Commodity supercycle, salary hikes, Musk loses $15 billion and other news
Business news and insights in under 5 minutes
“The entrepreneur always searches for change, responds to it, and exploits it as an opportunity.”
- Peter Drucker
Good morning!😀
Here’s what grabbed our attention today:
Rising commodity prices
Amazon goes electric
India Inc salary hike
📈 How did the markets fare
BSE Sensex - 49,751.41 | +0.01% ⬆
NSE Nifty - 14,707.80 | +0.22% ⬆
10-Yr Bond Yield - 6.202% | +0.070 ⬆
S&P 500 - 3,881.37 | +0.13% ⬆
USD/INR - ₹ 72.45 | -0.07% ⬇
The Nifty50 is set to be rejigged on 31 March with Tata Consumer Products set to replace Gail India in the index. It is reconstituted every six months to include the largest and most liquid Indian companies.
📰 What's happening around us
Economy
A commodity supercycle? That’s what many investment banks are predicting as prices of commodities from corn to crude and copper go through the roof. The Bloomberg Commodity Spot Index which tracks prices of 23 raw materials hit its highest in eight years, surging more than 60% since reaching a four-year low in March 2020.
A supercycle is a prolonged period of high prices as demand outstrips supply and many indicators are pointing toward it. Copper is leading a broad rally in metals, with prices doubling in less than a year and rising above $9000 per metric ton for the first time in nine years. Oil prices have doubled in less than six months, rising to the highest in over a year amid tightening supplies.
So what’s driving this? The trillions of dollars in monetary and fiscal stimulus measures introduced by governments across the world have helped in a quick economic rebound but that money is leading to commodity inflation. Another measure that is having unintended consequences is the fight against climate change. It’s threatening to constrain oil supplies and resulting in huge demand for metals used in the construction of renewable energy infrastructure, batteries and electric vehicles.
Bank of America Securities said rising commodity prices could affect earnings of 31 companies in the benchmark Nifty50 index. A higher than desirable inflation could also lead to central banks tightening money supply and raising interest rates which could further impact corporate profits.
E-Commerce
Amazon India is partnering with Mahindra Electric to deploy 10,000 electric three-wheelers to its fleet of delivery vehicles by 2025. Nearly 100 Mahindra Treo Zor three-wheelers have already been inducted into the service by the e-commerce giant in seven cities - Bengaluru, New Delhi, Hyderabad, Ahmedabad, Bhopal, Indore and Lucknow.
These electric vehicles are in addition to the global commitment of 1,00,000 electric vehicles in its delivery fleet by 2030, announced in the Climate Pledge signed by Amazon. Rival Flipkart already has EVs running in Delhi, Mumbai, Hyderabad, Bengaluru and other cities as part of their commitment to transition to a fully electric fleet by 2030.
Ride-sharing companies such as Uber and Ola, earlier announced their intent to transition a large part of their fleet to EVs and with e-commerce players also jumping on the sustainability bandwagon, it will be a big boost for EV manufacturers in India.
Corporate
Want to know how much of a salary hike you can roughly expect in your next performance appraisal? A survey by global professional services firm Aon says that Indian companies are likely to offer a 7.7% salary increase in 2021, better than most major economies.
The study analysed data across 1,200 companies from more than 20 industries and found that 88% of the surveyed companies intend to increase salaries this year, up from 75% in 2020. It also noted that employee attrition – employees retiring or resigning – dropped to 12.8% in 2020, the lowest in the last few years. Surely a global pandemic might have had a say in that.
But a salary hike won’t necessarily mean a higher cash-in-hand for employees as companies may choose to pay higher provident fund contributions as per the proposed definition of wages under the new Labour Codes.
E-commerce, venture capital firms, IT and life sciences are expected to roll out the best pay hikes while hospitality, real estate/infrastructure, retail and engineering services will be laggards.
🎯 News Bites
China took the top spot as India’s trade partner in 2020, despite the government’s efforts to curb trade with the neighbour after the border skirmish. Total imports from China at $58.7 billion were more than India’s combined purchases from the US and the UAE, which are our second and third largest trade partners.
Indian pharma companies in a bid to reduce dependance on China are looking for local suppliers of Active Pharma Ingredients (API) or making them in-house. Even though India has massive capacities for drug manufacturing, almost half of the ingredients are imported from China.
Violent fluctuations in the cryptocurrency markets continued yesterday with Bitcoin dropping as much as 23% from the highs hit on Sunday after negative comments from Elon Musk and US Treasury Secretary Janet Yellen. Meanwhile, billionaire investor Rakesh Jhunjhunwala has backed a ban on cryptocurrencies in India saying “it’s speculation of the highest order”.
Elon Musk is no longer the richest person in the world, thanks to a staggering $15 billion single-day loss he suffered when shares of Tesla dropped 8.6%. The decline was fueled by his comments on Twitter that prices of Bitcoin and Ethereum seem high. Tesla had previously invested $1.5 billion in Bitcoin.
After a brief standoff with the Australian government that led to a complete blackout of news on Facebook, the social media giant will once again allow users and news publishers down under to share and post links to news articles. The announcement comes after the government agreed to make a few changes to the proposed law which aims to make technology companies pay for hosting news content.
Korean automaker Hyundai unveiled the Ioniq 5 electric crossover SUV on Tuesday, set to hit international markets this year. The retro styling and the quick charging battery tech are sure to attract buyers.
That's it for today. Adios!
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