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Things that matter this week… 🔥
1️⃣ Earnings—as we enter the last lap of 2020, investors will be keeping an eye out for major earnings reports to better understand business performance for the past 3 months and for clues on the broad economy. Key reports will come from IT services this week—particularly TCS and Infosys, and then HDFC bank as well.
2️⃣ Trump’s health—irrespective of whether you’re fond of The Don or not, his health matters to your portfolio. Expect markets to churn vigorously through rumors and fake news to get an early whiff of what’s going on at the Walter Reed Medical Center where the US President is held for observation.
3️⃣ Services output—Indian markets will also be looking out for the Services PMI data that will be released this week—an indication of how well India’s “services” production is looking. If you remember, last week the manufacturing PMI had continued an upward move, instilling good confidence in the markets.
4️⃣ Finally, Miss Rona—India is desperately foraging for signs that show new infections receding. With the death toll having crossed 1 Lakh over the weekend, containing the virus before most North Indian states go into the winter is critical. Fingers crossed. The econ-times has more.
From the Retail aisle 🛒
Global PE firm TDR Capital and UK based Billionaires, the Issa brothers, have together bought out one of Britain’s largest retail chains, Asda, from Walmart in an $8.8 billion deal.
Founded some 70 years ago, Asda is one of the largest retail chains in the UK, and was purchased by Walmart for £6.7 Billion in 1999. Now as we turn a historic chapter—with COVID changing the landscape of global offline-retail and with Britain looking to close on Brexit soon, Asda no longer fits Walmart’s increasingly global and omnichannel ambitions. Offloading it made sense. Read more.
The Issa brothers however, partly driven by a nationalist cause, aspire to expand the chain of supermarkets further within Britain now, adopting a smaller convenience shops strategy as well as an ecommerce presence to match new needs. The new owners will plonk a billion pounds more, over 3 years, to drive their agenda.
Why we care — the fact that Walmart’s OK with letting go of legacy assets in Britain while they’re not shy to make bold bets locally here in India (Flipkart, Tata etc.) gives us an incisive glimpse into growth ambitions of the company and how it counts on India to deliver on that outcome. This broadly reads positively for foreign investor confidence in India. Sorry Brits.
While we’re on this subject,
More wads of cash for Reliance Retail — ₹5,512.5 crore coming from global investment firm GIC this time for a 1.22% stake. TPG also topped the round with a smaller ₹1,837.5 check for a 0.41% piece of the cake.
You’d think the Tata-Walmart alliance would probably take some mojo out of RIL, but not the case so far! 👌
Uber’s Round 2 🚕
With the ride-hailing business out of favor currently, thanks to COVID, Uber is betting on another one of its verticals to step up to the test of the markets — Trucking and Freight. And to help with the battle, the company has raised $500 million in a fresh raise from New York-based Greenbriar Equity, valuing the freight unit at $3.3 billion.
This isn’t very surprising actually — the shift of demand from malls to online platforms has catalyzed a storm in the freight and trucking arena, demanding overnight re-wiring of logistics and transportation to suit emerging needs.
The big logistics players are scrambling to digitize themselves, to add software, make things more visible, more trackable, more analytics — on and on. Uber, with a digital native edge and a solid tech footing, can make a valuable and lasting entry into the market, considerably solidifying its position before the pandemic-boom dust settles.
Greenbriar has been a seasoned investor in this space for decades. Although Uber made little money from its freight business so far, this could be a moment of change, particularly with Greenbriar’s connections. To make it worth their while, post deal Greenbriar will take 2 board seats while Uber retains majority stake in the freight unit.
Takeaway: Wall Street’s eyes are on Dara Khosrowshahi to pull a magic trick out of his hat—who until now had been busy fixing leakages and turning Uber around from its rough past with Travis K at the helm. Can Freight give investors reason to cheer?
Uncharted territory? ✌️
For the past 3 months, foreign investors were buying into the Indian markets, deploying more capital into stocks every month, then they were taking out. However, that trend seems to have reversed significantly in September, with foreign investors withdrawing a total of ₹7,783 crore from Indian stocks for the month of September.
In the debt markets however, there has been some buying which helped offset the equity selling, bringing net withdrawals to about ₹3,419 crores. Regardless, analysts are a bit alarmed and closely watching for more signs. The picture was completely different recovering from the pandemic though—with positive inflows of ₹46,532 crore in August, ₹3,301 crore in July and ₹24,053 crore in June. Read more.
What explains this outflow—the world is slowly entering uncharted waters. The biggest economy in the world is entering regime change elections, with a sick President at the helm, while the rest of the world is ravaged by a once-in-a-century pandemic, while fiscal policies across the world has become a massive experiment.
All this frenzy could be giving global investors the chill, which makes emerging markets like India not their first choice. Or, it could also be that after 3 months of buying, foreign investors are just taking a break to chew on all the fodder.
Tweet of the day —
What else are we Snackin’ 🍿
🥛 Essentials testing- JioMart pulls off a Milk Basket, testing subscription based deliveries of everyday essentials (milk, eggs, bread) in Chennai and Bengaluru. National launch is coming by Diwali based on the response in these markets.
💉 Hopes set for Christmas- The COVID-19 vaccine candidate by University of Oxford scientists in collaboration with AstraZeneca is in its furthest in the process of trials and could be given the required clearances by Christmas in December.
🐦 Birdie’s alert- Twitter is planning to develop a new product called Birdwatch in an attempt to address misinformation across the platform. The service will add context to tweets in the form of notes and will flag them for moderation.
✋ Malware purge - Google has removed 17 apps from its Play Store which were infected with the Joker malware. The infected apps included PDF scanners, messengers, translators, app lock, collage makers and were capable of stealing the users financials and private info.
👏 HDFC gets a pat- CMO of HDFC bank, Ravi Santhanam has been recognized in the Forbes list of the world’s most influential CMO’s. He has ranked number 39 and is the only CMO of an Indian company to be featured in the list along with the marketing heads of Apple, BMW, Lego, Adobe, MSFT, P&G and others. Bravo!
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