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Goldman Sachs on stock markets, start-ups and IPO

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Investors have been pouring money into India’s stock market, and it could grow to more than $5 trillion to become the fifth largest in the world within three years, according to Goldman Sachs.

Indian start-ups have raised $10 billion through IPOs so far this year — more money than was raised in the last three years, the investment bank said in a report dated Sept. 19.

And the pipeline for future public listings is expected to remain robust over the next two years, Goldman analysts said. Based on Goldman’s analysis, as many as 150 private firms could potentially list on the stock market over the next 36 months.

“We estimate nearly US$400bn of market cap could be added from new IPOs over the next 2-3 years,” Goldman analysts wrote.

They explained that could drive India’s aggregate stock market value to increase from $3.5 trillion currently to over $5 trillion by 2024. That’s likely to make the South Asian country the fifth largest in the world by market capitalization, surpassing the U.K. and the Middle East.

A store advertises the use of the Paytm digital payment system and the Zomato food delivery app in Mumbai, India, on Saturday, July 17, 2021.

Dhiraj Singh | Bloomberg | Getty Images

Many of India’s largest technology start-ups have announced plans to go public, which some investors say will usher the beginning of a new era for the entire ecosystem.

Food delivery firm Zomato became the first of a slate of prominent names to be publicly listed. Others in the pipeline include payments giant Paytm, ride-hailing start-up Ola and e-commerce firm Flipkart.

“What we’re really flagging here is that as exciting as China was over the last decade, when you had this new China story — which is very, very profitable and successful for investors – we could see some sort of an analog of that beginning to take place in India,” Timothy Moe, co-head of Asia macro research at Goldman told CNBC’s “Street Signs Asia” on Monday. Moe was one of the report’s co-authors.

India’s digital economy

Looking forward, we think Indian equity indices could see a larger representation of the new-economy sectors over the next 2-3 years as the large digital IPOs get included in the index.

The number of so-called unicorns — start-ups valued at over $1 billion — surged in India in recent years. That’s due to the rapid growth in the internet ecosystem, combined with better availability of private capital and a favorable regulatory environment, Goldman said.

The bank estimated there are at least 67 private start-ups in India that fit the definition of a unicorn, and that 27 of them said they hit the $1 billion valuation mark in 2021. Most of them are focused on India’s digital economy.

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As those highly valued start-ups list in the public markets, Goldman predicted that it could potentially transform Indian capital markets and stock indexes over the next few years.

Capital market shifts

India’s share in the global stock market value is expected to rise from 2.8% currently to 3.7% over the next five years, according to the investment bank. That’s higher than Goldman’s prediction of 40 basis points increase in India’s share of global GDP over the next five years.

At home, Indian indexes like the Nifty could see bigger representation of the so-called new economy sectors as large floats from internet start-ups get included in the index. Currently, the indexes are dominated by financial stocks and companies belonging to the more traditional sectors like energy and information technology.

New economy is a term that refers to high-growth industries, which are underpinned by the latest technologies. They are thought to be the driving force of economic growth.

“The lack of fast growing new economy/digital stocks in the index has meant that India’s earnings have lagged the region while the internet-heavy China index, on the other hand, has delivered the best earnings over the past decade,” the analysts said.

Based on their calculations, Goldman’s analysts expect segments like e-commerce, internet, internet retail and media to have more weight on the indexes, through the consumer discretionary and communication services sectors. Other sectors such as commodity and software services would likely see their weightage shrink, the analysts predicted.

“Looking forward, we think Indian equity indices could see a larger representation of the new-economy sectors over the next 2-3 years as the large digital IPOs get included in the index,” Goldman said. “We see the new-economy sector weight could rise from the current 5% to 12%.”

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Xpeng launches flying car that can also operate on roads

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HT Aero, an affiliate of Chinese electric carmaker Xpeng Inc., launched a new vehicle capable of flying in the air and driving on roads. The launch of HT Aero’s 6th–generation model happened at the Xpeng Tech Day on Sunday, October 24, 2021.

Xpeng

GUANGZHOU, China — HT Aero, an affiliate of Chinese electric vehicle maker Xpeng Inc., launched a new flying car on Sunday that it says can also drive on roads.

The company says it plans for a rollout in 2024.

HT Aero’s vehicle will have a lightweight design and a rotor that folds away, the company said. That will allow the car to drive on roads and then fly once the rotors are expanded.

The vehicle will have a number of safety features including parachutes, the company said.

HT Aero is backed by Xpeng and its founder He Xiaopeng. The company raised $500 million last week from a number of outside investors including high-profile venture capital firms.

Flying cars — also called electric vertical take-off and landing vehicles — have garnered a lot of interest from automakers and start-ups.

However, there are a number of challenges for these vehicles to become wide-scale including regulation and safety issues.

HT Aero’s new land and air vehicle was launched at Xpeng’s Tech Day where the company also took the wraps of the latest version of its advanced driver assistance system called XPILOT 4.0.

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Twitter and Square CEO Jack Dorsey says ‘hyperinflation’ will happen soon in the U.S. and the world

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Jack Dorsey, CEO of Twitter and co-founder & CEO of Square, speaks during the crypto-currency conference Bitcoin 2021 Convention at the Mana Convention Center in Miami, Florida, on June 4, 2021.

Marco Bello | AFP | Getty Images

Twitter co-founder Jack Dorsey weighed in on escalating inflation in the U.S., saying things are going to get considerably worse.

“Hyperinflation is going to change everything,” Dorsey tweeted Friday night. “It’s happening.”

The tweet comes with consumer price inflation running near a 30-year high in the U.S. and growing concern that the problem could be worse that policymakers have anticipated.

On Friday, Federal Reserve Chairman Jerome Powell acknowledged that inflation pressures “are likely to last longer than previously expected,” noting that they could run “well into next year.” The central bank leader added that he expects the Fed soon to begin pulling back on the extraordinary measures it has provided to help the economy that critics say have stoked the inflation run.

In addition to overseeing a social media platform that has 206 million active daily users, Dorsey is a strong bitcoin advocate. He has said that Square, the debit and credit card processing platform that Dorsey co-founded, is looking at getting into mining the cryptocurrency. Square also owns some bitcoin and facilitates trading in it.

Responding to user comments, Dorsey added Friday that he sees the inflation problem escalating around the globe. “It will happen in the US soon, and so the world,” he tweeted. Dorsey is currently both the CEO of Twitter and Square.

It’s one thing to call for faster inflation, but it may be surprising to some that Dorsey used the word hyperinflation, a condition of rapidly rising prices that can ruin currencies and bring down whole economies.

Billionaire investor Paul Tudor Jones and others have called for a period of rising inflation. Jones told CNBC earlier in the week that he owns some bitcoin and sees it as a good inflation hedge.

“Clearly, there’s a place for crypto. Clearly, it’s winning the race against gold at the moment,” Jones said Wednesday.

But most of the major investors have not gone so far as to call for hyperinflation like Dorsey.

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Alec Baldwin fatal prop gun shooting raises questions about working conditions

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While injuries or death from prop firearms are extremely rare, the accidental killing of Halyna Hutchins on a Sante Fe movie set Thursday has sparked inquiries about working conditions for Hollywood crew members.

“I’ve been in the industry 21 years,” said Kevin Williams, the prop department supervisor at the UCLA School of Theater, Film and Television. “I have not heard of any circumstances like this. So, this is definitely one of these things, and it sounds like a cliche to say, but it really sounds like a freak accident.”

The circumstances of the shooting are under investigation. The Santa Fe County Sheriff’s office confirmed that actor Alec Baldwin fired a prop gun on the set of “Rust,” a Western being filmed at the Bonanza Creek Ranch, killing the film’s director of photography and injuring its director, Joel Souza.

Security guards and a compliance officer at New Mexico’s Bonanza Creek Ranch on Oct. 22, 2021, the film set where actor Alec Baldwin fatally shot cinematographer Halyna Hutchins and wounded a director when he discharged a prop gun.

Adria Malcolm | Reuters

Souza has since been discharged from the hospital. No charges have been filed. The Santa Fe County Sheriff’s office did not immediately respond to CNBC’s request for comment.

While it’s unclear at this point what exactly transpired Thursday, many in the industry have begun to inquire about working conditions on set. These queries come as the International Alliance of Theatrical Stage Employees works to finalize a new three-year contract with the Alliance of Motion Picture and Television Producers that addresses the union’s calls for better working hours, safer workplace conditions and improved benefits.

“There have been times that I have been on projects for 18 to 20 hours and then been asked to return in six,” Williams said.

Crew protested working conditions

The IATSE issued a statement Friday addressing Hutchins’ death and encouraging its members to contact the union’s safety hotline if they feel unsafe on set.

“Our entire alliance mourns this unspeakable loss with Halyna’s family, friends, and the ‘Rust’ crew,” the statement read. “Creating a culture of safety requires relentless vigilance from every one of us, day in and day out. Please, if you see something, say something.”

The union declined to comment further.

A person familiar with the matter told NBC News that half a dozen camera crew workers walked off the “Rust” set in protest of working conditions just hours before the shooting took place. Among their concerns were multiple misfires of the prop gun.

Earlier Friday, the Los Angeles Times reported, citing three unnamed people involved with the production, that the crew was frustrated with the production’s long hours. It also alleged that there were two previous prop gun misfires on set, one the previous week and one on Saturday.

​”The safety of our cast and crew is the top priority of Rust Productions and everyone associated with the company,” Rust Movie Productions said in a statement provided to CNBC. “Though we were not made aware of any official complaints concerning weapon or prop safety on set, we will be conducting an internal review of our procedures while production is shut down.”

Rust Productions is cooperating with the Santa Fe authorities in their investigation.

A ‘potential failure in the system’

Hollywood productions typically adhere to strict safety measures for stunt work, particularly when it comes to weapon and prop safety. The Industry-Wide Labor-Management Safety Committee has written and distributed safety bulletins on best practices for television and movie productions.

“Blanks can kill,” the first bulletin reads. “Treat all firearms as though they are loaded. ‘Live ammunition’ is never to be used nor brought onto any studio lot or stage.”

These guidelines are recommendations and may not apply to reality shows such as “Mythbusters” or “Top Shot” where live rounds are used to test scientific theories or for marksmanship competition.

“I can say unequivocally that a blank round versus a live round is really easy to identify in the hands of an experienced armorer or prop master,” Williams said. “I can’t imagine anybody would say ‘whoops’ and just put that in there.”

He also noted that safety demonstrations are done with all cast and crew involved in firearm stunts who are instructed that prop weapons should never be pointed at another actor or crew member. In cases where a director wants to film a weapon being pointed at the camera and discharged, ballistic shields are used, he said.

“There are a lot of safety measures put in place,” he said. “If it turns out that a live round was loaded into a vintage weapon and it turns out that that is how this happened, then we need to figure out why.”

That’s a “potential failure in the system,” Williams said.

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