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Revival for Cryptocurrency, Spice and Indigo to Fly to China et al.

Professor of Financial Economics and Part-time Value Investor, Transfin.
Nov 10, 2018 12:47 PM 3 min read
Editorial

Good evening reader,

 

Most of us see some value in Netflix. From the diabolical Frank Underwood in House of Cards to the home-bred rogue Ganesh Gaitonde of Sacred Games, its industry leading Original Programming has us hooked. After all, Netflix is expected to spend $8bn on it in 2018.

 

Off late, our Netflix Home Screen shows a lot more Indian titles. Not surprising considering the significant air-time given to its India strategy in the company's recent Q3 earnings call.

 

As Netflix tries to consolidate its position in a rather new and price-sensitive market, the video-streaming service is preparing to push more and more content 'tailored' for local sensitivities.

 

So what's in the pipeline?

 

For starters, one original series and eight original films. These include a spin-off to the epic Bahubali franchise, adaptations of Midnight’s Children and Bard of Blood and a feature film starring Rishi Kapoor unassumingly titled Rajma Chawal. Now while the last one may invoke good-old memories for some and judgmental rebukes from others, it remains to be seen if Netflix’s offering resonates well or gets lost in translation.

 

Moving on to Today's Top 6 Business Stories through our End Of Day Wrap Up:

 

INDIA

 

Govt may push to cap RBI’s surplus reserve, and transfer the balance amount to it.

As per an India Today article, with the RBI’s surplus reserve running up to c. INR10L cr, the govt might ask the central bank to limit its surplus reserve and transfer the remaining to the govt. The matter is likely to be taken up in the RBI board meeting to be held on November 19.

 

The RBI keeps 27% of its assets as reserves vs. 13-14% kept by most central banks around the world.

 

Govt considers delaying oil subsidy payment due in FY19 to Q1 FY20.

As per a Business Standard article, subsidy on oil for FY19 is likely to exceed INR46,000cr vs the budgeted estimated of INR25,000cr.

 

In the face of a widening fiscal deficit (touching c. 95% of FY19 target in April-September) and higher than expected payment burden, the govt is likely to push the payment to the first quarter of FY20.

 

SpiceJet and IndiGo planning to launch flights to China.

As per a Business Standard article, low-cost airlines SpiceJet and IndiGo are planning to launch flights to Guangzhou and Kunming in China. China is an all-season market due to many IT professionals working with Chinese companies and the large presence of Indian traders in Guangzhou and Kunming.

 

However, industry experts flag extreme competition from Chinese airlines which are heavily subsidized by the govt and can engage in predatory pricing when faced with competition as a potential barrier to entry.

 

Moody’s places Airtel on review for downgrade.

Bharti Airtel’s “Baa3 issuer and senior unsecured rating” has been put under review for possible downgrade on back of high debt levels and weak cash flow generation due to sustained competition from Reliance Jio.

 

As per Moody’s, “The ratings could be downgraded if the company fails to use proceeds received from its recent pre-IPO of its African business or its proposed capital-raising activities for debt reduction.”

 

US/INTERNATIONAL

 

Muted Bitcoin volatility might indicate a revival for the cryptocurrency market.

As per a WSJ article, Bitcoin’s 30-day volatility recently fell to its lowest level since December 2016, even though the wider US stock market suffered its worst month in more than 7 years. The muted swings vis-à-vis traditional markets might suggest that investors are waiting for the next technological development that might gain more traction for cryptocurrencies.

 

FDA prepares to announce harsh restrictions on sale of flavored e-cigarettes, also plans to ban menthol cigarettes.

As per US Food and Drug Administration (FDA) officials, menthol cigarettes are associated with increased smoking initiation by teenagers and young adults, possibly because menthol helps reduce the throat irritation caused by cigarette smoke.

 

Electronic cigarette company, JuuL to stop sales of most flavored e-cigarettes in retail stores in anticipation of the announcement

 

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