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- Arvind's Newsletter
Most of the world (except perhaps India and Africa) is ageing fast and fertility rates our declining. In China, its one-child policy has led to too few women. Grooms are now paying more money for wives, in a tradition that has faced growing resistance, leading to lower marriage rates. South Korea is giving families $770 per month for one year to have a baby. It has already spent $200 bn trying and failing to boost fertility.
As China faces a shrinking population, officials are cracking down on an ancient tradition of betrothal gifts to try to promote marriages, which have been on the decline. Known in Mandarin as caili, the payments have skyrocketed across the country in recent years — averaging $20,000 in some provinces — making marriage increasingly unaffordable. The payments are typically paid by the groom’s parents. To curb the practice, local governments have rolled out propaganda campaigns, instructing unmarried women not to compete with one another in demanding the highest prices. Some town officials have imposed caps on caili or even directly intervened in private negotiations between families.
South Korea’s birth rate has reached alarming new lows. Births shrank to 0.78 per woman last year, from 0.81 in 2021, which already put the country lowest in the world. If that trend continues, South Korea’s population will be less than half what it is now by the end of the century.The situation has pushed president Yoon Suk Yeol to call for an “emergency mindset,” proposing new measures to encourage South Koreans to have children.
2.The reversal of a hefty tax nudge could deepen our bond market
Because of tax arbitrage, debt MFs historically have ended up becoming vehicles for converting interest income into capital gains, rather than active bond portfolios generating superior investor returns by actively managing credit and interest rate risks. Close to 80% of the assets under management (AUM) of debt MFs today comprise either short-dated sovereign/quasi-sovereign/AAA paper or longer-dated holdings of AAA/sovereign paper intended to be held till maturity—both strategies have minimal interest-rate risk and virtually no credit risk.
A strong Thalerian policy nudge (or rather, shove) of investors to invest in the likes of HDFC bonds via MFs rather than participate directly in the bond market has left this market bereft of any significant retail presence. An overwhelming dominance of wholesale participants and a near-absence of retail investors has meant that India’s bond market has been mono-cultured (with most of the liquidity concentrated in sovereign and a few AAA bonds), slow on innovation (near non-existent derivatives market) and prone to single-sidedness (i.e., all participants on one side, driven by groupthink).
Today retail ownership of Indian equities rivals and sometimes even exceeds that of foreign portfolio investors (FPI) and domestic institutions (like MFs and insurers). In contrast, retail participation in India’s bond market is a fraction of that in most major markets around the world, including ones in Asia.
The reversal of a hefty tax nudge could deepen our bond market
3.GPT-4 revolution in medicine.GPT4 passed the medical licensure exam but the critics want to know how does it perform in the real world? Zak Kohane, pediatric endocrinologist, data scientist, and chair of the Harvard Chair of the Department of Biomedical Informatics at Harvard Medical School has apparently been working with GPT4 for about 6 months. He has a forthcoming book (with Peter Lee and Carey Goldberg). He writes:
“How well does the AI perform clinically? And my answer is, I’m stunned to say: Better than many doctors I’ve observed.”—Isaac Kohane MD
4.Growing signs suggest Russia’s economy is heading for long-term economic decline as a result of its full-scale invasion of Ukraine and subsequent sanctions.
Spiking gas prices gave Moscow a windfall in the first months of the war, but it is now struggling, forced to sell at a discount to India and China since Europe will not buy, The Wall Street Journal reported. The ruble is sharply lower against the dollar in recent months, and according to the Russia-focused outlet The Bell, emigration and conscription have caused a huge labor shortfall, which even Russian President Vladimir Putin acknowledges is hampering military production.
5.Bhutan is no ordinary place. It is the last great Himalayan kingdom, shrouded in mystery and magic, where a traditional Buddhist culture carefully embraces global developments. It is rated by Lonely Planet as Best Place to Travel in 2023
The Bhutanese pride themselves on a sustainable approach to tourism in line with the philosophy of Gross National Happiness. Foreign visitors famously pay a sustainable development fee of US$200 per person per day, making it seem one of the world's more expensive destinations.However, Indian tourist have to pay Rs 1200 per person per day.
