As debt woes spread, India’s IL&FS ratings cut to lowest levels
HONG KONG: Alibaba co-founder Jack Ma sent out a grave warning regarding the trade war between the US and China: It’s going to last longer and have a bigger impact than most people think.
The chairman of Alibaba Group Holding Ltd said the dispute could last 20 years and persist beyond the presidency of Donald Trump, as the world’s two strongest economic powers battle for global supremacy.
China needed to strengthen its economy to deal with the conflict and shift trade relations from the US to regions like South-East Asia and Africa, he said during a speech at the company’s investor day conference in Hangzhou.
“Short term, business communities in China, US, Europe will all be in trouble,” said Ma, pacing a stage in an open white dress shirt and punctuating his remarks with forceful jabs.
“This thing will last long, if you want shortterm solution, there is no solution.”
His remarks came just hours after China vowed to retaliate against US plans to levy tariffs on about US$200bil in Chinese goods.
He said Alibaba would also be affected by the rising trade tensions, given its wholesale business allowed American merchants to source products from China.
But he also said the trauma would offer unprecedented opportunities for companies that could take advantage of them.
“We should not focus on this quarter or next quarter or next year’s profit. This is a huge opportunity,” he said.
“If Alibaba cannot sustain and grow, no company in China can grow. I’m 100% confident in that.”
Ma’s remarks carry particular weight because he is an icon of Chinese innovation and has been seen as an ambassador to the US. Last year, he met with President Trump and promised to create one million jobs in the US through 2021.
But Ma, a week after he announced plans to hand over the chairman role to chief executive officer Daniel Zhang, left no doubt about his support for his own country yesterday.
He said if the US insisted on levying tariffs on Chinese goods, then China should shift its business to the rest of the world.
“When problems come, learn how to hide, learn how to train,” he said. “I believe Daniel and his team will have the wisdom to fight for the future.” — Bloomberg MUMBAI: The Indian infrastructure finance and construction firm that has rocked the nation’s credit markets with rare defaults had some of its credit ratings cut as low as they can go, as more debt deadlines loom.
Infrastructure Leasing & Financial Services Ltd (IL&FS), which helped fund India’s longest tunnel, started missing deadlines on shortterm debt instruments late last month.
In light of those developments, ICRA and Care Ratings cut their scores on several debt instruments of the firm to “D”, indicating actual or imminent default.
“The liquidity profile of the group has been under pressure given the delays in fund raising as initially envisaged, deterioration in credit profile of key investee companies and the sizable repayment obligations at group level in the near term,” Moody’s Investors Service unit ICRA said in an e-mailed statement.
IL&FS Group reported losses before tax of 21.1 billion rupees (US$292mil) in the year to March 31, the first such loss since at least 2015, according to its annual reports.
While India is rushing to enact infrastructure-related policies that could boost employment in Asia’s third-largest economy before elections in 2019, new project announcements have been subdued.
At the same time, the rates that all companies pay for money have shot up to multi-year highs, and the group’s own fundraising costs are no exception.
Worries over the ability of the beleaguered IL&FS Group to service debt heightened last month following a delayed payment by one its units on commercial paper. — Bloomberg