Markets sink, gold falls on Fed exit, China credit squeeze; Alibaba as the next Facebook; Gadgets and our planet; India dollar millionaire numbers surge

1 Markets sink, gold falls on Fed exit, China credit squeeze (David Jolly in The New York Times) Global markets tumbled on Thursday over concern about a credit crunch in China and uncertainty about the US central bank’s plans for withdrawing the monetary stimulus upon which the American economy has become dependent.

Just a day after the Federal Reserve hinted that it could soon begin winding down its bond-purchasing program, investors were unnerved by reports that Chinese banks had become reluctant to lend to one another, causing interest rates in the interbank market to spike to punishingly high levels.

On Wall Street, the broad-based Standard & Poor's 500-stock index ended down 2.5%, the Dow Jones industrial average dropped 2.3% — more than 350 points — and the Nasdaq composite index shed 2.3%. The pain was also felt in the bond market, with yields on government bonds, which move in the opposite direction of the price, surging worldwide. The 10-year US Treasury bond was yielding 2.380%, up 2.8 basis points. Expectations that interest rates will rise tend to depress the prices of existing securities. 

Gold futures dropped 6.2%, to $1,288.40 an ounce. The euro fell 0.6%, to $1.3220, while the dollar rose 1.6%, to 97.98 yen. The sell-off Thursday came in the face of economic news that showed an improving trend, if not actual growth, in the European economy. 

2 Alibaba as the next Facebook (Linda Yueh on BBC) Most people will probably have heard of Amazon and eBay, but not the world's largest e-commerce company - which is the Chinese firm, Alibaba. The Alibaba Group is larger than Amazon and eBay combined. Unless you're in the supply chain business, few are likely to have heard of it before. It's because the company operates predominantly in China. 

Think of Alibaba as a company that is a combination of eBay and Amazon. It is an online company with multiple revenue streams that are more conventional than a social network site. By the end of this year, the online market in China is expected to surpass that of the US. By the end of the decade, Alibaba estimates that China will be larger than the US and Europe combined.

As with other Chinese companies that are coming of age, Alibaba is ready to go global and go public. The chance to buy into what is potentially the next Facebook unsurprisingly means there's a lot of interest. It is so high that analysts think that its initial public offering (IPO) could rival Facebook's $104bn offering. If it does so before the end of 2015, then it will have the right to buy back more of the shares that Yahoo owns in the company (currently 20%) or allow Yahoo to sell it in the IPO.

If Alibaba does well in its IPO and breaks into overseas markets, it has the potential to be a globally competitive firm in the online space. That technologically-oriented industry is precisely where China would like to see its firms succeed. Such success would be a tell-tale sign if "Made in China" continues to be viewed as low quality, or it becomes increasingly synonymous with producing the best in the world. So, there's a lot riding on the success of this IPO.

3 Slimmer phones and our planet (Khaleej Times) A key reason for the survival of a business in an intensely competitive environment is product innovation. This is the capitalist mantra that cellular companies seem to religiously adhere to. So first we had the smart phones flooding the market. And now, with every passing month, new cell phones, each one touting its own unique selling point, are released for consumers.

While the fast pace of technological innovation is definitely impressive, it seems like cell phones   are like toys in the modern world — their functionality is secondary to their additional features meant to entertain their users or please them aesthetically. After all, one just needs a simple phone to make phone calls, chat or even check email. Must we rush to the nearest tech store, every time a phone with some swanky, yet complete unnecessary, feature is released in the market?

In the race for the slimmest and the smartest gadget, we have forgotten how our voracious appetite for products adversely affects the environment and produces waste. We should keep that in mind the next time we go to a mall to buy yet another gizmo.

4 India dollar millionaire numbers surge (Joanna Sugden in The Wall Street Journal) India’s economy is struggling with a weak rupee and widening current account deficit, but the number of dollar millionaires in the country has surged, according to a report on the global distribution of wealthy individuals.

In 2012, India had 152,750 dollar millionaires, up 22% from 125,000 in 2011, according to the World Wealth Report 2013. The report  classes dollar millionaires as those with at least $1million beyond the money tied up in their main homes, collectibles, consumables or consumer items made to last a few years. Last year’s increase  made up for the 18% decline in 2011 that pushed India out of the world’s top 12 for number of high net worth individuals.

By contrast, India had 354 million people living below the poverty line (less than half a dollar a day) in 2009/10, the latest year for which figures are available. The US, Japan and Germany continued to dominate world rankings in overall dollar millionaires. For the past three years, these countries accounted for roughly 53% of the world’s high net worth individuals.

By 2014, Asia-Pacific is expected to regain its position as the region with the highest population of dollar millionaires after being overtaken by North America in 2012. By 2015, high net worth individual wealth in the Asia-Pacific region is expected to reach $15.9 trillion, the report said.