Govt tightening grip, Xiaomi doubles down, NFT craze and other news
Business news and insights to jump start your day.
“Optimism is the one quality more associated with success and happiness than any other.”
- Brian Tracy
Good morning!😀
In today’s edition, we look at:
India tightens grip on social media, OTT platforms and digital news outlets
Xiaomi doubles down on India
World’s largest crypto exchange going public
📈 How did the markets fare
BSE Sensex - 51,039.31 | +0.51% ⬆
NSE Nifty - 15,097.35 | +0.77% ⬆
10-Yr Bond Yield - 6.184% | +0.036 ⬆
S&P 500 - 3,829.34 | -2.45% ⬇
USD/INR - ₹ 72.41 | +0.13% ⬆
The Rs 625-crore initial public offering of agrochemical manufacturer Heranba Industries was subscribed 83 times on the issue’s final day.
The shares of healthcare and wellness products distributor Nureca made a stellar debut on the bourses at a premium of 59% and ended the day up 66% up from its IPO price.
U.S. stock indices closed sharply lower on Thursday with investors spooked by bond yields rising rapidly to its highest level in a year. Rising bond yields indicate that investors are worried about inflation which could prematurely cut the central bank’s easy-money policy.
📰 What's happening around us
Tech
The Indian government has announced new rules to regulate social media, OTT platforms and digital news outlets. The Information Technology (Guidelines for Intermediaries and Digital Media Ethics Code) Rules 2021, aimed at giving the government greater control over messaging and streaming platforms, is likely to have a far-reaching impact on digital media.
Messaging apps like WhatsApp and Telegram have been mandated to identify the originator of objectionable content, which may force these companies to dilute end-to-end encryption of messages. Facebook, Twitter and other social media companies will now have to adhere to stricter timelines to take down unlawful content after being served either a court order or a notice by an appropriate government agency.
Till now, OTT platforms have managed to operate in the country without having to censor much of their content. Going forward, they would have to self-classify the content into five age-based categories as is done by films and TV currently. Meanwhile, Publishers of news on digital media would be required to observe norms of journalistic conduct of the Press Council of India and the programme code under the Cable Television Networks Regulation Act, similar to their print and TV peers.
Tech
Even though an anti-China wave swept across the country last year, putting money where your mouth is, is a tough thing to do when you consider the outstanding value the Chinese offer. And consumer electronics firm Xiaomi, unaffected by the anti-China sentiment, is setting up three new plants to keep up with surging demand.
Xiaomi is the leader in both the smartphone and smart TV segment in India, and according to IDC, shipped 41 million smartphones in 2020, cornering a 27% market share. It also holds close to 15% share in the TV market. Even though smartphone shipments were lower by 6% in 2020, it wasn’t down due to lower demand, but because of supply disruptions as a result of the lockdowns.
The three new plants are being set up, not just to meet growing demand, but in order to avoid a repeat of the supply disruptions. Last year, the company had to import finished handsets from China on a mass scale, something it hadn’t done in the past few years.
Nearly 75% of the components used in Xiaomi phones are locally sourced according to Manu Kumar Jain, MD of Mi India, and with the move to expand capacity, 99% of the handsets will now be made in India.
Cryptocurrency
With the chatter about cryptocurrency seemingly everywhere, the world’s largest cryptocurrency exchange Coinbase, is set to become a publicly-traded company. It is seeking a direct listing on Nasdaq even as recent trading of the company’s shares in private markets value it at an eye-watering $100 billion.
While an initial public offering (IPO) will include the company raising money by issuing new shares, in a direct listing, no new shares are issued and the offer typically includes sale of existing shares by founders, earlier investors and vested employees.
The cryptocurrency exchange generates most of its revenues from transaction revenues and had 43 million verified users in 2020, with 2.8 million making transactions monthly. Coinbase more than doubled revenue to $1.14 billion in 2020 as volumes on the exchange increased and the company swung to a profit of $322 million.
Despite the strong financial performance, the $100 billion valuation may be a bit hard to swallow for some, considering Intercontinental Exchange, which owns the world’s largest stock exchange NYSE, among a host of other exchanges, is valued at only $63 billion.
However, one thing going for Coinbase is its massive growth potential as cryptos become more mainstream. But it’s not without its risks as there is a lingering threat of regulation with governments and central banks across the world not taking too kindly to the crypto boom.
🎯 News Bites
Nirav Modi, the diamond merchant wanted in India for his alleged involvement in the Rs 14,000 crore Punjab National Bank (PNB) fraud, lost his legal battle against extradition from the UK. But it could still take months before Indian authorities can bring him back given that there are many rounds of appeals that could come in the way.
With petrol prices at record levels, food delivery firm Zomato has revised the remuneration of its delivery partners to accommodate the fuel price hike. Rival Swiggy is also expected to follow suit.
The newest entry to the unicorn club is Infra.Market, a four-year-old startup that runs a marketplace for real estate and construction materials. The startup sells to more than 400 large clients and 3,000 small retailers.
After EU and Australia, it looks like Google has trouble brewing in India. The Indian Newspaper Society (INS), which represents print media houses, on Thursday asked Google to increase the publisher share of advertising revenue to 85%, pay a fair value for content generated by news media and ensure credible newspaper content pops up in search.
Major European banks have launched the European Payments Initiative (EPI) aimed at creating their own payments network by 2025 to rival American corporations Visa and MasterCard.
In the world’s largest automobile market, SAIC Motor is reportedly massively outselling Tesla in China with its electric vehicles that sell for just $ 4,465. The four-seat Hong Guang Mini has a top speed of 100 kph and an estimated cruising range of 200 km.
Weekend Recommendation
NFTs or non-fungible tokens are all the rage right now in the US with some of them selling for millions online. We find the craze a bit hard to fathom but then again, we never really understood why people pay millions for abstract art. Here’s a Twitter thread that simplifies what it is.
That's it for this week. See you on Monday!
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