Tag: Economy News

Mexican Prez cancels trip to Washington after he refuses to pay for wall

Mexican President Enrique Pena Nieto today cancelled his planned trip to the US after President Donald Trump tweeted that he should cancel his visit if Mexico is “unwilling to pay” for the massive border wall being build to stop illegal migrants from entering America.

“We informed the White House this morning that I will not attend the working meeting scheduled for next Tuesday” with Trump in Washington, Pena Nieto said on Twitter.

His decision came hours after Trump tweeted that “If Mexico is unwilling to pay for the badly needed wall, then it would be better to cancel the upcoming meeting.” Trump’s Mexican counterpart condemned the US decision to build a border wall and repeated that Mexico would not pay for the wall despite Trump’s assertions that it would.

Pena Nieto was scheduled to be in Washington on January 31.

“Mexico does not believe in walls Donald Trump. I’ve said time again; Mexico will not pay for any wall,” Pena Nieto had said in a video statement posted to Twitter.

“I regret and reject the decision of the US to build the wall,” he had said.

Pena Nieto had said he would wait for a final report from his top officials who arrived here yesterday to meet with the Trump administration, and previous meetings with Mexican legislators, before deciding which steps he would take next.

Trump also tweeted that the US has a $60 billion trade deficit with Mexico.

“It has been a one-sided deal from the beginning of NAFTA (The North American Free Trade Agreement) with massive numbers of jobs and companies lost,” Trump, who has been in office for just six days, said.

Earlier, Trump had signed two executive orders directing the construction of a wall on the US-Mexico border, boosting border patrol forces and increasing the number of immigration enforcement officers who carry out deportations.

In a speech on Monday, Pena Nieto had said his government is prepared to negotiate with the US if Mexico’s national sovereignty is respected. He laid out economic integration and respect for the rights of migrants and the money they send home as his nation’s key negotiating points.

Trump has suggested some of the $25 billion in annual remittances that migrants return home would be retained to pay for the border wall.


Top 5 biggest life insurance myths

There are several misconceptions about life insurance. It is a popular notion that older or married individuals with kids should invest in one, or that the insurance only offers post-death benefit. Here we debunk some of the biggest life insurance myths…

Life insurance policy is critical to any financial planning. Yet it is never prioritized and is often considered complicated to decode. But it is always a good idea to invest in life insurance,Life Insurance more so sooner than later. Especially, since not having one when you need it can be devastating.

While there are quite a few common myths about life insurance, here is a list of the five biggest ones.

Myth 1: Single, without dependents. I don’t need coverage

At the risk of sounding morbid, singles too need enough coverage to cover the costs of personal debts and medical bills. If uninsured, they could leave unpaid expenses for families to deal with. Even if single people are not saddled with such dire situations, it is a good way to leave a legacy to some cause. Also, many policies allow insurers to purchase additional coverage in the future. For example, HDFC Life offers Life Stage Protection – under Life option where the insurer can increase the insurance cover on certain key milestones of life like marriage, child birth without fresh medical test. So, the policy can be continued with changes if and when he or she decides to have a family.

Many employers too provide employees with life insurance. And even if it does seem like enough, what happens when one loses or leaves the job? Many insurance companies offer to convert optional insurance to an individual policy, but it may turn out to be more expensive than purchasing a policy in the long run. It is rather prudent to consider employer-provided insurance as a bonus.

Myth 2: Too young to think about coverage

There is no such thing as too young for life insurance. If you earn a salary, you might as well have insurance. Several independent studies and the Insurance Regulatory and Development Authority of India (IRDAI) observe that the insurance sector is a colossal and growing at a speedy rate. However, although the awareness about life insurance is increasing, the Indian youth is still misinformed about the cost.

Speaking in terms of smart finance, life insurance is financially more economical when opted for at a young age. The price of the policy is based on the age and health of the person being insured. Typically, premiums are less expensive when one is younger and healthier. When say a healthy 25-year old opts for a term policy the premium charges would be a fraction of what he/she would need to invest at later stages of life. Also, there is always a risk of developing a medical condition later on, which can make a policy much more expensive.

Myth 3: Only men need life insurance

While many families are prompt in getting a life insurance policy for the male breadwinner, coverage for the working woman is rarely factored into the financial planning. Most don’t even bother to insure the homemaker as they don’t have financial earnings. What if something were to happen to the lady of the house? Besides the emotional repercussions, the harried head of the family may need to get help to take care of the kids. And that, even in a developing nation like India, can cost a lot of money. Besides, this coverage will also give the father a chance to take time off and help the family adjust to their loss.

Myth 4: Insurance is of no use unless you die

It is critical to understand the type of life insurance that one needs to integrate in the financial plan. Term insurance is a life insurance product offered by an insurance company that offers financial coverage to the policyholder for a specific time period. Endowment plans, unit linked insurance plans (ULIPs), money back and more also cover life for limited term and post that if you survive the term – the plans provide returns unlike a term plan.

One can start by buying a term insurance, since it’s easier on the pocket and later on add other insurance products to the financial portfolio at various instances as and when required. However, the main reason for purchasing insurance is to provide financial protection for your loved ones in your absence; so it shouldn’t be evaluated for returns. Also, it’s crucial to know that insurance policies are tax free.

Myth 5: Better to invest the money rather than lock it up in life insurance of any kind

Everyone, irrespective of their financial standing, needs life coverage. Solely depending on investments is not wise. It could mean that in case of an untimely death, the investor would leave very little provision for dependents. That would hit the family finances really hard after the depletion of assets.

It is important to think of life insurance as a way out to help in continuing life as usual when something unusual happens, and not as an instrument where money would be locked in for a long period.

Amidst its several offerings, HDFC life offers Additional Protection against Critical Illness where the policyholder is offered a lump sum payout on diagnosis of specified critical illnesses. Under Additional Income Benefit, the company also offers monthly income for 10 years on total permanent disability due to accident.

Illness can befall anyone without any notice, so better to be prepared than ignorant. It’s therefore best to opt to invest in a life insurance policy sooner rather than later.

Sebi allows celebrity endorsements in MFs; issues new ad code

To increase awareness of mutual funds as a financial product, Sebi today allowed celebrities to endorse the instrument at industry level and issued new advertising code that will require fund houses to communicate in a simple manner with the public.

Besides, the Sebi board has decided to allow investment by mutual funds in REITs and InvITs. The move is likely to help in attracting more number of investors into Real Estate and Infrastructure Investment Trusts.

Also, it issued new advertisement code for mutual funds so that performance related information should be disclosed in a simple and effective manner, while providing precise and latest information to investor.

At its board meeting here, India company news Sebi allowed investment by mutual funds in REITs and InvITs saying the units of such trusts are hybrid instruments.

A mutual fund would be permitted to invest only up to five per cent of its net asset value in units of a single issuer of REITs and InvITs.

However, such limit would not applicable for investments in case of index fund or sector or industry specific scheme pertaining to REITs and InvITs.

The limit would be 10 per cent of its NAV in units of REITs and InvITs. These caps would not be applicable in case of index funds.

Sebi has deliberated the proposals relating to review of existing advertisement guidelines for mutual funds. It considered the existing guidelines on publishing performance of schemes in advertisements issued by mutual funds should be reviewed.

Performance of mutual fund schemes should be advertised in terms of CAGR for the past one year, three years, five years and since inception, in place of current requirement to publish scheme’s returns for as many as 12-month periods as possible for the past three years.

Besides, performance advertisement of mutual fund schemes should provide information based on last day of month-end preceding the date of advertisement, instead of current requirement of publishing such data based on last day of preceding quarter-end.

Performance of other schemes managed by the fund manager should be disclosed in a summarised manner. Sebi has permitted to mutual funds to provide an exact link to such summarised information.

The board of Sebi has allowed celebrity to endorse the instrument at an industry level as part of its efforts to increase awareness of mutual funds as a financial product category.

This is not applicable for endorsing a particular scheme of a mutual fund or as a branding exercise of a fund house. Moreover, a prior approval of Sebi would be required for issuance of such advertisements which feature celebrities.

Govt may announce package for leather sector in Budget

The government is expected to announce an incentive package for labour intensive leather sector in the forthcoming Budget with a view to give a boost to the segment and generate jobs.

The commerce and industry ministry has asked its finance counterpart to give financial assistance for the Indian Leather Development Programme (ILDP) and for setting up of mega leather clusters in the country, an official said.

As the ILDP, which is a central sector scheme, has provided huge support to the sector, the finance ministry may consider extending it for three more fiscals. It will end by this fiscal.

The commerce ministry has asked for about Rs 7,000 crore for this programme for three years.

“The incentives are asked broadly on the lines of the package announced for the textiles sector. Presentations have already been given to Prime Minister’s Office and the Finance Ministry,” the official said.

The industry has also demanded cut in excise duty to 6 per cent from 12 per cent for non-leather products like footwears till the Goods and Service Tax comes into force.

The major players of the sector includes Bata India, Liberty Shoes, Mirza International and Relaxo Footwear.

The commerce ministry is hopeful for the package in the India Budget 2017-2018 as the sector has huge potential to attract investment and generate jobs, the official added.

Synthetic leather accounts for about 90 per cent of the total leather manufacturing in the country.

The sector is important as it is a thrust segment under the ‘Make in India’ initiative.

Chairman of Council for Leather Exports Rafeeq Ahmed has time and again asked the government to extend financial support.

As per industry experts, Rs one crore investment in the sector results in creation of jobs for about 250 people. Currently about 30 lakh people are directly employed in the sector.

China is giving tough competition to Indian leather manufacturers in terms of pricing.

Support to the sector will also help boost shipments. Leather and leather goods are among the 25 focus sectors under the Make in India initiative.

The government aims to increase the exports to USD 15 billion by 2020 from the current USD 7 billion.

Even Donald Trump building isn’t immune to India’s real estate woes

After trying for four months to sell his apartment in a western suburb of Mumbai, Meher Verma decided to cut the price by 10 per cent. With property demand plummeting in the wake of November’s sudden ban on high-denomination notes, he’s not sure the reduction will do the trick.

“I was hoping to sell my house soon,” said Verma, who put his two-bedroom property in Andheri on the market for $400,000 in September. “Now it looks like I might have to cut my price or wait much longer for the market to improve.”

Real estate has long been a place where Indians have parked cash, often using money on which taxes haven’t been paid. Now, with the crackdown on so-called black money and the underground economy, real estate is taking a hit. The rate of home sales has fallen by about half since the government acted in early November, according to an estimate from Khushru Jijina, managing director of Piramal Fund Management. Home prices may decline 20 per cent and land prices could plummet as much as 25 per cent, according to analysts’ projections.

“Those who were looking to buy property as an investment vanished overnight from the market after the cash ban,” said Aubrey Carvallo, a Mumbai broker who has never seen International News India demand in Mumbai so low in his two decades of working in the industry. He’s been unsuccessfully seeking buyers for eight apartments with prices starting at Rs 1.5 crore. “They are thinking of moving to stock markets and other financial assets, as real estate prices are set to correct in the coming years with the government crackdown on unaccounted money.”

India’s largest developers, including DLF and Lodha Developers, say they’re taking a hit on sales. Even an association with the US president-elect hasn’t helped stoke sales at Lodha, which is building a Donald Trump-branded apartment tower in Mumbai’s Worli district. The 75-floor Trump Tower Mumbai includes a 24-hour resident manager and a fractional membership to a private jet service. The company has sold 226 of the 396 units in the project from its launch in 2014 through last June, said Lodha, which added that it limits the sale of its inventory at the Trump Tower. Lodha said in an e-mailed response to Bloomberg News that while it has notched sales of more Rs 300 crore for all its properties since November, sales would have been higher without the policy change.

“No doubt that sentiment for real estate will be subdued over the next three to six months,” said Jijina at Piramal, citing the most pressure on luxury projects India-wide and in secondary cities such as Ahmedabad, Indore and Jaipur. Markets such as the region around the New Delhi area “where some developers took only cash will be in severe trouble,” he said.

After Sushma’s visa threat, Amazon halts sale of Tricolour doormat

Amazon.com removed doormats resembling the Indian tri-colour flag from its Canadian website on Wednesday, after an Indian government threat to rescind visas of the US company’s employees if they did not stop selling the product.

“Amazon must tender unconditional apology,” external affairs minister Sushma Swaraj said on Twitter. “They must withdraw all products insulting our national flag immediately.”

“If this is not done forthwith, we will not grant Indian Visa to any Amazon official,” she added. “We will also rescind the Visas issued earlier.”

The doormat, sold by a third-party on Current Affairs News Amazon’s Canadian portal, was taken down late on Wednesday.

“The item is no longer available for sale on the site,” a spokeswoman for Amazon said in an email.

Amazon’s portal in Canada sells doormats fashioned around other national flags, but under Indian law any desecration of its flag is punishable with fines and imprisonment.

Amazon’s official support account on Twitter had earlier responded to angry user comments on Twitter by saying the mats were not being sold on their Indian portal and the concerns had been escalated. Swaraj tweeted that she had asked the Indian High Commission in Canada to take up the issue with Amazon, after it was brought to her attention by a Twitter user from India’s financial capital of Mumbai.

Swaraj is a prolific user of the social media website and often responds to tweets directed at her.

Amazon is making a huge bet on India and has vowed to invest more than $5 billion as it takes on home-grown Flipkart and Snapdeal for a bigger share of the world’s fastest growing internet services market.

In an event attended by premier Narendra Modi in Washington last year, Amazon Chief Executive Jeff Bezos said India was the company’s fastest growing region.

Five things to watch out for in TCS results

India’s largest IT services firm Tata Consultancy Services (TCS) will kick off on January 12 the third-quarter results for technology services companies, casting light on how the industry will face automation, the Donald Trump presidency and disruption in business models as clients go digital.

In July-September 2016-17, TCS had missed street expectations with 7.8 per cent growth in revenue at Rs 29,284 crore. The operating margin, calculated as sales minus expenses, was 26 per cent, which surprised analysts. But the forecast was muted as Chief Executive Officer and Managing Director N Chandrasekaran had said the quarter was unusual and growth should rebound in third and fourth quarters.

In the third quarter, TCS saw a 0.3 per cent sequential decline in revenue in dollar terms and 11.7 per cent growth in rupee terms. Analysts expect the technology major to post stable growth in rupee terms. In dollar terms, its revenue is likely to decline.

Lack of focus on growth in digital technology business delivery and a proposed minimum wage hike for H1B visa holders in the US are concerns for TCS in the third and fourth quarters. Here are five key things one should watch out for in the TCS results and management commentary:

Outlook for the BFSI and retail verticals

The banking and financial services and retail verticals, which account for 54 per cent of TCS’s revenue, grew marginally in July-September owing to a delay in discretionary spending. India Company News said there was a “softness in BFSI” without providing much clarity.

Bhrugesh Parsawala, an analyst with ICICI Securities wrote that the company may have seen a stabilisation in these verticals and discretionary spending may have resumed. It will be important to look out for commentary on this. With the Brexit issue and disruptions by fintech start-ups, slow growth in BFSI has become a known issue and the company has to think of ways for improvement.

Digital strategy and acquisitions

TCS’s digital strategy is largely to build capability, unlike peers Wipro, HCL Technologies and Infosys, which have looked at acquisitions and partnerships. “One should look out for its positioning in the evolving digital landscape and growth outlook for digital practice,” says Kawaljeet Saluja, research analyst with Kotak Institutional Equity. IT services firms are witnessing growth from digital and cloud services, but the projects require programmers onsite unlike traditional services, which can be done offshore. There is enormous pricing pressure on traditional services, where customers are cutting budgets. Analysts say outcomes from organically developed verticals for emerging technology have not been effective.

Will Chandrasekaran remain TCS CEO?

Ever since the conflict between Tata Sons and its former chairman Cyrus Mistry became public, there is speculation of Chandrasekaran being elevated as chairman of Tata Sons. This development will be keenly watched, as also the Tata group’s strategy for TCS, says Pareekh Jain of HfS Research.

Outlook for revenue from TCS Japan

Investors are gearing up to hear about growth from TCS’s business in Japan, says Ashish Chopra of brokerage firm Motilal Oswal. Growth in different geographies will be crucial as IT services players are increasingly seeing a decline in traditional business and pricing pressure in markets like the US and Europe. A major deal from India, which was deferred earlier, is expected to come back in the third quarter. This should have a significant impact on business from markets other than Europe and the US.

Commentary on issues like H1-B visa norms

The TCS commentary on the US and the conversations with clients on proposed policies of President-elect Donald Trump will be critical. Trump has said he will not let H1B visa-holders to replace US workers. A good share of H1B visa-holders in the US are employees of Indian IT services firms. The Protect and Grow American Jobs Act has been submitted in the US Congress, seeking a hike in the minimum wage for H1B visa-holders from $60,000 to $100,000. This may potentially impact TCS’s margin for the next quarter and 2017-18. One should watch out for the management commentary on measures to offset this impact, says Saluja of Kotak.