Most profitable company, India wants chips, Insta for kids and other news
Business news and insights to jump start your day
“There are three things you can do with your life: You can waste it, you can spend it, or you can invest it. The best use of your life is to invest it in something that will last longer than your time on Earth.”
- Rick Warren
Rise and shine! 😀
It’s a new week! We’re starting this week with:
Saudi Aramco loses to Apple
India’s aims to be a force in chip manufacturing
Numbers behind the record-breaking stock market surge
📈 How did the markets fare
BSE Sensex - 49,88.24 | +1.30% ⬆
NSE Nifty - 14,44.00 | +1.28% ⬆
10-Yr Bond Yield - 6.193% | -0.010 ⬇
S&P 500 - 3,913.10 | -0.06% ⬇
USD/INR - ₹ 72.50 | -0.03% ⬇
The initial public offer of mobile gaming company Nazara Technolgies witnessed massive demand with the issue subscribed 175.5 times. Meanwhile, the other issue that closed on Friday, that of Suryoday Small Finance Bank, saw tepid response with the issue subscribed only 2.37 times.
📰 What's happening around us
Corporate
Apple has officially overtaken Saudi Aramco to become the most profitable company in the world after the oil major’s profit plunged 44% in 2020 to $49 billion. Apple, the most valuable public company in the world, reported a profit of $59 billion in 2020.
However, Saudi Aramco maintained dividend payout for the year at $75 billion. Unlike other companies that pay dividends from the profit it earns during the year, Aramco is borrowing to pay dividends in order to fulfil the pledge the management made in 2019 – $75 billion in annual dividends for the next five years. Almost all of that amount will go to the Government of Saudi Arabia which owns more than 98% of the company.
It’s been a topsy-turvy year for Aramco with global crude oil prices plummeting more than 70% in 2020 before rising nearly 350% from the lows. It seems like the kingdom wants to recoup some of its lost revenue as they, along with other petroleum-producing countries, have opted to restrict supply to keep oil prices high. Expect Aramco to retake the crown from Apple in 2021.
Manufacturing
The pandemic-led demand swings that resulted in a global semiconductor shortage has left electronics and auto majors staring at billions of dollars in lost revenue. The shortage doesn’t have a quick fix, but the largest semiconductor company in the world, Taiwan Semiconductor Manufacturing Company (TSMC) is reportedly increasing capital spending by about 50% to as much as $28 billion this year. Other companies are also expected to follow suit and expand capacities.
Wanting to get a piece of the action, the Indian government is trying to lure global chip majors from Europe, Japan, South Korea, Taiwan and the US to set up chip manufacturing plants in India. This is part of making India’s electronics system design and manufacturing a $400-billion industry by 2025.
Even though earlier attempts to attract major chip makers in 2007 and 2013 were unsuccessful, the government is hoping that the recently announced production-linked incentive (PLI) scheme and other measures will help India’s ambitious plans of being a global hub.
Markets
A year ago around this period, countries around the world started going into lockdowns to control the spread of the coronavirus. Uncertain about how economies would recover from such an unprecedented situation, equity markets were in free-fall. At that point, if you’d said markets would go on a record-breaking wealth creation run over the next one year, people would have called you delusional.
But in FY21 so far, equity investors have added a record Rs 89.95 lakh crore in wealth with the markets rising 79%. The market value of all listed companies on the Bombay Stock Exchange (BSE) has risen from Rs 113 lakh crore at the beginning of April 2020 to the current Rs 203 lakh crore.
The biggest contributor to the stock market rally has been the huge inflow of foreign capital as investors across the world sought higher returns in a world where the interest rate of many developed countries had dropped to near-zero. Up until March 10, foreign portfolio investors have pumped in $36 billion into equities this financial year, the highest since FY13. Now the trillion-dollar question is – what will happen in the next 12 months?
🎯 News Bites
Ban or block seems to be the mantra. The Indian government is considering the option of blocking the IP addresses of companies or exchanges on which trading in cryptocurrencies is happening.
India’s IT major, Tata Consultancy Services (TCS) is rewarding its 4.7 lakh strong workforce for delivering growth amid the global pandemic by rolling out salary hikes. This is the second salary increment within six months.
While the rest of the world worries about the possibility of interest rates rising, investors in Turkey are worried about interest rates falling after controversial President Recep Tayyip Erdogan sacked the country’s central bank chief who was doing well to reign in Turkey’s currency crisis. The replacement chief is likely to resume an easy-money policy that had sent the Turkish Lira crashing to historic lows.
Brazil fined Apple $2 million for not including a charger in the recently launched iPhone 12 series, accusing the tech giant of allegedly engaging in misleading advertising, selling a device without the charger and unfair terms.
To catch them young, Facebook is building a version of Instagram for kids under the age of 13 years to allow them to “safely” use Instagram under parent-supervision.
That's all for today. Have a great day and a productive week ahead!