Chinese money, Lucid dreams, oil smuggling and other news
Business news and insights to jump start your day
“Only take advice from people who have done what you want to do.”
- Elon Musk
Good morning!😀
Here are the main stories for today:
India wants Chinese money
Less ‘Reliance’ on oil
Tesla rival Lucid Motors going public
📈 How did the markets fare
BSE Sensex - 49,744.32 | -2.25% ⬇
NSE Nifty - 14,675.70 | -2.04% ⬇
10-Yr Bond Yield - 6.202% | +0.070 ⬆
S&P 500 - 3,876.50 | -0.77% ⬇
USD/INR - ₹ 72.50 | -0.20% ⬇
Equity markets extended losses for a fifth day, as the benchmark Sensex plunged 1,145 points on Monday. Rising inflationary risks and an increase in coronavirus cases are prompting investors to tread cautiously.
The sell off wasn’t just in stocks as bonds also fell, fuelled by inflation fears. Despite intervention from the RBI to keep yields under check, the benchmark 10-year bond yield jumped to 6.20% on Monday which could mean borrowing costs for the government could go up.
📰 What's happening around us
Investment
As tensions over the border dispute ease, India and China are set to go back to doing business after almost a year. India will reportedly clear 45 investment proposals from China, mostly in the manufacturing sector, which is considered non-sensitive in terms of national security.
About 150 investment proposals from China worth more than $2 billion came under increased scrutiny and were stuck since last year after the border skirmish between the two nations. As per reports, the proposals will now be split into three categories based on risk to national security. Sectors such as automobiles, electronics, chemicals and textiles are considered non-sensitive and will be approved faster whereas those involving data and finance are deemed sensitive and will take longer.
Caught in the crossfire were investments from two major Chinese auto firms. But now, it is likely their investment plans will get approved. Great Wall Motor, which had initially planned to start selling its cars this year, plans to invest $1 billion in India over the next few years. Also awaiting approval is SAIC Motor Corp which committed to invest more in the country after the success of its MG Motors brand.
Corporate
Last week we had written about supermajors Shell and BP’s plans to transition from oil and gas companies to integrated energy companies. Here at home, Reliance Industries is also reorganising its businesses, ushering in a new era where the company is reducing its dependance on oil and increasing its focus on tech and retail.
Reliance has proposed the demerger of its O2C (oil-to-chemicals) business into a wholly owned subsidiary, amid talks of an agreement with Saudi Aramco inching closer. Reliance had first announced plans to sell a 20% stake in the O2C business to Aramco for $15 billion in 2019, but it was put on hold when the pandemic hit. Talks between the two companies seem to have restarted recently and the deal could be wrapped up in the coming months.
Reliance is already cashed up from stake sales in its retail and Jio divisions and with the money coming in from the Aramco deal, the company will be readying itself for the next investment cycle. Reliance will be looking to invest more in tech and also ramp up its retail presence both online and offline.
Jio will be heavily involved in the upcoming 4G and 5G auctions and it plans to invest around Rs 7,000 crore to set up a data centre in UP, which could be powered by its own renewable energy plant. JioMart is steadily ramping up its operations, expanding its reach and products offered. Ambani will also be hoping the deal with Future Group goes through as it is a crucial piece of the jigsaw that will offer the company a dominant position in the retail sector.
Auto
Attracted by the eye-popping valuations Wall Street investors are willing to give electric vehicle startups, Saudi Arabia-backed Lucid Motors is set to go public through a merger with a special-purpose acquisition company (SPAC), raising roughly $4.4 billion in cash and valuing the California-based company at $24 billion! Keep in mind they haven’t shipped a single vehicle yet.
Founded in 2007, the company struggled to stay afloat during the development of its vehicles and was rescued by Saudi Arabia’s sovereign wealth fund in 2018. The fund currently owns 85% of the company. Not a bad way for the heavily oil-dependent nation to diversify its interests.
The Tesla rival will start deliveries of its first luxury electric vehicle, the Lucid Air, later this year. The sedan will have an estimated range of over 500 miles and do 0-60 mph in under 2.5 seconds. An electric SUV called Gravity will follow in 2023.
🎯 News Bites
From gold to oil smuggling? With fuel prices at record highs, petrol and diesel exported to neighbouring countries like Nepal are being smuggled back into the country and sold by roadside vendors at lower prices.
After WHO (World Health Organisation) clarified that it hasn’t reviewed or certified the effectiveness of any traditional medicine for the treatment of Covid-19, the Indian Medical Association (IMA) questioned Health Minister Harsh Vardhan for promoting the Coronil drug that Patanjali claimed had WHO approval.
Uttar Pradesh government has plans to develop Jewar Airport (Noida International Airport) as the biggest in India. The airport, is being built at an estimated cost of Rs 29,560 crore.
Master Blaster Sachin Tendulkar is taking guard as the brand ambassador for edtech firm Unacademy. He’s also picking up a small stake in the company for an undisclosed amount. Expect live interactive classes from the cricketer.
Coimbatore-based local e-tailer Daily Basket said that Bigbasket is bullying it with cease and desist letter. Bigbasket alleges that the name, Daily Basket, along with the design of the app and website, is too similar to that of the Bengaluru-based startup.
What Apollo couldn’t, Goodyear has achieved. Goodyear Tire & Rubber Co said it would buy Cooper Tire & Rubber Co for $2.8 billion, strengthening its position as No. 1 in the U.S. market and almost doubling its presence in China. In 2013, Apollo Tyres made a failed attempt to acquire Cooper for $2.5 billion.
French multi-national luxury brand LVMH’s Moet Hennessy has acquired 50% stake in Armand de Brignac, a Champagne producer owned by rapper Jay-Z. In 2019, Armand de Brignac sold more than half a million bottles priced at over $300.
Tata Motors launched its flagship SUV, the all-new Safari with prices ranging from Rs 14.69-21.45 lakh. Living up to the iconic name will be a test for the SUV with stiff competition coming from the likes of the MG Hector Plus, upcoming Mahindra XUV500 and upcoming 7-seat Hyundai Creta.
That's all for today. Have a good day!