Trading News

As Hopes on Trade Talks Rise Asian Stocks Reach 4-Month High

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There is great optimism that the US and China will be able to come to a deal and resolve the seven-month trade war between both countries. Due to that sentiment, the stocks in the Asian markets which were fluctuating mostly in the negative side rose to a 4-month high on Wednesday.

At the market:

The Beijing and Washington officials are hopeful that the talks which will begin next week will bring them closer to deal over the trade war and that cheered the markets.

The Shanghai Composite which is China’s benchmark and CSI 300 which is a blue-chip rose to 0.4% and the Hang Seng of the Hong Kong market increased by 0.6%. Asian markets rose on indications from the Wall Stress where Nasdaq and Dow rose by 1.5% over the positive outcome of trade talks between China-US. Wall Street was also optimistic as the possibility of another government shutdown became less due to a tentative deal with the US Congress.

Asia-Pacific broadest index MSCI increased by 0.5% and reached its highest since October 2018. South Korea’s KOSPI rose by 0.5%. Meanwhile, Nikkei climbed by 1.3% to reach a two month high.

In the currency market, the dollar was shedding as investors in the hope of a deal between China and the US moved their money to assets that are riskier. The dollar after reaching a two week high stood at 96.69.

The Euro ended a little higher by gaining 0.5% from yesterday and ended at $1.133 surpassing the 3-month low of $1.1258.

The Reserve Bank of New Zealand confined the cash rate at 1.75% which is a record low and highlighted its neutral stance. The Kiwi dollar increased by 1.4% and reached a one week high of $0.6829.

The dollar was steady at 110.57 yen.

Another major development that happened overnight in Wall Street is that the Cboe Volatility Index dropped to its lowest in more than four months and was at 14.95. The yields of the government bonds rose due to the risks being averted for the time being. The 10-year bonds of the US Treasury increased to a high of 2.694%.  The US crude oil futures also increased by 0.1% and was at $53.64 per barrel after it rallied at 1.3% on Tuesday.

There was an increase in oil prices as the data published by OPEC showed that there was a reduction in oil production in January. Moreover, Saudi Arabia which is a leading member in OPEC said that it would cut its output in March additionally by 500,000 barrels.

Company News

Facebook Encryption Case: US Judge Keeps The Documents A Secret

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A US court has rejected the demand by two civil rights groups for the release of documents by Facebook to decrypt the conversation that an MS 13 gang had on Facebook’s messenger app. On Feb11, the US judge rejected the demand, the issue came up after a joint investigation by the Federal and state investigation agencies wanted Facebook to decrypt the voice conversations the MS-13 gang had on their Messenger service. Facebook uses end-end encryption to protect calls from being intercepted. That essentially means only the two conversing parties will only have access to it and nobody else can intercept it.

All telecom companies in the US have to give access to calls to the police under its Federal laws, but those apps which use the internet are exempt from it. Facebook claims that its Messenger app also falls under that exemption. The filings made by the two civil groups and the public filings in the Fresno case states that the government intercepted all ordinary phone calls and texts that happened between the MS-13 gang members and the affidavit says that only a few Messenger calls were not heard. Despite not hearing the conversations, the gang members were arrested.

Many groups which include the ACLU or the American Civil Liberties Union contend that the public had the right to know the laws on encryption and it outweighs the reason the Justice Department may have for a criminal probe. Even the Washington Post filed a brief to decrypt the records. The US judge in Fresno Lawrence O’Neill judged that the documents were sensitive and that it would not be possible even to release the revised version of it as it is a sensitive law-enforcement technique. He addressed that ‘The materials at issue in this case concern techniques that, if disclosed publicly, would compromise law enforcement efforts in many, if not all, future wiretap investigations.’

The arguments made by Facebook and the Justice Department to ACLU’s statements are kept as a secret, but the judge in his statement wrote that Facebook had supported the ACLU’s request to release the documents with some revisions while the Government was against the decision. Both the US Justice Department and Facebook have declined to make any comment publicly about this case as the court has passed a gag order against speaking in public. However, there have been reports of investigators failing to convince Facebook in a courtroom to wiretap specific messenger calls.

Kiran Mazumdar Shaw Imposed With Fine Of 9.5 Lakh Rupees
Trading News

Duracell and Energizer Competing for Controlling Stake in India’s Eveready

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Eveready, one of the biggest manufacturers of flashlights and dry cell batteries, has been put on the market by India’s Williamson Magor Group due to a pile of debt that has crippled the holding company of the group. According to a report in India’s Economic Times, the fight for the controlling stake in Eveready is going to see be an intense one, and it is interesting to note that two American heavyweights, Duracell and Energizer, are both vying for it. However, what places Energizer in a far better bargaining position is the fact that the company already owns the Eveready brand in key markets like the United States and China. They are, without a doubt, in pole position.

That being said, Duracell is going to mount a serious challenge to their bid, according to sources that are familiar with the matter. The fact that Warren Buffett’s Berkshire Hathaway is the owner of Duracell also makes it a very interesting duel. Other than the two American companies, major private equity companies are also in the running for the controlling stake. Among them are India private equity outfit Kedaara and global giants like KKR and Blackstone. Eveready is an incredibly attractive asset, and the interest among investors is palpable.

The Willamson Magor Group, which has interests in a range of business, is led by the Khaitans, an Indian business family and as of now, they own 45% of the shares in the company. Having been saddled with debts to the tune of around $140 million in the group, the Khaitans now want to sell off their stake in Eveready, and they have contacted Indian bank Kotak Mahindra to look for buyers. Any bidder who manages to get his hands on 45% of the shares owned by the group will also have the option to enforce a clause by way of which they can acquire a further 26% stake in the company.

All bids are going to be sent in this week and out of those a set of entities will be selected. Once that is done, a concrete offer can be made. Everyone who is close to the developments refused to comment on the issue. Spokespersons for Eveready refused to comment, while it was the same with Duracell, Energizer and private equity players KKR and Blackstone. A source, however, pointed out that the Khaitan family might retain a stake of around 10% to 15% following the sale. He said, “They are flexible and are looking at all options and will take a final call based on the final offers on the table. There is significant traction for the asset for its scale and brand equity. Expect a 30-40% control premium to the current market price.” 

Budget Boost in the Offing
News

Budget Boost in the Offing for Singapore’s Senior Citizens

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With an election looming this year, the senior citizen population in Singapore are going to get a generous package in the upcoming budget, according to analysts familiar with the matter. The population in the country is getting on in age quite fast, and the budget is possibly being framed with one eye on the election. Although taxes in Singapore are low, living costs have continued to rise in one of the world’s biggest financial hubs, and consequently, the senior citizen population has been forced to work well past the conventional retirement age. This situation has led to a lot of anger and resentment on the part of the elderly, which is why the upcoming is going to be quite a generous one for the section of the population.

The Singaporeans born in the 1950s or the so-called ‘independence generation’ has been chosen for special treatment this year as the country readies itself for an election this year. Direct benefits transfer and rebates have been part of budgets in election years before, but this is possibly going to be different. As the country clamps down on immigrant labor, the need to keep the senior citizens in the workforce is more important than ever. Life expectancy stands at 83 in Singapore. Additionally, birth rates are falling as well and hence, the provisions for the elderly in the February 18 budget is not a huge surprise.

Other than direct or indirect benefits, the Singaporean government is also going to unveil plans to launch drives that will help senior citizens in different industries in enhancing their skills. Before the elections in 2015, the government had announced a scheme by way of which pensioners with low income were going to get regular payments from the government. Additionally, an S$9 billion scheme was launched to take care of the healthcare costs of senior citizens, and according to analysts, such a scheme could be introduced in the upcoming budget as well.

Although there is widespread concern about the rise in public spending in a low tax country like Singapore, analysts believe that the country has enough legroom to continue with their spending and much of that has to do with the fact that the country has recorded a fiscal surplus over the past three years. The total fiscal surplus stood at S$19 billion, and it is no surprise that the lawmakers are comfortable with this initiative in this year’s budget. Barnabas Gan, who is an economist at United Overseas Bank, said, “Notwithstanding the prospect of a pre-election budget, the need remains for Singapore to stay business relevant and education supportive amidst the ongoing uncertainties in the global economic space.”

Jim ONeill Says
Opinion & Analysis

Jim O’Neill Says, Chinese Consumer is the most Important for World Economy

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Former Goldman Sachs Chairman Jim O’Neill has told in a recent interview that the single most important thing in today’s world economy is reviving the Chinese consumer.

As per Chinese official statistics, the country’s growth has been slowed down to 6.6 percent in 2018, which is slowest in the last many years. The country’s on-going trade war with its biggest trading partner is also affecting China’s economy. The trade war coupled with slower growth is impacting China’s plan to have a transition from a manufacturing and export-led economy to a consumer-driven model.

O’Neill who now acts as chair of Chatham House, an international affairs think-tank, told that he was not at all surprised that the growth figures of China have dipped.

He said, “People shouldn’t be freaking out, the demographics have turned.” He also added that Beijing had planned some of the reduction in Chinese growth.

The former Goldman Sachs supremo said though the Chinese growth of 6.6 percent is slowest in almost last three decades, its year-on-year growth is still equivalent to the GDP of Australia.

However, O’Neill also noted one area where Chinese officials are struggling as far as the economy is concerned.

O’Neill said, “The one thing that does bother me is the Chinese consumer is slowing, that’s not supposed to happen, and the single most important thing in the world economy is the Chinese consumer slowing down.”

Brexit-

As per O’Neill Brexit also have similar if not equal impact on the world economy as it will impact both the United Kingdom and the European Union. As Britain has only 50 days to leave the European Union, the relations between the two parties have dipped after EU Council President Donald Tusk suggested on Wednesday there would be a “special place in Hell” for Brexiteers who had still offered a no-exit plan.

O’Neill told in an interview to CNBC that the rhetoric was perhaps “a bit surprising by Brussels leadership standards,” who were “normally extremely diplomatic,” but did not come entirely out of the blue.

He said, “It doesn’t look like the Brexiteers have thought about Irish border question at all, so kind of not surprising so for Brexiteers to feel a bit of their own general aggressiveness, you know they are not the only guys that can be mean and tough.”

As per him, Brexit with a no deal from the European Union has a meager chance.

He also added there had been signs that U.K. Prime Minister Theresa May, who visits Brussels Thursday, looked to be trying to weaken the resolve of the hard-core Brexit elements in her own party to get a withdrawal deal struck.

He said, “I wonder if the PM is trying to play a sort of Machiavellian game, she is sort of trying to split the hardcore Brexiteers, and she has sort of dragged them to a slightly different position.”

Oil rich Kuwait Plans
News

Oil-rich Kuwait Plans to Increase the Investment in India by Double

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Taking advantage of India’s growth story and exploring third country joint Projects. Kuwait is aiming to double its investment in India from the current five billion dollars.

As per sources, The Kuwait Investment Authority (KIA) has currently invested five billion USD and plans to double this. Kuwait also is aiming to enter into third country joint projects on the lines of joint Kuwait-Japan investments in third countries.

Recently India and UAE have joined into a third country project with the African nation, Ethiopia. India also has plans of having a similar partnership with Saudi Arabia.

As far as history goes, India and Kuwait have a vibrant trade relationship. India has been consistently one of Kuwait’s top ten trading partners. As per the 2017-18 statistics, Kuwait was the ninth largest oil supplier to India, and it meets about 4.63% of India’s energy needs. According to India’s External Affairs Ministry’s brief on India-Kuwait relations, “India is looking for a substantial Kuwaiti investment in the oil & gas sector. Large business houses of Kuwaiti also have investible surpluses.”

As per India’s MEA, total non-oil bilateral trade between India and Kuwait increased by about 11%, from $ 2,150.63 million in 2015-16 to $ 2,405.40 million in 2017-18. India’s non-oil exports to Kuwait are experiencing a positive trend for the past few years. In 2017-18, non-oil export from India to Kuwait increased by about 19.60%, from $ 1,240.54 million in 2015-16 to $ 1,361.06 million.

The MEA brief added total bilateral trade with Kuwait during 2015-16 was $ 6.2 billion. India’s exports to Kuwait grew by 4% ($ 1.24 billion) in 2015-16 with respect to 2014-15. India’s exports to Kuwait included food items, cereals, textiles, garments, electrical and engineering equipment, machinery and mechanical appliances, cars, trucks, buses, tires, chemicals, jewelry, handicrafts, metal products, iron, and steel, etc.

However, Kuwaiti investment in India has been largely through portfolio managers indirectly. In 2015, KIA announced an investment of $ 300 million in GMR Infrastructure Ltd. According to the MEA brief, earlier, in October 2015, KIA made a substantial investment in the Interglobe Aviation’s (Indigo Airlines) IPO.

The MEA brief states, “In 2013, KIA had made an investment of $ 5.37 million in the Power Grid Corporation of India Limited, other significant Kuwaiti presence in India includes those by Alghanim Group of Kuwait; the KAPICO group; National Aviation Services; Agility Logistics, Hasibat Holding Co, KGA Group, KCIC, KIPCO, Global Investment House, Kuwait Finance House among others.

The brief added, “India related funds launched in Kuwait include India Fund (October 2005); Tijari India Fund (December 2006); India Equity Fund (January 2007); Kuwait Indian Holding Company; 3rd Real Estate Islamic Fund (May 2007); and Mayur Hedge Fund (August 2008), hydrocarbon sector, Kuwait remains a reliable supplier of crude oil &LPG to India, meeting our crucial energy needs.”

Many Indian PSUs like TCIL, LIC, New India Assurance Company, LIC Housing Finance, Oriental Insurance Company, Air India Ltd. (Air India and Air India Express) have opened their offices in Kuwait. In the last couple of years, companies like Larsen & Toubro, Shapoorji Pallonji, Dodsal, Punj Lloyd, Simplex Projects, Essar, Kalpataru, etc. have been awarded EPC projects worth over $ 6 billion in Kuwait. The Energy & Resources Institute (TERI) is executing Kuwait Oil Company (KOC)’s project of soil remediation worth $ 39 million.

As per IMF estimates, Kuwait’s nominal GDP for 2016 was $101.524 billion, and GDP per capita in terms of PPP was $70165 in 2015. Kuwait’s Sovereign Wealth Fund is above $592 billion, and it is managed by the Kuwait Investment Authority (KIA). The brief also added these assets are held in 2 state-owned sovereign funds: the Reserve Fund for Future Generations (RFFG) and General Reserve Fund (GRF) to which Kuwait has been transferring 10% of its total revenues from October.

The MEA brief informed, “It is understood that in June 2017 KIA invested US$ 87 million invested as a consortium along with Nomura in Wells Fargo, HSBC in AU Small Finance Bank.” It further added, “also in June 2017, KIA was one of the 15 Anchor investors who participated in the IPO of Dixon Technologies, a Noida based Electronic manufacturer, they bought shares worth Rs 12.5 crores ($ 2 million), Kuwait’s National Petroleum Services Company (Napesco) opened their first company in India, Napesco India, a limited liability company with a capital of about Rs.50 million ($ 780000) at Chennai Special Economic Zone.”

United States and China Make Significant
Trading News

United States and China Make Significant Progress in Bilateral Trade Talk

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Significant progress has been made during the latest round of China-United States trade talks. Business leaders, analysts, and officials said that it could pave the way for a complete solution during the next-step of negotiations. They also conveyed that China has been opening up its economy to the rest of the world and is offering ample opportunities for various global investors.

The comment was made after the wrap-up of the latest round of talks between the United States and China in Washington on Thursday. According to the Chinese delegation, it is reported that both the sides had specific and constructive discussions covering topics such as technology transfers, protection of intellectual property rights, trade balance, and non-tariff barriers. The Chinese delegation said, “Important progress has been achieved in the current stage, and the two sides had candid, specific and constructive discussions.”

According to a Xinhua News Agency report, Vice-Premier Liu He met with United States President Donald Trump, who assured that a United States trade delegation would visit China in the middle of February for further negotiations. It added that the United States delegation is to be led by Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer.

Liu and Lighthizer were the ones who lead the two-day talks that happened in Washington on Wednesday morning. They were accompanied by dozens of other senior officials from both governments.

During the talks both the sides also determined the road map and timetable for next-step consultations. Both the United States and the Chinese delegation attached massive importance to the issue of technology transfers and IPR protection and accepted to improve the cooperation in this regard further.

The president of the US-China Business Council, Craig Allen said, “We understand that this week’s discussions covered familiar ground on structural issues and looked forward to hearing details about any progress that was made.” Craig Allen led council, in a statement has advised both the governments to use this month to address their unsettled issues.

The Chinese delegation said that creating a market environment of fair competition aligns with the direction of China’s opening-up and reform and therefore, China will look forward to addressing relevant US concerns.

Chinese delegation went on to add that both the countries have concurred to take adequate steps to engage in the more balanced development of bilateral trade. China will be making active efforts to expand imports from the United States in manufacturing, energy, agriculture, and services. This in return will help the country’s goal of high-quality economic development and also meet the people’s demand for a better life.

Craig Allen said it’s evident that changes to the bilateral commercial relationship are going to happen. But due to the complexity of the issue, it might take considerable time and hard work to resolve them.

The president for Asia-Pacific of the United States agricultural conglomerate Cargill Inc, Robert Aspell said that the best way to resolve trade issues is communicating with each other and finding a solution. “A large number of global companies have invested in China; it is a clear signal that China is going to open its markets further, and many opportunities can be found in different sectors across the country,” he commented.

Experts say that with collaborative efforts, both the United States and the Chinese economies can improve and could also increase the supply chain and global economy in 2019. The economies of both United States and China are strongly interconnected and that a blow to anyone would most likely make an impact in the other said Bai Ming who is the present deputy director at the International Market Institute of the Beijing-based Chinese Academy of International Trade and Economic Cooperation. Chen Wenling, the chief economist at the China Center for Economic Exchanges, said, “The United States needs Chinese goods as much as China needs equipment and agricultural products from the United States.”

Company News

QuadrigaCX to be sold to Settle Debts

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As per a recent news correspondence, a lawyer has been appointed by a Nova Scotia’s court in Canada to have access to the encrypted laptop of the deceased CEO, Gerald Cotton of QuadrigaCX, which is a major Canadian crypto exchange. The laptop which is believed to provide access to $190 million of QuadrigaCX customer funds has been currently handed over to someone for monitoring. The Court has appointed a monitor, Ernst & Young Inc., an independent third party to oversee these proceedings, so that customer obligations are addressed. Even, creditor protection has been filed which would allow to work diligently through the process and ensure the viability of the company. The laptop was previously held by QuadrigaCX representatives.

QuadrigaCX which is a cryptocurrency exchange, or a digital currency exchange (DCE) provides its customers services for the exchange of virtual currency into various assets, such as fiat or other digital currencies. The platforms usually work solely online, providing transactions in electronic forms and taking fees for them, though there are also some brick-and-mortar businesses that use traditional payment methods. Debit and credit cards, postal money orders and other kinds of money transfers are accepted to make an operation using a DCE.

Currently, the assets are stored in a cold wallet, and the court believes this QuadrigaCX case is not a case of typical bankruptcy. The creditors have the rights to consider changing the jurisdiction to proceed with the case in future.

This week the company has been asked by the court to appoint one of the ‘Big Four’ auditing firm, the Ernst & Young as an independent third party to follow up and monitor the proceedings. Ernst & Young (EY) which is a British auditing and consulting company would be following up the company financials. In terms of cryptocurrency, EY representatives have a positive attitude toward the technologies of blockchain and digital currency. Unlike the other three companies in the Big Four, EY supports the Bitcoin community.

The QuadrigaCX management has asked for a month of stay for proceedings which is expected to end on Mar. 7. The investigation team would be searching almost $190 million which is apparently inaccessible following the death of Cotton. In the worst scenario, if the missing keys are not found, the lawyers representing QuadrigaCX would be looking forward to selling the company to satisfy the debts.

Recently, QuadrigaCX which is a Canadian cryptocurrency exchange had to face financial difficulty since the death of the CEO, Gerald Cotten who reportedly died of complications from Crohn’s disease.

One of the leading publications in Canada has published the death certificate and have expressed their concerns about Cotten’s death. The users do not have access to its wallets, and the CEO has not left evidence of passwords.

Opinion & Analysis

Kraken’s acquisition of crypto facilities leads the company to a new high

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Kraken is a giant cryptocurrency exchange based out of US and is operating in Canada, the EU, Japan, and the US, and it is the largest Bitcoin exchange in Euro volume and liquidity. Recently, the company made a huge announcement about the acquisition of cryptocurrency facilities. This will restructure the entire company to rank between 1 and 10 in the global bitcoin exchange. Currently, they are the 46thexchange by adjusted volume.

Kraken released details about the acquisition to the press, but they had not mentioned the exact amount spent on crypto facilities. They hinted the cost to be a “nine-digit figure” which amounts to $100 million at the least. This move of acquisition took the market by surprise as there was news about the company downsizing last year. CEO of Kraken, Jesse Powell, cleared the air confirming the dismissal of 57 employees in Halifax. However, he stated that the company was still hiring in various sectors.

Furthermore, Kraken has stepped into Bitcoin Derivatives space. This could be given the success of its #10 competitor Huobi Global, a cryptocurrency exchange based out of Singapore, which proliferated after launching the derivatives market in November last year. Instead of creating its platform, Kraken has used Google’s approach and procured the best derivative platform and have put them to use for their clients.

Crypto facilities are based in London, and as seen by the UK’S financial conduct authority, the firm will be functional from its base country and benefit from the oversight of the authority. Even though the company operates from London, the future of the product will be Kraken branded.

Crypto facilities have taken a step forward and introduced a Revenue Sharing Program (RSP) for the clients who provide liquidity. This program calculates the contribution from clients on a weekly basis, starting at 12 p.m. UTC ( Universal Time Coordinated) every Friday. RDP is scheduled to run for ten weeks initially, and at the end of each week, the revenue will be calculated according to the contribution and paid out. $50,000 a week is allotted to the clients who create markets in the exchange.

Unlike stock market and share prices, the price of crypto asset originates from spot trading. Hence, the derivative market is effective only in a limited period. Even so, the sentiment value on a derivative market has the power to affect the price of an asset, which means, if the derivative values an asset more or less than your value, you will have to change your value and the price to trade it.

Virtually, the value of derivative exchanges is unlimited. For-profit, the Bitcoin derivatives, and its competitors are offered higher prices, depending on the volume, the offered price could be extreme. Binance’s founder, ChangpengZhao mentioned that the crypto market grows rapidly (could increase by 1000 folds)and hence makes the derivatives market bigger. BitMEX proved Changpeng right by trading for $1 billion on an everyday basis, making it the largest exchange in the derivatives market. Kraken is now following the steps of both BitMEX and Huobi, therefore, would emerge as a giant exchange with more innovations and profit in the future.

US Agency Seeks Potential
News

US Agency Seeks Potential Sources for Blockchain Data Analysis

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US Securities and Exchange Commission has issued a notice in which it is looking for various Blockchain analytics companies to provide blockchain data and its analysis.

SEC is looking for a potential blockchain company that can provide blockchain data to encourage its risk monitoring and compliance improvement. Also, SEC expects this blockchain company to inform the commission about digital assets.

Earlier in the last month, SEC declared that cryptocurrencies were among one of the most examination preferences for the past year.

Furthermore, SEC is looking for potential sources that can encourage the objective of acquiring data for the mostly used blockchain ledgers that include transaction information. Also, SEC wants these sources to provide data as well as convert this data into a simple form that can be reviewed easily.

US Securities and Exchange Commission requests information related to data extraction, verification and conversion procedure. Moreover, an agency is also requesting these potential sources to look at their ability to estimate insights from the blockchain data that is available to them. These insights include recognizing the owners of the crypto addresses.

Notice further states that companies who are willing to respond to US SEC should write an email to the agency before 14th Feb. And SEC requests all the participating companies to mention their capabilities.

Earlier in the August month of the year 2018, An agent working in the US Drug Enforcement Administration (DEA) noticed that agency could track the cryptocurrencies that are more focused on privacy. Agent says that blockchain provides us so many tools by which we can easily recognize people. She further states that she wishes all the people keep using blockchain.

Scott Kupor, a Managing Partner at Andreessen Horowitz, also advised in June month of 2018 that popular cryptocurrency Bitcoin is the best friend of the law compliance. This is because it can track illegal transactions on the blockchain.

The blockchain is a digital ledger that records any kind of transaction that cannot be tampered. Moreover, all the transactions can be tracked easily. So, being an immutable and digital asset blockchain has been the most popular technology of this decade.

This innovative technology is revolutionizing industries from various sectors such as healthcare, logistics, medicines, and finance.