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Look at what the Government’s doing, not what it says

By India, News No Comments

India’s Electronics and IT Minister, Sanjay Dhotre, has confirmed his Government is bracing itself for another step towards a fully regulated Blockchain economy with publication of its latest Policy Paper: The National Level Blockchain Framework, and at its heart is a high-level route map for distributed ledger technologies focused on a single infrastructure base for multiple user platforms. In other words, Blockchain’s going to be big in India and as Mr. Dhotre put it in his written Parliamentary answer to Lok Sabha it will have “important potential applications in different areas such as Banking and Finance”…As Basil Fawltey would have put it, Sanjay Dhotre is a specialist in stating the Bleedin’ Obvious.

Blockchain will indeed have important future applications, and not just in Banking and Finance either.

Mr. Dhotre’s written reply also provides further confirmation that Prime Minister Modi’s Government is set in its intention to re-fashion the subcontinent as a Blockchain Centre of Excellence, where innovative distributed ledger platforms will be created and developed as part of the so-called Sandbox Regulatory changes that have been in place since the middle of last year and are now starting to generate some positive results.

And let’s not forget either, all this is happening despite the Government maintaining an industry-wide ban on cryptocurrency support finance and standing full square behind the Reserve Bank as it continues a hopeless defence of its 2018 decision to implement the Government’s policy: a decision that now makes Boris Johnson sound like Themistocles and would have crashed and burned months ago had it not been for the Supreme Court’s latitude in giving the Reserve Bank an opportunity to change its mind. No sign of that happening yet though (for the fourth time of asking)…

But despite all this, the Modi Government has still managed to persuade the influential Centre for Development of Advanced Computing and the Institute for Development and Research in Banking Technology to support its latest initiative, neither of them being particularly well known for Blockchain or Cryptocurrency aversion. Indeed, the Government itself is involved in key collateral projects including prospective authentication of academic certificates (with a proof-of-existence framework), vehicle life cycle oversight and hotel registry management. Not so much a wolf in sheep’s clothing as a fully-fledged sheep.

In November last year, Tech Mahindra announced that it was teaming up with the Netherlands-based Quantoz to provide secure digital payments and Tata Consultancy Services have launched a multi-brand consumer loyalty platform on R3’s enterprise Blockchain Corda. So where the Government is heading others will obviously follow if not positively take the lead. Even its own Defence Minister Rajnath Singh has started to look at potential military applications for Blockchain.

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North Block Capital Fund is structured specifically to make the most of the exciting opportunities India has to offer, launching in Blockchain DLT and Crypto Currencies. It draws specifically on the company’s unparalleled expertise in the subcontinent’s markets because when it comes to India, nobody understands those markets better than Red Ribbon.

Executive Overview

I’ve got no doubt that Blockchain has a very real potential to change the way we all do business in the future and more and more it looks like Cryptocurrencies too will become part of its single, unified regulatory structure.

Despite deliberately dampening comments last year from various Ministers and Functionaries, as well as the Reserve Bank’s increasingly hopeless defence of the claims against it in the Supreme Court, none of the Government’s recent actions and statements would suggest anything other than a long term, fully regulated Blockchain environment on the subcontinent. 

A Scattering of Bricks and Girders…The Indian Government is stiffening some spines

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A Power Station that’s only nine-tenths built is nothing but a scattered pile of bricks and girders and the occasional builder looking for somewhere to plug in a kettle: all the value is in that crucial last tenth of construction, and until it’s finished you haven’t got a Power Station at all. It’s worthless. That’s the problem with Project Finance, you pump millions into something that takes years to plan and more years to complete and right up to the last moment that crucial something isn’t really there at all. And if you can’t even see your funding security, let alone sell it, completion becomes a nerve-jangling test of nerve and resolution, which is why so many construction projects come to nothing. Look no further than the crumbling, still unfinished mega Port Complex in Sri Lanka… it’s not really a mega Port Complex at all, just a scattering of bricks and girders after the Chinese financiers lost their nerve, took away their diggers and scuttled back to Beijing.

It’s all a question of nerve and resolution, and that’s exactly why in these uncertain times Governments sometimes have to step in and stiffen some spines along the way: a lesson that was lost in Sri Lanka (hence the concrete and girders), but it’s a lesson the Indian Government of Prime Minister Modi has now taken on board.

Historically the subcontinent’s property markets have been bedevilled by unfinished housing projects, with developers running out of finance and leaving behind yet another concrete wasteland for children to play in and the homeless to find such shelter as they can. And that’s just the point: bearing in mind India’s rapidly burgeoning urban population and its pressing shortage of affordable housing stock, this all to public waste of resources has been little short of a disgrace. But not any longer…

Last month the Government approved the creation of a $1.4 Billion Fund which will be deployed to complete at least 1,600 unfinished housing projects across the country, and there will also be an additional $2 Billion available for much-needed project finance from state-run financial institutions. The Chairman of Mumbai based Anarock Property Consultants, Anui Puri, confidently predicts the approved funds are likely to “rescue thousands of homebuyers who have invested in blocked projects”, and coming from Mumbai he should certainly know what he’s talking about. At a more Macro level, Reuter’s sector report also predicts a market bounce over the coming year as the Government’s initiative starts to gain traction: 11 out of 15 analysts polled took the view the new Fund would “significantly boost demand” with average national house prices set to rise by 3% next year and 4.3% in 2021.

Modulex Construction is the World’s largest and India’s first Steel Modular Building Company, working to meet the opportunities of India’s real estate markets in a practical and focussed manner. It was established by Red Ribbon to harness the full potential of these fast-evolving markets and deliver exciting opportunities for investors: because, when it comes to investing on the subcontinent, nobody knows its markets better than Red Ribbon.

Find out more about Modulex 

Modulex Construction is the World’s largest and India’s first Steel Modular Building Company, working to meet the opportunities of India’s real estate markets in a practical and focussed manner. It was established by Red Ribbon to harness the full potential of these fast-evolving markets and deliver exciting opportunities for investors: because, when it comes to investing in property on the subcontinent, nobody knows its markets better than Red Ribbon.

Executive Overview

The bigger the project the bigger the headache, and it can certainly be frustrating, devastating even to find things faltering in the final stages of development. So it certainly has to be a good thing that the Indian Government is taking steps to ease that crucial final stage of delivery, especially bearing in mind the subcontinent’s pressing need for affordable housing where a rapidly growing and increasingly urbanised population has created demand levels like never before.

But of course, it never pays to focus exclusively on one solution only, and to my mind, Modular Construction is an equally important weapon in the Indian Government’s armoury to address this pressing issue.

For a start, a Modular Project doesn’t take years to plan and deliver, it costs less than traditional methodologies and it can deliver reliably, no matter how difficult the externalities might be. In short, there’s virtually no chance of a Modular Project remaining uncompleted. 

So whilst we should all support initiatives of the kind launched by the Indian Government last month, we mustn’t forget there are other ways forward and sometimes they’re much better ways too…

Pandrah Minats of Fame…India’s Real Estate has its Minsky Moment

By India, News No Comments

Hyman Minsky finally got his fifteen minutes of fame – what Wall Street came to call “the Minsky Moment”- when everything he said about the instability of a sliced and diced, over-hyped subprime property market turned out to be true after all. He sadly died twelve years before his moment arrived, but it didn’t make it any less important. As far as Minsky was concerned investment (in its pure sense) is by far the most important driver of economic growth: far more important than government spending levels, consumer spending and the general trajectory of money wages. Because while money wages and government spending can enhance or dampen economic stability (or relative instability as Minsky would have it), investment is the key to growth and it is inextricably bound up with financial markets, capital asset prices and, of course, profits.

And on that basis Indian real estate is currently having fifteen Minsky Minats of its own…

Mumbai domestic property sales jumped to their highest levels in four years by the end of 2019, with developers switching focus to affordable housing projects rather than the multi-billion rupee, high rise apartment blocks (take note Donald Trump). And despite a perceived tightening in the subcontinent’s finance markets, local sales rose by 22% with the same trend being mirrored across the subcontinent where new starts in seven major cities were up by an equally healthy 21%. Compare that with London, where comparable available data for sales and new starts showed 1.3% growth and a fall of 11% respectively: and with just 39,500 new UK starts in the third quarter, this means 87 new homes for the 3.4 million young adults still living with their parents.

Perhaps predictably, Indian commentators are now pointing to these localised property trends as “clear evidence” of a pent up demand in residential markets, with the Chairman of Anarock Group, Anuj Puri, placing particular emphasis on a resurgence in affordable housing: “One of the major factors that helped Mumbai become the showstopper in 2019 was a conscious decision by developers to bridge supply and demand between the competing demands of commercial and residential property…Mumbai saw maximum supply in the affordable housing category which is something unusual for this market.”

But what’s so Minsky about all that?

Well, in stark contrast to the surge in sales of affordable housing, overall growth in India’s commercial property markets slowed to 5% over the course of 2019, albeit from a stellar base of 17.6% in 2018: and that was largely due to a semi-toxic cocktail of demonetisation (obviously: when in doubt blame demonetisation), a new regulatory and tax structure widely thought to have placed a chill hand on commercial developments and, perhaps most of all, a squeeze in available non-bank finance (shadow lending), with sector participants suffering noticeably over the last year and one of them in particular, Dewan Housing Finance, being hit by interest defaults, a moratorium on new deposits and delayed commercial debt repayments (citing “cashflow problems” of course: when in doubt blame demonetisation and cashflow problems). And to state the obvious, Dewan is not long in affordable housing investments which is precisely the point…

According to Minsky’s hypothesis, this kind of squeeze in available finance will reduce investment levels because there then is a natural tendency for the value of capital assets to decrease invalidation of existing debt decisions: in other words, a (forward) decision to invest in capital assets is necessarily coloured by the (existing) liability structure of the business, with cash flow and current asset values acting as the two ends of a decisionmaking see-saw. And that toxic cocktail we were talking about just now, it might have eroded confidence in commercial developments, but it’s hardly touched affordable housing at all: particularly as these projects are still supported by a series of major initiatives introduced by Prime Minister Modi’s Government (including further incentives in the most recent Union Budget).

The fact is residential property and affordable housing simply aren’t so dependant on non-bank finance, and India’s regulatory and tax regimes are positively working in their favour meaning capital asset values remain strong as do profit levels. As a result, the commercial and residential property markets are gradually peeling apart: asset values in affordable housing have increased and tipped the decisionmaking seesaw in favour of new investment, and that’s what’s given rise to the current boom.

And for those still in search of additional evidence, look no further than the unsold housing inventory which declined across India by 4% in 2019: In the same period average residential prices increased by 1% and it’s all now buttressed by the government’s $3.5 billion safety net for developments still in danger of succumbing to the toxic cocktail.

Hiram Minsky would have been pleased…

Find out more about Modulex 

Modulex Construction is the World’s largest and India’s first Steel Modular Building Company, working to meet the opportunities of India’s real estate markets in a practical and focussed manner. It was established by Red Ribbon to harness the full potential of these fast-evolving markets and deliver exciting opportunities for investors: because, when it comes to investing in property on the subcontinent, nobody knows its markets better than Red Ribbon.

Executive Overview

I was fascinated to see the latest residential property sales figures from India: the market is certainly buzzing and recent incentives introduced in the Union Budget look set to see it surge even further forward.

Minsky moment or not, it’s a game-changer.

Another Year, another Union Budget…A Tweak and a Tune will do for India’s Economy

By India, News, United Kingdom No Comments

Its that time of year again…another Union Budget, and in the wake of seemingly unremitting IMF grumbling and post-Christmas chill, it’s time to find out if India’s economy needs a little tweaking and tuning or something more radical. And given Nirmala Sitharaman has just delivered the longest Budget Speech for more than six years, it would be peevish and cruel to leave you in suspense any longer: for the third fastest growing economy in Asia, a tweak and a tune will do just fine.

The Finance Minister announced a series of groundbreaking reforms, designed to sustain growth and reach out more to the poorer, mostly rural sections of the country: but with a clear message that the economy is still on track and set for further growth in the years ahead, especially in the all-important Affordable Housing sector.

Say what you like but Prime Minister Modi’s Government still has its political antennae finely tuned to the key components of economic growth, and with a rapidly expanding and increasingly prosperous middle class driving retail expansion like never before, Nirmala Sitharaman wasn’t about to forget the importance of consumer spending. With shades of Margaret Thatcher, she announced a series of lower income tax rates in return for individual taxpayers waiving current exemptions and deductions. The resulting fiscal incentive is worth something in the order of $5.6 Billion, which will certainly be enough to give the economy a further boost but for any doubters and sceptics still left the Budget also includes provision for taxpayers to opt-out and keep their existing deductions if they want to. So what’s not to like?

But it’s certainly not all about the middle class either: those earning less than $7,000 a year will now be exempt from taxes altogether, which should significantly improve the condition of the rural poor in particular: a section of the public all too often forgotten by parties of all political complexions in the past.

And then, of course, Affordable Housing had its own special place in the Budget, just as it has for the last ten years: the process of approving loans within the existing (highly tax-efficient) government scheme will be extended by a further year to March 2021, and property developers will get an additional tax holiday on qualifying profits. The impact of that sort of incentive is already being felt in a resurgent residential property market across the subcontinent, and in Mumbai in particular.

So having looked after the roof over the heads and given India’s burgeoning population fresh license to join in another wave of consumer spending, the Finance Minister’s attention then turned to business: dividend distribution tax (a modern form of ACT) has now been abolished, with all its despised apparatus of surcharges, red tape, and bureaucracy. Businessmen and women across India will have heaved a sigh of relief, as will any accountants and bookkeepers anxious to get home from the office before 11.30pm.

The Government will also increase the investment limit from 9% to 15% for foreign investors holding corporate bonds, in addition to which a raft of Government Securities will be open to foreign participation for the first time as part of an ongoing project to open up the subcontinent to the world.

Then the Finance Minister turned to some of the bigger elephants in the Chamber: she invoked the so-called “escape clause” in the Fiscal Responsibility and Budget Management Act:  revising a 3.8% deficit target from 2019/20 to 3.5%. Less than half a point but Nirmala Sitharaman has never allowed fine detail to obscure economic reality, and the revision comes with increased infrastructure commitments too: including $26.3 Billion in support of a new National Infra Pipeline with the ambition “to improve ease of living for every citizen of our country” not to mention creating additional employment across the subcontinent. Again, what’s not to like?

And finally, last year’s PMC Bank failure was never going to be far from the rostrum, prompting the Minister to announce a hike in Bank Deposit Insurance Cover from $1,450 to $2,100, so protecting a much broader constituency of depositors. For those of us who lived through the anguish of BCCI in the 1990s, it will be clear just how much of a boost this kind of initiative that can give to depositor confidence. There will also, in the words of the Minister, be a more “robust mechanism to monitor the health of scheduled commercial banks and assure depositors that their deposits are absolutely safe”.

Quite right too, and this closing statement of intent also underpinned the steady, realistic and well-modulated tone struck by Ms. Sitharaman in her Budget. She is to be congratulated.

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Executive Overview

We all waited to see whether India’s Finance Minister would keep to a steady course or start to apply the brakes: and in this year’s Union Budget we got the answer.

It’s full steam ahead, with a further emphasis on consumer-driven growth and additional incentives for overseas investors.

That’s welcome news for Asia’s third-fastest going economy, the essentials of which are still so obviously sound.

No Big Bong but a Bigger Bang…What does the Withdrawal Agreement mean for Britain?

By India, News, United Kingdom No Comments

Some of the facts about Brexit are simply inescapable and two of them in particular: the British Isles are a collection of relatively small islands and the United Kingdom, which makes up most of them, will be leaving the European Union at 11.00 pm this Friday. No more straight bananas; no more sausages that aren’t sausages and plenty more milk chocolate without milk. The UK will finally be out and it will be getting £350 Million a week extra into the bargain (or perhaps not). The island race will finally be set free to ply its trade across the four corners of the world and not just with its single biggest market across the Channel.

Because one of those inescapable facts is that since the grant of a first Royal Charter to the East India Company in 1600 and right down to the dog days of the post-colonial Empire, trading with the rest of the world has been an economic necessity for Britain’s economy. India’s Railways were built with British steel and they kept British workers in jobs, just as much as Indian cotton kept Lancashire’s mills alive and spinning this same economic necessity is just as vigorous and inescapable today…

In 2015 the UK imported nearly three times as many agricultural products as it exported and a consistent year on year decline of 2% means it is now only 60% self-sufficient in food. By 2017 the country’s biggest commodity exports by value were fuel (£165.7 Million), drinks and tobacco (£109.2 Million) and manufactured goods including cars (£107.9 Million), while on the other side of the ledger imports of fuel accounted for twice as much and manufactured goods (including cars) were broadly equal both ways. These islands are bound up as a trading nation par excellence and like a shark, it has to keep moving forward to survive.

But, you might be asking, what about that other inescapable fact? What about Brexit?

At the stroke of 11.00 pm this Friday (not the stroke of Big Ben obviously, that’s too expensive) the United Kingdom will leave the European Single Market and its Customs Union, but until 31 December this year, it will continue to be treated as a Member of the European Union: that long lapse of time between this Friday and the end of the year is the much-vaunted Transition Period.

Well, it sounds like a long lapse of time but in fact, it’s considerably shorter than it might have been: the original transition period agreed by Theresa May (remember her?) was left unchanged by Boris because when he wanted to keep his replacement deal in line with the EU’s current Multinational Financial Framework, in other words, he didn’t want to make another budget contribution. As a result, about half of the original 21-month Transition Period has been lost making it wildly improbable that a long-term trade deal can be negotiated before Big Ben finally chimes at the end of the year.

And that’s not a matter of minor importance: the whole point of the Transition Period is to allow time for the negotiation of a new UK/EU Trade Deal and avoid the dire prospect of what most of us had already grown tired of calling a No Deal Cliff Edge. Bearing in mind India has been trying to negotiate a trade deal with the United States since 1972 and EU negotiations with Canada took seven years, it might be pushing it to expect a brand new trade deal to emerge in just eleven months (less than a third of the time Anne Boleyn was married to Henry VIII, and look what happened to her). All of which now makes the prospect of a no-deal exit more likely and that’s something the unlikely triumvirate of the CBI, TUC and financial markets globally have all (for good reason) set their faces against.

For all the huffing and puffing of the European Research Group (remember them, anyone?) the Withdrawal Agreement also requires the UK to follow EU law and related decisions of the Court of Justice of the European Union during the Transition Period (Article 127(1)) if you’re interested). The UK must also adhere to the EU’s four freedoms (including freedom of movement), continue to abide by EU Customs Rules and so cannot during the transition period conclude any trade deals with third-party countries. And all of this happens whilst the UK has no representation at all on the EU Commission, no members in the EU Parliament and no presence in the Court of Justice. What was all that about being a vassal state?

But, it’ll all be over by December when the United Kingdom can finally shake off its chains, imaginary or otherwise. And then this relatively small collection of islands in the cold northern climes will do what it has always done best: it will trade with the rest of the world and makeup that 40% (and growing) deficit in domestic food production, it will find new markets for cigarettes and alcohol and it will stop all those bananas from going straight.

There may though still be a shiver of apprehension that in a post EU world, India doesn’t need that British steel anymore (even if Britain was making it) and Lancashire’s mills have been silent for more than half a century so Indian cotton goes elsewhere. India is thriving because of its new, global economic outlook but it remains to be seen whether the United Kingdom has either the appetite or ability to do the same, having had no independent trading policy at all for nearly 50 years.

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Nobody understands the fundamentals of the Indian economy better than Red Ribbon Asset Management, which has placed the subcontinent at the heart of its investment strategies since the company was founded more than a decade ago. Drawing on unrivalled knowledge of local markets with an expert team of more than a hundred advisers working in India’s economic hotspots, the Red Ribbon Private Equity Fund offers unique opportunities to share in this potential.

Executive Overview

Brexit will change the UK’s outlook on the world and the way it will trade across a new range of global markets, but it will also change the way the UK is seen across the world. Whether that is a good or a bad thing I don’t know, but I do know a lot will depend on the successful negotiation of a slew of new trade deals which certainly can’t be taken for granted and will undoubtedly take time to complete. At the last count, the Government was looking to put more than 600 new trade treaties in place by December, and I can’t help thinking that is wildly optimistic.

It could well be that after all the uncertainties and largely self-inflicted injuries caused by Brexit over the past four years, the real work is only just beginning.

I’m sure we’ll all be keeping a close eye on developments.

India is already a Technology Super Power…as it prepares to step up a gear, imagine what’s coming next

By India, News No Comments

Over the past year the Subcontinent’s IT Services Sector has grown to $181 Billion, making up nearly 45% of total service exports and contributing 7.7% to GDP: and as if that wasn’t enough India is locked, loaded and ready to step up another gear as it embraces new technology paradigms like Blockchain and AI, with a slew of small to medium-sized businesses based around Bangalore already reskilling to reflect India’s increasing importance as a global technology hub. In every sense of the words, India has become a technology superpower.

And where it was once synonymous with low cost, outsourced software, India is now spearheading global innovation as well. So what’s behind this sudden step-change, turning an essentially outsourced software backwater into a world leader?

Well, first and foremost don’t underestimate the importance of the subcontinent’s youthful demographic: one of the largest in the world and as devoted as young people anywhere to their iPhones and social media platforms. India currently has more than half a billion Internet subscribers and according to Mckinsey, this will create e-commerce and digital supply chain worth $35 Billion annually within the next six years. The fact most youngsters would seemingly rather lose a limb than their iPhone has a lot to do with that: they provide the raw collective drive for IT innovations of the type India is going through at the moment and it would be foolish to underestimate their potential.

Added to that India also has a thriving start-up an ecosystem where Government incentives are now attracting Foreign Direct Investment (FDI) like never before, with training programmes and a regulatory infrastructure that is genuinely supportive of digital growth: precisely what those thousands of small to medium-sized businesses in and around Bangalore. The Modi Government has also identified IT as one its twelve so-called Champion Service Sectors and its policy think tank, the snappily named NITI AAYOG, has just announced a national programme for mainstream adoption of AI across all Indian business.

Then there is the Government’s new Blockchain pilot project for Social Welfare, working with prominent healthcare providers such as Apollo Hospitals and Strides Pharma to tackle the increasing problem of counterfeit pharmaceuticals on the subcontinent and provide greater support for government based welfare schemes. 

In short, there can be no doubting the Government is putting money and considerable effort into where its mouth is…

Just look at the recent success stories: Flipkart, Ola, PayTM and Oyo all of which have grown to multi-million dollar businesses over the last decade, and some of them over a considerably shorter period. And these Indian Unicorns already have their eyes and horns on international markets, with Ola recently expanding into Australia and Oyo set to follow in its wake. 

Oracle India’s CEO, Shailender Kumar, recently predicted potentially explosive growth if India’s IT service companies were to combine with these new technology titans: unlocking fresh business opportunities in an increasingly ambitious and near white-hot environment.

And he’s right… just imagine what’s coming next!

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Nobody understands the fundamentals of the Indian economy better than Red Ribbon Asset Management, which has placed the subcontinent at the heart of its investment strategies since the company was founded more than a decade ago. Drawing on unrivalled knowledge of local markets with an expert team of more than a hundred advisers working in India’s economic hotspots, the Red Ribbon Private Equity Fund offers unique opportunities to share in this potential.

Executive Overview

Most economic commentators would identify Blockchain and AI as the key drivers of future radical change in international labour and capital markets, and I think they’re right: so it really is impossible to underestimate the stark potential of India’s resurgent IT sector given it is focusing precisely on those two areas, with increasingly decisive support from the Modi Government in the form of training and regulatory initiatives. 

No wonder then that FDI into Indian technology is currently running at an all-time high, and small surprise IT comprises such a significant part of Indian GDP. IT will be a powerhouse for economic growth.

These are exciting times and they are creating unrivalled investment opportunities: we will all be watching carefully to see what happens next.

It’s not all Beijing and Brexit …India’s Markets are forging ahead too

By India, News No Comments

Immediately after UK General Election results were announced last month, the market valuation of Britain’s leading companies rose by nearly £50 Billion: a paper increase big enough to give £830 to every man, woman, and child in the country. And despite clear evidence that the UK economy is continuing to slow down (turning in 0% growth for the final quarter of a sluggish year), the FTSE 100 index closed 165 points up at 7,519.05 on the first morning of Boris Johnson’s new government: at one point having risen 190 points, its biggest single rise since the Brexit Referendum in June 2016. All this despite a general strengthening of sterling (since accommodated), which generally depresses profits for most FTSE 100 listed Companies.

It’s not hard to find reasons for this seemingly irrational surge: as soon as Boris took back the keys to Downing Street we knew for sure Brexit would happen, hopefully in orderly fashion with the benefit of a landslide victory; the threat of widespread nationalisation was removed at a stroke after Labour’s worst election result since 1934 and, to top it all, the trade war between China and the United States showed signs of pacifying: both countries more or less committing to rolling back protectionist measures and the US Trade Representative, Robert Lighthizer going so far as suggesting an interim trade deal had already been “totally done”. Expect a bounce in export figures if Mr. Lighthizer’s President and Congress are on the same page.

But of course, it’s not all about Beijing and Brexit…

Indian Markets have been bouncing along nicely too, with the NSE Nifty 50 Index rising to another high on 18 December: ending the session with a 56.65 point gain at 12,221.65 and since going on to close on 26 December at 2,126.55 (after widely anticipated pre-Christmas profit taking). Shares in Indian Metals, Automobiles, and IT companies have been particularly strong performers. In the week to 18 December the Nifty Metal Index rose by 0.8%, NiftyIT rose by 0.47% and shares in JSW Steel went up by 2.07%, a sure sign of continuing resilience in the subcontinent’s housing and construction sectors.

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Nobody understands the fundamentals of the Indian economy better than Red Ribbon Asset Management, which has placed the subcontinent at the heart of its investment strategies since the company was founded more than a decade ago. Drawing on unrivalled knowledge of local markets with an expert team of more than a hundred advisers working in India’s economic hotspots, the Red Ribbon Private Equity Fund offers unique opportunities to share in this potential.

Executive Overview

I hope you all had a good Christmas but now that 2020 is finally with us, its time to roll up our sleeves and get back to work. Like the rest of us, I’m looking forward to seeing what the new year will bring but if its anything like the final quarter of 2019 we can expect markets to rise further on the back of increased Brexit certainties and (hopefully) increasing pacification of the US Sino Trade War. 

But as the article rightly says, it’s not all about Beijing and Brexit: India’s economy continues to show marked resilience in the face of well-publicised recent difficulties, with the Nifty Index now standing at a post-election high (just like its London counterpart).

And I was especially struck to see shares in Indian Metals running so hot at the moment, reflecting a continuing strengthening in the subcontinent’s real estate markets. That’s an area I’ll be watching with particular interest.

A Game of Two Halves…With 2020 dawning, you just have to know where to look

By India, News No Comments

So this is 2020…

The new decade dawns with welcome confirmation that for the first time in its history zero-carbon energy became the UK’s biggest source of electricity generation last year, making 2019 the cleanest year on record. 53% of Britain’s energy was created without turning coal and gas into smoke and fumes, and that has to be a good thing: the UK has already eaten up half its allotted time to becoming a zero-carbon economy by 2050. But there again, Brexit is (finally) looming at the end of the month and the CBI has warned a no-deal exit will be a “tripwire to economic chaos”: the chances of Boris Johnson actually cutting a deal have already been heavily discounted by currency markets with even the announcement he was about to start talks with the Ursula Von Der Leyden causing sterling to drop a cent on the Euro (and it was already down two cents down on its post-election high).

And for those looking to the United States for salvation, Donald Trump, in his inarticulate fashion, has been characteristically blunt: “To be honest with you, this deal, under certain aspects of the deal, you can’t do it. You can’t trade. We can’t make a trade deal with the U.K.” So don’t hold your breath. And even if the President’s orange tones disappear from our screens forever after the election this autumn, don’t count on any later deal leaving the NHS intact or supermarket chickens unchlorinated, and don’t count on it taking any less than the forty-eight years the US has already been negotiating with India, its ninth biggest trading partner (the UK is seventh).

Added to which, of course, Mr. Trump is a man of coal and smoke having withdrawn the US from the Paris Climate Accords in June 2017, so any news of UK progress towards zero carbon emissions is unlikely to cause even the remotest flicker on his Twitter screen.

But hang on a moment…it’s not all gloom and doom, there’s a whole world out there outside the distorting mirrors of Boris and Brexit and Trump. 

For a start, one country will certainly be raising a cheer at the news of last year’s reduced emissions in the UK, and that’s India.

The subcontinent is now the world’s largest renewables auctions market and it was ranked first (for the first time) in Bloomberg’s 2019 Climatescope Report. India’s clean energy policies, alternative power infrastructure, and emissions policies bring it in top of 103 countries worldwide and that is also something to celebrate as we creep into the New Year. Just Like the President, Bloomberg were unequivocal in their views, if a little more articulate: “The Indian market is home to one of the world’s most ambitious renewable energy targets and has held the largest ever auction for clean power generation”: so expect the New Year, and the New Decade to mark an entrenchment in India’s position as the global renewables superpower. That will be good for all of us and good for the subcontinent’s economy too.

And despite all that muddle-headed gloom from the IMF last year, India still goes into the New Year with forecast GDP growth of 6.6% (ironically that’s an IMF figure) in addition to remaining the fastest-growing large economy in the World, so expect to see that growth entrenched over the coming year: especially when compared with the US whose economy is projected to slow to 2% over the same period and the UK which is forecast to turn in a mere 1.6% IF Boris gets his deal…but don’t hold your breath on that either. 

So there are certainly bright spots to look out for in the year ahead, but in global terms, it’s a game of two halves and you have to know where to look…

 

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Nobody understands the fundamentals of the Indian economy better than Red Ribbon Asset Management, which has placed the subcontinent at the heart of its investment strategies since the company was founded more than a decade ago. Drawing on unrivalled knowledge of local markets with an expert team of more than a hundred advisers working in India’s economic hotspots, Red Ribbon offers unique opportunities to share in this potential.

And whatever your plans and hopes are for 2020 we here are Red Ribbon wish you a very happy and prosperous New Year!

Executive Overview

I’m looking forward to what 2020 will bring, and it will come as no surprise to anyone that I’m keeping a particularly close eye on developments on the subcontinent where India’s economy continues to show signs of robust resilience in the face of 2019’s sprinklings of year-end gloom. As I write this, the Nifty Index is running at a post-election high and India, as the article points out, is still the fastest-growing large economy on the planet so that resilience is likely to continue and entrench. I imagine Boris Johnson and Donald Trump would both give their eyeteeth for GDP Growth of only 6.6%.

So whatever lies ahead in 2020, it’s very unlikely to be dull…

I wish all our investors and regulars to this site a very happy and prosperous New Year!

India gets an early Christmas Present…and it may well be the gift that keeps on giving

By India, News No Comments

India currently has 11.09 Million vacant housing units, accounting for almost half the number of properties currently being rented out in the subcontinent’s ferociously expanding urban hinterlands. So it’s a safe bet strategic moves to tap into this unused stock of potential new homes will now play a central role in Prime Minister Modi’s policy of housing a further 223 Million urban residents by 2031: the enticing prospect of delivering more than 11 Million new homes more or less at a stroke is not easily overlooked, especially when the needs of an increasingly urbanised population are as pressing as they are at the moment. And the way to do it quickly may well be bound up in India’s proposed Model Tenancy Act, trailed so enthusiastically by the Finance Minister in her Union Budget Speech this year, providing a more structured and resilient framework for releasing all those untapped units onto the market. The legislation has all the hallmarks of being an early Christmas present for suppliers and consumers alike.

Under its core provisions, future tenancies will have to be input into writing and filed centrally to be enforceable, and unlike the current regime this means residential and commercial tenancies (but oddly not industrial premises); if the tenant fails to get out on time the agreement will automatically revert to a month by month letting for six months after which twice the agreed rent has to be paid two months and four times as much after a further two months (which is quite an incentive to leave). On the tenant’s side, there will be a cap on the amount a landlord can take by way of the security deposit (heralding the end of a much-abused necessity) and a ban on increasing the rental figure during the period of the lease. There will also be statutory recognition of a new Property Manager role, making estate and building management more coherent and rational, and certainly more effective than it is in downtown Mumbai at the moment.

Building on India’s new climate of corporate and public compliance, there will also be reinvigorated Rent Courts and Tribunals providing faster and more effective dispute resolution procedures in place of the existing shambles of labyrinthine systems that either don’t exist in any practical sense or take years to complete. Bad news for the lawyers perhaps, but very good news for everyone else involved.

Widely expected to be adopted in its current format following State consultation later this year, the new legislation will play a key part in securing the release of those 11.09 Million unoccupied units onto the market, meeting the demands of a rapidly expanding and increasingly urbanised population and, not unimportantly, also helping attract long term capital investment to the subcontinent’s housing sector: investors will be much more willing to take a stake in developments that are planned, conceived and completed in a culture of improved legal and regulatory certainty.

But of course, there are other ways to get housing units onto the market quickly…

In 2016 Savjibhai Dholakia, owner of a leading diamond polishing business in Surat gave away 400 flats to his employees. There’s no suggestion he repeated the feat in subsequent years so perhaps the business took a nosedive in the meantime, in which case he probably won’t have any future plans to recruit the young lady who gave her parents a particularly mercenary Christmas list last month: several bottles of Chanel No.5, Gucci Flip Flops, an iPhone and $4,000 in cash in case she’d forgotten something (and she’s only ten). At least she never asked for a house…

Whatever you find at the foot of your tree this year and no matter how dizzying or humble the price tag might be, we wish you a happy and peaceful Christmas from everyone at Red Ribbon.

 

Find out more about Modulex 

 

Modulex Construction is the World’s largest and India’s first Steel Modular Building Company, working to meet the opportunities of India’s real estate markets in a practical and focussed manner. It was established by Red Ribbon to harness the full potential of these fast-evolving markets and deliver exciting opportunities for investors: because, when it comes to investing on the subcontinent, nobody knows its markets better than Red Ribbon.

Executive Overview

We’ve been focussing closely on Indian real estate markets ever since Red Ribbon was founded more than a decade ago, and I’m very proud of the part Modulex has played and will continue to play in meeting the demands of the fastest-growing urban population in the world.

Particularly because there is also a pressing human story behind this demand, reflecting the needs of individual families struggling to find shelter and security is often very difficult urban conditions.

So as we gather at home with our families this Christmas, it’s appropriate that we should reflect on these realities and resolve to help to change things for the better in the years ahead.

Binance Eyes up India…and this will be a transaction to remember

By India, News No Comments

The world’s biggest cryptocurrency exchange is just over six years’ old and operates a global trading platform of more than 100 cryptocurrencies, yet in those six short years, Binance has grown to a market capitalization of $1.3 Billion and is already worth significantly more than half the current value of Virgin Money which has been around twice as long. You can almost feel the tectonic plates of international finance shifting in the wake of such explosive growth: after the 2017 cryptocurrency ban in China (Binance’s home territory), the company rehomed in, then Taiwan a year later and now it operates out of the Channel Islands too: expanding its European reach by offering fiat to cryptocurrency pairs trading that includes Sterling and the Euro. Market-based restrictions in China and Japan have simply made Binance stronger and enhanced its international influence. And from last month that means India too…

On November 21 Binance announced that it had acquired the Mumbai headquartered Bitcoin exchange, WazirX in a transaction worth up to $10 Million, and don’t forget WazirX itself is only a little over a year old having stacked up some pretty remarkable returns in the difficult aftermath of the Reserve Bank’s financial support sanctions last year. It makes you wonder just what it’s capable of doing once these restrictions are removed (as they inevitably will be) and it’s a safe bet future expansion in a newly liberalised Indian market won’t have been far from the minds of those on the Binance board.   

So what does all this tell us about the future of cryptocurrencies on the subcontinent? Well, quite a lot actually…because over recent years cryptocurrency exchanges have been shutting up shop in the teeth of continuing uncertainties over legal and regulatory compliance thresholds: the WazirX acquisition marks a significant reversal of this trend, the first major international acquisition to be completed in the sector and a clear recognition that India is now one of the leading players internationally, if not the leading player in cryptocurrency trading. Binance is in a unique position to know and it has just put $10 Million where its mouth is…

In terms of the way forward, the plan is to fully integrate WazirX’s peer to peer trading platform with Binance’s Fiat Gateway platform by the end of the first quarter of 2020, which will allow participants greater opportunities to trade digital assets using core Blockchain-based technologies. 

And the wider geopolitical reasons for Binance choosing India should also be obvious to any informed observer: the subcontinent has the fastest growing population on the planet, forecast by the United Nations to be bigger than China by 2024, and it has a strikingly youthful demographic too with the Office of Statistics in India predicting more than 34% of the population will be under 24 years of age by 2020. In the prescient and plain incontrovertible words of Binance’s CEO, Changpeng Zhao: “This gives India an edge to adapt to and build on new financial technologies and I believe it will become a global Blockchain innovation centre capable of cryptocurrency innovation throughout the world”. 

So take note of where you were in November 2019…this will be a transaction to remember.

 Invest in North Block Capital Fund

North Block Capital Fund is structured to make the most of the exciting opportunities India has to offer, launching in Blockchain DLT and Crypto Currencies. It draws specifically on the company’s unparalleled expertise in the subcontinent’s markets because when it comes to India, nobody understands those markets better than Red Ribbon.

Executive Overview

Investing a sum as large as $10 Million to acquire a company that started operations only a little over a year ago is a big call on any basis, and especially so for a cryptocurrency company currently operating in a sector that has all but banned cryptocurrency trading and denied financial and banking support for its exchanges. But that last point is the critical one in my opinion.

A leading player like Binance is in a unique position to judge future trends in the market, not least because it has certainly made all the right calls so far. So its decision to invest so heavily and so publicly in India at this moment tells us something important about the future of these Government based restrictions and inhibitions…they’re short term and they won’t last.

My guess is they’ll be gone soon, leaving India to take its place as the world’s leading Blockchain and cryptocurrency market.

Watch this space!

Red Ribbon

At Red Ribbon we understand that the transition towards a resilient global economy will be led by well-governed businesses in mainstream markets, striving to reduce the environmental impact of their production processes on society at large and on the environment as well.

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