Beijing is bleeding
Also in today’s edition: India scorches; MeitY goes after VPNs; Insiders dish on Musk-Twitter drama; US-EU write the Internet’s future
Good morning! The demand to own land in a Bored Apes Yacht Club metaverse project called Otherside has unleashed chaos across Ethereum. Bloomberg reports that the transaction costs to mint Otherside NFTs now exceed $6,000. Twitter handle @web3isgreat revealed that traders elsewhere on the network are paying over $3,000 in gas fees for NFTs worth anywhere between $270-$500. Suckers.
A programming note: We are taking a publishing break on Tuesday (May 3) on account of Eid Ul-Fitr. The Signal and The Signal Daily will resume publication on Wednesday. We wish our readers Eid Mubarak!
The Market Signal*
Stocks: Equities continue to fluctuate wildly as corporate earnings send out mixed signals even as the Ukraine conflict, inflation, and weakness in key economies such as China and India play on investors’ minds. The US Fed reserve has a crucial meeting coming up this week. While Big Tech earnings are out of the way, several old economy companies’ Q1 performance reports are lined up next week.
Early Asia: The Nifty was trading 0.62% lower in Singapore at 7:30 am India time. The Nikkei 225 was in the red but Hong Kong’s Hang Seng index had surged more than 4% in morning trade.
Heat And Virus Keep India On Edge
Northwest and central India just endured the hottest April in 122 years and May is unlikely to bring much respite, the meteorological department warned.
The subcontinent’s satellite map of surface temperatures now resembles glowing embers.
With the rising heat, demand for electricity has blown up, leading to shortages and long power cuts that have disrupted industrial activity.
No reprieve: A surge in Covid-19 cases, meanwhile, has the government machinery on tenterhooks. April and May of 2021 were the worst months for India when a raging Covid-19 Delta wave claimed thousands of lives.
🎧This is quite the double whammy. A heat wave, and a surge in Covid cases (yes, it’s still around, folks!). What does this mean for India? Well, we’ve got that sorted for you in today’s episode of The Signal Daily. Dive in!
The Law Is Coming for VPNs
Everyone’s favourite workaround for blocked content is under the scanner. The Ministry of Electronics and Information Technology’s Computer Emergency Response Team (CERT-in) directed VPN providers, crypto exchanges, and data centres to log customer data for five years.
Logjam: VPNs by their very nature have no-log policies. While they’re typically associated with accessing restricted, blocked, or pirated content, they also offer encryption and privacy.
But CERT-in wants customer details and the purposes for which they’re using the above services. The stated objective is to respond to cyber incidents within six hours. Failure to provide requisite data could attract one-year imprisonment.
That could, however, be a blow to companies with transnational operations and staff working from home.
Elsewhere: Hollywood studios want a ban on VPN providers. In one settlement, provider VPN.ht even agreed to log traffic on US servers.
🎧There’s a lot to uncover here. On VPNs, the government view, and of course, Hollywood. And we’re doing just that in today’s episode. Tune in!
China Is In Quite A Pickle
One of Asia’s most prominent private equity investors, Weijian Shan, warned that large parts of the Chinese economy have been “semi-paralysed” by Beijing’s zero-Covid measures. The country is now experiencing its worst crisis in 30 years.
Firefighting: Chinese regulators held an emergency meeting with domestic and foreign banks to discuss how they could protect the country’s overseas assets if it was targeted with financial sanctions similar to those imposed on Russia for its invasion of Ukraine.
Easing up: China signalled an easing of its tech crackdowns as President Xi Jinping seeks to bolster the economy. It has also hinted at supporting the sagging property sector.
Xi Jinping’s iron fist that was so sure when it came down on China’s tech companies, property tycoons and Covid-19 appears a bit shaky as the economy reels from repeated blows. China’s currency has fallen steeply. Xi’s diktats are now being questioned by officials to the point of scepticism over government data. Social media users in the country are also expressing discontent like never before.
Record defaults by real estate developers and dud loans to Belt and Road countries (read: Sri Lanka and Pakistan) have added to Beijing’s woes. Burgeoning trade surpluses, a source of strength in normal times, could become a problem in the event of a conflict with the West.3/10 What is especially interesting, according to the FT, is that "when one official asked Chinese bankers if they could diversify into more yen or euro-backed assets, they replied that the idea was not practical."
The meeting with banks indicates that Xi is aware of the risks and is perhaps weighing options if the country is pushed into a corner for any reason (a conflict with Taiwan, perhaps) by the US and allies.
Arming Global Internet Governance
India could find itself in the crosshairs of scrutiny for its Internet and digital tech policies as the US and Europe are at work on a new global Internet governance framework.
Political will: The first bricks have been laid with the Declaration for the Future of the Internet signed by 61 countries. India has stayed out.
The declaration’s objectives, which include promotion of democracy, fundamental freedoms and human rights, will be woven into multilateral processes of institutions such as the UN, G20 and WTO. That means there could be new political demands in negotiations, including trade talks. Although the declaration is not binding, signatories are expected to frame policies and laws to uphold the vow.
The pledge to promote pluralism and freedom of expression could put pressure on India, which has been called out for online hate speech. The government has also been criticised for record Internet shutdowns.
Behind The Scenes of The Twitter Buyout Drama
Jack Dorsey publicly endorsed Elon Musk’s Twitter bid on April 26. The billionaires reportedly developed a friendship in 2020 that led to Dorsey telling Musk the company should go private.
Musk was encouraged by prominent libertarian executives Peter Thiel and David Sacks too. He also reached out to the CEO of a right-wing publication who’d been suspended from Twitter.
Sweeping the board: A report by The New York Times says Twitter was rankled by Dorsey’s public criticisms of the board, that Musk was in touch with chairman Bret Taylor, and that the board capitulated despite its ‘poison pill’ due to a dearth of other offers.
Postscript: Musk is supporting an amicus brief against his old foe, the SEC. Twitter may struggle with interest payments for Musk’s debt-and-cash financing. And a political cartoon shared by Musk is now an NFT. Also, if you are a Musk-diehard (or critic), we have some news for you. There’s a new biography coming.
April pool: India collected its highest GST dues of ₹1.68 lakh crore in April 2022. The month also had a record number of UPI transactions amounting to ₹9.83 lakh crore, and property registrations in Mumbai.
Raided: The Enforcement Directorate has seized ₹5,551.27 crore of Xiaomi’s assets as part of an investigation into suspected illegal remittances.
Auto update: Skoda and Tata Motors registered a 436% and 81% increase in year-on-year domestic vehicle sales, respectively; Maruti and Hyundai sales dipped 10%.
Express delivery: The Indian Railways plans to launch 25 high-speed Vande Bharat freight trains to capitalise on the booming e-commerce sector.
Berkshire bytes: Warren Buffett doubled down on crypto criticism and revealed his increased stake in Activision Blizzard during Berkshire Hathaway’s annual meeting. His company also reported a 53% decline in year-on-year earnings.
Chips out: Chip consortium ISMC is investing $3 billion in India’s first semiconductor fabrication unit.
Deal busy: Days after its Viacom18 investment, the Uday Shankar-backed Bodhi Tree Systems will invest $600 million in Allen Career Institute. The Kota-headquartered Allen is India’s largest coaching institute company.
Renovation with a side of fries: An American couple stumbled upon a decades-old McDonald’s takeaway in their bathroom while undertaking home repairs. The paper bag, which featured the fast food giant’s original mascot, had half-eaten French fries that were still crispy. Why they were bunched up in a wall though, nobody knows.
XXX fallout: History repeated itself ten years after three BJP MLAs resigned when they were caught watching porn in the Karnataka Legislative Assembly. Only this time, the disgraced politician is a British lawmaker. Tory MP Neil Parish claims he was looking at tractors before experiencing a “moment of madness” and segueing to porn.
Starring AirBnB: The world’s most famous vacation home rental company—rather, its crisis response team—is now the subject of a motion picture. A member from AirBnB’s safety crew is doubling as an anonymous consultant on Enjoy Your Stay, which focuses on the company’s crisis management in the events of crimes in listed properties.
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