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Is this India’s most mysterious company?
Also in today’s edition: Hindenburg-Adani arm wrestle; Pakistan is in the doldrums; Google’s ad empire may be in serious danger; Food insecurity continues
Good morning! ’90s kids rejoice. Alka Yagnik, Udit Narayan, and Kumar Sanu were among the top five most streamed artists on YouTube in 2022. ChartMasters says Yagnik had 15.3 billion streams, which averages 42 million streams a day 😱. Bad Bunny, the world's most streamed artist on Spotify, claimed second place. K-pop juggernauts BTS and Blackpink rounded off the list otherwise dominated by Indians: Bhojpuri singers Khesari Lal Yadav and Shilpi Raj came in at seven and nine respectively, while the late Lata Mangeshkar claimed eighth spot.
The Market Signal*
Stocks & Economy: Morgan Stanley and JP Morgan are advising investors not to buy into the stocks rally as they will be taking on the US Fed Reserve, Bloomberg reports.
The IMF has, meanwhile, raised the output forecast for the world for 2023, based on the US and China’s economic performances. It said in an update to its World Economic Outlook that inflation was peaking amid low growth, and it now expects 2023 global GDP to grow 2.9%, 0.2% more than its October 2022 expectation, half of it coming from India and China.
Back home, finance minister Nirmala Sitharaman tables the Economic Survey 2023 in Parliament on Tuesday.
Early Asia: The SGX Nifty (-0.64%) and Nikkei 225 (--0.92%) were dragging their feet at 7:30 am India time. The Hang Seng was perky (0.18%).
Floating On Oil
Ever wondered how India managed to ramp up oil imports from Russia when Washington was setting up hurdles globally to curb Moscow’s oil trade? A little-known Mumbai shipping company founded within weeks of Russia invading Ukraine may have a hold on it.
The noob shipper Gatik Ship Management went on a boat shopping spree and now controls 25 tankers. Although it has become a major carrier of oil from Russia to not only India but other markets as well, it only manages the fleet and prefers to sail them under safe haven flags. Trade publications report it to have taken control of multiple super ships or VLCC (very large crude carriers).
Foggy ownership: Two companies, Buena Vista Shipping and Liberia-based Gardsea Shipping, have been noticed by these publications as paying top dollar to buy up old ships, which are now managed by Gatik.
The Staring Match Is On
The battle between Hindenburg Research and the Adani Group intensified after the US short-seller pooh-poohed the latter’s clarificatory, 413-page rebuttal to its 100-page report.
Nationalism no cover: Hindenburg said, “India’s future is being held back by the Adani Group, which has draped itself in the Indian flag while systematically looting the nation.”
$68 billion lost: Although Adani Green Energy and Adani Total Gas were gasping on the floor, the other group stocks were better off on Monday, with four of them even posting gains. US Bondholders were also selling large chunks. Adani Enterprises got a boost when International Holding Company, a conglomerate controlled by Abu Dhabi’s ruling royals, said it would invest $400 million in the company’s follow-on share sale.
Investors such as the Life Insurance Corporation and State Bank of India are under pressure to increase their scrutiny of the group.
Pakistan On A Precipice
After the economic woes of Sri Lanka, Bangladesh, and, to a lesser extent, Nepal, India’s western neighbour is suffering a polycrisis. Pakistan has been a frequent door-knocker to the International Monetary Fund (IMF), but it’s in quicksand this time.
The Pakistani rupee is at a record 250 to the US dollar, forex reserves are at an all-time low of about $3.5 billion, and inflation has surged to 25%. The Shehbaz Sharif government has hiked fuel prices by PKR 35 ($0.14) a litre. His country is also suffering an energy crisis and political instability.
India’s neighbours are all seeking aid from the IMF subject to varying conditions. But Pakistan is in a precarious spot because disbursements from a $7 billion IMF loan were stalled after the agency demanded that the country abandon its “multiple exchange rate” policy in favour of a market-determined one.
Former PM Imran Khan was reluctant to agree to IMF’s stringent conditions, which pushed the country to near-default. This left Sharif to pick up the pieces—including raising the currency price cap and hiking energy rates—at the risk of political capital.
Ordinary Pakistanis are grappling with unaffordable staples; some are even moving their children to cheaper schools. Economist Ahmad Mukhtar foresees job losses, the crumbling of some financial institutions, allies imposing huge conditionalities, a change in government, and social unrest in the long term.
Bad news for India, which is bracing for the extremist foment that may be created by the turmoil.
🎧 Why is Pakistan’s economy collapsing? Also in today’s episode: A final send-off for Boeing 747. Listen to The Signal Daily on Spotify, Apple Podcasts, Amazon Music, Google Podcasts, or wherever you get your podcasts.
Google May Lose Its Ad Empire
That’s if the US Department of Justice (DOJ) wins its lawsuit against the company. The US’ second antitrust suit against Google—the first challenged the tech giant’s search monopoly and goes to trial in September—may not just fracture its golden goose but disrupt the $500 billion digital ad market itself.
How?: If the DOJ wins, Google will have to break up its ad empire, which comprises an ad server used by 90% of large publishers, and an ad exchange with 50% market share. The DOJ’s contention was that Google monopolises ad tech, ad space, and ad auctioning.
Microsoft, The Trade Desk, and Comcast can afford to acquire Google’s spun-off ad businesses but probably won’t due to further antitrust scrutiny. In which case, divested Google entities may end up acquiring small ad tech players.
Aside: Ads seem to have accounted for Snapchat India’s profit surge for the year ended March 2022.
The Crisis Isn’t Over
Despite fertiliser and crop prices dropping sharply from their peaks last year after Russia’s invasion of Ukraine, experts have warned that the world’s food supplies are still under threat.
A lot depends on whether a deal brokered by the United Nations last year to allow both countries to export food grains and fertilisers from a transit corridor in the Black Sea is extended in March. Ukraine and Russia are major grain exporters, while Moscow is also the world’s largest supplier of fertilisers.
Climate change is also a major threat, with 2023 expected to be a warmer year than 2022 thanks to the El Niño weather phenomenon.
Bigger bite: Apple supplier Jabil Inc has started making components for AirPods in India. The company is shipping plastic bodies or “enclosures” to assembling units in China and Vietnam.
Towards that superapp goal: The Financial Times reports that Twitter has started work on designing a payments architecture and is applying for regulatory licenses for the same.
Down: Samsung’s operating profit in the fourth quarter (Q4) of 2022 fell 69% to $3.5 billion, its lowest since Q3 2014; operating profit in the chip unit alone plummeted by nearly 97% to ~$219 million from the year before.
Trimming the fat: In a bid to “restore profitability”, Dutch health tech company Phillips will scrap 6,000 jobs. The cuts come following the recall of faulty ventilators.
Fresh dough: Mobility company Bounce has raised $20 million from existing investors in a new funding round.
Hat-trick: Toyota ended 2022 as the world’s top-selling automaker for the third year in a row, firming up its lead over Volkswagen. The Japanese company sold nearly 10.5 million units last year.
Hit reset: French automaker Renault will decrease its stake in Japanese partner Nissan from 43% to 15%.
THE DAILY DIGIT
That’s 97 zettabytes, the volume of data that was generated in 2022. One zettabyte is one billion terabytes. (Capgemini)
This won’t fly: We feel for social media managers who handle company accounts, we really do. But what was IndiGo’s person in question thinking? Indian Twitter is rife with jibes and jokes after IndiGo tweeted a picture of poha with the caption ‘Salads that are prepared and served on the same day, do try them. You’ll toss everything else away. #AiromaticFresh’. One user even exhorted the carrier (in Marathi no less) to check out a poha recipe on a popular food blog. Clearly, people can’t digest this.
Hurtling through space…: …was an asteroid the size of a compact shipping truck, and it missed Earth by a whisker last week. The object, named ‘2023 BU’, wasn’t a threat, but that’s not stopped astronomers from being concerned about our asteroid detection abilities. They fear that space rocks as big as Olympic-sized pools (and larger) will cause local and even continental devastation. Thankfully, NASA is upgrading its asteroid-surveilling NEO Surveyor telescope, which will detect 90% of all asteroids larger than 140 metres.
Three strikes: The controversies keep coming for Anglo-Australian mining giant Rio Tinto. In 2020, it blasted rock shelters sacred to the Aboriginal people. In 2022, it revealed that 21 women employees had complained of sexual abuse at work. Now, one of its contractors has exposed West Australians to deadly radiation. In focus is a tiny-but-deadly density gauge, which went missing from a truck travelling from a remote Rio Tinto mine to Perth. Authorities are now hunting for the 6mmx8mm device along 1,400 km using radiation detectors. Yikes.
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