✊ Protests in China may impact manufacturing globally
🎤 Taylor Swift’s concert fiasco explains consumer trends post-covid
🚘 People are choosing mutual funds over luxury cars like Mercedes
Read Time: 1.2 mins
China Protests & Manufacturing
Zero tolerance against ‘Zero COVID’ policy
A deadly fire ensued in a northwestern Chinese district this week, with protesters blaming lockdown rules for hampering rescue efforts. The protests are localized addressing the effects of lockdowns and incessant PCR testing.
But they also include broader calls for political liberalisation, such as freedom of expression. Those on the streets of at least two major cities have called on President Xi Jinping and the Chinese Communist Party to step down.
Manufacturing may take a hit
Analysts warn that more protests could further slow the production and distribution of integrated circuits, machine parts, household appliances and more.
- S&P 500 index closed 1.5% lower.
- Metal & Oil prices dropped.
- Further drop in factory production may cause a global economic slowdown.
Stack's Verdict: The problem is not necessarily China manufacturing less, but that global demand has surged more. For now, the biggest economic impact will be within China, rather than on the global economy. Sectors that depend on face-to-face contact — retail, hospitality, entertainment — will take the biggest hit.
Taylor Swift tickets resold for $40,000
Even as recession looms, many consumers are willing to splurge on what they missed at the height of the pandemic, so much so that they are willing to pay a super extra premium on tickets Her fans waited at least four years to see the superstar live again.
Post-covid, we all changed
According to McKinsey & Company here’s how things have changed post-covid with regards to consumer trends worldwide.
Stack’s Verdict: Given that discretionary spending comprises roughly one-fifth to one-fourth of many countries’ GDP, it is important that people keep spending on things they want. Although, the sudden rise in spending as a reaction to pent-up demands from the pandemic shouldn’t last too long.
Mercedes is afraid of SIPs
Netflix hates sleep, Mercedes hates SIPs
The new MD & CEO of Mercedes was worried that people investing for their future wealth is harming the sales of discretionary or aspirational purchases such as premium luxury cars like Mercedes. In the last financial year, the contribution to SIPs in India was ₹1,24,566 Crore, 50% more than 4 years ago. Luxury car sales however have declined.
Indians aspire to wealth, not flashy cars
Even with the rise in high-income individuals in the middle age group, they are more invested in financial instruments to grow their wealth. Indians psychologically lean towards the conservative habit of saving often, so even with more disposable income, luxury spending doesn’t seem to grow proportionally.
Stack’s Verdict: Luxury car sales have hit lower than sales in 2010. People recognize that taking a huge loan on a depreciating asset is not a good idea. But if you aspire to own a specific premium car and you’re willing to work towards it, an SIP is the way to go. With car loans, by the time you complete your EMI, the car will have lost half its value and you end up paying way more than it was worth when you bought it.