In this briefing:
- UK Trip – Wake up to Deflation Risk
- Silent Alarm: Promoters Flock To Pledge Shares
- Confluence of Politics – China Bans Australian Coal Imports (Flash Note)
- India Monthly Report: Jan’19 – Feb’19
- Foldable Smartphones to Debut in 2019; Will It Aid an Industry Turnaround?
1. UK Trip – Wake up to Deflation Risk
By Bo Zhuang, Chief China Economist
- London-based investors are turning cautiously optimistic on China’s growth outlook amid the latest easing measures in January
- There is still little awareness about the rising deflation risk
- Interest in the trade war has subsided
2. Silent Alarm: Promoters Flock To Pledge Shares
In 2009, when Satyam Computers case unraveled it was revealed that a large portion of promoter shares were pledged with lenders and a substantial portion of that was sold by lenders. Responding to the situation then the Market regulator Securities and Exchange Board of India (SEBI) asked all the listed companies in the country to make disclosures on shares pledged by promoters within seven days and also amended the relevant regulations for the same.
3. Confluence of Politics – China Bans Australian Coal Imports (Flash Note)
- China implements coal import caps specifically targeting Australian producers
- Unclear as to how widespread these restrictions will eventually be
- Thermal and metallurgical coal exports affected
- Impacting ~A$8.4Bn of metallurgical coal exports; or 4.4% of national income
- Thermal coal exports affected worth ~A$3.8Bn; or an additional 2% of national income
- Collectively, thermal and metallurgical exports equate to ~0.9% of Australian annual GDP
- Actions appear to be a response to blocking Huawei bidding for the 5G network
- Recent Chinese cyber-attacks harden Australian Government’s resolve
- Expect similar Chinese measures (in time) to be applied to other commodities and industries
4. India Monthly Report: Jan’19 – Feb’19
Indian indices were the least performing among the select global indices with S&P BSE Sensex and Nifty 50 generating returns of 0.01% and negative 0.73% in domestic terms respectively. In Dollar terms they fell by 2.18% and 2.89% respectively. Indian Rupee witnessed deprecation of 2.18% during the period and fell from 69.40 USD/ INR to 70.95 USD/ INR. Among the select indices, Hang Seng was the best performer with dollar returns of 10.89% and among the select currencies, South African Rand was the best performing with an appreciation of 7.88%.
| Performance of Select Indices during Jan’19 | ||
| Index | Returns in Domestic Currency | Returns in USD |
| S&P BSE SENSEX | 0.01% | -2.18% |
| NIFTY 50 | -0.73% | -2.89% |
| Nikkei 225 | 6.19% | 6.84% |
| Dow Jones Industrial Average | 7.08% | 7.08% |
| HANG SENG | 11.19% | 10.89% |
| FTSE 100 | 3.49% | 7.06% |
Among the Sectoral indices, Nifty Pharma was the best performing with returns of 4.91% in dollar terms and Nifty Realty was the worst performing with falling by 17.41%
Performance of Indian Sectoral Indices during Jan’19 | INR Returns | USD Returns |
NIFTY PHARMA | 7.25% | 4.91% |
NIFTY IT | 0.67% | -1.52% |
NIFTY FMCG | -0.35% | -2.53% |
NIFTY FIN SERVICE | -0.64% | -2.81% |
NIFTY PVT BANK | -1.97% | -4.11% |
NIFTY BANK | -2.10% | -4.24% |
NIFTY AUTO | -3.55% | -5.66% |
NIFTY METAL | -3.77% | -5.87% |
NIFTY MEDIA | -7.00% | -9.03% |
NIFTY PSU BANK | -10.50% | -12.45% |
NIFTY REALTY | -15.57% | -17.41% |
5. Foldable Smartphones to Debut in 2019; Will It Aid an Industry Turnaround?
Plans regarding Samsung and Huawei’s foldable smartphones are out. The companies, which happen to be two of the largest contenders in the smartphone landscape are expected to unveil their foldable smartphone prototypes this month. In 4Q2018, Samsung, coming in first place, held a market share of 18.7% while Huawei, in third place, held a market share of 16.1%. Both companies are following different strategies when it comes to their foldable phone models.
The concept of foldable phones revolves around devices that can be folded into the size of a smartphone or opened up in to the size of a tablet. Huawei is said to be planning to introduce their foldable smartphone with 5G compatibility while Samsung is planning to release their foldable model with 4G compatibility. The market leader aims to leverage the expertise it has gained on its display technologies in its foldable smartphones.
Get Straight to the Source on Smartkarma
Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.
