Category: Economy

On Tuesday, February 20, Prime Minister Narendra Modi launched multiple development projects in Jammu. These projects included education, railway, aviation, and road sectors worth INR 30,500 crore.

PM Modi addressed a public rally at Maulana Azad Stadium in Jammu, distributing appointment letters to 1,500 newly recruited government employees and interacting with scheme beneficiaries under the ‘Viksit Bharat, Viksit Jammu’ programme. He inaugurated the Banihal-Khari-Sumber-Sangaldan railway line (48 km) and electrified the Baramulla-Srinagar-Banihal-Sangaldan section (185.66 km), initiating the first electric train service in the valley.

There were more than INR 13,375 crore projects inaugurated by PM Modi, including the permanent campuses of the IITs, the IIITDM, the Indian Institute of Skills, and Central Sanskrit University. Additionally, he inaugurated three new IIMs, 20 Kendriya Vidyalayas, 13 Navodaya Vidyalayas, and AIIMS Vijaypur (Samba), costing ₹1,660 crore, equipped with 720 beds and medical and nursing colleges.

PM Modi also laid the foundation for a new terminal at Jammu airport, road projects, and a Common User Facility petroleum depot in Jammu. He initiated development projects worth over ₹3,150 crore for civic infrastructure in J&K. The initiatives encompassed various sectors, reflecting a comprehensive effort towards the region’s development.

The Indian government is launching a landmark initiative to attract $26 billion in private investments to its nuclear energy sector. The project aims to increase electricity production and reduce carbon emissions. Major companies like Reliance Industries, Tata Power, Adani Power, and Vedanta Ltd. are being pursued for investments averaging ₹44,000 crore each.

This move signifies a significant shift as India pursues private investment in nuclear power, intending to increase non-fossil fuel-based electricity generation to 50% by 2030 from the current 42%. Discussions involving the Department of Atomic Energy, NPCIL, and private entities are ongoing to finalise the investment plan, targeting the addition of 11,000 MW of new nuclear power capacity by 2040.

Currently, NPCIL manages India’s nuclear power plants, totalling 7,500 MW in operation, with commitments for an additional 1,300 MW. Private firms will finance nuclear plant construction, including land acquisition, while NPCIL retains control of station construction, operation, and fuel management. NPCIL will oversee project operations for a fee, with private investors profiting from electricity sales. Despite a 2010 deal with the United States, India has faced fuel supply shortages as it expands its nuclear programme.

Thus, India postponed adding 2,000 MW of nuclear power from 2020 to 2030, highlighting the complexities of nuclear energy.

On Monday, Saudi Arabia closed at its highest level since August 2022, leading most Gulf stock markets higher despite diminishing chances of early rate cuts. U.S. producer prices surged in January, mainly due to rising service costs, potentially stoking inflation. Since the currencies of the Gulf Cooperation Council, including the United Arab Emirates, are fixed on the US dollar, they keep a careful eye on the Fed’s policies.

Saudi Arabia’s benchmark index rose by 0.7%, marking its thirteenth straight session of gains, driven by a 3.5% increase in ACWA Power. The Capital Market Authority and the Saudi Stock Exchange are examining more than 57 IPO requests.

The Qatari benchmark closed 0.9% higher, with Qatar Islamic Bank and Masraf Al Rayan rising by 2.3% and 3.8%, respectively. Dubai’s main index rose by 0.3%, with Emirates NBD leading the way with a 1.7% increase.

Head of sales at NCM, Yousef Ayoub, was optimistic about the Dubai stock market, pointing to strong corporate activity, but he also warned investors about persistent geopolitical dangers. The Abu Dhabi index decreased by 0.2%.

Furthermore, Brent crude remained stable around $83 a barrel amid continued Middle East conflicts and the risk of supply disruption, balancing concerns about demand.

The National Association of Software and Service Companies (Nasscom) projects a modest 3.8% growth in India’s technology sector revenue to $253.9 billion for the current fiscal year, a deceleration from the previous year’s 8.4% increase.

This deceleration stems from restrained client spending and delayed decision-making. The industry anticipates lower to mid-single-digit growth in all areas, including software products, BPM, IT, and R&D.

Software exports declined by 3.3% to $199 billion, contrasting sharply with the 11.4% growth observed earlier. It is anticipated that job growth will drastically decline by 80% to 60,000, in sharp contrast to the 290,000 jobs generated in the prior year. However, the total workforce of the industry increased slightly, from 5.37 million to 5.43 million.

For the fiscal year, Nasscom does not reveal the precise revenue distribution breakdown, citing uncertainty and slow decision-making.

Senior Vice President of Nasscom Sangeetha Gupta notes a major “correction in spending” following COVID-19 and links income stagnation to postponed projects. Although the pandemic sped up digital investments in industries like finance and retail, the momentum slowed down because of uncertainties in the world economy. As US recession fears diminish, Nasscom’s president, Debjani Ghosh, sees a “reversal” in sentiments by 2024.

On Sunday, most Gulf markets closed higher, bolstered by U.S. inflation data suggesting a potential interest rate cut this year and a surge in crude prices. Although consumer prices rose less than expected in December, underlying inflation remained strong, allowing central banks to adjust rates as expected.

Due to currency pegs to the US dollar, the monetary policy of the Gulf Cooperation Council (GCC) often reflects the actions of the Federal Reserve; therefore, investors eagerly await the release of the January U.S. inflation numbers.

In Saudi Arabia, the benchmark index edged up by 0.5%, supported by gains in Al Rajhi Bank and Saudi Arabian Mining Co. Moreover, news of Saudi Arabia’s possible further sale of Aramco shares to diversify its economy from oil positively impacted investor sentiment. However, Aramco’s shares experienced a slight decline.

Qatar’s index surged by 0.8%, primarily driven by Qatar Gas Transport’s selection by QatarEnergy to manage conventional-size LNG carriers. Gulf Cooperation Council nations, including the UAE, closely monitor and align their monetary policies with those of the Fed, despite a significant drop in U.S. retail sales.

The National Shipping Company for Saudi Arabia witnessed a substantial increase as Saudi Arabia’s benchmark index reached its highest level since August 2022. Meanwhile, the annual net profit of the National Agricultural Development Company rose significantly.

UAE’s non-oil foreign trade soared to a record $953 billion in 2023, with non-oil exports reaching $120 billion, a 16.7% increase from 2022. These exports have doubled since 2018 and are nearing doubling compared to 2019.
Sheikh Mohammed bin Rashid Al Maktoum attributed this success to new partnership agreements, especially with top trading partners like Türkiye, seeing a 103% rise, and Hong Kong-China, up by 47%.

Gold, aluminium, oils, cigarettes, jewellery, copper wire, and ethylene polymers were the top exports. Re-exports rose 6.9% to AED690 billion, with imports climbing 14.2% to AED1.4 trillion. Türkiye saw the highest growth at 103.7%, while Hong Kong-China, the US, and India also saw significant increases.

The UAE’s services trade surplus surged to AED207 billion in 2023 from AED96.26 billion in 2021, led by sectors like travel, ICT, professional services, education, and logistics. Q4 2023 witnessed record non-oil foreign goods trade at AED710 billion, with non-oil exports hitting AED132.2 billion, marking consistent growth since Q1 2023. China remained the top trading partner, followed by India, the US, Saudi Arabia, and Turkey. The UAE’s trade resilience, supported by strategic alliances and a wide range of industries, highlights its status as a hub for global trade that is ready to grow.

Japan’s recent decline to the fourth-largest economy in the world highlights the growing difficulties it confronts due to its ageing population and declining currency. Even though growth appears to be picking up steam in the fourth quarter, Japan’s yearly output is expected to be less than Germany’s in terms of dollars, which raises questions about the country’s economic future.

Germany offers little guidance or comfort due to its declining economy, which is characterised by rising energy prices, inflation, and slow growth.

The imminent rise of India, which the IMF projects will overtake Germany by 2027 and Japan by 2026, signals a major recalibration of the world economy. Against the ageing populations of Japan and Germany, India’s youthful demographic dividend and steady population growth make it a powerful force in innovation and manufacturing.

Meanwhile, the United States experiences a subdued deceleration in consumer inflation, signalling broader shifts in the global economic panorama. The features of global economic leadership are changing as countries negotiate the challenges of demographic shifts and economic policies.

This flux underscores the imperative for nations to adapt, innovate, and collaborate to thrive in an ever-changing global economic landscape.

India and the United Arab Emirates (UAE) have signed a groundbreaking agreement to establish a trans-continental trade corridor connecting Europe with India via the Middle East by sea and rail. Prime Minister Narendra Modi announced the pact during his visit to the UAE, backed by support from the United States and the European Union. While specific details remain undisclosed, the corridor aims to enhance regional connectivity between the two nations, building upon existing cooperation efforts.

Initially proposed at the G20 summit in New Delhi, the corridor plans to stretch from India across the Arabian Sea to the UAE, encompassing Saudi Arabia, Jordan, and Israel before reaching Europe. The region’s ongoing difficulties, which include the Gaza conflict and Saudi Arabia’s suspension of normalisation efforts, highlight the significance of this agreement.

The UAE, which has maintained ties with Israel since 2020, remains committed to the trade corridor with India, potentially impacting global trade infrastructure and the Belt and Road strategy.

Despite threats to the sea route due to Yemeni Houthi attacks, India and the UAE also exchanged bilateral investment agreements covering commerce, digital infrastructure, and electrical connectivity. This marks PM Modi’s ninth trip to the Gulf state since taking office, showcasing the growing importance of Indo-UAE relations and collaborative efforts towards regional connectivity and trade expansion.

Westports Holdings, the largest port operator in Malaysia, is considering external strategic investors to help with an RM39.6 billion (S$11.1 billion) expansion that will see nearly double capacity in the coming decades.

Executive chairman Ruben Emir Gnanalingam expressed openness to potential investors who could contribute value, mentioning options like a dividend reinvestment plan and borrowing for funding.

The expansion aims to increase capacity from 14 million to 27 million 20-foot equivalent units by 2082. Beginning in 2027, eight new container terminals will be progressively operational. This mirrors ambitious port developments across the Malacca Strait, including Singapore’s $20 billion Tuas Port, set to be the world’s largest automated terminal by 2040.

Thailand has proposed a $28 billion “Landbridge” project to bypass the Strait’s congestion by linking seaports, reducing travel time. However, Westports remains unconcerned, citing a lack of serious consideration among customers.

Amid increasing environmental scrutiny, Westports focuses on sustainability. The maritime industry’s greenhouse gas emissions rose by 20% in a decade, prompting efforts for net-zero emissions by 2050. Despite mixed results in reducing carbon footprints, the company reconsiders electric vehicle (EV) usage due to its grid’s emissions, primarily coal-powered.

On Tuesday, Japanese shares surged to a 34-year high, with the Nikkei hitting 38,010, near its 1989 record. It has seen a surge of more than 13% this year after rising 28% in 2023.

European stocks and S&P 500 futures dipped as investors awaited a US inflation report influencing Federal Reserve policy. The dollar and Treasury held steady ahead of the data. Due to investments in cryptocurrency-backed ETFs, bitcoin was hovering around $50,000.

Max Kettner, HSBC’s chief multi-asset strategist, remarked that U.S. yields had increased year to date. He pointed out that in the absence of significant tightening from the Bank of Japan, which would adversely affect the Japanese yen, it provided support to the export-driven Japanese equity market.

European stocks, including Germany’s DAX, retreated, with the Stoxx 600 down 0.51%. S&P 500 and Nasdaq futures declined, despite the S&P 500 hitting a new intraday high.

Britain’s FTSE 100 slid while the pound rose against the euro on strong wage growth data. US inflation data expected at 1330 GMT could affect markets, with economists anticipating a 2.9% CPI rise. The yen hovered near 149.4 per dollar, reflecting a 6% drop this year amidst expectations of prolonged BOJ easing.