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India's First Blockchain Payment, US Midterm Elections et al.

Professor of Financial Economics and Part-time Value Investor, Transfin.
Nov 11, 2018 2:42 PM 3 min read
Editorial

Good evening reader,

 

This week has been a mixed bag. While the domestic markets were rather muted owing to the festive shenanigans, the global markets witnessed some fluctuations in the aftermath of the Midterm elections.

 

This week’s Podcast was a discussion on how the American electoral system is different from that of India and how the impact of Midterm Elections will potentially play out.

 

Back home, the battle between the Government and the Central Bank continued. Nikhil’s article was an attempt to understand why the RBI, the Government of the day, and Businesses always disagree on the role of inflation in setting Interest Rates. – a perennial bone of contention amongst the three.

 

Switching to a lighter discussion, the LongShorts this Thursday examined the business model of the most popular video game of the world.

 

Moving on to this week's Top 6 Business Stories through our End Of Week Wrap Up:

 

INDIA

 

Reliance receives India’s first payment via blockchain.

In a first, HSBC Holdings has executed a letter of credit payment using blockchain for an export by Reliance Industries to US-based Tricon Energy.

 

Use of blockchain can significantly reduce the time involved in exchange of export documentation from seven-ten days to less than a day, reported the company.

 

FPIs infuse INR4,800cr in the last five trading sessions on back of stabilizing global crude oil prices and rising Rupee.

Foreign Portfolio Investors (FPIs) infused INR215cr in the equity markets and INR4,557cr in the debt market in the first week of November.

 

FPIs had pulled out over INR28,000cr from the capital markets in the July to September period.

 

Govt earmarks loans worth c. INR9,000cr for MSMEs as part of its outreach and support programme.

The Prime Minister had on Friday announced a 12-point package for Micro, Small and Medium Enterprises (MSMEs) as a part of a 100-day outreach and support programme, which aims to provide MSMEs with increased access to credit and cash flows, along with a liberal business environment.

 

The MSME sector contributes about 45% to manufacturing, 40% to exports and roughly 8% to the GDP.

 

US/INTERNATIONAL 

 

US Fed keeps rates unchanged on back of a strong economy, signals potential hike in December.

Federal Reserve held short-term interest rates steady at 2 to 2.25%. The Central Bank noted “that the labour market has continued to strengthen and that economic activity has been rising at a strong rate.”

 

Dow Jones Industrial Average surges nearly 550 points; US stocks rally post Midterm elections, Asian stocks follow suit.

S&P 500 rose 2.1% on Wednesday, the largest gain in the session after an Election Day since 1982. Following suit, South Korean and Japanese indexes ended higher on Thursday. Major companies including Tencent, Samsung and Toyota traded higher.

 

The jump is likely on back of a divided Congress, one where Democrats control the House of Representatives and Republicans control the Senate. This is likely to put in place some checks and balances, with a lesser chance of tax cuts or other measures that could drive up US borrowing costs by stimulating more robust growth and quicker inflation.

 

Robyn Denholm to replace Elon Musk as Chairman at Tesla.

Tesla appoints Chief Financial Officer of Australian telecommunications company Telstra Corp as Chairman. Denholm has been on the Tesla board as an independent director since 2014 and has had senior roles at other Silicon Valley tech companies including Juniper Networks, Sun Microsystems and Toyota.

 

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