From Venezuela to Austria to India and much more
While there's a possibility of another war on oil, Russian gas continues to guzzle to Europe. And India's growth story continues, while the race for 2nm chip making becomes more intriguing.
The fight for oil can trigger a war in Latin America?
Guyana has experienced a good economic growth, emerging as the world's fastest-growing economy with a remarkable quadrupling in size over the past five years, propelled by extensive offshore oil reservoirs initially explored by Exxon in 2015. The nation's substantial crude reserves, juxtaposed with its modest population of 800,000, have led to projections suggesting Guyana could surpass Kuwait to become the globe's leading per-capita crude producer.
In a recent development, the Guyanese government announced its intention to allocate new oil blocks by year-end, signaling further expansion in the country's oil sector. However, this prosperity is not without geopolitical challenges.
A longstanding border dispute with Venezuela over the Essequibo region has been reignited by Venezuelan President Nicolás Maduro, escalating regional tensions.
The historical backdrop of the Guyana-Venezuela boundary dispute dates back to the late 1800s, with Venezuela asserting claims to all land west of the Essequibo River.
In 1899, an international arbitration panel awarded the territory to Britain.
However, in 1962, Venezuela contested the decision's validity and has intermittently demanded the area's handover, occasionally even threatening military action.
Despite the United Nations referring the dispute to the International Court of Justice, Venezuela refuses to acknowledge its jurisdiction, adding a layer of complexity to the ongoing geopolitical dynamics in the region.
On December 3rd, 2023, Venezuelans participated in a referendum with five questions asking whether this region should be ruled from Caracas Preliminary results indicate an "overwhelming victory" for positive answers, prompting Guyana's government to call for the cancellation of the referendum.
One of the songs backed up by the current Venezuelan government states “I’m going to the Essequibo, it’s mine, I’m going to defend the gold, the silver and even the coltan” and the entire campaign is whipping up nationalism within Venezuela.
Whether this translates to war in that region, remains to be seen.
Is Austria still banking on Russian energy, despite EU “banning” the same?
Austria finds itself immersed in a surplus of Russian natural gas, strategically bolstering sales to neighboring countries while concurrently navigating the complexities of distancing from Kremlin-controlled energy sources.
Austria has played a pivotal role in facilitating Russian gas flows for over fifty years, boasting storage depots and pipelines intricately designed to channel fuel to Hungary, Germany, Italy, and Slovenia.
The evolving landscape of Austria's energy supply is drawing increased attention, particularly as the country articulates its intent to diversify away from Russian dependency.
Despite this ambition, trade data reveals a consistent flow of Russian gas via Ukraine, meeting over half of the nation's economic demand.
The Gazprom contract remains in effect until 2040, and even amid ongoing geopolitical challenges, Gazprom persists in supplying OMV's Baumgarten gas hub through a network of pipelines traversing Ukraine.
A pivotal shift is likely on the horizon, as the transit arrangement via Ukraine is slated to conclude in December 2024. The Ukrainian government has firmly declared its refusal to engage in new negotiations with Russia for an extension.
Austria, at the crossroads of energy dynamics, faces the imperative to navigate this transition period strategically, balancing its commitment to diversification with the existing contractual obligations that extend into the next two decades.
India overtakes Hong Kong to become the world’s seventh largest stock market
Early December’ 2023, India achieved a significant milestone as its stock market value surged beyond $4 trillion for the first time, solidifying its position as the world's seventh-largest equity market.
As of the end of November, the total market capitalization of the National Stock Exchange of India was $3.989 trillion versus Hong Kong’s $3.984 trillion.
This impressive feat has been accompanied by substantial investments, with foreign investors injecting over $15 billion into the nation's stocks on a net basis this year.
Concurrently, domestic funds have shown confidence by channeling more than $20 billion into the market.
Despite these positive developments, some experts sound a note of caution. The upcoming vote in India in 2024 introduces potential risks to the stock market, and concerns linger regarding the elevated valuations of Indian shares. The S&P BSE Sensex Index, currently trading at 20 times forward earnings estimates, sits slightly above its five-year average and exceeds the 16 times valuation for a global stocks gauge.
Amidst these considerations, differing perspectives emerge. Goldman Sachs recently upgraded India to overweight, citing it as having "the best structural growth prospects in the region."
Race to make the next generation chips
The leading players in the semiconductor industry are currently engaged in a competitive race to develop "2 nanometre" processor chips, poised to drive the next wave of innovation in smartphones, data centers, and artificial intelligence.
Over the years, chip manufacturers have relentlessly pursued the goal of creating increasingly compact products. The mantra has been clear: the smaller the transistors on a chip, the lower the energy consumption, and the higher the processing speed.
Presently, terms like "2 nanometre" and "3 nanometre" are commonly used to signify each new chip generation, serving as shorthand rather than precise physical dimensions.
In a sector that amassed over $500 billion in global chip sales last year, any company securing a technological edge in advanced semiconductors stands to dominate.
This is particularly crucial as the demand for data center chips, powering generative AI services, continues to surge. Despite the immense potential, the costs associated with transitioning to the next technological node are rising, while performance gains appear to be reaching a plateau. To some experts, the allure of moving to the next generation is diminishing in the eyes of customers.
Despite Samsung's early entry into the market with its 3nm chips, the company has encountered hurdles in its "yield rate." This metric, representing the proportion of produced chips meeting shipment standards, is a critical factor. Samsung's yield rate for its simplest 3nm chip currently stands at a modest 60 percent, falling well below customer expectations.
This concern is amplified when considering the production of more intricate chips comparable to Apple's A17 Pro or Nvidia's graphic processing units, which is likely to exacerbate the decline in yield rates.
It will be an intriguing journey of more advanced chip making in the years to come.