13th September 2024 – 20th September 2024 | Another week in the markets
| S&P 500 | Nasdaq | VIX | DJIA | Russell 1000 | NYSE |
| 5,702.55 | 17,948.32 | 16.15 | 42,063.36 | 3,114.23 | 19,373.74 |
| 1.36% | 1.49% | -2.48% | 1.62% | 4.03% | 1.32% |
| Nifty 50 | Gold | Silver | Brent crude | USD-INR | EUR-INR |
| 25,790.95 | $2,647.10 | $31.49 | $74.72 | 83.48 | 93.20 |
| 1.71% | 3.14% | 1.38% | 3.52% | -0.48% | 0.31% |
Source: MarketWatch
Hello Saturday,
This week, China’s affluent class cuts back on luxury cars purchases after saying no to luxury retail items, US tech workers suffer as companies reset their hiring policies and a chartered accountant’s death puts the spotlight on the burnout epidemic in India Inc.
- After luxury retail items, luxury cars witness a sales drop in China signalling a consumption slowdown on the card
- Tech workers wrestle for jobs as openings dry up and companies recalibrate their need for a bigger workforce
- A 2022 McKinsey report states that 1 in 3 employee in Asia suffers from a burnout
- The future is bright for hybrid and electric vehicles, says ICRA. Both segments have the potential to hold 8% market share each by FY28.
Taking stock | Germans slow down on Chinese highway | Tech jobs dry up | Crash and burn on the job | Revving up | Invest wisely | Another week in the markets
Taking stock
The Federal Reserve jumbo rate cut is likely to dictate the market narrative in the coming days. Dow Jones edged slightly higher on Friday to clinch a record close. The S&P 500 closed on Friday with a marginal 0.19% fall and the Nasdaq ended lower by 65.66 points or 0.36%.
Germans slow down on Chinese highway
Mercedes and BMW are sounding the alarm on their Chinese sales.
The top-end German auto manufacturing duo are flashing warning signs that affluent Chinese are turning away from big-ticket purchases.
Last Thursday, Mercedes-Benz became the second luxury car maker to cut down on its earnings guidance for the year. Mercedes’ cut was preceded by BMW, which, in the same vein, indicated that its profits would take a drubbing this year as a consequence of wealthy Chinese downsizing their budgets and turning cautious.
It is not the Germans alone, who are spooked by the falling consumption levels in China. French luxury brands like LVMH and Kering have also become more conservative on Chinese sales.
Winds of change in the European markets have been buffetting the boat of German automakers in the past couple of years. High interest rates and massive capex over electric cars have contributed to massive margin erosion. Nevertheless, luxury car makers could till very recently rely on the Chinese market to add more meat to their top line. The comfort zone would now sorely be absent. As per a report by Bernstein, sales of Mercedes and BMW fell by 10% and 11% respectively in the eight months to August.
Meanwhile, more and more consumers have been tilting towards BYD, a low-cost car manufacturer, which managed to unseat Volkswagen as the market leader.
Tech jobs dry up!
Gone are the days when tech workers were being wooed and dined by companies and chased after with fat pay packages. As more and more tech opportunities disappear, engineers are battling each other over limited openings.
Data from the US employment portal Indeed.com shows that postings for software development jobs have been down more than 30% since February 2020. Engineers are now reckoning with the double whammy of not just fewer openings but increasing layoffs on the side. Tech companies have given the pink slip to more than 137,000 employees in 2024 alone.
The job crunch is emblematic of a deeper reset in the IT industry’s perspective on hiring and retaining talent. Instead of splurging on newer hires with generous compensation packages, companies are hitting the kill switch on the expansion of team strength. Recruitment of entry-level talent has been cut to size. Lavish off-sites and permanent work-from-home flexibility are being clawed back. Simultaneously, moonshot projects are being junked and focus is being redirected to revenue-yielding products and services.
Data from Pequity, a compensation planning start-up, shows that wage growth has been mostly stagnant in 2024, growing by a laughable 0.95% compared to 2023. Equity grants for entry-level roles with middling software-as-a-service companies declined 55% on average since 2019.
Crash and burn on the job
Social media has been seething with rage over the sudden death of a young chartered accountant working at one of the Big 4 firms, who allegedly passed away because of overwork.
Many have taken to social media to highlight that their work-life balance is in shambles, and how India Inc fosters a corporate culture which glorifies burnout and marginalization of family and personal commitments.
As per a 2022 report by consultancy firm McKinsey, stress emanating from work ranks far higher in Asian countries compared to other regions. Around the globe, only one in four experiences burnout, whereas in Asia, the phenomenon claims one in three as its victim.
For the report, the McKinsey Health Institute conducted a survey of nearly 15,000 employees and 1,000 HRs in 15 countries including India, Japan, China and Australia.
The report also highlighted the sorry state of Indian employees. Indian respondents reported elevated rates of burnout, depression, anxiety and distress.
Toxic workplace behaviour was cited an overwhelming 90% of the time by respondents as the main factor contributing to work-life disorders. Toxic workplace behaviour was also cited 90% of the time by respondents as the reason behind leaving a workplace. Notably, the intention of Indian respondents to leave a workplace was 60% greater than the global average.
Another report published by the World Health Organisation estimated that 15% of working-age adults had a mental health disorder in 2019. The report also highlighted that depression and anxiety result in the loss of 12 billion working days annually, leading to $1 trillion in lost productivity each year.
Source: McKinsey.com
Revving up!
Investors in EV companies can rejoice! As per ratings agency ICRA, hybrid cars and EVs separately could occupy as much as 8% of the market share by FY28. This is glad tidings for EV and hybrid car manufacturers considering that both segments currently have a market share of 2% each. Additionally, the share of CNG cars is also expected to bump up from 14% in FY24 to 18% in FY28.
Speaking to Business Standard, Shamsher Dewan, senior vice president and group head (corporate ratings) explained that EVs are currently in an evolutionary phase. “For example, if you are able to get a vehicle at a low price point with a solid-state battery, it could have a range of up to 600–700 km, and this could change the entire game,” he said.
“Hybrids are a trade-off. You get better mileage. At the end of the day, you do not have range anxiety as there is an internal combustion engine (ICE). Just with two major players—Maruti and Toyota—strong hybrid cars’ penetration has reached two per cent,” said Dewan.
Invest wisely
Investing demands that one should always keep an eye on all the developments occurring in the financial and economic landscape. Alas, most investors do not have the time or the inclination to keep up with the nitty-gritty of the business world. This is where the Appreciate app can be of great help to diligent investors. With our deep research capabilities and macroeconomic indicators, you will always be well-informed about macroeconomic and financial events that can have a repercussion on your portfolio. With Appreciate by your side, staying on top of the market cycle is a walk in the park.
Warm regards,
Another week
in the markets
