Top Indian companies make significant progress on disclosures and compliance in 2015: Report 23Rd June 2016

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The second study by FTI Consulting, a global business advisory firm, shows that top 100 listed Indian companies, by market capitalisation, have made significant progress on following mandatory disclosure norms and compliance in 2015. Whilst some might say this has been forced, the improvement has been impressive, it said in its report titled India Disclosure Index 2015.

As per the report, during 2015, BSE 200 companies, other than the BSE 100 constituents, taken as an aggregate, lag the aggregate BSE 100 constituents’ mandatory disclosure scores, but beat them (albeit marginally) when it comes to voluntary disclosure. "Only time will tell, if this is a more ambitious or enlightened perspective for this group, as they seek to attract investment and grow to replace constituents in the top 100 list," it added.

Overall, as a group, the BSE 100 index constituents, have an average composite disclosure score of 7.4 out of 10, a significant improvement compared to 6.7 out of 10 from 2015 primarily on the account of improved mandatory disclosure scores. 

As per the report, almost 45% have composite disclosure scores of eight or more which is up from 26% in 2015 - and includes eight companies, Axis Bank, Bharti Airtel, Federal Bank, IndusInd Bank, Infosys, Shriram Transport, Sun Pharma and  Vedanta, which stand out for achieving the maximum score of 10.

Only six companies, compared to 25 in 2015, of the BSE 100 index constituent companies have low composite disclosure scores of five or less, it added.

FTI said, the next BSE 100 or the BSE 200 without the BSE 100 companies does slightly better than the BSE 100 with an average composite disclosure score of 7.4. Six companies in this group Biocon, Cholamandalam, Jubilant Lifesciences, L&T Finance, SKS Microfinance and Welspun have a score of 10 out of 10.

Talking about mandatory disclosure scores, the report says, BSE 100 index constituents have an average score of 3.7 out of 4, much higher from the average of 3.1 out of 4 in 2015. 

"71 of the 100 companies in the BSE 100 Index had a full score for mandatory disclosure (up from 41 in 2015), with the remaining 29 falling short on either one or some of the mandatory disclosure parameters. This is a significant improvement within the last year. However, there are still close to a third who fall short of what we have considered to be full mandatory disclosure. Only three of all BSE 100 index constituent companies have mandatory disclosure scores less than 2.5 (compared to almost half in 2015), reflecting the leap by BSE 100 companies in mandatory disclosure compliance," FTI Consultancy says.

According to the report, a significant reason for improvement has been the improved individual scores regarding ‘analyst engagement information and earning call transcripts’ with 73% providing this information, which is up from 49% in 2015. A little over a quarter of the companies (27%) did not provide this information. Some of them interpreted the revised regulations to disclose details of the analysts they met but not the information they shared or exchanged, in violation of the spirit of fair disclosure and transparency that was the context of the revised regulations, it said.

The mandatory disclosure score for the next BSE 100 or BSE 200 without the BSE 100 companies was 3.4 out of 4, with the weakest performance on analyst engagement information and earning call transcripts. Only 49% of these companies disclosed this information on their corporate websites, the report added.

In voluntary disclosure scores, the BSE 100 index constituents have an average score of 3.7 out of 6, up from 3.5 out of 6 in 2015, when reviewed against seven voluntary disclosure parameters. Only eight of the 100 companies in the BSE 100 Index had a full 6 out of 6 score for voluntary disclosure, reflecting the low priority placed on providing additional information. 

Banks account for half of this group with highest voluntary disclosure scores namely, Axis Bank, Federal Bank, IndusInd Bank and Shriram Transport. Infosys, Bharti Airtel, Sun Pharma and Vedanta were the non-bank players in this list of high voluntary disclosure scorers, the report says.

The voluntary disclosure score for the next BSE 100 companies is 4 out of 6, with the weakest performance on debt information and business strategy articulation, the same as it was with the BSE 100 companies in 2015.

The greatest progress on voluntary disclosure by the BSE 100 constituents has been made on two parameters — better debt related information and strategy articulation. These were areas that were identified as weaknesses in the 2015 report. Both show up as weaknesses for the next 100 companies — indicating perhaps the areas to focus on for these companies in 2016, the report says.

FTI says, Indian companies have expended significant resources in reviewing disclosure policies and creating the necessary processes to be aligned to the new regulations. "Clearly, some Indian companies are leading the way — leveraging disclosure as a strategic signal to investors, employees, business partners and the public — that they are well governed and best-in-class corporations. At the same time, there are Indian companies, which have embraced regulatory changes in a strictly legalistic manner — following the letter but not necessarily the spirit of the regulations. Requirements of disclosing information about analyst engagements and presentations made to them have at times been selectively interpreted as information about analyst engagements only without making the information shared with them available to the wider public," it concluded.

RBI worried over credit guarantee scheme of MSMEs?

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The Reserve Bank of India (RBI) is concerned about the extent of micro, small and medium enterprises (MSME) loans backed by the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), and regulatory oversight of the scheme, says a report from Live Mint. 

Citing one person, who spoke on condition of anonymity, the newspaper says, "The credit guarantee scheme is clearly over-leveraged. There needs to be some gradation to determine which loans can be guaranteed and which cannot. At this point, there seems to be barely any assessment of proposals and all the loans which apply for a guarantee are granted approval. The RBI is closely watching the situation and is concerned about the over-leveraging."

The CGTMSE was set up in association with the Small Industries Development Bank of India (SIDBI) and guarantees loans up to Rs1 crore. The CGTMSE scheme extends guarantee cover to units availing limits up to Rs1 crore within certain threshold if the primary lender extends loans sans collateral. It is mandatory to lend up to Rs10 lakh without seeking collateral security. Several banks take collateral for term loans and grant collateral free advances up to Rs10 lakh working capital. Once instalment or interest becomes overdue beyond 90 days, both working capital and the term loan, the unit becomes NPA and the collateral security gets invoked for realization of all the loans. 

Pradeep Malgaonkar, in-charge of CGTMSE at SIDBI told the newspaper that the Trust has so far issued cumulative guarantees to 23.23 lakh loans involving an aggregate loan amount of Rs1.08 lakh crore over a period of 16 years.

According to the newspaper report, RBI's concerns might be stemming from the fact that the MSME lending segment is susceptible to volatility at times of economic stress. As such, banks often see a build-up of bad loans in this segment.   "For instance, State Bank of India (SBI), the largest lender in the country, had an SME loan book worth Rs1.89 lakh crore as on 31 March, where NPAs worth Rs17,032 crore were reported. This works out to about 9% of the SME book being classified as bad. The overall level of NPAs for SBI is at 6.5% of the total loan portfolio," the report says. 

However, risk appetite for the MSMEs is very low among banks and their adherence to the guidelines of both the RBI and Government of India (GoI) to identify sickness at the incipient stage and to introduce corrective action plans, is highly suspect. By just allowing postponement of instalments for three months, banks label such loans as restructuring without going into the processes of restructuring. The standard advances were restructured to sub-standard advances and were range bound at 0.09% to 0.38% indicating that not much restructuring took place in the sector. 

Banks though moving on CGTMSE coverage, their partial coverage of guarantee - term loan is under the collateral cover while the working capital is under guarantee cover. When there is default of the unit under term loan due to non-payment of interest for 90 days, it becomes an NPA qualifying for Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act proceedings.   

It is time that the RBI monitors the MSMEs on more robust data at the regional levels and ensures compliance of the guidelines. RBI data reveals only less than 5% of potentially viable units were revived during the last decade as compared to a huge corporate debt restructuring that went bust. 

According to RBI's Financial Stability Report (12 December 2015), the NPAs in MSMEs, when put to stress test, were 5.04% as of December 2015 with no significant contribution to the losses as percentage of either profit or capital. The industry NPA level was 6.68% and only 7.9% constitute MSME advances to the total advances. 

About 14% of the total manufacturing sector credit is reported for the MSEs while 5.9% of the MSE credit has been declared as NPA. Banks mostly cover all the government sponsored accounts, most of which are in the services sector and transport sector under the CGTMSE. There is no information as to how many and how much of the manufacturing MSEs are covered under the CGTMSE and the amount covered under collateral securities.

It is appropriate for the RBI to tweak the prudential norms to the advantage of the banks that take a positive action in ensuring that the units do not turn sick in the first place and in cases where they find it worthwhile to rehabilitate in the second place so that asset loss and job loss can be avoided. 

MSME units broadly fall into – stand-alone enterprises; ancillary enterprises and cluster based enterprises. While those in the former category could be having wider markets, ancillary enterprises and even some cluster based enterprises operate in narrow markets. If the anchor industries failed, the dependent MSEs would be a pack of cards in spite of themselves.

Instead of worrying over the credit guarantee scheme for MSMEs, the RBI should consider redefining NPAs under the sector differently and also allow takeover of any viable unit if the parent bank is willing to shed it in a manner that such advance would not add to the baggage of NPAs of the receiving bank.

  

Slowdown in credit growth due to stress in PSBs and not because of high interest rates: Rajan

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Reserve Bank of India (RBI) Governor Dr Raghuram Rajan has blamed the slowdown in credit growth to stress in public sector banking (PSBs) and not because of high interest rates. "...what is required is a clean-up of the balance sheets of public sector banks, which is what is underway and needs to be taken to its logical conclusion," he said while speaking at an interactive meet in Bengaluru organised by ASSOCHAM.

There is a slowdown in lending by public sector banks compared with private sector banks in non-food credit growth, he said, adding, that the immediate conclusion one would draw is that perhaps it is the lack of bank capital that is affecting credit growth. Yet, if we look at personal loan growth, and specifically housing loans, PSB loan growth approaches private sector bank growth. The lack of capital therefore cannot be the culprit. Rather than an across-the-board shrinkage of public sector lending, there seems to be shrinkage in certain areas of high credit exposure, specifically in loans to industry and to small enterprises."

Rajan says that the "The more appropriate conclusion then is that PSBs were shrinking exposure to infrastructure and industry risk right from early 2014 because of mounting distress on their past loans. Private sector banks, many of which did not have these past exposures, were more willing to service the mounting demand from both their traditional borrowers, as well as some of those corporates denied by the PSBs. Given, however, that PSBs are much bigger than private sector banks, private sector banks cannot substitute fully for the slowdown in PSBs credit. We absolutely need to get PSBs back into lending to industry and infrastructure, else credit and growth will suffer as the economy picks up," the RBI governor added.

Talking about the high interest rates affecting credit growth, Dr Rajan, said, this is another argument made by those who do not look at the evidence – that the stress in the corporate world is because of high interest rates. He says, "Interest rates set by private banks are usually equal or higher than rates set by public sector banks. Yet their credit growth does not seem to have suffered. The logical conclusion therefore, must be that it is not the level of interest rates that is the problem. Instead, stress is because of the loans already on PSB balance sheets, and their unwillingness to lend more to those sectors to which they have high exposure."

According to the RBI Governor, there are two sources of distressed loans – the fundamentals of the borrower not being good, and the ability of the lender to collect being weak and both are at work in the current distress.

"A number of these loans were made in 2007-2008. Economic growth was strong and the possibilities limitless. It is at such times that banks make mistakes. They extrapolate past growth and performance to the future. So, they are willing to accept higher leverage in projects, and less promoter equity. Indeed, sometimes banks signed up to lend based on project reports by the promoter’s investment bank, without doing their own due diligence. One promoter told me about how he was pursued then by banks waving cheque books, asking him to name the amount he wanted. This is the historic phenomenon of irrational exuberance, common across countries at such a phase in the cycle," he said.

The problem is that growth does not always take place as expected. Strong demand projections for various projects were shown to be increasingly unrealistic as domestic demand slowed down. Moreover, a variety of governance problems coupled with the fear of investigation slowed down bureaucratic decision making in Delhi, and permissions for infrastructure projects became hard to get. Project cost overruns escalated for stalled projects and they became increasingly unable to service debt.

Dr Rajan said, "I am not saying that there was no malfeasance – the country’s investigative agencies are looking into some cases such as those where undue influence was used in getting loans, or where actual fraud has been committed by diverting funds out of a company, either through over-invoicing imports sourced via a promoter-owned subsidiary abroad or exporting to related shell companies abroad and then claiming they defaulted. I am saying that, typically, there were factors other than malfeasance at play, and a number of genuine committed entrepreneurs are in trouble, as are banks that made reasonable business decisions given what they knew then."

As per the RBI Governor, poor monitoring and collection are the source of lending distress. "The truth is, even sensible lending will entail default," he said, adding, "A banker who lends with the intent of never experiencing a default is probably over-conservative and will lend to too few projects, thus hurting growth. But sensible lending means careful assessment up front of project prospects, which I have argued may have been marred by irrational exuberance or excessive dependence on evaluations by others."

"Unfortunately, too many projects were left weakly monitored, even as costs increased. Banks may have expected the lead bank to exercise adequate due diligence, but this did not always happen. Moreover, as a project went into distress, private banks were sometimes more agile in securing their positions with additional collateral from the promoter, or getting repaid, even while public sector banks continued supporting projects with fresh loans," he added.
Talking about collection process by banks, Dr Rajan feels laws like SARFAESI that are intended to speed up secured debt collection has been prolonged and costly, especially when banks face large, well-connected promoters. "Knowing that banks would find it hard to collect, some promoters encouraged them to “double-up”, by expanding the scale of the project, even though the initial scale was unable to service debt. Of course, the unscrupulous among the promoters continued to divert money from the expanded lending, increasing the size of the problem on bank balance sheets."

"The inefficient loan recovery system then gives promoters tremendous power over lenders. Not only can they play one lender off against another by threatening to divert payments to the favoured bank, they can also refuse to pay unless the lender brings in more money, especially if the lender fears the loan becoming a non-performing asset (NPA). Sometimes promoters can offer miserly one-time settlements (OTS) knowing that the system will ensure the banks can collect even secured loans only after years. Effectively, loans in such a system become implicit equity, with a tough promoter enjoying the upside in good times, and forcing banks to absorb losses in bad times, even while he holds on to his equity," the RBI Governor said.

Dr Rajan also criticised the incentives built into PSB system, especially for recovery of loans. He said, "The short tenure of managers means they are unwilling to recognise losses immediately, and more willing to postpone them into the future for their successors to deal with. Such distorted incentives lead to over lending to or “ever-greening” unviable projects. Unfortunately, also, the taint of NPA immediately makes them reluctant to lend to a project even if it is viable, for fear that the investigative agencies will not buy their rationale for lending. The absence of sound and well documented loan evaluation and monitoring practices by banks makes such an outcome more likely. So, excessive lending to bad projects and too little lending to viable ones can coexist."

Regulators who want to clean up the banking system so that it can again start lending do face a dilemma, the RBI Governor said. "First, we want banks to recognize loan distress and disclose it, not paper over it by ever-greening unviable projects. Second, we want them to be realistic about the project’s cash generating capacity, and structure lending and repayment to match that. And third, we want them to continue lending to viable projects, even if they had to be restructured in the past and are NPAs," he added.

The new tools effectively created a resolution system that replicated an out-of-court bankruptcy. Banks now had the power to resolve distress, so RBI could push them to exercise these powers by requiring recognition. This is what the Asset Quality Review (AQR), completed in October 2015 and subsequently shared with banks, sought to accomplish.

He said, "There is a change in culture, and banks have been quite willing to get into the spirit of the AQR. Many have gone significantly beyond our indications in what they have cleaned up by the quarter ending March 2016. Of course, once the banks have properly classified a non-performing loan and provisioned against it, their incentive to evergreen or avoid writing down the debt to appropriate levels is diminished."

Sending stern message to wilful defaulters, the RBI Governor said, "Even while we make it easier for committed promoters to restructure when they experience bad luck or unforeseen problems, we should reduce the ability of the fraudster or the wilful defaulter, who can pay but simply is disinclined to do so, or the fraudster, to get away. This is why it is extremely important that banks do not use the new flexible schemes for promoters who habitually misuse the system (everyone knows who these are) or for fraudsters. The threat of labelling a promoter a wilful defaulter could be effective in the former case, and we have coordinated with SEBI to increase penalties for wilful defaulters. For fraudsters, quick and effective investigation by the investigative agencies is extremely important. We should send the message that no one can get away, and I am glad that the Prime Minister’s Office is pushing prosecution of large frauds. The RBI has set up a fraud monitoring cell to coordinate the early reporting of fraud cases to the investigative agencies. And for those who have diverted money out of their companies, especially into highly visible assets abroad, a stern message sent by bankers sitting together with investigative agencies should help send the message that the alternatives to repayment can be harsh."

"The cleaning up of bank balance sheets, and the restoration of credit growth are vital, related elements in the growth agenda. The government and the RBI are helping our public sector bankers in this difficult but critical task. I know the process is working, so PSBs will soon be set to finance the enormous needs of this economy once again," Dr Rajan concluded.

Nifty, Sensex trendless – Wednesday closing report

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I had mentioned in Tuesday’s closing report that Nifty, Sensex were still on course to head higher. The major indices of the Indian stock markets were positive in the morning but closed with minor losses on Wednesday. 

Uncertain global situation, profit booking and a weak rupee depressed the Indian equity markets on Wednesday, as selling was witnessed in automobile, capital goods and FMCG (fast moving consumer goods) stocks. The BSE market breadth was skewed in favour of the bears -- with 1,597 declines and 988 advances. Initially, the key indices opened positive as investors believed that Britain's upcoming referendum on whether or not to stay on in the European Union would go in favour of staying with EU.

India's cabinet on Wednesday cleared the base price for the country's largest spectrum auction to date, expected to fetch around $85 billion at the approved reserve price, address the menace of mobile phone call drops and give a push to 4G data communications. The approval was given at a meeting of the cabinet chaired by Prime Minister Narendra Modi. But a decision on spectrum usage charges, which has evoked strong opinions from stakeholders, has been deferred and the matter referred again to the telecom watchdog. "This will be the largest auction to date," Jaitley said in a press briefing later. He said since the recommendations on spectrum usage charges from the attorney general's office and the Telecom Commission came later, it was felt that the matter be referred to the watchdog once again. "The appetite for India's telecom sector is very big," Communications and IT Minister Ravi Shankar Prasad, who also briefed the media, said, when asked if such a large auction will evoke the kind of interest which the government is hoping for. More than 2,300 MHz of airwaves will be on the block for telecom operators in seven bands -- 700 MHz, 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz and 2,500 MHz. Based on their pan-India reserve price the mop up can be as much as $83 billion against $17-billion the last time. With the public having forgotten the Supreme Court cases on old spectrum allocations, the government is moving on with industry growth.

The US dollar decreased against most major currencies on Tuesday as investors were digesting Federal Reserve Janet Yellen's remarks during her semi-annual testimony. In her testimony before the US Senate Banking Committee on Tuesday, Yellen reiterated the cautious approach to raising interest rates that the central bank signalled last week after its policy meeting. She said that the central bank expected interest rates to "remain low" for some time, in view of the weak global economy and sluggish productivity growth.

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

The closing values of the major Asian indices are given in the table below:

Nifty, Sensex are still on course to head higher – Tuesday closing report 21St June 2016

Nifty, Sensex are still on course to head higher – Tuesday closing report 21^St June 2016

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I had mentioned in Monday’s closing report that Nifty, Sensex were headed higher. The major indices of the Indian stock markets were range-bound on Tuesday and closed with small losses over Monday’s close. The trends of the major indices in the course of Tuesday’s trading are given in the table below:

 Profit booking, combined with negative global cues and a weak rupee, subdued the Indian equity markets on Tuesday resulting in the key indices trading marginally in the red during the mid-afternoon session with heavy selling pressure witnessed in banking, consumer durables and capital goods stocks. The key Indian indices ended in the green on Monday, following economic reforms and higher global equity markets. Initially on Tuesday, the equity markets opened on a flat-to-positive note, in-sync with their Asian peers. The Asian markets gained on the back of increased chances of Britain staying on in the Eurozone. The island nation will go in for a referendum on this issue later this week. However, profit booking, consolidation and negative European markets dragged the key domestic indices lower. Further, investors were seen concerned about US Federal Reserve Chairperson Janet Yellen's testimony to the US Congress. The testimony can provide further cues towards the next phase of the key lending rate hikes. In its two-day policy meet last week, the US FOMC (Federal Open Market Committee) decided to maintain its key lending rates. The US Fed signalled its intention to limit the times it might increase key lending rates due to weak domestic jobs market. A hike in the US interest rates can potentially lead FPIs (Foreign Portfolio Investors) away from emerging markets such as India. Besides, lower global crude oil prices and a weak rupee eroded investors' risk-taking appetite.

With two more days to go for the crucial referendum on Britain's continuance in the European Union, speculation over its exit (Brexit) is making the global economy nervous and the unfolding situation is being closely watched, a top World Bank official has said. “It’s clear that the discussion around Brexit is one of several factors that is contributing to uncertainty in the global economy,” Ayhan Kose, director of the World Bank Group’s Development Prospects Group, told IANS in an e-mail interview. Kose, however, did not comment on queries over Brexit's possible impact on India. He said the event was being closely watched by the World Bank, though it does not want to speculate on the outcome. The referendum is slated for June 23. The United Kingdom represents more than 15% of European Union’s GDP (gross domestic product), 25% of its financial services activity, and 30% of its stock market capitalisation. The European Union, in turn, is a key export market and source of foreign direct investment for many emerging market and developing economies. Financial market volatility around a decision to leave the European Union could lead to heightened global risk aversion, hampering already weak capital flows to emerging market and developing economies, a report said.

With increasing concern over foreign institutional investors continuing to invest in emerging markets, US President Barack Obama said on Monday that investing in the US is the "best business decision" possible because this is a country of "making and tinkering, and entrepreneurship and risk-taking, and of innovation and invention". "Investing in the United States is the best business decision you can make," he told more than 2,000 business owners and executives meeting at the Washington Hilton for the SelectUSA Investment Summit. Obama noted that the US is responsible for one-quarter of global investment in research and development, and that no other country receives more direct foreign investment. Energy costs are among the lowest, and "no country has as many top universities, and no country invests more in research and development than we do," Obama said. He acknowledged, however, that advances in technology and the process of globalisation are legitimate concerns for some workers.

In anticipation of stable interest rates in the Indian economy, interest rates for various small savings schemes have been kept unchanged for the July-October quarter of current fiscal, the government announced on Monday. A finance ministry statement here said that the interest rate on one-year deposits for the July-October quarter of 2016-17 has been kept unchanged at 7.1%. Similarly, the interest rates on two-year, three-year and five-year time deposits have been retained at 7.2%, 7.4% and 7.9% respectively. Besides, the interest rates on Public Provident Fund (PPF), the Kisan Vikas Patra scheme and the Sukanya Samriddhi Account Scheme were kept at 8.1%, 7.8% and 8.6% respectively, the statement added. The government had announced in February that small savings rates will be set quarterly to align them with the market rate of government securities.

Selling pressure was there among bank stocks in Tuesday’s trading. Axis Bank closed at Rs517.45, down 1.37%; Bank of Baroda closed at Rs149.95, down 1.28%; and IndusInd Bank closed at Rs1,090.90, down 1.07% on the BSE. Other losers among banks were Federal Bank (-0.88%), State Bank of India (-0.88%), Kotak Bank (-0.81%), HDFC Bank (-0.59%), Yes Bank (-0.43%) and ICICI Bank (-0.02%) on the BSE.

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

 The closing values of the major Asian indices are given in the table below:

MARKET COMMENTS

MARKET COMMENTS

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September E-mini S&Ps (ESU16 +0.47%) this morning are up +10.00 points (+0.48%). Monday's closes: S&P 500 +0.58%, Dow Jones +0.73%, Nasdaq +0.59%. The S&P 500 on Monday rallied to a 1-week high and closed higher on carryover support from a sharp rally in European stocks as Brexit concerns eased after the latest polls showed that Britons will vote to remain in the European Union at Thursday's referendum. Stocks were also boosted by strength in mining stocks and energy producers after copper rallied +2.1% and the price of crude oil climbed 2.9% to a 1-week high.

Sep 10-year T-note prices (ZNU16 -0.12%) this morning are down -3 ticks. Monday's closes: TYU6 -1300, FVU6 -6.25. Sep T-notes gapped lower Monday to a 1-week low and closed lower on reduced safe-haven demand for T-notes as stocks rallied sharply as the latest polls showed Britons favored remaining in the EU. T-notes were also undercut by slack demand for the Treasury's $26 billion 2-year T-note auction that had a 2.72 bid-to-cover ratio, below the 12-auction average of 3.01.

The dollar index (DXY00 +0.02%) this morning is down -0.046 (-0.05%) at a 1-1/2 month low. EUR/USD (^EURUSD) is up +0.0001 (+0.01%). USD/JPY (^USDJPY) is up +0.70 (+0.67%). Monday's closes: Dollar Index -0.595 (-0.63%), EUR/USD +0.0037 (+0.33%), USD/JPY -0.22 (-0.21%). The dollar index on Monday fell to a 1-week low and closed lower on an easing of Brexit concerns, which lifted EUR/USD to a 1-week high and GBP/USD to a 2-1/2 week high. The dollar index was also undercut by cautiousness ahead of Tuesday's testimony by Fed Chair Yellen to the Senate Banking Committee on monetary policy.

July WTI crude oil (CLN16 -1.13%) this morning is down -54 cents (-1.09%). July gasoline (RBN16 -1.60%) is down -0.0227 (-1.43%). Monday's closes: CLN6 +1.39 (+2.90%), RBN6 +0.0774 (+5.14%). Jul crude oil and gasoline on Monday rallied to 1-week highs and closed higher. Crude oil prices were boosted by the fall in the dollar index to a 1-week low and a report by the Joint Organizations Data Initiative saying that Saudi Arabian Apr crude exports fell to a 6-month low of 7.44 million bpd.

OVERNIGHT U.S. STOCK MOVERS

OVERNIGHT U.S. STOCK MOVERS
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Signature Bank/New York (SBNY +0.95%) was upgraded to 'Strong Buy' from 'Outperform' at Raymond James with a 12-month price target of $162.

Abbott Laboratories (ABT +0.96%) was upgraded to 'Buy' from 'Hold' at Edward Jones.

Imperva (IMPV +0.27%) rallied over 9% in after-hours trading after Elliott Associates disclosed a 9.8% stake in Imperva and said it began a dialogue with management and board regarding strategic and operational opportunities.

Knight Transportation (KNX +3.53%) was downgraded to 'Neutral' from 'Buy' at Bank of America/Merrill Lynch.

Prologis (PLD +0.06%) was downgraded to 'Hold' from 'Buy' at Deutsche Bank.

Kirby Corp. (KEX +0.90%) was downgraded to 'Neutral' from 'Outperform' at Credit Suisse.

CNOOC Ltd. (CEO +2.55%) was upgraded to 'Buy' from 'Neutral' at UBS.

Paratek Pharmaceuticals (PRTK -2.59%) slid over 2% in after-hours trading after it proposed an offering of 3.75 million shares of common stock.

Sunrun (RUN +2.66%) gained over 1% in after-hours trading after it was rated a new 'Outperform' at Oppenheimer,

American Superconductor (AMSC +1.21%) was rated a new 'Outperform' at Oppenheimer with an 18-month price target of $12.

Opko Health (OPK +1.55%) rose nearly 4% in after-hours trading after a FDA approved-drugs website indicated approval for Opko's Rayaldee drug came on June 17.

Werner (WERN +1.36%) dropped over 9% in after-hours trading after it warned that Q2 EPS may be only 21 cents-35 cents, below consensus of 40 cents, due to "sluggish" freight market conditions, driver pay and contractor cost increases.

Scynexis (SCYX +6.85%) tumbled over 11% in after-hours trading after it announced it will launch a public offering of common stock and warrants.