Talking Points This Week: G20, FTX And Twitter — Highs And Lows
Chinese President Xi Jinping confronted Canadian Prime Minister Justin Trudeau at the Group of Twenty summit, accusing him of leaking details of a private meeting between the men. This video could well be the most watched video this week, and for many people, it provided an unusually candid glimpse at Xi’s interactions with other world leaders.
Quite frankly, it was the biggest talking point of a week which had other large stories like the G20 summit or the false alarm about a Russian rocket attack on Poland, had the after effects of one of the biggest fallouts in the crypto space and had news flow about China's pivot from recent policy hardlines.
Let's look at some of the key talking points this week:
China issued sweeping relaxation measures on property and Covid-19 controls, in the strongest signal yet that President Xi Jinping is now turning his attention on rescuing the economy.
Beijing unveiled an extensive 16-point rescue package for the struggling real estate market as well. The major policy shifts will likely aid China’s growth outlook and add fuel to a market rally that sent a gauge of Chinese shares in Hong Kong up 17% in the past two weeks.
However, the cities were only limping back to normalcy. There were dramatic declines in the number of people on the subway across China’s largest cities this week, including economic powerhouses such as Beijing, Guangzhou and Chongqing, despite the updated measures that ended mass testing and citywide lockdowns.
All That Could Go Wrong (With Crypto), Did
This was an epic week for crypto, bordering in importance to December 2017-2018, as cryptocurrency exchange FTX filed for Chapter 11 bankruptcy protection. The company's valuation plunged from $32 billion to bankruptcy in a matter of days, dragging down founder and CEO Sam Bankman-Fried's $16 billion net worth to near-zero.
The mess, that is now known, is unreal and so unbelievable, that it prompted the new CEO of FTX, who has 40 years of experience in some of the biggest bankruptcies in history, including Enron's, to say in court documents filed on Nov. 17 that he had never seen anything as bad as FTX.
Bitcoin prices have fallen swiftly, and if CLSA's Laurence Balanco is to be believed, there is a possibility of more downside.
Elon Musk gave Twitter Inc. employees an ultimatum to either commit to the company’s new “hardcore” work environment or leave. Several employees appeared to have quit following this deadline by the billionaire entrepreneur and the company sent messages it was closing its office buildings for the next few days.
According to a Bloomberg report, citing sources, many more workers declined to sign on than he expected, potentially putting Twitter’s operations at risk. Twitter’s future is also complicated by a possible national security review of Musk’s deal by the U.S. government. It's one story that will be followed with keen interest next week as well.
What's With Capex?
Government capex is running on track, according to all anecdotal evidence. A note from Crisil mentions that a full-fledged revival in capex in FY24 will push the corporate credit growth in double digits.
SKF India CEO Manish Bhatnagar, spoke on BQ Prime's show Talking Point, and maintained that he is not hearing many dramatic slowdown in capex noises from his clientele.
While calling himself "cautiously pessimistic", he mentioned that government capex is still running strong and he did not expect that to change.
While he is worried about private sector clients starting to sound "not-bullish", he seemed worried about the global landscape and the impact that a western slowdown will bring.
As we wrap, I would like to highlight a non-business development which was the biggest talking point for me.
Vikram-S, India's first privately developed rocket, successfully lifted off from the spaceport in Sriharikota today, marking the foray of the private sector into the country's space industry, dominated by ISRO for decades. May there be more such developments in the year to come.
Niraj Shah is Executive Editor at BQ Prime.