Moonshot hits pay dirt

Also in today’s edition: What recession?; Diamonds are not forever; Same wars, another day; Statutory warning: do not post fakes

Good morning! Ronaldo fans, look away. Bloomberg reports that a set of six jerseys worn by Lionel Messi at last year’s World Cup in Qatar are being auctioned. The set also includes the jersey worn by Messi in the final. Sotheby’s (the auctioneer) expects to raise a sum north of $10 million and thus break the record for the most expensive sporting memorabilia. If that happens, the auction will give us a definitive answer to the question of how much is too much for a stinky old T-shirt?

🎧 Tesla’s electric cars face off against Toyota’s hybrids. Listen to The Signal Daily on Spotify, Apple Podcasts, Amazon Music, Google Podcasts, or wherever you get your podcasts.

Jaideep Vaidya and Adarsh Singh also contributed to today’s edition.

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The Market Signal 

Stocks & Economy:  Just when China appeared to be coming out of the long shadow of the pandemic with a bruised economy, a respiratory disease outbreak has left citizens choking and thronging hospitals. 

Officials said multiple pathogens, mainly influenza, were circulating among the citizenry and children were the worst affected. WHO is monitoring the situation and India is on high alert. 

The outbreak reflected in Hong Kong and Shanghai markets negatively but Korea and Singapore were unfazed in morning trade. The Nikkei 225 was in the red too. US investors’ risk appetite, fired up by the Fed’s easing monetary stance, remains high. Bloomberg reports that traders have become so relaxed that demand for hedging instruments is falling.

Warren Buffet’s Berkshire Hathaway sold its entire stake in Paytm’s parent One97 Communications for $164 million, booking a 40% loss on its 2018 investment. Indian markets will remain closed for Guru Nanak Jayanti. 

WEALTH

Talking To The Moon!

Automobiles and aeroplanes took them only so far. But Chandrayaan-3 literally was the moonshot that made bank for electronics circuit board maker Kaynes Technology and its founder Ramesh Kunhikannan. 

India’s space odyssey has made the 60-year-old electrical engineer a billionaire, courtesy of his 64% stake in Kaynes, whose stock rose 40% after the company’s role in Chandrayaan became widely known. Founded in 1988, Kaynes has been supplying electronic systems and design services to industries ranging from auto and aerospace to medical and defence. The expertise eventually landed the contract to supply electronics for the moon lander and rover. 

Next bet: Another moonshot. The company is planning to build a $340 million semiconductor assembly and testing factory in Hyderabad. 

Network effect: Kaynes' rise is part of ISRO’s broader strategy to foster a local supplier ecosystem for its missions, à la NASA. 

CONSUMER

Thank God It’s (Black) Friday

There’s some good news in the global worry of a slowing economy and rising cost of living: shoppers spent a record $70.9 billion on Black Friday deals worldwide and $9.8 billion in the US. 

Wooing hard: US shoppers are cutting holiday gifting budgets with rising inflation, but they turned out in bigger numbers to shop in person than in previous years. Retailers also wooed them by handing out coupons and gifts. 

UK shoppers are hunting bargains so keenly, they’ve realised Black Friday deals may not necessarily be the best. They’re also using these deals to stock up on groceries most. Just as well: data suggests that ‘porch piracy’ or the theft of delivered parcels from doorsteps has jumped 5x in the UK in the last four years. 

Meanwhile: Fast fashion retailer H&M has promised to compensate its Bangladeshi suppliers for a rise in garment workers’ minimum wages. 

GEMS & JEWELLERY

Cheap Stones Steal Diamonds’ Sparkle

What happens when rare and exclusive becomes unlimited and ubiquitous? Value erodes. That’s what is happening to the world’s most coveted baubles.

Martin Rapaport, chairman of the US-based Rapaport Group, has warned about crashing prices of lab-grown diamonds (LGDs). Now, when Rapaport issues a warning, it is a BFD because Rapaport Group’s natural diamond price list is a global benchmark. 

Steep drop: Prices have fallen 67% and a two-carat LGD now retails at $1,535, less than one-third of its price three years ago. India, a major exporter of cut natural diamonds, processing nine out of 10 diamonds mined worldwide, is ratcheting up production of LGDs too. The crash would hit producers’ margins but they are not worried as the prices are near the value-conscious local consumers’ sweet spot. 

The Signal

Artificial diamonds could be an existential threat to the industry. Leading supplier DeBeers recently slashed prices of uncut natural diamonds by 40% in a category most used in engagement and bridal rings popular in the US. The market share of LGDs in India has risen from near zero to 20% in the past three years. As synthetic gems become affordable and ubiquitous, diamond ownership itself is likely to undergo a status change. Although large stones and flawless solitaires will likely retain their allure among collectors and luxury lovers, sales of small natural diamonds, the bread-and-butter of the industry that employs thousands in India and accounts for a big chunk of the country’s export basket, will suffer. 

WAR

Time Out In West Asia, Drone Battle in Europe

Palestinian militant group Hamas and the Israeli military continued to exchange prisoners as part of a four-day ceasefire. Hamas on Sunday released 17 hostages, including 13 Israelis and four Thai citizens, while Israel let go of 39 Palestinian prisoners. 

More than 14,300 civilians have died in Gaza so far.

The deal was briefly endangered by a dispute over aid delivery in Gaza, which Reuters reported was overcome after intervention from Egypt and Qatar. Hamas has agreed to release 50 hostages for 150 prisoners in Israel.

Meanwhile, Spain and Belgium condemned the killing of civilians. Spanish Prime Minister Pedro Sanchez also called for the international recognition of the state of Palestine.

Over in Europe, hordes of Russian drones invaded Kyiv on Saturday, wounding five people. Retaliatory strikes targeted Moscow on Sunday. 

REGULATION

How Deep Is Your Fake?

The internet is so awash in deepfakes that India wants social media companies to repeatedly remind users not to post any, Reuters reports. The IT ministry may make it mandatory to do so; already, it is framing rules to regulate deepfakes. 

There has been a recent spate of ‘obscene’ deepfakes of famous Indians, including ‘AI Modi’: videos of the prime minister seemingly singing popular songs. 

Bad ads: The use of deepfakes in ads is going to be a problem as election season begins in India. In the US too, political lawyers are figuring out legal remedies for AI-generated content, without clear regulations in place. 

But you don’t need AI to run manipulative political ads. The Press Council of India issued notices to several newspapers last week over an ad modified to look like a news headline during the Rajasthan assembly polls. 

FYI

Take it easy: Markets regulator Sebi has reduced compliance for venture and private equity funds, eased norms for index providers and proposed loosening insider trading rules. 

Urge to fly: The Adani Group will square off with Emirates, Etihad Airways, and 13 others for a stake in SriLankan Airlines, the country’s loss-making national carrier.

Clear the doubt: Kota’s Allen Career Institute, backed by James Murdoch’s and former Walt Disney Company Asia Pacific president Uday Shankar’s venture Bodhi Tree Systems, is set to buy struggling edtech company DoubtNut. 

The big churn: One hundred and ten managing directors resigned from Indian companies between January and October 2023, matching the decadal record set the previous year.

Off target: A majority of Indian states are likely to miss capital expenditure targets for FY24 as revenues shrink, rating agency Icra estimates.  

Probe on: Beijing has launched an investigation into insolvent non-banking financial services company Zhongzhi for suspected financial crimes.

All-cash deals: Gujarat Titans’ captain Hardik Pandya has moved to Mumbai Indians and Cameron Green has shifted to Royal Challengers Bangalore in an IPL cricketer tradeoff. 

THE DAILY DIGIT

$15 billion

The discrepancy in estimates of trade between India and China released by Beijing and New Delhi for Jan-Oct 2023, largely due to under-invoicing by Indian importers. (The Indian Express) 

FWIW

Story-time!: Life on the internet comes with its challenges. The biggest one? Cyber-security threats. Companies shell out a good chunk of money every year to make sure employees don’t fall for phishing targets. But the results haven’t been anything to write home about. New research suggests that the answer might be a simpler one: storytelling. Peers telling employees relatable stories of falling for a cyber scam or ones that explicitly teach a lesson were found to be very effective. Clearly, there’s no pressure like peer pressure.

Sayonara: The world’s biggest iceberg, named A23a, has decided to call it quits. A23a is on the move after decades of being grounded on the seafloor in Antarctica. The iceberg is roughly double the size of London and is heading eastward at the speed of five kilometres a day. Where will it go? Will it affect any continent? All important questions to which no one really has a definitive answer. 

Kiss and tell: A team of biologists led by Dr Nicolas Fasel has found that serotine bats mate without penetration, making them the first mammals known to do so. Instead, they rely on ‘cloacal kissing’, a reproductive behaviour found in birds. Both the male and female members of the species have unique genitalia, which Dr. Fasel attributes to “a really interesting evolutionary arms race based on socio-sexual conflict”. Dr Fasel believes that the discovery could potentially lead to similar discoveries in other mammals. Cool!