This week, I came across a news article which featured in Daily Mail in the UK about 20 years ago. Here is the article.
James Chapman, who wrote this piece, a graduate from University of Oxford, eventually went on to become Director of Communications at UK treasury and was named one of the top 100 connected people in the island. A guy like him got internet wrong. A lot of parallels are now being drawn between this and cryptocurrencies. Fans of digital currencies are saying that bitcoin is the next internet. Is it? Could it be?
Nassim Taleb meanwhile said on Twitter that he sold all of his bitcoins when it hit $50,000 last week and has now turned bearish. Bill Gates on the other said this week that if you have any less wealth than Elon Musk, you shouldn't be considering buying Bitcoin. I guess I can only speak for myself 🙂
IN TODAY'S NEWSLETTER
News in brief
Cover story - Why did the markets crash this week?
Quiz, thought for the day, crypto news
Game : Price is right
In case you missed it : Delicensing electricity distribution
MARKET UPDATE (WEEK ON WEEK CHANGE)
Gold (per gram)
NEWS IN BRIEF
India is out of the recession. The Indian economy recorded 0.4% GDP growth in the October-December quarter – Thanks in large measure to government spending. But COVID-19 cases are starting to surge again in Maharashtra and we are hoping that this doesn’t lead to more local lock downs.
SBI is preparing to list its mutual fund arm in what could possibly be a $1Bn IPO. At $1Bn, it could be one of the largest ever IPOs in India and just after SBI cards and payment services’ $1.4Bn listing. SBI’s mutual fund is the largest in the country and has made rapid progress in the last few years both on AUM and fund performance fronts.
Shares of RailTel corporation of India defined the market rut and listed at a 20% premium to issue price on Friday this week. It was of course oversubscribed by silly-o times
DHFL was back on news again this week after the company submitted resolution plans to the NCLT backed by Piramal capital and housing finance limited.
Maruti Suzuki said this week that it has partnered with IIM Bangalore to incubate 26 mobility related start-ups. Some of the very interesting start-ups within that pack included gypsee.ai(AI based driving assistant), clearquote.io (vehicle inspection through AI) and kuldew.com (white label solution for car rental businesses)
The world’s largest rubber glove maker, Malaysian company, Top Glove this week announced that it plans to list its shares in Hong Kong.Glove makers were in focus at the onset of the pandemic as they struggled to meet the surging demand. The vaccine roll-out has since cooled demand for their products and their stocks.
GAME : PRICE IS RIGHT
This is the Rolex Daytona, a mechanical chronograph wristwatch designed to meet the needs of racing drivers by measuring elapsed time and calculating average speed. It is equipped with a tachymetric scale, a sweep seconds hand for reading to 1/8 of a second, and elapsed-time hours and minute displays. Its Rolex calibre 4130 has the particularity of using a vertical (rather than lateral) clutch to activate the chronograph and was engineered to feature a reduced number of components for greater reliability. The minute and hour systems of this series is simplified with one single mechanism placed on a side of the movement (used to consist of two mechanisms placed on both sides of the movement). Your job now is to guess its price!
One British company listed in the London Stock Exchange produces 40% of the whole world’s yearly platinum output & 30% of all diamond produced in a year. Can you name this company?
Why did the markets crash this week?
The SENSEX and NIFTY dropped as much as 4.2% on Friday’s intra-day trade posting one of their worst single-day losses since March 2020. It wasn’t just an India problem – the decline was global. CSI 300, the Shenzen stock exchange in China, dropped 2.4%, KOSPI (Korean) index was down 2.8% and TAIEX (Taiwan) dropped 3%.
And why? This is why.
10-year government bond yields have been consistently increasing since the beginning of this year. The above chart shoes the trend for Indian government bonds 10Y and US government bonds 10Y.
What does that even mean? Hit the link to read more.
Power generation, transmission and distribution businesses in India have traditionally been facilitated by government owned enterprises since independence. Around 1991, while power distribution continued to be licensed to state entities, power generation was opened up to the private sector in order to encourage more competition and to meet the growing demands of the country. There was just one problem – the State Electricity Boards (SEBs) which distributed electricity to end consumers were in such poor financial health that they could hardly be expected to pay for power generated by private companies. This led to the recognition that fixing the financial health of these SEBs took priority. A number of measures were announced in support of fixing the DISCOMs’ (distribution companies) books, but most of it never really delivered results. Why? Well, fixing DISCOMs’ books actually would require state governments to increase tariffs to end consumers. Even me, with my little political astuteness, can tell you that this wasn’t going to get any votes. But fairly soon, the state governments realised that they could not afford to play politics around power sector issues, quite simply because there is only so much the DISCOMs could afford to subsidise. Their books got stretched, they were unable to pay to buy electricity from generating companies leading to power cuts – which proved even more unpopular among the population base.
One of the proposals that has been on the table for a long time now is to allow the participation of private sector in electricity distribution and permit ‘open-access’ to the transmission and distribution system enabling customers to obtain electricity from any supplier. On Thursday, the Prime Minister announced that the government will enable just that. What did he really mean and how is that going to affect your electricity bill? Read Further.
Bitcoin’s price fell as much as 6% on Friday and was trading at its lowest in over 2 weeks as low as $44,451.
We said a new Bitcoin ETF came out Canada last week. Ethereum is going to be getting its own ETF next said, US based digital investment house, CoinShares!
Elon Musk needs to make up his mind about Dogecoin. He said ‘Dojo for Doge’ on twitter and like that, Dogecoin’s price went up by 25%!What sorcery is this!
ANSWER TO QUIZ
Anglo American Plc
is the name of the company which produces 40% of all platinum and 30% of all diamond in the world. It is the majority owner of diamond producer De Beers which at one time controlled nearly 90% of the diamond market. It is also one of the largest miners of copper, nickel, iron and coal.
THOUGHT FOR THE DAY
Or perhaps for the love of it, Raghu?
ANSWER TO PRICE IS RIGHT
That’s what a Rolex Daytona costs. It comes highly recommended as a good gift option. Oh and, on a totally unrelated subject, my birthday is just around the corner 🙂
The Chinese aren’t going to eat much Hawaiian pizzas for a while now as the country bans the import of ‘pineapples’ from Taiwan. Bloomberg
Watch this interesting video about the economics behind expensive watches & veblen goods. WSJ
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