The collapse of Silicon Valley Bank (SVB) and Signature Bank raises concerns that the problem could be more deep-rooted than initially thought. Is another credit crunch, a la 2008, in the making?
- By M R Raghu, CFA, FRM, FCMA, CEO - MARMORE MENA Intelligence

We now know that the collapse of Silicon Valley Bank (SVB), Signature Bank, and now First Republic Bank) was triggered by the asset-liability mismatch that is typical of many banks and financial institutions that got used to near-zero interest rates. When interest rates went up (too quickly) in order to combat inflation, most of them were caught in a balance sheet problem, especially banks that borrow short-term and lend long-term. SVB is a specialized bank that was created mainly to fund start-ups (as the name Silicon Valley implies). However, SVB experienced a drastic rise in its deposits between 2019 and 2021 (thanks to fiscal largesse being showered as a response to the Covid-19 pandemic), which it found difficult to match through its loan growth (mainly to venture capital funds and start-ups). With an average cost of its deposit at a mouth-watering 25 bps, it sought to pick up some good yields in the long-end of the curve (upwards of 150 bps) through Mortgage-backed securities (MBS).    Full Article ...

India's manufacturing sector activity rose for the 21 successive month in March, as per latest data from the S&P Global. According to the US-based provider of financial information and analytics, the S&P Global Purchasing Managers' Index (PMI) coming in at 56.4, up from February's 55.3, S&P Global's latest data released on April 3 showed. The PMI is an economic indicator, which measures the performance of the manufacturing sector and is derived from a survey of 500 manufacturing companies. A reading above 50 indicates expansion in activity, while a sub-50 print is a sign of contraction. As per S&P Global, at 56.4, the March PMI print was at a three-month high. "India's manufacturing sector posted a remarkable performance at the end of the final fiscal quarter, as growth of factory orders and production quickened to the strongest in three months," S&P Global said in a statement.    Full Article ...

Generative AI is having a huge impact on every market, even though it is only a few months old. This has created a feeding frenzy as companies recognize that the risk exists but don't yet understand the technology.

- By Rob Enderle, President and Principal Analyst, The Enderle Group, Bend, Oregon, USA

There are recurring waves in technology. Each subsequent wave is both faster and more powerful than the one before because they are cumulative. In other words, the prior wave speeds up and enhances the wave that follows. For instance, the client/server wave that replaced the mainframe enabled the Internet wave that followed, and the proliferation of computing technology has powered the AI wave we are at the front end of today. This current wave has at least 250x the speed of the Internet wave that preceded it. As with the Internet wave, the majority of companies that we currently see as dominant today will be at risk as this wave accelerates and begins to change how we work, where we work, and if at all we work! It is interesting to note that Microsoft, which was caught sleeping during the Netscape-driven Internet wave, is driving this one and stands to benefit from it the most. But Netscape serves as a cautionary reminder that first-mover success isn't a given, though given Netscape's failure was due to    Full Article ...

Toshiba is set to go private, as in a last-ditch attempt to stave off what looks like an existential crisis, the board of Toshiba, one of Japan's biggest industrial conglomerates, agrees to accept a buyout proposal worth $15 bn from a consortium led by PE firm Japan Industrial Partners. However, concerns remain if that alone may save the embattled electronics giant.
Its official now: Toshibas board has agreed to accept a buyout deal, valued at $15.2 bn, from a consortium of about 20 institutional investors led by the Private Equity firm Japan Industrial Partners. This could not have come at a more opportune time as the group faces its biggest crisis ever. It is to be mentioned that Toshiba Corporation, one of Japans biggest industrial conglomerates, which pioneered color picture tube and radar and was once the flagbearer of Japanese consumer electronics, is facing an existential crisis, courtesy an accounting scandal that rocked corporate Japan in 2015. Many experts have blamed the groups culture where strict obedience to superiors was required and which possibly encouraged top brass to indulge in accounting malfeasance without the fear of being questioned, besides its weak corporate governance, for its current troubles. But the buyout deal can be the panacea? Maybe, it would be too early to say that. Meanwhile, as a section of experts reckon, the deal, the terms of which are yet to be made public, materializes, could also mean the end of the road for the electronics-to-infrastructure systems giant, which boasts of an illustrious history but has found itself in the regulatory crosshairs over its questionable accounting practices and shoddy management. Just to recall, as recently as in June 2021, then-Chairman Osamu Nagayama offered his apologies after two board members were ousted in response to an investigation over the Japanese corporates manipulation of a board vote. Earlier that month, a shareholder-commissioned investigation found that the company had sought government help to influence a key shareholder vote at its July 2020 annual general meeting (AGM). As per a capital.com report, at the July 2020 AGM, Singapore-based Effissimo Capital Management, Toshibas top shareholder with a 9.9% stake, had nominated three candidates. However, none of the candidates were elected and instead 12 other members were    Full Article ...

Southern Diva Samantha Ruth Prabhu Invests In Hyderabad-Based D2C Superfood Startup Nourish You

Hyderabad-based food startup Nourish You has onboarded South Indian cinema's leading actress and diva Samantha Ruth Prabhu. She is among a group of investors who have invested in Nourish You's seed funding of $2 mn. Others who have invested in the seed funding round include Y Janardhana Rao of Triumph Group; Rohit Chenna-maneni, Co-Funder, Darwinbox; Nikhil Kamath, Co-Founder, Zerodha; Abhijeet Pai, Co-Founder, Gruhas Proptech and Abhinay Bollineni, CEO, KIMS Hospitals. Commenting on her decision to invest in the food startup, the actress said, "Investing in Nourish You was a natural progression since I have been consuming their products for a while. I was impressed by their story of bringing superfoods like quinoa and chia to India, growing them locally, and their product roadmap    Full Article ...

Chatbots and AI represent the future of the Internet. Thats both good and bad. Balance is the key going forward.

- By Jeff Kagan, Technology Industry Analyst, Atlanta, USA

Artificial Intelligence (AI) has been with us in vari- ous stages for decades. That being said, AI is en tering a new, rapidly growing, and exciting stage with Chatbot technology. In fact, this is the fastest-growing new technology ever. Today, there is some debate regarding whether Chatbot is a flash-in-the-pan or a long-lasting growth opportunity. So, lets take a closer look at the future of the Internet economy.

First, the good news is that Chatbot technology is a real and long-term growth opportunity. At the same time, the hype in this new segment is also over-the-top. Both can be true at the same time, and in this case, they are.

This is an opportunity and a challenge every CEO needs to deal with.

To start with, ChatGPT, which is the new Chatbot technology from OpenAI, is the fastest-growing technology ever. Growth is even faster than TikTok, which until now was the fastest. The current state of this Chatbot technology is an amazing accomplishment. However, it is still very young, very new, and very rough at the edges. The real long-term value is not there yet.    Full Article ...

The world continues to pay the price for Russia's ongoing military misadventure in neighboring Ukraine.

Bandhan Mutual Fund (the erst while IDFC Mutual Fund) re- cently entered the market with its New Fund Offering (NFO) of "US Treasury Bond 0-1 year Fund of Funds", which is an open-ended Fund of Funds (FOF) scheme that seeks to provide long-term capital appreciation by passively investing in units/shares of overseas index funds and/or Exchange Traded Funds (ETF) which track an index with US Treasury securities with a maturity range of zero to one year as its constituents, subject to tracking error. The NFO was open for subscription between March 10, 2023, and March 23, 2023. Since the FOF is an open-ended and an ETF scheme, there is no lock-in period, and like any ETF, the units of the scheme can be bought and sold on needed blend of relatively high quality and low volatility investment opportunities." The FOF is also Indias first international debt-oriented FOF. As per Kapoor, "Currently, mutual funds offer global diversification via equity-oriented funds, but this fund is another step in offering opportunities via a debt-oriented fund." What also adds to the funds attractiveness is the fact that the spread between the US and Indias one-year government bond yields has now narrowed significantly from about 390 bps to 227 bps since February 2022, which clearly demonstrates that exposure to US treasury bonds is relatively more attractive for Indian investors, Kapoor said in a press release. The fund will be benchmarked against the ICE 0-1 Year US Treasury Securities Index.    Full Article ...

Apples decision to shift the production of some of its key iPhone models to India from China as part of its "China Plus One" strategy presents a major opportunity to the former to establish itself as the next global manufacturing hub.

- By Surbhi Singhal, Senior Research Analyst, Advance ThinkTank, New Delhi

China has for long domi nated the smartphone manufacturing in- dustry. In fact, it would not be an overstatement to call it a monopoly in the sector. But world orders are established only to be overthrown. It will be no surprise if one sees that happening sooner or later, as far as the tech manufacturing arena is concerned, with rivals eyeing the potential to bring these capabilities and investments to their own shores. The prominent contenders eyeing to emerge as the next global smartphone manufacturing hub include India, along with other Asian nations like Taiwan and Vietnam.

India, an apple of Apples eye
For any Apple user, the phrase "Designed by Apple in California Assembled in China" on product packaging is a familiar sight. Seeing Indias name up looked like a distant dream for many years. However, Indias iPhone assembly dream finally comes true as Apple is shifting its production of iPhone SE, iPhone 12, iPhone 13, and iPhone 14 to India.

Plans are now afoot to manufacture AirPods, the Apple Watch, and other Apple products in India as well. By the end of 2025, Apple is expected to move 25% of its production to India. The Cupertino-based tech giant currently has its iPhones assembled in India by Foxconn, Wistron, and Pegatron, its three Taiwanese partners, while Indian conglomerates, such as the Tata Group, supply parts to these manufacturers. What could give a further boost to Indias global manufacturing efforts, is that Tata is reportedly mulling buying a significant iPhone production plant in India from Wistron, which would make it the first Indian company to manufacture for the global tech giant. In another significant development, as part of the reshuffling of its international business management, Apple has promoted Ashish Chowdhary as the Head of India, replacing Hugues Asseman, who recently retired as the person in charge of India, the Middle East, Mediterranean, East Europe, and Africa. The move indicates that India will soon become its own sales region at Apple.    Full Article ...

Why is one of the greatest exporting countries of the last 80 years now running regular deficits on its trade with the rest of the world?

- By Michael Roberts, Economist, London, UK

In February this year, Japans trade deficit jumped to nearly ¥9 tn from just over ¥7 tn in the same month a year earlier. This was the 19th straight month of a trade shortfall, the longest stretch since 2015, and the largest trade gap ever seen in February. For the whole year of 2022, the deficit was just under ¥20 tn (about $150 bn). This was also the second straight annual shortfall and the biggest since 1979.

Why is one of the greatest exporting countries of the last 80 years now running regular deficits on its trade with the rest of the world? There are three reasons. The first is to do with cyclical trends in global economic growth and the pandemic. The second is structural, to do with the weak aspects of Japans economy. And the third is the result of the economic policies adopted by successive governments in the last 20 years.

The recent record monthly trade deficits are the product of a surge in the cost of energy imports as oil and gas prices rocketed after the end of the Covid pandemic due to supply chain blockages; and then the Ukraine-Russia war. Imports in value terms have shot up, but exports, at the same time, have not recovered as much, primarily because the lockdowns in China-a key trade partner-reduced demand for Japanese goods. Besides the general slowdown in the world economy in 2022, the initial post-pandemic recovery in 2021, too did not help its cause either.    Full Article ...

Not long ago, the name Credit Suisse commanded similar respect in the market as its US and UK counterparts did. CSFB, the acronym it is also known by, along with the compatriot UBS and its new owner, were credited to have not only carved a niche for itself in the global banking arena but also ensured Swiss banking stayed relevant. Not surprisingly, its dramatic collapse comes as a rude shock to not just the Swiss society, but also to the world at large and puts a big question mark over the robustness of the Swiss banking system. What went wrong?

- By Shail Apte, Founder & CEO, Airtham, Ahmedabad

It is curtains down for Credit Suisse, undoubtedly one of the most well-known faces of Swiss banking outside its domestic market for long. While the bank had been in the news over the last few years for one reason or the other, no one expected it to collapse and become history. Yet, March, in a dramatic development, UBS announced it was acquiring the ill-fated bank as part of what many said was a government-sponsored bailout deal. It was not as if no one knew trouble was already brewing in at one of Switzerlands leading banking giants. In fact, following the abrupt failure of Silicon Valley Bank, Signature Bank, and later Silvergate Bank in the United States, concerns about the financial stability of banks in Europe, especially Credit Suisse, had already begun to surface.

In fact, with the overall derived probability of default hitting 51% on March 15 and the 5-Year credit default swaps reaching a record high of 574 bps, Credit Suisse saw a sharp increase in the cost of insuring its debt and knew it was already in a spot of bother. There was a significant drop in bond yields across developed markets as well as a sharp sell-off in the global stock markets. This indicated that investors were growing more concerned about the banks capacity to manage risk and prevent further losses, and they believed that the company may eventually file for bankruptcy, which can have global spillover effects.    Full Article ...

Hydrogen, at least theo retically, has immense potential as a sustain- able energy carrier be- cause it is three times more energy dense than gasoline and provides energy without direct emissions. Also, a variety of difficult-to-electrify processes, including heating, refining, fertilizer manufacture, and transportation, can be decarbonized using low-carbon hydrogen, notably green and blue hydrogen. What sets hydrogen further apart from other fuel sources such as natural gas is that hydrogens production methods can be environmentally-friendly. Low-carbon hydrogen can be an excellent source of clean energy, which can help combat global climate change and poor air quality. It is for these reasons that the concept of a green hydrogen economy has become increasingly popular over the last few years as the world looks for sustainable alternatives to reduce its dependence on fossil fuels.

Green hydrogen is produced through the process of electrolysis, which uses renewable energy sources such as wind or solar power to split water molecules into hydrogen and oxygen. The resulting hydrogen gas is then used as a fuel source for a variety of applications. Global hydrogen demand is thus forecast to increase from 94 million tonnes (mt) in 2021 to 115-130 mt by 2030 due to the increasing use of hydrogen as a pathway for reducing greenhouse gas emissions.

Benefits, usage, and ultimate aim of green hydrogen in our energy mix
One of the primary benefits of a green hydrogen economy is its potential to significantly reduce greenhouse gas emissions. Hydrogen fuel cells produce only water as a byproduct, which means that they do not release carbon dioxide or other harmful pollutants into the atmosphere. This makes hydrogen an ideal alternative to fossil fuels in industries such as transportation and energy production.    Full Article ...

Mergers and acquisitions (M&As) by India Inc. seem to have hit the pause button. As per the latest data, M&A volumes fell by a mind-boggling 80% in the first two months of CY2023, compared to the same period last year, as firms grapple with falling profit margins, while massive sell-offs witnessed post the Hindenburg-Adani row too have dampened sentiment. Apart from, the long and bitter winter chill that has gripped startups, a major participant in the M&A market, for over a year now, too weighed on the domestic deal-making space amid concerns over unrealistic valuations, and widening losses that have added to the uncertainty over their path to profitability and derailed their IPO plans, which could have provided a lucrative exit route to their early investors.

According to data from Refinitiv, M&As in India stood at $3.3 bn from 253 deals year-to-date (YTD), a fall of 80% year-on-year (YoY). Besides, even cross-border deals by Indian firms too recorded a massive decline, falling 84% to reach a mere $1.5 bn during this period. Meanwhile, global M&A advisory firm Grant Thornton said, both deal value and volume fell sharply in India in February, marking the second-lowest deal volumes and lowest values recorded since 2014. As per Grant Thornton Bharat data, when compared with January 2023, deal volumes witnessed a 39% decline while values decreased by 35%. As per the research firm, 145 transactions worth $2.7 bn were undertaken in the month of January. Nonetheless, deal mania is expected to    Full Article ...

An executive's workplace image is significant be- cause it reflects who that executive both believes themselves to be and invites others to take note and respond accordingly. Within the context of organizational life (i) impression management, (ii) an executive's identity and reputation, and (iii) their body language form what can be called the executive's 'Impression Triad'. How an executive presents at work matters a great deal and shapes key workplace interactions. The three factors of the impression triad form an influential foundation for an executive's success and will help to establish their workplace influence, gravitas, and behavioral impact.

Executives are always "in public view" and so will be watched and observed all the time. This intensifies the importance of paying attention to how they present and behave within the workplace. Colleagues, for example, will pay particular attention to what an executive says and what that executive actually does (NB the two are not necessarily consistent!). They will notice what issues and tasks they prefer to avoid tackling in contrast to what they like to do and also note with precision what frustrates or makes that executive cross. Colleagues will also log how an executive tends to respond to challenges, what they tend to penalize and also what behaviors they reward.    Full Article ...

What Does President Xi Jinpings Third Term Mean for China and the World?

- By Andrew K P Leung, SBS, FRSA, International and Independent China Strategist

President Xi Jinpings third term has been on the cards ever since the presidential term limit was amended in Chinas Constitution in March 2018. At the latest "Two Sessions" in Beijing (the annual plenary sessions of the National Peoples Congress (the national legislature) and of the Chinese Peoples Political Consultative Conference (the national political advisory body), Xi secured full votes for his Third Term and key appointments in the Politburo, the State Council, the Central Committee, the Standing Committee of the National Peoples Congress, and the Military Commission, consolidating his position as Chinas most powerful leader since Chairman Mao Zedong.

How does the Chinese Communist Party work?
To sustain legitimacy, the Chinese Communist Party (CCP) has long become a highly competitive meritocracy. To make it to the top, all cadres start from the bottom, usually villages and towns, competing through ranks and responsibilities, as Xi himself had experienced. Leaders rising to Beijing and provincial levels have long proven track records of delivering stability, growth, and peoples support.    Full Article ...