his vice president and Xi Jinping.

The mood across the region was a little calmer at the start of the week, providing some much-needed support after the volatility of seven days ago, with oil stabilising and the Federal Reserve tempering fears about its plans for interest rate hikes. US markets provided a positive lead after Trump said Friday that Beijing had made overtures toward resolving their trade war, meaning he might hold off imposing another round of tariffs.

The president’s comments followed an indication from one of his top economics advisers that talks were under way ahead of a planned meeting at the G20 in Argentina at the end of this month.

However, hopes for an early agreement were jolted by a spat at the weekend APEC meeting between Mike Pence and Xi over China’s economic and regional ambitions, with the US vice-president mocking Beijing’s “constricting belt” and a “one-way road” initiative. Xi defended his scheme and hit out at Trump’s “America First” protectionist agenda, saying it was a “short-sighted approach” that was “doomed to failure”.

The stark differences between the two sides meant the APEC gathering ended without a final communique for the first time in its history. Still, investors in Asia were in a buying mood Monday as they picked up bargains.

In early trade Hong Kong was up 0.5 percent and Shanghai added 0.4 percent while Tokyo ended the morning 0.4 percent higher. Seoul gained 0.3 percent and Taipei added 0.1 percent with Manila jumping more than one percent.

However, Sydney dropped 0.6 percent, Singapore was off 0.4 percent and Wellington eased 0.2 percent. There was also some support from comments by top Fed officials last week hinting at concerns about the global economic outlook, indicating they see signs of slowing that could affect their plans for raising borrowing costs.

Expectations the US central bank would press ahead with a series of hikes well into next year, making debts more expensive for investors, have helped send global markets down this year. But while the prospect of slower rate hikes would be cause for celebration, Stephen Innes, head of Asia-Pacific trade at OANDA, sounded a note of caution.

“A Fed pause during a hiking cycle is a very strong ‘canary in a coal mine’ type of signal and could eventually lead a more profound correction lower in US equity markets if the US economy does sputter,” he said. Oil prices rose more than one percent, extending gains from the end of last week after major producer Saudi Arabia said it plans to cut output and called on other producers to follow suit.

“Hope is building on OPEC Plus (countries) to curb output as oil prices have entered into a bear market, falling over 20 percent from the peak in early October when Brent was at USD 86 per barrel,” Margaret Yang Yan, market analyst at CMC Markets Singapore.

However, the commodity remains under pressure from concerns about global demand and rising output as well as the China-US trade war. On currency markets the pound managed to hold off falling further as attention turns to British Prime Minister Theresa May’s attempts to win over enough members of her party to push through her Brexit deal.

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Sensex rises for 8th session, ends marginally higher

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Mumbai | Continuing its upward journey for the eighth consecutive session, market benchmark BSE Sensex ended marginally higher on Wednesday, following gains in Infosys, HDFC twins and L&T amid uninterrupted capital inflows by foreign funds.

However, gains were capped tracking weakness in Asian shares that slipped from six-month highs after a lackluster session as investors took profits ahead of a policy decision by the US Federal Reserve amid a report of US concerns that China is pushing back against American demands in trade talks.

The 30-share index began the session on a firm note at 38,433.86 and rallied to hit the session’s high of 38,489.81 on steady inflow of buying by foreign funds as well as retail investors.

However, emergence of profit-booking and losses in select heavyweight stocks on expiry of March series derivative contracts, the index turned negative and hit a low of 38,316.21 before returning in positive terrain to close the day higher by 23.28 points, or 0.06 percent, to 38,386.75. The barometer had rallied about 1,500 points in the previous seven sessions.

The broader NSE Nifty, however, ended 11.35 points, or 0.10 percent lower at 11,521.05 after shuttling between 11,556.10 and 11,503.10 during the session. Markets will remain closed Thursday on account of Holi.

Stocks of software exporters were centre of brisk activity after the rupee slipped below the 69 mark against the dollar. Software exporters’ majority of revenues come in dollar.

On a net basis, foreign institutional investors (FIIs) bought shares worth Rs 2,132.36 crore Tuesday, while domestic institutional investors (DIIs) sold shares worth Rs 1,253.67 crore, provisional data showed.

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Brookfield Asset Management bets big on India

Ali Azar

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Brookfield Asset Management – A Canadian firm with $ 350 billion of assets under management and a 120 year heritage, seems to be favouring India, and is on a deal making spree in the country with acquisition of hotels, real estate and a massive gas pipeline.

Just last week, an investment trust led by Brookfield bought Reliance Industries’ East West Pipeline – a 1,400 km pipeline that transports natural gas and connects Kakinada on the eastern Andhra coast to Bharuch in Gujarat on the west coast for an acquisition price of ₹ 13,000 crore.

Previously, Brookfield had invested around $ 7 billion in India, which includes the acquisition of office and retail assets of Hiranandani Developers in Mumbai, purchase of Equinox Business Park from Essar Group, which is a commercial property in Mumbai’s business district of Bandra Kurla Complex and has also invested in roads and renewable energy.

However, its latest acquisition on Monday, of hospitality chain, Hotel Leela Ventures is the one that’s making waves. At a transaction value of ₹ 3,950 crore, Brookfield marked its entry into the Indian hospitality sector and the promoters of the Leela brand, led by C.P. Krishnan Nair, who founded the group in 1986, will transfer assets, properties, management and other contracts of Leela Hotels at Delhi, Bengaluru, Chennai and Udaipur; which collectively contributed 88% of the net worth in F.Y. 2018.

However, Brookfield is not alone in its bullishness on India; almost all sovereign funds from West Asia, Singapore as well as Canadian Pension Funds are recognising India as a key destination and purchasing assets here.

 

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Mukesh’s help saves day for Anil as RCom makes Rs 550 crores payment to Ericsson

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New Delhi | Embattled billionaire Anil Ambani Monday warded off a possible jail term as RCom cleared dues of a Swedish service provider at the eleventh hour with money received from elder brother Mukesh and his wife Nita, whom he thanked for standing by him in trying times and extending “timely support”.

Anil’s heavily debt-laden Reliance Communications made a Rs 550 crore payment, including interest, to Ericsson just a day before expiry of the deadline set by the Supreme Court to clear dues or face a three-month jail term.

Soon after making the payment, RCom announced termination of a Rs 17,000 crore deal to sell telecom assets like spectrum, fibre and tower to Mukesh’s Reliance Jio, citing delays in approvals from the government and lenders.

Anil, whose businesses in telecom and power sectors went into heavy debt in the face of regulatory headwinds and intense competition, thanked Mukesh and his wife Nita for bailing him out.

“My sincere and heartfelt thanks to my respected elder brother, Mukesh, and Nita, for standing by me during these trying times, and demonstrating the importance of staying true to our strong family values by extending this timely support,” a late night statement issued by Anil’s firm quoted him as saying.

Anil said he and his family “are grateful” and “deeply touched with this gesture” that they “have moved beyond the past”.

In the statement, RCom said Rs 550 crore dues to Ericsson, including interest dues, has been made in compliance with the Supreme Court judgement.

However, the company did not give details about the source of funds but cited “timely support” from Mukesh in the trying times.

The two brothers had fought a bitter public battle after his father Dhirubhai died without leaving a will. They split his businesses between themselves, with Anil getting telecom and power while Mukesh retained oil and petrochemical businesses.

The split did not end the feud and the two bickered over commitment of Mukesh’ Reliance Industries for supply of gas to Anil’s power plants. In 2008, Anil’s RCom wanted to merge with South Africa’s MTN but the move was thwarted by Mukesh citing his holding right of first refusal.

Since then, the two brothers scrapped a no-compete agreement and Mukesh re-entered telecom business in 2016 offering free voice call for life and data at dirt cheap prices.

As debt grew, RCom, in December 2017, entered into a deal with Jio to sell spectrum and other assets such as fibre network and telecom towers for an estimated Rs 17,000 crore.

But the deal could not progress amid regulatory hurdles faced as the Department of Telecommunications wanted a written assurance on who would pay for RCom’s dues such as spectrum fee.

Jio refused to make a commitment to pay for such fee and lenders to RCom also played hardball, resulting in the deal falling through.

In separate statements, RCom and Jio announced the scrapping of the deal, citing delays in getting approvals from the government and lenders.

“The said transactions have become incapable of being consummated in accordance with the terms thereof, on account of various factors and developments since the execution of the said agreements nearly 15 months ago…,” RCom said.

Jio said the master agreement for acquisition of certain specific assets of RCom and the spectrum trading agreement for change in allotment of certain specific spectrum stand terminated.

This, it said, also follows the Board of Directors of RCom passing a resolution to seek fast track resolution through bankruptcy court and the National Company Law Appellate Tribunal (NCLAT) on February 4 restricting the sale, transfer or alienation of any movable or immovable property of RCom.

“The termination of the master agreement shall not, in any manner, affect the rights and obligations of the parties, accrued prior to the date of termination,” it said.

An Ericsson spokesperson confirmed that it has received balance payment of Rs 458.77 crore (principal amount) from RCom on Monday. Together with Rs 118 crore it had previously paid, RCom has cleared all dues including interest.

Last month, the Supreme Court held Ambani in contempt for not paying Ericsson’s dues despite promising to do so. The court had warned to send Anil as well as Chhaya Virani and Satish Seth – chairmen of two RCom units — to jail if they fail to pay the dues in four weeks. The deadline expires Tuesday.

The company suffered a blow when National Company Law Appellate Tribunal (NCLAT), last week, refused to free up Rs 260 crore tax refunds withheld by the lenders. Banks had opposed release of the tax refunds.

In 2017, Ericsson moved a bankruptcy court alleging it had not been paid dues around Rs 1,600 crore after signing a deal in 2013 to operate, maintain and manage the telco’s nationwide network. It extracted a personal guarantee from Ambani to pay the dues.

RCom scrip closed at Rs 4 a share on the BSE Monday, 9.30 per cent lower than the previous close.

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