Indias Economic Growth Slows Down to 6.6 Percent in Q3
Opinion & Analysis

India’s Economic Growth Slows Down to 6.6 Percent in Q3; GDP Growth Rate is Much Lower than Expectations

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India’s Gross Domestic Product (GDP) growth rate in Q3 which ended on 31st December 2018 has stood at 6.6 percent; the information is according to recent government data which was released on Thursday. The growth rate is at a 5-quarter low. It is the slowest growth rate ever since the quarter that ended in September 2017. The GDP growth rate is lower than the economist’s estimation. As per Reuters poll, the news agency mentions that they had assumed to GDP growth rate to be around 6.9 percent. The assumption was based on more than 55 economists, who voted on the poll held from February 19 to 25; the average prediction was of 6.9 percent GDP growth rate.

Ministry of Statistics addressed in a statement that, the GDP growth rate for the current fiscal year 2018-2019 has been assumed to 7 percent in comparison to the year 2017 to 2018 which was at 7.2 percent.

As per the data released by the government, the GDP growth estimation for the previous quarter of July to September has been reconsidered from 7.1 percent to 7.0 percent. The third quarter growth rate for the current financial year has noticed a considerable fall of 8 percent from April to June 2018.

The GDP growth rate was at 7 percent a year ago, higher than the Q3 growth rate and there is a decline in the GDP rate from 7.2 percent in 2018-2019, which was released recently, Central Statistics Office stated.

Meanwhile, India is overtaking China to maintain the tag of world’s fastest growing economy. China’s economic rate was up at 6.4 percent during its third quarter.

Economists have suggested that the slowdown in GDP may direct the Central Bank of India to another rate cut during its policy review in April.

L&T Finance Holdings group chief economist, Rupa Rege Nisture stated that she had assumed the overall GDP growth for the fiscal year 2019 should be reconsidered and reviewed downwards because of the farm sector that had suffered a lot due to uneven rainfall, drained reservoirs in agricultural states and their negative effect on the cultivation of food grains. The GDP data has managed to correctly hold on to these events.

In January, the Central Statistical Office (CSO) in its first advance estimation had predicted that the Indian economy may grow to 7.2 percent for FY19.

CSO mentioned that Gross Domestic Product at Constant Prices (2011-2012) for the year 2018-2019 is most likely to achieve Rs 141 lakh crore which will be against the GDP’s First Revised Estimate for the year 2017-2018 of Rs 131.80 lakh crore, that data was published on 31st January 2019.

The Reserve Bank of India (RBI) had predicted the GDP growth rate to be at 7.4 percent in this current year, 2018-19. This GDP slowdown had led the RBI to cut the important interest rates and to modify their policy stance to neutral so as to push for expansion ahead of sharp inflation fall.

The RBI has estimated the GDP growth rate for the next financial year to be between the level of 7.2 to 7.4 percent in the first half and in Q3 GDP growth rate to be around 7.5 percent.

The GDP at constant prices for quarter one is at 8 percent and for quarter two is at 7 percent, the Central Statistics Office mentioned in a statement.

In January of 2018, growth rate of 8 core sectors has slowed down to 1.8 percent because of decline in the output of crude oil, electricity and refinery products. While in January 2018, eight infrastructure sectors such as, fertilizers, cement, electricity, crude oil, coal, natural gas, steel and refinery products had increased by 6.2 percent, as per the government data that was released on Thursday.

However, in January, the production of refinery products was down by 2.6 percent, crude oil by 4.3 percent and electricity by 0.4 percent.

During the time of Narendra Modi’s government, the highest GDP growth rate was at 9.2 percent which was noticed in January to March quarter of 2018, and the lowest GDP was registered at 5.6 percent in the later quarter of July to September of FY18.

Meanwhile, the next projection of GDP growth rate for the March quarter and the yearly assumption will be on 31 May, 2019; for the year 2018-2019.

Economist’s Analysis

There are few sectors that may record a growth rate of more than 7 percent namely, defence, public administration, construction and other services like, electricity, gas, manufacturing, water supply and other utility services and real estate, financial and professional services.

HSBC misses
Trading News

HSBC misses on earnings expectations for 2018, blames US-China trade war and slowdown in the UK

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Declaring the annual financial report card for 2018, HSBC on Tuesday admitted falling short of expectations on several fronts, following a challenging fourth quarter. Markets across the globe experienced sharp falls in business activity during the last quarter.

Europe’s largest bank’s reported pre-tax profits for 2018 stood at $19.89 billion, a 15.9% jump from the previous year. Total revenue reported for the last year was $53.78 billion, 4.5% higher than in 2017. However, the London based bank’s pre-tax profit for the year gone by was expected to be at $21.26 billion, a 23.8% hike from 2017. Revenue projections were at $54.674 billion, 6.28% higher than the previous year.

The lender bank warned that it might have to scale down investment plans to avoid missing a key target known as ‘positive jaws,’ tracks whether banks are growing revenues faster than costs, for a second straight year. The share prices of HSBC fell by 3%. The bank has attributed the shortfall of expectations to the slowing trade in China and the UK.

HSBC CEO John Flint said on Tuesday that the bank would be proactive in managing costs and investments to meet risk to growth ratios where necessary. However, he assured that they wouldn’t take short term decisions that would hurt business interests in the longer run. He stated that the key focus would be to moderate investments and not to cancel or change the shape of investments.

The Chinese economy has slowed down to a 28-year low at 6.6%. This has challenged HSBC’s plans to increase investments in Asia, from where the banking giant accumulates 90% of its total profits. One of the major reasons for the slowdown of China is its elongated trade tussle with the United States. And if Beijing and Washington don’t reach the point of mutual consent, businesses will continue to suffer in both countries.

Asian markets contributed $17.8 billion to the bank’s profits, 16% more than what they did in 2017. Flint said that though the profits from Asia would continue to grow, the growth rate will dip a little due to the Sino-US trade war.

On the other hand, business back home continues to suffer. The sword of a no-deal Brexit is hanging on the UK as the deadline for Britain’s exit from the European Union is approaching. HSBC recently set aside $165 million against possible future bad loans in Britain, which reflected potential economic suffering due to a no-deal Brexit. Commenting of UK figures, Flint said that the longer uncertainty hovers around, the worse situations will continue to be for their customers. Due to uncertainty, the majority of the bank’s customers are postponing investments, which has resulted in the slowdown of the UK economy.

The core capital ratio of HSBC dropped to 14% for December 2018, a 0.5% drop from the previous year’s corresponding period, mainly due to adverse foreign exchange movements. Nonetheless, the bank has announced that it will be paying the yearly dividend at $0.51 per share, which is more or less in line with what markets analysts had predicted.

Opinion & Analysis

RBS Profits Soar More than Double, as Lender Issues Dividends Worth £1.6 Billion

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The Royal Bank of Scotland (RBS) has reported profits of £1.62 billion for the year ending 2018. The year on year profit growth has been over 200% from £752 million in the preceding year. The Bank has revealed a near £1 billion windfall for the taxpayer.

This is the bank’s second consecutive year yielding profits, and its performance allows it to pay a more than expected dividend, with £977 million returning to the treasury. This is the first time since 2007 that the RBS has posted profits for two years in a row.

He further added that the bank is also announcing an intention to pay back more capital to shareholders, and claimed that £1 billion is about to be returned to the UK taxpayers for 2018.

The RBS will be paying a final ordinary dividend of 3.5p per share and a 7.5p special dividend. Ross McEwan, chief executive officer of RBS, said in a statement that this was a positive performance in times of economic and political uncertainty, commending the bottom-line profits than doubled from what the bank achieved in the preceding year. Apart from the profit figures, the annual report published by the RBS also showed that the pay package of McEwan from £3.5 million in 2017 to £3.6 million in 2018.

He further added that the bank is also announcing an intention to pay back more capital to shareholders and claimed that £1 billion is about to be returned to the UK taxpayers for 2018. McEwan said that they are very well positioned to support the UK economy accompanied by strong capital and liquidity levels. He also said that the total banks lending to business and commercial clients crossed the £100 billion mark at the end of 2018.

However, McEwan has warned against a no deal Brexit. In a recent interview, he opined that uncertainty over Brexit was hitting investments, and urged politicians to come up with a conclusion as early as possible. He stated that larger businesses have been pausing investments in the UK for the last few quarters. This might adversely affect small businesses who cater to the large ones, ultimately trickling down jobs and money that comes into the economy. He expressed his concerns on the approaching deadline of March end and felt that certainty over the big fallout is extremely crucial for business.

Nonetheless, the RBS has declared that it would pay £355 million as bonuses to staff. Past week RBS acquired shareholder approval to buy back shares of up to £1.5 billion value from the Treasury. The move aims to accelerate the privatization process by buying back 4.99% of the government’s stake per year. Currently, the British Government owns 62.4% shares in the RBS. As on today, the bank’s stock is trading around 240p per share, which is far less than 502p that the government paid as a bailout (£45b) during the peak of the 2008 financial crisis.

The Treasury plans to sell its stake in the RBS by 2024, with expected losses amounting to billions.

Ford Focuses on Doubling Profit
Company News

Ford Focuses on Doubling Profit

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Jim Hackett, Chief Executive of Ford Motor Co, said on Thursday that the company would be aiming to double its annual operating profit this year. Ford, the No.2 automaker in the U.S. had mediocre gains last year. Hackett’s comments on the coming year’s profits were made in an email to the employees at Ford.

Ford has been restructuring its operations worldwide, including plenty of cuts in Europe. The company also recently announced its new alliance with Germany’s Volkswagen to introduce self-driving and electric vehicles. This move will help both the companies save billions of dollars.

Ford’s fourth-quarter results announced on Wednesday, comprised of $7 billion operating profit in 2018 along with a profit margin of 4.4 percent, which is comparatively lower than the 6.1 percent reported in 2017. Ford has announced that it is targeting 8 percent operating margin in the upcoming quarter.

According to the email Hackett sent to the employees, 2018 was considered a mediocre year. He thinks the $7 billion which comes to 4.4 percent operating margin to be only half of the appropriate margin. He also mentioned that the company would be aiming for $14 billion although he has not given a timetable as to when the $14 billion targets will be hit. A Ford spokesman clarified that Ford was demonstrating to the employees how the margin target translates to the overall profit.

With 20 months experience on the job, Hackett said that it is time to bury 2018 in a deep grave and mourn over what could have been and focus better on the coming year.

Ford did not share a specific financial forecast for 2019 with Wall Street. It only mentioned that there is a potential for improving earnings and revenue. This is in stark contrast to General Motors Co, which is Ford’s larger U.S. rival. General Motors forecasted higher 2019 earnings on Jan 11, surpassing analysts’ estimates.

Hackett also said that he was angry at himself while looking through the 2018 results of the company. He speaks in his email about the competition which is better and how he believes that Ford is better than its 2018 results.

According to Hackett’s email, Ford is considering moving its timeframe to introduce electric and self-driving cars in its portfolio. He is trying to find out why it missed the trends in China, where Ford is losing money.  With China being the world’s largest auto market, this issue needs to be tackled quickly if Ford plans on doubling its revenue in the coming year.

News

Tamil Nadu Intends to be the popular hub for defense sectors, aerospace, sights investment of worth $15 billion

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The Tamil Nadu government in considering an investment of worth $15 billion in the aerospace and defense department during the next 15 years to enable the State the most popular hub for both the sectors.

When Nirmala Sitharaman revealed the most awaited desirous aerospace and defense policy, the Defence Minister investment of $15 billion was informed. During the opening day of the Global Investors Meet the second edition on Wednesday, it was mentioned.

The main goal of the policy is to shape Tamil Nadu as the most preferred hub for aerospace and defense industries across India especially in the areas of design engineering, allied operations, and manufacturing.

In Tiruchirappalli, on January 20 the Defence Minister Sitharaman has unveiled the Tamil Nadu Defence Industrial Corridor which is about 300km away from Chennai. Investment of worth more than Rs 3,038 crore, at this defense corridor it was stated among them the majority of them were from public sector undertakings.

The objective of the Aerospace and Defence policy is to draw investment of around $5 billion in the next 5 year and later investment of another $10 billion by ten years mainly in the aerospace and defense department

The government also intends to create more job of around 1 lakh during the initial ten years especially in the field of aerospace and defense sectors.

Apart from this Aerospace and Defence sectors will be boosted, the policy will also control the strengths of Tamil Nadu mainly in the automotive manufacturing industry.

Tamil Nadu is home for most popular automobile companies. These companies have established themselves in the State among them the most popular are the following one’s Ford, BMW, Hyundai Motor India, and India Yamaha Motors.

The government also desires to develop Center of Excellence, Skill development institutions and Research and Development centers within the State by drawing the attention of global OEMs [Original equipment manufacturers] and top Indian companies across Tamil Nadu.

Some of the important benefits about Tamil Nadu in boosting the industries have covered in the policy. Namely, the state will rank first depending upon the number of factories and industries employees.

Tamil Nadu’s Gross State Domestic Product has increased at an annual growth rate of around 9 percent during the year 2004-2005 and during 2016-2017 average rate of around 7.5 percent growth higher than the national growth rate.

In India, Tamil Nadu is the third largest manufacturer of electronic and hardware, and the electronic hardware companies of the State noticed a growth, the annual growth rate from 2008 was around 30 percent.

In State, fortune 500 companies have established the manufacturing facilities which includes companies like Dell Computers, Motorola, Foxconn, Flextronics, Samsung Sanmina-SCI and other it mentioned.

To build the aerospace and defense industry in the State, the government is considering undertaking Cluster development and use appropriate approach to develop the aerospace and defense manufacturing unit by building the most needed infrastructure.

Some of the government agencies like the Tamil Nadu Industrial Government Corporation and SIPCOT will develop parks related to aerospace and defense industries using adequate infrastructure within the State.

The government will establish single window clearance facility through the Tamil Nadu Industrial Guidance Bureau that will look after the overall industry of aerospace and defense mostly associated with the infrastructure and manufacturing projects regardless of the size of the investment, it stated.

The formal launch of the aerospace and defense policy was revealed by the Defence Minister Sitharaman and the first copy of the policy was accepted by the Chief Minister of Tamil Nadu K Palaniswami.

Company News

Alipay secures smooth business amidst Brexit tensions

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China’s leading mobile and online payments app Alipay has received e-money license in Luxembourg.

Alipay already holds a license issued by Britain’s Financial Conduct Authority. Luxembourg, a small country between Belgium, Germany, and France gave Alipay the surety of uninterrupted and smooth business in the event of a strong exit of UK from the European Union. The new P2D2 license will allow the Alibaba group to connect Chinese users with local merchants in EU countries and vice versa. The increase of mobile payments has effectively increased local merchant sales and advance the financial tech economy both in China and Europe. According to a recent survey, about 71% of Alipay adopting sellers said they recommend its use to increase sales.

With more than a billion users worldwide the Chinese giant Alibaba has been lobbying the Brexit situation and proactively approaching solutions to a worst-case scenario Brexit. The new Luxembourg licensed entity will be called Alipay (Europe) Limited S.A. and was officially introduced to the world in a Hong Kong press release by Pierre Gramegna, the Minister of Finance in Luxembourg.

Supporting the country’s decision of license grant, Mr. Pierre said: “Alipay’s presence would be beneficial to the Luxembourg financial ecosystem and will facilitate Luxembourg to consolidate the country’s position as the leading European hub for financial technology and e-commerce in EU.”

The news comes instead of another technology giant Alphabet Inc. being granted a payments license in Ireland, a move that will see Google expand its financial services offerings across all European countries.

dfg
Opinion & Analysis

Exchange-traded notes to attract Wall Street Investors, claims CBOE Analysts

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As per recent news, Ed Tilly who is the CEO, president and chairman of Chicago Board Options Exchange (CBOE), said that to attract Wall Street Investors, it is important that exchange-traded notes (ETNs) from Bitcoin (BTC) is made public. The visibility is important for the Wall Street institutional investors as far as joining the digital asset industry is concerned.

CBOE is the largest options exchange in the United States and offers options for over 2,200 companies, 22 stock indices, and 140 exchange-traded funds. It is a subsidiary of the Chicago Board of Trade and was established in 1973. CBOE Global owns CBOE. CBOE is the issuer of the CBOE Volatility Index and is a popular measure of the stock market’s expectations of volatility.

In a press meet, Billy said that there had not been a substantial growth for Bitcoin futures in recent times due to the absence of possible notes or trackers which are usually associated with BTC, with which retail customers could trade.

He even claimed that as far as the offering of access points to Wall Street Investors are concerned both exchange-traded notes and futures are important. Exchange-traded notes or ETNs are predominantly more accessible to the general investors when compared to traditional futures because of the fact of their low barrier for entry. Having a future comes along with having an ETN as well which is attractive to retail customers followed by institutional customers who can avoid the risk on the listed future market.

An exchange-traded note is a senior, unsecured, unsubordinated debt security issued by an underwriting bank. Similar to other debt securities, ETNs have a maturity date and are backed only by the credit of the issuer. ETNs are designed to provide investors access to the returns of various market benchmarks.

According to Billy, there is a particular reason for not approving the Bitcoin exchange-traded products such as the still-pending exchange-traded fund (ETF) application as the regulators are not competent to protect investors from trade manipulation which are inevitable in a market where regulators lack control.

An Exchange-Traded Fund or ETF is a fund that is traded on a stock market. They function as investment funds which allow everyone accesses to an index or commodity providing the same profit to investors as the major markets do. Thus, ETF stocks are one of the most popular among exchange users because of the easiness to invest in industries without being charged by the fund manager. Before buying an ETF, it is necessary to check what is included in the fund.

As per a leading news agency, Cointelegraph, Brian Kelly who is an entrepreneur and contributor to the news channel CNBC, stated in a press meet that there might not be any chance for a Bitcoin ETF approval this year.

It was in the news recently that Bitwise Asset Management which is a digital asset index fund provider is looking forward to registering with the US Securities and Exchange Commission to introduce a new Bitcoin exchange-traded fund platform.

China Tax Cut Strategy to Tackle Slowdown
Financial Planning

China’s Tax-Cut Strategy to Tackle Slowdown

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As per the recent Chinese credit data, the Chinese Government is relying on the tax cut as the first line of defense against the slowing down of the economy. The data imply that the Chinese Government has accepted the fact and started taking measures for the same.

Senior Chinese policy officials confirmed that more large scale tax reductions are in the pipeline. As the country is facing multiple issues with the economy like worsening of trade and total output, it has finally depended on the fiscal measures. As per JPMorgan Chase & Co., the total impact would be around 2 trillion yuan ($300 billion), or 1.2 percent of the gross domestic product of China.

This time China is following a different path to tackle the situation than the path taken after the global financial crisis. Its focus on the previous attempt was on infrastructure investment and monetary policy changes. This time China wants to tackle the slower economic growth without a debt blowout. It has managed to expand the credit growth for December, and the Central bank has been very successful in curbing the shadow banking which possesses a huge risk to the economy.

As per data, aggregate Financing in November was 1524 billion yuan, and in December it rose to 1590 billion yuan, with a median estimate of 1300 billion yuan. Out of the total financing, new yuan loans for November was 1250 billion yuan, and in December it contracted to 1080 billion yuan, with a median estimate of 825 billion yuan. And M2 money supply year-on-year basis for November was 8.0 percent, and in December it rose to 8.1 percent, with a median estimate of 8.1 percent.

Cui Li, the head of macro research at CCB International Holdings Ltd. in Hong Kong said at this moment the scope for monetary policy is very less, and fiscal policies such as tax cuts will be effective. She also added that the high leverage and property prices had limited the chances of massive monetary stimulus. But comparing with the infrastructure binges, as a growth measure, tax cut’s effects will be realized gradually.

Last year May saw a deduction of value added tax by the Government in manufacturing, transportation, construction, telecommunications, and farm produce industries, followed by a lowered personal income taxes and the introduction of more such deductions. And earlier this month, the State Council announced a $29 billion annual tax cut meant for small businesses.

Though it is still unclear whether the new approach of a tax cut will be effective or not owing to global tensions and trade war with the United States, but the approach has been adopted due to China’s debt load. By spending money on infrastructure like bridges, road, railways, etc. may become counterproductive for the stability of the economy.

JP Morgan economists led by Zhu Haibin wrote in a report that the Government is facing the debt load problem due to years of over-investment and huge spending on infrastructure that led to a surging debt.

The report also states it is yet uncertain that how much tax benefits will be moved to the required class for showing the effects on the Economy.

As per economists, the reduction in the tax may boost the Gross Domestic Product growth by a minimum of 0.46 percent. But, the slowdown linked to slower growth of world economy and trade war will not leave the Chinese economy very soon. It will linger on to the few next quarters.

The new policy changes that are scheduled to happen was briefed by Zhu Hexin, deputy governor of the People’s Bank of China, Xu Hongcai, assistant minister of the Ministry of Finance, and Lian Weiliang, the vice chairman of the National Development and Reform Commission. They also pledged to support the consumption of cars as well as other household goods. It should be reported here that the sales of cars fell for the first time in 28 years.

Xu said that the government would facilitate local governments to issue more infrastructure bonds in comparison with 2018 that will ensure continuous infrastructure development, but the rise in bonds should not be taken as a measure to tackle slower growth.

A Shanghai-based economist at Shenwan Hongyuan Group Co. said that in order to increase the personal consumption and consumption by businesses, a tax cut is the only way out for the Government. Introducing big financial stimulus packages may not yield results that are expected.

However, owing to the nation’s quasi-fiscal efforts such as special bonds and land sales will lead to an inflated fiscal deficit. It is expected to have a growth in Fiscal deficit of 11.3 percent of total output this year, whereas the last year’s mark was at 10.7 percent.

Tariff Cuts-

The government also has declared rounds of import tariff deductions so that the cost pressure would be minimal on the consumers and it also had said that opening up of the economy would be again rolled out this year on a wider basis.

The Government is most likely to set a target growth for this year in the range of 6 and 6.5 percent, as per experts.

Carie Li, an economist at OCBC Wing Hang Bank Ltd in Hong Kong, said the credit data is still showing negative numbers as the Government’s prolonged campaign to wring out the shadow banking has been successful. The new stimulus measures in terms of fiscal policy changes are still unable to fill the gap created by the crackdown by the Chinese Government. And the Government, as well as the Central bank, may need to think about the funding needs of the privately-owned businesses specifically in order to achieve the credit growth they have expected.

Trump Orders Fast Food after Shutdown Closes White House Kitchen
News

Trump Orders Fast Food after Shutdown Closes White House Kitchen

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The on-going shutdown has affected the lives of many in the United States. The affected persons range from the federal employees to other businesses dependent on the Government. But, it is strange and equally surprising that the shutdown has also affected the United States President.

President Trump personally paid for an “all American” feast of burgers, pizza, and fries for a visiting college football champions in White House. President Trump had to do this as the White House chefs are among those federal workers who are furloughed owing to the partial shutdown. It should be reported here that the ongoing shutdown is the longest one in the history of the United States.

On Monday, the Clemson Tigers were invited by President Trump to the White House as they have won the national championship defeating Alabama Crimson Tide.

Having all the Chefs of White House absent due to the on-going shutdown, Trump used his own money to order burgers and fries from McDonald’s and the Wendy’s which he termed as the “great American food.”

He said that he had ordered American Fast food paid by the President himself, the food included lots of hamburgers, pizzas. He also added that he had hoped the team would like those foods more than he could offer.

Standing behind the spread of fast food, in the Dining Room of the White House, Trump said he likes them all, and he would like to see at the end of the evening how many are left.

White House Press Secretary Sarah Sanders said that the President had arranged a fun event to celebrate the College Football National Champion Clemson Tigers. As the Democrats are adamant on refusing the budget for the border wall, there is a shutdown, and the President had to pay on his own as due to the Shutdown, White House staff is also furloughed.

When asked about the choice of McDonald’s or Wendy’s Trump said he chose these outlets as those are all good American stuff, and the national champion team at the White House deserves a little celebration. Praising the team for the game, he said that the team had played fantastic against Alabama.

It was for the second time the Clemson Tigers were invited to the White House. They had visited the White House in June 2017 after winning the previous championship.

The football player walked into the event and found tables loaded with hamburgers from McDonald’s, Wendy’s and Burger King. Another table was full of Dominos Pizzas and fries.

President Trump explained that he had arranged a number of foods that are liked by the Americans throughout the nation and he would like to see how many are left after the end of the event. He also said that because of the shutdown he had to arrange the event like this.

He also added that he was happy about the Republicans sticking together for the greater good of the nation. Emphasizing on the border wall, he said it is needed from the security viewpoint, and the wall should have been done many years before. And he said he is confident that the wall is going to be built this time.

It should be reported here that the partial shutdown has reached 24th day due to the conflict between the Trump administration and the Congress over the funding of proposed U.S. – Mexico border wall. The lives of around 800000 federal workers have been affected by this partial shutdown. The cost of the proposed wall would be $5.7 billion and as per some experts in a week, if the Shutdown continues, the cost to the American economy will surpass the cost of the proposed wall.

The shutdown has closed temporarily many key departments like the State Department and not surprisingly the White House kitchen. Trump told at the event that he did not want to postpone the event until the shutdown ended.

The last record shutdown happened in 1995-1996 at the time of President Bill Clinton which lasted for 21 days.

Trading News

Pound Steadies After May Loses Brexit Vote

By 22432 0

UK Prime Minister Theresa May suffered a humiliating and historic defeat on the Brexit deal in the House of Commons. Her deal was dismissed by the Member of Parliaments by 230 votes which is considered as the largest defeat suffered by a ruling government in UK’s history. 432 of the MP7s voted and out of them, 209 said ‘No’ to the deal. Earlier, May has postponed the voting from December to garner more support from the MP’s but despite that could not get them to vote for her Brexit Deal.

If the vote had been passed in the House of Commons, May had plans of making a departing from EU on Mar 29 and has also worked out on a transition period to thrash out details of a deal for free trade. Since the deal did not come through, now there is speculation about an early general election which could be another headache for Prime Minister May after Jeremy Corbyn has pressed for a no-confidence vote against the government.

Pound steadies but till when?

Despite May’s defeat in the exit vote, the Sterling has recovered, and that has taken the investors on a rollercoaster ride. The investors expected the Pound to slide down if May lost, but on the contrary, the Pound rebounded against the Dollar. Now that the ‘no-deal’ situation is highly probable with the huge defeat May has faced, the Pound is getting much support, and that is seen in the markets too. Even though the pound is steady for the time being, the future looks quite unstable as there is no telling about the outcome of the vote for ‘no-confidence.’ The Pound is expected to be stable for a short duration if Theresa May survives the vote of no-confidence. However, on the other hand, if she loses the pound can have a significant fall due to chances of a general election. The pound will remain volatile till the political situation stabilizes.

The GBP was at $1.284 against the dollar and was less by 0.1% and had regained a cent more than the lowest in the day after a huge margin defeated may. The trade funds that are focused on UK exchange are under tremendous pressure. The FTSE 100 ETF which a Tokyo based saw a decline of 1%, so were the shares in Asia-Pacific outside Japan. Shenzhen and Shanghai shares also saw a fall of 0.1%.