Updates from the world of economy, markets, and finance
After rising concerns among investors over the shutdown of certain funds by Franklin Templeton, there’s been some firefighting by mutual funds.
Reuters reports: “The Association of Mutual Funds in India on Friday urged investors to remain calm after global fund manager Franklin Templeton shut six of its debt funds in India, citing market dislocation and a lack of liquidity amid the coronavirus pandemic.
Franklin Templeton Mutual Fund, one of India’s most prominent mutual fund houses within the fixed income space, said late on Thursday it would wind up six credit funds with a large exposure to higher-yielding, lower-rated credit securities.
AMFI said the debt portfolios of most mutual funds had ”superior credit quality” and were “fairly liquid” and called on investors to “not get side-tracked by an isolated event”.
“There is no need for (investors) to panic and redeem their investments,” AMFI chairman Nilesh Shah said in a statement. ”The industry continues to remain robust.””
Rupee slips 40 paise to settle at 76.46 against US dollar
An update on the rupee as trading comes to a close for the day.
PTI reports: “The rupee depreciated by 40 paise to settle at 76.46 (provisional) against the US dollar on Friday, tracking weak domestic equities and a strengthening greenback overseas.
Forex traders said market sentiment weakened after a potential antiviral drug for coronavirus reportedly failed its first trial.
The rupee opened lower at 76.30 at the interbank forex market and then fell further to 76.47 and finally closed at 76.46, down 40 paise over its last close.
The rupee had settled at 76.06 against the US dollar on Thursday.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, advanced by 0.31 per cent to 100.74.”
NBFCs, MFIs to see Rs 50-60k crore funding gap on lack of moratorium
The shadow banking sector has been hit hard by the RBI moratorium for retail borrowers and is now in need of emergency funding to make good on the debt they owe towards commercial banks.
PTI reports: “The RBI may have to open direct liquidity window for small NBFCs and MFIs as banks refuse to offer moratorium to them on one hand, and gave a muted response to the first TLTRO auction, aggravating their funding gap to Rs 50,000-60,000 crore, according to a report.
Small and medium shadow banks and micro-lenders need a direct refinance from financial institutions or the RBI should open direct refinance window for them, Acuite Ratings said, a day after the apex bank said the first TLTRO auction of Rs 25,000 crore saw a tepid response from banks, which put in bids for just half the amount — only Rs 12,850 crore.
“We believe the liquidity concerns of NBFCs (non-bank financial companies) and MFIs (microfinance institutions) have aggravated and a quick response is the need of the hour. The funding gap is estimated to further increase to Rs 50,000-60,000 crore,” the agency said in a report.
The estimate is based on the analysis of “the top 11 retail NBFCs which may find the funding gap of Rs 10,000-20,000 crore in Q1. Without the moratorium or partial moratorium from banks, the funding gap will increase further to Rs 15,000-25,000 crore in Q1. Clearly, the gap for the sector including MFIs in Q1 will be much higher at Rs 50,000-60,000 crore based on broad estimates“.”
COVID-19 crisis likely to hit 29 lakh jobs in Indian aviation, dependent sectors, says IATA
The COVID-19 pandemic is expected to impact more than 29 lakh jobs in the Indian aviation and dependent industries, global airlines’ grouping IATA said on Friday.
Commercial flight services in the country remain suspended till May 3 amid the nationwide lockdown to curb the spread of infections.
The International Air Transport Association (IATA) said its latest estimates indicate a worsening of the country impact from the COVID-19 crisis in the Asia-Pacific region.
About India, IATA said the pandemic is expected to potentially impact 29,32,900 jobs in the country’s aviation and its dependent industries. The passenger traffic has declined 47%.
India’s truckers in crisis: Police checks, no food and fears of coronavirus
Even a month after the lockdown, supply-chain issues continue to plague the country threatening food supplies.
Reuters reports: “India had exempted truckers carrying food, medicine and other essential items from the nationwide lockdown that started on March 25, but in many cases, the message had not gone through to police on the highways and officials at state border checkpoints.
Restaurants and repair shops along highways are also mostly closed, despite government approval this week to open them, further throwing the sector into turmoil. For the trucks that do operate, loading and unloading times have spiked because of a lack of workers.
Industry bodies estimate only about 20% of India’s roughly 9.8 million trucks are currently operating – either due to a lack of drivers or because demand from manufacturing and other industries has come to a halt. The $130 billion domestic trucking industry ships roughly 60% of the nation’s freight.
Globally, freight movements by road were down about 30-40% at the end of March, the International Road Transport Union has said.
About a dozen truck drivers who spoke to Reuters in India said despite empty roads, it was taking longer to make deliveries due to non-availability of food and repair shops, slow loading of goods and in some cases, harassment by police.
They said hundreds of thousands of drivers, many of whom fear catching the virus as well, have fled to their villages, slowing movement of goods, pushing up freight rates and causing logjams at ports and warehouses.”
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