In this week's wrapup, we talk about why Chinese imports started piling up at Indian ports, how different countries are tackling unemployment, why moneylenders are regaining popularity in India, Softbank's winning bet on Lemonade, and the problem with Hong Kong's currency peg.
The China Pump
Before we get to the wrapup, here's another thriller from China. We don't want to give away too much right now, but know that Chinese stocks are on a spectacular rally and you won't believe why it's happening.
So in this week's Finshots Market we are covering the China Pump and you can read the full draft here
Stop the Chinese Shipment
On Monday, we talked about why Chinese consignments were being blocked at Indian ports. The strange part, however, was that no official orders had been issued on restricting or physically inspecting these goods. And according to officials, if some containers were held up, it was simply a routine exercise based on intelligence inputs.
But considering the government was already planning on retaliating against China, this didn't seem very routine. It seemed like the government wanted to subtly incentivise manufacturers to either source products locally or seek alternatives elsewhere.
And things took a pretty bad turn. We'll tell you all about it here.
Unemployment Demons and how to fight them
On Tuesday, we discussed the best ways to tackle mass unemployment. Different countries have different approaches. For instance, the US has chosen to let companies fire employees at will, and then protect them by supplementing unemployment benefits with special grants. On the other hand, most European countries have launched generous furlough schemes, where the government bears a part of the wage bill to keep most employees on the payroll.
And while this second approach has drawn considerable praise, it it really the best way to go? Find out what we think right here.
The Moneylender is Back
On Wednesday, we spoke about the resurgence of the Indian Moneylender on the back of COVID-19. Here's the thing- Almost one-third of all MSMEs in Tamil Nadu are now ready to tap moneylenders for cash amid the current crisis.
On the face of it, this isn't very surprising. When the chips are down, some people inevitably turn to moneylenders- even though they charge interest rates of up to 200%. But the question is, why do moneylenders still hold so much sway despite formalized banking penetrating most corners of India?
We'll tell you why here.
The Remarkable Insurance Company Lemonade
On Thursday, we talked about the insurance company Lemonade.
Lemonade’s IPO last week was a runaway success, and the company’s stock price has rallied by a whopping 150% since then. But while everyone is talking about the IPO, nobody seems to be asking the most important question - What's the business model here and why so much hype?
Well if you want to know a little about insurance and human behaviour, you must definitely read the full story here.
The Currency Assault on Hong Kong
On Friday, we talked about the Hong Kong currency peg. The value of a national currency is largely a byproduct of trust in the country’s financial ecosystem. Simply put, if people don't trust their currency, they will start giving it up en masse and it will lose its value. And from there, things will quickly spiral out out control, unless of course, the government and the central bank can undo the damage.
But how would they do that? Well, in Hong Kong's case, they decided to peg the currency to something that holds value for people - the US dollar. And we explain exactly how this works here.
That's all for this week, folks! Have a great weekend.