It pays to be cheap

Good morning! While Silicon Valley is pushing AI chatbots the world doesn’t need, a leafy island within the borough of New York City is showing the way. Governors Island has turned into a living lab for sustainable pilot projects focused on water, Bloomberg reports. A company named Cycleau is installing greywater treatment units that reuse water from washing machines, bathtubs, and showers. Another, Seaweed City, is growing lines of kelp to minimise erosion. Governors Island is already home to a public school focused on maritime education, a tech incubator for green businesses, and open spaces with native greens. It’s also mandating that new developments be fossil fuel-free, and by 2028, it will house a 400,000 sq ft New York Climate Exchange campus. The US East Coast-West Coast beef just got juicier.

The Market Signal* 

Stocks & Economy: Hedge fund Citadel’s founder Ken Griffin joined JPMorgan chief Jamie Dimon in advising the US Federal Reserve caution in cutting rates. Griffin said an extended pause is better than reducing rates, but having to quickly reverse course. His comments followed an unexpected spike in February US retail inflation to 3.2% from 3.1% in January. 

Investors, however, seem to be tired of the Fed-inflation cat-and-mouse game and are charting their own course, with US stocks setting new records. The rally was driven by tech stocks. Asian shares were mixed in early Wednesday trade. 

Indian retail prices rose 5.09% in February, almost at the same rate as January’s 5.1%. Food continues to be the joker in the pack lending uncertainty to prices. Indian equities continue on their upward trajectory. The GIFT Nifty hints at a flat or positive start to the day.

SMARTPHONES

Sounds Familiar

The Chinese original equipment manufacturer playbook is to launch dirt-cheap models with near-flagship level specs, then go premium in a maturing market. Transsion, which sells Tecno, Infinix, and Itel smartphones, has a similar strategy. But for now, it’s eyeing the sub- ₹10,000 (~$121) market—which accounts for 30% of smartphone sales in India. It’s a segment ripe for the taking since Jio has failed to crack it, and the likes of BBK Electronics (Oppo, Vivo, OnePlus) prioritise premiumisation.

To this end, it’s offering higher margins to retailers in non-metros, Rest Of World reports. It also understands regional preferences. Transsion launched four-sim phones in Africa—a continent where it has 40% market share. Earlier Indian models had sensors that functioned with oily fingers.

The result is Transsion’s near-doubling of year-on-year profits and increasing market share in India. But will it be able to shed its budget baggage once it goes premium?

PODCAST

Every Monday to Friday, tune in as financial journalist and host Govindraj Ethiraj gives you the most important take on the latest in business and tech.

In today’s show, Madhavi Arora, Lead Economist, Emkay Global, talks about inflation trends. Plus: Pushan Sharma, Director, Crisil Research, analyses the price contrasts between vegetarian and non-vegetarian food.

REGULATION

Grappling With Grey

Markets regulator Sebi is determined to curb, if not eliminate, grey market trading in unlisted companies preparing for public share sales. 

Sebi chairperson Madhabi Puri Buch said the regulator is concerned that grey market prices were becoming the benchmark for IPO valuations. For instance, market insiders say that Paytm shares were traded upwards of ₹3,000 (~$36.24) each in the grey market before its IPO, which was priced at ₹2,150 apiece. The Paytm stock never saw that level after debut and currently languishes at about a 10th of the then grey market valuations. 

Eliminate the kerb: While there is no easy way to tackle trading in unlisted firms, Buch said bringing down the settlement period will shrink the kerb market as a whole. Sebi’s target is to move to a T+0 or same-day settlement of trades, which will remove the space for kerb trading.

GEOPOLITICS

The Guns Are Booming

For the first time in 60 years, India imported less than half of its overall foreign weapons from Russia. Still, it purchased 34% of all Russian arms exports, which shrank by 53% to a dozen countries in 2023 as opposed to 31 in 2019 as US-led sanctions tightened.  

New data published by the Stockholm International Peace Research Institute (SIPRI), which tracks the global weapons trade, shows India was the largest weapons importer in the world during the five-year period of 2019-23.  

The one industry President Joe Biden will not need to woo for his White House re-bid is US weapons makers. US arms exports grew 17% in 2019-23 compared to 2014-18. Its share in total global arms exports rose from 34% to 42%. European nations, scared stiff after Russia’s invasion of Ukraine, are stocking up their depleted armouries. Their imports nearly doubled and 55% of the weapons came from the US in 2019-23. 

🎧 The Signal Daily in conversation with Lt General DS Hooda. Also in today's edition: what India's ride-hailing companies are doing to attract increasingly-wary gig workers. Tune in on Spotify, Apple Podcasts, Amazon Music, Google Podcasts, or wherever you get your podcasts.

ENERGY

Amazon Joins The Nuclear Club

Artificial intelligence is a resource guzzler. But there’s only so much clean energy to power burgeoning data centres in a world where superpowers jostling for emerging tech dominance must also adhere to the 1.5°C climate action benchmark.

Enter nuclear power, specifically, micro/modular reactors. Last year, we summed up Microsoft’s moves in the space, in particular its agreement with nuclear fusion startup Helion Energy. OpenAI chief Sam Altman is a Helion investor and also backs fission startup Oklo. Google has invested in Helion competitor TAE Technologies.

Now, Financial Times reports that Amazon has acquired a nuclear-powered data centre in Pennsylvania, US, in a $650 million deal that includes a 10-year power purchase agreement.

It’s a significant development because Amazon is the world’s largest buyer of renewable energy. Unlike weather-dependent solar and wind, nuclear can provide round-the-clock baseload power (i.e. minimum electricity demand required over 24 hours).

ELECTRIC VEHICLES

Home Alone

According to The Wall Street Journal, the world’s largest EV maker is finding it hard to replicate its homegrown success abroad. Some executives in BYD even believe that the company won’t achieve its target of selling 400,000 cars outside China this year.

The global EV slowdown and wariness over China’s EV pumping and dumping aside, certain markets have flagged quality control issues. While some cars in Japan arrive with surface imperfections, vehicles in Europe, Thailand, and Israel are reported to have mould, peeling plastic, and trouble bearing roof rack loads.

In the EU, some models cost twice as much as they do back in China as BYD seeks to increase margins. That makes them less tempting propositions than European competitors in the same range.

In other news: As many as six Indian EV makers may consider an IPO in the next 2-3 years, Mint reports.

FYI

Vroom: The Economic Times reports that Ola Electric will launch an electric autorickshaw, likely to be named ‘Raahi’, at the end of March. Meanwhile, a 38% rise in SUV sales drove overall February passenger vehicle sales up 11% over the same month the previous year to 370,786 units.

Negative reinforcement: Test prep firm FIITJEE has held back salaries of its employees for two months to “make them work harder”. It operates 100 centres and employs more than 4,000 staff, including non-teachers. 

Change of guard: Nayab Singh Saini, the current BJP state president, took oath as the chief minister of Haryana after incumbent Manohar Lal Khattar and his cabinet resigned.

Hot potato: The State Bank of India has handed over the details of electoral bonds to the Election Commission of India (ECI) on the Supreme Court’s orders. The court has also asked the ECI to compile and publish the data on its website by March 15. 

Bibi’s going down: A US intelligence assessment has concluded that Israeli premier Benjamin Netanyahu’s “viability as a leader may be in jeopardy”.

Whistleblower dead: John Barnett, a 32-year Boeing veteran who left the company in 2017 but spoke out about production issues at the aircraft maker, has reportedly died by suicide. 

Hand it over: The National Company Law Tribunal has ordered Jet Airways’ lenders to transfer ownership of the airline to the Jalan-Kalrock Consortium. 

THE DAILY DIGIT

1,500

The number of millionaire wallets the Bitcoin rally is creating every day. (Bloomberg) 

FWIW

Syrup on the turnpike: Those with a sweet tooth will concur that sometimes, nothing makes the day quite like a hot gulab jamun. If you’re in the National Capital Region or Uttar Pradesh, here’s some good news: there’s a stretch from the capital to Lucknow informally dubbed the gulab jamun highway. This stretch, Highway 24, is dotted with 25 shops that sell the much-loved dessert, and the epicentre is Maigalganj village. In true local mishthan (sweet shop) fashion, several claim to be ‘Mashoor Gulab Jamun ki Dukaan’ or ‘famous old gulab jamun shop’. Being spoilt for choice isn’t a bad thing though. More so when you’ve had your fill of dhaba food, what say?

Never say dye: Moving on from the sweet stuff to the not-so-sweet stuff. Karnataka has banned harmful artificial colours such as Rhodamine-B and Tartrazine, common in cotton candy and gobi manchurian. That said, Tartrazine use will be restricted to packaged food items as per Food Safety and Standards Authority of India norms. Violators may be fined up to ₹10 lakh ($12,075) or face seven years in prison. While we’re all for binning harmful ingredients, we also can’t imagine cotton candy without its distinctive pink colour.

Don’t be a sport about this: Climate change is endangering one of the most unique sporting events in the world. Held every two years, the Arctic Winter Games or the ‘Olympics of the north’ has five contingents: Yamal (Russia, sitting out this year), Canada, the US (specifically, Alaska), Kalaallit Nunaat (Greenland), and Sapmi (northern Sweden, Finland, and Norway). If you’re wondering about the names, those are indigenous terms for those territories. The Games platform indigenous customs and events such as throat singing, the knuckle hop, and sledge hop. Sadly, these traditions are now threatened by a warming Arctic, where it’s been estimated that summers will be sea ice-free by 2030.