1. No surprises that the plumbing of Indian capital markets is of dubious quality. Sample this about credit ratings of Indian corporates,
While India has 70-odd companies that are rated highest quality, only two companies in the US enjoy this distinction. No company in Germany and UK enjoys AAA rating. Among emerging countries, China has only 14 AAA-rated entities. This implies a gulf between credit standards in India and elsewhere. The exacting standards observed in other countries are missing among domestic agencies.
2. Economist on African countries building up cash transfers based social protection programs,
From 2010 to 2015 the countries of sub-Saharan Africa launched an average of 14 schemes per year, up from seven per year between 2001 and 2009. These countries spend an average of 1.2% of GDP per year on social safety-nets, using a broad definition that includes pensions as well as support for children and the poor. That is only a little less than the average for developing countries (1.6%).
In countries where state capacity is chronically weak and public provisioning of services of appalling quality, cash transfers may not be a bad idea. And in any case, as a social safety net, it is a good idea. The only question is whether these countries have the fiscal space to provide this as well as the regular public goods.
3. Tax avoidance, Amazon edition,
The company, with nearly $11 bn in earnings in 2018 paid nil corporate tax. Unlike others who transfer profits to off-shore subsidiaries or undertake reverse mergers, Amazon takes advantage of Section 162 (m) of US tax code by expensing stock-based compensation.
4. The Adani Enterprises has bagged the 50 year concession for operating all the 5 currently AAI operated airports - Lucknow, Jaipur, Ahmedabad, Trivandrum, and Mangalore - which were put up for auction. They quoted the highest per-passenger fee for all the five airports, bidding "aggressively" to bag the contracts in a very competitive race. The tender also includes rights for developing real estate projects and operating retail within the airports. Adani Enterprises, which has no experience of running commercial airports, also becomes the largest airport operator in India.
I am not sure this is a good turn of events for multiple reasons. Is the bid motivated by the secondary activity of real estate and commercial development of the airport assets or development of the airports themselves? Does the Adani group have the ability to develop the financial strength over the next 3-4 years to ensure that is effectively delivers on its short to medium-term contractual obligations (almost Rs 12,500 Cr investments in next five years), given their already big commitments on new ports, gas distribution, power transmission, and now airports, not to speak of its already over-leveraged (Rs 1.2 trillion group debt) legacy businesses? Finally, while perhaps too early, are competition authorities not concerned by the Group's dominance (or likely dominance) in several sectors?
Just 43 per cent of trade in textiles and apparel was based on labour-cost arbitrage in 2017 (defined as exports from countries whose GDP per capita is a fifth or less than that of the importing country), compared with 55 per cent in 2009, as the first chart shows. For furniture, toys and other labour-intensive goods, there has been a decline from 43 per cent to 35 per cent over the same period.... McKinsey calculated that trade intensity (the ratio of gross exports to gross input) rose rapidly from 1995 to 2007, when it peaked at 28.1 per cent. It has since fallen back to 22.5 per cent. In addition to this, trade has become more regional. The share of goods traded within the same region fell from 51 per cent in 2000 to 45 per cent in 2012, MGI said, but has rebounded to 47.7 per cent, led by Asia and Europe. This reduces the scope for emerging countries to sell to the rich west.
6. The International Court of Justice rules 13-1, in a non-binding judgement, that Britain's occupation of its 'last colony in Africa', the Chagos Islands in the Indian Ocean, is illegal. As FT writes,
In a non-binding opinion delivered in The Hague on Monday, the court said the UK’s half-a-century of rule over the islands, including expelling 1,500 inhabitants and hosting a US military base, was a “wrongful act” and not “based on a free and genuine expression of the people concerned”. “The UK is under an obligation to bring an end to its administration of the Chagos Archipelago as rapidly as possible"... Although advisory, the ruling will increase pressure on Britain to cede the islands to Mauritius, from which it split the territory... In what the court on Monday called an “unlawful detachment,” London split the Chagos Archipelago from Mauritius in 1965, three years before the end of colonial rule. From 1968 to 1971 UK authorities forced Chagossians to leave — gassing their pets — to make way for a US base on the largest island, Diego Garcia. At the time a British diplomat dismissed the islanders as “some few Tarzans or Man Fridays whose origins are obscure and who are hopefully wished on to Mauritius”.
7. David Leonhardt examines the trends associated with incomes of different income segments of the US population.
The incomes of the upper middle class have grown at the same rate as per capita income growth. His recommendation,
Politicians should recognize that there are three broad income groups, not just two. The bottom 90 percent of Americans does deserve a tax cut, to lift its stagnant incomes. The top 1 percent deserves a substantial tax increase. The upper middle class deserves neither. Its taxes should remain roughly constant, just as its share of economic output has.
8. MSCI announces an increase in China's weighting in its flagship $1.9 trillion EM index from 0.71% to 3.3% by November 2019, a decision that is expected to see an estimated $125 bn of offshore funds flowing into Chinese equities this year.
9. Finally, a fascinating Simon Kuper peek inside the great Barcelona football club and how, through its Innovation Hub, the club is creating not just the "future of football" but an entire innovation eco-system focused on sports. Sample this,
Barça field men’s, women’s and children’s teams in sports from basketball to roller hockey. The start-ups or universities with which Barcelona are partnered can test their findings on athletes. Sometimes Barça’s staff help co-develop a product. If any of this work results in a breakthrough in, say, treating hamstring injuries, then Barça’s athletes will benefit first. After that, though, the club hope to spread any new products throughout global sport... If a company can market a product as “tested at FC Barcelona”, the club will charge royalties. And if the product is in sleep or nutrition, areas in which elite athletes and ordinary mortals have similar needs, revenues could be large. Now Barça plan to launch investment funds, with initial outside capital of €125m, to invest in tech and sports projects worldwide.
In terms of a match objective, this is stunning,
The team’s basic playing style barely changes from match to match. They aim to play a passing game in the opponent’s half and to lose the ball in dangerous positions no more than six times a match, allowing the opposition about three threatening attacks. More than six, and Barça aren’t playing well.
The remarkable thing is how much value is being attached to data analytics, at least for now, in the club's successes. In fact, given this, such humility of coach Ernesto Valverde stands out,
“This is a game where the coach has less margin than any coach in another sport, because I’m shouting to the player over there, and he doesn’t hear me, and the one by my side doesn’t either. This is a continuous sport in which the coach has barely any influence, or at least much less than in basketball: we only have three substitutions, the game never stops [for time-outs]. So, football belongs to the players. For 45 minutes at a time, non-stop, the player takes his own decisions. I have to say that the great players analyse the game better than I do.”
Sample this on the limitations of data analytics,
Attacking in football is about creating superiorities. These can be numerical (two of your players against one of theirs), positional (your player controls a space) or qualitative (Messi dribbling against an inferior opponent). Barça hope that tracking data can uncover ways to create superiorities. For now, the club’s analysts can barely help the players do that. On the contrary: the analysts learn about football by observing the most intelligent players. For instance, Barça’s midfielder Sergio Busquets, the team’s pivote, knows just how to draw an opponent towards him and then release a teammate into the space the man has left. No coach shouting instructions at him through an imaginary earpiece could advise him better. How to identify intelligent footballers? A Barcelona official fantasises about one day tracking players’ brains. For now, though, the analysts suspect that the most intelligent players — Busquets, Andrés Iniesta or Messi — are those who almost always face the right way on the field.
This is brilliant sports writing. Do read the whole article.
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