SoftBank Invests in India’s Flipkart
The Japanese group’s $93bn Vision Fund has invested $2.5bn in the Indian online retailer.
Editor’s Remarks: SoftBank invested in Flipkart’s struggling online rival Snapdeal in 2015 and had been trying to engineer a merger of the two businesses in recent months. But deal talks broke down last week, so SoftBank has now moved on and is investing in Flipkart directly. The Vision Fund will be buying a mixture of old and new shares in the Indian e-commerce group, and the deal will leave Flipkart with up to $4bn of cash on its balance sheet following an investment of $1.4bn from Microsoft, eBay and China’s Tencent back in April. The battle for India’s e-commerce market is set to get hot – Flipkart is the top online retailer in India, but Amazon India has commitments of around $5bn from its US parent to expand its market share there. There is a lot of market to go for – in 2016, only 1.7% of India’s total retail sales were online.
Miners Focus on Car Batteries
Glencore and BHP are both talking up their exposure to raw materials needed for lithium-ion battery production.
Editor’s Remarks: Glencore is the world’s largest producer of cobalt, a key input into lithium-ion battery production, and is also a major producer of nickel and copper which are used in the production of electric car motors and invertors. At its investor presentation for first half results, CEO Ivan Glasenberg estimated that by 2030, the world would need an extra annual supply of two million tonnes of copper, 1.2 million tonnes of nickel and 260,000 tonnes of cobalt. Current global demand for these metals is 23 million tones, 2.1 million tonnes and 100,000 tonnes, respectively. Australian miner BHP has also been singing from the same hymn sheet as it revealed plans to turn itself into the world’s largest supplier of high-grade nickel by investing in its Nickel West mine in Western Australia targeting an annual 100,000 tons of output.
Prudential’s Monster Merger
The UK insurer is to combine its UK and European insurance business with its M&G asset management unit into a single group.
Editor’s Remarks: There is more UK financial services consolidation to come after next week’s closing of the merger between Standard Life and Aberdeen Asset Management to form a £670bn active fund manager. Prudential has announced that it will merge M&G into its UK and European insurance business in a move that will generate £145m of annual cost savings in a combined entity that manages over £330bn of assets. But the market is looking beyond the cost savings and sees this move as a possible precursor to a spin-off of its UK businesses that will allow the Prudential Group to concentrate on its faster-growing Asian and US businesses. Prudential’s first half results showed the units to be combined had produced profits of £728m out of total group profits of £2.4bn.
China in Quantum Transmission
Scientists have sent the world’s first quantum transmission from earth to a satellite.
Editor’s Remarks: The Chinese team who teleported a photon into space last month have now succeeded in transmitting 300kbit of quantum code 1,400km to its Micius satellite that is orbiting the earth. The code was sent at a transmission efficiency 20 times larger than by using an equivalent length of optical fibre and is “unhackable” as any interceptions would change the quantum state of the code and destruct it. China has taken the lead in the development of quantum teleporting and transmissions and has deployed a local area quantum network in the eastern Chinese city of Jinan, which is part of a 2,000km network being built between Beijing and Shanghai. But they have been focusing on space transmission as the vacuum allows light to travel unimpeded over long distances.
US Producer Prices Decline
The Producer Price Index (PPI) for July has come in below expectations and fell for the first time in 11 months.
Editor’s Remarks: Economic data coming out over the summer may be showing that global growth could be flagging into the second half of the year. After Germany and China both released disappointing trade figures for June and July, US PPI for July came in at -0.1% compared with market expectations of a 0.2% monthly rise. The Federal Reserve does not meet again until mid-September but continued weak readings such as these could lead them to scale back their plans for future interest rate rises. The data has come out as global markets continue to show weakness in the face of Korean peninsula tensions and the VIX index, which measure global market volatility, climbed to above 15% for the first time since May.