New innings at the SEBI is the big news story this week, with Finance Secretary Tuhin Kanta Pandey taking over as the chief of the market regulator for a three-year term. The street will be watching for what the change in guard brings about in policy changes.
Speaking of new things, shareholders of Nvidia are now getting used to a new normal, with the stock correcting sharply towards the latter half of the week after delivering a good-but-not-great set of quarterly results. Contrast this with shares of British aerospace giant Rolls-Royce, which jumped on upbeat outlook and profit beat.
In new moves, Hungary is planning to impose profit curbs to contain soaring food prices, and yields in US are down due to slowing business confidence.
Speaking of confidence, or lack of it, an analysis of earnings transcripts by Bank of America going back to 2004 showed that sentiment on earnings calls of small-cap companies in the US has never been as negative in comparison with their large-cap peers. The good part for India is that the third quarter gross domestic product data shows some uptick sequentially, with the Q3 GDP growing 6.2%.
Here are the top talking points for the week gone by:
Trump Moves — New But Not So Necessarily
Trump reiterated his threats against US allies Canada and Mexico, as well as a new threat to impose an additional 10% tax on Chinese imports. March 4 is the D-Day it seems for all of this. Amidst all this, he welcomed UK Prime Minister Keir Starmer to discuss the future of economic relations between their nations. Trump expressed optimism about the potential for a robust trade agreement, stating there was a strong chance at arriving at a “terrific trade deal” that would benefit both the United States and the United Kingdom. He further emphasised that such a deal would eliminate the need for tariffs, suggesting a smoother and more cooperative trade relationship could be on the horizon for the two allies. Trump is also slated to meet Ukraine’s Volodymyr Zelenskyy, which is expected to keep this weekend full of newsflow.
New Moves Reiterated By China
China plans to inject at least $55 billion of fresh capital into several of its largest banks, including Agricultural Bank of China and Bank of Communications, as part of a broader effort to stimulate economic growth, as per various reports. This move aims to bolster the banks’ Tier 1 capital, addressing challenges posed by sluggish credit demand, interest rate cuts, and a surge in bad loans exacerbated by the ongoing property sector crisis. The capital injection, expected to be completed by the end of June, may be supplemented by an additional 1 trillion yuan raised through special treasury bonds.
The Chinese government’s intervention is crucial, as the country’s big banks face growing demands on their balance sheets, including supporting struggling borrowers and providing a financial safety net. By recapitalising these banks, China aims to stabilise its financial system and stimulate economic growth.
Another indicator is the frenzy for IPOs. Mixue Group’s public offer was literally flying off the shelves. Individual investors in Hong Kong went all in, applying to borrow a whopping HK$1.8 trillion ($234 billion) to get their hands on the stock. That’s thousands of times more than what was available, much like the Bloks Group Ltd. IPO frenzy all over. The demand was so crazy that underwriters had to stop taking orders a day early.
I May Die, But Will Kill You For Sure
UltraTech Cement is foraying into the cables and wire segment. The Aditya Birla Group entity announced its entry as part of the strategy to become a comprehensive ‘Building Solutions’ provider, and it led to a serious derating in the multiples of the incumbents, with all three players falling around 20% in trade on Thursday.
Nuvama, as well as a few other analysts, remained constructive. Nuvama said that given that C&W industry is likely to sustain strong 13% CAGR (similar to FY19–24) and emerging opportunities in exports, entry of Ultratech may have only a modest impact, at best, in FY28 or onwards (less than 5% of the total industry then). Nuvama reasons that this is on account of — i) fragmented nature of C&W industry (largest player has less than 18% market share); ii) distribution nuances; and iii) approvals for cables. Time will tell whether this is true or not, but for now, the street punished the incumbents and the challenger alike, with shares of Ultratech falling around 5% on Thursday and continuing to remain sluggish on Friday.
Gold Is The Global Hedge? Not New Actually
Gold demand in Asia has never been stronger. China’s gold reserves hit a record $73.5 billion last month, while India’s gold reserves reached $70.9 billion, also an all-time high. Over the last 10 years, India’s reserves have more than tripled while China’s reserves have more than doubled. Clearly, both China and India have been diversifying out of US Treasury bonds and reducing dependence on the US dollar. I remember a note from Sridhar Sivaram of Enam, as also from DSP Mutual Fund, who had data which showed that over the last 15 years, gold has given an almost identical return as the Sensex. Clearly, its working for a retail investor as well as for central banks.
As we wrap today’s piece, I was saddened by the news of the death of Gene Hackman, who was found dead in his home. The legendary actor won multiple awards, but amongst the standout roles for me was his enactment of a brilliant but temperamental lawyer in The Firm. If you have not, then it’s worth seeing the movie. As might be the India-New Zealand match in the Champions trophy over the weekend. And in return for the fabulous piece above, my big question for the readers is — Are we on the cusp of artificial general intelligence, as Elon Musk suggests?
. Read more on Opinion by NDTV Profit.From the appointment of new SEBI chief to UltraTech Cement’s foray into cables and wires, here are the key talking points this week. Read MoreOpinion, Markets, Exclusive
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