In today’s briefing:
- Indian IT Services: Weakening Revenue Dynamics, and Above-Fair Valuation Levels, Keep Us Side-Lined
- SEA Digital Economy to Grow in 2022 Despite Headwinds: Report
- China Steel Exports Plunge for Fourth Straight Month
- Local SOEs Slow Land Purchases After Finance Ministry’s Warning on Inflating Revenue
Indian IT Services: Weakening Revenue Dynamics, and Above-Fair Valuation Levels, Keep Us Side-Lined
- Following the purple patch of growth experienced in the wake of accelerated digitization following the COVID-19 pandemic, revenue growth has continued to slow down during FY2023, for the sector.
- Operating margin deterioration has continued, despite significant FX tailwinds, largely due to the inflationary impact of increased employee attrition rates, to record levels, across the industry.
- Given weakening near-term revenue growth prospects and valuation levels barely touching fair value levels, we remain cautious on the sector.
SEA Digital Economy to Grow in 2022 Despite Headwinds: Report
- Southeast Asia’s digital economy is poised to hit US$200 billion in gross merchandise value (GMV) in 2022 – three years earlier than predicted.
- Over the past three years, 100 million users have come online in Southeast Asia, with the region housing over 460 million internet users.
- However, the report stated that after years of acceleration and growth, digital players are more concerned about deepening engagement with current consumers rather than acquiring new ones.
China Steel Exports Plunge for Fourth Straight Month
- Chinese steel exports fell four months in a row amid weakening global demand, another signal of the world economy’s precarious situation amid rising inflation and a global energy crunch.
- In September, China exported 4.984 million tons of steel, down 19% from August and up only 1.3% year-on-year.
- It was the lowest monthly export total since May, according to China Customs data
Local SOEs Slow Land Purchases After Finance Ministry’s Warning on Inflating Revenue
- A dramatic reduction in the value of land purchases by state firms at an auction in the Jiangsu province trade hub of Wuxi this week suggests the noose could be tightening
- It came after China’s Ministry of Finance banned local authorities from using their own state-owned enterprises (SOEs) to inflate their revenue from land sales
- This year, local government income from land sales has plummeted in the wake of the property sector’s crisis of liquidity and confidence, tumbling 28.5% year-on-year in the first eight months, compared with a 12.1% increase in the same period last year.
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