The Markets Rise on Positive Undertone
Foreign investors participated in their longest buying spree since July 2023 on Monday
On Episode 569 of The Core Report, financial journalist Govindraj Ethiraj talks to Anindya Banerjee, Head of Research for Forex and interest rates at Kotak Securities as well as Pushan Sharma, Director-Research at Crisil Limited.
SHOW NOTES
(00:00) Stories of the Day
(01:00) The markets rise on positive undertone but struggle against border tensions
(03:24) The rupee swings wildly hits calendar high even as value of forex reserves jumps
(10:22) Build on Blockchain
(15:39) India Inc revenue up around 5% for over 400 companies studied by Crisil Intelligence, 1/3rd of companies do well
(28:06) US braces for supply shocks as shop shelves could start running empty in weeks now
(32:23) China announces more nuclear power generation capacity
NOTE: This transcript contains the host's monologue and includes interview transcripts by a machine. Human eyes have gone through the script but there might still be errors in some of the text, so please refer to the audio in case you need to clarify any part. If you want to get in touch regarding any feedback, you can drop us a message on [email protected].
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Good morning, it's Wednesday, the 30th of April and this is Govindraj Ethiraj, headquartered in Broadcasting and Streaming from Mumbai, India's Financial Capital. Our top stories and themes.
The stock markets rise in a positive undertone but struggle against border tensions.
The rupee swings wildly, hits a calendar high even as the value of India's forex reserves jump.
India Inc.'s revenue up around 5% for over 400 companies studied by Crystal Intelligence, one-third of companies do well.
The US braces for supply shocks as shop shelves could start running empty in weeks from now.
And China announces more nuclear power generation capacity.
Markets Are Steady
Well, this is a holiday-shortened week and we won't have an edition tomorrow, so watch out for our next edition that's on Friday. Meanwhile, foreign investors participated in their longest buying spree since July 2023 on Monday, keeping the upward momentum strong despite concerns of conflict at the border between India and Pakistan. Foreign portfolio investors have now pumped in about $4.1 billion into Indian equities in just the last nine sessions, lifting the Nifty 50 index by about 6.5% according to Reuters. On the trade front, it appears that from a statement made by US Treasury Secretary Scott Besant on Monday that one of the first deals to be signed will most likely be with India and as early as this week. Meanwhile, large-cap valuations are seen as attractive, coupled with strong earnings from heavyweights like Reliance Industries alongside a tactical shift in flows between China, India and the US, Reuters quoted analysts saying. The recent foreign buying in India's stocks follows sustained outflows worth over $25 billion between October 2024 and March 2025, thanks to various factors including a slowing growth in the economy and in companies and high valuations apart from the more recent global trade uncertainty.
On Tuesday, the Sensex swung back and forth and finally closed up 70 points at 80,288, so it stays above the 80,000 level. The NSE Nifty 50 index was up slightly, that's 7 points at 24,336. Reliance Industries was the top gainer for another session, up close to about 2.3% and of course largely helped the Sensex end where it did. In the broader market, the BSE mid-cap index and the small-cap index were up but very, very slightly. As on Monday's close, the Nifty is now trading just 7.4% below its peak of September 27, 2024. On Wall Street, the S&P 500 was down Tuesday morning as there was no fresh development on tariffs as expected and anticipated, which of course tells us something about how people should be setting or not setting their expectations.
Though India and Japan are still ranked highly to close the first deals in the tariff sweepstakes that are on. The Nasdaq composite and the Dow Jones were either down slightly or flat. Meanwhile, shares of Amazon dropped on Tuesday in an interesting development after the White House press secretary said that if a report was true that the e-commerce giant was planning to list tariff costs of goods on its site that would be considered a hostile and political act.
Well, The Rupee Swings But Stays Strong
The rupee swung like the Sensex, in a manner of speaking, before ending lower on Tuesday and it pushed the currency's near-dated implied volatility to an over two-year high, according to Reuters. The rupee jumped out of the blocks to touch its year-to-date or calendar high of Rs. 84.95 before going down to its day low of Rs. 85.38 and it finally ended at Rs. 85.26. The jitters have also pushed the rupee's one-month implied volatility to 5.5%, which Reuters says is the highest since March 23. Meanwhile, the dollar index was up about 0.2% at Rs. 99.2. So, how is the rupee stacking up right now in contrast to the previous month and where could it be headed and what could be the driving factors? There are also some interesting insights on India's forex reserves and how they've jumped in value because of the dollar index and the gold price appreciation. I reached out to Anindya Banerjee, Head of Research for Forex and Interest Rates at Quotex Securities and I began by asking him how he would describe the movements of the rupee in recent days.
INTERVIEW TRANSCRIPT
Anindya Banerjee: See, Indian rupee, in fact, if you look at the entire performance of the US dollar against all currencies, so basically it has retraced the entire Trump pump and dump. So, it is back to where the dollar index is back to where it was in September of last year. The USD annual has not done the complete retracement because it started from 84 levels.
It had gone to 84.90-ish. I think because RBI is there in the market. They don't like upside volatility and they also don't like too much downside volatility.
So, it is basically a kind of a small overall, I would say, the area of movement of the Indian rupee has been much smaller compared to other currencies. But the trend has been the same. It is up and down.
Govindraj Ethiraj: How is the rupee behaving specifically versus other regional currencies at this point?
Anindya Banerjee: So, in the last month or so, the Indian rupee has been one of the strongest currencies. It has been appreciated a lot. But if you look at how much the dollar index has done, it has come down from levels of 110-111 all the way to almost 97.99. Then it bounced a bit. So, it has done much more. So, the Indian rupee has done well against the other Asian currencies. But compared to the European currencies, it has been an underperformer.
Govindraj Ethiraj: And what are the kind of signals that you're getting at this point on both the dollar as well as the rupee if you were to look a little ahead?
Anindya Banerjee: Sure. The last time when we spoke, I said that I expect the trade war to intensify and I will stick to that stance. And I expect the economic, I would say the economic decoupling between China and America to intensify.
And it could actually spread towards capital flows. Because I think a few weeks back, there was a comment from the Treasury Secretary that they are considering delisting of the Chinese companies in the US stock exchanges. But after that, the market turmoil, that thing kind of faded away.
But I think that kind of action may happen in the coming times. Because see, the Trump administration's America first policy basically cannot happen without America sort of hard decoupling with China. It has to do a hard decoupling because currently, America is the consumer, China is the producer.
So, if America has to create the ecosystem for the manufacturing to come in and happen, it needs to have much more intensified trade war with China. And that's what I'm expecting in the coming quarters. And that can be negative for the emerging market currencies initially, because it will be negative for growth, both for America, as well as for China.
And during that time, we could see the Indian rupee depreciate a bit. So, towards 86, half 87 odd levels.
Govindraj Ethiraj: And we are seeing very high volatility in recent days, including on Tuesday. So, what does that represent? I mean, is it because traders are uncertain or are they being driven by factors like the tension on the India-Pakistan border? Or is it trade wars?
Is it a combination of everything?
Anindya Banerjee: It's actually yes, it's a very emotional time. Because if you look at the global factors, the whole market is changing its trend every day on a tweet. So, when the market is flipping on a tweet from the Trump administration, or from China, the volatility is going to be high.
And as I said, the overarching theme is off decoupling or intensification of the trade war, which feeds onto the volatility. So, volatility is going to be structurally higher going forward. But that doesn't mean every week we will have higher volatility, we'll get these calm before the storm kind of moments.
And we are sort of in that phase, a lull phase. It may continue for a couple of more months till the supply shock hits America, because of the kind of tariff-led dislocation that has happened between China and the US trade of goods, it is quite possible that in the coming months, we could actually see a shortage. And that is the time when the markets could see higher volatility.
Govindraj Ethiraj: If you were to look ahead, would you say that the rupee is going to be consistent and steady like it was last year? Or do you see it as unpredictable?
Anindya Banerjee: Last year, in fact, 2023-2024 was unprecedentedly low volatility. It's like you have to go all the way back to early 2000 to get that kind of low volatile phase. So, I don't think we are getting that bad because the world has changed.
The RBI is going to be extremely active in the market. That's not changing. And RBI has got all the tools in place.
You have got large reserves, they intervene in the offshore market, they intervene onshore. So, the RBI is going to be extremely vigilant. But if the overall volatility rises, which I'm expecting, let's say across the dollar against all currency pairs, then the Indian rupee will also see an increase in volatility.
But it will be less than other currencies.
Govindraj Ethiraj: You know, we've also seen a rise in forex reserves and we're just $19 billion or $20 billion short of the all-time high hit in September last year. Does that say anything?
Anindya Banerjee: It just means that when this decline happened in the dollar internationally, the RBI was there recouping its lost reserves. But also we have to understand a lot of this fluctuation in the reserves over the past six months has been due to the valuation gain and loss. Because the dollar index rose 8-9%, it fell 10%.
So, you get a huge impact on the FX reserves, on the FX assets. And plus, there is a valuation impact of gold because gold prices have jumped by almost 28% in a span of four months. So, when we strip out the valuation impact, I don't think the RBI has been so active in the market as far as to make the FX reserves swing in such large quantities.
It's primarily on account of valuation.
Govindraj Ethiraj: Right. That's good to know. Anindya, thank you so much for your time.
Anindya Banerjee: Thank you for having me.
Build on Blockchain
Last week on Build on Blockchain, we looked at how smart contracts are cutting out paperwork and intermediaries to deliver faster, fairer services, especially in critical areas like climate-linked insurance. This week, we turn to the foundation of all digital services, identity. With Aadhaar and DigiLocker already in place, can blockchain and decentralised identity solutions take India's digital infrastructure to the next level?
Joining me now is Nikhil Verma from Algorand as we explore how this convergence could make identity more secure, portable, and citizen-controlled. So, coming back to identity and KYC. So, identity, you said, is in any case a starting point, which has to be authenticated.
How about KYC? I mean, do the smart contracts play a role in KYC or do they ride off KYC?
INTERVIEW TRANSCRIPT
Nikhil Varma: I think KYC is embedded in the identity rather than in the smart contract. The construct of identity in the blockchain world has different facets. There are many people who will say, you know, we want decentralised ID, which is essentially a Web3C standard of identity, which talks about a person having different forms of identity and having verifiable credentials.
But, you know, coming to the context of India, right, we have something which is Aadhaar. And Aadhaar could be the one of the basis for creating the identity of the person. And then things could be abstracted or stored behind that Aadhaar.
So, we can have a wallet, which could be created for every citizen who has an Aadhaar. And then that person could collect different pieces of identity in that wallet. And then based on whoever they want to share the data with, they could share.
That identity could have their land records, like, you know, talking about land insurance, suppose, that would have their land record. Now, when somebody is buying insurance, you could check their land records and say, hey, whether they are even eligible to buy this insurance, right? So, I feel that a smart contract should be decoupled.
But yes, there could be constructs where smart contracts would help with the identity formation also.
Govindraj Ethiraj: Right. So, again, from an India perspective, I think we are now familiar with two or three kinds of identity constructs. So, Aadhaar we are familiar with.
That's a biometric-based ID, which is authenticable virtually, as in I can authenticate it from wherever. That in turn links to, let's say, banking transactions, other forms of, let's say, real-time authorisations or authentications. So, that's one kind.
Then India has created the digital sort of the stack, the India stack, which has, among other things, the DigiLocker. So, the DigiLocker has, in turn, various other identity portraits. For example, it could be our permanent account number, which is linked to our income tax payments or filings.
It could be linked to our driver's licence or driving licence. Increasingly, even governments, state governments or provincial governments, can link their education records. So, for example, my graduation degree, I could pull it into the DigiLocker.
And all of this allows me to access it. And the law is already enabled to say that tomorrow, if a policeman stops me on the road, I don't have to show my old physical licence. I can now show my licence in DigiLocker.
And by law, the policeman or person is supposed to accept it. So, this is what we are familiar with. So, tell us about how this now connects with the blockchain world, connecting with this from a user perspective.
Nikhil Varma: So, from a purist perspective, yeah, purist blockchain is a very decentralised world, right? You will talk about no centralisation. Over here, DigiLocker is a government control system.
But, you know, a pragmatic approach to things is where we can converge and make sure that all the solutions that we build are, you know, complied with the law of the land, So, the first thing for us is, if we are able to connect DigiLocker and Aadhaar with our blockchain based systems, we will be able to create magic in India, right? Now, one of the things that, you know, DigiLocker also gives, which is very analogous to what blockchain also has, your wallet is under your control. Your DigiLocker is under your control, right?
Govindraj Ethiraj: On your mobile phone.
Nikhil Varma: In your mobile phone, right? You can decide to share a document from your DigiLocker through your digital signature to someone, which is essentially saying that this document is authentic, right? Same logic in blockchain.
I have something in my wallet which has a hash, right? And I share it with you, you compare the hash, those two documents are authentic, right? So, what if we combine the two, right?
Now, we have the government recognised system and we create a token architecture in a blockchain based system. So, now, I will be able to demonstrate to you, suppose, you know, you are looking to help me get a loan, yeah? Now, you have to, I'm talking about people who are doing the last mile in supporting loans, giving, helping people to get loans, right?
What is the biggest challenge for them? They don't know what these people have, right? If I'm able to see their wallet, not their data, their wallet, and get to know what all documentation is available with them and what all documentation is not, and be able to help them get that documentation, that would be a game changer, right?
And this is where we marry blockchain with India, Aadhaar and DigiLocker. This is just one simple use case.
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This segment was part of our special coverage built on blockchain and brought to you in partnership with Algorand.
India Inc's Revenue Is Up But Not Much
Corporate revenue increased about five to six percent in the Jan to March quarter of fiscal 2024-25, thanks to improved showings by consumer-driven sectors, apart from staples, that is, according to a report released by Crystal Intelligence over the weekend. For the full year, that's 2024-25, overall revenue growth is estimated at about five percent. That's lower than previous years, and we'll hear more about that, and lower than the average as well.
Now, this is based on an analysis of 400 plus companies that account for about half the market capitalization of the National Stock Exchange, though the final results, which could be over 750 companies or thereabouts, is unlikely to change the picture much. Crystal has also taken note of the tariff move, saying that affected countries could retaliate, which would lead to excess supply landing in countries like India, so expect volatile commodity prices, and eventually we'll have to see where tariff prices or tariffs eventually settle, and the tariff shock will obviously add to the uncertainty. Now, all of this means that India Inc is continuing to put investments on hold, at least in the short term.
I spoke with Pushan Sharma, Director of Crystal Intelligence and one of the authors of this report, and I began by asking him what were the key takeaways from this first cut of data, what was standing out, and more importantly, his outlook.
INTERVIEW TRANSCRIPT
Pushan Sharma: Looking at the sample of 400 plus listed entities, what we can see is that the corporate revenue for the sample set has increased by about five to six percent on the year, during January to March quarter, and this is at pace with the preceding quarter, and this is being supported by improved showing by the consumer driven sectors, excluding the staples, and it is being weighed down by sectors which are linked to exports, construction, and industrial commodities.
The growth on a quarter on quarter basis is also expected to be around five percent, and if you look at the full fiscal for fiscal 25, that too is converging around five percent, so most of these numbers you can see are around the five percent level. Now, if we talk about the margins, we're seeing that the overall EBITDA in Q4 has grown by about eight percent, and taking the overall margins to about 21.1 percent, which is about a 50 basis point improvement YOY.
Govindraj Ethiraj: Okay, that's for the full year. 50 basis point is for Q4. Have you looked at overall the full year as well, 23, 24, 24, 25 versus 23, 24?
Pushan Sharma: If you look at fiscal 2025, the margins are expected to be around 21.5 percent, which would be about 80 basis points better than last year.
Govindraj Ethiraj: Overall growth for the full year again is five percent? It's five percent, so most of the revenue numbers are converging around five percent. And how would this compare to previous years, let's say 2021 versus 19-20, or let's say before COVID or two years after COVID?
Pushan Sharma: Right, so if we look at, say, from fiscal 22, we saw revenue growth of around 27 percent, fiscal 23, we saw growth of around 19 percent. Here, of course, one has to note that these were on the slightly low base of the COVID year of fiscal 21. Fiscal 24, we saw this number at three percent, and now it's at about five percent.
So slight improvement compared to fiscal 24, but much below the typical averages we've been seeing over the years.
Govindraj Ethiraj: And when you say average, what would that average be? Because there's 26-27 percent, I'm also assuming it is a slight aberration. Right, so the average would be close to about eight to nine percent.
And that's, let's say, the average of India in growth, whether it's for this sample or even for a larger sample. That's right. Can you tell me how this is looking when you break it up?
I mean, is there an 80-20 principle working here or similar?
Pushan Sharma: So something on similar lines, I wouldn't say 80-20, but what our analysis shows is it's a story of one-third versus two-third. One-third, which is performing better than the average, and two-thirds, which is actually weighing it down. And now, when we dwell deeper into these two parts, what we see is that the one-third is being driven by segments which are consumer discretionary products and services, consumer staple services like hospitals, and some agriculture linked sectors like fertiliser.
Now, consumer discretionary products and services account for about one-fourth of our entire sample set by revenue. And within this, we're seeing that the consumer discretionary services are performing much better than the products. We're seeing mid-team level of growth in the consumer discretionary services such as airline, telecom, and hotels.
Telecom, in particular, is benefiting from tariff hikes that have been taken by players last July, as well as transition to 5G, which has better realisations. Airlines, on the other hand, are benefiting from higher airfares. Now, when we come to consumer discretionary products, automobile being a large chunk of it, here we're seeing growth is in the mid-single digits, whereas organised retail is growing at a much faster pace at around 17% because of groceries and other such segments.
Coming to consumer staple services, which is something like hospitals, here we're seeing steady growth of around 13%, which was recorded in Q4 of fiscal 25. And finally, on the agri side, with crop prices having been firm last year, we can see primarization on the fertiliser side, farmers moving to premium chemicals, and this has increased by about 18%. So that's one third that has done well.
But if you look at the two thirds, that's actually weighing things down. Here we see segments such as consumer staples dominated by FMCG, exports dominated by IT, construction investment linked sectors and industrial commodities. And if we look at FMCG, we're seeing tepid growth in low single digits.
There's pressure coming to the two third of the revenue side, which is weighing down the overall revenue growth. There are segments like consumer staples dominated by FMCG, export dominated by IT, construction investment linked sectors and industrial commodities. Now, if you look at consumer staples, FMCG forms a large part of it, like I mentioned, here we're seeing single digit, low single digit growth.
And the pressure is across categories, right from personal care to beauty, and relatively lower in the food segment. However, if one looks closely at this segment, we see that the home care segment has seen high single digit volume growth, unlike the overall FMCG pack. And that is evident from actual results as well.
And here we're seeing that sales of liquid based detergents and dishwashers are doing well. Now what this points to is that the discretionary segment within FMCG is also doing well. And what that indicates is that the upper middle class, they are still participating in a big way in consumption, and there's pressure in the lower segments across the board.
Govindraj Ethiraj: When you say things like liquid based detergents, you're classifying them as discretionary within FMCG?
Pushan Sharma: Probably FMCG, we classify under consumer staples, but you know, has a host of segments. So while it is still classified as staples just from a definition point of view, there are some discretionary parts to that. Like for example, a liquid detergent is we would still call it discretionary.
Govindraj Ethiraj: But that would mean that people buy it only on occasion, right? I mean, not frequently.
Pushan Sharma: No, they are now the market is moving towards the premium side of home care. So rather than powders and the bars, people are moving towards liquid based detergents and dishwashers, which is why I'm classifying that as discretionary. And you were talking about exports.
Right. So coming to exports, the heavyweight here is the IT services segment. And that's clocked around just 2% growth in Q4, with only a marginal pickup and demand.
On the other hand, on the export side, pharmaceuticals have performed much better at around 8%. Now coming to construction linked sectors, here, companies pure play into construction are doing well at, you know, growing by about 8%. But we're seeing subdued growth in the heavyweights in this category, which are cement and steel.
And that's largely linked to the price pressure. In the case of cement, it is because of the high level of competitiveness. In the case of steel, it's because of the low price imports coming in from China.
And finally, go to the last two segments in this two third, which is investment linked. Here, we're seeing that the power generation revenue growth is quite tepid. And in the case of industrial commodities, coal is the heavyweight.
And we're seeing that has grown by just about 1%. And that's due to fallen e-auction premiums. So that's a summary of the entire, you know, sectors across corporate India.
A mixed bag. Consumption sectors, largely on the discretionary side, are doing well. Pressure on the industrial construction commodity side.
Govindraj Ethiraj: And if I were to add it up, so construction linked is your top vertical with about 24%. Consumer discretionary 20% and export linked is 21. So about 65%, or rather 66% is really these three areas.
That's construction, followed by exports, followed by consumer discretionary. Am I right?
Pushan Sharma: So this adds up to, so if you look at construction, export, and you said the other one you mentioned is consumer discretionary. So consumer discretionary, I wouldn't classify under the same bucket because consumer discretionary is actually doing well. These represent about 51% of our sample site.
Construction, export, and consumer discretionary services. If I add consumer discretionary products, then it crosses about 70%. What's your final sample size like, Pushan?
So the final sample would be closer to about 750. Right now we're at about 400.
Govindraj Ethiraj: You said you're halfway in terms of market capitalisation. Could the picture change dramatically?
Pushan Sharma: Not substantially, because most of the leaders have come out with their results. It's well spread out across these sectors. So it may not change substantially.
Only a tad bit here and there.
Govindraj Ethiraj: And any other takeaways at this point from the whole year, which is 24-25, and also your outlook at this point?
Pushan Sharma: Like we were discussing earlier, the whole year we're looking at revenue growth of around 5%. It's a tad bit lower than the averages that we see typically. There is definitely pressure on some of the commodity linked sectors on account of pricing, and also pressure on some of the staples, like FMCG on the volume side.
Coming to the growth that we expect for next year, we're looking at the growth of about 7% in fiscal year 26. And the growth is expected to be driven by some of the sectors which have underperformed this year, like FMCG, also driven by some sectors that are performing well, like airlines, telecom, as well as hotels. Now, what is going to aid this growth?
We see that there is some benefit that we will get out of the revised tax slabs that have been announced in this budget. That is expected to put about 80,000 extra cash in hand for a person earning a salary of about 12 lakhs per annum. This, along with an increased reduction in the interest rates by about 50 basis points that have been announced this year by the RBI, once that gets transmitted into actual lending rates, we expect that is going to aid growth.
On the rural side, we have a forecast for an above normal monsoon. There's a caveat there. Right now, the forecast is for 105% above normal.
But there is also a probability that they have associated that it can actually go above 110%. And there's probably a probability of around 26% associated with that. If that happens, then things could change.
But now considering 105% above normal monsoon, rural growth could also be supported for the Kharif as well as the Rabi season. So these are factors that should aid growth. And we're expecting some volume driven growth, because the commodity prices are expected to be still under pressure.
Govindraj Ethiraj: Pushan, thank you so much for joining me.
The First 100 days
By April 30th, US President Donald Trump would have closed out his first 100 days in office. Despite last week's rally, the S&P 500 is down about 8% since his inauguration and on track for its worst run during the president's first 100 days since Gerald Ford in 1974 following Richard Nixon's resignation. It was whiplash after whiplash after whiplash, an analyst and a 30-year Wall Street veteran told Bloomberg.
Few on Wall Street saw this U-turn coming after two straight years of over 20% gains and what was expected to be a pro-growth agenda. The uncertainty over tariffs combined with the administration's aggressive push to deport undocumented workers, mass firings of federal employees has unnerved investors and sent the S&P 500 down into its seventh fastest correction since 1929, says Bloomberg. Analysts also pointed out this volatility has been wholly different from anything they've experienced in the past and has indiscriminately spread through all sectors and asset classes like wildfire.
If you recall, traders went all-in on the America First bet immediately after Trump's election victory and all of that sent the indices to their best post-election gains. The S&P 500 has lost more than 10% in two sessions earlier this month after Trump imposed the steepest US tariffs in a century on the 2nd of April. Meanwhile, the US is bracing for supply shocks.
While this is US-specific for now, the manner in which the events are playing out are an object lesson in economic management for any country, particularly as you look at second order and downstream impact, which may not be apparent in the beginning. Bloomberg says that in the three weeks since tariffs took effect, ocean container bookings from China to the US are down about 60%, industry-wide, quoting Ryan Peterson of supply chain logistics platform Flexport. As per his calculations, the US imports about $600 billion of goods from China, which retails for around $2 trillion.
By the middle of May, thousands of companies, big and small, will be needing to replenish inventories. Some of the larger retailers like Walmart and Target told Trump in a meeting last week that they are likely to see empty shelves and higher prices soon, according to Bloomberg. Economists at Apollo Management warned of looming COVID-like shortages and significant layoffs in industries spanning trucking, logistics, and retail.
The president of an 84-year-old supplier of holiday decorations and candles to US major retailers told Bloomberg that it sources more than half its products from China and currently has about 250 containers waiting to be shipped. US tariffs on China also come at a critical time for the retail industry, and March and April is when suppliers start ramping up inventory for the second half of the year to fill orders for back-to-school shopping and Christmas. For many firms, the first holiday goods should be hitting the waterbound for the US in roughly two weeks, says Bloomberg.
AtomMaker Basic Fund, which supplies big retail customers such as Amazon and Walmart, said the tariffs were a de facto embargo and said customers have been pausing orders so far, and he also expects them to start cancelling them if the China tariffs stay at this level for much longer. There's a couple of weeks, and then it really starts to hurt, he said. His company generates about $200 million in sales and sources about 90% of products from China.
Meanwhile, CNBC quoted data released by the US Department of Agriculture on Thursday, which said that China made its biggest cancellation of pork orders since 2020, halting a shipment of 12,000 tonnes of pork. AGTC says massive financial losses are already being shared by its members as a result of the trade war, based on reports it's receiving from member companies. A woodpulp and paperboard exporter reported to the trade group the immediate cancellation or hold of 6,400 tonnes in a warehouse and a hold of 15 railcars, sitting in what is known in the supply chain language as demerge, when you are charged fees for delayed movement of goods, said CNBC.
Meanwhile, another exporter said there are 9,000 tonnes on the water to China, which are expected to arrive on May 13, and facing the threat of costly diversion to Chinese-bonded warehouses or to other countries as Chinese buyers may refuse the cargo and abandon it at port. China's state council has approved the construction of 10 new nuclear generation units, according to a report from government-backed media late on Sunday, which estimated the total outlay at $27 billion, according to Reuters. This continues the pace of expansion over the past few years, with about 10 to 11 units being approved annually in 2022-24.
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China's investment in nuclear power engineering and construction rose to a record high last year, the China Nuclear Energy Association said in its annual white paper also released over the weekend. As of 2024, China had about 57 nuclear power generation units in operation, with an installed capacity of close to 60 gigawatts, according to that paper. By 2030, China is expected to reach the top spot globally for installed nuclear capacity.
Currently, it's in third place, after the United States and France. Nuclear is currently representing about 5 percent of China's power generation as of 2024, and is expected to rise to 10 percent by 2040.
