China Leaves Benchmark Lending Rates Unchanged

Apparel retailers may see revenue fall 30-35%: Crisil

‘Departmental stores to suffer most’

The revenue of the organised apparel retail sector is expected to plummet 30-35% this fiscal due to temporary store closures, restricted mobility due to the lockdown and low income visibility for consumers, Crisil Ratings said.

“While operating profitability is expected to be impacted by 200 basis points (bps), the absolute fall in operating profits will be much sharper, necessitating additional funding, mainly debt, by firms to make up for cash flow shortfalls. This will affect credit metrics,” it said.

The analysis is based on a sample of 60 Crisil-rated apparel retailers (representing a third of the sector’s revenue).

“Pent up demand, as well as the behaviour of consumers post lifting of lockdown, will have a bearing on the pace of recovery,” it said.

According to Crisil, sales at departmental stores will be hit harder with a 40% decline in revenue, as half of these stores are located mainly in malls and Tier 1 cities.

For value fashion retailers, the impact will be lower at 30%, as these have higher presence in Tier 2 and 3 cities.

Apparel retailers are also likely to see higher contribution from online channels this fiscal, driven by changing buying pattern of consumers amid the pandemic, the ratings agency said.

Albertsons' shares fall in NYSE debut

June 26 (Reuters) – Shares of Albertsons Cos Inc fell 3% in their U.S. market debut, even as the supermarket operator priced its offering below the marketed range.

Shares opened at $15.50 compared with the initial public offering price of $16.

United Airlines to resume China flights in July

(Reuters) – United Airlines said on Friday it would resume service to China, with two flights a week between San Francisco and Shanghai beginning July 8.

The U.S. carrier said it would also restart flights to Tokyo, Seoul and Hong Kong.

Amazon to buy self-driving technology startup Zoox

Amazon has agreed to buy California-based self-driving startup Zoox in a deal reported to be worth more than $1 billion that gives it options to use autonomous technology in either ride-hailing or its delivery network.

The world’s largest online retailer has stepped up its investment in the car sector, participating in self-driving car startup Aurora Innovation’s $530 million funding round early last year.

While Amazon and Zoox did not disclose the financial terms of the deal, the Information said on Thursday, citing sources, that Amazon had agreed to pay over $1 billion to buy Zoox. The Information’s report did not mention the exact purchase price.

Zoox CEO Aicha Evans and its co-founder and chief technology officer, Jesse Levinson, will continue to lead the company as a standalone business, the companies said.

A majority of Zoox investors are getting their money back, according to the Information.

Zoox did not immediately respond to a Reuters request for comment.

Lux Capital, DFJ and Atlassian co-founder Michael Cannon-Brooks are some of the investors in the six-year-old startup.

The Wall Street Journal reported last month that the companies were in advanced talks and the deal could value Zoox at less than the $3.2 billion it achieved in a funding round in 2018.

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S&P cuts Axis Bank rating on risks to banks

Says economy to fall into recession, asset quality to deteriorate, credit costs to rise

S&P Global Ratings on Friday downgraded Axis Bank’s rating to BBB- from BB+ saying the rating action reflected its view that economic risks had increased for banks operating in India.

“We have lowered our ratings on Axis to reflect our expectation that heightened economic risks facing India’s banking system will affect the bank’s asset quality and financial performance,” it said.

S&P said while Axis’s asset quality was superior to the Indian banking sector average, its level of non-performing assets (NPAs) will likely remain high compared with the international peers. The rating major has placed ratings of Indian Bank on ‘Credit Watch’ as it sees high risk that the public sector bank’s credit profile could weaken over the coming quarters due to COVID-19 as well as the merger with the weaker Allahabad Bank.

S&P expects the Indian economy to slip into recession in the current fiscal year and anticipate Indian banks’ asset quality to deteriorate, credit costs to rise, and profitability to decline over the next 12 months.

“We affirmed the ratings on the other banks we rate in India,” S&P added.

China Leaves Benchmark Lending Rates Unchanged

China left its benchmark lending rates unchanged for the second straight month despite the economy struggling to recover from the impact of the coronavirus crisis.

The one-year loan prime rate was retained at 3.85 percent and the five-year loan prime rate was maintained at 4.65 percent.

The one-year and five-year loan prime rates were last reduced in April. The one-year loan prime rate was lowered by 20 basis points and five-year rate by 10 basis points in April.

The loan prime rate is fixed monthly based on the submission of 18 banks, though Beijing has influence over the rate-setting. This new lending rate replaced the central bank’s traditional benchmark lending rate in August 2019.

Last week, the People’s Bank of China injected CNY 200 billion funds into the financial system via medium-term lending facility at a rate of 2.95 percent, unchanged from the previous operation.

With fiscal stimulus ramping up and economic recovery well underway, the PBoC appears to see less of a need to encourage stronger private borrowing, Julian Evans-Pritchard, an economist at Capital Economics, said.

Broad credit growth still looks set to accelerate further in the coming quarters. But short-term interest rates are unlikely to decline much further, the economist noted.

Iris Pang, an ING economist said she is looking for a targeted RRR cut this week, by 0.5 percentage points for some banks on the specific requirement to use the liquidity for small and medium sized enterprises.