Not Lovin’ It

Also in today’s edition: Fewer takers for laptops; India’s edge over China; WeCrazy for WeGovy; Cookie cuttin’

Good morning! The awards season is here and that means Michelin stars for restaurants in the UK and Ireland. As per the Financial Times, 25 restaurants were chosen for the honour with three Indian chefs bagging the accolade. Two west African restaurants, Akoko and Chishuru, also won. From keeping Indians and Africans out of dining halls to rewarding them for their culinary skills, the Brits have really come a long way. 

🎧 Can Apple make AR headsets cool? Also in today’s edition: Will a trial in a UK High Court solve the riddle of who Satoshi Nakamoto really is? Tune in to The Signal Daily on Spotify, Apple Podcasts, Amazon Music, Google Podcasts, or wherever you get your podcasts. 

Adarsh Singh also contributed to today’s edition.

The Market Signal 

Stocks & Economy: For a change, Chinese stocks provided the impetus to Asian markets after regulatory intervention and heavyweight investors tied to the sovereign shored up their free fall. Shares in Shanghai and Hong Kong markets jumped on the support. 

US equities were buoyant on Tuesday even as a JPMorgan survey predicted unexpected volatility will be the biggest risk on a daily basis in 2024. 

The Reserve Bank of Australia has, meanwhile, turned pessimistic about growth. Governor Michele Bullock said a prolonged cyclical slowdown in China was a risk to Australia whose commodities, education, and tourism sectors will be hit. But the bank will not cut rates as inflation is still outside its comfort zone. 

Indian markets shrugged off fintech firm Paytm’s troubles and continued to rise. Reports suggest the RBI may cancel its payments bank licence or supersede its board. The GIFT Nifty suggests a positive opening for Indian equities.

F&B

Dealt A Whopper

A lot more than burger patties are staying pressed at McDonald’s. The world’s largest fast food chain by footprint is a target of the pro-Palestinian Boycott, Divestment and Sanctions (BDS) movement that urges the cultural and economic boycott of entities perceived to be pro-Zionist. McDonald’s, alongside fellow-American chains Starbucks, KFC, Krispy Kreme, and others, reported “weaker than expected same-store sales” in its latest quarter, especially in MENA (Middle East and North Africa), Malaysia, and Indonesia. McDonald’s chief Chris Kempczinski says there may be no considerable upswing unless there’s a resolution on Gaza.

Boycotts against western products in countries like Egypt and Jordan are so widespread that local coffee chains and sodas (!) are benefitting from skyrocketing sales.

Save us, China: That’s McDonald’s mantra this year too. It wants to open around 1,000 restaurants in the country despite flagging consumer sentiment because it sees a golden opportunity in lower-tier cities.

GADGETS

No Clients, No Laptops

For many years, despite the rising sophistication of handheld gadgets, the laptop held its own as the personal computing device of choice for work. It still is, but 2023 was different. 

Stagnation: At about 10.8 million, laptop sales in India were the same as in 2022, when remote work peaked. But now demand from bulk buyers, IT firms, is slowing down as they struggle to renew deals and bag new contracts. Net employment at top software services companies declined for the first time ever in 2023. Firings continue apace even now while thousands of jobs are set to vanish as automation scales up. 

Surprise: Last year, the government banned laptop imports to promote local manufacturing. It rolled back the decision when companies agreed to phase-in local assembly. HP leads the laptop market with a ~30% share while Lenovo and Dell follow with 17% and ~15% shares, respectively.

ECONOMY

Dancing With The Elephant

The exit China, enter India strategy is not new but its use is now widening and accelerating. Bloomberg reports that India is the new destination for many Wall Street firms searching for high returns. India is finding a place or increasing its weight in several key indices.

Hedge funds are rebalancing after the China stocks rout that took valuations to five-year lows, prompting regulatory support and attracting even President Xi’s attention. 

The alternative: Companies and investors began looking at backup destinations after the Chinese economy failed to recover quickly enough from the twin blows of flawed pandemic management and regulatory overreach. Now deflation is hurting small exporters, and workers going home for the Lunar New Year holidays aren’t sure they’ll have jobs when they return after February 17. 

The Signal

The West’s beef with China as a rising military and technology power is helping capital flows, both long-term and short-term, to India. It is being seen at a point in its growth trajectory where China was decades ago. It helps that India has found political stability under a political party that favours big business and is willing to spend public money to build infrastructure on a massive scale. Also, China is trying to actively reduce financialisation of its economy while India is encouraging it. The strategy is highly risky for a country struggling with income inequality, lack of jobs, and employability of its youth. Unless of course it grows much faster than currently anticipated rates.

PHARMA

The World Is Not Enough

It sure feels like that for Novo Nordisk. The maker of diabetes prescription drug Ozempic and its weight loss drug counterpart Wegovy is buying one of the world’s biggest contract manufacturing firms, Catalent, for $16.5 billion.

Pivot: The deal marks a departure from the industry practice of outsourcing manufacturing for Novo Nordisk. By acquiring Catalent, it wants to fully control its supply chain. Its rival Eli Lilly pivoted to a similar strategy last year.

Unrelenting demand: Everyone wants their hands on the super drug. US prescriptions for Wegovy increased by 148% in 2023 on a year-on-year basis. In Europe and West Asia, Wegovy registered sales of $1billion in 2023. Ninety percent of US sales are covered by health insurance, while the figure is only 20% in Europe.

Meanwhile: US-India efforts to make pharma ingredients together aren't working according to plan. 

AD TECH

End Of An Era

Goodbye third-party cookies, you won’t be missed. Although, a bigger monster is on its way to replace you.

Amazon has finalised a deal with UK publisher Reach to obtain first-party customer data, following Google disabling third-party cookies—critical for tracking users’ online footprint and displaying relevant ads—in its browser, Chrome. Apple is doing the same with Safari.

The deal is significant also because the media industry, which has faced off against Big Tech over digital ads (speaking of: the trial against Google in this context starts September), is having one of its worst years already. Condé Nast slashed jobs and so did Sports Illustrated, National Geographic, The Los Angeles Times, and TIME. Reach, which publishes Daily Mirror, OK!, and several other print properties, cut 450 jobs last year.

Losing third-party cookies would be a further setback for publishers, for whom selling ads will become trickier.

FYI

Add to cart: HDFC Bank and its group companies have got the RBI’s approval to together own up to 9.5% stake each in Axis Bank, Survoday Small Finance Bank, ICICI Bank, Bandhan Bank, YES Bank and IndusInd Bank.

Pumping oil: Billionaire Anil Agarwal’s Vedanta will invest $4 billion in its oil fields to raise output to 300,000 barrels per day in three years.

No cover: Donald Trump does not have immunity from prosecution because of his status as former US President, a federal appeals court has ruled.   

Out of the woods? Swedish audio streamer Spotify now has 602 million monthly active subscribers, including 236 million paying ones. 

Back to work: Adam Neumann is planning to bid for WeWork, the bankrupt coworking services company he co-founded, with funding from Third Point. 

Labour taking wings: In yet another crisis for Boeing, the International Association of Machinists and Aerospace Workers, the US aeroplane maker’s biggest union, is set to demand a 40% pay rise. 

Exodus: In the latest in a string of high-level exits at Tata Digital, Pratik Pal, its CEO for four and a half years who oversaw the launch of Tata Neu, has quit. Naveen Tahilyani, CEO and managing director of Tata AIA Life Insurance Company, will take Pal’s place.  

THE DAILY DIGIT

5

The number of functioning CT scan machines across 19 government-run hospitals in Delhi. (Hindustan Times) 

FWIW

New king: Tesla is no longer the king of EVs and the evidence of that is in the test. It had dominated El Prix, the biannual tournament conducted by the Norwegian Automobile Association, all these years. El Prix is the world’s largest EV range check and takes place every summer and winter to test the effects of weather on EVs. This year, however, things changed. While Tesla slumped to 22nd out of 23 cars, it was a Chinese startup that took the crown. HiPhi Z, made by the Shanghai-based technology startup Human Horizons, is available for sale in China and Europe, where it’s competing with Porsche Taycan. Game on!

Scandal: Politicians buying expensive things is never a good look, and the incumbent South Korean President, Yoon Suk Yeol, is learning this the hard way. An old video of his wife, first lady Kim Keon Hee, being gifted a Dior bag is making the rounds online. The bag in question is worth three million won ($2,200) and has stirred backlash against the president. A Gallup Korea survey revealed that support for Suk Yeol’s party fell to 34% from 36% after the video was released. If you think this is an overreaction, then that’s because Kim has a shady track record. She’s been accused of stock manipulation and lying about her academic credentials. Talk about a red flag.  

Heavy lies the head: … that wears the crown. For Karolina Shiino, winner of the Miss Japan pageant, that adage has become a reality. Karolina’s win has been a matter of national debate because of her predominantly European heritage. She was born in Ukraine and became a naturalised citizen of Japan over time. This didn’t sit well with certain sections of Japanese society. Now, two weeks after her win, Karolina has decided to relinquish her title. This comes after a local newspaper ‘revealed’ her affair with a married man. Man, whoever thought prosperity leads to progression just needs to look at Japan.