Jio Financial Services Ltd., the newly established subsidiary of Reliance Industries Ltd., encountered a modest decline in its much-anticipated trading debut, primarily attributed to passive-fund trackers engaging in selling activity.
On Monday, Jio Financial’s stock experienced a dip to as low as 248.90 rupees ($3), marking a departure from its opening price of 265 rupees on the local BSE Ltd. exchange. The company’s shares were initially priced at 261.85 rupees each during a special hour-long trading session last month, placing a valuation of approximately $20 billion on the enterprise.
Following its listing, Jio Financial enters a segment where the buying and selling of shares necessitate the mandatory delivery of shares over a span of 10 trading sessions.
The observed selling pressure on Jio Financial, previously a constituent of India’s vital benchmark indices, anticipates its probable removal from indexes such as the Sensex and NSE Nifty 50 after three days of trading. Passive funds are estimated to have offloaded holdings worth up to $465 million, according to Abhilash Pagaria, an analyst at Nuvama Wealth Management.
Abhay Agarwal, a fund manager at Piper Serica Advisors Pvt and also a shareholder in Reliance, noted, “There are ETFs and index funds who have had to sell shares, they have no choice as the stock will be removed from the index soon.”
Despite this selling pressure, market analysts remain optimistic about Jio Financial’s prospects, attributing its potential success to its synergies with Reliance’s extensive footprint in digital and retail sectors.
This positioning could potentially elevate Jio Financial to a prominent position among India’s leading non-banking finance entities, aligning with Mukesh Ambani’s vision to establish a conglomerate akin to China’s Alibaba Group Holding Ltd. and Tencent Holdings Ltd.
In a statement, Ambani mentioned that Reliance offered one share of Jio Financial for each share held by the parent company’s investors. This strategic move aims to unlock value for shareholders and involve them in a new growth platform, as outlined in Reliance’s recent annual report.
K.V. Kamath, the non-executive chairman of Jio Financial, speaking during the listing ceremony, emphasized the company’s intentions to become a comprehensive financial services provider.
Kamath said, “We intend to be a full-service financial sector player and are already working on products.”
He also noted that being slightly delayed to the market provides the advantage of leveraging existing technological advancements.
Notably, Jio Financial boasts an asset-backed balance sheet, a robust credit rating, and significant support from its founders, positioning it to secure funding at more favorable rates. This is particularly pertinent following HDFC Bank Ltd.’s merger with the country’s primary mortgage lender earlier this year, as highlighted by Prakhar Sharma, a Mumbai-based analyst at Jefferies.
For further updates and insights into the dynamic Indian economic landscape, stay tuned for the forthcoming India Edition newsletter by Menaka Doshi – a weekly insider’s guide to the driving forces behind the emerging economic powerhouse and the prominent personalities and enterprises contributing to its ascent.
Bearish Sentiment Persists: Investors Lose N112 Billion on NGX
Drastic Decline in FGN Bond Listings Raises Concerns Over Government Borrowing
Data from the Nigerian Exchange Limited (NGX) has shown that the value of listed Federal Government of Nigeria (FGN) Bonds on the exchange experienced a decline of 99.9% in the eight months ending on August 31, 2023.
Plummeting from N1.6 trillion recorded during the corresponding period in 2022 to a mere N148.2 billion.
The stark contrast in FGN Bond listings between the two years has raised eyebrows and prompted experts to delve into the implications of this significant shift.
Analysis of NGX data revealed that the bonds listed this year primarily consisted of the FGN Savings Bond and Sukuk, whereas the previous year featured a combination of both Federal Government Bonds and Savings Bonds.
Among the listings, the FGN Sukuk stood out with the highest recorded value of N130 billion for the period under review.
Analysts have identified several factors contributing to the stark decline in FGN Bond listings.
David Adonri, an analyst and Vice Executive Chairman at HighCap Securities Limited, commented on this development, and said, “The reduction of FGN Bond listing could be an indication that the government borrowed less in the domestic market, and its implication is that it could affect liquidity in the secondary market.”
He continued, “The decline could also be that the FGN Bonds were not listed on the Exchange during the period under review as only the Savings Bonds were captured as well as Sukuk.”
Adonri highlighted concerns about the country’s debt profile, both domestically and internationally, saying, “Both externally and internally, the immediate past government had taken more debt. This is increasing the risk of sovereign default and economic nightmares.” He also noted the adverse effects on the real sector, explaining that “the borrowing has now reached the alarming point of crowding out the productive real sector.”
Tajudeen Olayinka, an Investment Banker and Stockbroker, echoed similar sentiments, saying, “If there was an increase in debt listings in the market, it brings about increased liquidity and trading activities in the market, but the drop in the eight-month period could be largely as a result of higher yields in other competing instruments.”
Olayinka also speculated that “the drop in the FGN Bond listing could also be that there was less borrowing by the government in the primary market so not much to offer for listing in the secondary market.”
NGX Chairman Urges Federal Government to Boost Listings Attractiveness
News4 weeks ago
Npower Program Restores Hope with Long-Awaited Stipend Disbursement
Commodities4 weeks ago
Three Chinese Groups Vying to Acquire $2 Billion Botswana Copper Mine
News3 weeks ago
Government Plans to Revamp Npower Scheme and Combat Poverty
Banking Sector4 weeks ago
Guaranty Trust Holding Co. Surpasses Expectations with $468 Million Forex Windfall
Forex4 weeks ago
Black Market Dollar to Naira Today, September 7th, 2023
Government4 weeks ago
French Influence Wanes in Africa: Is Macron’s Africa Policy Doomed?
Black Market Rate4 weeks ago
Dollar to Naira Black Market Today, 2nd September 2023
Cryptocurrency4 weeks ago
Ripple Labs Objects to SEC’s Request for Appeal in Landmark Cryptocurrency Case