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Emerging Markets Rise, Iran Burns
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Good Morning. While Iran saw deadly protests against its dictatorial regime, a different story played out across global markets this week. As the dollar weakens and geopolitical risk rises, investors are showing interest in emerging markets, commodities and alternative assets. Could this turmoil in the rich world end up reshaping the fortunes of the Global South?
In other news, Tesla woos buyers with discounts. Meanwhile, India’s US exports stay steady despite tariff threat.
Emerging Markets Boom, Iran Burns: The Week That Was
Can bad news for the rich world spell good news for the rest, in today’s interdependent world? It just might, if you consider Emerging Markets as an asset class to which investors turn as they flee the uncertainties over a weakening dollar and rising Trump hubris that causes him to demolish larger chunks of the global order. This is supplemented by a global race for critical minerals essential for Artificial Intelligence (AI), the Green Transition in power and high-end electronics that unleashes a commodities boom in the Global South. This is the thesis that Bloomberg columnist Shuli Ren puts forward.
This does ring true. Gold and silver have gained serious ground, thanks essentially to the weakening of the dollar.
Country after country are lowering their holding of US dollars as currency reserves, contributing to the rise in gold and silver prices, besides the rise in demand for alternate assets such as cryptocurrencies.
Trump might not believe in climate change or the need for Green technologies to reduce the impact. However, just the race for ever more powerful AI is creating a major demand for all kinds of innovations in the power sector, including tapping unconventional sources, including geothermal, power electronics to fortify the grid and large-scale battery storage to keep the grid stable.
Batteries create demand for lithium, cobalt, nickel, and zinc, besides for copper. These conventional minerals join rare earths and other critical minerals that are vital for the electric vehicle and electronics industries, of which there is a swingeing shortage. The race to tie up supplies of these minerals could well create a commodities boom in the Global South, where the bulk — even if not all — of these are to be found.
Between Sovereignty And Ruin
As President Trump threatens to attack Iran, in case the besieged regime kills more protesters — as many as 2,000 are reported to have died in the current round of protests — it poses a peculiar choice for friends of the Iranian people.
Should they prioritise Iran’s sovereignty and oppose America’s interference in Iran’s internal affairs, or should they welcome the additional external pressure that might well lead to the collapse of the tottering regime in Tehran, and liberate the most sophisticated Muslim nation from the hold of an illiberal theocracy?
The history of regime change has not been edifying. The removal of Saddam Hussein paved the way for the emergence of the Islamic State and protracted anarchy and killings in Iraq and the neighbourhood. In Libya, the removal of Col Gaddafi paved the way for a civil war that continues to this day. Authoritarian rule survives by crushing the Opposition, so that no readymade structure of administrative coherence stands ready to take over control of the state in case of a regime collapse. If removal of the theocracy only leads to anarchy and schism, it is better to side with Iran’s sovereignty and oppose American intervention.
On the other hand, if civil society organisations and the institutional memory of democratic self-governance, brief though that experiment was in Iran before the Americans engineered a coup and installed the Shah as their puppet, a successor regime can be counted on to come up, if the incumbent regime falls.
Have the protests in Iran created a network of resistance that can take over power from the clergy?
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Ahead of the Union Budget 2026, The Core, in partnership with EDGE, a community of leaders, is hosting a small, in-person breakfast discussion with senior economists and tax leaders to examine India’s tax and economic signals.
This discussion is designed as a focused, off-record exchange, centred on interpretation rather than prediction. The aim is to understand direction early, in a setting that allows informed discussion among senior decision-makers.
Attendance is limited to maintain the quality of discussion. If this is relevant to your role, you may register using the link below. Confirmations will be shared separately.
$25.04 billion
That’s India’s merchandise trade deficit in December, widening slightly as imports rose faster than exports, even as shipments held up better than expected despite higher US tariffs, Reuters reported.
Overview: Merchandise exports increased to $38.51 billion from $38.13 billion in November, while imports climbed to $63.55 billion from $62.66 billion. The deficit was higher than November’s $24.53 billion, but below economists’ $27 billion forecast.
By The Numbers: Exports to the US slipped marginally to $6.89 billion in December from $6.92 billion in November. Still, shipments to the US rose 9.75% year-on-year to $65.88 billion in the first nine months of the fiscal year, despite tariffs of up to 50% on some Indian goods.
Offset: Services trade posted an estimated $18.12 billion surplus, cushioning the overall external balance, according to Reuters calculations.
Russian Oil Loses Ground
India’s purchases of Russian crude are likely to stabilise or even decline this month after falling to a three-year low in December, as refiners are exposed amid mounting US pressure. Imports had dropped about a third from their June peak, Bloomberg reported.
Context: The Trump administration has criticised India’s Russian oil buying and imposed punitive 50% tariffs, while considering sanctions on countries importing Russian hydrocarbons. Analysts expect January imports to plateau around 1.2–1.4 million barrels a day, potentially lower.
Setup: Indian refiners are increasingly sourcing costlier alternatives from the Middle East, West Africa and Latin America. Purchases from Saudi Arabia have risen, while Indian Oil has tapped Ecuador and issued tenders for Urals-like grades.
Tesla Seeks Traction
Tesla is sharpening its push in India four months after launching its first model, offering discounts, Bloomberg first reported. The US electric vehicle maker is offering discounts of up to Rs 2 lakh on the Model Y standard-range variant in Stealth Grey, a company executive, who asked not to be identified, told The Core. The incentive is being communicated to customers during test drives, the person said. The move is yet to be announced publicly.
Overview: From January 15, Tesla has also begun experience drives in Bengaluru — its first showcase outside Mumbai and Delhi — hosted at the ACKO Drive Service Centre and open until January 31.
Flashpoint: Despite these efforts, Tesla’s footprint remains limited. The company sold just 225 units in 2025, far below newer EV entrant VinFast. Selling only the imported Model Y, priced higher due to steep import duties, Tesla faces intensifying competition in India’s evolving EV market.
EU Deal On Deck
India is “very close” to finalising a major free trade agreement with the European Union (EU), which the two parties have been negotiating since 2022, according to India’s commerce and trade secretary Rajesh Agrawal.
Impact: EU leaders, including European Commission President Ursula von der Leyen and European Council President Antonio Costa, are set to attend India’s Republic Day celebrations and co-chair the India-EU Summit on January 27, a meeting where they could formally sign the trade deal.
Pivot: In the past year, India has signed trade deals with the United Kingdom, Oman and New Zealand, boosting market access and economic ties. But a sore point remains an unconcluded trade agreement with the United States. Washington continues to charge tariffs of up to 50% on certain Indian goods, even as officials talk about resuming negotiations.
Apple Faces Final Warning
India has issued a final warning to Apple, saying it will proceed with an antitrust case after the US tech giant delayed responses for more than a year, according to a confidential order, Reuters reported. Apple fears penalties of up to $38 billion if regulators use global turnover to calculate fines, after investigators found it abused its App Store dominance, an allegation Apple denies.
Flashpoint: The company has challenged India’s penalty rules in court, where the case is pending. A December 31 order shows Apple sought to pause the antitrust proceedings during the court challenge, a request rejected by the Competition Commission of India.
What’s Next? The watchdog said repeated extensions undermined the probe and warned it would proceed unilaterally if Apple fails to respond by next week.
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Iran Tensions Lead To Markets Flip Flopping
On Episode 774 of The Core Report, financial journalist Govindraj Ethiraj talks to Nishank Goyal, CEO at Masters India.
Iran tensions lead to markets flip flopping
Gold, silver hit record highs again, quite predictably
Indian exports to the US are holding steady for now
Oil prices pull back as US says will not attack Iran for now
China trade surplus hits record $1.19 trillion despite US tariffs
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