Wednesday 16th April Flashcards
India's Middle Class debt crisis
What’s happening with Nvidia
Nvidia is dealing with a 5.5 billion dollar blow because of new export requirements.
- regulatory filing on Tuesday, US chip maker needs a special licence to sell its H20 chips to customers in china
- Washington is worried that these chips will be used in a super computer
what is the h20 chip
less powerful version of Nvidia’s original Ai chips. High demand in china
what was the effect of this?
6% fall in share price after trading
What’s happening with the Junk Bond Market
Junk Bond refers to the debt of lower rated riskier companies
- no appetite for it since beginning of DJ trumps trade war
Who does the decline of the JBM affect?
- JBM shut completely, - raises questions about companies ability to raise money and maintain liquidity.
- ## also happening in the Loan market
Why might a company rely on a loan market instead of a bank
How does the Bond market influence PE
PE firms use loan markets to fund their deals. if it shuts they are out of business. The vitality of the PE market depends on how long the bond market is shut.
What is Venture global doing
they are attempting to reopen he bond market by raising money through the market. Investors are watching to see if there is enough demand for the market to re-open and if this deal with shepherd in more to follow
What happens if JBM continues to stay shut?
- depends on how long it lasts. If only a couple of weeks, market will likely to return to functionality
- but if investors dont buy and capital costs surges, deal makers can’t transact, banks can’t loan and deal making dampens
How does CB and JBM affect wider economy?
- investors are expecting a recession. They are saying they have to be more risk averse
- increased defaults in the corporate sector
- borrowing costs are higher for companies - harder to justify hiring people and raising wages.
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What’s happening with PWC
re-evaluating where it does business.
Shutting down operations in 12 countries , 10 in Africa.
Pwc pressuring leaders to avoid dealing with risky clients
firm is trying to avoid scandals.
trying to avoid scandal since botched ever grant audit
What’s happening with India’s middle class
middle class facing debt problem.
Middle class previously prosperous and so banks gave out personal loans and credit cards to urban households.
How much debt are they in ?
household debt jumped to 35% of GDP to 43%, which economists say is worrying for a low GDP capita nation like India
- a lot of the debt is unsecured credit + borrowing without collateral
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Why did middle class debt soar
happened after pandemic and inflationary pressures and job losses happened.
easy credit exploded - fuelled by tech and buy now pay later schemes. People borrow to maintain lifestyle, invest in stock market, finance necessities.
Why is the debt an issue now
Pressure on people to repay.
Banks are now cutting off credit to riskier borrowers, pushing borrowers over the edge
Illegal debt collection tactics causing distress.
Southern states have legislated against harassment , but not enough done to stop more predatory tactics
How is the larger economy
India is usually seen as this unstoppable growth machine.
debt crisis reveals a much more fragile reality. If middle class tightens belt, middle class
