Good morning! The INDIA opposition bloc’s performance in the 2024 Lok Sabha elections caught everyone off guard, but that’s far from the only surprise this election season. According to PTI, Lucknow-based legal publisher Eastern Book Company (EBC) is reaping the rewards of INDIA leader Rahul Gandhi flashing its pocket version of the Indian Constitution at rallies. Measuring 20 cm x 9 cm, this leather-bound copy has been around since 2009 and is a popular gifting option for dignitaries and lawyers. But EBC says orders are piling up for the “coat pocket Constitution”, whose last edition sold up to 6,000 copies. We wholeheartedly support politicians brandishing (the right) books and inadvertently supporting local publishers this way.

Programming note: We are on leave today on account of Eid ul-Adha. There will be no editions of The Signal newsletter and The Signal Daily podcast on Tuesday, June 18.

🎧 How does the Indian summer impact electric vehicles? Also today: China's formidable solar energy industry is facing the twin challenges of prices crashing at home and trade restrictions abroad. Tune in to Spotify, Apple Podcasts, Amazon Music, Google Podcasts, or wherever you get your podcasts.

The Market Signal*

Stocks & Economy: Political turbulence in Europe is making global investors jittery. French President Emmanuel Macron calling for snap elections has thrown his country’s political parties in disarray. They are hastening to cobble together coalitions even as they bicker about agendas should they come to power. 

Observers are forecasting far-right ascendancy in France even as they expect the Tories to be routed in neighbouring UK which will go to the polls on July 4. 

US markets are calm and that, The Wall Street Journal reports, is making investors nervous. The volatility index, also known as the fear gauge, has dropped to a five-year low and they know that it is unlikely to stay subdued for long. What worries them is the uncertainty of what comes next. Asian markets were awash in red in morning trade. Indian markets are closed for Eid ul-Adha.

GEOPOLITICS

A Thawing Of The Ice

The camaraderie between Indian PM Narendra Modi and Italian counterpart Giorgia Meloni is grabbing headlines in the Indian media. But there’s a juicier story about Modi trying to rebuild bridges with US president Joe Biden and Canadian PM Justin Trudeau at the just-concluded G7 summit in Italy.

Modi used his prime placement in the G7 ‘family photo’ to strike conversations with Biden and Trudeau at a time when Washington and Ottawa have accused India of trying to assassinate dissidents on their soil. India is now cooperating more with both countries about the murder plots, which may have given Modi an opening.

A more consequential stabilising of relations is taking place between China and Australia. Premier Li Qiang became the first Chinese leader to visit Australia since 2017 — a significant development given the otherwise hostile bilateral relations, Indo-Pacific tensions, and Australia being a close ally of the US.

PODCAST

Tune in every Monday to Friday as financial journalist and host Govindraj Ethiraj gives you the most important take on the latest in business and economy.

In today’s episode, he speaks about Wall Street’s nerves, the Hyundai IPO, likely the largest in India, and the global shipping crisis.

CORPORATE

The Pretence Is Over

OpenAI’s governance model of the nonprofit parent overseeing the for-profit business won’t stick if CEO Sam Altman has his way. The Information reports that he’s in talks with shareholders to possibly turn OpenAI into a for-profit benefit corporation that could finally give him equity in the company that once ousted him for not being “consistently candid”. Altman was reinstated as OpenAI’s chief with help from friends such as partner-investor Microsoft and backer Khosla Ventures.

Why this matters: The primary responsibility of OpenAI’s nonprofit board is to prioritise the company’s mission of “AI for the benefit of humanity”. But investors like Microsoft have pushed for a for-profit model that could give them board seats and quicker returns on investments. Restructuring will remove profit caps for shareholders.

Tangent: OpenAI still claims to work for the benefit of humanity, but according to Financial Times, it’s hiring more lobbyists to influence AI regulation worldwide.

STRATEGY

One Man’s Trash, Another Man’s Treasure

Word on the street is that One97 Communications, the parent company of Paytm, is in advanced talks with Zomato to sell its movies and ticketing businesses. While Bloomberg reports that there are “other suitors” for Paytm Movies and Paytm Insider, The Economic Times (ET) reports that Movies and Insider will be merged into one vertical, which could be valued at around Rs 1,500 crore. If the deal goes through, it will be Zomato’s largest acquisition after Blinkit (then Grofers), which was snapped up for Rs 4,447 crore.

Movies and Insider compete with segment leader BookMyShow, which is closing a funding round that values it at ~Rs 7,500 crore. Paytm doesn’t disclose standalone numbers for these businesses, though events and ticketing fall under ‘marketing services’. That vertical reported revenue of Rs 1,734 crore in FY24. Zomato began sharing numbers from its “going out” vertical — which includes food fest Zomaland — late last year. It reported Rs 73 crore in revenue for the October-December 2023 quarter.

The Signal

According to the ET report, One97’s decision to sell the businesses comes after the board urged chief Vijay Shekhar Sharma to fix what’s broken: financial services and payments, both of which are in the doldrums after the RBI’s ban on Paytm Payments Bank.

While Paytm focuses on its core businesses, Zomato’s Deepinder Goyal is a step closer to his stated diversification plan for a “fourth large business”. After all, movies and events are an obvious choice to capture additional consumer demand for food and/or staples.

FYI

Bundle of energy: India is in talks with Equinor to secure long-term liquified natural gas deals and have the Norwegian energy giant participate in exploration and production of local petroleum reserves, Mint reports.

Green bet: Essar Group is planning a four-year investment of Rs 30,000 crore to set up a green hydrogen plant in Gujarat and also considering a foray into mining critical minerals for renewable energy.

Delay upon delay: Boeing has informed its suppliers about a three-month delay in 737 output goals, a decision that will affect airlines already waiting to expand fleets, Reuters reports.

Nature’s fury: Authorities in California have evacuated at least 1,200 people as a wildfire north of Los Angeles continues to spread over thousands of acres.

THE DAILY DIGIT

~10,000

The number of staffers laid off by Indian startups during January-June 2024, per data from Longhouse Consulting. Twenty-one thousand startup employees were fired in the first half of 2023. (The Economic Times)

FWIW

They ain’t playing: The world’s biggest sporting spectacle is getting toned down. Organisers of this year’s Paris Olympics, as well as future hosts Los Angeles and Brisbane, have vowed to make the Games more sustainable. That means everything from recyclable cups to constructing fewer new venues. Paris has pledged to cut emissions in half compared to the 2012 London and 2016 Rio de Janeiro games, and it’s trying to achieve that goal by shunning diesel generators and serving athletes less meat. The athletes’ village, which has natural ventilation instead of air conditioning, will also be converted into a social housing facility after the event. Critics feel such measures are a drop in the ocean because athletes and spectators fly thousands of air miles anyway for the Olympics. The only thing that will make a radical difference, they feel, is to ‘decentralise’ the Games and organise “sub-events” across the globe. We stan this idea tbh.