Daily Financial News Analysis – 17th Mar’20

Table of Contents

RBI liquidity measures

RBI unveiled more liquidity measures to ensure smooth functioning of the financial markets.
RBI didn’t follow other central banks in slashing interest rates.
RBI governor Shaktikanta Das: It is important to ensure that policy reactions are carefully considered and calibrated so as to assuage fears and instil confidence.
“It is important that the policy space is used appropriately and suitably timed to optimise its impact.”
RBI announced another dollar-rupee swap — similar to the one it conducted on Monday — to stabilise the currency market and long-term repo operations for ensuring sufficient liquidity.
Das said the central bank would use an array of tools at its disposal to counter the economic effects of Covid-19, adding that the monetary policy committee (MPC) would evaluate the situation and decide on rate cuts.
The MPC is to announce the results of its next review on April 3, but it can meet ahead of schedule too.
A rate cut is widely expected on or before then.

Outbreak and India’s Growth

India’s economic growth could take a hit of up to half a percentage point in FY21.
Independent economists see a deeper cut of up to one percentage point.
Prime Minister Narendra Modi has asked top verticals within the government, including the Niti Aayog, the Economic Advisory Council to the PM and finance ministry to assess the economic impact of the novel coronavirus.
India is relatively insulated from the global value chain and to that extent impact on India will be less.

India-US

India is also looking to team up with other countries as well to contain the spread of Covid-19.

Meanwhile, the number of confirmed Covid-19 cases surpassed 3,000 in the US and the death toll increased to at least 61 people while in India the number of confirmed cases increased to 114, including foreign nationals, on Monday.
Australian Prime Minister Scott Morrison welcomed Prime Minister Narendra Modi’s initiative in this regard.
A G20 finance meeting is also in the offing to deal with the economic impact of the pandemic.

$1.2 Billion Fine on Apple

Apple Inc. was fined a record 1.1 billion euros ($1.2 billion) by French antitrust regulators after the U.S. tech giant was criticized for anti-competitive agreements with two favored distributors.
The French agency said Apple conspired with two wholesalers — Tech Data and Ingram Micro — in a move that thwarted wholesale competition for non-iPhone products such as Apple Mac computers.
The duo was also slapped with fines of 76.1 million euros and 63 million euros.
“Apple and its two wholesalers agreed to not compete against each other and prevent resellers from promoting competition between each other, thus sterilizing the wholesale market for Apple products,” Isabelle de Silva, head of the French agency, said in a statement on Monday.
The Apple penalty is the latest crackdown on Silicon Valley by France’s Autorité de la Concurrence.
It fined Google 150 million euros late last year for setting “opaque” rules for its Google Ads advertising platform that it applied unfairly and randomly.
The fine comes after Apple said Saturday it’s closing its hundreds of retail stores outside of Greater China until March 27 and is moving to remote work in order to help reduce the spread of coronavirus.
Apple said the French decision “will cause chaos for companies across all industries” and vowed to appeal.
The tech firm said it considers customers should be allowed to choose the product they want, either through Apple Retail or its large network of resellers across the country.
Monday’s fine dwarfs the previous record antitrust penalty in France for a single company — 350 million euros — which was handed down to Orange SA in 2015.
The combined penalty for Apple and the two wholesalers is also a record, topping the 951.2 million euros fine in 2014 split between 11 shampoo and toothpaste makers including L’Oreal SA.
The French regulator said the Apple case was prompted by a complaint lodged by eBizcuss, an Apple premium reseller, in 2012.

ED summons

The Enforcement Directorate has summoned founder of defunct Jet Airways – Naresh Goyal, promoters of DHFL – Wadhawans, chief of Reliance Group – Anil Ambani, Subhash Chandra of Essel Group, promoter of Indiabulls – Sameer Gahlot, Gautam Thapar of Avantha Group and many other big corporate businessmen in connection with the Yes Bank money laundering case.
The ED has asked these businessmen to appear before them for questioning on separate dates from March 17 to March 21.

Pak-China

Pakistan President Arif Alvi will become the first head of state to visit Beijing since the outbreak of Covid-19 that originated down south in Wuhan, in a bid to show solidarity with its all-weather ally and its leadership amid China’s biggest crisis in recent years.
A number of ministers are expected to accompany the President in a trip that is also aimed at boosting China’s Belt and Road Initiative.
Pakistan had suggested that China be included in the initiative to counter the spread of disease in South Asia.
Beijing has pledged tens of millions of dollars under the China-Pakistan Economic Corridor (CPEC) project.