🇯🇵 What’s happening in Japan?

Good morning. The markets are experiencing a significant meltdown 🫠 

If you haven't kept up with it, fret not—we've got you covered.

- Ruchirr Sharma & Shatakshi Sharmaa

TABLE OF CONTENTS

• 🇯🇵 What’s happening in Japan?

• 🇧🇩 The Bangladesh protests

• 🗞️ Bite-sized summaries

  • 📉 Reduce GST on insurance

  • ⌚️ See you in Minutes

  • 👪️ Indian succession

• 🧑‍🍳 What else is cookin’?

• 🍿 Entertainment, Entertainment, Entertainment

MARKETS

🇮🇳 India

• Indian stock markets plummeted on Monday, with the Sensex falling 2,222.5 points and the Nifty dropping 662 points. The volatility index also surged over 60%, indicating the biggest surge since 2015. Most stocks across indices and sectors ended in the red, with auto, metal, IT, and banking sectors hit hardest. Only two Sensex stocks, Hindustan Unilever and Nestle India, managed gains.

🌍️ International

• U.S. markets fell today amid concerns over a slowing economy, driven by weaker manufacturing and employment data that raised recession fears. Investor anxiety grew over potential delays in Federal Reserve interest rate cuts. Disappointing earnings from major tech companies like Amazon and Intel prompted sell-offs, further impacting market indices. Additionally, declines in Asian and European markets, particularly the Nikkei 225, contributed to the overall downturn.

  p.s. more on this below.

JAPAN

🇯🇵 What’s happening in Japan?

On Monday, Japanese stocks experienced their largest one-day drop in recent history. The Nikkei 225 index plummeted by over 12%, shedding 4,451 points and entering bear market territory - marking the biggest single-day fall since 1987. 

The broader Topix index also fell nearly 13%, reflecting widespread sell-offs across sectors. This crash sent shockwaves through global markets, with significant losses seen across Asia and Europe.

So... what happened, and why?

The crash can be attributed to several factors related to the U.S. economy and global market sentiment:

1. Unwinding of Yen carry trade: A “carry trade” is a popular strategy where investors borrow money from a country with low interest rates and a weak currency and invest it in assets of another country, offering higher returns. This used to be a heavily popular strategy among investors trading the Japanese Yen. However, now, with the Bank of Japan's interest rate hike and strengthening currency, traders are unwinding their positions, bleeding the Japanese market as equities and other asset prices become more vulnerable.

2. Disappointing U.S. jobs data: A report showing U.S. employers added far fewer jobs than expected in July sparked fears of a potential recession in the world's largest economy. The report shook the global financial markets and eroded the optimism that had driven the Nikkei to record highs in recent weeks.

3. Stronger Yen impacting exporters: The Japanese yen strengthened sharply against the U.S. dollar, trading at around 143 yen per dollar compared to over 160 yen a few weeks ago. The rapidly appreciating yen hurt Japanese exporters and companies with significant overseas earnings, making their products more expensive abroad.

4. Broader global sell-off: All of these factors combined caused a massive sell-off in Japanese stocks. But the damage wasn’t just limited to Japan. Other markets also faced the biggest losses:

   • Europe's Stoxx 600 index fell 2.5%. 

   • Taiwan's Taiex and South Korea's Kospi suffered their worst days ever, down 8.4% and 8.8%, respectively.

   • The BSE Sensex crashed ~2,700 points, while the NSE's Nifty index fell ~825 points.

The aftermath:

• Tech stocks in the US were particularly hard hit, with disappointing earnings reports and growing scepticism about AI hype.

• Circuit breakers were activated in Japan and South Korea to halt trading temporarily.

• The oil market took a hit, with both Brent futures and WTI down 3%.

• Cryptocurrencies were affected, with Bitcoin down 12%.

What's next?

Analysts predict more volatility as the markets continue to regulate and adjust to the US's poor jobs report and rising interest rates in the East. 

A close eye is also being kept on the geopolitical situation in the Middle East following the recent assassination of Hamas leader Ismail Haniyeh. 

We’ll keep you updated as the situation evolves! 

Read more: CNN

BANGLADESH

🇧🇩 The Bangladesh protests

The protests in Bangladesh have undergone a dramatic transformation, evolving from a focused opposition against a government job quota system into a widespread movement that has toppled Prime Minister Sheikh Hasina's administration.

Here’s a quick TL;DR: 

• The unrest began in early July 2024, primarily among students, in response to a court ruling that reinstated a controversial quota system. This system reserved 30% of government jobs for descendants of those who fought in the 1971 War of Independence. 

• Many viewed this as a politically motivated decision to benefit Hasina's supporters, exacerbating frustrations among youth already facing high unemployment and economic challenges.

• The situation intensified on July 16, leading to violent confrontations between protesters and security forces. The government responded with tear gas, rubber bullets, and a curfew, including a shoot-on-sight order. 

• Reports indicate that the protests have resulted in over 300 deaths, with thousands injured, as the state crackdown became increasingly severe.

• Hasina's administration initially labelled the protesters as criminals and imposed internet restrictions to control the unrest. However, the government's grip on power weakened as the movement gained momentum.

Present situation: 

• In a surprising development, Prime Minister Hasina has resigned and fled the country - currently situated at the Hindon Airbase in Ghaziabad. 

• Bangladesh's army chief Waker-Uz-Zaman has taken the reigns for now, with an interim government to be formed in the immediate future. 

What’s next? Hasina's resignation opens a new chapter for Bangladesh, filled with both challenges and opportunities. The formation of an interim government by the military could either stabilize the country or lead to further turmoil, depending on its actions and policies. 

The political landscape will likely evolve as various factions vie for power, and the international community watches closely to gauge the future direction of Bangladesh under new leadership.

Read more: Economic Times

GENERAL OVERVIEW

🗞️ Bite-sized summaries

📉 Reduce GST on insurance - India's GST system is due for rationalisation, sparked by recent calls to reduce rates on health and life insurance. The GST Council has long discussed rate reviews but hasn't acted, despite rising tax collections. Many essential goods and services face high levies, frustrating consumers. Experts argue that now is an ideal time for change, given improved economic conditions. Proposed changes include merging the 12% and 18% slabs into a 15-16% rate, which would affect various product prices. Challenges include addressing potential refund issues and deciding on cess for specific items. Despite hurdles, tax experts advocate for simplification, believing it could boost compliance and collections. The Council must balance revenue needs with consumer affordability.

⌚️ See you in Minutes - Flipkart has launched its quick commerce service, 'Minutes', in select Bengaluru areas, delivering groceries, electronics, and smartphones within 8-16 minutes. This marks Flipkart's entry into the competitive quick commerce space, challenging established players like Swiggy's Instamart, Zomato's Blinkit, Zepto, and BigBasket's BB Now. Flipkart plans to operate around 100 dark stores for this service. Meanwhile, competitors are rapidly expanding their dark store networks, with Blinkit aiming for 2,000 stores by 2026 and Zepto planning 700 by March 2025. The quick commerce sector is expected to see intense activity during the upcoming festive season, traditionally dominated by big-ticket sales from e-commerce giants.

👪️ Indian succession - Gautam Adani, chairman of the Adani Group, plans to retire at 70 and hand over control of his $213B empire to the next generation by the early 2030s. The succession plan involves his sons, Karan and Jeet, and their cousins, Pranav and Sagar, who will have equal shares in the family trust. Each heir currently holds key positions within the Adani Group:

1. Pranav: Managing Director of Agro, Oil & Gas

2. Karan: Managing Director of Adani Ports and SEZ Limited

3. Sagar: Oversees energy business and finance

4. Jeet: Responsible for airports and digital businesses

HEADLINES

🧑‍🍳 What else is cookin’?

What’s happening in India (and around the world 🌍️)

• Assam to hold the first magic festival to revitalise lost traditions of Mayong.

• Debate over the debate: Harris, Trump spar over date, network.

• Hamara Hospital! Bajaj plans a healthcare ride.

• 92% of Indian SaaS startups have adopted AI over the past year.

• Gender disparity exists in rural India with the majority of employed individuals male.

CULTURE

🍿 Entertainment, Entertainment, Entertainment

• Olympics updates:

  • View the complete medal tally here.

  • Lakshya Sen loses bronze to Malaysia's Zii Jia Lee in Badminton Men's singles.

  • Team India lost the Mixed Skeet bronze medal match to China.

  • India beat Romania in Women’s Team Table Tennis 3-2.

• Janhvi Kapoor’s spy thriller Ulajh opens to mid reviews