The First Forum is an initiative which focuses on covering the latest happenings going around in the world in a brief format. This is in lieu with the importance of catching up with these events in this fast changing world.
In this Fifteenth Edition of The First Forum we would be covering the following:
1. Business
2. Economics
3. Finance

(By Shruti Jha, Nikunj Gulati, Kanika)

Business

Online Casino CEO Fired After a 46 Million Rupees Mistake
Online casino comparison site operator Voodoo Dreams Inc. has made a costly mistake after launching their online casino in India that caused the company to lose millions of Rupees to its players. This glitch has already lost them close to ₹80,000,000 Rupees cash prizes and the loss is going to continue to increase until 16 March 2020 when their new customer agreement takes effect. Read MoreThe new promotional campaign for new customers in India was supposed to give Rs. 10,000 of your money back for every 10 Euros deposited. But, due to a minor error the contract wrote that it will give Rs. 100000. As a result, people are using the free credit and hitting jackpots that are costing Voodoo Dreams heavily. What is making matters even worse for the company is that there is no way for them to fix it due to the strict gambling laws which require casino companies to notify at least 7 days in advance before changing their terms and conditions.

Abu Dhabi’s long-troubled Etihad Airways reports $870 million loss in 2019
Abu Dhabi’s long-troubled national carrier Etihad Airways on Thursday reported losses of $870 million in 2019 after losing billions in recent years, calling the result “encouraging.” Read MoreSince 2016, Etihad has lost a total of $5.62 billion as its strategy of aggressively buying stakes in airlines from Europe to Australia to compete against Dubai-based Emirates and fellow rival Qatar Airways exposed the company to major losses. The company has since started to claw its way out of financial trouble. In February, Etihad announced it would sell 38 aircraft to an investment firm and a leasing company in a deal valued at $1 billion.

Cathay Pacific fined by UK watchdog over massive data breach
Hong Kong carrier Cathay Pacific has been fined HK$5 million by Britain’s privacy watchdog over a huge data leak of more than nine million customers including passport numbers and credit card details. Read MoreBetween October 2014 and May 2018, a lack of security measures on the carrier’s computer systems led to a data breach involving more than 9.4 million customers around the world, according to the ICO. Cathay said in a statement it wanted to “express its regret, and to sincerely apologise” for the breach, adding it had taken measures to enhance its IT security and spent “substantial amounts” on computing infrastructure.

 America’s retailers start crowd control as virus spreads
America’s response to the coronavirus is accelerating, and now major retailers and restaurants are taking action to decrease human interaction in their locations. Starbucks Corp., which had already been dealing with the virus fallout in China, said it may reduce seating in its coffee shops and may limit transactions in some stores to mobile-only pickup orders, delivery or drive thru. Read MoreChipotle Mexican Grill Inc. will offer free delivery from March 15 through March 31 on orders over US$10. The deliveries will come with a new tamper evident packaging seal and customers can leave instructions for drivers to limit direct contact, it said. The White House announced a 30-day restriction on travel from Europe to the U.S., while New York Governor Andrew Cuomo said he’s banning gatherings of more than 500 people. The measures are aimed at slowing the virus by crimping social interactions, a challenge more complicated for industries that rely on physical customer visits.

Coronavirus: ‘No shortage of medicines, prices won’t increase’
Indian pharmaceutical industry, which grew 12 percent in February on the back of healthy sales growth in the respiratory (17.9%), anti-infective (14.1%) and cardiac (13.3%) therapy segments seems to be well geared to manage the novel coronavirus (COVID-19) infection crisis. Read MoreThe inventory level of the industry is marginally down, but warrants no crisis at the moment. Market intelligence entity AIOCD Pharmasofttech AWACS Pvt. Ltd points out that at the industry level, inventories in February went down by just two days as compared to January. Though the inventory level is down by eight days, as compared to the same period the previous year, there are sufficient stocks for more than a month for every therapeutic category.

Economics

The UK pumps $30 billion into the economy to combat Coronavirus
Chancellor Rishi Sunak in his first budget speech has unveiled a $30 billion package to boost the economy and get through the coronavirus outbreak. Out of the $30bn in extra spending, $12bn will be specifically targeted at coronavirus measures including at least $5bn for the NHS in England and $7bn for business and workers across the UK along with the $18bn of wider spending plans to stimulate the economy as supply chains disrupted and consumer spending decreases. Read MoreThe government independent watchdog Office for Budget Responsibility said,” a recession this year is quite possible if the spread of the virus causes widespread economic disruption”. The Bank of England also cut the interest rates from 0.75% to 0.25% and launched other emergency measures to limit the economic fallout from the virus. The move is designed to combat the economic shock which is expected to be caused by a coronavirus. Labour leader Jeremy Corbyn welcomed the steps being taken to reduce the economic impact from coronavirus.

 Moody’s cut India GDP forecast to 5.3% for 2020 on weak demand
Rating agency Moody’s Investors Service cut its growth predictions for India from 5.4% to 5.3% as it expects the COVID19 outbreak will dampen the growth. The spread of novel coronavirus has resulted in significant economic fallout, which is severely happening not only to trade and supply chains but depressing domestic consumption demand in affected countries. Read MorePreviously assume that effect of virus mainly on aggregate demand in China, global trade and global factory output but it is now clear that the outbreak will accidentally hamper domestic demand globally, which will affect a wide range of non-traded activities across countries. In such a downside scenario, Moody’s expects India’s growth to fall 5 per cent in 2020, China (3.7%) and the US (0.9%). However, it expects a moderate recovery in the second half the year as a result of global efforts to arrest the spread of the virus and warmer weather in the northern hemisphere in the spring and summer. 

Meat, Rice, Pharma exporters worried
Exporters are currently facing issues such as the decline in meat exports, falling global demand for rice, restrictions on shipments of medicines and a shortage of raw material for the pharmaceutical due to coronavirus epidemic. Meat is the worst affected sector in food where there is a 12-15 % decline in exports. Read MoreThe non-basmati rice orders have declined and overall container movement is restricted and the pharma sector is facing a shortage of raw material most of which comes from China. India’s pharmaceutical companies source about 70% of their ingredients from Chinese factories, many of which have been shut for weeks owing to the coronavirus outbreak. The closure of airports in China has also impeded supplies reaching India while the US and Europe are heavily reliant on the supply. The commerce and industry ministry has drawn up a list of at least 500 products to fill the gap created by China in the global supply chain.

Indian Economy to benefit from a slump in International Oil prices
The Indian economy set to benefit from lower oil prices, the statement said by Kotak in its latest report on the oil sector. Crude oil prices fell by 30% single largest fall since the 1990 Gulf war after the failure of OPEC (Organisation of Petroleum Exporting Countries) and Russia to agree on an extension of production cuts. This led to Saudi Arabia initiating a price war against Russia. Read MoreThe sudden slump in oil prices resulted in fall in net revenue realization for the oil-exporting countries. On the contrary oil-importing countries immensely benefited from prices. India which imports 83% of its oil requirements, is one of the significant gainers from the oil prices slump. This may be a boom to pull out the economy from an 11-year low growth rate and rising inflation. It can lead to significantly lower import bills and lower current account deficit, fiscal deficit, inflation and make the rupee stronger.

China looks to bounce back from Virus but recovery likely to get hit
The number of Coronavirus cases in China has seen a drastic drop in recent days but the Asian giants economic recovery may be held back by the global outbreak as countries around the world struggle with this pandemic. The rate of resumption of work at its factories has also inched up, according to analysts tackling the progress of activities in the country. Read MoreChina had shut down most provinces in a bid to contain the outbreak and roads, transportation networks as well as factories had been closed. The virus outbreak has now spread to China’s key trading partners. In Europe and Italy which has the highest number of cases outside China has shut down the entire country and in the US cases crossed 1,000 this week due to this the pace of recovery will be held back by weakening demand from Europe and the US where cases are still surging.

Finance

Bitcoin loses Half of its value in two-day plunge
Bitcoin lost its allure as a safe-haven asset this week. The world’s first and most widely held cryptocurrency dropped 50% over the past two days. Bitcoin — sometimes referred to as “digital gold” — fell more than 30% Friday to its weakest level since March 2019, according to data from CoinDesk. The cryptocurrency briefly dropped below $4,000 Friday after starting the week above $9,000. Read MoreIt later recovered to roughly $5,400 as of the close of U.S. markets. Bitcoin Futures, meanwhile, were on pace for its worst week since debuting in December 2017. The bitcoin nosedive came amidst volatile trading on Wall Street this week. On Thursday, stocks saw their worst since the “Black Monday” market crash in 1987. Stocks rose sharply Friday afternoon on the possibility of fiscal stimulus from governments around the world. Other cryptocurrencies also dropped this week. The world’s second largest digital currency, ethereum, fell 46% this week while XRP lost nearly 40% of its value. 

Not every bear market accompanied by an economic recession, but chances remain high
This week, the S&P 500 and the Dow Jones Industrial Average entered bear markets, ending their historic 11-year bull runs.  A bear market marks a 20% decline from all-time highs. As a forward-looking mechanism, the stock market usually sends warnings about the economy before shrinking growth shows up in the data. Read MoreStill, there have been a couple of instances where recessions didn’t accompany previous bear markets, according to data from LPL Financial going back to the S&P 500′s inception. Now the good news is not all bear markets occur in recessions; in fact, when the economy has avoided recession, stocks have bottomed right around down 20% over the past several bear markets,” said Ryan Detrick, LPL Financial’s senior market strategist. In 1987, the S&P 500 tanked 22% in the infamous Black Monday crash, suffering its largest single-day percentage loss ever. That bear market lasted for only four months and the U.S. economy avoided a downturn. The S&P 500′s Thursday plunge of 9.5% was the second largest ever, only next to the 1987 market crash. Recessions also didn’t occur amid the bear markets in 1961, 1966 and 1947.

Economists expect RBI to cut 50-75 bps before April
Amid fears around the growth slowdown being intensified by the spread of Covid-19 and inflation easing in February, the markets are expecting a repo rate cut anytime now. Similar actions by a number of central banks around the world, that are widely being seen as acting in concert, have also fuelled expectations in India. Read MoreEconomists and money-market watchers — some of whom were till last week expecting the Reserve Bank of India (RBI) to act on the liquidity front — now anticipate action on rates as well. “The cuts by central banks across the world clearly seem part of a coordinated effort. Now that we have seen a fall in the CPI (consumer price inflation) data for February, the MPC (monetary policy committee) could hook on to that and go for a cut. And, it could come anytime now,” said a senior economist with a foreign bank. CPI inflation eased to 6.58% in February from 7.59% in January, largely due to lower food prices. Over the last couple of weeks, the US Federal Reserve and the Bank of England, among others, have slashed rates by 50 basis points (bps). On Friday, the Chinese central bank lowered the reserve requirement for some local banks to bring down the cost of money. Ananth Narayan, professor-finance at SPJIMR, said there is a possibility that the RBI would go for a deep rate cut before the scheduled MPC meeting on April 3.

SBI to invest Rs 7,250 crore in Yes Bank, others to bring Rs 5,000 crore
State Bank of India (SBI) on Thursday said it would invest Rs 7,250 crore in Yes Bank for a stake of up to 49%. SBI will buy 725 crore shares in the private sector lender at Rs 10 apiece. Other investors who are expected to pick up a stake in Yes Bank include lenders like Kotak Mahindra Bank, ICICI Bank and HDFC and high net worth investors Rakesh Jhunjhunwala and R Damani. Read MoreTogether they are expected to bring in close to Rs 5,000 crore. Some foreign investors may be roped in at a later stage for additional infusion of capital. The size of the ‘problem book’ at the beleaguered Yes Bank is estimated by analysts at close to Rs 80,000 crore; stressed loans at the end of September 2019 were Rs 50,396 crore, up from Rs 43,482 crore at the end of June, 2019. Thanks to steep increase in the BB and below pool in the last couple of years, the net stress loans at the end of September stood at 18.7%. The bank’s provision coverage was a little under 17%. Experts said around Rs 40,000 crore of the Rs 80,000 crore of the problem book may need to be written off. The lender will announce results for Q3 FY20 on Saturday.

Rupee hits record low of 74.5 against US dollar amid Coronavirus scare
The dollar stood tall on Friday as investors scrambled for the world’s most liquid currency amid deepening panic while the euro nursed losses after the ECB disappointed by not cutting rates. The Indian rupee dropped to a record low on Friday, weighed down by worries over the coronavirus pandemic that has prompted investors to dump riskier assets and move towards safe havens. Read MoreThe dollar stood tall on Friday as investors scrambled for the world’s most liquid currency amid deepening panic while the euro nursed losses after the European Central Bank disappointed by not cutting rates. The partially convertible rupee dropped to a record low of 74.5075 against the dollar before recovering slightly to trade at 74.4445 by 0355 GMT. Traders expect the central bank to step in to prevent further sharp falls in the currency but don’t see it protecting the rupee at any particular level.

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