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WhatsApp To Expand Payment Services, Grab to Fund OYO, Qatar to Exit OPEC et al.

Professor of Financial Economics and Part-time Value Investor, Transfin.
Dec 3, 2018 1:32 PM 3 min read
Editorial

Good evening readers,

 

below expectation Q2 GDP, and a doubtful GDP back-series placed clouds of grey around India's growth story last week. 

 

Part of the glumness was factual, but most was driven by spin and politics. 

 

This week's opener has been different. The government is suddenly confident of maintaining its fiscal deficit (thanks to higher than expected direct taxes). Improvements in Manufacturing PMI which represent sector expansion, a Moody's stamp of a "weak but stable" banking sector perhaps leaves a different after taste. 

 

There are nevertheless convergences. The RBI expects GDP to dip further to 7.1% and 6.9% by Q3 and Q4 respectively. Their annual projection is 7.4%. Considering we've already hit below their numbers one quarter prior, the outlook cannot be rosy. Moody's trajectory concurs. 

 

Expect political distractions to hit a zenith in the months to follow. It's election time...and the economic narrative would continue to stay challenged.

 

Moving on to today’s Top 6 Business Stories through our End of Day Wrap Up:

 

WhatsApp seeks RBI’s approval to expand payment services to all 200 million users.

 

The What: WhatsApp Chief Chris Daniels wrote a letter to RBI seeking its approval to expand “WhatsApp’s BHIM UPI (Unified Payments Interface) compliant payments product to all users in India.” Currently around 1 million people are testing WhatsApp payments in India.

 

Zoom Out: The development comes shortly after WhatsApp named a grievance officer for India, and announced the appointment of an India head. WhatsApp also assured the regulator that it complies with the new payments data storage requirements stipulated by the RBI.

 

Govt proposes new Direct Tax Code to simplify the Income Tax Act; income tax slabs to remain unchanged.

 

The Aim: The proposed Direct Tax Code will aim to reduce litigation and make the tax law relevant to new business models. It will seek to simplify the IT Act and make it less prone to interpretation.

 

Also, this: Reducing tax rates or altering tax slabs are policy decisions which will be executed by annual Finance Acts to be passed by Parliament as part of the Union Budget exercise.

 

Grab in advanced talks to invest $100m in OYO. Go-Jek in talks to invest $30m in e-sports startup Mobile Premier League.

 

The What: As per a ET Tech article, Singapore ride-hailing company Grab is in advanced discussions to invest $100m (INR70cr) in  Oyo, as part of the latter’s ongoing $1bn funding round.

 

Grab and OYO, both have SoftBank as one of their primary investors and have identified Indonesia as a key market for growth.

 

Other Stuff: Go-Ventures, the investment arm of Indonesia-based tech platform Go-Jek, is finalising a $30m financing round in Indian mobile gaming company, Mobile Premier League (MPL).

 

MPL had raised $5m in October as part of its Series A round at a $12-13m valuation. The company’s earlier fundraise was led by Sequoia Capital, also an early investor in Go-Jek.

 

Hindustan Unilever signs €3.3bn deal with GSK to buy Horlicks and other consumer healthcare nutrition products.

 
The What: Unilever today announced that it has signed an agreement to acquire the Health Food Drinks portfolio of GlaxoSmithKline (GSK) in India, Bangladesh and 20 other predominantly Asian markets in an-all equity deal.

 

Up Close: The transaction is in conjunction with Unilever’s strategy of increasing its presence in health-food categories and in high-growth emerging markets.

 

Qatar to withdraw from OPEC; to focus on natural gas production instead.

 
The What: Qatar to withdraw its membership from OPEC effective January 2019 and instead focus on development and increase of natural gas production.

 

Zoom Out: Qatar has oil output of only 600,000 barrels per day (bpd), compared to the 11 million bpd produced by Saudi Arabia, the group's biggest oil producer and world's biggest exporter. However, it is the world's biggest exporter of liquefied natural gas (LNG).

 

The Big Picture: The development comes as OPEC and its allies consider a cut in supply in order to support falling crude oil prices which have slid more than 30% since Oct.

 

US postpones its threat to increase tariffs on $200bn Chinese goods to 25% from 10%. China to ‘Reduce and Remove’ Tariffs on American Cars.

 

The What: After a meeting of the top leaders from both the countries over the weekend, US postponed its threat to increase tariffs on $200bn Chinese goods to 25% from 10%. 

 

US President Donald Trump also announced in a tweet that China has agreed to reduce and remove tariffs on cars coming into China from US. Currently the tariff is 40%. US automobile exports to China were worth $9.5bn last year.

 

The Why: The move may be an attempt to contain the escalating trade wars.

 

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