📈 India’s nifty-fifty is booming

Good morning Investor. “Envy is inversely correlated with self-examination. The less you know yourself, the more you look to others to get an idea of your worth.”

— Lawrence Yeo

MARKET UPDATE

The Bitcoin Halving took place over the weekend, meaning that miners’ rewards have now been halved from 6.25 Bitcoin per block to 3.125 Bitcoin per block.

TODAY’S BIG HEADLINES

• India’s nifty-fifty is booming

• How AI is revolutionizing sports

• The Semiconductor “Super cycle” isn’t here yet

• Pension funds pull hundreds of billions from stocks

MACROECONOMICS

India’s nifty-fifty is booming📈

The Rise Of A Titan: It’s no secret that India is on the upswing. In fact, the Indian Nifty Fifty is flexing its muscles with a 12-month return of almost 27%, leaving both the Nasdaq and the S&P 500 in the dust. These Herculean returns are powered by an economy that’s growing faster than a teenager on a protein shake diet. It’s set to outpace China as the world’s largest contributor to global economic growth by 2028. That’s closer than the expiry date on your milk carton!

Growth Engine: India is currently experiencing a boom thanks to its appeal as a global manufacturing hub, and this reputation continues to get a facelift as the government pumps money into infrastructure like a bodybuilder on steroids. Last year alone, the government flexed its financial biceps, spending a whopping $240 billion on improvements, a threefold increase from five years prior. To give you a sense of the scale of these improvements, there are more airports due for completion in the next 12 months than there are episodes in a season of Game of Thrones (81 airports).

The Power Of Youth: India’s secret weapon is its young, burgeoning population. A young workforce is typically more productive and often the spender keeping the economy alive, much like a caffeine-addicted college student during finals week. As of 2022, more than half of India’s population was 25 years old or younger, giving it a sizable advantage over its peers in Asia with regards to manufacturing.

Outsized Returns: Goldman Sachs recently spilled the beans that within a five-year rolling period anytime since 2000, more than half of the stocks contained within India’s Nifty 500 index generated over 10X returns. Putting its global elite peers to shame.

Investable Assets: Due to government restrictions, directly investing into Indian-listed stocks is about as easy as nailing jelly to a tree. Fortunately, there are ETFs which can provide exposure to both India’s nifty fifty and broader market index which mostly consists of 100 small and mid cap stocks. These include the iShares India 50 (INDY), the iShares MSCI India ETF (INDA), or for non-US investors, the iShares MSCI India UCITS ETF (NDIA).

sources: (Forbes), (Investor’ Chronicles), (Goldman), (Hargreaves Lansdown)

ARTIFICIAL INTELLIGENCE

How AI is revolutionizing sports 🏉

Reel To Real: Remember the film Moneyball starring Brad Pitt and Jonah Hill? It was based on a small-time baseball team, struggling to compete with its rivals due to their financial strength. Given this situation, management turned to data-driven decisions, only buying players based off their statistics. This led to the longest ever winning streak in the MBA. We are currently seeing a very similar trend in the real world, thanks to AI tools crafted by London-based sports data company, Prospect and its subsidiary, Oval.

From Zero To Hero: The English Rugby team Leicester Tigers, who finished dead last in the rugby league back in 2019, turned to Prospect’s AI tools and everything changed. The club’s fortunes began to turn as they managed to win the premiership in 2022, beating all 13 of their rivals. It’s like the nerdy kid at school suddenly becoming the prom king. A similar trend has been observed in football, cricket, and other sports, where the integration of AI tools has led to significant improvements in team performance.

The Magic Wand: These AI tools are used for a plethora of tasks such as helping clubs scout for players, analyze their performance, and plan tactics against opponents in ways that were previously considered too complex. It’s like having a magic wand that can do everything from making your bed to cooking your dinner.

The Economics: The use of AI tools is now also proven to increase the revenue of a club with Deutsche Bank stating “better performance and management strategies can directly increase ticket sales and merchandise sales.“, resulting in an ever increasing valuation of the club as a whole by demonstrating potential for higher, more sustainable earnings.

sources: (Fortune), (ABC News)

SEMICONDUCTORS

The Semiconductor “Super cycle” isn’t here yet🌊

The Chip Dip: Last week, the semiconductor world held its breath as ASML (ASML) and Taiwan Semiconductor (TSM), the LeBron James and Steph Curry of the AI space, unveiled their first-quarter earnings. Despite Nvidia’s (NVDA) Usain Bolt-like sprint in the AI data center market, the earnings reports were more of a mixed salad than a gourmet feast, sending semiconductor stocks on a rollercoaster ride. This week, all eyes are on Cadence Design (CDNS) and Texas Instruments (TXN), the industry’s next top models, as they prepare to strut their stuff on the earnings catwalk.

The Prodigal Son: ASML, the middle child, left investors feeling like they’d bitten into a sour apple after reporting net bookings of €3.6 billion, falling short of the €5.4 billion expectations. But fear not, order intake is notoriously lumpy. Plus, with TSMC, Samsung, and Intel setting up shop in the US (courtesy of Uncle Sam’s subsidies), ASML’s machines will soon be hotter than a fresh batch of cookies, receiving orders from everyone! And let’s not forget, ASML now rakes in about 25% of earnings from servicing, maintaining and upgrading its ever-growing installed base of equipment.

The Golden Child: TSMC, the family’s golden child, had investors doing the happy dance with an AI-powered double whammy of revenue and earnings beats. The company is projecting AI revenues to grow at a 50% compounded annual growth rate across the next 5 years, faster than Jack’s beanstalk, with AI accelerators set to make up a “low teens” percentage of revenue by the end of 2024.

The Bigger Picture: But let’s not forget, the chip industry isn’t just about AI chips. It’s like a pizza - there’s more than just one topping. TSMC’s biggest customer, for instance, is still the smartphone maestro, Apple (AAPL). But with smartphone sales dropping faster than a hot potato, the smartphone sector is looking less appealing than a cold cup of coffee. Sales have dropped from 43% of revenue for TSMC down to 38%. Add to that a slowdown in electric vehicle demand, and TSMC’s automotive and IoT segments are feeling the pinch. In short, take AI out of the equation, and the semiconductor space is tighter than a pair of skinny jeans.

sources: (Reuters), (MSN)

INSTITUTIONAL INVESTORS

Pension funds pull hundreds of billions from stocks 👋

The Great Retreat: The market landscape is changing faster than a chameleon on a rainbow, moving from a state of greed to a state of fear. This shift is as clear as day in the actions of large institutional investors, especially the $9 trillion pension fund market. Goldman Sachs predicts that pension funds will offload $325 billion worth of stocks this year, nearly double last year’s yard sale.

Greener Pastures: It seems that investors are now playing the field, looking for greener pastures offering better risk-adjusted returns. Real estate, private equity, and other markets, including bonds (still trading at bargain basement prices), are looking more attractive than a sunset on a beach.

Cashing In: According to the head honcho at Goldman Sachs, the main reason for this predicted stock clearance sale is that pension funds are cashing in their chips, locking in the gains from the bull market joyride of the past 15 months. They’re trying to play it safe, like a squirrel stashing away nuts for the winter, to ensure a comfy retirement for their beneficiaries. Whether this prediction holds water or is as leaky as a sieve, only time will tell.

sources: (WSJ), (BusinessDesk)

MORE NEWS

Additional market-moving events🌎

• Layoffs Everywhere: Shoe-maker Nike are set to layoff 740 jobs at its headquarters by late June of this year in yet another a cost-cutting measure. (Bloomberg)

• Recalls Galore: Ford are recalling 456,565 vehicles in the US due to a potential loss of drive power from low battery issues. Meanwhile, Tesla recalls 3,900 Cybertrucks due to a fault accelerator pedal. (TechRadar)

• Mortgage Crisis: Mortgage rates surge past 7%, reaching this year’s highest level with the 30-year fixed-rate mortgage averaged 7.10% for the week, up from 6.88% the week prior. (CNN)

• Brick-And-Mortar: Online furniture retailer Wayfair is opening its first physical location next month. (CNN)

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• Evolution AB: 1,281.00 SEK (📉-2.39%)

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