QBiz: Brexit Shocks Global Economies, China’s FDI Growth in India

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File photo of David Cameron at an EU summit. (Photo: AP)

1. Shocking Brexit Poll Results Leave Indian Economy in Shambles

The result of the EU referendum provided the ‘Leave’ campaign a decisive majority, indicating that Britain will no longer be a part of the European Union.

Shortly afterwards, British Prime Minister David Cameron announced that he will quit office after three months and the UK Pound hit a 31-year low. Now, with Great Britain’s bitter break up with the EU, the world market is a wreck. Back home, Dalal street is seeing red and the rupee hit a low.

Rs 4 lakh crore were knocked off from the investors’ wealth in Indian stock markets within minutes of opening for trade on Friday.

The total investor wealth, measured in terms of cumulative value of all listed stocks, including that of promoters, fell below the Rs 98 lakh crore-level early morning as reports from the UK showed Britain voting against remaining with the EU bloc.

Read more on The Quint.

2. Opinion: Referendum and Dangerous Outcomes

Britain decided to quit the European Union and a humiliated Prime Minister David Cameron announced that he would not stay in the office after October. As Britain’s referendum takes the entire world by shock, Shashi Tharoor writes on the fallout of direct democracy in a polity.

Referenda change the basis of national decision-making from politics to popular sentiment, and the sources of judgement from experts to demagogues. The considerations that normally weigh heavily in the minds of finance ministers, for instance, are wholly absent from the thoughts of voters, who are more likely to be reacting to the unaccustomed sound of foreign languages on the bus. The pound sterling has already dropped 10 percent against the US dollar, and investors are bracing themselves for a market crash. The UK economy will wobble, whether or not it recovers soon enough, as Leave supporters optimistically claim it will.Just a year ago no one would have imagined that Europe, Britain and the US would constitute major threats to global geopolitical stability. Today, thanks to Brexit, pandora has popped out of her box, and no one knows where she will take the world.
An excerpt from Shashi Tharoor’s article on The Quint

3. US Fed Rate Hike to be Postponed as Britain Votes to Leave EU

The US Federal Reserve, already undecided on when next to raise interest rates, now had one more reason to wait – Britain’s vote on Thursday to leave the European Union.

Not that the Fed needed another reason.

Weaker-than-expected growth in US jobs in recent months have already forced US central bankers to put off a rate hike at their meeting last week. But while data due early in July about the US payrolls growth in June could help clear doubts about the strength of the labour market, the political and economic consequences of Britain’s exit from the EU will take months or years to unfold.

Read more on The Quint.

4. Uber to Provide Upfront Fares in India and US: Livemint

App-based cab provider Uber is piloting a new pricing mechanism for its customers in India and the US. According to a Livemint report, the firm will disclose the exact cost of rides before customers book them – a move that may help it deflect some of the criticism over its controversial surge pricing practice.

Under the new scheme, Uber will show the price upfront to customers before they book a ride. Currently, Uber provides an estimated price range in some cities.

To arrive at the price, Uber will factor in multiple criteria such as expected duration of the ride, distance, traffic and toll taxes. During peak hours, when demand for cabs exceeds supply, Uber will also add a surge price.

5. Despite 7.99 Percent Drop in Shares, Tata’s JLR Remains Unfazed: Livemint

The subsidiary of Tata Motors, Jaguar Land Rover Automotive Plc faced a massive loss of 7. 99 percent in its share pricing on Friday after UK voted to exit European Union. However, the automobile firm said that it doesn’t believe that operations or investment commitment will get impacted.

According to Livemint, at one point, Tata Motors’ shares fell as much as 13 percent to Rs 425 per share, which is their lowest in almost seven years. The stocks, however, managed some last minute recovery and closed at Rs 449 per share at a 7.99 percent drop.

The company said it respects the views of the British people and in-line with all other businesses, Jaguar Land Rover will manage the long-term impact and implications of this decision.

Nothing will change for us, or the automotive industry, overnight.
Jaguar Land Rover

6. China Jumps 10 Spots in Terms of FDI in India: ET

China has recorded a 10 place leap in its rank in terms of Foreign Direct Investment (FDI) in India. According to The Economic Times, in the first two years of the Narendra Modi government, we have had an inflow of $956 million in sectors like automobiles, metallurgical industry, electrical equipment and power.

China is currently ranked eighteenth in the list.

China had committed investments of over $20 billion in India in the next five years during President Xi Jinping’s visit in September 2014.

Chinese companies have shown interest in sectors ranging from telecommunications, renewable energy, manufacturing, electrical equipment and infrastructure to e-commerce and industrial parks in the past two years.

7. Wipro Invests in Israeli Venture Capital Firm TLV Partners: ET

Software Service exporter Wipro has invested an undisclosed amount in Israeli Venture Capital firm TLV partners. According to The Economic Times report, this is Wipro’s first investment in a venture capital firm.

The move will provide India’s third largest software service exporter access to a portfolio of early-stage enterprise and security ventures in one of the world’s most fertile startup ecosystems.

According to Wipro’s latest annual report, the company invested in the Tel Aviv-based venture capital firm sometime during the 2015-16.

8. Tatas Told to Pay $1.17 Billion in Damages to NTT DoCoMo: HBL

An international arbitration panel has ordered Tata Sons to pay $1.17 billion (Rs 7,950 crore) in damages to Japan’s NTT DoCoMo Inc for breaching an agreement related to their telecom joint venture – Tata Teleservices.

This will increase the pressure on Tata group to sell the telecom business, which has been reeling under losses and intense competition.

According to The Hindu Business Line, the dispute dates back to January 2015 when Japan’s NTT DoCoMo filed an arbitration request with the London Court of International Arbitration against Tata Sons for failing to find a buyer for its stake in Tata Teleservices.

In April 2014, NTT DoCoMo announced plans to sell its entire stake in TTSL, exiting India five years after entering the country. The exit came after the Indian company failed to achieve certain performance targets.

9. CLP Sees India as Key Growth Market for Clean Energy: ET

Hong Kong-headquartered utility CLP has identified India as a primary growth market.

According to The Economic Times report, the firm is on a lookout for organic as well as inorganic growth opportunities in the country. India allows 100 percent foreign direct investment in power projects and CLP, through its arm CLP India, has been an early entrant and the largest foreign investor in power sector.

Given the global commitment to cleaner energy, it is obvious that at some point in future a company like CLP will be making only clean investments. For this, our strategy was identification of the primary growth market and the choice was China and India .
Rajiv Mishra, Managing Director, CLP India

The company aims to add 250-300 MW of renewable energy capacity every year, through organic as well as inorganic route, to benefit from the government’s push for the sector.

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