Evercore ISI analyst Stephen Richardson raised his ratings for Albemarle and Livent to Buy from Hold—and lifted his price targets for both, too.
(Bloomberg) -- Microsoft Corp. conducted an investigation into co-founder Bill Gates’s involvement with an employee almost two decades ago after it was informed in 2019 of his attempt to start a romantic relationship with that person.The board reviewed the matter and held a “thorough investigation” with the help of an external law firm, the software giant said. It didn’t reach a conclusion to the probe because Gates had stepped down before it was completed, Microsoft said.“Microsoft received a concern in the latter half of 2019 that Bill Gates sought to initiate an intimate relationship with a company employee in the year 2000,” Microsoft said in a statement. “A committee of the Board reviewed the concern, aided by an outside law firm, to conduct a thorough investigation. Throughout the investigation, Microsoft provided extensive support to the employee who raised the concern.”Dow Jones earlier reported that Microsoft’s directors found Gates’ involvement with the female employee to be inappropriate and decided last year that he had to step down from the board, citing people familiar with the matter who weren’t identified.Microsoft didn’t provide further details on the investigation.The billionaire said in March last year that he was stepping down from the board to devote more time to philanthropy. Gates hasn’t been active in a day-to-day role since 2008, Microsoft said at that time. Gates co-founded the software company in 1975 and served as its CEO until 2000, the same year his foundation was started, and was chairman until February 2014.‘An Affair’A spokeswoman for Gates said his decision to leave the board has nothing to do with the romantic involvement with an employee.“There was an affair almost 20 years ago which ended amicably,” she said, adding that his “decision to transition off the board was in no way related to this matter.”The belated investigation into the affair came at a time that was marked by a groundswell of discussion at Microsoft about the treatment of women and Me-Too conversations in the broader industry. Since 2000, Microsoft had also put in place processes for investigating allegations and overhauled them with the goal of making them stronger, the company said.Intel Corp. Chief Executive Officer Brian Krzanich resigned after the board was informed that he had had a consensual relationship with a subordinate, even though that relationship had ended years before and predated his appointment to the top job at the company. The board conducted investigations internally and via external counsel to confirm the violation of the company’s policies and made the announcement June 2018.Gates and Melinda French Gates announced their divorce earlier this month after 27 years of marriage. Several reports, including those that emerged over the weekend, said she had raised concerns over his dealings with convicted sex offender Jeffrey Epstein.The New York Times had reported in 2019 that Gates had met with Epstein several times, and once stayed late at his New York townhouse. Epstein had died in jail two months prior while awaiting trial on federal charges related to sex trafficking.Gates’s spokeswoman denied the reports. The “characterization of his meetings with Epstein and others about philanthropy is inaccurate,” she said. “The rumors and speculation surrounding Gates’ divorce are becoming increasingly absurd.”While Gates’ dealings with Epstein weren’t a part of the scope of the Microsoft investigation, it was discussed by some board members, according to a person familiar with the matter, who asked not to be identified because the information isn’t public.Stock TransfersThe split also put a spotlight on the Gates fortune, valued at about $144 billion by the Bloomberg Billionaires Index, as well as their foundation.The Bill and Melinda Gates Foundation is the largest of its kind on the planet. With more than 1,600 employees and offices around the world, it has already distributed more than $50 billion since its inception to causes like vaccine development and women’s empowerment.Last week, Cascade Investment, the investment company created by Gates, transferred stock in Deere & Co. to his wife, bringing the total amount she’s received since they announced their divorce to more than $3 billion.The investment vehicle transferred about 2.25 million shares worth about $851 million, according to a regulatory filing. That followed similar disclosures tied to Mexican companies Coca-Cola Femsa and Grupo Televisa and about $1.8 billion of stock in Canadian National Railway Co. and AutoNation Inc.Read More: Gates Divorce Roils World’s Biggest Family Philanthropy EngineFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Elon Musk continued to whipsaw the price of Bitcoin, briefly sending it to the lowest since February after implying in a Twitter exchange Sunday that Tesla Inc. may sell or has sold its cryptocurrency holdings.Bitcoin slid below $45,000 for the first time in almost three months after the billionaire owner of the electric-car maker seemed to agree with a Twitter post that said Tesla should divest what at one point was a $1.5 billion stake in the largest cryptocurrency. It traded at $45,270 as of 5:51 p.m. in New York, down about $4,000 from where it ended Friday.The online commentary was the latest from the mercurial billionaire in a week of public statements that have roiled digital tokens. He lopped nearly $10,000 off the price of Bitcoin in hours last Wednesday after saying Tesla wouldn’t take it for cars. A few days earlier, he hosted “Saturday Night Live” and joked that Dogecoin, a token he had previously promoted, was a “hustle,” denting its price. Days later he tweeted he was working with Doge developers to improve its transaction efficiency.Musk’s disclosure in early February that Tesla used $1.5 billion of its nearly $20 billion in corporate cash to buy Bitcoin sent the token’s price to record and lent legitimacy to electronic currencies, which have become more of a mainstream asset in recent years despite some skepticism.His latest dustup with Bitcoin started with a tweet from a person using the handle @CryptoWhale, which said, “Bitcoiners are going to slap themselves next quarter when they find out Tesla dumped the rest of their #Bitcoin holdings. With the amount of hate @elonmusk is getting, I wouldn’t blame him...”The Tesla chief executive officer responded, “Indeed.”The twitter account @CryptoWhale, which calls itself a “crypto analyst” in its bio, also publishes a Medium blog on market and crypto trends.Musk has spent hours Sunday hitting back at several different users on Twitter who criticized his change of stance on Bitcoin last week, a move he said was sparked by environmental concerns over the power demands to process Bitcoin transactions. He said at the time that the company wouldn’t be selling any Bitcoin it holds.An outspoken supporter of cryptocurrencies with cult-like following on social media, Musk holds immense sway with his market-moving tweets. He has been touting Dogecoin and significantly elevated the profile of the coin, which started as a joke and now ranks the 5th largest by market value.Dogecoin is down 9.6% in the last 24 hours, trading at 47 cents late Sunday afternoon, according to data from CoinMarketCap.com.Tesla didn’t immediately respond to an email seeking comment on Musk’s tweet on Sunday.Read More: Elon Musk Just Reopened an Old Wound in the Bitcoin WorldMusk’s Sunday social-media escapades were the latest chapter in one of the zaniest weeks in a crypto world famous for its wildness. For die hards, the renewed slumps in Bitcoin and other tokens have done nothing to deter crypto enthusiasts who say digital coins could many times their current value if they transform the financial system.“We’re looking at the long-term and so these blips, they don’t faze us,” Emilie Choi, president and chief operating officer of crypto exchange Coinbase Global Inc., said last week on Bloomberg TV about the wild swings prevalent in the market. “You’re looking for the long-term opportunity and you kind of buckle up and go for it.”Seat belts were needed by anyone watching the crypto world in the past eight days. Aside from Musk’s antics that sent Doge and Bitcoin on wild rides, a host of other developments pushed around prices.Tether, the world’s largest stablecoin, disclosed a reserves breakdown that showed a large portion in unspecified commercial paper. Steve Cohen’s Point72 Asset Management announced that it would begin trading cryptocurrencies. And a longstanding critique of the space reared its head again: illicit usage.It was reported that the owners of the Colonial Pipeline paid a $5 million ransom in untraceable digital currencies to hackers that attacked its infrastructure, while Bloomberg also reported that Binance Holdings Ltd., the world’s biggest cryptocurrency exchange, was under investigation by the Justice Department and Internal Revenue Service in relation to possible money-laundering and tax offenses.But, “for many crypto assets such as Bitcoin and Ethereum, the long-term story has not changed,” said Simon Peters, an analyst at multi-asset investment platform eToro. “This emerging asset class continues to revolutionize many aspects of financial services, and while nothing goes up in a straight line, the long-term fundamentals for crypto assets remain as solid as ever.”Bitcoin was already swinging wildly on the weekend before Musk tweeted. The two days tend to be particularly volatile for cryptocurrencies, which -- unlike most traditional assets -- trade around the clock every day of the week. Bitcoin’s average swing on Saturdays and Sundays so far this year comes in at 4.95%.That type of volatility is owing to a few factors: Bitcoin’s held by relatively few people, meaning that price swings can be magnified during low-volume periods. And, the market remains hugely fragmented with dozens of platforms operating under different standards. That means cryptocurrencies lack a centralized market structure akin to that of traditional assets.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
China’s EV makers are not only set to grow big in their domestic market, but also have great plans to expand in Western Markets and commodity demand in these overseas markets could see huge demand for metals as a result
Getting money back this year? The investing icon has some advice on how to use it.
A Swiss parliamentary committee will discuss the fallout from billions of dollars worth of losses at Credit Suisse amid risk-management failures, bringing political scrutiny to bear on the financial sector, a Sunday paper reported. "It's the politicians' turn on the Credit Suisse issue," the SonntagsZeitung quoted Prisca Birrer-Heimo, a Social Democrat member of the lower house's economic affairs committee, as saying ahead of committee hearings set for Monday and Tuesday. Credit Suisse declined to comment on the report.
Technology shares in the Asia-Pacific Region led the advance as investors hunted for bargains following a global sell-off in the sector.
An improving economy and rising inflation are likely to pull rates higher before long.
Elon Musk continued to whipsaw the price of bitcoin, briefly sending it to the lowest since February after implying in a Twitter exchange Sunday that Tesla Inc. may sell or has sold its cryptocurrency holdings.
(Bloomberg) -- Iran is preparing to ramp up global oil sales as talks to lift U.S. sanctions show signs of progress. But even if a deal is struck, the flow of additional crude into the market may be gradual.State-controlled National Iranian Oil Co. has been priming oil fields -- and customer relationships -- so it can increase exports if an accord is clinched, officials said. Under the most optimistic estimates, the country could return to pre-sanctions production of almost 4 million barrels a day in as little as three months. It could also tap a flotilla’s worth of oil that’s hoarded away in storage.But there are many hurdles to overcome. Any agreement must fully dismantle the gamut of U.S. barriers on trade, shipping and insurance involving Iranian entities. Even then buyers may still be reluctant, according to Mohammad Ali Khatibi, a former official at NIOC.“Our return may be a gradual process rather than swift and sudden -- it can’t happen overnight,” Khatibi, also Iran’s former OPEC envoy, said in an interview. That’s partly due to the coronavirus pandemic having “significantly hurt demand,” he said.The pace of Iran’s comeback may prove critical for the oil market. While fuel consumption is on the rebound as governments distribute vaccines and major economies reopen, it remains depressed by lockdowns and new virus outbreaks. Extra Iranian supplies would impose a burden on other members of OPEC+, which has toiled for more than a year to clear a glut built up as the pandemic spread.Within ReachU.S. and Iranian diplomats, currently negotiating via intermediary governments in Vienna, have signaled that an agreement is within reach.If successful, the negotiations could reactivate a 2015 international nuclear accord that Donald Trump withdrew the U.S. from three years later. That would require Iran to once again accept limits on its atomic activities, in return for the lifting of an array of tough sanctions imposed by the former president.Tehran has already taken advantage of a less hostile climate since President Joe Biden came to power in January. It is reviving petroleum sales, sending more crude to emboldened Chinese buyers. Iran’s production has climbed almost 20% this year to 2.4 million barrels a day, according to data compiled by Bloomberg, though most of that oil is still used domestically.“Even if the sanctions are not removed, depending on their ability to sell oil in the gray market, they will increase their production further,” said Sara Vakhshouri, president of consultancy SVB Energy International LLC in Washington.Maintaining WellsEngineers at NIOC have been rotating crude production between different fields to maintain sufficient reservoir pressure, according to officials at the company, who asked not to be identified. The procedure is crucial for keeping up output levels. Gas injections at older oil fields in the south of the country are playing a similar role, SVB’s Vakhshouri said.If there’s a deal with the U.S., the Islamic Republic could increase production to almost 4 million barrels a day in three to six months, according to Iman Nasseri, managing director for the Middle East at consultant FGE, who has decades of experience covering the region and worked in Iran.Others expect a slower pace. It would take 12 to 15 months after the lifting of sanctions to increase production to 3.8 million barrels a day, Reza Padidar, head of the energy commission of the Tehran Chamber of Commerce, said in an interview. Some work required to restore capacity at fields, such as removing and servicing blocked bore-hole pumps, can take as long as one month per well, he said.China StockpilesEven before pumping more oil, Iran could boost its sales. FGE’s Nasseri estimates that the country has stockpiled about 60 million barrels of crude. About 11 million barrels of that, plus another 10 million barrels of a light oil called condensate, is in storage in China, where it’s ready to be sold to refiners, according to FGE.NIOC officials say they’ve maintained contacts with customers, who are willing to resume purchases on regular contracts.An Iranian restart poses complications for the Organization of Petroleum Exporting Countries and its allies. Led by Saudi Arabia and Russia, the 23-nation coalition is gradually restoring the oil output it cut last year when the coronavirus crisis battered demand. Its cautious approach to raising supplies has helped Brent crude prices climb 33% this year to almost $69 a barrel.Saudi Energy Minister Prince Abdulaziz bin Salman has signaled that the alliance will make room for Iran to boost output, as it has in the past. It’s unclear whether others, including countries eager to revive production such as Russia and the United Arab Emirates, would be so accommodating. But they may not need to be.Difficult TalksWith Tehran and Washington still haggling to secure the best terms, a deal may take much more time. If recent confrontations in the Persian Gulf between U.S. and Iranian naval vessels escalate, it might slip away altogether.Talks could also be affected by next month’s elections in Iran, after which President Hassan Rouhani is stepping down. While Supreme Leader Ayatollah Ali Khamenei has so far endorsed the negotiations, Rouhani’s successor may take a harder stance against the U.S.Even if sanctions are removed, Iran faces other problems. Many refiners sign annual contracts at the start of the year, leaving little room for Tehran to strike its own long-term supply agreements for the time being, Khatibi said.“Our biggest concern is limitations imposed on our customers and their fear of buying oil from Iran,” he said. “As we draw closer to the end of the year, we’ll see more term contracts happen.”Trump’s sanctions “suffocated” Iran’s relationships with traditional customers including India, China, South Korea, Japan and Turkey to a greater extent than previous trade restrictions, said Padidar of the Tehran Chamber of Commerce.For Wall Street banks like JPMorgan Chase & Co. and trading houses such as Vitol Group, the oil market is recovering fast enough to comfortably absorb additional Iranian barrels. Pent-up demand for travel stands to propel consumption higher in the second half.“There is space for oil from Iran to return,” said Mike Muller, head of Asia for Vitol Group, the world’s largest independent oil trader. “It won’t come back in one big bang.”(Updates from fourth paragraph with details of analyst and oil prices.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Australian expatriate investment bankers are returning home in large numbers, lured by the launch of new boutique advisory firms, a sharp pick up in deal-making and the safety of a country relatively unscathed by the coronavirus pandemic. Signs of a strong economic rebound from a brief pandemic- induced recession are underscoring a trend that is starting to reverse a long tradition of Australian bankers heading overseas to more tax-friendly global financial centres. "There is a brain gain happening in Australia, we are acquiring additional knowledge and experience," said Nick Hughes, Australia co-head at UBS.
British businesses ramped up their search for new staff as pubs, restaurants and other hospitality and travel firms got ready for Monday's lifting of coronavirus restrictions in England, a survey showed. But an exodus of foreign workers is aggravating a shortage of candidates, with more than 10 jobs on offer for every job-seeker in some cities, according to the survey by job search website Adzuna. Job adverts on Adzuna jumped to 987,800 in the first week of May, up by 18% from the end of March, which was before the reopening of non-essential retailers and hospitality firms for outdoor service on April 12.
(Bloomberg) -- China’s central bank injected medium-term cash into the financial system, in a push to keep borrowing costs low as the economy recovers from the virus pandemic.The People’s Bank of China added 100 billion yuan ($15.5 billion) of one-year funds with its medium-term lending facility on Monday, matching the amount coming due in a move that was expected by analysts. The authorities kept the interest rate unchanged at 2.95%.The operation, which is usually conducted once around the middle of every month, could further support Chinese sovereign bonds, coming soon after the country’s 10-year government yield and benchmark money-market rate both recently touched a four-month low.The notes have gained for three weeks in a row, the longest run since January. That’s even as Treasury yields have climbed and a surprisingly quick jump in the nation’s factory-gate prices were seen to pose a challenge to current monetary policy.Factors behind the resilience in China’s debt include ample liquidity and foreign capital inflows, which accelerated in April. While the loose conditions could be tested by a rise in debt sales in May, the PBOC’s vow to keep cash supply ample has boosted confidence.The PBOC has done the minimum in its daily operations to manage short-term liquidity over the past two months. It has been injecting 10 billion yuan of cash daily-- no matter the size of funds coming due -- since the start of March. That’s a sign the central bank is so far pleased with the subdued volatility in the money market.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- It’s going to take more than a pesky pipeline shutdown to knock energy stocks off their pedestal as this year’s best performing group in the S&P 500. Indeed, while the market focuses on popular meme stocks, alternative energy plays, tech and Tesla, the best place to make money in 2021 has been that old warhorse, the crude patch.Oil & gas shares are up 40% this year compared with a 11% gain in the broad equities benchmark. Despite headwinds from regulatory concerns and the popularity of ESG investing, the group has continued to surge higher on rising oil prices, improving earnings and a market-wide rotation into value stocks. The mantra of limited capital spending and low growth appears to be working. Even the hacking of the largest fuel pipeline in the U.S. last week couldn’t halt the gains.Macro dynamics are favorable, and share prices remain wildly undervalued as the broader investment community continues to ignore the space, according to New York-based Goehring & Rozencwajg Associates LLC. That probably won’t last with these returns, considering Marathon Oil Corp. is up a whopping 77% this year, while Devon Energy Corp,. EOG Resources Inc. and Diamondback Energy Inc. have all soared more than 60% since the start of 2021. But so far, investors appear to be staying away.“To date, we have not seen any material flow of funds from generalist investors” or institutional money, says managing partner Adam Rozencwajg. “The move will be violent when it happens.”Shrinking PresencePart of this may come down to simple index weightings, where energy has become just a tiny slice of the stock market. The group accounts for less than 3% of the S&P 500 after being in the double digits 10 years ago.Energy bulls got a little encouragement in February when Warren Buffett’s Berkshire Hathaway Inc. disclosed a stake in Chevron Corp., according to Bank of Montreal capital markets. Berkshire’s ownership stole headlines, though BMO’s scan of 13F filings also showed broad-based increases in active long-only ownership across E&P stocks after steady declines in recent years, analyst Phillip Jungwirth told clients in a February note.Shale drillers also offer hope about the macro environment, as they’re generating cash and giving back to investors without increasing supply. EOG Resources Inc. reiterated a no-growth outlook for this year at Citi’s global energy conference earlier this week, according to the bank. The company also declared a surprise special dividend after generating record cash in the first quarter.See more: Exxon, Chevron Preach Prudence Even as Cash Waterfall ReturnsEarnings EncouragementMeanwhile, first-quarter earnings from 40 U.S. shale drillers were generally positive, according to KeyBanc Capital Markets. Almost 80% of the group beat cash flow per share/Ebitda estimates, analyst Leo Mariani wrote in a note to clients.The cyberattack on Colonial Pipeline Co.’s fuel distribution line along the U.S. Eastern Seaboard didn’t do much damage to refining stocks, as a prolonged shutdown was avoided. The approaching summer driving season and the lifting Covid-19 restrictions are keeping analysts bullish.“What we’re calling the ‘summer of YOLO’ should drive a large-scale recovery in gasoline/jet demand this summer as the U.S. (and hopefully the world) returns to normal,” according to Raymond James. “This narrative will be very hard to fight,” analyst Justin Jenkins wrote in a note to clients.One cause for concern is inflation. While oil’s generally thought to benefit from rising prices, in this case it raises the specter of a less accommodative U.S. Federal Reserve, which could hurt crude. That, however, isn’t bothering Leigh Goehring. “Inflation is a massive, massive positive tailwind” for oil & gas companies, which are “asset-heavy,” he said.While rising oil prices have fueled the early stages of an earnings recovery for energy firms, the longer-term outlook is murkier, BMO’s chief investment strategist Brian Belski said earlier this week as he upgraded the sector to market weight from underweight.“Secular supply and demand dynamics for oil will likely make it difficult for the energy sector to sustain any type of outperformance over the longer-term,” he concluded.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
The company's recent move is more about policy than price. Plus: Did this week mark the start of a meaningful shift in the stablecoin market?
In the not-so-distant future, a majority of drivers probably won’t even own the cars they drive in, instead they may join the rising phenomenon of car subscription services
(Reuters) -Gasoline shortages that have plagued the U.S. East Coast slowly eased on Sunday, with 1,000 more stations receiving supplies as the country's largest fuel pipeline network recovered from a crippling cyberattack. The six-day closure of Colonial Pipeline's 5,500-mile (8,900-km) system was the most disruptive cyberattack on record, preventing millions of barrels of gasoline, diesel and jet fuel from reaching fuel tanks throughout the eastern United States. Thousands of gas stations ran dry as supplies failed to arrive and drivers fearing a prolonged outage filled tanks and jerry cans.
(Bloomberg) -- Taiwan stocks slumped, extending their biggest rout in more than a year, as the government tightened restrictions on people and businesses to control its worst outbreak of the coronavirus.The Taiwan Stock Exchange Weighted Index slid as much as 3.6% in Taipei as authorities urged companies to allow staff to work from home or split locations after reporting a record 206 new local cases Sunday. It pared losses to 1.5% as of 9:25 a.m. local time. The benchmark gauge sank 8.4% last week on concern about the impact on growth, the most since March 2020, turning Taiwan stocks into the world’s worst performers so far this month.Forced selling may add volatility to Monday’s trading, with the level of margin debt falling by a net NT$5.8 billion ($207 million) on Friday, according to exchange data compiled by Bloomberg. That took the four-day drop in leverage to NT$39.4 billion, showing traders faced margin calls by brokers to cover losses in their stock accounts.The sharp reversal in Taiwan stocks is a warning to highly leveraged investors around the world. The Taiex was the world’s best performing equity gauge in the three years through April, surging almost 80% in U.S. dollar terms, as a seemingly never-ending rally in tech shares pulled in retail investors.Travel and consumption-linked names were among the big losers on Monday. Restaurant operators Gourmet Master Co. and Wowprime Corp. plunged almost 10% each, while shares of Formosa International Hotels Corp. and The Ambassador Hotel slumped at least 5% each.Taiwan’s stock exchange urged investors not to overreact. The latest development in Covid fighting is relatively controllable, and the fall in stock market last week should be already priced in the situation, the bourse said in a statement issued late Sunday night, adding that stabilizing measures will be adopted if the market becomes irrational.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Sanjeev Gupta’s plans to save his sprawling metals empire were mired in confusion on Saturday as a key financial backer sent mixed messages about its support in the wake of a U.K. fraud probe.On Friday, the Serious Fraud Office launched an investigation into possible fraud and money laundering at Gupta’s GFG Alliance That initially prompted White Oak Global Advisors LLC -- which had recently offered loans to his U.K. steel businesses and one of his Australian units -- to say it wasn’t in a position to continue discussions with a company facing a probe.Hours later, a spokesperson for the San Francisco-based lender said it was continuing efforts to refinance Liberty Primary Metals of Australia, “subject to financial due diligence and acceptable governance.” Last week it had agreed terms with Gupta to refinance the unit.The apparent reversal throws the fate of Gupta’s businesses into further confusion. It’s unclear whether the loan to the Australian unit, which includes the Whyalla steelworks, will still go ahead as planned or depends on the SFO investigation.White Oak declined to comment Saturday on the status of a reported 200 million pounds ($282 million) of lending to Gupta’s U.K. businesses, The company also wouldn’t comment on a report in the Financial Times saying White Oak may be reluctant to walk away because it has a financial exposure to Gupta’s businesses after buying up debt from the steel tycoon.GFG said Friday it will co-operate fully with the SFO investigation. It declined to comment on White Oak’s decision.Gupta has been scrambling to find new financing after Greensill, his biggest lender, fell into insolvency. His group employs 35,000 people across 30 countries, all which may be in danger of losing their jobs if the tycoon can’t secure replacement loans. He faces an uphill battle, with the SFO probe likely to deter many potential financiers.The exact scope of the SFO investigation isn’t yet clear. Four banks stopped working with Gupta’s Liberty House Group trading business, starting in 2016, amid concerns about what they perceived to be problems in paperwork provided by Liberty, Bloomberg News has reported. In one example, the company had presented a bank with what seemed to be duplicate shipping receipts. A spokesman for Gupta has denied any wrongdoing.The two-month period from when it started looking into GFG and its financing by Greensill to announcing the formal probe is a quick turn-around for the SFO, which often takes years to publicly confirm it’s taking action against a company.It will now start to gather evidence, including securing devices and documents. However, it’ll likely take years for the office to make any tangible updates to the investigation, including whether it decides to charge individuals as part of the probe.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- The world’s worst coronavirus outbreak is set to stretch the already strained budgets of Indian states, making it more costly to borrow just when they need the money to cushion their economies.India’s 28 states will have to foot about $5 billion or more in vaccination costs after Prime Minister Narendra Modi’s federal government suddenly made them responsible for inoculating most adults from May 1. Since they hadn’t budgeted for the jabs or steps to tackle a second wave, their options to meet the additional expense are limited to cutting capital expenditures, selling public assets and boosting borrowing.A simple calculation shows it will cost states 354 billion rupees ($4.8 billion) to give two vaccine shots to about 590 million Indians in the 18-to-44 age group, at a combined cost of 600 rupees per person. If vaccinations are extended to those under 18 years old, the expense could rise to 0.25% of gross domestic product, or about $7 billion, according to Emkay Global Financial Services Ltd. economist Madhavi Arora.The additional burden couldn’t have come at a worse time for states, which are facing higher yields on market borrowings this year amid the threat of widening fiscal deficits.Failure by India’s provinces to raise and spend enough money risks holding back the recovery from a rare recession last year. That’s because states account for 60% of total government spending on asset creation and infrastructure building, which drive jobs creation and consumption.In addition, provinces are having difficulty attracting foreign investors despite paying yields that are typically higher than those on federal government debt. Global funds have used only 1.2% of the 676-billion rupee investment limit available to them in notes issued by states as of May 10, down from 4.8% two years ago, data from the Clearing Corp. of India Ltd. show.Sell Assets“Finances are bound to be affected,” said T. S. Singh Deo, health and commercial tax minister of the central Indian state of Chhattisgarh. “The axe will certainly fall on capital expenditure.”Modi’s government has encouraged states to sell assets to fund spending plans in the current year. That’s one way to bring down the debt burden, said Palanivel Thiaga Rajan, an ex-Wall Street banker and newly appointed finance minister of the southern state of Tamil Nadu.“Everything is on the table,” he said. “We will cut back on a bunch of spending that we don’t think is essential during this time. We will try to raise new sources of funds. We will try to do some restructuring of the debt. We will look at asset sales.”The pandemic has changed states’ budgets significantly, according to the central bank. The average gross deficit for states that presented their budgets before Covid was 2.4% of output, while after the lockdown it stood at 4.6% in the year ended in March, the Reserve Bank of India said.Uttar Pradesh, India’s most populous state, saw the gap widen to 4.17% of the state’s GDP in the year ended March 31, compared to the prescribed limit of 3%. Bihar, among the nation’s most impoverished provinces, estimated the gap at almost 7%.They may miss their goal of narrowing the budget gap this year. Although there’s no national lockdown this time to stem the deadly second wave of the pandemic, several states have imposed local movement curbs that are hurting economic activity and revenue collection. That’s nudging many economists to cut their double-digit growth forecasts for the current fiscal year.What Bloomberg Economics Says...“Daily activity index for India has steadily declined since the last week of March, which broadly coincides with the rise in the country’s lockdown stringency levels.”-- Abhishek Gupta, India economistFor the full research, click hereThere’s “renewed uncertainty regarding the near-term economic outlook,” said economists led by Aditi Nayar at ICRA Ltd, the local rating arm of Moody’s Investors Service. That “may modestly constrain the indirect tax collections of those particular states.”To bridge the gap, the western Indian state of Rajasthan is planning to sell or lease out unused properties. Telangana, a southern state, is planning to sell land parcels to raise about 145 billion rupees, according to local media reports.Still, there’s no guarantee these deals will come through. Even the federal government has failed to achieve divestment targets for the past two years after failing to sell flag carrier Air India Ltd. and Bharat Petroleum Corp., a state-owned oil refiner. Those sales have been carried forward to the current year.The northern Indian state of Punjab plans to cut capital spending and instead boost health care expenditure, its Finance Minister Manpreet Singh Badal said.“States have to fend for themselves,” he said. “Even though we increased our health budget by 18% this year, I see my health budget going up further on account of this emergency. There is no other way.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
The relief bill the president signed in March is giving states money for direct payments.