Thursday, 3 August 2017

India struggles to rebalance water-energy nexus -The Total Investment & Insurance Solutions

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3 August  2017
 
Nexus big (The Total Investment & Insurance Solutions)
Acute shortage of water in India, particularly following the years there is low rainfall during the monsoon season, has started hurting its energy production badly. Electricity generation in the country is heavily dependent on coal-fired thermal plants and hydropower projects, which require consistent supply of large volumes of water to operate at optimal levels. Any disruption in water supply affects production and leads to power outages. The Total Investment & Insurance Solutions

For instance, water shortage related shutdowns in 2016 cost India roughly 14 terawatt-hours (TWh) of thermal electricity generation, enough to power neighbour Sri Lanka for an entire year, according to research by the World Resources Institute (WRI).

The Washington-based research organisation compiled and analysed over 1,400 daily outage reports filed with the Central Electricity Authority between 2013 and 2016 to arrive at this conclusion.

The loss of generation has significantly increased over the past three years from 1,258 million units in 2014-15 to 4,989 million units in 2015-16 and to 5,870 million units between April 2016 and January 2017, Energy Minister Piyush Goyal told Parliament in March. 

In 2016, as many as 18 thermal power plants had to lie idle for various lengths of time due to water shortages. If these plants had water supply during the shutdowns, they could have generated 14 TWh of electricity, about one per cent of the country's annual consumption, WRI's analysis showed.

During the four years from 2013 through 2016, the thermal power sector lost more than 30 TWh of potential electricity due to water scarcity, Tianyi Luo, Research Associate at WRI's Water Programme, wrote in a recent report. The Total Investment & Insurance Solutions

It is worrying that most of the shutdowns happened between March and September, the hottest months in South Asia when demand for electricity is high not only for domestic and industrial use but also to irrigate farms during the main cropping season. "In other words, electricity generation was the most hampered when people needed it the most," Tianyi said.

Although India is taking big steps to expand its renewable energy capacity, its power sector remains reliant mostly on thermal plants, which have a high water demand, mainly for washing coal and then for the boilers, from which the steam is funnelled to turn the power generation turbines.

India depends on coal for about 60 per cent of its energy needs and aims to double its output to 1.5 billion tonnes by 2020, according to Niti Aayog, the government's policy think tank. It means that droughts, which last occurred in 2016, can lead to prolonged power outages, hamstringing the economy and endangering livelihoods. The Total Investment & Insurance Solutions

Climate change is likely to increase the frequency and intensity of droughts, and socio-economic development will intensify local water competition. "In the coming decades, we expect more water shortage-induced power shutdowns, unless steps are taken to reduce these risks," WRI said.

To reduce water requirement in thermal power plants, there has been a move to install closed cycle systems in new plants instead of the once-through cooling systems, the Energy Ministry has said. Existing thermal power plants can also reduce water risk by adopting less water-dependent cooling technologies, such as dry cooling. The Total Investment & Insurance Solutions

Power plants are using other measures to conserve water such as installing ash water recirculation system, stopping discharge from ash pond effluents, adopting high and medium concentration ash slurry disposal systems, maintaining of high cycle of concentration in cooling towers and use of cooling tower blow down for disposal of bottom ash. The Total Investment & Insurance Solutions

These measures have helped bring down the total water requirement in a closed cycle system for a thermal power plant from seven cubic metres per MWh to about three cubic metres.

But, considering the future water demand from upcoming thermal power plants and sectors like agriculture and domestic use, reducing water consumption in power plants will have only a short-term effect in improving overall water balance of the country, says a 2016 policy brief by The Energy and Resources Institute (TERI). The Total Investment & Insurance Solutions

Adopting a more comprehensive approach, thermal power plants must be asked to reduce the water footprints (rather than consumption) of their operations, said the brief titled Water Neutral Electricity Production in India: Avoiding the Unmanageable.

To assess vulnerability of thermal power plants to water scarcity, there is need for detailed plant-level water withdrawal and consumption data, says WRI, which is working on a methodology by using satellite imagery to develop a water usage database for thermal power plants.


As demand for energy grows and climate change impacts water availability and timing, this kind of analysis will become vital for all countries, Tianyi said.The Total Investment & Insurance Solutions

Global Stocks Mixed After Dow Record, Pound Falls-The Total Investment & Insurance Solutions

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3 August  2017
Japan  stock markets (The Total Investment & Insurance Solutions)
Global stocks were mixed on Thursday as investors looked to see whether the Dow Jones industrial might add to its record close from the day before. The pound slumped after the Bank of England kept its key interest rate at a record low. The Total Investment & Insurance Solutions

KEEPING SCORE: France's CAC 40 rose 0.4 percent to 5,126 while Germany's DAX was down 0.2 percent at 12,155. Britain's FTSE 100 gained 0.5 percent to 7,447. U.S. shares were set to drift lower with Dow and S&P 500 futures both down 0.1 percent. The Total Investment & Insurance Solutions
UPBEAT COMPANIES: Upbeat earnings from Apple pushed U.S. markets higher the day before, with the Dow closing above 22,000 for the first time. Investors appear wary of any further major gains and are keeping an eye on more earnings reports for clues. In Europe, profits at industrial giant Siemens and carmaker BMW rose more than expected. The Total Investment & Insurance Solutions
BRITISH CAUTION: The Bank of England left its key rate at a record low and cut its growth forecasts for Britain. The pound fell as a result, as the decision indicated the central bank is unlikely to raise rates any time soon. The British currency was down 0.7 percent at $1.3127.
ASIA'S DAY: Japan's benchmark Nikkei 225 lost 0.3 percent to finish at 20,029.26. Australia's S&P/ASX 200 slipped 0.2 percent to 5,735.10. South Korea's Kospi sank 1.7 percent to 2,386.85. Hong Kong's Hang Seng shed 0.3 percent to 27,531.01, while the Shanghai Composite skidded 0.4 percent to 3,272.93. India's Sensex fell 0.5 percent to 32,310.37 and markets in Southeast Asia also dropped.
ENERGY: Benchmark U.S. crude rose 17 cents to $49.76 a barrel in electronic trading on the New York Mercantile Exchange. It added 43 cents to $49.59 overnight. Brent crude, the international standard, added 19 cents to $52.55 a barrel in London. The Total Investment & Insurance Solutions

CURRENCIES: The dollar was down to 110.38 yen from 110.69 yen the day before, while the euro fell to $1.1852 from $1.1856The Total Investment & Insurance Solutions

Wednesday, 2 August 2017

Nifty, Sensex May Go Sideways – Wednesday closing report-The Total Investment & Insurance Solutions

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2 August  2017

I  had mentioned in Tuesday’s closing report that Nifty, Sensex were on an uptrend. The major indices of the Indian stock markets were range-bound on Wednesday and closed with losses over Tuesday’s close. The trends of the major indices in the course of Wednesday’s trading are given in the table below: The Total Investment & Insurance Solutions

Major Indices (The Total Investment & Insurance Solutions)

The Indian equity markets fell into the red after the Reserve Bank of India (RBI) on Wednesday reduced its key lending rate by 25 basis points (bps). RBI in its third bi-monthly monetary policy review of 2017-18 announced that the repurchase rate, or the short-term lending rate for commercial banks on loans taken from it, stands lowered to 6% from 6.25%. Selling pressure was witnessed in metal, capital goods and FMCG (fast moving consumer goods) stocks. On the NSE, there were 627 advances, 1,043 declines and 302 unchanged. Before the RBI announcement also, investors were cautious and were trading on a flat note.

State-owned Punjab National Bank (PNB) on Wednesday reported a 12.09% increase in the standalone net profit for the first quarter (Q1) of 2017-18. According to the bank, its standalone net profit during the quarter under review stood at Rs343.40 crore as compared to Rs306.36 crore in the corresponding period of 2016-17. The lender's total income during the quarter under review rose by 7.37% to Rs14,468.14 crore from Rs13,475.41 crore earned during Q1 of FY17. The amount of gross non-performing assets (NPAs) of the bank stood at Rs57,720.70 crore in the April-June period in 2017-18 as compared to Rs56,654.09 crore in the corresponding period in the previous fiscal. PNB’s shares closed at Rs158.90, up 0.89% on the BSE.

Coal India reported that its production during July declined marginally to 36.64 million tonnes (mt) as compared to 36.74 mt produced in the same month last year. According to the state miner's provisional data, it produced 155.48 mt of coal during the first four months of the current financial year, down by 4.3% from 162.38 million tonnes produced during the year-ago period. Its off-take grew by 4.1% in the April-July period to 181.69 mt as against 174.66 mt sold in the corresponding period and in July only, its off-take was at 44.33 mt, up by 6.89% from 41.47 mt in the year-ago month. Coal India's two subsidiaries -- South Eastern Coalfields Ltd (SECL) and Mahanadi Coalfields Ltd (MCL) -- contributed to majority of its July production by generating 9.95 mt and 10.24 mt of coal respectively. The off-take from SECL during the last month was at 11.93 mt while MCL achieved 11.09 mt of sales. Coal India shares closed at Rs250.25, down 0.77% on the BSE. The Total Investment & Insurance Solutions

FMCG major Marico reported a decline of 12% in its consolidated net profit to Rs235.94 crore for the first quarter (Q1) ended June 30. According to the company, its India business during the quarter under review witnessed volume decline of 9% against the backdrop of destocking by trade in June due to transition to the Goods and Services Tax (GST) regime. The total income from operations of the company slipped to Rs1,715.28 crore in Q1 -- down 3.73% -- from Rs1,781.78 crore reported during the same quarter of 2016-17. "For the quarter Q1FY18, India business witnessed volume decline of 9% on the backdrop of destocking by trade in June due to GST transition. However, the offtake growth was satisfactory and we saw increase in the market shares across all key franchisees," Marico said in a statement. "The volume decline is attributable to steep pipeline correction across channels, especially wholesale and rural, leading to a decline in the stock turnover ratios (STRs) in trade. The northern and eastern markets were impacted more than the rest of India," it added. The company’s shares closed at Rs326.50, up 0.09% on the BSE. The Total Investment & Insurance Solutions

A host of brokerages, including Credit Suisse, Deutsche Bank and CLSA downgraded the Godrej Consumer Products stock on lower than expected earnings for the April-June quarter.  Credit Suisse downgraded the stock to ‘neutral’ from ‘outperform’ and observed that the core of the business in Indonesia is under pressure which will impact growth adversely in FY18 while steep valuations leave little room for upside. The company attributed the weak profit to low sales after GST and lower consumer spending in its Indonesia market which dragged down its international business. Indonesia — once among the best-performing overseas businesses — had a relatively weak quarter due to the Lebaran holidays. Godrej shares closed at Rs925.00, down 4.07% on the BSE. The Total Investment & Insurance Solutions

The top gainers and top losers of the major indices are given in the table below:

Top Gainer (The Total Investment & Insurance Solutions)

The closing values of the major Asian indices are given in the table below: The Total Investment & Insurance Solutions

Asian Indices (The Total Investment & Insurance Solutions)

RBI cuts repo rate by 25 bps to 6%-The Total Investment & Insurance Solutions

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2 August  2017
 
RBI (The Total Investment & Insurance Solutions)
As expected by many economists, the Monetary Policy Committee (MPC) in its third review for FY2017-18 on Wednesday reduced repo rate by 25 basis points to 6% from 6.25%. Consequently, the reverse repo rate under the liquidity adjustment facility (LAF) will also come down to 5.75%, while marginal standing facility (MSF) rate and the bank rate will be at 6.25%. 

In a statement, the Reserve Bank of India (RBI) says, "The decision of the MPC is consistent with a neutral stance of monetary policy in consonance with the objective of achieving the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/- 2 per cent, while supporting growth." The Total Investment & Insurance Solutions

The MPC says it noted some of the upside risks to inflation have either reduced or not materialised. This includes, the baseline path of headline inflation excluding the HRA impact has fallen below the projection made in June to a little above 4% by fourth quarter, inflation excluding food and fuel has fallen significantly over the past three months; and, the roll-out of the goods and service tax (GST) has been smooth and the monsoon normal.

"Consequently, some space has opened up for monetary policy accommodation, given the dynamics of the output gap. Accordingly, the MPC decided to reduce the policy repo rate by 25 bps. Noting, however, that the trajectory of inflation in the baseline projection is expected to rise from current lows, the MPC decided to keep the policy stance neutral and to watch incoming data. The MPC remains focused on its commitment to keeping headline inflation close to 4% on a durable basis," it said.
The Total Investment & Insurance Solutions

The MPC observed that while inflation has fallen to a historic low, a conclusive segregation of transitory and structural factors driving the disinflation is still elusive. In respect of inflation-sensitive vegetables, prices are recording spikes. Excess supply conditions continue to push down prices of pulses and keep those of cereals in check. The MPC will continue monitoring movements in inflation to ascertain if recent soft readings are transient or if a more durable disinflation is underway. In its assessment of real activity, the MPC noted that while the outlook for agriculture appears robust, underlying growth impulses in industry and services are weakening, given corporate deleveraging and the retrenchment of investment demand.

Commenting on the the state of the economy, the MPC says it is of the view that there is an urgent need to reinvigorate private investment, remove infrastructure bottlenecks and provide a major thrust to the Pradhan Mantri Awas Yojana for housing needs of all. This hinges on speedier clearance of projects by the States. On their part, the Government and the Reserve Bank are working in close coordination to resolve large stressed corporate borrowers and recapitalise public sector banks within the fiscal deficit target. These efforts should help restart credit flows to the productive sectors as demand revives. The Total Investment & Insurance Solutions


Dr Chetan Ghate, Dr Pami Dua, Dr Viral V Acharya and Dr Urjit R. Patel were in favour of the monetary policy decision, while Dr Ravindra H Dholakia voted for a policy rate reduction of 50 basis points and Dr Michael Debabrata Patra voted for status quo. The Total Investment & Insurance Solutions

Here are the latest policy rates following MPC review… 

Repo Rate......................6.0%
Reverse Repo Rate........5.75%

Bank Rate......................6.25%

Working on next steps for NPAs resolution: RBI-The Total Investment & Insurance Solutions

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2 August  2017

The Reserve Bank of India (RBI) on Wednesday said it was working on the next steps for the resolution of the stressed assets or non-performing assets (NPAs). The Total Investment & Insurance Solutions

"We are working on the next steps on NPAs, for resolution of the stressed assets," RBI Deputy Governor N.S. Vishwanathan said here at a press briefing after the monetary policy review.

The government in May had passed the Banking Regulation (Amendment) Ordinance, 2017, that allowed more power to the RBI to tackle the NPAs' issue. It has been empowered to issue directions to commercial banks to initiate insolvency proceedings for recovering bad loans.

The RBI's IAC (Internal Advisory Committee) has chosen top 12 NPA accounts for insolvency which has outstanding debt of above Rs 5,000 crore, Essar Steel being one of them.

Essar Steel had a debt of Rs 45,655 crore, of which Rs 31,671 crore had turned NPAs for banks by March 31, 2016. This increased to Rs 32,864 crore by March 31 this year.

The NPAs, or bad loans, of state-run banks at the end of last September rose to Rs 6.3 lakh crore (almost $100 billion).The Total Investment & Insurance Solutions


Chinese brands hold 48% smartphone market share globally-The Total Investment & Insurance Solutions

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2 August  2017

While overall global smartphone shipments grew 3 per cent Year-over-Year (YoY) reaching 365 million units in the second quarter of 2017, Chinese brands have emerged as the dominant force, making a dent in Apple's market share, a report said on Wednesday.

According to the market research firm Counterpoint Research, Chinese smartphone brands marked a record 48 per cent market share worldwide with India, South Asia and Africa remaining as key focus geographies. The Total Investment & Insurance Solutions

Xiaomi (60 per cent), Vivo (45 per cent), Oppo (33 per cent) and Huawei (20 per cent) were the fastest growing brands with increasing overseas smartphones shipments (YoY).

"Chinese brands have been successful in not only cementing their positions in their home country but also managing to expand beyond mainland China at the same time," said Tarun Pathak, Associate Director, Counterpoint Research, in a statement.

"They have backed their channel strategies with aggressive marketing spend in both above-the-line and below-the-line campaigns," he added.

According to Counterpoint, these brands will continue to expand their reach beyond China during the second half of this year. The Total Investment & Insurance Solutions

Samsung led the smartphone market by volume with a market share of 22 per cent. However, its shipments recorded only a marginal growth of 4 per cent annually during the quarter.

Apple's global smartphone market share declined due to seasonality.

On Tuesday, Apple revealed third quarter results, saying iPhone sales were up 1.6 per cent to 41.03 million. The Cupertino-based tech giant sold 40.4 million iPhones a year earlier.

"Demand for older generation iPhones remained strong in markets like Russia, India, Vietnam, Indonesia and other fast-growing markets," Pathak noted.

"Many users are likely to delay their purchase of a new iPhone in anticipation of the much awaited iPhone 10th anniversary edition which is expected to be a super-cycle for Apple - though supply-side challenges might limit the initial volumes available," he added.


Apple's decline in China continues as Oppo, Vivo and Huawei posted record Q2 2017 shipments in the country.The Total Investment & Insurance Solutions

Global Stocks Mostly Lower Ahead Of US Jobs Data-The Total Investment & Insurance Solutions

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2 August  2017
Japan stock markets (The Total Investment & Insurance Solutions)

Global stocks mostly turned lower on Wednesday amid reports that the U.S. is considering a move that would allow it to put tariffs on some Chinese imports. Investors will also monitor U.S. jobs data ahead of the key payrolls report on Friday. The Total Investment & Insurance Solutions

KEEPING SCORE: Germany's DAX dropped 0.2 percent to 12,227 and the CAC 40 of France edged 0.1 percent lower to 5,121. Britain's FTSE 100 slipped 0.4 percent to 7,392. Wall Street looked set for gains with Dow futures up 0.2 percent and the S&P 500 futures up almost 0.1 percent.

CHINA TRADE: President Donald Trump's administration may use rarely invoked U.S. trade laws to fend off China's demands that foreign companies share their technology in return for access to the Chinese markets, according to a person familiar with the matter. The law allows Washington to investigate China's trade practices and raise tariffs on imports from China or impose other sanctions. The move comes as Trump's administration appears set to adopt a harsher stance toward Beijing than it did during the initial months after the inauguration. The Total Investment & Insurance Solutions

ECONOMIC DATA: Factory output data in China, Europe and the U.S. released this week were encouraging, while the Institute for Supply Management reported that U.S. factory production rose again last month though at a slower pace than in June. Later Wednesday, U.S. payroll processor ADP will give its employment updates for July. But the biggest highlight will be the U.S. jobs report due Friday.

ANALYST'S COMMENT: "Tonight, investors will closely watch the ADP private payroll number to assess the health of the jobs market," said Margaret Yang, a market analyst at CMC Markets in Singapore. "A higher figure indicates rising employment and potential inflation pressure, which will increase the likelihood of rate hikes." The Total Investment & Insurance Solutions

IPHONE IMPACT: Apple reported Tuesday that its quarterly earnings rose 12 percent to $8.7 billion, exceeding expectations, as demand for iPhones rose and gave an upbeat revenue forecast for the current quarter, easing concerns about production problems for the next-generation iPhone. Shares of Apple's suppliers in Asia rose. Samsung Electronics Co. rose 0.8 percent and LG Display Co. jumped 1.8 percent. Taiwan-based contract manufacturer Foxconn Technology Co., which assembles Apple's iPhones, climbed 2.2 percent. The Total Investment & Insurance Solutions

ASIA'S DAY: Japan's Nikkei 225 rose 0.5 percent to 20,080.04 and South Korea's Kospi gained 0.2 percent to 2,427.63. Hong Kong's Hang Seng index advanced 0.2 percent to 27,607.38 while the Shanghai Composite index shed 0.2 percent to 3,285.06. Australia's ASX/S&P 200 bucked the region's trend, falling 0.5 percent to 5,744.20 as commodity prices dropped. Stocks in Southeast Asia were mostly higher. The Total Investment & Insurance Solutions

OIL: Benchmark U.S. crude fell 8 cents to $49.08 per barrel in electronic trading on New York Mercantile Exchange. The contract shed $1.01 on Tuesday. Brent crude, the international standard, rose 2 cent to $51.80 per barrel in London. It dropped 94 cents the day before.


CURRENCIES: The dollar rose to 110.72 yen from 110.36 yen. The euro strengthened to $1.1830 from $1.1802.The Total Investment & Insurance Solutions

Tuesday, 1 August 2017

Nifty, Sensex On an Uptrend – Tuesday closing report-The Total Investment & Insurance Solutions

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1 August  2017

I had mentioned in Monday’s closing report that Nifty, Sensex have continued to trend higher. The major indices of the Indian stock markets closed with gains over Monday’s close. The trends of the major indices in the course of the day’s trading are given in the table below:
 
Major Indices (The Total Investment & Insurance Solutions)
Indian equity markets traded on a flat-to-positive note during the late-morning trade session on Tuesday. According to market analysts, profit bookings capped gains after the key Indian equity indices -- NSE Nifty and BSE Sensex -- rose on expectations of a monetary policy easing and broadly positive global cues. Besides, healthy quarterly results released on Monday had also enhanced investors risk taking appetite during the initial phase of the day's trade. On the NSE, there were 498 advances, 871 declines and 65 unchanged.

With latest macro-economic data showing inflation at a record low and fall in factory output, the Reserve Bank of India (RBI) is expected to reduce its repo, or short term lending rate, at its monetary policy review on Wednesday. At its second bi-monthly monetary policy review of the fiscal on June 7, the RBI maintained status quo on its short-term rate for lending to commercial banks, at 6.25%. In doing so, the policy statement said the six-member Monetary Policy Committee (MPC) was guided by the risks to inflation. Retail inflation in India during June dropped to a record low of 1.54%, while industrial production data showed that the growth in factory production fell to 1.7% in May, from 8% in the same month a year ago. Industry chamber Assocham on Sunday urged the apex bank to cut interest rates in view of the latest macro data. "Citing inflation at a five-year low and deceleration in the factory output, the Assocham has written to RBI Governor Urjit Patel, making out a strong case for at least 25 basis point cut in the policy interest rate when the RBI Monetary Policy Committee meets on August 2," an Associated Chambers of Commerce and Industry of India statement said here. "The wholesale price index (WPI) also eased to 0.9% from 2.17%. The case for rate-cut is additionally strengthened by easing of food inflation to (minus)2.12% from 0.31%. Good monsoon forecasts for the current financial year have additionally created a stance for further reduction in the food inflation," Assocham said. These developments are likely to extend to a long-term bullish stock market in India. The Total Investment & Insurance Solutions

Automobile major Tata Motors on Tuesday reported a rise of 7% in its passenger and commercial vehicle sales, including exports, for July 2017. According to the company, the total sales of its passenger and commercial vehicle increased to 46,216 units from 43,160 vehicles sold in July 2016. Tata Motors' domestic sales of Tata commercial and passenger vehicles for July 2017 were higher by 13% at 42,775 units from 37,789 units sold during the corresponding month of last year. "The overall commercial vehicles sales in July 2017, in the domestic market were at 27,842 nos., higher by 15% over July 2016, due to ramp-up of BS4 production, across segments," the company said in a statement.  "The company also passed on the benefits of GST to consumers by reducing the prices of its vehicles across all commercial vehicle segments." Tata Motors shares closed at Rs446.90, up 0.54% on the BSE.

Commercial vehicles major Ashok Leyland Ltd on Tuesday said it closed last month with 14% growth in its sales volumes. In a statement here, the company said it sold 11,981 units last month -- up from 10,492 units sold in July 2016. However, the company this fiscal, till last month, sold 40,479 units -- down from 41,657 units sold during the comparable period of last fiscal. Ashok Leyland shares closed at Rs111.05, up 1.42% on the NSE.

India's manufacturing sector's output declined last month due to the launch of the Goods and Services Tax (GST) along with weak demand, a key macro-economic data showed on Tuesday. The Nikkei India Manufacturing Purchasing Managers' Index (PMI), which is a composite indicator of manufacturing performance, stood at 47.9 in July from the index reading of 50.9 in June 2017. An index reading of above 50 indicates an overall increase in economic activity, and below 50 an overall decrease. As per the figures, the Nikkei India Manufacturing PMI was at its lowest mark in July since February 2009 and highlighted the first deterioration in business conditions in 2017 so far. Some of the manufacturing companies’ shares are likely to be on a bearish trend in the medium term. The Total Investment & Insurance Solutions

The top gainers and top losers of the major indices are given in the table below:
 
Top Gainer (The Total Investment & Insurance Solutions)


The closing values of the major Asian indices are given in the table below: The Total Investment & Insurance Solutions
Asian Indices (The Total Investment & Insurance Solutions)