Financial Blog

Banking, infra schemes made the most money last month

Banking, infra schemes made the most money last month They offered returns in excess of 6% beating all other equity categories

Equity mutual fund schemes in the banking and infrastructure sectors have made the most money for investors in the past month. During a period when world stock markets remained volatile amid unfolding of the #39;Brexit#39; event, these schemes offered returns in excess of six per cent.

At a time when the benchmark indices on the two major stock exchanges, Sensex and Nifty, could register a gain of a little less than two per cent, these schemes -- primarily investing in banking and infrastructure stocks emerged as the top gainers in the equity segment.

Birla Sun Life Banking Financial Services Fund beat its category and gave a 7.3 per cent monthly return. ICICI Prudential Banking and Financial Services Fund did much better, with 9.3 per cent. Other schemes in the banking category include Reliance Banking Fund, UTI Financial Sector Fund and Invesco India Banking Fund.

Heavyweight stocks in the public bank space like State Bank of India, Bank of Baroda and Punjab National Bank have gained between 10 per cent and as much as 45 per cent. Shares of private banks remained flat, though moving up swiftly in the last few sessions. The BSE Bankex was up three per cent in the period. The category average monthly return of infrastructure equity schemes was 6.2 per cent. The sector hasn#39;t done well for the past couple of years but helped schemes having exposure to infra stocks. For instance, Birla Sun Life Infrastructure Fund offered investors a return of 6.4 per cent; Canara Robeco Infrastructure Fund made 6.2 per cent.

The only category which could beat the banking and infrastructure schemes were gold funds. The Brexit and other turmoil led to a sudden increase in gold prices and gold funds as a category gave an average return of 7.49 per cent.

Abu Dhabi Merger to Create $175 Billion Banking Heavyweight

National Bank of Abu Dhabi and First Gulf Bank won board approval on Sunday for a merger to create a banking heavyweight with $175 billion in assets, part of the emirates plan to revamp its economy hit by lower oil prices.

The newly-branded National Bank of Abu Dhabi will become one of the Middle East and Africas biggest banks when the tie-up is completed in the first quarter of 2017, rivaling Qatar National Bank, which has just purchased Turkeys Finansbank.

The tie-up comes as the Gulfs oil-rich countries take new steps to diversify their economies after two years of lower oil prices have weighed heavily on state revenues.

By creating a national banking champion, Abu Dhabi hopes to better service its own changing economy and those of the region, as well as take on global banking rivals at home and abroad.

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With a combined market value of $29.1 billion as of June 30, the new bank will overtake the likes of Britains Standard Chartered and Royal Bank of Scotland and Frances Credit Agricole.

The proposed merger will create a bank with the financial strength, expertise, and global network to support the UAEs economic ambitions at home and drive the countrys growing international business relationships, the banks said in a joint statement.

The deal is one of two significant consolidation efforts currently underway in Abu Dhabi. Last week, the government ordered the merger of state investment funds Mubadala and International Petroleum Investment Company.

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Abu Dhabis efforts to reform the economy are considered slow compared with neighboring Saudi Arabia, which has adopted a much more radical approach to restructure the economy through a national transformation plan.

Even then, bank mergers are uncommon in the Middle East due to cumbersome regulation and an unwillingness by major shareholders to cede control, indicating significant government support for the deal between NBAD and FGB.

State investment funds Abu Dhabi Investment Council and Mubadala will hold 33.2% and 3.7 % respectively of the new entity, which will have assets worth 642 billion dirhams and a return on equity of 14.1% based on first-quarter figures.

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Anders: The 'system' of 'fractional reserve banking'

"Banking." The name comes from the business of the "money changers" who sat on benches (German: "banks") in the temple plaza in Jerusalem. They'd exchange the foreign coins of the pilgrims who wanted to pay the half-shekel "Temple tax," which had to be paid as the silver coin issued by the Temple.

Silver has always been a rare metal. As such it has intrinsic value. It is tarnish resistance and antibacterial, easy to mold and stamp into coins of assured weight, which makes it ideal for use in trade. From times immemorial silver has been used as medium of exchange in many places of the world.

Where silver is plentiful, the goods exchanged for it are expensive; where silver is rare trade goods are cheap.

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