Arvind's Newsletter -Weekend edition

Seasons Greeting and Best wishes to our readers for Happy New Year

1 Mumbai’s much-awaited Trans Harbour Link (MTHL) to open on January 12, Phase 1 of Metro 3 in April: Times of India

The much-awaited Mumbai Trans Harbour Link (MTHL) is set to achieve a significant milestone with its likely inauguration by Prime Minister Narendra Modi on January 12.

Stretching over nearly 22km, including an impressive 16.5km expanse across the sea, the MTHL will stand as the country's longest sea bridge and the world's 12th longest. Commencing at Sewri in south Mumbai, traversing Thane Creek, and concluding at Chirle in the outskirts of Navi Mumbai, this engineering marvel, in the making since 2018, is poised to redefine connectivity in the region, a TOI report stated.

While toll rates are yet to be finalized, MMRDA officials suggest a likely range of Rs 250-Rs 300 for passenger cars, with potentially higher rates for freight traffic. Expected to accommodate 70,000 vehicles daily, the six-lane bridge, at a cost of Rs 17,843 crore, boasts a maximum speed limit of 100 kmph, providing a crucial link between Sewri in Mumbai and Shivaji Nagar, Jassi, and Chirle on National Highway 4B in Navi Mumbai.

In related news, the Phase I of the Metro 3 underground corridor, connecting Aarey and Bandra Kurla Complex (BKC), is also expected to open in April 2024. The 12 km stretch will enhance connectivity to both domestic and international airports, along with Metro I (Versova-Andheri-Ghatkopar) at Marol.

2.India's core sector growth falls to six-month low of 7.8% in November reported Moneycontrol

At 7.8 percent, the growth in India's eight key infrastructure industries - coal, crude oil, steel, cement, electricity, fertilisers, refinery products, and natural gas - last month is the lowest in six months and sharply down from the 12.1 percent recorded in October. The commerce ministry, on December 29, revised this figure to 12.0 percent.

However, for April-November, the core industries' production was 8.6 percent higher year-on-year as against a growth of 8.1 percent in the first eight months of 2022-23

3.Global mergers and acquisitions hit lowest level in a decade, reported Axios
Global mergers and acquisitions fell 17% to $2.87T in 2023, the lowest level in more than 10 years and driven partly by tightening markets; Japan was the only country to see M&A growth at 32%.

A slow M&A market can strain companies seeking growth or investment.

• The 2023 tally was driven lower by economic worries and tight financing markets.

• The last time global M&A fell below $3 trillion was in 2013, thanks in part to the eurozone crisis.

U.S. M&A outperformed the globe, falling 6% to $1.36 trillion. This was aided by a flurry of deals in late December, including a $15 billion deal for U.S. Steel and a $14 billion takeover of schizophrenia drugmaker Karuna Therapeutics.

• Global private equity-backed buyouts fell nearly 30%.

• Japan was the only region that saw acquisition value grow, soaring 32% on the strength of a $14 billion takeover of electronics and energy giant Toshiba.

• Deals below $500 million, which comprise the vast majority of activity, were down 27% in terms of dollar volume and 6% in terms of deal number.

• Goldman, Morgan Stanley, and JPMorgan were the top three global M&A advisers for banks. Latham & Watkins, Davis Polk, and Kirkland & Ellis were the top three legal advisers.

The year's largest announced deal was ExxonMobil agreeing to buy Pioneer Natural Resources for $65 billion, followed by Chevron inking a $60 billion agreement for Hess Corp. and Pfizer agreeing to buy Seagen for $42 billion.

4.Apple Is Being Overtaken by Chinese Smartphone Rivals—in Cars reported Wall Street Journal

After a decade, Apple still hasn’t introduced an Apple car. Some of its biggest smartphone rivals in China are moving faster.

Huawei and Xiaomi, whose phones battle the iPhone for supremacy in China, both released new cars this week with advanced digital features. The companies’ goal is to keep their phone customers engaged in high-tech vehicles and seize turf before Apple’s possible entry into the fray.

Though reports emerged in the mid-2010s of Apple’s interest in cars, the company has yet to describe plans publicly. It didn’t respond to a request for comment.

China is a top market for Apple and Tesla, accounting for roughly a fifth of each company’s revenue. It is also the country where the majority of the world’s electric vehicles are sold, making it a bellwether for global trends.

The latest announcements show that futurists’ notion of an EV as a smartphone on wheels is beginning to turn into reality. Not only are smartphone makers getting into EVs, but Chinese EV maker NIO has started selling a phone.

On Thursday, Xiaomi, which shipped about 150 million smartphones last year globally, showed off its first car, an electric sedan it is manufacturing.

5.The Chinese smartphone maker Xiaomi unveiled its first electric vehicle, and announced its ambition to become one of the world’s biggest car manufacturers.

 The SU7 sedan shares an operating system with Xiaomi phones and home appliances, which Xiaomi sells as a “smart ecosystem” linking the various devices. 

The company’s CEO said the car would be available for sale in 2024, and that it beat rivals such as Tesla’s Model S on various metrics, including acceleration: He pledged that “over the next 15 to 20 years, we will become one of the world’s top 5 auto makers.” Lei, a prolific venture investor, has called it his final entrepreneurial bet. “Xiaomi’s goal is to make a dream car that is as good as Porsche and Tesla,”he said

China already leads the world in EV exports, and BYD is expected to soon overtake Tesla as the biggest producer of EVs.

6.Who was the best CEO of 2023? The Economist opines.

It has been a tricky year atop the corporate ladder. Sluggish growth in many markets has set bosses scrambling to rein in costs just as inflation has spurred their workers to demand hefty pay rises. Fractious geopolitics and toxic culture wars have left corporate chieftains feeling like tightrope-walkers. The craze for generative artificial intelligence (AI) has had them fretting over looming technological disruption, too.

Still, for some chief executives 2023 was a vintage year. To determine who did it best, The Economist has examined the performance of bosses of large listed companies in the S&P 1200 index, which covers most big economies bar China and India. We put aside those who have been in the job for less than three years, to avoid giving too much credit for replacing an inept predecessor. We then ranked the remaining chief executives by the returns they generated for shareholders relative to their sector’s average. The top ten by that measure included both household names and relative dark horses.

Among the top ten were bosses of two companies—Cameco, a Canadian miner, and PulteGroup, an American homebuilder—whose stellar results were thanks mostly to macroeconomic forces (a surge in uranium prices and a slump in sales of existing homes, respectively). We left them out. Also on the list were the chief executives of two buy-out firms, 3i and Melrose Industries, whose results were more a testament to the performance of the bosses running their portfolio companies than the financiers on top. We excluded them, too. Last, we also removed Richard Blickman of be Semiconductor Industries, a Dutch maker of chipmaking tools. His pay was rejected by shareholders—not a good look for any chief executive.

That has left us with a shortlist of five superstar chief executives for 2023 (see table below). In ascending order of shareholder returns these are: David Ricks of Eli Lilly, now the world’s most valuable pharmaceutical firm; David Vélez Osorno of Nubank, a Brazilian neobank that is gobbling up customers across Latin America; Sekiya Kazuma of Disco, a Japanese maker of cutting-edge tools for semiconductor production; Mark Zuckerberg of social-media giant Meta; and Jensen Huang of Nvidia, a chipmaker whose market value soared past $1trn this year.

Over the holiday season all five can bask in the warm glow of having generated enormous value for shareholders. But who has had the best year of all?

It has been a tricky year atop the corporate ladder. Sluggish growth in many markets has set bosses scrambling to rein in costs just as inflation has spurred their workers to demand hefty pay rises. Fractious geopolitics and toxic culture wars have left corporate chieftains feeling like tightrope-walkers. The craze for generative artificial intelligence (ai) has had them fretting over looming technological disruption, too.

Still, for some chief executives 2023 was a vintage year. To determine who did it best, The Economist has examined the performance of bosses of large listed companies in the s&p 1200 index, which covers most big economies bar China and India. We put aside those who have been in the job for less than three years, to avoid giving too much credit for replacing an inept predecessor. We then ranked the remaining chief executives by the returns they generated for shareholders relative to their sector’s average. The top ten by that measure included both household names and relative dark horses.

Among the top ten were bosses of two companies—Cameco, a Canadian miner, and PulteGroup, an American homebuilder—whose stellar results were thanks mostly to macroeconomic forces (a surge in uranium prices and a slump in sales of existing homes, respectively). We left them out. Also on the list were the chief executives of two buy-out firms, 3i and Melrose Industries, whose results were more a testament to the performance of the bosses running their portfolio companies than the financiers on top. We excluded them, too. Last, we also removed Richard Blickman of be Semiconductor Industries, a Dutch maker of chipmaking tools. His pay was rejected by shareholders—not a good look for any chief executive.

That has left us with a shortlist of five superstar chief executives for 2023 (see table). In ascending order of shareholder returns these are: David Ricks of Eli Lilly, now the world’s most valuable pharmaceutical firm; David Vélez Osorno of Nubank, a Brazilian neobank that is gobbling up customers across Latin America; Sekiya Kazuma of Disco, a Japanese maker of cutting-edge tools for semiconductor production; Mark Zuckerberg of social-media giant Meta; and Jensen Huang of Nvidia, a chipmaker whose market value soared past $1trn this year.

Over the holiday season all five can bask in the warm glow of having generated enormous value for shareholders. But who has had the best year of all?

A case can be made for any of the five. Mr Ricks has put Eli Lilly close on the heels of Novo Nordisk, a Danish rival, in the bulging market for anti-obesity drugs and overseen extraordinary results in a very ordinary year for the industry. Few neobanks have managed to dislodge entrenched incumbents. Yet under Mr Osorno’s leadership Nubank, which he co-founded in 2013, has grown into the fifth-largest financial institution in Latin America by number of customers. Mr Kazuma, who also runs Disco’s research-and-development division, has kept his company at the frontier of semiconductor dicing and grinding for many years. After terrifying investors in 2022 with his descent into metaverse madness, Mr Zuckerberg delighted them in 2023 with his “year of efficiency” and his company’s forays into generative ai. And Mr Huang has cemented his firm’s position as the indispensable supplier of the chips powering the ai revolution.

How, then, to choose? One way is to listen to the underlings. After all, a chief executive that hoists the share price but enrages staff is unlikely to succeed for long. We gathered figures from Glassdoor, an employee-review website, on how workers at the five companies felt about their chief executives and their companies more broadly.

At a mere 62% Mr Zuckerberg’s approval rating is a clear outlier, suggesting that his “year of efficiency” has been as awful as it sounds for employees. Worker satisfaction at Disco also seems low (albeit with fewer respondents). One explanation may be the company’s odd mechanism for co-ordinating work. Teams use a virtual currency called Will to pay one another for providing services. Managers then dole out the currency among team members for performing tasks, which determines bonuses. All that sounds like an economist’s dream, but hardly collegial.

Angering customers is also an unsound strategy for chief executives. This year a number of American states including California have sued Eli Lilly, among others, for allegedly overcharging for insulin, an essential drug for diabetics. The company’s decision in March to slash insulin prices by 70% has done little to quell the upset. (The company has rejected what it describes as the “false allegations” of the lawsuit in California.)

As for Mr Osorno, not all of his strategy is paying off. Although Nubank is profitable as a whole, an achievement that has eluded many of its peers elsewhere, it is losing money in Mexico, where its approach of targeting the unbanked is proving costly. If Mr Osorno pulls it off, he could claim the prize in years to come.

It is Mr Huang, then, who prevails. Few bosses have been as farsighted in their bets on AI as Nvidia’s chief. Over a decade ago Mr Huang realised that the graphical processing units his company produced were also good at training AI models. In the years that followed he readied Nvidia for the AI wave by investing in a proprietary software platform, CUDA, to help developers make use of its chips and by acquiring Mellanox, a supplier of networking technology that links many chips together to deliver greater processing power. The pay-off from those bets is now becoming clear; Nvidia controls over 80% of the market for specialist AI chips.

Mr Huang, whose signature leather jacket has become as integral to his public persona as the turtlenecks sported by Steve Jobs, reportedly shares the Apple founder’s intensity and exacting standards. Nonetheless, he is adored by staff, with a 98% approval rating. All things considered, he has had the best 2023 of all.

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