Things we are reading today- 6th December, 2022: Consolidation in Fintech, Tax havens and tax loss, Residential real estate, Remittances, brain drain and more

More consolidation in Fintech?

Bux, a European rival to US retail brokerage Robinhood, has acquired the retail-trading arm of Spanish fintech startup Ninety Nine. Though the deal’s terms were not disclosed but the move marks ongoing consolidation in fintech.

Increasing tax losses on account of tax havens

The percentage of multinational profits shifted to tax havens increased from less than 2% in the 1970s to 37% in 2019, resulting in a tax loss of roughly €250 billion.

Because multinational profits themselves have been rising much faster than global profits, the fraction of global profits (multinational and non-multinational) shifted to tax havens has risen from 0.1% to about 7%. Consistent with these findings, we estimate that the corporate tax lost from global profit shifting has increased from less than 0.1% of corporate tax revenues in the 1970s to 10% in 2019. The tax loss is slightly higher than the fraction of profits shifted to tax havens globally because the marginal rate on shifted profits is higher than the average rate.

Thinking of investing in the housing sector?

One may be tempted to fall for the illusion of rising real estate prices but it makes sense to calculate the real increase in housing prices by subtracting the retail inflation rate from the increase in prices.

India touches $100 billion in remittances

India just became the first country to touch $100 billion in remittances. This is not necessarily a good thing. It is indicative of a brain drain as the number of high skilled and therefore highly paid workers are migrating in larger numbers.

Between January 2015 and September 2021, up to 8,81,254 people gave up their Indian citizenship. The trend accelerated post-pandemic after countries like Canada, New Zealand, Germany, and Ireland relaxed their immigration policies to attract skilled workers.

Such relocation has moved from the Arabian Gulf earlier, for often low-skilled and informal employment, to developed countries such as the US and UK for high-skilled jobs.

In 2020-21, the US became the largest remitter to India due to large stimulus packages and wage hikes in that country during the pandemic months and after.

The structural shift in qualifications and destinations has accelerated growth in remittances tied to high-salaried jobs, especially in services.

Coinbase sees bond and equity prices fall

Could be just the market sentiment but both bonds and equity prices, for Coinbase, falling together isn’t a good sign.

Coinbase’s stock and bonds have been knocked by the collapse of FTX, which has sparked renewed concerns about the outlook for the US-listed cryptocurrency trading venue. Over the past month, Coinbase’s bonds maturing in 2028 have tumbled by about a tenth in price, with investors demanding an elevated 14 per cent yield to purchase the debt. The bonds are now priced at 59 cents on the dollar, a big discount compared with 93 cents at the start of 2022.

The failure of Sam Bankman-Fried’s $32bn crypto exchange has also rattled Coinbase’s equity valuation, with its Nasdaq-listed shares plummeting by about a fifth over the past four weeks to change hands at just under $48 apiece, after a small uptick on Friday. Coinbase’s stock, which traded at almost $369 at the height of the crypto bull run last November, is down 81 per cent for the year to date.

Fund Raising

SBM Bank India has catered to fintech startups while larger banks have generally avoided younger startups. It now seeks to raise between $50-75 million.


Currently, the opportunites for the highly skilled guys in india in terms of pay is not encouraging. The day it changes, we may see these smart folks coming back.

Till then, I guess its a good thing - growing soft power

Well said YS_Bhargav, but the scenario might be changing, especially in light of where long term growth will be maximised. There are signals indicating that a change might be coming. Please refer to the following: