Pushing back the retirement age
The India findings of Millennial Careers-20:20 Vision, published by US-headquartered human resource consulting firm ManpowerGroup, threw up some interesting observations. The survey looked at those those born between 1980 and 1995.
- 94% cite job security as a priority when looking for work.
- 39% expect to work beyond the age of 65 and 25% are ready to work even after they turn 70.
- Indian millennials claimed the longest working week in the survey, with 82% saying they work more than 40 hours a week while 45% said they work more than 50 hours. Still, 41% plan to take significant breaks for relaxation, travel or vacations.
In the research, ManpowerGroup commissioned a global study of 19,000 working millennials and 1,500 hiring managers across 25 countries. The fieldwork took place between February and April this year.
Millennials prioritise three things when choosing where and how they work - job security, opportunity to learn new skills and money. They also rank holidays and time off, the opportunity for promotion and a flexible working environment as priorities.
Eight in 10 millennials in India said working for employers who are socially responsible and aligned to their values is important while 93% said the opportunity to learn new skills is a top factor when considering a new job.
EPFO incurs loss of around Rs 300 crore in equities
The Employees’ Provident Fund Organization, or EPFO, which functions under the labour ministry, incurred a loss of around Rs 300 crore on its investment in stocks (via ETFs) in the year ended March 31, according to a report in Mint.
Notwithstanding the negative return it earned on its equity investment in the first year, it plans to channel more than 5% of its incremental corpus to the stock market this financial year.
“One-year return is not an indicator of equity returns. It will give us a better rate over a long period of time. We are convinced about the long-term benefit,” says labour minister Bandaru Dattatreya.
In 2015-16, EPFO invested 5% of its incremental corpus, or a little more than Rs 6,000 crore, in stocks. The estimate for 2016-17 is the amount would rise to as much as Rs 10,000 crore.
The two ETFs chosen by the EPFO were the SBI-ETF Nifty and SBI Sensex ETF. In the past fiscal year, the finance ministry permitted the EPFO to invest between 5% and 15% of its incremental corpus in equities, but the EPFO decided to invest only 5% of it.
Nalanda Capital to raise $620 million for third fund
According to a report in Economic Times, Singapore-based Nalanda Capital is setting up a new fund.
The firm is headed by former Warburg Pincus India MD Pulak Prasad. Prasad had led Warburg Pincus' investment in Bharti Airtel which made more than six times returns of over $1.8 billion.
Nalanda Capital will raise over $600 million for the new fund, which will take the corpus raised by the only public market-focused investor to about $1.5 billion.
The firm has already registered with U.S. market regulator Securities & Exchange Commission (SEC) to raise a new $620 million fund.
Oil prices move up
The price of oil has gone above $50 a barrel for the first time in 2016 as supply disruptions and increased global demand fuel a recovery. Brent crude has now risen 80% since it hit 13-year lows of below $28 a barrel at the start of the year.
The rise followed U.S. data showing that oil inventories had fallen after supply disruptions due to fires in Canada. Canada is the biggest supplier to the US and wildfires in the western provinces have reduced supplies by about a million barrels per day. Attacks by militant groups continue to restrict oil pipelines in Nigeria. Talks in recent months between OPEC and Russia about freezing oil production had already encouraged a price rise.
Gold in a slump
Earlier in the week Bloomberg reported that gold fell for a fifth day, the longest run of losses in six months, as speculation that the Federal Reserve will raise interest rates as early as next month strengthened the dollar and dented the metal's allure.
PTI reported that gold prices today dropped to Rs 28,870 per 10 grams — an over 3-month low — in line with a weak trend overseas amid sluggish demand from jewellers at the domestic spot market. Globally, gold fell 0.13% to $1,217.90 an ounce in Singapore.
Minister of State for Finance, Jayant Sinha, has said that India would have 8 to 10 very competitive state owned banks after consolidation. Some of them are going to be large-scale global players. Some of them are going to be differentiated banks. Currently, there are 27 in existence.
The mergers of public sector banks are back on the agenda. State Bank of India is to integrate associate banks: State Bank of Mysore, State Bank of Patiala, State Bank of Hyderabad, State Bank of Bikaner and Jaipur, and State Bank of Travancore. In addition, the merger of Bharatiya Mahila Bank was also considered.
Morgan Stanley gets bullish on India
According to Morgan Stanley’s emerging markets strategy team, the rally in emerging markets was nothing but a bear market rally with the risks of a reversal now building yet again.
The report in Business Insider stated that the pillars that supported the rally earlier this year seem to be crumbling, as risk conditions have turned and have started to expose weak fundamentals and structural imbalances once again. The strong USD trend has resumed and Chinese data is deteriorating.
However, the bank believes that India's beta to MSCIEM has significantly reduced since the government change in 2014 to only 0.80 times currently. The note also stated that it sees a sign of de-coupling between MSCI India performance versus the rest of EM, evidenced by the decreasing correlation.
So while the bank has downgraded emerging markets’ bonds, India is now overweight in its Asia Pacific equity portfolio, while Australia is underweight.
The reasons given for this stance are:
1) MSCI India consensus forward P/E relative to MSCI EM is currently trading within its historical standard deviation band (from 56% premium to 36% premium), due to India’s underperformance versus EM since the start of year. GEM fund managers are turning less overweight in India, with their overweight position coming off to only 5.4% from a record high 7.9% in 1Q2015. Meanwhile, domestic flows proved resilient through a difficult 1Q.
2) MSCI India F12M dividends per share is on a consistent rising path post GFC, and its dividend yield relative to EM is now reaching an historical high level.
3) Supportive macro environment: a) Little deflation threat, favourable demographics, low overall debt, and possibility of productivity-enhancing reforms. b) Further rate cut by another 50bps in F2017, according to our economist Chetan Ayha. c) GST bill likely to be approved this year, according to our India Equity Strategist Ridham Desai. d) Monsoon rainfall is expected to be above normal.
Earlier this month, Morgan Stanley released a note stating that Indian companies will likely resume growth in the coming quarters helped by lower debt, positive cash flows and a better economic environment signaling the end of the corporate debt crisis in the country.
