Story Of the Week: 130 Countries came onboard for Global Minimum Corporate Tax!
What is Global Minimum Corporate Tax?
An initiative led by US President – Joe Biden, global minimum corporate tax(GMCT) will force companies to pay a minimum of 15% tax no matter where they operate. Under this program, countries would be able to tax the company’s foreign income from tax-subsidized countries.
This week, 130 countries(India being one of the strong supporters of this) came on board with the plan to bring the Global Minimum Corporate Tax into play. The rule is expected to come into law by 2022 and get in effect in 2023.
How does it impact my investment?
The report published by Goldman Sachs suggests that GMCT would “represent a downside of just 1%-2%” to S&P 500.”At the sector level, Info Tech and Health Care would face the greatest earnings risk, but even those sectors appear to face the aggregate downside of less than 5% relative to current consensus estimates,” Goldman wrote.
With Q2 earnings around the corner, a lot of companies are expected to mention the GMCT impact on their bottom line
In 2019, India reduced the corporate tax to 22% for domestic companies and 15% for new manufacturing companies. With a minimum corporate tax of 15%, India would still remain an attractive market and expected to be benefited from this move.
Oil pushes to highest prices since Oct ‘18!
Why are oil prices pushing highs?
The best example of demand and supply. The opening of the US has accelerated the pent-up demand while US drilling remains relatively mute and OPEC tapping most of the situation by controlling supply.
How will the hiked prices impact me?
Almost everything around us is impacted by changes in oil prices – whether it be transportation or industrial dependency. The increased price is expected to continue as more and more countries enter the post-pandemic phase. The major concern lies when an expected increase in oil prices would couple with already rising inflation concerns to make the situation worse.
Global Market Update
Equity Update –
With over 14.4%, S&P marks one of the strongest first half in history. But, the market could be heading for a good pullback in the coming months.
Please note that past indicators might not reflect what could happen in the future.
Crypto Update –
Yet another week with major turns in the crypto market. Earlier this week, UK shuns crypto traders by banning one of the biggest crypto exchanges – “Binance”, to conduct its business in the UK.
This week, India also tried to follow the regulatory crackdown norm – but a bit silently. Based on reports from Reuters, RBI has guided banks to divert their partnership with major Indian crypto exchanges. Read more in our story cover – “Should You Invest In Crypto?”
Companies In Focus
- The original meme stock – “Hertz” emerges from bankruptcy. Finally, the mad frenzy did some good. Hertz received a $6 billion bid from Knighthead Capital Management, Certares Opportunities, and Apollo Management to buy the company out of bankruptcy.
- Amazon Music is getting more serious about its podcast endeavors, announcing today that it’s acquiring 10-year-old, Oakland, Ca.-based Art19, a major podcast hosting and monetization platform. The terms of the deal haven’t been disclosed.
Shubham Agarwal (CFA L2 Candidate | Incoming MBA candidate at University of Cambridge, UK)