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India's Billionaire Raj, Indian Equity Markets Plummet et al

Professor of Financial Economics and Part-time Value Investor, Transfin.
Oct 19, 2018 1:09 PM 3 min read
Editorial

Good evening reader,

 

In the year 2000, Indian adults comprised c. 16% of the world's adults (imagine that room), owning 0.9% of global wealth.

 

Zoom past 18 years to 2018. The 16% has now become 17%, but the 0.9% share has risen to 1.9%! 

 

One percentage point rise in share of adults, but double the share of wealth.

 

Do you see progress?

 

Of course. But, that can't be the correct answer. We opt for the more ambiguous "It depends."

 

Allow us to explain. The same Credit Suisse Global Wealth Report which brought forward the above trends, adds:

 

More than half of India's wealth is in the hands of its top 1%.

 

Almost three-quarter of India's wealth is in the hand of its top 10%.

 

Translation: We're on track perhaps when it comes to wealth. We're completely off when it comes to wealth inequality.

 

Credit Suisse is not the first institution to make this revelation. The same dynamic of our flawed progress has shown itself when Oxfam did its study, when Thomas Piketty decided to pick this up, when Crabtree wrote his book.

 

None of us are Gandhians here, but when we're placed second to Russia in a conversation on inequality, something is wrong.

 

On that note, moving on now to Today Top 6 Business Stories through our End Of Day Wrap Up:

 

INDIA

 

Tata Group wants complete control of Jet Airways, pushing out existing Founder promoter Naresh Goyal, as per reports.

As per a story by the Economic Times, the Tata Group rejected an initial proposal for part-ownership (26%) and joint control of Jet Airways.

 

A similar offer was rejected by financial buyer TPG Global, a US based private equity firm.

 

Indian Equity Markets drop more than -1% today on back of weaker large caps, NBFCs, global macros.

Investors sell-off RIL, Infosys, HDFC, and YES Bank dragging broader indices down.

 

Amongst NBFCs, DHFL, India Bulls, and PNB Housing Finance drop by double digits on back of ongoing liquidity concerns, despite RBI relaxing lending requirements to non-infra NBFCs. Weak Chinese data act as external headwind.

 

Former SBI Head, Arundhati Bhattacharya joins the board of Reliance Industries Limited.

Ms. Bhattacharya joins RIL board as independent additional director. She is also an advisor with India focused Private Equity firm ChrysCapital.

 

US/INTERNATIONAL

 

Chinese growth slows down to 6.5% in the third quarter (slowest since Q1 2009), short of market expectations.

Growth in industrial output and consumption (9.3% YTD vs. 10.4% in prior year) slows in 3Q, pushing top regulators to launch coordinated statements to calm investors. Shanghai Composite Index down -24% YTD.

 

Exports however marginally improved to 11.7% vs. 11.5% growth in the prior quarter in light of accelerated orders ahead of trade conflict. Future exports expected to be muted.

 

Tesla releases a lower cost, mid range (260 miles) Tesla Model 3 at $45,000.

With top speed of 125mph, the model will cost $35,000 after federal and state tax rebates.

 

The $35,000 "before incentives" version, vouched as the mass market offering of Tesla, may come early next year as per the company.

 

Swiss Drugmaker Novartis announces $2.1bn acquisition of Endocyte.

Endocyte specialises in radio cancer treatments, especially Prostate cancer therapies. Novartis eyes opportunity to diversify away from its high-volume drug production business towards "innovative and personalized medicines", as per a report by the Financial Times.

 

Novartis is paying a 54% premium over Endocyte's Wednesday share price.

 

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