Aurelia Butler

MUMBAI (Reuters) -India’s best-known stock investor Rakesh Jhunjhunwala, dubbed the country’s Warren Buffett, died on Sunday, prompting an outpouring of tributes for a self-made billionaire whose fortunes rose with the country’s economy.Jhunjhunwala died at the age of 62, a week after the launch of his budget airline, Akasa Air. He had looked and sounded frail promoting the carrier. The cause of his death was not immediately known.He is survived by his wife, whom he used to call his only client, and three children. He leaves stakes in around three dozen Indian companies and a legacy of quoting one-liners like “the trend is your friend” and “the only rule I have is there are no rules”.”All I’ve known is trading and investing. I don’t want to do anything else in life,” Jhunjhunwala told Reuters 10 years ago. “I’ll call it quits the day I die.”On Monday, he told CNBC-TV18 that India’s economy, Asia’s third-biggest, was “entering a golden age,” expressing hope that “my fellow Indians are as optimistic as I am.”Jhunjhunwala was a big public supporter of Prime Minister Narendra Modi, who lauded him on Sunday as “indomitable, full of life, witty and insightful”.Jhunjhunwala’s communication skills helped small investors understand the stock market, said businessmen and bankers based in India’s financial capital, Mumbai, who had interacted with him for over 30 years. His insights on the economy and companies made him a TV celebrity.Born in the state of Rajasthan and trained in chartered accountancy, Jhunjhunwala started dabbling in stocks as a teenager and went on to manage a stock trading firm, RARE Enterprises. His net worth was about $6 billion, according to Forbes.He made his first big profit by buying 5,000 shares in Tata Tea with borrowed money, confident the markets had under-estimated the potential of a company looking to grow at a time of rising yield production. He trebled his money within months.Better, bigger investments followed, including a leveraged bet in the late 1980s on iron ore exporter Sesa Goa. Jhunjhunwala bought the stock at 60-65 rupees and sold at 2,200 rupees.His firm’s investments include many Tata Group companies, such as Tata Motors (NYSE:TTM), watchmaker Titan, Tata Communications and Indian Hotels Co, which runs the Taj hotels.Other investments include Indiabulls Housing Finance, Star Health Insurance, Federal Bank and vocational training company Aptech Ltd.Jhunjhunwala had told Reuters the growth of the Indian stock market since the country’s economy was liberalised in 1991 – a period in which the main Sensex index has risen about 40-fold – was a big factor in his success.”Investor, bold risk taker, masterly understanding of the stock market, clear in communication – a leader in his own right,” Finance Minister Nirmala Sitharaman wrote in a tribute on Twitter (NYSE:TWTR). “Had strong belief in India’s strength and capabilities.”Uday Kotak, chief executive of Kotak Mahindra Bank, and school and college mate, said Jhunjhunwala “believed stock-India was undervalued. He is right.”Kotak said on Twitter: “Amazingly sharp in understanding financial markets. We spoke regularly, more so during COVID. Will miss you Rakesh!” More

The writer is executive director of American CompassAt first glance, Republican opposition to the Chips and Science Act, through which Congress approved more than $70bn in support for the American semiconductor industry and roughly $200bn for scientific research, appears a straightforward story — of course the GOP resisted “big government” and “picking winners and losers”. But the criticism actually came from the opposite direction. Republicans showed an appetite for intervening in markets, confronting corporations, and unwinding globalisation. To appreciate how sharply America’s economic debate has swerved, one must dive into the legislative details — where platitudes about “strengthening America” and “helping working families” give way to trade-offs that force the application of abstract principles to decisions. With Chips, the main argument was over “guardrails”. The bill would offer semiconductor manufacturers billions of dollars in grants to build new fabrication plants in the US. But those grants came with strings attached. Any company accepting federal money for an American project had to agree not to make any new high-tech capacity investments in China. Despite sounding simple, such guardrails have various parameters. What counts as “high-tech”, and who decides? Should the definition be fixed, or should it evolve? Intel and others, determined to both take federal money and invest aggressively in China, lobbied to weaken the guardrails — and here the swerve comes into view. Historically, Intel might have expected a sympathetic hearing from Republicans. It is a large corporation seeking to maximise profits and make investments to further that goal. Isn’t that the GOP formula for a rising tide that will lift all ships? No longer. When the Democratic majority in the Senate was swayed by chipmakers’ advocacy and modified the bill accordingly, the Republicans were incensed. Their frustration is expressed in the memo quickly released by the Republican Study Committee, the largest caucus of conservatives in the House of Representatives. Entitled “Chips for China”, it warned that “it is especially critical to understand how [the bill] fails to protect US taxpayer dollars intended to boost semiconductor production from flowing to China”. Kevin Roberts, president of the Heritage Foundation, appeared on Fox Business to decry subsidising “the construction of semiconductor factories in China”. But keep the money in America, he told an audience at the Intercollegiate Studies Institute’s American Economic Forum later that week, and he would be “all in”. The question here is not whether federal spending should go towards construction in China. The Chips Act unambiguously specifies that a company can only receive a grant for a project in the US. The Republican claim is that a company benefiting from a federal programme should not be able to invest in China at all. But if supporting an entity that does business there constitutes “helping China,” then everything helps China. By this metric, a tax cut to encourage investment by multinationals is an impermissible pro-China subsidy. What Republicans are saying is not really specific to Chips — rather, it evinces a crossing of the Rubicon towards full decoupling from China. After all, it hardly makes sense that an American semiconductor company making new, publicly-supported investments in the US should be barred from investing in China, while one refusing to invest domestically is free to partner with the Chinese government. The underlying logic of the GOP criticism is that investment in China is not in the American interest and the implication is that federal policy should respond, paeans to “free trade” be damned.Legislation already under consideration would restrict investment flows both to and from China — for instance, implementing more stringent reviews, limiting Chinese access to US capital markets, and prohibiting the transfer of sensitive technology. But if Republicans don’t want Intel investing in China, they presumably feel the same way about Apple, Tesla, Goldman Sachs and Pfizer — and Harvard. Recent GOP rhetoric suggests they are less interested in subjective standards and reviews than outright bans. If they do well in November’s midterms, expect rapid advances in this direction. A more aggressive industrial policy could also follow. The rationale behind the Chips Act will hold for other critical industries like communications equipment, rare-earth minerals, and biopharmaceuticals. Conservative interest in rebuilding America’s industrial base may finally be overtaking the free-market fundamentalism that once dominated the centre-right. More

Did the rate of UK inflation rise last month?Surging oil and gas prices, coupled with climbing food costs, are weighing heavily on the UK economy. In June, inflation in the country hit a fresh 40-year high of 9.4 per cent, above levels in the eurozone and US.Inflation data for July will be released on Wednesday, with economists polled by Reuters expecting the consumer price index to have risen by 9.7 per cent year on year. British households are forecast to face average annual energy bills above £5,000 next year, as Russia’s war in Ukraine adds to a squeeze on oil and gas supplies to Europe.Earlier this month, the Bank of England warned that UK inflation is expected to hit 13 per cent and the country would fall into recession by the end of the year. The bank raised interest rates by 0.5 percentage points to 1.75 per cent as it attempts to damp demand and stem rising inflation. Vasileios Gkionakis, head of G10 currency strategy at Citi, said that inflation in the UK is “likely to prove stickier due to Brexit, complicating further [the] BoE’s policy.”The US consumer price index rose by 8.5 per cent year-on-year in July, according to figures released this week, slowing compared with the previous month. “The US doesn’t have quite as acute an energy issue as the UK,” said Lyn Graham-Taylor, senior rates strategist at Rabobank, adding that the Bank of England finds itself having “to sacrifice the economy” by raising interest rates in order to bring surging inflation back down to the 2 per cent target. Nikou AsgariWhat will retail sales tell us about the state of the US consumer? US retail sales figures for July are expected to give market participants insight into consumer confidence at the start of the third quarter — an important data point after two quarters of contraction. Economists polled by Bloomberg forecast that the Commerce Department will report a 0.2 per cent increase in overall retail sales in July from the previous month, a slowdown in growth from the 1 per cent increase reported for June. Some of the difference may be attributable to the decline in petrol prices since June, when the average cost for a gallon at the pump peaked at over $5. The move between June and July is less stark when auto and petrol prices are stripped out, though it still shows a slowdown: the Bloomberg poll indicates expectations of a 0.3 per cent increase in July versus 0.7 per cent in June. Analysts at Bank of America suggest it is possible that the plunge in gas prices — which was evident in a slowdown in annual consumer price inflation in July — could have ramped up consumer spending in other areas of the economy. Those analysts forecast a 0.9 per cent month over month increase in retail sales, stripped of the effects of spending on cars, petrol, building materials and restaurants. The data come in the wake of a red-hot jobs report for July as well as a second consecutive quarter of contraction in gross domestic product in the April-June period, the combination of which has provided a somewhat muddled picture of the state of the American consumer. “Following the second consecutive contraction in real GDP during Q2, the moderation in inflation and durability of consumption will inform how the third quarter plays out in terms of realised growth,” said Ian Lyngen, head of US rates strategy at BMO Capital Markets. Kate DuguidHas the dollar turned?The US dollar has been on a tear. The Federal Reserve’s aggressive interest rate rises, aimed at curbing inflation, have helped push the greenback to 20-year highs in recent months. Yet economists are divided over how much further the currency has to run.The latest US consumer price index data, which investors were watching closely for clues over how far the Fed will lift borrowing costs, showed signs of steadying in July. Wall Street stock markets rallied in response, and the dollar index — which measures the greenback against a basket of six other currencies — has slipped about 3 per cent lower from its July 14 peak. “Barring a major upward repricing of rate expectations or revived hard landing fears,” Société Générale’s Kit Juckes said on Friday, “the dollar has peaked for good, subject as ever to what is going on elsewhere.”Others are less sure: over 70 per cent of currency strategists polled by Reuters in early August thought the dollar’s strength had yet to peak, though a third of those surveyed said it would do so within the next six months.ING’s Christopher Turner is among those who reckon the dollar will stay strong to the end of the year, arguing that it tends to benefit from high rates of inflation, slowing economic growth and “flat/inverting US yield curves as we have today” — referring to the scenario where yields on shorter-dated government bonds are higher than those on longer-dated bonds.“Not until investors become convinced that the Fed is prepared to stimulate, not slow, the US and global economies should the dollar turn lower,” said Turner. George Steer More