Good morning! Wish you a Happy New Year. Beautiful river valleys? ✅ Perfect roads? ✅ Multi-million dollar supercars? ✅ No, this isn’t the shooting checklist for the next Bond film. This is the new reality of Arunachal Pradesh, which is vying to be India’s Monaco for the rich. The Print reports that the state has invested heavily in roads and festivals for motorsport fans. We’re talking Ferraris and Bugattis here. The results have been phenomenal so far, with the likes of Gautam Singhania (CEO, Raymond Group) being regular visitors. Just proves that anything is possible when the rich are involved.

🎧 Arunachal is where Lamborghini roams free. Also in today’s edition: The New York Times is dragging OpenAI and Microsoft to court over alleged copyright infringement. Listen to The Signal Daily on Spotify, Apple Podcasts, Amazon Music, Google Podcasts, or wherever you get your podcasts.

 Venkat Ananth and Adarsh Singh also contributed to today’s edition.

The Market Signal 

Stocks & Economy: US shares, which ended 2023 at record highs, began 2024 on a sombre note as a tech stocks rout led by Apple brought down major indices in the first session of the New Year. Barclays downgraded Apple, anticipating it will struggle to boost iPhone sales. Investors and traders are now awaiting the Federal Reserve’s last rate-setting meeting’s minutes, which will be released on Wednesday. 

Asia was downcast too. Japanese stocks were trending lower in morning trade. The country began the New Year rocked by strong earthquakes that brought down buildings, ripped up roads, and took lives. 

Indian stocks ended lower too. The Supreme Court will today pronounce its judgement on a bunch of cases related to the Hindenburg Research report on the Adani Group. The GIFT Nifty was subdued this morning, indicating a slow start for shares. 

Bitcoin crossed $45,000 for the first time in 20 months.

WEALTH

Bigger, Not Better…

…is how we’d describe the 2023 list of Indian billionaire promoters, which Business Standard says features a record 152 promoters of listed companies, up from 126 in 2022. Mostly thanks to an IPO boom, specifically a rally in small and midcap stocks. The biggest gainers include Authum Investment and Infrastructure’s Amit Dangi and Kalyan Jewellers’ TS Kalyanaraman, whose wealth increased by 323% and 168%, respectively.

Usual suspects Mukesh Ambani and Gautam Adani accounted for over 25% of the net worth of India’s billionaires’ club.

Meanwhile, former SoftBank executive and now CEO of Palo Alto Networks, Nikesh Arora, has become one of the rare non-founder tech billionaires. 

Why not better?: Ambani-Adani may consolidate their wealth even more this year—to the point they’ll become centi-billionaires (those with a net worth of $100 billion or more). That’s if the NDA government retains power in the 2024 general elections.

GEOPOLITICS

Red Sea Is Red Hot

Warships are crowding the Red Sea even as merchant vessels flee after the US sank three Houthi boats and killed 10 fighters when they tried to board a Maersk ship. 

Iran, which backs Yemen-based Houthis who have been attacking ships in the corridor, is ratcheting up the stakes by deploying a destroyer, ostensibly to challenge US actions. Denmark is sending a frigate to bolster the US’ Operation Prosperity Guardian even as the USS Gerald R. Ford aircraft carrier strike group left the Mediterranean for its home base.

The Pentagon says the Houthis hijacked a container ship and attacked 10 other vessels in the past month. 

Meanwhile: Israel appears to be changing tack in Gaza, pulling out some troops while continuing aerial and tank bombardment of what is now largely rubble of buildings and humanity. It reportedly assassinated a Hamas leader in Beirut on Tuesday.

MOBILITY

Are India’s Metros Falling Short?

It would be unusual to think of the metro rail system in Delhi as a failure. And it is not. Except that it is less than half a measure of what its planners originally imagined it to be and do. 

Ridership of most metro rail systems in India is just 25-30% of what they were planned for. Delhi metro rail comes closest to projections but still manages less than 50% of the riders it was expected to carry by now, according to an independent assessment. “None of the systems have achieved the estimated benefits at the time of approval of the project,” the assessment report on urban transport systems said. 

The numbers: Metro trains run along 905 km of tracks across 20 cities in India. Most city dwellers in India commute less than 10 km daily and a third of urban residents travel less than 5 km daily for work. 

The Signal

Sleek metro trains slithering along elevated tracks and underground tunnels have been long considered the ultimate solution to big city mobility. Metro rail can efficiently move people en masse quickly in crowded cities but they need to be integrated with other modes of transport. The choice of commuting by metro is often determined by last-mile connectivity. Their full economic benefits and rate of return cannot be realised at current ridership rates. India’s infrastructure, policies, and financial incentives are all skewed to encourage personal rather than public transport. That’s why 2023 was a high watermark for carmakers.

TECHNOLOGY

Apple’s Tricky New Year

Last month, Wall Street was buzzing over Apple’s potential $4 trillion market cap by the end of 2024.

However, its fast-growing revenue stream—services—could come under pressure, with regulators whirling around the company’s practices and its peers in 2024.

Why?: The antitrust case against Google could have a bearing, leaving a potential $26 billion hole in Apple’s growing annual services revenue. Its App Store is also the subject of a US Department of Justice (DoJ) investigation.

Giving in: In Europe, Apple is preparing to comply with the Digital Markets Act and made changes to its App Store. It will also allow app sideloading in the region from this year.

Beyond Apple: After ending the year with a rare win, the US antitrust “enforcers” could be in the thick of it, with the DoJ’s Google’s ad tech trial in January and the possibility of the FTC’s case against Meta moving forward.

INVESTMENT

Singapore’s Loss, Saudi’s Gain

There was a time—for six years running, up until 2023—that GIC was the world’s most active sovereign wealth fund. As Bloomberg reports, citing data from research consultancy Global SWF, the Singaporean institution, alongside Temasek, drastically slashed capital deployment. The result: Saudi Arabia’s Public Investment Fund (PIF) emerged as top dog last year, having deployed $31.6 billion, nearly $11 billion more than in 2022. In contrast, GIC cut spending by 46% in 2023.

Why?: The decline is across developed markets. Singaporean sovereign wealth funds are (relatively) gung-ho about emerging markets like India.

The trend isn’t limited to Saudi. Government-backed funds across the UAE, Qatar, Kuwait, etc. are expected to control ~$4.4 trillion in global assets by 2024-end.

In other news: Global private equity firms sitting on a record $2.8 trillion in unsold investments are increasingly banking on deferred buyer payments and corporate carve-outs in a sluggish environment.

FYI

Miracle: All 379 passengers and crew of a Japan Airlines aircraft escaped a fire at Tokyo’s Haneda Airport following a collision with a Coast Guard aircraft en route to provide aid to earthquake-affected citizens. However, five crew members of the Coast Guard plane lost their lives, according to Japan’s NHK.

Attacked: South Korea’s principal opposition leader Lee Jae-myung was stabbed in the neck by an unidentified assailant during a visit to Busan. Lee was airlifted to Seoul for further treatment.

Bid, please: The Board of Control for Cricket in India has set the base price for the title rights of the Indian Premier League at ₹1,750 crore ($210 million) for five years. Tata, the current title rights holder, The Economic Times reported, will have the right to match the highest bid.

Sweet exit: Indian patisserie chain Theobroma could soon have a new owner with minority shareholder ICICI Venture and its founding owners seeking an exit, according to Mint. The deal could value Theobroma at  ₹2,800 crore ($336.1 million).

Slash, slash: Mutual fund major Fidelity has further slashed the valuation of its holding in X (formerly known as Twitter) by 10.7% at the end of November 2023. Fidelity now values the company at 71.5% less than the $44 billion Elon Musk paid to acquire it in 2022.

Dton Rap Su: Thailand’s cabinet has greenlit a tax cut on alcohol and entertainment venues (night clubs) in a bid to boost tourism in the country. These measures will be in place until the end of 2024.

THE DAILY DIGIT

155

The number of earthquakes Japan witnessed on January 1, 2024, according to the Japan Meteorological Agency. At least 57 people have been confirmed dead. (The Economic Times) 

FWIW

Lean times: Airlines now want to remove reclining seats in economy. Apparently, the recline feature is a big headache for them. They consider its high maintenance cost, heavy weight, and countless customer troubles as pain points. Unsurprisingly, several budget airlines have used this as an excuse to take them out. Full-service airlines are looking to join the bandwagon as well, with a marketing gimmick called “pre-reclined seats”. They’re exactly how they sound and don’t have any of the above-mentioned problems. Not everyone’s enthused, but airlines have promised that these seats are just restricted to short haul flights. Feels like another step closer to cattle class. 🙃

AI in court: That’s the question on the mind of the Chief Justice of the Supreme Court of the US as well. In his annual year-end report, Chief Justice John G. Roberts Jr. talked about the need to maintain “caution and humility” while using AI. This comes weeks after it emerged that Michael D. Cohen, former POTUS Donald Trump’s aide, had supplied his lawyer with legal citations by Google’s Bard. However, the Chief Justice was quick to dismiss any possibility of AI replacing judges by noting that judges rely on nuance and body language and not just facts to deliver decisions. Not sure how that fits in with the whole ‘justice is blind’ thing. 

We ship: We’re officially bored. Why else would we obsess over the lives of strangers on a cruise? Because that’s exactly what the latest trend on TikTok is, where videos of passengers on the Ultimate World Cruise, a nine-month-long round-the-world voyage, are trending. These videos focus on life on the ship and treat passengers as characters on a reality show. The passengers have mixed feelings about this. Some have taken to this trend with elan and are posting regular videos to keep audiences engaged. The rest are still trying to come to terms with this madness.