Meta laid off 11,000 employees (or 13% of its workforce) amid falling
revenues from advertising and e-commerce. The company is also
considering other cost-cutting measures and might close a few offices.
Investors have shown apprehension towards the company’s focus on
creating a metaverse at the expense of the rest of the business. This can
be reflected in the total market capitalisation of the company, which has
fallen from $1 tn in September 2021 to now around $270 bn.
Not just Meta, most other Tech companies in the US are trimming staff
and have halted hiring. Many of these tech companies went on a hiring
spree during the pandemic. A risk of global recession, exacerbated by the
Russia-Ukraine war and inflation, has increased pressure on the tech
industry. Also, these companies face pressure on the back of higher
interest rates, sluggish consumer spending and a strong dollar.
Even as the economy slows, the labour market has rapidly recovered.
Employers added 261,000 jobs in October, beating economists’
predictions. Several economists noted that layoffs at these tech
companies could be relatively self-contained events, related more to their
own corporate restructurings than the overall economic outlook
The year 2022 has been a difficult one for cryptocurrency investors across the world. After witnessing a sharp fall in the price of most cryptocurrencies, the global cryptocurrency market is shaken by the looming collapse of FTX. A leaked balance sheet from FTX’s sister company, a crypto trading firm named Alameda Research reported that 40% of its asset were held in FTX’s own crypto token (FTT). Such high exposure led to questions on financial stability and governance. The once biggest crypto exchange (FTX) faced a liquidity crunch after customers started a bank run to
withdraw money from their accounts. FTX turned to Binance, an arch-rival, to bail them out. Initially, Binance agreed to take over FTX, but then pulled out of the deal, citing reports that FTX had mishandled customer funds and was being investigated by the authorities. This event led to a sharp fall in the prices of some of the major cryptocurrencies. Bitcoin fell below $16,000, its lowest level in two years.
The US market jumped sharply after the consumer price inflation data in the US was lower than expected. Market participants saw that as the topping of the interest rate cycle. There is hope that the intensity of the rate hikes will slow as inflation peaks. However, the US Fed is unlikely to hint at any lowering of the guard until the inflation falls below the acceptable rate of around 2% or below. Also, the Fed officials believe they will have to hold higher interest rates for some time. With the US market witnessing heightened volatility through much of 2022, investors could find it an attractive investment proposition from a valuation perspective.
Indian equities have shown resilience during the year so far. While the sentiment is optimistic about the Indian market, midcaps continue to underperform.
Given the run-up in equities compared to most other major markets, the expensive valuation of Indian equities could prompt foreigners to pull money out
of India and move to cheaper markets. Also, for Q2FY23, the quarterly results have been a mixed bag. In the near term, markets could be volatile. Thereby,
investors can choose large caps over midcaps to minimise the downside risk in their portfolios.
From a long-term perspective, there is a global consensus that India will continue to grow faster than any other major economy. Domestic demand and
consumption would drive India’s growth. The limited dependency of Indian businesses on global supply chains or exports makes India an attractive
destination. At the same time, the China + 1 strategy of multinational corporations is likely to help India increase manufacturing activity