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India eyes $11bn on public shareholding sale

The Indian government could raise about $11 billion over the next three-years by raising the public float of its 36 state-owned companies, whose public shareholdings are under 25%.

An employee walks past an electronic board
Source: Bloomberg

According to the chairman of Securities and Exchange Board of India, companies will need to increase their public float to at least 25% from 10% within three-years.

This rule kicked in for the private sector companies in last June.

The measure is part of a reform to attract more foreign investments and revive economic growth through various industries.

There will also be new requirements for research analysts to be regulated to help boost transparency and disclosure standards.

There has already been a run up with investor’s interest this year, partly boosted by the landslide election victory by Prime Minister, Narendra Modi. Investors have bid up stocks such as Coal India, which currently enjoys a monopoly, and sending its share price to a record high earlier this month.

So far, local equities have benefited from an inflow of $9.9 billion from overseas funds, according to Bloomberg data, which was the highest amongst the eight markets it tracks.

However in the interim, investor sentiment will be weighed down by concerns over India’s economy, which is currently facing a five-month high inflation rate and a widening budget deficit. Efforts to jumpstart the economy will be made tougher by weak summer monsoon rains that threaten to hike food and fuel prices.

What investors will be watching out for next is the government’s first budget by Finance Minister, Arun Jaitley, this is expected to be delivered in the second week of July.

 Ahead of the Singapore open

Wall Street was generally positive with the S&P 500 hitting a new record high at 1,959.48 ( +0.1%). The Dow Jones was at 16,921.46 (+0.09%), while NASDAQ slid 0.1% to 4,539.33 after hitting a 14-year high the prior day.

US initial jobless claims were slightly better than expected at 312,000 versus market expectations of 313,000, giving some encouraging signs of consumer confidence returning.

The yen will be in focus today as the Bank of Japan’s governor is due to hold a press conference over monetary policies in the afternoon.

We are calling for the MSCI Singapore to open -0.45 points to 370.75.

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