Daily update: May 6, 2021

Subscribe on LinkedIn to stay up to date with every new daily update – a curated selection of essential information on financial markets and the global economy from S&P Global.

As India’s coronavirus crisis continues to devastate its population of 1.4 billion, the outlook for the emerging economy is deteriorating. The implications of India’s second wave of COVID-19 cases include increasing loss of life, declining economic output, heavy hits for energy industries and a reduction in global trade.

With nearly 2.7 million new cases and 25,000 deaths last week alone, the crisis in India is spreading with no end in sight, as hospitals grapple with oxygen shortages and non-existent facilities and supplies. There have been more than 20.6 million infections and 226,200 deaths since the first cases of coronavirus in January 2020, according to data from Johns Hopkins University. Many global health experts believe the actual tally to be considerably higher. The Indian government’s chief science adviser, K. VijayRaghavan, told a press conference on May 5 that a third wave in the country is “inevitable” after the surge. Forecasters at the University of Washington’s Institute for Health Metrics and Evaluation predict that the death toll in India could more than quadruple by the end of July, to more than one million deaths.

Against this backdrop, many of the hardest hit areas, including Mumbai, New Delhi and Bangalore, have implemented local and regional coronavirus containment measures. Prime Minister Narendra Modi has yet to instill a nationwide lockdown despite pressure to do so.

A nationwide lockdown could have more negative economic consequences for India, according to S&P Global Ratings. The second wave could reduce the country’s GDP growth by up to 2.8% in FY2022 and block the strong recovery in corporate profits, liquidity, access to finance, government revenues and the profitability of the banking system. If new infections peak at the end of June, India could lose an average of $ 210 million in daily production.

“The Indian economy is expected to resume its recovery after the second wave recedes and continue to grow at a faster rate than its peers at a similar level of per capita income around the world,” S&P Global Ratings said in a report yesterday. “If the epidemic were to worsen over the next few months, or if the number of cases peaked at a very high level, it would increase the risks to India’s economic and fiscal recovery. This assumes that the health system faces prolonged capacity constraints. “

India’s COVID-19 crisis has impacted the country’s energy, metals and agriculture markets, as well as the outlook for international prices for some commodities, according to S&P Global Platts. S&P Global Platts Analytics has lowered its forecast for the country’s oil demand growth this year, to 400,000 barrels per day, from 440,000, in light of cases of rising. The outlook for domestic gasoline demand is plunging. Analysts predict that Indian demand for town gas could fall by 25-30% in the coming months, and that Asian demand for liquefied natural gas has already been affected by the situation. Prices for petrochemicals in India are under pressure.

Demand for ships in India is also expected to decline, hampering imports of crude and exports of other refined products. Elsewhere, the increase in COVID-19 cases in India has dealt a blow to Australia, which has been targeting the South Asian nation in its efforts to diversify its dependence on commodity exports from -vis from China.

India’s capital markets and business activity can emerge without damage in the long run. Despite the volatility expected to result from this second wave, India could experience a boom in listed companies this year.

“Many companies have given the intention to raise funds this year. We see documents filed with the regulator and they have increased a lot. We are also seeing a lot of companies preparing and taking the leap towards initial public offerings, ”Ajay Saraf, head of investment banking and institutional stocks at ICICI Securities Ltd., told S&P Global Market Intelligence. “I am convinced that the number of companies going public will be higher than what we have seen in 2020, with broader activities in the capital market. In terms of total value, we have to see how much money each company decides to raise. Maybe it’s at a similar level to last year and I don’t think it’s a significant increase in terms of total value, but in the number of companies there would be a significant difference.

Last year, around $ 26 billion in funds were raised in India’s primary market, and the volume of the capital market grew 65% year-over-year, according to Saraf.

Today it’s Thursday, May 6, 2021 and here is the essential intelligence of today.

Uncertainty in the global economy

Healthcare M&A activity rebounds in Q1’21 after slump in early 2020

The size and volume of pharmaceutical and biotech M&A deals began to rebound in the first quarter of 2021 from a deep valley a year earlier, but the industry has remained fairly calm on the megadeal front, according to compiled data. by S&P Global Market Intelligence.

—Read the full article from S&P Global Market Intelligence

Market dynamics

PJM’s electricity demand, electricity and natural gas prices increase year by year in April

PJM Interconnection’s electricity and natural gas prices soared year over year in April, as electricity prices rose nearly 70% at some hubs, reflecting an increase in load from peaks nearly 7% from April 2020, when demand for electricity was lower due to the impacts of the coronavirus pandemic lockdown. . Long-term weather forecasts point to potentially warmer year-over-year summer temperatures in the northeastern United States, which could support electricity and gas prices.

—Read the full article from S&P Global Platts

Palladium retreats above $ 3,000 / ounce, near record high

Base and spot prices for palladium surpassed $ 3,000 an ounce on May 5, on continued tight supply and an expected improvement in auto demand, to near a recent record high. South African research firm Afriforesight said spot palladium prices maintained their upward momentum amid limited Russian supply and strong vehicle sales expectations later in 2021.

—Read the full article from S&P Global Platts

The banking sector under pressure

African market to recycle bad debt will boost banks and attract investors

Investors’ pursuit of better returns could bolster Africa’s nascent secondary market for nonperforming loans, with defaults surging across the continent as a result of the pandemic, creating more opportunities to buy distressed debt . For an NPL market to develop, three key aspects are necessary: ​​an adequate regulatory and legal framework; sufficient capital from investors; and specialized companies to rehabilitate acquired loans. The lack of favorable laws and regulations and difficulties in agreeing on the prices of NPL’s portfolios have so far held back growth in Africa – and support from the World Bank, International Finance Corp., or IFC, will be essential to the creation of a secondary market.

—Read the full article from S&P Global Market Intelligence

Non-bank financial corporations capitalize on lower rates and investor demand

Favorable financing conditions persist for financial companies and asset managers that we note after a year of strong issuance. For this article, financial companies and asset managers will collectively be referred to as non-bank financial institutions (NBFIs). The dovish environment rests on the idea that pandemic concerns and volatility are behind us and that near-record interest rates are too hard to ignore.

: Read the full report from S&P Global Ratings

Technology and media

How congested were global mobile markets in 2020?

Spectrum auctions and delayed tower deployments, along with increased grid demand amid the pandemic, have improved spectrum congestion, but worsened tower congestion in the mobile markets covered by Kagan in 2020.

—Read the full article from S&P Global Market Intelligence

2021 US broadband forecast shows rise in digital home profiles

U.S. broadband providers are emerging from the pandemic with considerable momentum despite increased competition and looming service maturity with penetrations close to 90% of occupied households, according to updated forecasts from Kagan, a research unit of S&P Global Market Intelligence.

—Read the full article from S&P Global Market Intelligence

ESG during the COVID-19 era

Leaders’ summit on climate change: a decisive decade to reduce emissions

During the April 22 Leaders’ Climate Summit hosted by the United States, several major economies, including Canada, Brazil, Japan and the EU, increased the reach of their Nationally Determined Contributions (CDN ) under the six-year-old Paris Agreement. . S&P Global Ratings believes that these strengthened public policy commitments are major milestones, confirming the generalized decarbonization dynamic in all regions, in addition to the important milestones achieved to date.

: Read the full report from S&P Global Ratings

The future of energy and raw materials

Global infrastructure and energy: sector update for the first quarter of 2021

As more people around the world are vaccinated against COVID-19, the economic outlook looks brighter, offering a clear path out of restrictions to the pandemic. S&P Global Ratings is still forecasting a K-shaped recovery that would eventually expose widening gaps between certain sectors and countries.

: Read the full report from S&P Global Ratings

Former Iranian oil minister runs for president, with refining and petchem ambitions

Iran must focus on developing its refining and petrochemicals sectors so that it does not ultimately have to export crude and face international sanctions, according to the former petroleum minister of Iran. country, Rostam Ghasemi, who is now running for president.

—Read the full article from S&P Global Platts

The main gas pipelines face 1.1 million dth / d of contracts expiring in the second quarter

According to an analysis of data from S&P Global Market Intelligence, the main US gas pipelines total 1.1 million Dth / d of firm transport contracts which are expected to be concluded during the second quarter.

—Read the full article from S&P Global Market Intelligence

Written and compiled by Molly Mintz.

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