Wanted: someone to foot the bill
Also in today’s edition: Decathlon’s fighting fit in India; IIM-B > IIM-A; Israel loses support; The digital ad boost is only temporary.
Good morning! Toothbrushes, shirts, utensils and now crash barriers… bamboo is really the Tom Hanks of nature, fitting into every role with ease. The Economic Times reports that the Government of India is looking at bamboo to replace steel crash barriers on highways. That’s because the high cost and inconsistent supply of steel are big deterrents. Bamboo not only fares well in these aspects, but is also ecologically sustainable and a boon for the rural economy. A true gem! ✨
Soumya Gupta and Adarsh Singh also contributed to today’s edition.
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The Market Signal
Stocks & Economy: It is testimony to how uncertain the world has become that Goldman Sachs is setting up an institute to advise clients on geopolitical developments and technological disruption.
Robust quarterly performance by US retailer Amazon and chipmaker Intel, which came after the US markets closed, wrestled Asian equities out of the bear grip they had been this past few days.
Indian shares are likely to follow them as early trend in the GIFT Nifty indicates a positive opening. Stocks were routed on Thursday on global uncertainties. The BSE Sensex has so far lost over 2,600 points in October wiping off nearly ₹10 lakh crore ($120 billion) in investor wealth.
The US economy expanded by 4.9% in the third quarter, much faster than expectations. That presents the Fed Reserve with a quandary over interest rates.
CONSUMER
Fitness Is My Passion…
…or at least, buying fitness stuff. Indians are stocking up on cheap clothes, shoes, and equipment from Decathlon. Its India unit reported just under ₹4,000 crore (~$480 million) in sales for FY23, up 37% year-on-year, more than the local units of rivals Adidas, Nike, and Asics combined.
‘Broken’ record: Indians are breaking shopping records this festive season. Already, retailers have sold over ₹47,000 crore (~$5.65 billion) in gross merchandise value (before discounts and returns). So much so that Indians are ditching debit cards for UPI, while credit card e-commerce transactions are up 22% year-on-year. Yet, online retailers Flipkart and Amazon are racking up losses as they fuel a discounts frenzy.
Diamonds aren’t forever: Not this festive season. China’s recession, the Russia-Ukraine war, and now, the Israel-Gaza conflict have hurt global demand for polished diamonds, pushing their prices to a nearly 20-year low.
EDUCATION
As Hard As A-B-C
By which we mean cracking the alphabet isn’t easy when it comes to India’s B-schools. The ‘A-B-C’ IIMs are in the QS World University Global MBA Rankings 2024. IIM Bangalore has beaten IIM Ahmedabad for the top Indian spot (48th globally), followed by IIM Calcutta and the Indian School of Business.
D for Distrust: Rankings are easy, but can IIMs fight for autonomy? The institutes are battling a central government that wants more control over how they run. This year, it passed a bill making the President of India a ‘visitor’ at all IIMs, with powers to review their work and nominate their chair.
E for Exits: The government says IIMs are mismanaging their affairs so much that it’s forced to step in. Among the goof-ups: IIM Rohtak director Dheeraj Sharma being accused of fudging qualifications, and two IIM Calcutta directors exiting in quick succession after fighting with the board.
🎧 The tussle for autonomy over India’s B-schools. Also in today’s edition: Amazon isn’t giving up on live commerce in India. Listen to The Signal Daily on Spotify, Apple Podcasts, Amazon Music, Google Podcasts, or wherever you get your podcasts.
ENERGY
Not Enough Dough For This Switch
You would have read in this newsletter yesterday about US energy giants muscling up to prepare for, if not push back against, peak oil as predicted by the International Energy Agency.
That is just one side of the story. On the other is the user on whom would depend the pace of green tech adoption.
Electric vehicle sales, for instance, are not expanding fast enough. Not that users are not buying. China EV sales grew 22% and Europeans bought 14.3% more battery-run vehicles in September. Quarterly sales crossed 300,000 units for the first time in July-September in the US. But carmakers are worried high interest rates will turn off buyers.
The Signal
Central to the world transitioning to green energy is availability of affordable finance for both industry and consumers. Companies are reluctant to bear the massive costs and likely temporary losses in the transition period. General Motors and Honda ended a $5 billion project to make low-cost EVs. Tesla is slowing down work on its Mexico factory. Battery makers such as South Korea’s LG are also expecting EV sales to slow next year. Shell is scaling back development of hydrogen-powered light passenger vehicles. Banks are unwilling to finance oil refiners.
Companies have to lay out clear pathways to net-zero if they hope to secure funding. And consumers won’t take to EVs without cheap credit. The G20 summit in New Delhi had estimated that about $4 trillion will be required annually for clean energy to meet net-zero emission targets.
GEOPOLITICS
Israel Is Running Out Of Friends
“War is politics by other means, and this war is increasingly politicised”. So observes The Economist, which details that Israel PM Benjamin Netanyahu is at loggerheads with his war cabinet while the country sends ground forces into Gaza.
There’s disunity in western governments’ official positions too. Germany, a longtime Israel ally, refused to criticise the UN after Secretary General Antonio Guterres declared that Palestinians were subject “to 56 years of suffocating occupation”. While the US unequivocally supports Israel, several EU countries are calling for humanitarian ceasefire. Turkey has deemed Hamas a liberating force.
Israel’s efforts to shape the social media narrative is also backfiring, in no small part because of eagle-eyed users.
Kids on online gaming platform Roblox—Roblox!—are hosting pro-Palestine protests.
It’s unlikely to help that Israel has roped in blacklisted spyware Pegasus maker to track hostages in Gaza.
TECH
Subtracting From The Ad Optimism
The Q3 2023 earnings of Meta, Alphabet, and Snap reveal that digital ad sales are on the upswing. Meta reported some standouts, such as Chinese advertisers spending big and a 13% increase in gross ad revenue in India.
But the optimism is shortlived. These companies have indicated so by citing the Israel-Hamas war and (resulting) macroeconomic volatility. The ad industry is already experiencing headwinds in the Russia-Ukraine war, rising interest rates, and inflation.
As Financial Times notes, Meta’s good quarter was thanks to extensive cost-cutting measures to observe a ‘Year of Efficiency’. But the company is expecting an 11% increase in expenses next year, probably to expand AI-everything. Any squeeze in the digital ad market will make it harder for all three companies to fund big AI bets.
X/Twitter is the least fortunate. A year since Elon Musk bought the platform, neither ad nor subscription revenue has picked up.
FYI
Fighting for their lives: India will contest the death penalty verdict passed by Qatar against eight former Indian Navy personnel; the men were sentenced after allegations that they spied for Israel.
Challenge to Ambani: Jindal (India), a company owned by the family that runs Jindal Poly Films, has made a bid for the bankrupt Future Enterprises.
RIP: Former Chinese Premier Li Keqiang, who stepped down in March 2023, passed away in Shanghai after suffering a heart attack.
Greenbacks for green plans: Adani New Industries is in early stage talks with lenders to raise $4 billion to develop manufacturing plants for low-cost green hydrogen, Bloomberg reports.
🔋🚗💰: Ola Electric has raised ₹3,200 crore ($385 million) in debt and equity from State Bank of India and Temasek-led investors.
Another shooting tragedy: A manhunt is underway in the US after an unidentified man opened fire at a bowling alley and restaurant in Lewiston, Maine; at least 22 people have been reported dead.
Shopping for approval: Reuters reports that TikTok and YouTube are considering applying for e-commerce licences in Indonesia, a month after the country banned e-commerce transactions on social media.
THE DAILY DIGIT
17%
The median attrition rate among permanent employees of BSE100 firms in FY23, up from 10% in FY21. Women quit their jobs more often than men did. (Mint)
FWIW
Party pooper: Airbnb is cracking down on home parties due to homeowner complaints. The company has implemented a global ‘party ban’ by penalising offenders, resulting in a 55% decrease in reported parties. To achieve 100% compliance, Airbnb is now utilising AI. The AI identifies red flags like account creation date, same-town property rentals, short stays, and specific booking dates (e.g., New Year's Eve). Bookings meeting these criteria are either prevented or redirected to partner hotels. If only AI could fix those exorbitant cleaning fees.
Flu alert: The British Antarctic Survey has detected the first case of bird flu in the Antarctic. The survey found Highly Pathogenic Avian Influenza (HPAI) in the brown skua populations on Bird Island, South Georgia. They believe the birds carried the disease on their return from migration to South America. OFFLU, a network of avian influenza experts, had last issued a warning back in August about the immense negative impact it’d have on the avian population of the region, given their isolation and susceptibility to the virus.
Luddites incoming: The city of angels doesn’t want robotaxis. Los Angeles lawmakers noted in a press briefing that robotaxis by companies like Waymo and Cruise do not belong in their city. They cited threats to pedestrians, cyclists, motorists and job losses as the reasons behind the move. The International Brotherhood of Teamsters labour union was also present at the briefing, indicating its influence behind the decision. While Cruise refused to comment on the matter, Waymo issued a generic statement about “working transparently with lawmakers”. Looks like a storm’s brewing.
2216 people dead?!!