💎 Historic breakthrough, Trade Wars & Box Office Hit (18th December, 2022 )

This week in our Expert Take stories, we cover:

1. A historic breakthrough for clean energy
2. The war for global supremacy: Trade is the weapon
3. Why South Indian movies are taking over the box office

Also, in our Investment Insights section, we explain how you can save tax and build your retirement corpus through the National Pension Scheme.

Expert Take

EXPERT TAKE #1 - 45 sec read ⏱

A historic breakthrough for clean energy

This week, researchers in the USA announced a historic nuclear fusion breakthrough that paves the way for clean and cheap energy.

Using the world's largest laser, scientists created a fusion reaction that generated more energy than it took to produce it.

A solution for reduced nuclear waste

• At present, fission reactors that are used to produce energy generate huge amounts of radioactive nuclear waste.

• Energy generation through nuclear fusion significantly reduces this waste generation and poses no risk of nuclear disasters.

Our take📝

Our dependency on coal, crude oil, natural gas and other hydrocarbons has only accelerated the climate change crisis. While this breakthrough paves the way for clean and cheap energy, the end to our reliance on fossil fuels is still distant.

The focus now shifts to dramatically scaling up fusion projects and reducing the costs in generation. This will set the pace for commercialization of nuclear fusion.

EXPERT TAKE #2 - 45 sec read ⏱

The War for Global Supremacy: Trade is the weapon

In a bid to bolster its technological supremacy, China is investing $142 billion in its semiconductor chip industry. It's a well-timed move, as news came out that Japan and the Netherlands have joined hands with the USA to impose chip export restrictions on China.

This move has been seen as a united effort to prevent China and its military forces from acquiring advanced technologies such as leading-edge computer chips and hypersonic weapons.

Technology and trade matters

• The USA has added 36 Chinese technology companies to a trade blacklist. This has been seen as a move to counter China’s technological advancement.

• The global semiconductor market size was $527 billion in 2021, with the USA, Taiwan, South Korea, Japan, and the Netherlands dominating the industry.

Our take📝

This powerplay between the USA and China is a precursor to the new-age wars in the fight for global dominance. Not just semiconductor chips, but other industries have also seen such sanctions and trade wars.

This united stance against China is a sign that wars need not be played with traditional arms. Geopolitical alliances, sanctions and trade wars are the new weapons, as they seem to be more powerful than traditional arms.

EXPERT TAKE #3 - 45 sec read ⏱

Why South Indian movies are taking over the box office

South Indian movies contributed to 62% of box office collections in 2021. We've come a long way from when South Indian movies made up just 20% of the box office collections. So what caused this change?

Well, it turns out that OTT platforms are playing a huge role in creating a mass market for regional cinema!

OTT platforms are bringing about a change

• OTT (Over-The-Top) platforms such as Netflix, Amazon Prime and Hotstar allow people to stream audio and video content over the internet. Thanks to easy internet access and subtitle features, we have access to content from different parts of the country.

• Compared to last year, OTT expenditure in 2022 has grown by 80% and transactions by 175%. This a clear indication of the popularity of OTT platforms and the content consumption that goes along with it.

Our take📝

OTT platforms have changed how we consume content. Instead of being limited to just mainstream movies, viewers are now able to watch a wide range of regional content. These platforms have helped good content reach different parts of the country and gain a large audience. This has resulted in South Indian movies making huge money, including overseas.

It is clear that audiences are hungry for more than just mainstream cinema. They want both quality and quantity when it comes to content and cinema.

Investment Insights

INVESTMENT INSIGHTS - 90 sec read ⏱

How you can save tax and build a retirement corpus Since tax-saving season is around the corner, today we’ll look at a lesser-known tax-saving cum investment option called National Pension Scheme (NPS). NPS is an investment option available to Government sector as well as private sector and self-employed individuals.

What is NPS?

The National Pension Scheme (NPS) is an investment option that helps you save for retirement! It’s similar to a mutual fund where your money is managed by a fund manager. It has two categories:

• Tier 1: This is typically meant for retirement savings but also gives you a tax-saving opportunity. You have to invest every year until the age of 60 (till the age of retirement).

• Tier 2: You can open a Tier 2 account only if you have invested in a Tier 1 account. The Tier 2 account has no requirements of minimum balance or annual contribution. There are no restrictions on withdrawals as well . However, there’s no tax benefit here.

You can invest either in auto mode or active mode.Auto mode, as the name suggests, is for passive investors whereas active mode is for those who want to actively manage their money.

In the active mode, you can decide how your money should be split across debt, equity, government bonds or other alternative investment products.

Benefits and drawbacks of NPS

Advantages:

• Tier 1 NPS is not just an investment option but also provides tax benefits. If you invest in Tier 1 category, you can claim a deduction up to Rs 2,00,000 per year from your taxable income.

• It’s more personalized compared to mutual funds, since the asset allocation is done based on the age of the investor.

Drawbacks:

• The money invested in Tier 1 NPS is locked in till the age of 60 (partial withdrawal is possible only under certain conditions)

• Even after reaching retirement, only 60% of the corpus can be withdrawn tax-free. The remaining 40% needs to be compulsorily reinvested in another pension plan that gives monthly payouts, which are taxable.

Our take📝

Historically, NPS has provided returns in the range of 10-11%. However, over such a long term, a diversified equity mutual fund would have generated 12-14% returns. Thus, if you are a disciplined investor, equity mutual funds can generate higher returns than NPS, that too with fewer restrictions on withdrawal.

NPS is a good option for passive investors who may not have the knowledge or time to build a portfolio. It is a disciplined way of building a retirement corpus.