Asian shares are trading on a mixed note today. The Nikkei 225 is down 0.1% while the Hang Seng is up 0.5%. The Shanghai Composite is trading up by 0.2%.
Back home, India share markets opened the day marginally lower. The BSE Sensex is trading down by 11 points while the NSE Nifty is trading down by 22 points. The BSE Mid Cap index is trading down by 0.5%, while the BSE Small Cap index has opened the day down by 0.8%.
Sectoral indices have opened the day on a negative note with realty stocks and capital goods stocks witnessing maximum selling pressure.
The rupee is trading at 68.97 to the US$.
In the news from global financial markets, Asian share markets hit their nine-month lows on Thursday on growing worries about the economic outlook amid a trade dispute with the United States.
Note that the US and China are on the cusp of a trade war. US President Donald Trump has announced the details of a plan to crack down on Chinese investments in US technology companies. Also, the US Treasury Department is set to announce additional restrictions specifically targeting Chinese investors as part of the Section 301 investigation into China's intellectual property practices concluded in March.
Earlier this month, the US administration said that about US$ 34 bn worth of Chinese goods will be subject to tariffs starting July 6. Also, additional US$ 16 bn worth of goods will undergo further review and public hearings.
How this trade war pans out remains to be seen. Meanwhile, we will keep you updated from all the developments from this space.In response, China has promised to retaliate against these tariffs with its own tariffs of the same strength. It said that it would purposely impose tariffs that will affect American farmers and industrial workers in the Midwest.
In the news from the IPO space, the initial public offering (IPO) of Varroc Engineering was fully subscribed on Wednesday - the second day of its bidding process.
As per the NSE data, the total bids received stood at 1.02 times of the IPOs total issue size.
The portion of the share sale reserved for institutional investors was subscribed 3.2 times, while those reserved for retail investors and high net-worth individuals (HNIs) were subscribed 22% and 4%, respectively.
The price band for the issue has been fixed at Rs 965-967 per share and the auto parts manufacturer aims to raise over Rs 19.5 bn through its IPO, which is a pure offer for sale (OFS), with no fresh issue of capital. Today is the last day of the subscription offer.
Note that the market is gearing up for a burst of IPO activity, with at least 12 companies planning to raise more than Rs 170 bn over the next two months, after a quiet start to the June quarter.
Reportedly, the introduction of the new Indian accounting standards (IndAS) as one of the reasons why IPO-bound companies have not approached the market so far, this quarter.
All companies, including unlisted ones, having net worth of between Rs 2.5 bn to Rs 5 bn have to prepare their financial accounts for the year ended 31 March, 2018 as per the IndAS accounting standards. Companies with net worth of Rs 5 bn or more had to implement the new standard a year earlier.
According to EY India IPO Readiness Survey Report, globally, Indian exchanges recorded the highest IPO activity as the country saw 90 IPO launches that raised US$ 3.9 billion in the first half of this year.
Indian exchanges recorded the highest IPO activity in terms of number of deals accounting for 16% of the total issues in the first half of this year (January-June).
This data includes effective IPOs as of 31 May 2018, and expected IPOs as of 30 June 2018.
In terms of proceeds, Indian exchanges accounted for 5% of global proceeds in the January-June period.
Out of 90 deals that listed in the first half of this year, 15 listed both on NSE and BSE, accounted for 93% of the total proceeds.
National SME recorded 42 listing accounting, contributing a mere 5% to the country's proceeds in the January-June period, while Bombay SME recorded 37% of all deals listed, contributing 2% to the total proceeds.
Meanwhile, the amount raised by SME IPOs in 2017 stood at Rs 17.9 bn. This is more than three times the amount raised in 2016. The number of SME IPOs launched also doubled from 66 to 132. This is evident from the chart below:
SME IPO Boom in 2017
Speaking of IPOs, a merit-based selection primarily including valuation, business, and management quality is the logical way to go about investing in IPOs. If it means going against the herd, so be it. And going by recent past, this strategy has been proven to be successful more often.
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