Influencers with 5 lakh followers will now be considered celebrities; And, the US-China tech war continues to escalate

Market Watch

• Indian benchmark indices ended the day in the red, with the Sensex decreasing 307.63 points at 65,688.18 and the Nifty declining 89.45 points at 19,543.10.
• Sectorally, Nifty FMCG (-0.91%) and Healthcare (-0.85%) shed the most, while Media (+6.63%) and Metal (+0.68%) gained the most.

Four things:

• Analysts are confident in Bajaj Finance’s performance amidst increasing competition in unsecured lending, while investors remain cautious.
• The Nifty Pharma index reached an all-time high on Monday, reflecting a bullish trend in Indian healthcare companies.
• TVS Supply Chain Solutions is set to open its IPO for public subscription on Thursday.
• Jefferies has questioned India’s ‘Goldilocks position’ in equities, citing concerns over rising crude oil prices, increasing consumer inflation, and shifting yields.

New norms for influencers who endorse brands, wellness products

Indian authorities are continuing to tighten norms on influencers who endorse products or services.

The details: The Advertising Standards Council of India (ASCI) has expanded its definition of “celebrities” to include social media influencers with over 500,000 followers or earning more than Rs 40 lakh per year.

• Influencers must now adhere to ASCI’s regulations for celebrities — such as performing due diligence before endorsing a brand, providing evidence of this when required by ASCI and avoiding endorsing products or treatments prohibited under specific Indian laws.
• Meanwhile, the consumer affairs ministry has also issued guidelines requiring health and wellness celebrities and influencers to disclose their qualifications and provide clear disclaimers if presenting themselves as health experts or medical practitioners.

The big picture: This change was necessitated by the growing influence of social media personalities on consumers’ spending habits.

• The ASCI, despite the existence of these norms, had observed a surge in misleading advertisements featuring celebrities, with over 500 such instances in 2022-23, compared to 55 in the preceding year.
• This includes violations by well-known figures like Mahendra Singh Dhoni and Virat Kohli, as well as YouTube personality Bhuvan Bam.?
• The Central Consumer Protection Authority had also modified its rules to encompass influencers and endorsers as well back in January, while markets regulator SEBI had begun cracking down on ‘finfluencers’ who were giving investment advice despite lacking requisite credentials and often having undisclosed conflicts of interest.?

The intrigue: Ahead of crucial state elections and the 2024 general elections, political parties are increasingly tapping social media influencers to win over voters — yet, there are no mandated disclosures for such campaigns.?

What they’re saying: Manisha Kapoor, CEO and Secretary General of ASCI, highlighted the importance of safeguarding consumer interests, especially when celebrities or influencers endorse products that could lead to financial loss or physical harm.

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White House bans US investments in Chinese tech sectors

US President Joe Biden has signed an executive order limiting American investments in Chinese technology sectors.

The details: The executive order primarily targets investments in AI, advanced semiconductors, and quantum computing, and aims to prevent the transfer of American expertise and capital to China, which is viewed as a significant national security risk.

• The restrictions are expected to mainly impact private equity and venture capital firms as well as US-China joint ventures.
• However, the order does not affect existing investments and will only be implemented in 2023 following a public comment period.

Between the lines: The US has adopted a “small yard, high fence” approach in its attempts to limit China’s access to technology.

• This entails cutting off its rival’s access to technology that has particularly sensitive security- and defence-related applications.?
• Previous measures sought to control the export of products and components that could be used in such systems, like semiconductors or even input materials.
• However, China could potentially have undermined those curbs by building up its own productive capacity. This move aims to make that more difficult by stemming the inflow of US capital into Chinese tech ventures.?
• This latest order is likely to hammer China’s tech sector even further after Covid-19 lockdowns and rising US-China tensions already resulted in foreign direct investment inflows to China plunging 87% YoY in the second quarter of 2023.?

What they’re saying: Responses to the order were mixed — Democrats praised the move as a necessary step to prevent American investment from bolstering China's military advancement, while Republicans criticised the order for not being comprehensive enough, noting the absence of restrictions on sectors like biotechnology and energy.

• Meanwhile, China condemned the order as disruptive to global supply chains and said it “deviates from the principles of fair competition and the market economy that the US consistently advocates.”

ICYMI

• The Indian government wants to alter the selection process for the country’s top election officers, notably excluding the Chief Justice from the appointment committee.
• The US State Department reportedly urged the Pakistani government to remove Prime Minister Imran Khan due to his neutral position on Russia’s invasion of Ukraine.
• Micromax, once a dominant player in India’s mobile phone market, is now venturing into electric vehicles.
• While WeWork’s share price has plummeted and the company is on the verge of bankruptcy, its Indian business remains on an upbeat trajectory.
• A presidential candidate in Ecuador was shot and killed at a political rally in Quito on Wednesday less than two weeks before the election.
• The Kerala Assembly has unanimously adopted a resolution urging the Central government to officially change the state’s name to ‘Keralam’.
• Disney+ Hotstar lost 12.5 million subscribers in the quarter that ended July 1, 2023, marking its biggest-ever subscriber drop.