- What does 2024 hold for risk assets and deal making?
- Are geopolitical tensions here to stay?
Niraj Shah speaks to Jefferies' Mahesh Nandurkar and EY's Rajiv Memani at 'Davos 2024'. #NDTVProfitLive
- Are geopolitical tensions here to stay?
Niraj Shah speaks to Jefferies' Mahesh Nandurkar and EY's Rajiv Memani at 'Davos 2024'. #NDTVProfitLive
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TVTranscript
00:00 Government of India lounges, we have the CII lounge.
00:03 In fact, we have five different state governments also having their own lounges.
00:07 And just to build on to what Ashish mentioned,
00:10 what you're seeing is the government officials are clearly trying to understand
00:14 the bottlenecks, if any.
00:15 It's not just the chest thumping.
00:18 There's a clear and honest exercise to understand the key investor concern.
00:22 We ourselves have been instrumental in getting a lot of large investors,
00:25 be it private place or public place, multi-asset, etc.
00:29 And we've been organizing interactions for them with senior government officials.
00:35 And I can clearly see a very meaningful dialogue going on.
00:38 And I think this can actually further improve the ease of not just doing business,
00:46 but ease of investing in India as well.
00:49 I think which will probably be a big factor going forward.
00:55 One last question, and that is around what kind of promise does
01:00 a policy continuous India bring to global investors?
01:06 Now, I'd love to understand what are people talking about from that front,
01:09 because 40 to 50 countries going for elections in 2024,
01:13 presumably very few have the predictability of policy,
01:16 at least in the large nations that India would be having.
01:19 Is that a factor that is coming up in conversations?
01:21 And what else would you be seeking to understand from people who are wanting to make
01:28 either a fresh investment into India or double down on what they already have in India?
01:33 I think the one thing that really makes India stand out versus a lot of other EMs
01:41 is sheer diversity of opportunities to invest in India.
01:45 If you look at the listed space per se, it has a mix of everything.
01:51 Consumption to export to local to Capex,
01:54 and which is I think something that investors really appreciate.
01:58 Most of the other EMs, barring one or two,
02:01 have dependence on either a particular company or a particular industry,
02:06 whereas India offers a lot more opportunity.
02:08 I think, again, Jefferies India,
02:11 Jefferies is a firm, we are very bullish on India outlook.
02:14 We have been strengthening our presence here.
02:16 We moved into a new office, hiring more people, building a new team.
02:20 And clearly see India as one of the most profitable markets and
02:24 growth markets for us as a firm.
02:25 I think I would definitely say that a lot of investors that we interact with,
02:33 and in fact, we had a chance to meet with some of the business CEOs as well.
02:37 I think the policy point that you mentioned, I think that is very important.
02:42 And I would say that while the government itself, because of the fiscal constraints,
02:47 might be lowering the Capex growth that the government has been
02:51 putting with its own money through the budget, that number might come down.
02:55 But I think over the last several years, we have seen a solid foundation building by way of
03:00 the GST implementation, by way of the bankruptcy law,
03:04 the private corporate leverage level is at an all-time low.
03:08 The housing cycle is looking up and with the laws like RERA getting passed,
03:15 the homebuilders confidence is also on the rise, which is giving longevity to that cycle.
03:20 So I think all these policy initiatives are clearly going to be the key driver for growth
03:24 going forward. And that's what we are picking up from here in Davos as well.
03:28 Okay, great. Gentlemen, thank you so much for joining us today and all the best for
03:33 the remainder of the stay in Davos and look forward to interact more with you on NDTV Profit.
03:37 Thank you very much, Neeraj. Thanks for hosting us.
03:40 And viewers, thanks for tuning in.
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07:45 In very cold Davos, we have a very special guest today, Chairman of EY, Rajiv Meemani, with me
07:51 out here. Rajiv, thanks so much for taking the time out. My pleasure. Thank you. We'd love to
07:55 understand how you feel about conversations thus far this year at the WEF relative to whatever you
08:00 may have had in the past. Yeah, so I would say two things. One is from a global standpoint,
08:06 if I was to compare it with last year, I think the mood last year was much more bearish than where
08:13 it is today. I think people were discussing whether we'll have one quarter of recession,
08:17 slowdown or two quarters as compared to and you know it hasn't been the case. I think things have
08:22 worked out not perfectly but not as bad as what people thought it will be. So this year I find
08:28 people are, I wouldn't say they are bullish, but they probably feel that things will start
08:34 picking up. The interest rate cycle is coming down, inflation is coming down, geopolitics is
08:39 still a concern, AI is still which way it will happen is a concern. But overall I think people
08:45 feel much better. Europe feels that they'll probably do better than where they did last year.
08:51 US feels probably they'll be a bit slower than where they were last year. Some pockets of Europe
08:55 like Germany and others may go through slowdown. So that's a global perspective. From an India
09:00 standpoint I think last year also the Indian story was very strong but I think it certainly
09:05 got much more reinforced this year because the growth this year really stands out as compared
09:11 to global growth. People are also seeing whatever was committed in the budget, you know, actually
09:18 we probably done better than that. So overall I would say things are very very positive from
09:22 an India's standpoint. AI has become much more front and center. I mean if you walk down the
09:30 promenade you see AI much much more visible than before. So it's really AI, AI, AI everywhere.
09:37 Geopolitics is less muted. Last time there was a lot of talk about Ukraine and everything else.
09:42 I think it's muted as compared to what we saw last year. And sustainability, there's a lot of talk
09:47 till now but I think given with the around economic issues around AI, I think it's it is there but I
09:55 won't say it's front and center. And then there's a lot of conversation around elections, elections
10:00 around the world this year, especially the US elections. Geopolitics muted and it's a valid
10:06 point. You think the world is learning to live with the fact that these things are on now and
10:11 there's nothing much that can be done about it? No, I think it's a concern. I mean it's really
10:15 it's a big concern that people have but I think for whatever reason I think that's not been
10:19 discussed and debated to that extent in the forum. But definitely it's a point of conversation
10:23 and people are worried and especially given the fact that this is a big election year,
10:28 I think people are more worried. So actually two interesting points that you bring in then.
10:34 One, the India story reinforced in some sense some people call it oasis of growth in an otherwise
10:41 fragmented world. But also in a year wherein 40-50 countries go to elections, policy continuity much
10:47 more likely in India than maybe some of the others. Is that working? Are people talking about that
10:51 with you? Yeah, I think so. I think people feel that there will be a continuity in policy.
10:56 So I think that factor is, I'm sure it's in the back of mind of people that we still have election
11:03 and election results are always important. One can never undermine them. But I think people,
11:07 there's a general sense of confidence that the policy, there will be greater policy continuity
11:11 going forward and the government has a much more medium term to long term picture in the way they
11:15 are looking at things. Got it. I would love to understand this from you. Last year and this year
11:20 when I've spoken to corporates, global corporations, they all talk about how they were to increase the
11:25 India share, make in India for India, make in India for the world. We've not necessarily seen
11:30 that in FDI numbers and you can argue that the services FDI came down as well. But how do you
11:36 see this translating to actual numbers being visible? I think it's getting better. You think
11:42 so? I think it takes time. I mean, it takes time for companies to pivot. Plus, we don't do a great
11:46 job of helping people to come in, ramp up quickly, get the land, get things going. I think from our
11:52 side also, it takes time. But I definitely see visible signs of companies now coming. I mean,
11:58 there are some companies like Apple and others who have a very visible presence. They make a
12:02 big difference in the entire telecom, in mobile handset value chain. The value addition is increasing
12:09 on the consumer side. The value addition is going up very significantly. Defense, we are starting
12:14 to see early signs of local manufacturing and also some companies starting to look at exports
12:19 and everything else. So I think I'm very bullish. I think first is manufacturing for India. I think
12:27 that's definitely picking up. And I think as that picks up, more and more global companies are also
12:33 trying to see how they can use India from a supply chain standpoint. And whosoever has come to India,
12:38 I mean, they've had teething pains. There are issues around ease of doing business. There are
12:42 issues around acquisition of land, approval processes and everything. But once they settle in
12:48 and they get a good management team, I think they can see the benefits of doing manufacturing in
12:54 India. So I continue to be very bullish on that. - Okay. One final question. The world will probably
13:00 get used to a paradigm shift of sorts, higher interest rates related to the last 15 years.
13:06 But it's also a year wherein while rates will remain high, but it will be a year of interest
13:11 rates coming off. What's your sense about how corporates will deal with this? Because for a
13:16 lot of them, not Indian necessarily, but globally in nature, these are unprecedented times of sorts.
13:21 - Yeah. So I think, I mean, my view is that the interest rates will come down, but may not come
13:26 down at the rate or the speed at which all of us are anticipating. I think it will take time.
13:33 How quickly inflation gets tamed is also a factor of a lot of other geopolitical issues,
13:40 overall economic growth, what happens in China. So it may take more time to settle in,
13:47 but definitely will not reach the lower levels what we saw earlier. So definitely investment
13:53 decisions will get impacted, especially for private equity funds or financial investors.
13:58 I think this will impact their valuation norms, the way they invest and the amount of effort that
14:05 they'll have to put in to sweat the assets better. I think that'll get it, definitely that'll get
14:09 impacted. - Okay. What stood out for you here? Is it the AI chatter at the promenade or something
14:15 else? - No, I would say the AI chatter at the promenade was probably the single most biggest
14:21 thing. And also I think the number of business people who have come, especially from the US,
14:26 is a pretty high number. So that's the, those are the two things I would say, which were quite
14:31 interesting. - Mr. Ajay Mehmani, thank you so much for talking to us today on this cold evening.
14:35 Much appreciate your time. - Thank you so much. Thank you very much. Thanks. Thank you.
14:38 - And you guys, thanks for tuning in.
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17:12 One of the big guests on the NETV network this year is Mr. Peter Woeser of ABB.
17:18 I have written this down. He's a Swiss national, but calls himself foremost a global businessman.
17:24 And therefore, this is the best stage to talk to somebody with that mindset. Mr. Woeser, thanks.
17:30 Thanks indeed for taking the time out and speaking to us here at NETV Prophet.
17:34 It's a pleasure. Thanks for having me.
17:36 Tell us at the start of calendar year 24 in a world which is looking fragmented.
17:42 We're calling this the opposite of globalization, which is globalization in some sense.
17:50 How do you feel about business momentum and business confidence as you look ahead for 2024 or the next two, three years?
18:00 I think during 2023, we all experienced that we did forecast a slowdown, but it actually never happened in a big way.
18:11 So we have learned out of that. I think we are carefully still optimistic for 24.
18:18 I think we are looking at two different halves. I think the first half will be more challenged than the second.
18:24 And I think you need to take a regional lens as well.
18:28 I think the US, India, Asia except China, I think will actually just grow in the normal way, which means strong growth.
18:40 Europe is lagging, has structural issues, has also had to deal with the pandemic, the wars, high energy prices, cost inflation on wages, etc.
18:52 So we'll be slower. And China, I would also say they will most probably recover towards the second half of the year
18:58 because they have some consumer consumption issues which they need to sort out.
19:04 So I think personally, I'm a half glass full person anyway, and I don't see any other thing for 24 than that.
19:12 And the glass getting filled will probably happen in the second half of the calendar.
19:17 Yes, I would say so. Yes, it's more because you see during 2023, we experienced that what we call the short cycle products and orders,
19:27 they were starting to slow down. At the same time, the late cycle big project business started to come in.
19:34 So the order books and the revenue books were still actually quite well developed.
19:39 But I think the first half of next year, you will see the larger projects slowing down.
19:45 And most probably the short cycle business will come up at a little bit later in the year towards the end of second quarter, but normally third and fourth quarter.
19:57 OK. It's also a year wherein or maybe not just the year, but maybe many years of higher than the past 15 years of interest rates being there.
20:10 So higher for longer, but in a calendar year where we'll see interest rates possibly come lower.
20:16 How do you think the world adjusts to or how do you think corporates like yourself adjust to higher rates, different IRRs, projects,
20:26 different multiples as well, discounting for various assets, including equity or acquisitions?
20:32 Tell us a little bit about that. Yeah, I think over the last four years, ABB has transformed and we have actually performed very well,
20:41 including our India business, and we achieved our financial targets a year earlier than expected.
20:47 That means we go into this interesting period, 24, 25, with a strong balance sheet, a well-performing business.
20:57 And that gives us the opportunities. So I think we are facing clearly a business environment where generations have never lived through high interest rates,
21:07 have never lived through inflation. And I think, therefore, companies need to prepare themselves.
21:12 These are different risks which we now have to manage. We have to educate the middle management who for the first time have to deal with these issues.
21:21 Now, on the other side, there's a huge opportunity. Given the strengths we have in the company, we hopefully can take advantage of lower multiples,
21:30 because lower multiples means you can also do acquisitions, strengthen your businesses, your divisions, which we have.
21:37 And we will be watching for that. It may take a few months more before the multiples really come down.
21:44 Now, in terms of interest rates, that's where I'm most probably a little bit more conservative.
21:51 I don't see that many interest rate changes in 24. I think even the US most probably will be very careful,
21:59 given that the US economy is still growing, so that the inflation is not yet at the level where it should be.
22:07 So, therefore, I think it's also towards the latter part of the year where we will see that.
22:14 I don't think Europe will actually see interest rate reductions in 2024. That's 2025.
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26:16 >> Downturn in the benchmarks continue for the second day
26:19 on a weak global cues.
26:22 The bearish sentiment further supported
26:24 by a mixed December quarter performance by Nifty majors.
26:27 Meanwhile, mid-cap and small-cap indices decline
26:32 but outperformed benchmarks.
26:34 Nifty Bank crashes over 2%, tech stocks buzz and buck in trend.
26:39 A dismal day of trade for HTSC Bank.
26:45 The stock plunges over 5% post Q3 earnings losing
26:48 over 8,000-- 8,200 crores worth
26:54 of market capitalization a single day.
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27:02 And on our radar today, Asian Pains
27:05 and ICICI Prudential are set to report their December quarter
27:08 earnings stock trades flat ahead of Q3.
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27:17 Today on NDTV Profit, we get to you top voices
27:19 from the World Economic Forum Davos
27:21 where top economists and corporations--