World bank cautions Pakistan against privatization methods

Morning! *Your global high-speed internet order is on its way* 📦

Amazon's Project Kuiper, aimed at providing internet access in remote areas, achieved a milestone with its first satellite launch. With 3,236 satellites in low Earth orbit, it promises worldwide connectivity, revolutionizing how people connect and access information 📡

In this week’s edition:

📉 Stock’s low time in clean energy

🚩 Some red flag-waving

🎰 Betting big on AI

🤘 It’s brutal out there

- The Itla Squad 💼

Business

Global 🌎️

Clean energy but messy market

Renewable energy stocks, especially in the utility sector, are taking a hit, dropping over 10% last quarter. Investors are worried that shifting to green energy might take longer and cost more, especially with rising interest rates.

In numbers: The S&P Global Clean Energy Index, representing 100 major companies in solar, wind power, and other renewable sectors, has experienced a significant decline of 20.2% over the past two months. But, the S&P 500 Energy Index, which includes oil and gas companies, has shown a 6% increase in the same period.

Why higher rates hurt: Renewable projects need lots of money, and higher interest rates mean more costs. Also, these companies are finding it hard to get funds from the stock market due to falling prices and competition from higher-yield bonds.

Challenges in green moves: Changes in policies, like reduced incentives for solar panel owners in places like California, are making it tough for green energy companies. Even offshore wind farm projects are facing delays, causing more trouble for the renewable industry.

There’s still hope: Despite all this, experts say renewable stocks might be undervalued now, offering opportunities for investors. Even though it's a tough time, there might be good chances during the upcoming earnings season. Investors should keep an eye out for potential deals in the renewable sector.

TLDR: Renewable energy stocks fell over 10% due to worries about green energy transition delays and higher costs amid rising interest rates. S&P Global Clean Energy Index dropped by 20.2%, while S&P 500 Energy Index rose by 6%. Financial strain from higher rates makes funding difficult. Despite challenges, experts suggest undervalued opportunities for investors in the earnings season.

What else is new in news

✶With the urgency to embrace clean energy, Southeast Asian nations are rekindling a 20-year-old plan for regional power sharing. A recent pact between Malaysia and Indonesia is scoping out 18 possible spots for cross-border transmission lines after a deal in Bali.

Local 🇵🇰

The World Bank waves red flag

The World Bank is worried about how Pakistan is selling off its state-owned companies (SOEs). These companies haven't been making much money lately, and Pakistan's SOEs are now among the least profitable in South Asia.

Red flags about a new law: In its Public Expenditure Review 2023, The World Bank is concerned about a new law in Pakistan. This law lets the government sell SOE shares to foreign countries. The World Bank says that this could lead to legal problems and slow down the privatization process.

Problems in privatizing power: Privatizing the power sector is tough. There's resistance from worker unions, worries about one big company dominating, and past privatization attempts, like with K-Electric, didn't go well. It's making people wonder if privatizing more companies is a good idea.

How to do it right: The World Bank suggests taking it step by step:

• First, sell shares to the public through stock exchanges (it worked well in the banking and telecom industry).

• Then, restructure struggling companies, making them financially healthy. Private companies can help manage them, but the government needs to make sure nobody gets too powerful.

• To make privatization work, the Bank thinks Pakistan needs to improve transparency and have stronger oversight by creating a special committee in Parliament to keep an eye on things.

TLDR: The World Bank is concerned about Pakistan's sale of state-owned companies (SOEs). They're also worried about a new law allowing the government to sell SOE shares to foreign countries. The World Bank advises selling shares publicly, restructuring struggling companies, ensuring private management without excessive power, and enhancing transparency through a special parliamentary committee overseeing the process.

News Flash

✶Get ready for shorter days and chillier nights as the Caretaker Power Minister, Muhammad Ali, says that households will have limited gas supply (eight hours) this winter due to low natural reserves.

Tech

Global 🌎️

Visa invests big in the future of payments

Visa, the global digital payment giant, is investing a tiny $100 million in companies that are using advanced technology of generative AI. Led by Visa Ventures, this initiative builds on Visa’s AI expertise, aiming to streamline payment processes and enhance security.

What's generative AI and why does it matter for shopping?

• Generative AI is a groundbreaking technology that learns from past data to create new content, like images and text. Visa thinks this technology isn't just cool for making things; it could change the way we shop and pay for things online.

• By reducing friction in money movement, generative AI ensures seamless and secure payment experiences. It aligns with emerging trends in digital wallets, mobile, contactless, and biometric payments, ushering in a new era of instant, convenient payments.

Making payments smoother and safer: Financial leaders, especially CFOs, are key players in modernizing enterprises. By embracing digital transformation and upgrading systems, companies enhance speed and efficiency. Generative AI tools, with real-time analytics, streamline operations, reduce errors, and enhance customer experiences during payments.

An old player in the game: Visa isn't new to AI. They pioneered AI in payments way back in 1993, ensuring secure transactions. Their real-time fraud monitoring saved billions. VisaNet +AI, their suite of AI services, smooths payment processes for financial institutions, making transactions hassle-free.

What does this mean for you? For everyday people, this means that paying for things online could become even easier, faster, and safer. You might not notice the tech behind the scenes, but you'll feel its impact when you make a purchase without any hassle and fraud.

TLDR: Visa is investing $100 million in generative AI, technology that learns from past data to revolutionize online shopping. This innovation will make online payments smoother, safer, and more convenient, ensuring seamless experiences for consumers. With Visa's expertise, the future of online transactions promises hassle-free and secure shopping for everyone.

What else is new in news

✶In a significant move, LinkedIn introduced AI-powered tools for recruitment, marketing, and sales. Recruiter 2024 employs generative AI, enabling recruiters to use conversational language for refined searches. Additionally, LinkedIn Learning integrates AI via a chatbot "learning coach," providing soft skills advice, such as effective task delegation.

Local 🇵🇰 

It’s brutal out here

In Q3-2023, Pakistani startups snagged $6.8 million across 5 deals, a 20% jump from Q2. Despite this rise, it's a big drop from last year's $55.4 million. But it’s not only Pakistan as globally, startups faced challenges, leading to careful investments.

Breakdown across sectors: Edtech emerged as the quarter's champion with $2.3 million, showcasing its global potential in a market projected to reach $433 billion by 2030. Fintech, once dominant, took a back seat, while investment diversified into HR-Tech, EV mobility, and Motorcycle safety sectors.

Not a level playing field: Out of 8 publicly disclosed deals, 7 were by male-founded startups, totaling $5.5 million. Only one deal, amounting to $1.3 million, was closed by a female co-founded startup. Funding for solely female-founded startups remained untouched.

Investor behavior: Investors played it safe, putting their money on startups with steady cash flow. Indus Valley Capital led investments in 2 out of 8 deals and Opay made waves by snagging Finja’s Electronic Money Institution license.

It’s brutal out here: Globally, VC funding hit a rough patch, reverting to pre-Covid times. The quarter remained challenging, marked by notable startup closures and a broader trend of caution in venture investments.

TLDR: Pakistani startups secured $6.8 million in Q3-2023, a 20% increase from Q2. Edtech led with $2.3 million. Gender disparity persisted, and investors favored stable cash flow. Globally, VC funding reverted to pre-Covid levels, leading to caution in investments.

Tech tour of news

✶A new study by the Pakistan Institute of Development Economics (PIDE) reveals that a single day of internet shutdown results in a loss of Rs1.3 billion, equivalent to 0.57% of the country's daily GDP.

More interesting Itla (اطلاع) we consumed:

📝 Silicon Valley, who? This blog post titled “40 companies that are beating the West” was not only aesthetically pleasing but also super informative on market pioneers in this part of the world.

🎬 Taylor Tomlinson's stand-up special, "Look at You" on Netflix quickly became one of our top favorites. Her ability to turn serious matters into comedy gold is brilliant. It is funny, smart, and thought-provoking at the same time 🤏