Indian markets surge on FM’s announcements, trade talks' progress. Meanwhile, gold climbs to six-year high. Agritech startups see 300% increase in funding. Alibaba halts fresh investments in India. RIL plans to launch new offline-to-online commerce venture during Diwali. Synergy Group submits EoI for Jet Airways. India leads Asian peers in risky corporate debt, McKinsey report says. A lot of Chinese foreign debt is not listed in official data – and this debt is maturing fast. In day of dilemma, contradictory statements on trade talks’ progress emerge from US and China. As Hong Kong protests continue, companies are forced to choose between their employees and China. An update from the G7 summit.
Moving on to the top Business news of the day:
Indian markets surge on FM’s announcements, trade talks' progress. Meanwhile, gold climbs to six-year high.
Dog Days Are Over?: As expected, Indian markets reacted positively today following the Finance Minister’s announcements two days ago, which included backtracks on FPI surcharge and CSR penalties. Sensex posted its biggest one-day gain in three months, climbing 2.16% while Nifty rose 2.08%. The gains were led by financial stocks and meanwhile, the Rupee reversed some of its recent losses. Reports that Trump sought a trade deal with Beijing and the renewed possibility of trade talks further improved business sentiment.
Golden Bulls Go On Rampage: Not all investors are taking a starry-eyed Panglossian view of things, though. Gold is on the surge. The safe-haven yellow metal jumped 1.2% on Monday, a six-year high. This could imply that the long-term view is still ambiguous, despite the market euphoria today. Trade talks could break, just as they have in previous instances, and global growth is slowing. The uncertainty remains palpable – even the world’s largest wealth manager just turned bearish on stocks.
Agritech startups see 300% increase in funding. Alibaba halts fresh investments in India.
All About Agritech: Agritech is a burgeoning sector in India. The country’s agritech startups have received 300% more funding ($248mn in all) in the first half of this year than they did in all of 2018. Every ninth agritech startup in the world is from India (numbering 450 in all) and they are growing at an annual pace of 25%. As interest and investment in the sector continues to increase, the sector also benefits from increased digital penetration and could generate as many as 90 lakh jobs in the coming years.
Alibaba & the Not-So-Many Investments: Alibaba has invested in quite a few Indian startups, including Paytm, Zomato and Snapdeal. But it is now halting any fresh investments. The Chinese e-commerce giant reportedly wants to “wait it out and not invest, rather than make risky investments”. More details here.
RIL plans to launch new offline-to-online commerce venture during Diwali. Synergy Group submits EoI for Jet Airways.
Festive Tidings: Come Diwali, RIL plans to launch a new commerce venture that Chairman Mukesh Ambani said would "completely transform the unorganised retail market". The planned offline-to-online venture has been touted as the world’s largest platform of its kind. It will be a digital platform that has been under works for two years. Inspired by Alibaba’s O2O model, the platform will involve consumers searching for products and services online but purchasing the same from a physical store, thereby saving logistical costs and catering to local demand.
What’s Going On With Jet?: Jet Airways has a new suitor – South American conglomerate Synergy Group Corp, which has reportedly submitted its EoI.
India leads Asian peers in risky corporate debt, McKinsey report says. A lot of Chinese foreign debt is not listed in official data – and this debt is maturing fast.
India and Her Neighbourhood: A McKinsey report painted a less-than-flattering picture of the corporate debt situation in India. India Inc’s corporate debt is 56% of GDP, lagging its Asian peers’. Meanwhile, India led the region in risky corporate debt i.e., share of long-term debt with interest coverage ratio less than 1.5. Furthermore, a large part of this corporate debt has turned risky over the past decade.
Debt Comes to Us All: Almost 33% of China’s foreign debt finds no mention in official data, as per Bloomberg calculations. While $2tr in liabilities owed to foreigners by Chinese companies is accounted for by data, another $650bn in debts built by Chinese subsidiaries overseas is unaccounted for. And this debt is maturing – and maturing fast. $63bn is due in the first half of 2020 alone.
In day of dilemma, contradictory statements on trade talks’ progress emerge from US and China. As Hong Kong protests continue, companies are forced to choose between their employees and China. An update from the G7 summit.
Trumpian Rhapsody: US President Donald Trump has said that China contacted US trade officials saying they were ready to come back to the negotiating table. Trump said he thought there would be a deal and that “[the Chinese] have been hurt very badly but they understand this is the right thing to do and I have great respect for it”.
But in Beijing, the Foreign Ministry rebuked the claim, saying it was not aware of any phone call between the two sides. The Chinese delegation to Washington said it sought a “calm” end to the trade war and said Beijing “resolutely opposes the escalation of the conflict”.
Meanwhile, asked if he regretted raising tariffs, Trump said "Yeah, sure, why not? Might as well. Might as well. I have second thoughts about everything." Five hours after Trump’s statements, his Press Secretary said his comments had been misinterpreted. She said Trump “regretted not raising the tariffs higher”.
Not the best day for lucidity.
Caught in the Middle: In Hong Kong, as pro-democracy protests continue and the authorities’ clampdown turns violent, companies are being forced to choose between their workers’ sentiments and Beijing’s pressure.
G7 Update: The Group of Seven has been holding meetings and conferences in coastal France since yesterday. Updates on the annual summit here.
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