LESS DEMAND FOR BRANDED SMART PHONES

The rising demand for affordable smartphones in the major emerging markets of India and China has helped local mobile manufacturers surpass shipments by the established global brands like Samsung and Apple in April-June quarter this year, research firm IDC says. According to IDC data in the Asia/Pacific excluding Japan region, homegrown vendors shipped 46 million units, while Samsung and apple combined shipped 35 million units in second quarter this year. Other global brands like HTC, BlackBerry, Nokia, Sony, LG and Motorala shipped a combined 10 million units, whereas, the internal vendors from China like Huawei, ZTE and Lenovo shipped a total of 27 million units in April-June 2013. IDC identified Micromax, Karbonn, Lava, Maxx and Intex as the rising players in the emerging smartphone market in India and brands like Coolpad, K-Touch, Xiaomi, Gionee and OPPO in China. The research firm said local brands in the world's two most populous country, part of Asia/Pacific (Excluding Japan) region (APEJ), have aggressively scaled up their operations and are competitive on both price and hardware specifications. "Aside from the top-tier international brands or Chinese brands that also ship globally like Huawei and ZTE, there is also a rising segment of homegrown brands, which as a group have been steadily rising in shipments and prominence," IDC said in its latest report on mobile shipments. These homegrown players comprised 38 per cent of second quarter 2013 volumes, up from 20 per cent in the same quarter of 2012 and seven per cent 2011 second quarter, it added. Asia/Pacific region saw mobile shipments of 119 million units in April-June 2013, up 10 per cent quarter-on-quarter and a huge jump of 75 per cent from Q2 2012, IDC said. "In emerging markets like China and India, IDC has seen many local competitors spring up, but only in the last few quarters have we seen them aggressively scale up, competitive on both price and hardware specs like bigger screens. "We are now hitting a place where there are smartphones for every price point, where the masses will benefit from the slew of players bringing in more options," the firm said. This is the first quarter that IDC saw both the under USD 50 segment of smartphones gain some traction in China. While, the 4 inch plus screen size segment drove most shipments, the 5-6 inch segment saw its first gain in both China and India, it added.

MF's LINE UP FIXED MATURITY PLANS

Aiming to attract risk-averse investors seeking short-term returns, mutual fund companies have lined up at least 26 Fixed Maturity Plans (FMP) and have filed draft documents for them with market regulator Sebi. The documents for these New Fund Offers (NFOs) have been submitted with the Securities and Exchange Board of India (Sebi) since July and the schemes will be opened for subscription soon after the necessary clearances. Of these, 16 draft offers have been filed in August so far, while the other 10 were filed in July. The fund houses that have lined up these FMPs and Fixed Tenure Plans (FTPs) include HDFC, ICICI Prudential, L&T, Peerless, IDFC, Tata, Kotak, IDBI, Baroda Pioneer and Religare. Besides, LIC Nomura, J P Morgan and Birla Sun Life are launching more than one NFO in the fixed-maturity plan segment.
FMPs mainly invest in specified duration instruments like bank certificates of deposit (CDs) and commercial papers (CPs), which are issued by companies and usually have tenures of a few months or a year. The average return from FMPs have been in the range of 10-11 per cent in the past few years. Due to higher subscription amounts required, they are largely positioned for corporate as well as institutional investors. According to industry experts, the fund houses with their FMPs are looking to tap those investors who want to invest in close-ended funds with a lock-in strategy and lower interest rate risks.
"In these volatile times, fixed-maturity plans and short- term funds offer good options for investors to invest as short term interest rates have jumped by 200-300 basis points in the last few months. Besides, they would offer good return to investors," Indiabulls Mutual Fund Chief Executive Officer Sanjay Chandel said. "In fact, FMPs score better than bank deposits due to their tax efficiency," he added. The benchmark 10-year bond yield has jumped around 100 basis points to nearly 8.3 per cent from 7.5 per cent levels, in the less than two months.
RBI's liquidity tightening measures to strengthen the rupee has pushed interest rates upward. Following RBI's move, assets under under management of mutual funds in the debt fund category (liquid funds) fell by over Rs 45,000 crore to Rs 1.29 lakh crore in July because of large-scale redemption. Bond yields and return on debt funds move in opposite directions, that is, as bond yield increases return falls and vice-versa. 

PER CAPITA INCOME ROSE BY 6.7 %

The per capita income in the country increased by 6.7 per cent per annum during 2004-05 to 2011-12, while the percentage of poor declined by 2.2 per cent over the period. "The growth in employment and GDP is expected to raise the levels of income/consumption and hence results in decreasing the percentage of poor in the country," according to official sources. The per capita income measured by net national income (NNI) has increased by 6.7 per cent per annum between 2004-05 and 2011-12 and poverty reduced by 2.2 per cent per annum during the same period, according to sources. For 2011-12, the Planning Commission has estimated percentage of people living below the poverty line at 21.9 per cent. The poverty line in 2011-12 in terms of monthly per capita consumption expenditure was estimated at Rs 816 in rural areas and Rs 1,000 in urban areas. State-wise, Uttar Pradesh had highest number of people living below poverty line during 2011-12 at 598.19 people below poverty line out of every lakh. It was followed by Bihar at 358.15 people (per lakh), Madhya Pradesh 234.04 people, Maharashtra 197.92 people and West Bengal at 184.98 people living below the poverty line. "The 12th Five Year Plan (2012-17) emphasises the need to build upon the achievements of the 11th Five Year Plan and strive for faster, sustainable and more inclusive growth in order to reduce economic disparities," the sources said. 

IMPORTED BICYCLES MAY BE DEARER

Imported bicycles are set to get dearer soon with importers deciding to hike prices of bicycles, including of high-end ones, by at least 10 per cent in the wake of depreciation of the rupee against the dollar. "Definitely, there is going to be a hike in prices of imported bicycles in view of the weakening of rupee. There will be a 10 per cent increase in prices of bicycles," LA Sovereign, MD, Rohit Kalra told PTI. Expressing concern over the Centre's policies for not being able to contain spiralling increase in dollar versus rupee, Kalra said his company had to make payment at the current rate of 63-64 for orders, which were booked when the rupee was 55 against dollar. LA Sovereign Bicycles is one of the largest importers of bicycles which imports from China, Thailand and Sri Lanka. Price range starts from Rs 6,000 and goes up till Rs 2 lakh a bicycle. Bicycle importers said the price hike may affect the demand of bicycles which are priced below Rs 10,000. "There will not be any effect on demand for bicycles which are priced above Rs 10,000," Kalra said. "We will again raise prices of imported bicycles in the range of Rs 500-1,000 a unit because of wide currency fluctuations," Hi-Bird Cycles, MD, R D Sharma said while adding that company last month raised prices by Rs 500-600 a bicycle. India is gradually becoming a growing market for imported bicycles in the wake of increase in demand for high end bicycles. The market for high-end imported bicycles is pegged at 1 lakh units in the country, said industry insiders. Importers source high-end aluminium or carbon-based bicycles from countries including China and Taiwan. Besides, several bicycle components like basket, spoke, hub-cup, steel balls, free wheel, brakes etc are also imported. The country's annual import of bicycles and bicycle parts is estimated to be Rs 1,200 crore, as per bicycle makers. However, industry experts see weakening of rupee as an opportunity for domestic bicycle manufacturers, saying that high cost of import would force importers to source bicycle parts from local sources only. "Industry should take it as an opportunity and step up efforts to meet the requirements of importers here by producing cost effective items," said Satish Dhanda, Convener Bicycle Panel, Engineering Export Promotion Council (EEPC). Notably, last year the Centre raised the basic custom duty on bicycles from 10 to 30 per cent and on bicycle components from 10 to 20 per cent on to discourage imports. Ludhiana is major hub of bicycle cluster as it caters to country's over 90 per cent bicycle and bicycle parts needs. 

REALTORS CALLS FOR REIT TRUSTS

With investor sentiment waning and the rupee plunging to new lows everyday, there is an urgent need for implementing the real estate investment trusts (REITs) to ensure more liquidity in the sector, say experts. The government and market watchdog Sebi are actively working on a regulatory framework for REITs -- an asset class that buys income generating real estate assets and passes on the yield to investors. "The finance ministry and Sebi are working actively on its implementation. If implemented, we believe it will encourage both foreign and domestic investors to invest in the real estate sector," National Real Estate Development Council Vice-President Sunil Mantri said at an industry summit over the weekend here. According to Mantri, the sector can attract investments worth USD 10 billion in the next thee-four years after its implementation. "In the present scenario, if the sector has to bounce back from the lows, there is a need to bring in such a mechanism," he said. If implemented, it will be very positive for the real estate sector, attracting long-term and low-cost capital to India, PWC associate director Bhairav Dalal said. "We hope REITs is implemented soon. It will definitely give a boost to rental assets. It will act as an alternate source of funds for the developers as well," he said. However, he observed that the fund will not help in addressing the issue of non-availability of housing stock. "Though it will help in bringing liquidity in the sector, the REITs will not help developers who plan to develop residential projects. Also, developers who plan to undertake new projects, will not be able to get any benefit out of it in the initial stage," he said. Property consultancy firm Jones Lang LaSalle managing director for capital markets, Shobhit Agarwal too said REITs will not be the right answer to address liquidity issues. "REITs model, adapted to the existing mutual funds platform, do not seem to be the right answer. While everybody is working on entry and creating assets, the important question of who will buy these assets to provide an exit to the developers/investors needs to be addressed," he said. Agarwal further said FDI is clearly the only life-saver, which the real estate sector can look up to. "With all these routes being plugged because of the risk involved, FDI is clearly the only life-saver which the real estate sector can look up to. "However, the ever-changing policies on FDI, taxation and development, coupled with a lack in transparency in the system and a high amount of friction in approval mechanisms, have led to an uncertainty in yields and tenure of lock-in for investments in real estate," he added. 

AIR INDIA EXPRESS ON DOMESTIC EXPANSION

State-run Air India is mulling expanding operations of its international low-cost arm AI Express in the domestic market, where three budget carriers dominate the space and AirAsia India also expected to compete by year-end with launch of its operations here. The flag-carrier has recently set up a three-member committee to explore the feasibility of such an expansion plan and also review the routes of the two carriers, to leverage synergies and avoid eating into each other's market shares, they say. "Air India has set up a committee and mandated it to explore the possibilities of Air India expanding its operations in the LCC (low-cost carrier) segment," highly placed AI sources told PTI. Air India regained the third slot with 19.2 per cent market share beating budget carrier SpiceJet (17.5 per cent) in July. At the same time, the Delhi-based IndiGo continues to retain its leadership with 29.5 per cent market share in the month. However, the three low cost carriers-IndiGo, SpiceJet and GoAir combined enjoy 55.5 per cent market share as against 44.5 per cent of the two full service carriers -- Jet Airways group and Air India. Air India Express, which began operations as the international budget arm of Air India in 2005, today operates 172 flights a week across Southeast Asia and the Gulf region with a fleet of 21 Boeing 737-800s, and commands 5-6 per cent market share. Of its planes, 17 are owned, and the remaining leased and majority of its flights originate from Kerala, which contributes over 50 per cent of its income. However, Air India too operates on some of the routes catered to by it LCC arm, thereby affecting the revenue of both the carriers. Besides, the committee has also been asked to review the routes catered by these two carriers and examine the feasibility of bringing synergy into their operations, sources said. "The committee will also review the business model of AIE," they said, adding that the committee has been asked to submit its report within three weeks time. According to a report by Centre for Asia Pacific Aviation (CAPA), the domestic traffic is expected to expand by 4-6 per cent this fiscal, with most of it occurring in the second half. "AirAsia's likely entry towards the end of the year could also provide some further growth although the airline will still be relatively small even by the end of the forecast period. These factors could potentially push growth above 6 per cent subject to market conditions from Q3 onwards. "We expect that by the end of FY14, domestic traffic will match or slightly exceed the previous high water mark of just over 60 million annual domestic passengers reported in FY12," the CAPA report said.

TECHNICAL GLITCH HALTS NASDAQ TRADE

A technology glitch earlier today shut down trade on the Nasdaq for more than three hours, an unprecedented halt on the second-largest US stock exchange. Full trading resumed around 3:25 pm. The tech-rich exchange at around 12:15 pm halted trade in all "Tape C" securities, which includes options and securities due to a problem with its SIP, or securities information processing, system, which interfaces with other exchanges on stock quotes. The suspension froze values on big technology stocks like Apple, Google and Facebook as well as the value of the Nasdaq Composite index. The Nasdaq index was up 0.87 per cent at 3,631.17 when trading was halted. Shortly after it resumed, the index was up 0.95 per cent at 3,633.92. The glitch promises to increase scrutiny on Nasdaq, which came under fire following technical difficulties with Facebook's initial public offering in May 2012. After that debacle, Nasdaq paid the Securities and Exchange Commission a USD 10 million penalty, following a series of missteps that included a design glitch in Nasdaq's system to match IPO buy and sell orders. An SEC spokesman said the US securities regulator was monitoring the situation and was "in close contact with the exchanges." Treasury Secretary Jacob Lew was briefed on the issue, officials said. The shutdown came on a quiet day for Nasdaq, with no major economic news events or earnings from major Nasdaq companies. But analysts said such a stoppage could cause significant problems on a busier news day. "We're still investigating this. It's a technical problem on the UTP SIP system, halting all the Nasdaq options" said Nasdaq spokesman Ryan Wells. Because other exchanges could not see price quotes from Nasdaq, that meant other exchanges that trade Nasdaq-listed stocks, such as the New York Stock Exchange, could not continue to trade Nasdaq stocks. Art Hogan, head of product strategy at Lazard Capital Markets, said the halt was "frustrating, but you don't lose any money. You just lose time." He said the stoppage was unprecedented. "I've never seen an entire exchange shut down for 1 1/2 hours for technical issues during the middle of the day," Hogan said earlier in the afternoon.

INDIAN EQUITY RATING DOWNGRADES

Global financial services major HSBC has downgraded Indian equities from "overweight" to "neutral" citing that the country would struggle to defend a falling currency and declining growth. "We lower our weighting in India from overweight to neutral. In our view, India will continue to struggle with the trade-off between defending a currency and supporting growth," HSBC said in a research note today. According to HSBC, the volatility in Indian markets since May can be attributed to the initial talk about tapering of bond purchase by the US Federal Reserve but the catalyst for recent volatility in Indian equities was when policymakers decided to tighten liquidity to stem capital outflows. Since the beginning of the current fiscal in April 2013, though the rupee valuation of Indian stock market has fallen by 6.55 per cent, its dollar valuation has plunged 22 per cent. The rupee has depreciated by over 16 per cent during this period. "...the issue is that in many cases the authorities have taken only incremental steps to improve financing of the current account deficit in recent years. In India, the lack of structural reforms is well documented," it said. According to the report, India faces the most difficult situation as the country's growth is slowing, inflation remains elevated and it has a sizeable current account deficit. "It is the 'impossible trinity' – a country cannot have both in the current environment. Growth will likely suffer," HSBC said. The report further noted that the current inflation situation is also not helping. Imported inflation will further reduce the possibility of looser monetary conditions in the near future.

EGG EXPORTS UP ON RUPEE VOLITA;LITY

Egg exporters from Tamil Nadu have doubled their shipments, mainly due to rupee volatility and increase in demand from overseas markets. Namakkal, considered as one of the export hub for white shell eggs in India, produces high quality white and brown eggs.From this town, eggs are exported to countries like Afghanistan, the Middle East, officials of Namakkal Egg Merchant Traders Association said. "Rupee depreciation against the US Dollar is also one of the reasons. Last month, I shipped about 30 containers. Each container has a capacity of 7.20 lakh eggs. This month we will be shipping about 80 containers..", one of the representatives of the Association and Namakkal-based NS Exports, Managing Director, S Kesavan told. He said most of the exports were made to Afghanistan, Oman, Bahrain.
Season for egg demand in countries like Afghanistan begins this month and it will be on till December this year. "So, along with demand and rupee volatility we are seeing an increase in exports", he added. Given the beginning of season in increasing egg demand, he said the company was also looking to export into newer markets. "I will say we are also look at entering European and West African markets during this season", Kesavan said. The increase in exports of egg was despite huge competition from Pakistan, China, Iran and Bangladesh among other countries, he added. 

PHISHING ATTACK ON RISE IN INDIA

Facing over 1,200 phishing attacks every month, India is the fifth most targeted country for such attacks, a report by leading IT services firm EMC said. Globally, 1,81,600 phishing attacks were identified in the first half of 2013, with May witnessing the maximum 36,966 attacks, says the Anti-Fraud Command Center's (AFCC) fraud report for the first half of 2013, prepared by EMC's security division RSA. Phishing is the illegal practice of sending e-mails, purporting to be from legitimate companies or organisations in order to lure individuals to reveal personal information. "RSA announced the findings of its H1 2013 Fraud Report, ranking India fifth most targeted country for phishing attacks, receiving 4 per cent of the total attack volume," EMC said in a statement. The US was the most targeted country, accounting 52 per cent of the attacks followed by the UK (11 per cent), South Africa (6 per cent) and Canada (5 per cent), it added. "RSA identified 1,81,600 phishing attacks in H1 2013 globally with May witnessing maximum number of 36,966 attacks. This is 27 per cent increase in the total number of global phishing attacks as compared to the month of April," it said. News on hacking of over 40,000 Facebook accounts in the month of May contributed to the attack surge in the first half of 2013, it added. AFCC is a 24x7 war-room that detects, tracks, blocks and shuts down phishing, pharming and Trojan attacks perpetrated by online fraudsters. RSA is a provider of security, risk and compliance management solutions for business acceleration.