India's Gulf bar
Also in today’s edition: Big takeaways from Apple’s event; Shadow banks go to school; Ambani, Adani face off in drone wars; Terra’s Indian investors can’t catch a break
Good morning! That desi game of tag you played in school has now muscled itself into a sports league. Mint reports that the Ultimate Kho Kho League will kick off this year, with Sony Pictures Networks India as the official broadcaster. GMR and Adani Group have bought the Telangana and Gujarat franchises, respectively. Both conglomerates already have pro-league footholds across kabaddi, boxing, and cricket. We eagerly await a lagori league, too.
🎧 Coming soon: a professional Kho Kho League. Corporate giants GMR and Adani Group have already picked up teams.
The Market Signal*
Stocks: Metal, private banks and auto stocks helped recoup losses in early trade. Newly listed LIC fell another 3%. Markets will remain choppy for another day as investors await the RBI’s rate decision mid-week.
Early Asia: The SGX Nifty and the Hang Seng were down 0.12% and 0.39% respectively. The Nikkei 225 was marginally up at 0.24% at 7:30 am India time.
DIPLOMACY
Words That Went Too Far
India has run into diplomatic quicksand for two ruling Bharatiya Janata Party spokespersons’ diatribe against Islam’s Prophet Mohammed. A boycott India campaign saw Indian products removed from supermarket shelves and some Indians reportedly losing their jobs. The foreign ministry is left to do extensive damage control after Oman, Qatar, Bahrain, Kuwait, Iran and Saudi Arabia slammed the comments. Pakistan, Afghanistan and the Organisation of Islamic Countries also lashed out at India. Talks with Pakistan are a casualty.
On the line: Despite BJP removing the duo, their comments have put in jeopardy relationships the Narendra Modi government had assiduously cultivated over the past eight years. At stake for India are energy security, over half of remittances, about a fifth of its trade and significant potential investments from the vast pools of capital in the region.
Yet: Qatar and India shook hands and reinforced their friendship.
TECH
Apple Shows What Next
Apple showcased new versions of its core operating systems—iOS, MacOS, iPad OS and WatchOS at WWDC22, its annual developer conference. The company also launched the new MacBook Air with its latest M2 SoC.
Getting Closer: The core OSes received major updates to apps such as Mail, Spotlight, Safari and Messages. It also previewed a real-time collaboration app called Freeform which is similar to a digital whiteboard. iPadOS got additional features to make it more Mac-like.
New stuff: The Cupertino company showcased its latest version of CarPlay, software for car dashboards. There was no sign of the rumoured self-driving car though. It also launched its Buy Now Pay Later offering.
Building for who? While Google continues to build products and features with the global South and emerging economies in mind, as it showed off at its developer conference last month, Apple still focuses on the elite.
EDUCATION
NBFCs Lay The Parent Trap
Non-Banking Financial Companies (NBFCs) are doubling down on school fee financing as India’s edtech boom goes bust. Some schools are even giving them fee payment data without parents’ permission.
No child’s play: Higher costs of living and the likelihood of peak inflation are adding to the woes of parents, who already contend with exorbitant school and tuition fees.
A survey cited in the Deccan Herald story showed that 63% of Indian parents reported fee increases in 2021. Those who opt for loans are sometimes charged interest if they don’t clear everything in three instalments.
Nutshell: Education-focused NBFCs—Grayquest, Eduvanz, EnableCap, Financepeer, GyanDhan, Avanse Financial Services, etc.—pay lump-sum fees on parents’ behalf and charge interest, or take a cut from schools for facilitating interest-free loans. Either way, schools are assured of upfront cash flows.
Such startups have raised millions and partnered with institutions such as Delhi Public School.
The Signal
Easy and zero-cost digital finance transformed India’s consumer goods landscape. According to a PwC report (pdf), NBFCs account for 83% of personal loans. It’s not all rosy though; consumer durable loan defaults increased by 68% during the pandemic. It was against this backdrop that NBFCs eyed edtech.
But lenders that teamed up with edtech companies to disburse loans are turning away from the now-struggling sector. It didn’t help that India’s Department of School Education and Literacy singled out edtech loans for predatory practices.
And so, NBFCs are going straight to school… under the RBI’s watchful eye.
🎧 Fees are so unaffordable now that schools are tying up with NBFCs to offer EMI options. Listen in.
M&A
Billionaire Race Heads To The Skies
India’s tycoons are eyeing drone startups after India liberalised its drone policy. Leading the acquisitions in the marquee industry are Mukesh Ambani and Gautam Adani.
Use cases: Reliance Industries, which acquired Asteria Aerospace in 2019, will use drones to survey and monitor its telecom towers and oil and gas pipelines.
DCM Shriram Industries forayed into defence with a 30% stake in Turkish drone company Zyrone. Tata Steel uses Aarav Unmanned Systems’ drones to monitor mines and inventory. And just last week, Adani acquired agri-drone startup General Aeronautics. The Adani Group already has a joint venture with Israeli defence manufacturer Elbit for made-in-India military drones.
Hot opportunity: Reliance and Adani acquired drone startups for just ₹23 crore and ₹50 crore, respectively. That’s a steal when you consider that market application will shift from defence-only to commercial (mapping, agriculture, delivery) owing to the government’s drone-friendly policies. First mover advantage is everything.
CRYPTOCURRENCIES
Taxman Rubs Salt In Terra-Inflicted Wound
After Terra’s Luna token nosedived, Luna 2.0 was seen to be a revival of sorts. But, its price is already plunging, averaging below $11 last week. Investors in India are facing another blow—they are likely to be taxed at a flat rate of 30% and might not be able to offset gains from the new token against losses from the old one.
NFT downer: OpenSea product manager Nathaniel Chastain was arrested last week for insider trading on the world’s largest NFT marketplace. The ‘insider trading’ charge is a landmark one because blockchain assets aren’t covered by the US Securities Act. But prosecutors made it clear that regulatory gaps won’t come in the way of recognising fraud, whether on the stock market or the blockchain.
Bombshell: A Reuters investigation found that crypto exchange Binance was a conduit for illicit transactions worth $2.35 billion.
FYI
End is nigh? In an SEC filing, Elon Musk alleged that Twitter was “refusing to comply with its obligations under the merger agreement” over calculations of spam accounts, while threatening to scrap his agreement to acquire the company.
Checking out: Zomato’s board will meet on June 17 to greenlight the food delivery giant’s acquisition of quick commerce company Blinkit.
NoJo: British Prime Minister Boris Johnson survived a vote of no confidence on Monday, after 54 backbench MPs (15%) from his party wrote letters expressing displeasure.
Techlash over? Chinese regulators are concluding their probe into US-listed companies such as Didi, Full Truck Alliance, and Kanzhun, and will allow them to add new users on domestic app stores.
Memory issues: Mumbai is the most forgetful city in India, ahead of Delhi and Lucknow, according to a report by Uber.
Blank screen: China’s top live-streamer Li Jiaqi’s show went offline after allegedly offending censors by showing a cake shaped like a tank ahead of the Tiananmen Square massacre anniversary.
FWIW
Under the Tosca sun: Elon Musk can jetpack into the future for all his younger sister cares; Tosca Musk is busy building a sexy Hallmark Channel. Even as major streaming services fight for viewer attention, Tosca is betting on romance mass-market novel adaptations. Her platform, PassionFlix, charges $6 a month for cheesy nice-to-naughty content. PassionFlix is bankrolled by some heavyweights, but Tosca won’t divulge if Elon is an investor.
Stock still: Everything that flew off shelves during the pandemic is stale now; just ask Kohl’s, Gap, and Macy’s. As if American retailers didn’t have enough headaches already, they’re now stuck with excess inventories of casual wear, home décor, and activewear. The reason: supply chain delays, inflation, and reopened offices (buyers spending more on dressier outfits). The only solution: higher markdowns to push product.
Bye bye, Bali: Bali’s sun, sand, and sea were the apples of Indonesia’s eye. But the country is now eager to attract a different kind of tourist: the remote worker. Indonesia—like Thailand, Brazil, Estonia, and several other countries—is offering digital nomad visas. These five-year visas, targeted at business-leisure travellers and remote employees, are being launched as Indonesia pivots to “serenity, spirituality and sustainability”.
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