Just enter your email address registered with The Ken
Reset Password
Email Sent to:
Check your inbox for instructions to reset your password.
Wild, wild stock market country
A Joe Biden effect for Philippines, a breakthrough for WhatsApp in India, clean energy problems for India's central government, Singapore's dollar bill clean up, and Covid-19 may have an affect on libido.
This is edition 160 of Beyond The First Order, a premium daily newsletter that demystifies the hidden models, incentives and consequences of the most significant events across India and Southeast Asia
A Joe Biden effect for Philippines, a breakthrough for WhatsApp in India, clean energy problems for India's central government, Singapore's dollar bill clean up, and Covid-19 may have an affect on libido.
A 🔒 paid newsletter that demystifies the hidden models, incentives and consequences of the most significant events across India and Southeast Asia. Someone sent you this? Subscribe to BFO
Good morning,
The big news over the weekend is of course about the US elections and President-elect Joe Biden. So, it’s only fair that we talk about it - how the stock markets have reacted, and what it could mean for the Philippines.
An own goal is a footballer’s worst nightmare. But imagine when it’s not one, but multiple own goals that are scored in business or policymaking. Take the case of new regulations designed for India’s ubiquitous payments system.
Meanwhile, if India wants clean energy, the Centre cannot pass the buck to the states. And Singapore is trying to clean up its cash (throwback to India’s demonetisation, anyone?).
Also, Covid-19 could alter the future demographics of the world.
Are stock market traders fans of late-night TV? Probably not. If they were, they would’ve learnt a thing or two from a fairly ‘important’ episode of The Tonight Show with Jimmy Fallon.
In a clip that has now gone viral, US Senator Bernie Sanders is seen explaining how President Donald Trump would take the lead early on once the counting of the votes began. And as the mail-in votes were counted, how Biden would soon catch up. It was a play-by-play account of what would actually materialise.
But, instead of paying heed to Sanders, stock market traders turned to the betting markets for indications. And the gamblers, seeing the initial results, began to bet heavily on a Trump win.
And stock traders followed suit. What followed was a jump of over 3% in the price of the US S&P 500 futures contracts. As the name suggests, ‘futures’ are a contract to buy or sell a stock at a predetermined price at a predetermined future date. Traders believed that a Trump win would be good for businesses. And that it made sense to buy the stock market index.
Then the narrative changed.
Biden inched ahead.
But the stock market rallied anyway. Now the narrative was that even if Biden did win, increasing corporate taxes wouldn’t be an easy reform for him to pass. The Senate or the upper house of the US legislature would likely still be controlled by the Republican Party. Companies would potentially dodge the tax bullet.
And as John Authers writes, it’s about the narratives that investors and traders tell themselves.
“Markets run on narratives. So do human minds; it’s easiest to think in terms of stories. What makes markets in general, and stock markets in particular, so special is (first) their ability to shift from one narrative to another in a nanosecond and (second) the ability to make sure that any prevailing narrative is good news for stocks.”
Stocks Love Gridlock. Blue Waves Are So Yesterday, Bloomberg
Even Trump was famous for his narrative that he, and he alone, was the guardian angel of the stock markets. In fact, in February, during his trip to India, at a business roundtable he said, “If I don’t win, you’re going to see a crash like you’ve never seen before.”
But data over the past 78 years shows it doesn’t matter too much to Wall Street how the political scenario plays out. The tide ebbs and flows.
For now, the new stock market narrative as Josh Barro at New York Magazine puts it is, “Investors who wanted Trump to go but wanted some of his policies to stay will have their cake and eat it, too.”
It’s time to tune out.
WhatsApp: 1, UPI: -1
Arundhati
India’s digital payments system has been recognised the world over for being among the most innovative. But it probably scored a series of own goals this season.
Last week, India's retail payments body, the National Payments Corporation of India, allowed WhatsApp to finally launch digital payments via the unified payments interface, after a stay on it for two years. But the launch was with the caveat that any new payments apps can only have a maximum of 30% share of UPI's volumes. The existing ones like Google, PhonePe have till 2023 to comply. So WhatsApp was allowed to roll out first only to 20 million users. 4.4% of the people who use it in India.
It did this keeping in mind the runaway payments train that WhatsApp could end up becoming. With 450 million users in India, who used WhatsApp for nearly 5-6 hours a day, WhatsApp was the crowd favourite to win the UPI race, even before it launched. So, NPCI saw red.
When world over competition regulators are struggling to rein in companies like Google, which have grabbed the majority of the market share with its search feature, NPCI took the preemptive step here. But in doing so, it scored two own goals.
Own goal 1: UPI has so far been used by only about 150 million active users. And most of those who use it are already digitally savvy users. The next phase of UPI growth would come from India’s nook and cranny. Where payments companies could encourage new users by enabling low-value transactions and inspire faith in the payments system. But with a cap on volume market share, payments companies would have no incentive to let a large volume of low-value transactions flow through them. UPI would continue to remain a privilege of the high-end smartphone-toting users.
Own goal 2: UPI's rise caused a dent in debit card volumes and market share and sent Visa and Mastercard reeling (we wrote about it here). A market share cap now gives the payments apps the right incentive to partner with Visa and Mastercard and encourages people to make payments via debit cards stored on payments apps than via UPI. This would be a hit aimed at UPI as a payments system, itself. UPI just breached the 2 billion transactions in a month mark, this month.
It is not like the Indian government has not actively taken steps to keep monopolies in check. For instance, card networks Visa and Mastercard were held back after NPCI launched Rupay, a competing card network. Rupay had a 58% market share in 2019.
As for UPI, NPCI already has its payments app BHIM that runs on UPI. BHIM launched in 2016 with a splash. But it raised eyebrows. NPCI was both running its own payments product and regulating UPI. Now, BHIM is more of a background player. With NPCI’s latest market share move, the payments ecosystem would rather be wishing for a BHIM comeback than being cut down to size.
What Joe Biden’s win means for the Philippine economy
Jum
The Trump presidency’s policies in the past four years have had negative effects on the Philippine economy. Now with the free world having a new leader in US President-elect Joe Biden, are things going to improve for the Southeast Asian nation?
The trade war waged by conservative populist Donald Trump against China had the unwanted consequence of halving the growth of the Philippines’ manufacturing sector beginning 2018, from a briskly 7-8% annual increase in the previous years. The Philippines contributes raw materials like nickel and intermediate goods like electronic chips to China. Understandably, the demand for these has been affected after Chinese goods saw a slump in US orders due to substantial tariffs levied by Trump. While the trade dispute forced many manufacturing firms in China to relocate to Southeast Asian countries, the Philippines lost out to neighbours Vietnam and Indonesia, whose infrastructure and income tax rates have proven much more attractive.
Trump’s vow to bring jobs back to the US by making it harder for American companies to outsource jobs overseas also caused the Philippine business process outsourcing (BPO) sector to miss its revenue targets. A bedrock of the economy, the BPO industry accounts for over 7% of the Philippines’ gross domestic product and provides more than a million Filipino jobs.
With Biden’s win, it’s natural to expect things to change. However, analysts believe any shift in these policies is unlikely.
Biden, in fact, accused Trump of failing to effectively bring jobs back to the US. So he launched a renewed focus on the issue, calling for a 10% tax penalty on American companies that move operations abroad. He also plans to offer a 10% tax credit to those that create jobs locally—service-oriented firms as well as manufacturers that revitalise closed or nearly-closed production facilities, or retool and expand facilities.
Biden’s administration may also continue to take aim at China, keeping his predecessor’s tariffs on Chinese goods.
Both the Democratic and Republican parties are said to be critical of Beijing’s trade record and its stance toward Hong Kong, Taiwan, and religious and ethnic minorities. So Biden would be “savaged” if he tried to downplay complaints against China, say analysts speaking to ABC News. But world economies can find relief in the thought that the Biden presidency will be “more predictable” and “won’t be as emotional and ridiculous” as Trump in dealing with conflicts.
Still, the Philippines would be better off mitigating its risks by reducing reliance on China for trade, and the US for outsourcing revenues.
The unbearable burden of India’s Union government in clean energy
Seetharaman
Despite the pandemic, India has bid out over 15 GW (1 Gigawatt=1,000 Megawatts) of grid-scale (ones that supply power to the grid) solar and wind power projects in the first six months of 2020. That’s almost as much as the capacity awarded in all of 2019.
But there is more to the figure than meets the eye.
Most of the projects were awarded by central government entities, according to a recent report by New Delhi-based think-tank Council on Energy, Environment and Water–Centre for Energy Finance and the International Energy Agency.
This is interesting considering five years ago, states were responsible for two-thirds of solar power projects and almost all wind energy projects.
The entity that awards the project is responsible for finding utilities that will buy the power. And developers stand a better chance with projects awarded by the Solar Energy Corporation of India (SECI) or the National Thermal Power Corporation (NTPC)–both Union government units–than with those bid out by states. Simply because the distribution companies owned by state governments are heavily indebted, clean energy developers cannot expect a state government to act against its own utilities when the latter refuses to pay up.
Furthermore, states including Andhra Pradesh, have threatened to renege on contracts to buy power, making developers quite wary of state projects.
The higher the risk in a project, the higher the returns developers expect from it. So it’s not surprising that clean energy producers’ expected equity internal rate of return (EIRR) is higher for projects awarded by states (except Gujarat, which has had a good track record) than for those tendered by the Centre. After all, developers have more comfort when dealing with the centre’s SECI than a state agency.
India’s current clean energy capacity is 89 GW. And the Narendra Modi government can expect no help from states in helping India reach the increasingly distant target of 175 GW of installed renewable energy capacity by the end of 2022.
Covid kills the libido
Maitri
Covid-19 is having strange and unforeseen repercussions over the long term on the health of those infected.
Last week, I had a conversation with a leading infectious diseases consultant in Mumbai, who also happens to be on Maharashtra’s Covid task force. The task force has warned the state government of four areas over which long-term side effects need to be observed at least over the next two to five years. They include the lungs, the blood vessels, the brain and the hormonal system.
In some cases, the virus is causing the sexual hormones to go for a toss. Since the pandemic hit, the said doctor received cases of at least 17 men including youngsters who had been infected with SARS-CoV2 and now have zero sperm count. “Their testosterone levels have dropped drastically,” the doctor noted.
Two months ago, Turkish doctors published a study which confirmed findings that testosterone levels in men infected with Covid-19 reduce substantially. Of 232 males hospitalised with Covid in two centres in Turkey, up to 113 (up to 51%) reported hypogonadism, a condition in males characterised with lower than normal testosterone levels. Even in those that did not have any symptoms, out of 46, 30 reported a loss of libido.
Doctors warn that it is too early to comment on the long-term effects that low testosterone levels in males could have on their sexual health. “These patients need to be observed over the long term to study the impact of the virus on their fertility levels,” the doctor quoted above said.
And though long-term studies are wanting, the pandemic may cause alterations in the way couples have children in the future. In countries that are already struggling to correct their low birth rates—like Russia, Italy, France, Sweden and so on—the pandemic may topple their correction plans.
Disappearing notes
Ben
Singapore is looking to remove its S$1,000 (US$741.56) note in a bid to reduce money laundering and terrorism financing risk. This move comes six years after it stopped circulating the S$10,000 (US$7,415,62) note.
This does follow other countries and their lack of large denomination bills. The European Central Bank, for instance, removed the 500 euro (US$ 593.72) note in a bid to crackdown on money laundering and illegal money movement. These notes were often coined as “Bin Laden” notes, as there was about €300 billion (US$356.23 bn) worth of notes in circulation, but they were rarely seen by most Euro-zone citizens.
With large denomination notes out of circulation, moving money illegally or laundering it will become increasingly harder as large sums of money divided into S$100 (US$74.15) or S$50 (US$37.08) notes will be heavier and more obvious compared to a S$1,000 (US$741.56) note. Coupled with a pandemic restricting air travel, nefarious schemes looking to move or clean money will find it increasingly difficult to do so.
That's a wrap for today.
Don't forget to write in with your thoughts and observations on how this pandemic is reshaping businesses, societies and economies. We will be back tomorrow.
Beyond The First Order is a paid daily newsletter that demystifies the hidden models, incentives and consequences of the most significant events across India and Southeast Asia. This newsletter is published by The Ken—a digital, subscription-driven publication focussing on technology, business, science and healthcare
Unrivaled analysis and powerful stories about businesses in India and Southeast Asia from award-winning journalists. Includes access to longform articles, premium newsletters across a range of topics depending on your interest and our top-ranked podcast. For those who want to be prepared for what comes next.
Others tell you what. We tell you the ‘So What?’
Decode the most significant shifts happening around business, technology, startups and healthcare. All told through a combination of original reporting, beautifully visualised data and infographics, and delivered as a compelling narrative story.
Trusted and loved by 300,000+ subscribers
Our subscribers include executives and leaders from the world’s most successful companies, students at top post-graduate campuses, and smart, curious people who want to understand how business is shaping the future of India and Southeast Asia.
So much journalism in India is superficial.
Articles are generic, almost cookie-cutter in their approach. And they don’t provide enough context on the issues they cover. The Ken is different. I don’t always agree with everything they say but I appreciate their commitment to publishing deeply reported narratives and investigations. Their reporters find new ways to analyze tech among other industries. And that’s always worth a read.
Sid Talwar / Co-Founder and Partner / Lightbox Venture Capital
As entrepreneurs, we thrive on being in the know at all times.
A personal subscription to The Ken was a no brainer. But as startup founders, this isn't enough. Team members also need to be in the know, for everyone handles customer-facing responsibilities and an ecosystem change that impacts customers also impacts us
Kiran Jonnalagadda / Co-founder / HasGeek and Internet Freedom Foundation
This is a brilliant piece. Very well researched and explained.
The policy & execution is in quite a mess. the flip flops on KYC, the insidious use (& abuse) of consent, the hopeless competition with zero-balance Jan Dhan accounts - all brought out starkly. Congratulations!
Ajit Ranade / Chief Economist / Aditya Birla Group
Thanks to The Ken, we have articulate, original & relevant stories
that shape our understanding of businesses around us. With placements around the corner, Ken is a great resource to prepare and ace our interviews.
Sandeep Ganesh / Student Body President / ISB 2018
An article from The Ken has become an intrinsic part of my daily news diet.
Nandan Nilekani / Former Chairman / UIDAI
I look forward to Ken's incisive reporting, rigorous research, and contrarian but always logical viewpoints
Deep Kalra / Group CEO / MakeMyTrip
The Ken is my daily guide to intelligent business journalism like never before.
Kapil Chopra / Former President / Oberoi Hotels
Unlock a world of subscriber privileges. Subscribe now
Narrative stories
Read insightful, deeply-reported business stories everyday. Over 1500 stories published till date
Newsletters
Access exclusive newsletters based on your interest from award-winning journalists
Community
Join and engage with 300,000+ other career-minded subscribers across Asia
Audio
Listen to our top-ranked business podcast to understand the stories that matter
Questions?
What kind of subscription plans do you offer?
We have three types of subscriptions
- Premium which gives you access to either the India or the Southeast Asia edition.
- Borderless which gives you complete access to The Ken across both editions
- Echelon which gives you complete access to The Ken across both editions along with a bonus gift subscription
What do I get if I subscribe?
The Premium edition gives you access to stories in that edition along with any five subscriber-only newsletters of your choice.
The Borderless and Echelon subscription gives you complete access to The Ken across editions and unlimited access to as many newsletters as you like.
What topics do you usually write about?
We publish sharp, original and reported stories on technology, business and healthcare. Our stories are forward-looking, analytical and directional — supported by data, visualisations and infographics. We use language and narrative that is accessible to even lay readers. And we optimise for quality over quantity, every single time.
Our specialised subscriber-only newsletters are written by our expert, award-winning journalists and cover a range of topics across finance, retail, clean energy, cryptocurrency, ed-tech and many more.
How many newsletters do you have?
We are constantly adding specialised subscriber-only newsletters all the time. All of these are written by our team of award-winning journalists on a specialised topic.
You can see the list of newsletters that we publish over here.
Does a Premium subscription to your Indian edition get me access to the Southeast Asia edition? Or vice-versa?
Afraid not. Each edition is separate with its own subscription plan. The India edition publishes stories focused on India. The Southeast Asia edition is focused on Southeast Asia. We may occasionally cross-publish stories from one edition to the other.
We recommend the Borderless or the Echelon Plan which will give you access to stories across both editions.
Do you have a mobile app?
Yes! We have a top-rated mobile app on both iOS and Android which allows you to read on-the-go and has some amazing features like the ability to bookmark stories, save on your device, dark mode, and much more. It’s really the best way to read The Ken.
Is there a free trial?
You can sign up for a free account to experience The Ken and understand our products better. We’ll send you some free stories and newsletters occasionally, and you can access our archive of previously published free stories. You can stay on the free account as long as you’d like.
The vast majority of our stories, articles and newsletters can be accessed only by a paid subscription.
Do you offer any discounts?
Sorry, no. Our journalism is funded completely by our subscribers. We believe that quality journalism comes at a price, and readers trust and pay us so that we can remain independent.
Do you offer refunds?
No. We allow you to sample our journalism for free before signing up, and after you do, we stand by its quality. But we do not offer refunds.
I am facing some trouble purchasing a subscription. What can I do?
Just write to us at [email protected] with details. We’ll help you out.
I have a few more questions. How can I reach out to you?
Enter the email address that you’d like us to send this payment link to. This could be your HR, finance representative, or anyone from your organization. A copy of this email will be sent to the team’s admin as well.
Email Sent Successfully
Corporate pricing applies to teams of 5 or more members only.
Thank you. We have received your request to post comments. You’ll hear from us soon.
Are you sure? Your subscription will expire at the end of your current subscription period.
The Ken has added you as a partner. Read The Ken as a couple. Sign in to get started.
T
The Ken has added you as a partner. Read The Ken as a couple. Sign up to get started.
Having your name allows us to address you personally in emails and on our website. That’s all, nothing else.
T
The Ken has added you as a partner. Read The Ken as a couple.
The Ken’s stories are available only for paid subscribers. As a partner, you can now access The Ken subscription. For free. Just activate your account to get started.
T
The Ken has added you as a partner. Read The Ken as a couple.
The Ken’s stories are available only for paid subscribers. As a partner, you can now access The Ken subscription. For free. Just activate your account to get started.
By registering, you will be signed-up for a free account with The Ken
Sharp, original, insightful, analytical
Alert
Our anti-piracy system has flagged your account for suspicious activity and has temporarily paused your account. This may happen due to a number of reasons.
If you think that this was done in error, please get in touch with us at [email protected].
Are you sure?
You will be changing your registered email address to access your account. All email newsletters will be delivered to the new email ID.
As a part of the Learning and Development program at Myntra-Jabong, you have complete access to 300+ original daily stories over the next year, 500+ previously published stories and our comment sections. Also, do keep an eye out for our exclusive subscriber-only iOS and Android apps which will be rolled out for you shortly.
Happy Reading!
By continuing to browse our site you agree to our use of cookies to improve our performance and enhance your user experience.
