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Posts tagged as NSE

Pakistan an afterthought in market eyeing future

Protesters burn a poster depicting India’s flag against what they call airspace violation by the Indian military aircrafts, in a protest in Peshawar.
HONG KONG: There’s no doubt of the seriousness underscoring the worst military standoff between India and Pakistan in decades, yet investors appear to be looking past the tension for now, at least when it comes to their stock markets.
India’s NSE Nifty 50 Index of blue-chip companies erased its gain Wednesday and the Pakistan benchmark plummeted as much as 3.8% as headlines emerged of fighter-jet skirmishes, with an Indian MiG 21 jet later reported to be shot down and its pilot captured.The dramatic escalation came just a day after Indian forces bombed a terrorist training camp in Pakistan.Yet by the end of Wednesday, Karachi had recovered most of its losses to settle for a mere 0.3% decline, with the Nifty 50 closing down by the same amount.Back to business as usual, apparently.Both the Nifty 50 and the SP BSE Sensex Index rose slightly Thursday, and Pakistan’s KSE 100 Index rebounded as much as 1.1% before trading little changed.They’ve invested more than US$2.2 billion net in the market this month alone, including three days of inflows through Tuesday, the last day for which the data is available.
The US$1.7 billion added on Friday (some of which could be linked to a stake sale in Kotak Mahindra) was the most since April 2015.Meanwhile, the options market is showing that investors are concentrating their attention further into the future.The cost of hedging against Nifty 50 swings in the next month remains lower than protection prices for three months out, despite a rebound in the past couple of days, implied-volatility data show.Just on Monday, the spread between the two hit its widest level since at least Sept 2017.Prime Minister Narendra Modi faces a hotly contested general election due by May.
At the same time, the mood of markets across the region continues to vacillate with each fresh update on progress – or lack thereof – on a trade deal between the US and China, now that the original March 1 deadline has been pushed out indefinitely.When asked in a Bloomberg Radio interview what risks investors were keeping an eye on, Kay Van-Petersen, global macro strategist with Saxo Capital Markets, said: “In the very near term we have India-Pakistan, which no one seems to take seriously given the history there.”Indeed the two sides have long been in conflict, fighting three major wars since the 1947 partition and exchanging regular gunfire across the border.Similar to South Koreans learning to live with decades of threats from the North, perhaps investors in the two countries may have a higher tolerance for such volatility – at least for now.

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GST on real estate: Can developers recover input credit cost from home buyers?

In a decision which would have far-reaching implications for the real estate sector, the GST Council meeting has prescribed a GST rate of 5%.
The changes would be brought into effect from April 1, 2019, and suitable notifications would be issued to give effect to the same.It appears that the option of paying GST at a higher rate by claiming input tax credit would not be available going forward.Apart from a reduction in rates, it is also proposed that exemptions would be provided from payment of GST to transfer of development rights, lease premium, etc, for such residential property on which GST is payable.
The reduction in tax rates is being proposed with a view to provide relief to the industry which is grappling due to slowdown. Whilst reduction in rates is a welcome relief for the industry, let us evaluate whether these changes would lead to other unintended consequences.For this purpose, let us consider the impact due to proposed changes for cases where a project is going to be launched i.e.new projects and projects which are already underway.For new projects, there would be a reduction in upfront GST chargeable i.e. 5%/1%, instead of the current 12%/8% rate.But absence of input tax credit would mean that the said taxes paid on procurements would be loaded on to the base price. Whether this would mean an overall reduction in price for the end consumer would depend upon other factors like ratio of construction costs vis-à-vis selling price, cost of land, etc.
Whatever may be the outcome, the developer would be in a position to decide and control the outcome i.e.
reflect the same in the base price to be charged for the residential property.A bigger challenge awaits the existing projects.Let us say, the developer has contractually agreed for base price plus GST. Since the GST rate has reduced from 12% to 5%, he cannot charge the rate of 12% any longer.Further, as per the condition of the proposed amendment, the developer would not be able to claim input tax credit. Therefore, it becomes a cost.
Whether he can recover the same from the customer would depend upon the terms of his sale agreement, but looking at the current environment, it would be a herculean task.It is also commonly seen that the project has been advertised as an all-inclusive cost i.e. a lump sum price including GST, stamp duty, etc.For such cases, seeking any additional consideration due to denial of input tax credit would be difficult.It would also be interesting to see the implications of the anti-profiteering provisions.

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Real estate funds ‘ll boost economic activities —Report

Nike Popoola. The FSDH Research has said that a real estate fund is an investment vehicle that can be used to address Nigeria’s housing shortage
FSDH Merchant Bank stated this in its report on ‘Real estate fund — Investment vehicle to address housing shortage in Nigeria.’It observed that there was a significant shortage of affordable housing in Nigeria.The housing gap is estimated to stand between 17 and 20 million units, it stated.“This means that Nigeria needs to build between 17 and 20 million housing units to ensure that Nigerians have this basic human need,” it added.The report said, in monetary terms, Nigeria might require between N170tn to N200tn to bridge the housing gap if each unit costs N10m.
It stated, “Given the rising population in the country, the housing shortage keeps increasing. Meanwhile, the developments in the real estate sector of the Nigerian economy, which is where activities that will close the housing shortage will take place, have not been impressive.”Economic activity in the real estate sector had been consistently contracting since Q1 2016, it said.In addition, it added, investors (both retail and high net worth) could create wealth in real estate through regularly investing in a Real Estate Fund without investing directly in the brick and mortar.
“REF is an investment vehicle that pools resource together to invest in real estate, therefore, allowing individual investors to partake in the benefits of the underlying properties,” it added.The report said there was no minimum amount to invest in a REF, adding that it was suitable for all investors.
REFs have not gained much popularity in Nigeria in terms of the numbers available and their size relative to the size of the Nigerian economy.The report said there were currently only three REFs listed on the NSE which are Skye Shelter Fund, Union Homes Real Estate Investment Trust and UPDC Real Estate Investment Trust.
According to the Securities and Exchange Commission, the total value of the assets of all three funds stood at N43.74bn as of 18 January 2019; this represents about 0.03 per cent of Nigeria’s total Gross Domestic Product, it added.The FSDH Research noted that the assets had recorded weak growth over the last five years, perhaps due to the slow activity in the real estate sector in general.The inadequate information on how REFs worked and how investors could take advantage of the investment opportunities in them might also explain why REFs were not growing as they should, the FSDH said.It stated, “FSDH Research believes REFs can be used as one of the measures to boost activity in the real estate sector.As patronage for REFs in Nigeria increases, more funds would be available to buy and develop more real estate properties. Consequently, the real estate sector would begin to experience increased activity.”

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