While Beijing continues to turn the screws on companies like ride-hailing service Didi, which want to raise money and list in New York, the Chinese tech sector is also suffering restrictions in India — on its investments in a new generation of start-ups there.
Indian start-ups raised a record $7.2bn across 336 funding rounds in the second quarter, but Chinese investors participated in only 10 rounds, worth a total of $745m. US investors, by contrast, participated in more than 100 rounds worth $5.7bn. While tech giants such as Alibaba and Tencent were previously among the most influential investors in India’s fast-growing start-up scene, they have been largely sidelined by regulation introduced last year in response to rising tensions between India and China.
Meanwhile, the Cyberspace Administration of China announced on Saturday that companies that have the data of more than 1m users will need to pass a security review before issuing shares on overseas stock exchanges. More than 30 Chinese companies raised a combined record $12.4bn in New York share sales in the first half of the year, according to data from Dealogic.
Tom Mitchell in Beijing writes that President Xi Jinping is finally addressing what his administration has long seen as a nagging national security risk and a glaring weakness in China’s capital markets — their inability to attract the country’s best tech companies. The new policy is also consistent with Beijing’s “increasing emphasis on self-reliance and more inward-looking policies”, according to Eswar Prasad, a China finance expert at Cornell University.
That hasn’t worked out too well in the case of Tsinghua Unigroup, writes Lex. Despite the backing of the Chinese government, the chipmaker has creditors baying for a restructuring — by the end of last year, the group had defaulted on $3.6bn worth of bonds. China wants self-sufficiency in chips, but it is still the world’s largest importer of them and likely to be so for some time to come.
1. EU set to delay digital taxBrussels is set to delay plans for its controversial digital levy until the autumn in an effort to boost the prospects of a global corporate tax reform deal. The move followed the endorsement by G20 finance ministers in Venice over the weekend of a landmark global tax deal reached by G7 nations last month to set a worldwide minimum rate and to overhaul taxing rights.
2. Intel lobbies on EU fabUS chipmaker Intel has said investment for its planned European $20bn semiconductor factory could be spread across several EU member states, as it lobbies to win the bloc’s financial and political support for the project. Meanwhile, the boss of Europcar has warned higher rental car costs are likely to last until the auto industry’s production squeeze caused by the semiconductor shortage is resolved.
3. SoftBank steps up Vision Fund paceThe Japanese company’s second fund poured about $13bn into more than 50 companies during the second quarter, according to two people briefed on the numbers, marking a sharp increase in the pace of its investments. During the first three months of the year, the second Vision Fund invested less than $2bn in fewer than two dozen companies.
4. India’s Flipkart raises $3.6bnSoftBank is getting off to a fast start in Q3 as well — Indian ecommerce company Flipkart has raised $3.6bn in funding for a valuation of $37.6bn, with main shareholder Walmart leading the round alongside SoftBank and Singapore’s sovereign wealth fund GIC.
5. Virgin plans daily space flightsThe chief executive of Virgin Galactic has laid out a goal of taking tourists to the edge of space at a rate of more than one flight a day, as the private space company looks to capitalise on founder Sir Richard Branson’s successful test flight at the weekend.
Monday: Elon Musk is the first and most anticipated witness in a trial over Tesla’s acquisition of SolarCity, his once high-flying solar energy start-up that was teetering just before Tesla swooped in to buy it in 2016 for $2.6bn in Tesla shares. Dissident Tesla shareholders have alleged that Musk engineered the buyout not to create an integrated clean energy powerhouse as he claimed, but to use the carmaker’s balance sheet to bail out one of his grandiose projects.
Wednesday: Indian meal delivery company Zomato, backed by Uber and Ant Group, begins taking orders from investors wanting to join its initial public offering. The company has upsized its IPO target by 14 per cent to $1.26bn since its initial filing in April due to positive investor feedback. Revenues for India’s IT companies appear to have held up well during the April-June quarter despite the country’s devastating second COVID wave, with analysts forecasting that the major players had quarter-on-quarter gains of 2 per cent to 4 per cent. Infosys will report earnings today, followed by Wipro on Thursday.
Thursday: Chinese ride-hailing operator Didi Global has gotten a rough ride from Beijing regulators since listing in New York on June 30, with a series of edicts knocking its share price well below the IPO level. However, it could get a lift from MSCI as it adds the company to its main global and China stock indices, just after Didi also moves into the gauges of FTSE Russell and S&P Dow Jones. In Taiwan, chip foundry TSMC will report second-quarter earnings.
Friday: In Ericsson’s second-quarter earnings, investors will be nervously looking to see whether the telecoms equipment supplier can maintain its momentum in 5G networks and whether China’s threat to retaliate against Sweden’s ban of rival Huawei has hurt the company in one of its biggest markets.
Jonathan Margolis has five bits of tech that could improve your summer outdoors. He reviews for How to Spend It the Traeger Ironwood 650 Wi-Fi enabled barbecue, the DJI FPV drone, Fauna Audio glasses, esurfing with the Fliteboard 2 and making smoothies with the portable BlendJet 2.