Budget 2019, Income Tax Reforms, Facebook Cryptocurrency Libra, Tesla Model 3 Production Misses et al.
Explained
Facebook cryptocurrency Libra may not be available for launch in India. Slack sets reference price of $26 per share ahead of its direct listing. Waymo partners with Renault-Nissan to develop its self-driving tech in France and Japan. Tesla Model 3 misses Elon Musk’s ambitious goal. HDFC to acquire 51.2% in Apollo Munich Health in a INR1,347cr deal. Some progressive reforms the government could push in its upcoming budget 2019. FM Sitharaman expected to discuss single point refund system at GST Council meet. US central bank leaves benchmark rate unchanged. This will again anger Trump, who has been attacking the Fed for not slashing interest rates.
Moving on to the top Business news today:
TECH
Facebook cryptocurrency Libra may not be available for launch in India. Slack sets reference price of $26 per share ahead of its direct listing.
The What: As per reports, Facebook cryptocurrency, Libra, which is to be launched by the social media giant next year may not be available in India since the current regulations do not permit use of the banking network for blockchain currency transactions.
Zuck Wants Your Buck: Libra is a virtual currency that can be bought by users on platforms like Messenger and WhatsApp (owned by Facebook) and stored in a digital wallet called Calibra, which would be a standalone app.
Some Perspective: RBI had last year announced a ban on cryptocurrency in India, restricting any regulated entity from conducting business with its proponents. The draft Banning of Cryptocurrency and Regulation of Official Digital Currency Bill 2019 seeks to jail anyone who “mine, generate, hold, sell, transfer, dispose, issue or deal in crypto-currencies”.
A Loophole: However, peer-to-peer transactions of bitcoins are allowed. As per experts, If Facebook were to design the Libra to be a closed system, only to be transacted on its network and not beyond, RBI should ideally be less concerned.
In Other News: Workplace collaboration software, Slack, which is going public on Thursday has set a reference price of $26 per share, valuing the company at c. $15.7bn.
Waymo partners with Renault-Nissan to develop its self-driving tech in France and Japan. Tesla misses Elon Musk’s ambitious goal.
AUTO
Waymo partners with Renault-Nissan to develop its self-driving tech in France and Japan. Tesla misses Elon Musk’s ambitious goal.
The Case of the Missing Driver: Alphabet's self-driving car project Waymo has partnered with the Renault-Nissan Alliance in an attempt to develop driverless mobility services for France and Japan.
The companies entered into an “exclusive” arrangement for an unspecified period to research commercial, legal and regulatory issues for revenue-generating mobility businesses, including autonomous ride services and goods delivery.
Waymo has last year launched a limited robo-taxi pilot program in suburban Phoenix. It is also aggressively testing autonomous semi-trucks in Arizona.
The Sense of a Failure: As per sources, automobile-maker Tesla hasn’t met Elon Musk’s goal of consistently manufacturing 1,000 Model 3s a day this quarter which could have enabled it to beat its sales and delivery record.
As per a leaked email reportedly sent by Elon Musk, Tesla had a good chance of making Q2 the highest deliveries and sales quarter in its history.
Inside Goss: In fact, at the Fremont factory, Tesla’s production of Model 3 had hit 1,000 units per day on just one day post the email.
MARKETS
HDFC to acquire 51.2% in Apollo Munich Health in a INR1,347cr deal.
We Are Interested: Housing Development Finance Corporation (HDFC) is set to acquire a 51.2% stake in Apollo Munich Health Insurance in a c. INR1,347cr deal, and would be later merging it with its general insurance arm HDFC Ergo.
Additionally, Munich Health Germany will pay INR294cr to Apollo Hospitals and Apollo Energy for termination of their joint venture.
Ifs and Buts: The deal, subject to regulatory and shareholder approvals will result in the creation of a merged entity worth INR10,807cr.
Bonus Read: After becoming home to the world’s second largest internet user base, helmed by Reliance Jio, India is now bracing itself for the next leg of the digital revolution - 5G.
However, the immediate challenge would be the enormous investment required for the network, which the Telecom Regulatory Authority of India estimates could be as much as $70bn.
This will have rather severe consequences for the telecom players, especially the Ambanis who raked up a $59bn of net debt to survive in the fiercely competitive market.
INDIA
Some progressive reforms the government could push in its upcoming budget 2019. FM Sitharaman expected to discuss single point refund system at GST Council meet.
It’s Always the Right Time for Reforms: Very soon, the re-elected Modi government will present the first budget of its second term. Under the new Finance Minister Nirmala Sitharaman and five full years ahead, it is presented with an ideal opportunity to push significant reforms.
Many of these reforms, commentators hope, will be in the income tax regime, beginning with revising tax rates, which, though reduced recently for the INR2.5L-5L income bracket jumps abruptly to 20% for the next income slab (INR5L-10L).
Other possible reforms include incentivising individual investments by raising the cap on deductions, increasing HRA exemptions in metros, and boosting deductions for home loan interests and saving bank account interests.
US
US central bank leaves benchmark rate unchanged. This will again anger Trump, who has been attacking the Fed for not slashing interest rates.
Steady Does It: The US Federal Reserve today left interest rates unchanged at the 2.25-2.5% range, where it has been since December last year.
The Federal Open Market Committee voted 9-1 in favour of keeping the benchmark rate unaltered.
The central bank noted that while economic indicators painted a largely mixed picture, the state of the economy remained strong.
The Donald Will Be Displeased: The decision to keep rates unchanged will likely irk the White House. President Trump has been pushing the Federal Reserve to slash rates to stimulate economic growth, which has been gradually stalling.
In his press conference, Chairman Jerome Powell said that the bank would like to wait and “see more data before moving rates”. However, he did not rule out the possibility of a rate cut in the near future, predicting at least one or two cuts - but not until 2020.
And in its statement, the central bank dropped the word “patient” when talking about its approach to policy. This gives it plenty of wiggle room to change its stance should the economy go awry this year (or should Trump’s tirades actually dent the Fed’s independence).
