Perception is reality. Only till it isn't!
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Krishna Hegde
@PositiveGamma
FinTech, Markets, India, Food, Asia. Trust Only Data. Bengaluru Boy. Farmer. hegde.eth
Joined August 2014
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Many Indian consumers are affected by recent SBM bank curbs on LRS (remittance of money out of India for travel etc).
Since credit cards don't come under LRS apparently, fintechs are proposing using credit cards as an alternative.
Sure-shot way to attract further scrutiny?
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Replying to @Biswaji91732088
Hey Biswajit! Please be aware that credit card's don't fall under LRS.- AS.
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New York has 'Shakespeare in the Park'.
Bangalore has 'Carnatic Music in the Park'.
Beautiful Republic Day with sun peeking thru the trees & a nip in the air. Vande Mataram has an ethereal ring to it.
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Super detailed report worth a read.
To put in context, 90% of investors making a loss is same ratio as single digit lottery (where 9 out of 10 make loss).
Tax on lottery is used to fund social services.
In F&O, tax is in form of transaction costs & is revenue for brokers.
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Today Sebi released a detailed study on the P&L of individual traders in F&O 1) No of F&O traders zoomed - 7.1 lakh (FY19) to 45.2 lakh (FY22)
2) 89% made losses in FY 22. Avg loss of 1.1 lakh.
3)11% made profit. Avg of 1.5 lakh.
4) Top 1% traders account for 51% of netprofit
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Alternate headline: PhonePe's investors coughed up Rs.8,000 crores in taxes because they thought company would get a much better valuation by listing in India & regulatory friction would reduce by being India domiciled.
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PhonePe's investors coughed up Rs 8,000 crore in taxes to shift domicile from Singapore to India: CEO Sameer Nigam
@BhavyaDKumar reports
moneycontrol.com/news/business/6
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Credit cards have lots of churn. Churn (& LTV) can be different based on sourcing channel & customer segment. A quick analysis of SBI Cards (lots of offline SBI branch sourcing), RBL Bank (mainly thru Bajaj Finance) & Axis Bank (existing cust+ partnerships) shows stark contrast.
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YTD, BTC is up 37.5%.
From $16600 on Dec 31 2022 to $22850 on Jan 23 2023.
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Lotteries and retail Futures & Option trading are both negative expected value.
Median retail F&O investor loses more per year than person playing lotteries (all brokerages have this data).
Retail F&O is legal across India but lotteries are not.
Expect this to change soon.
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Pagseguro trades at less than 1x revenue. Growing revs 30%+ y/y, super profitable (at net income level) & growing market share.
When folks tell me Indian fintech has repriced enough, I nod politely or disagree violently depending on whether they actually want my view :-)
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Reflecting global trends, Indian neobanks seem to have an uphill task in convincing customers to make them their primary savings accounts & hold large balances.
Data shared by Indian banks that partner with neobanks shows very low avg balances that make it tough to breakeven.
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Indian private banks are struggling to grow deposits. Older people have ample deposits. To get deposits from PSU banks, private banks need to
a. Stop misselling. FD mangoge, insurance denge 🙅♂️
b. Have 50+ yo serve them in their language
c. Provide good calendars at start of year
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India's next super app contender is in Alpha. Interesting approach to start with flights (since many airports are operated by Adani Group).
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Average value of assets per Indian stock trading account created since April 2020 is Rs.930 ($12).
Intermediary sourcing the account likely got paid more than value of assets in account🤯.
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Some great visuals from Sebi's monthly dashboard. 1. Demat account openings v actual money in the new accounts (huge disparity)
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Parents: here’s an array of toys, all the ones we couldn’t afford as kids.
Toddler/infant: here’s this amazing piece of cardboard we are going to play with all day.
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Similar trend in Indian startups that have IPOed over last 24 months. Most VCs have held onto their stakes past the lock-up expiry & seen further erosion in value.
Crossover/growth investors have been quick to exit (even if it meant taking losses).
An arc that will be repeated across firms in multiple sectors - Logistics, financial services, healthcare, consumer goods, many B2B businesses.
Sustained, high ROIC merits high multiples.
Narratives of tech superiority aren't enough coz talk is cheap.
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METRO India was a growing & profitable wholesale business. Many peers haven't proven they can grow & be profitable simultaneously.
'METRO India’s equity value of approx. €0.3 billion implies an EV/sales multiple of 0.6x based on sales of FY 2021/22'.
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MamaEarth IPO filing is a way to build optionality. The $3 bn valuation is a placeholder. Investors will be happy to sell at $1 bn too.
In case Indian public markets provide exit liquidity, even at a lower price than last round, many early investors will happily take it.
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4 year performance. What a difference 2022 has made!
Still more luck than smarts.
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3 year performance. More luck than smarts.
IYKYK.
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Indian Bank fixed deposits have comfortably outperformed Indian equities (NIFTY 500 Total Returns Index) over the last year. NIFTY 500 TRI was up 4.25% for the year.
Of course, 2023 could be different :-)
For reference, 3 year (20-22)CAGR on NIFTY 500 TRI is 17.3%
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7/ Media darlings and social media gods are rarely as smart, virtuous or generous as they seem, even if they are successful by most objective measures
I’m reminded of this story recently after observing the entire SBF saga
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Indian securities regulator, SEBI, new rules for perf reporting & benchmarking for Portfolio Management Services are pretty badass.
It is mandatory to report portfolio performance relative to
a. Selected Benchmark AND
b. *Other portfolio managers*
sebi.gov.in/legal/circular
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Two commercial banks for sale in India - IDBI Bank (Sold by govt of India
- Nainital Bank (Sold by Bank of Baroda)
Nainital is much smaller. Bidders for both will need to put up their hands by Jan.
We could also get some UCB to commercial bank conversions in 2023.
More banks!
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If SBF was found to be operating a criminal operation, likelihood of money laundering charges for intermediaries involved with FTX will increase significantly.
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If you're wondering what obvious edge looks like, this is a great example of it.
You know exactly who is on the other side. You know exactly what they have to do. You know exactly when they'll do it. And you can estimate the impact.
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As a trader, there is barely a time that you can transparently share edge, but since FTX has gone down, it is clear that this strategy is never coming back, and I thought I would share insight on how i extracted round 5000% of value from the incompetency off SBF (1/x)
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Looking across Indian startups that have 're-focussed' over 2022, there are few/no business sales -carve outs/divestitures.
What has been trimmed so far are frills/side bets that couldn't be viable businesses.
Real focus on core will happen when viable but non-core are sold.
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Super significant opinion piece - since it comes from the CEO of Goldman Sachs.
Key outcome of FTX blow up is likely to be quicker regulation & rapid entry of regulated financial institutions into digital assets.
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Responses worth a read.
As an independent investor, if don't know what your edge is, over long periods of time, you are guaranteed to underperform benchmarks or worse, lose money.
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If you are an investor/trader that is NOT a part of a well-resourced organization, what do you consider to be your edge?
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ICICI Bank analyst day ppt is a monster. 220 pg with 🤯 visualisations.
Worth a read for all.
a. Fintechs: Check if you are getting disrupted
b. Other banks: Check what is needed for feature parity
c. Everyone else: Check if you should switch banks
bseindia.com/xml-data/corpf
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Dec 2019, India had 1151 million wireless subscribers with 95.46% prepaid.
Jun 2022, India had 1147 million wireless subscribers with 92.74% prepaid.
In 2.5 years, subs, esp dual SIM, 📉 coz of tariff hikes.
ARPU increased from Rs.78.65 in Dec 2019 to Rs.133.55 in Jun 2022.
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ICICI Bank analyst day ppt is a monster. 220 pg with 🤯 visualisations.
Worth a read for all.
a. Fintechs: Check if you are getting disrupted
b. Other banks: Check what is needed for feature parity
c. Everyone else: Check if you should switch banks
bseindia.com/xml-data/corpf
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Circle had Sep qtr revenues of $274 million & net income (profit) of $43 million.
Coinbase had Sep qtr revenues of $590 million & net loss of $544 million.
Great time to be a stablecoin issuer!
December qtr will be even more profitable for Circle 🚀
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Spillover from FTX/BlockFi into the fintech world - fascinating write up.
TL;DR: FTX+BlockFi & crypto troubles are compounding existing regulatory troubles in key fintech enablers. Look out for collateral damage.
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I’ve had the pleasure to work with some of the wealthiest families in the country as investors. Many of whom are worth Billions. I can tell you without hesitation, these family “offices” are almost always a shit show…
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Great news for Indian stock brokers (if all real money games get regulated).
Option volumes 🚀🚀
If only stock exchanges increase trading times to 24x7... Lots of upside for brokers and exchanges.
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Chat GPT3 can help you become a better consumer of information!
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ChatGPT is incredible. Answers thorny questions authoritatively
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We are in that part of the cycle where external counsel comes in & talks to investors about destruction/tampering of evidence, document retention requirements & implications of any violations.
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With Blackstone REIT limiting redemptions, game theory dictates investors in every other 'limited redemption fund' that has outperformed underlying public proxies should send in a large redemption request for year-end.
Fun times!
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Blackstone’s $69 billion real estate fund announced today that it’s limiting redemptions.
This is a scary sign for the real estate market.
Let’s dive in 
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Wall Street giant Fidelity has begun opening bitcoin trading accounts for its retail customers, after announcing a waitlist earlier this month.
The company already offers custody, trading and asset management for institutional customers.
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