Trusts to be allowed to invest in the markets.
The government today decided to amend the archaic laws to allow all trusts to invest in securities, including shares and bonds of listed companies.The move could see thousands of crores of rupees flowing to the booming capital market The Union Cabinet, which met today, approved a proposal to amend Section 20(f) of the Indian Trusts Act, 1882, in the next session of Parliament to make it more contemporary.This will be the first amendment to the Act since independence.Section 20(f) prescribes investment options and refers to places like Britain, Rangoon and Karachi.Since independence, only an administrative circular has been issued not to invest in any securities issued on behalf of a municipal body, port trust of city improvement trust in Rangoon Town, or by or on behalf of the trustees of the port of Karachi.The amendment in the investment norms under Section 20(f) will enable the government to notify a class of securities as eligible for investment by trusts, said an official statement after the Union Cabinet meeting here.At present, registered trusts can invest their funds either in securities notified by the government or authorised by the trust’s charter or under a High Court ruling.After the amendment to the Act, the government will allow all trusts set up under the Act, which include private and public trusts like religious trusts and educational trusts, to invest in shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities, sources said.Analysts said the measure could release thousands of crores of surplus funds, currently invested in risk-free government bonds and bank deposits, into the capital market.While newer trusts have provided maximum flexibility in their terms of investment options through their charters, older ones like cash-rich religious trusts, have been deprived of this opportunity.There are thousands of trusts in the country, out of which about 400 are very big and have huge resources. Trusts find it difficult to utilise the huge funds received for welfare.The infrastructure sector is expected to become a major beneficiary as the government may promote investment by such trusts in equity and bonds of infrastructure projects or firms.
China stock markets raise $113 bn in 2007
China's Shanghai and Shenzhen stock markets have raised 830.6 billion yuan (113.3 billion dollars) this year largely on an investment mania over initial public offerings, state media said Wednesday. The total amount, which was only for the year up to December 21, was nearly a four-fold increase over the money raised on the country's stock markets last year, Xinhua news agency said.According to estimates, the total amount raised for the entire year is expected to exceed 841 billion yuan, it said. This is equivalent to what was raised by the two bourses in their first 14 years of existence from 1990, it added. More than half the funds raised this year were through 120 IPOs, as investors jumped at new flotations with a vengance, disregarding warnings that an ongoing share bubble is destined to burst eventually. Chinese IPOs this year raised about 61 billion dollars, far outperforming the US capital market which earned 10 billion dollars in new flotations, Xinhua said. China's stock markets are in the midst of an ongoing boom with the Shanghai bourse up 95.60 percent for the year as of Wednesday, while last year the benchmark index rose 130.32 percent. According to Xinhua, more large IPOs are expected next year from numerous Chinese state-owned enterprises.
Meanwhile 13 large state companies already listed on the Hong Kong bourse, such as China Telecom and Dongfeng Motor Group, are being encouraged to seek mainland listings in the future, it said.
Notable IPOs in 2007 include PetroChina which became the world's biggest flotation when it raised nearly nine billion dollars in the sale of four billion shares in early November. Enthusiasm for China's largest oil refiner however faded quickly with the stock trading at around 30 yuan per share in recent weeks after touching highs of around 48 yuan immediately after the IPO. Other top IPOs include China Shenhua, one of the nation's largest coal producers, which raised a record 66.58 billion yuan on the Shanghai bourse in late September and China Construction Bank, one of China's four top commercial lenders, which raised more than 58 billion yuan.
6 SBI associates considering merger
The consolidation process in the Indian banking industry is set to get a new momentum in January next year, with the boards of six associate banks of the State Bank of India slated to meet on January 25, 2008 to consider in-principle nod for their merger with State Bank of India, India’s largest commercial bank.
SBI has seven associate banks including State Bank of Saurashtra, whose merger with the parent bank has already been approved by both the boards and awaiting Government and RBI approval.
The other six are State Bank of Travancore, State Bank of Mysore, State Bank of Bikaner and Jaipur, State Bank of Hyderabad, State Bank of Indore, and State Bank of Patiala.
SBI’s controlling interests in the associate banks range from 75 per cent to 100 per cent.
As and when the consolidation move goes through, SBI is expected to transform itself to a banking giant. It is already one of the largest banks in Asia.
The consolidation move stems from the need to shore up size, which has been a limiting factor for Indian banks as only 22 of them figure in the top 1,000 in the world. Mergers have been advocated as a strategy for Indian banks to make them bigger and face global competition.
In the domestic market too, late private sector entrants such as ICICI Bank have grown much beyond many public sector banks on the back of aggressive marketing of products besides some merger initiatives. Public sector banks too have been looking for consolidation opportunities, but none have materialised so far.
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