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The Future is Already Here

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A slew of novel, trustworthy and reliable computing and processing capabilities have revolutionised industrial output. They are also a new range of industries by themselves whose businesses have grown to trillions of dollars in no time.

By ATIM KABRA


Fortune is for the brave and entrepreneurs moving into areas hitherto unexplored, pushing new frontiers of businesses have to possess clairvoyance in abundance. Besides this ability to peek into the future and connect the dots in a yet undefined space, they need to possess lots of fortitude to stand up against the naysayers and disbelievers and persist in their vision for the new future at a yet distant horizon. 

Across industries, the pace of change has accelerated over the last two decades aided by the dazzling improvement in processing and computing capabilities. This has also resulted in a whole lot of absolutely new industries being birthed and massive wealth creation for the successful entrepreneurs as civilization marches on building on the previous blocks, block by block. Information technology, business process outsourcing, mobiles, Internet Web 1.0 and then Web 2.0, mobile VAS, e-commerce, m-commerce, biotech and bioinformatics have all surreptitiously become a part of the fabric of our daily life. The changes continue at an even faster pace as  industrial digitization takes a firmer hold in the manufacturing sector, 3-D printing reaches an inflection point,  electric vehicles become viable and affordable, renewable energy price points trend below fossil energy prices, social commerce establishes itself and Web 3.0 comes into play with Metaverse aided by blockchain and decentralized finance. 

The value of crypto coins now exceeds $2 trillion establishing cryptocurrency as an asset class on its own might. The future is unwrapping and revealing itself before our very eyes daily. 

The new land grab in a new world

Millions of dollars are being plonked down by investors buying digital real estate in several virtual world websites like Sandbox, Decentraland, Second Life, Somenium Space and cryptovoxels. Much like the physical world today you can build on this real estate and offer on your land opportunities to socialize, play games or savor digital entertainment such as live concerts conducted in a virtual world. You can have your digital avatar stand out from the masses by adorning your own self with designer accessories and offerings from luxury brands which have already started selling in the Metaverse through NFTs. Luxury goods are also being offered in collaboration with the gaming companies with blockchain powered transactions ensuring transparency and trust. And you can always monetize your real estate by renting it and selling it too. Our worlds are being virtualized and in line with the times speculating in real estate has gone virtual too.

 It’s still early days

The digital divide yawns wide. Try explaining the rationale and the process of deploying real hard money to buy digital domains, digital rights and digital land to ordinary folks who are already at an edge struggling with the nuances of new technology being thrown at them daily, barely managing to protect their computers and phones from getting hacked in the real world and trying to come to grips with the complexities of digital identities and e-commerce. Yet, new technologies march on and it’s a matter of time before they become mainstream, unleashing new and more exciting ways of living our lives. Of course, one retains the choice of being a Luddite, rejecting change and clinging on to the old ways of doing things. A few of us might physically go to the mountains and become meditative sages too. Or maybe that too can be done virtually, soon enough. 

Somewhere in the recesses of mind, this resembles the California gold rush. The American economy was invigorated, industries took shape and fortunes were made and lost during that era. But there was genocide, disease and starvation too that marked the dark side of the Gold rush as natives suffered. The current phase of technology enabled new industries will also come with its own pitfalls. Yet, Civilization shall march on building on the blocks laid before, bit by bit, block by block.

Evergrande defaults, finally 

Evergrande, the embattled Chinese property developer struggling to meet its interest obligations, seems to be heading deeper into a hole as it increasingly finds it difficult to service the obligations. Its current liabilities exceed $300 billion. The technical default scenario is unfolding despite the Chinese government publicly encouraging the founders of property companies to dip into their own personal fortunes to meet their companies due obligations. State coercion normally follows when polite requests fail to get the desired results. 

In an exchange filing the company declared that it would be engaging with offshore creditors for restructuring. There is no contagion effect as yet and the slide into insolvency seems to be well managed with markets taking it well into the stride.      

As expected, the Chinese government is stepping in to increase the available liquidity in the system and has cut down the reserve requirement by 50 basis points. This is aimed at supporting the economy and lowering the financing cost for businesses and managing the fallout from the crisis in an orderly fashion. 

The Chinese tech index is down nearly 50 per cent from its peak towards the beginning of the year. This has wiped off approximately $1.5 trillion of market value. That’s a serious amount of pain inflicted on the wealthy and should see a cascading effect on sectors and countries which had been on an upward trajectory on the back of incoming Chinese investment. To an extent this has the potential of offsetting the money flowing in from Hong-Kongers wanting to move away from China as well as the Taiwanese seeking to diversify their holdings in face of a looming threat from China. Property hotspots across the world might do well to brace themselves for a slowdown.  

The extreme volatility in cryptocurrency‘s continues with Bitcoin plunging nearly 20 per cent and losing one-fifth of its value on Saturday, 4th December and then staging a recovery. Other cryptocurrencies too were in freefall and extremely volatile. The extreme swings in the pricing of cryptocurrencies makes it very difficult for the regulators to give their blessings to this emerging asset class without adequate safeguards.  

Persisting high inflation coupled with a falling unemployment rate continues to make a case for shutting off the tap on new liquidity being supplied as a part of the ongoing stimulus program in the US and tapering is very much on the cards. A clear distinction needs to be made between turning the taps off on induction of more liquidity into the system versus sucking liquidity out from the system. The world continues to float in an ample liquidity pool.  


Atim Kabra is a keen observer of global social, political & economic trends and is based in Singapore. He is also the Founding Director at Frontline Strategy Funds.

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