Inject Dune into our veins
Also in today’s edition: IPO Xmas coming up, Informal economy only a fifth of formal GDP now, On a meme and a prayer
Good morning! It’s every kid’s fantasy to be locked in an amusement park. All the cotton candy, the rides, everything without a queue. A version of this happened in China. People were standing in queue waiting for their rides in Disneyland when the park was sealed and hazmat suit-clad government agents entered the premise forcing everyone to take a Covid test. More than 30,000 people were trapped in the park until midnight and special buses ferried them home. Talk about a weekend gone wrong.
Btw, our podcast has been going strong for over a month now. Tune in on your daily jog, drive to the office, or even as you WFH-ers have breakfast in bed. We promise it’ll be music to your ears.
The Market Signal
Stocks: Upbeat PMI data & GST collections for last month saw Indian benchmarks begin the month well on the front foot. All sectoral indices closed in the green with Realty (4.03%), Metal (3.06%), and IT (2.56%) among the biggest gainers.
The IPO Queue Is Packed
The first one is Nykaa. Policybazaar comes next. Paytm will join later. The next two quarters are expected to be busy seasons for initial public offerings (IPOs) in India. The biggest ever public issue, that of LIC, is expected in Q4.
Listing flurry: In just the December quarter, companies may raise as much as ₹80,000 crore via 35 IPOs. Additionally, 64 draft prospectuses have been filed with market regulator Sebi. This will beat the record of ₹67,147 crore raised through 36 IPOs in 2017, boosted by the sharp spike in the indices.
Internet spillover: A slew of consumer-tech startups are leading the way. MobiKwik has received the nod for its ₹1,900 crore issue. Oyo has also filed its draft papers even as it fights legal battles. The mega ₹1 lakh crore issue of LIC, likely in March 2022, will be a crucial test for India’s IPO appetite at the end of a long feast.
October Scares The Pandemic Blues
The cinema is back. The ultimate escape from being trapped indoors for months at end, squinting at screens not large enough to enthrall but enough to entertain. Box office collections in the US have started to point to a slow and steady recovery. In fact, October recorded the highest collections since the pandemic began, a whopping $638 million.
What made this happen? A combination of three highly anticipated releases. Dune, No Time To Die (the latest James Bond), and Venom 2. To take a step deeper into pop culture, the latest James Bond was Daniel Craig’s goodbye and considered the darkest since he took up the mantle of the spy. Venom 2, spoiler alert, finally crossed the Sony Universe with the Marvel Cinematic Universe. And finally Dune. The 2-hour 40-minute treat has people glued to the seats and coming back for more.
More coming: The next two months have three major releases lined up: Marvels’s Eternals, Spider Man, and Matrix 4.
India’s Informal Economy Shrinks
India’s informal economy has shrunk to less than a fifth of the GDP compared to more than half three years ago, thanks to the implementation of GST, accelerated digitalization, expansion of the gig economy, and demonetisation, an SBI report said.
Govt’s focus: Over the last couple of years, a number of measures have been taken by the government to speed up the digitalisation of the economy, which increased the rate of formalisation. At least ₹13 lakh crore of activity has come under the formal economy in this period.
Workers: Based on payroll data, the report estimates that over 36 lakh workers have moved to the formal sector. The e-Shram portal, the national database of unorganised workers through which social security schemes are facilitated, now has over 5.7 crore registered workers.
The Signal
Some analysts are skeptical. One believes that the size of the informal economy is overstated by about 10 percentage points. Pre-pandemic estimates suggest about 70% of workers in the economy did not even have written contracts. Anyhow, the informal economy has suffered the most during the pandemic, reducing its size. There is no exact data available on small establishments and jobs in the informal sector that vanished due to the combined stress of demonetisation, GST, and the pandemic. However, the widening reach of high-speed Internet, proliferation of fintech which has eased transactions, and digitalisation of a number of government services have indeed made it easier and cheaper to operate in the formal economy.
The World Bank Wants You To Buy An EV
NITI Ayog and the World Bank are putting together a $300 million fund to help create the market for electric vehicles (EVs) in India.
Buffer for banks: The fund will act as a buffer against potential defaults by those who borrow from banks to buy EVs. Currently, banks charge interest rates of 20-25% on EV loans. That is because the vehicles have low resale value, making them unattractive as collaterals. The NITI-World Bank fund would share the losses with banks in the event of first-time defaults by borrowers. That could bring down the interest rates to about 10-12%.
Costly EVs: Several banks and non-bank financiers have tied up with EV makers to fund vehicle purchases but adoption is low because of a lack of charging infrastructure and high prices. High-powered scooters, for instance, cost over ₹75,000 even after subsidies. A premium car such as a Tesla could cost about ₹35 lakh.
Meme Coin Goes For the Killing
Indians are getting rich, courtesy of a new asset class – meme coins. For those invested in Shiba Inu, a token inspired by the Japanese dog meme, returns have been as high as 4x in just the last three days.
Growing popularity: Meme coins, that crossover between finance and culture, buoyed more so by the latter, have seen a sudden spurt in interest. Dogecoin has a market cap of $38 billion while Shiba Inu is valued at $40 billion. As per WazirX, the Indian crypto exchange, Shiba Inu had a record 24-hour trading volume of more than $560 million on October 27.
Fueled by what? Cryptic tweets from Elon Musk have time and again boosted interest in Dogecoin. Meanwhile, over 450,000 Shiba Inu supporters have signed a petition demanding the coin be listed on Robinhood. It’s safe to say that meme coins, just like their namesakes, are driven not by fundamental value but rather a community following.
What Else Made The Signal?
Sporty Coke: Coca-Cola is acquiring sports drink brand BodyArmor for $5.6 billion, signalling a closer battle with Gatorade.
Ka-Ching! Ten-minute grocery delivery platform Zepto has raised $60 million funding while neo-bank Fi is now valued at $315 million after a $50 million raise.
Skyrocketing: After a fresh hike of ₹266, the price of LPG commercial cylinders has crossed ₹2000 in Delhi.
Triumph: Japan's PM Fumio Kishida has declared victory for his ruling Liberal Democratic Party, a month after taking oath.
Epstein effect: Jes Staley, chief executive of Barclays, has quit following a regulatory probe into his relationship with sex offender Jeffrey Epstein. He will be replaced by CS Venkatakrishnan.
Big collection: GST collection for the month of October topped ₹1.3 lakh crore, the second-highest ever collected.
FWIW
HUMAN ONE: Mike Winkelmann, better known as Beeple, has made his first physical sculpture. Winkelmann, who triggered the global NFT craze when he sold a digital collage for $69 million at Christie’s, has made a 7–foot-tall, white mahogany column covered with LED screens that is expected to fetch $15 million. The screen shows a shimmering image of an astronaut. It comes with an NFT too.
Good mosquitoes: Indonesia is breeding mosquitoes. Researchers have bred a species of the insect which carries a bacteria that does not let viruses such as the ones causing dengue grow inside them. The bacteria, Wolbachia, itself is found in 60% of insects and is relatively harmless to humans. The idea is that the Wolbachia mosquitoes will mate with the dengue-carrying ones and produce their clones. In trials, it helped reduce dengue cases by as much as 77%.
Virus sniffers: Country-music star Eric Church has been on a successful tour since September. He performs in packed stadiums despite the pandemic and there is hardly a ripple. He travels in a bubble, promotes vaccinations, and precautions against Covid-19. Yet, the success of his tours relies on another factor, sniffer dogs. Trained to screen 400 people an hour, these dogs have kept Church and his team safe. And tours are cheaper than they would have been. Testing a huge team and workers, again and again, would have cost a huge sum.
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