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Market sell signals seldom come much clearer than this. Two of India's top industrialists are poised to trade in controlling stakes in their businesses.
Anil Ambani, chairman of Reliance Communications, is set to swap a 66 per cent stake in RCom, India's number two mobile operator, for a 35 per cent holding in South Africa's MTN.
Meanwhile, Malvinder Mohan Singh, scion of the family that founded Ranbaxy, India's largest generic drug manufacturer, is cashing out altogether.
He has agreed to sell the family's 35 per cent stake in Ranbaxy, founded by his grandfather in 1961, to Japan's Daiichi Sankyo for about $4.5 billion.
The two situations have their differences. While the Singhs pocket a 54 per cent premium for making a clean exit from Ranbaxy's capital structure, Ambani expects to remain exposed to RCom's financial performance since it will most probably become a subsidiary of MTN.
Whatever their strategic logic, both deals have something in common: they reflect a growing sense the window for a generation of Indian industrialists to exploit high valuations is closing.
Ambani has not quite managed to swap at the top: RCom shares are 40 per cent off their January 9 peak. Singh has done better. Ranbaxy's shares are close to their 12-month high, having outperformed the Indian market by 49 per cent.
Their moves come as inflation is ripping through the economy. Wholesale prices jumped 11.05 per cent in the week to June 7 year on year, according to Friday's horrific data.
Up 230 basis points on the previous week's year-on-year figures, only in part due to a one-off fuel price hike, WPI has trebled since November and is now twice the Reserve Bank of India's 5.5 per cent comfort level.
With base effects not set to become helpful until the end of the year, sustained double-digit inflation will have a devastating impact on expectations. Facing a wage-price spiral, the RBI must now tighten and fast. As India's savvy industrialists know, sustaining the nine per cent-plus GDP growth rate that underpins valuations will be tough.
Oil and the city
China's urbanisation, shifting millions of farmhands into factories, is a big reason why the oil price has risen sixfold over the past 10 years.
China is not about to send everyone back to the land. So what is the solution to surging oil prices? One way, oddly enough, is to build more cities - or, at least, better ones.
GaveKal, a research company, estimates that, of the roughly 85 million barrels of oil the world consumes every day, just over one third is burned as petrol in vehicles taking city dwellers from point A to point B.
This presents a huge opportunity on two fronts.
In the developing world, new cities can be planned smarter, making use of mass transit systems. In the developed world the issue is more complex, as people used to driving across sprawling suburbs have to adapt their lifestyles.
But consider that, in the 2000 US census, about three-quarters of respondents said they drove alone to work and a similar proportion reached work within 20 minutes.
Clearly, that is a lot of cars that could be off the road if a decent alternative existed. Europe, notably, has ploughed more investment into public transportation and taxed petrol at a much higher rate and still consumes less oil than it did when the last oil shock struck 29 years ago. Has its standard of living declined since then?
Another 18 million barrels per day of global oil consumption goes on heating, cooling and lighting buildings. Again, denser urbanisation using better insulation and design would cut into that.
Switching to electricity fired by fuels other than oil in regions such as the Middle East would accelerate the process.
Altogether, therefore, roughly half of the world's oil consumption is used in areas where changes in behaviour, while disruptive for some and involving time-lags, are eminently possible. No wonder Saudi Arabia is anxious to cool oil prices.
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