Made in India

Written by Li-Ann Chin, researcher

Edited by Harriet Moll, creative director

Good morning,

Last week, headlines were made when the managing director of Indian multinational Reliance Industries, Mukesh Ambani, overtook Warren Buffet and Google co-founders, Larry Page and Sergei Brin, to become the fifth richest person in the world. His wealth is finally beginning to match his ambition if this statement is anything to go by, “I believe that the time has come for a truly global digital product and services company to emerge from India and to be counted among the best in the world.”

Despite Reliance Industries already being one of India’s largest corporations when Ambani inherited it from his father, profits have so far experienced a three-fold increase under his tenure. This month, Reliance became the world’s second largest energy corporation, surpassing Exxon Mobil.

The real success, however, comes from his digital platform, Jio, which has attracted investment from the likes of Google, Facebook and other high-profile investors. Having identified technology and retail as future growth areas, Ambani aims to build a digital society powered by Reliance Jio’s network technology.

Reminiscent of China’s WeChat dubbed ‘the super app’, Jio Platform applications include JioTV, JioChat, JioBrowser, JioHealthHub and more. It’s newly launched JioMart, a nationwide e-commerce platform operates on an offline-to-online (O2O) business model, an approach resembling the one that underpins Alibaba’s success. It is reported that Amazon is currently in talks to acquire a 9.9% stake.

And Ambani is about to crash the 5G party. Jio’s homegrown 5G technology is to be deployed next year, with the solution being exported globally, once proven at India-scale. Already, Qualcomm Ventures, the investment arm of Qualcomm Incorporated has taken a 1.5% equity stake.

Amidst the current calls for economic de-coupling from China, countries will be increasingly interested in using competitor technology to avoid over-reliance on the likes of Huawei. Indeed, 2020 has witnessed the biggest names in U.S tech invest $17bn in India, with Zoom announcing this week that it will triple its existing workforce in Mumbai, while also establishing new data centres in Bangalore and Hyderabad.

As India and the United States converge in their desire to counter China’s presence in the Indo-Pacific, Ambani’s Jio Platforms is strategically poised to emerge as a global tech darling.

News

After only six months on the job, the leader of the Scottish Conservatives, Jackson Carlaw, has announced his resignation. He said he would not be the best person to lead the case for Scotland remaining in the UK ahead of 2021’s Holyrood election. It is reported that Douglas Ross, former Scotland Office minister, is to stand for the leadership position.

Luxembourg has been added to the UK and Scotland’s quarantine lists, with travellers now facing a 14-day quarantine when returning home. The Foreign Office has stated that the move is motivated by a significant change in both the level and pace of confirmed coronavirus cases in the country. Belgium remains exempt for the moment, while case numbers continue to be monitored.

Meanwhile, back in the UK, separate households have been banned from meeting each other indoors in Greater Manchester, east Lancashire and parts of West Yorkshire following a spike in coronavirus cases. More than four million people will be impacted by the measures, with health secretary, Matt Hancock, reporting that the increase in transmission was "largely due" to people not observing social distancing.

The Hong Kong government has disqualified Joshua Wong from standing in legislative elections next month citing the territory’s new national security law. He is one of the city’s best-known pro-democracy campaigners. Four students have also been arrested for forming a Hong Kong independence advocacy group on social media in the first such arrests under the controversial legislation. (£)

Business and economy

According to a preliminary estimate from the Bureau of Economic Analysis, the US economy has experienced the sharpest contraction in post-war history, with GDP shrinking at an annualised rate of 33% and the latest weekly jobless claims rising to 1.42 million.

UK inheritance tax receipts fell for the first time in a decade due to a tax break introduced by the Conservative government after the 2015 election. Government figures have shown that the amount received in inheritance tax receipts declined by four per cent from the previous record year. (£)

Apple, Amazon, Facebook and Google parent company, Alphabet, have all beaten expectations in their quarterly earnings, amid regulatory scrutiny and the coronavirus pandemic. Amazon’s sales and profits have soared, as it benefited from a surge in online shopping, while Apple posted an 11% increase in quarterly sales. Alphabet reported its first ever decline in quarterly revenue, year on year, due to a dip in its digital advertising operation, and Facebook posted higher revenues as a result of increased user engagement, but revealed a significant decline in revenue growth rate. (£)

Columns of note

In The Guardian, Eleanor Morgan examines the relationship between trauma and obesity. Responding to Boris Johnson’s recent ‘Better Health’ campaign against junk food, she argues that obesity isn’t caused by a lack of willpower but emotional distress, poverty and inequality instead.

Writing in Bloomberg, Max Nisen cautions against the surge in Kodak’s share price after the company received a loan to make drug ingredients. He argues that the project has extremely low potential in the long-term, as Kodak has been out of the drug business for decades and will be unable to compete with other cost giants. (£)

Source: Cartoonist Alok

Markets

What happened yesterday?

Amid renewed uncertainty over how quickly states can emerge from lockdowns, US stocks experienced their biggest drop in more than a week. The S&P 500 Index fell 0.6% to close at 3,097.74 while the Dow Jones Industrial Average fell 0.8% to 25,871.46.

The FTSE 100 index closed down at 5,989.88, falling below 6,000 for the first time since mid-May as second wave fears unnerved investors and UK blue chips were hit by heavy losses.

The yield on 10-year Treasuries decreased two basis points to 0.69%, the lowest in more than a week. Britain’s 10-year yield, however, rose one basis point to 0.238%, the highest in more than a week.

Commodities, on the other hand, performed well as oil rallied for the second day and gold strengthened 1.2% to $1,7422.91 an ounce.

In company news:

In results announced this morning, the newly renamed NatWest Group (formerly the Royal Bank of Scotland) swung to a first half operating loss before tax of £770m compared to a £2.7bn profit the previous year. The bank reported a £2.1bn impairment charge for the second quarter, more than twice the size of its first quarter provision.

Credit Suisse will be undertaking significant changes to its structure even as the bank benefited from a trading profit boost in the second quarter. The restructuring will be designed to reduce costs and improve efficiencies.

Tiktok has announced that it is setting up a £2bn fund to pay creators on its platform, in a bid to poach influencers from rivals Instagram and YouTube.

John Lewis is looking to venture into housing and horticulture after warning its 80,000 staff that margins in retail are too thin to sustain the company in the long-term.

What's happening today?

Finals

China Nonferr

Dillistone

Interims

F.b.d hldgs

Intertek Group

Natwest Grp

Trading Announcements

Petropavlovsk

AGMs

Axis Bank regs, JD Sports, JPMorgan Global, Sequoia Economic Infrastructure Fund, Sirius R E, System1 Group

UK Economic Announcements

Nationwide House Price Index

Int. Economic Announcements

Retail Sales (GER)

GDP (Preliminary) (EU)

Personal Consumption Expenditures (US)

Personal Spending (US)

Personal Income (US)

Did you know?

Ketchup was once believed to have medicinal qualities.

Parliamentary highlights

House of Commons

In recess until 1 September 2020

House of Lords

In recess until 2 September 2020

Scottish Parliament

In recess until 10 August (except for 6 August, on which date business may be programmed by the bureau.)