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China’s benchmark lending rate ahead, oil and currencies

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SINGAPORE — Shares in Asia-Pacific looked set to drop at the open on Monday, with China set to announce its latest benchmark lending rate later in the day.

Futures pointed to a lower open for Japanese stocks. The Nikkei futures contract in Chicago was at 28,505 while its counterpart in Osaka was at 28,420. That compared against the Nikkei 225’s last close at 28,964.08.

Meanwhile, shares in Australia also looked poised to fall at the open. The SPI futures contract sat at 7,168, versus the S&P/ASX 200’s last close at 7,368.90.

Looking ahead, China’s latest one-year Loan Prime Rate (LPR) is expected to be out at 9:30 a.m. HK/SIN on Monday. Majority of analysts in a snap Reuters poll predicted no change to the one-year Loan Prime Rate as well as the five-year LPR.

Currencies

The U.S. dollar index, which tracks the greenback against a basket of its peers, was at 92.241 after a recent climb from levels below 91.2.

The Japanese yen traded at 110.18 per dollar, stronger than levels above 110.5 against the greenback seen last week.

The Australian dollar changed hands at $0.7502, still struggling to recover after its fall last week from above $0.768.

Here’s a look at what’s on tap:

  • Australia: Preliminary retail sales data for May at 9:30 a.m. HK/SIN
  • China: Latest one-year Loan Prime Rate and five-year LPR at 9:30 a.m. HK/SIN

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Shares of Indian food delivery start-up surge in debut

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Zomato food delivery partners is seen on a road in Kolkata , India.

Debarchan Chatterjee | NurPhoto | Getty Images

Shares of Indian food delivery start-up Zomato jumped more than 70% in their stock market debut Friday.

The initial public offering price was set at 76 rupees a share and the stock opened at 116 rupees on the National Stock Exchange of India — a 52.63% premium. That valued the company at about 910 billion rupees ($12.2 billion).

Zomato shares are also trading on the BSE, India’s other stock exchange, where they opened at 115 rupees per unit.

As of 12:55 p.m. HK/SIN, Zomato shares traded at 130.7 rupees, slightly off an earlier session high of 138.90 rupees.

The company filed to go public in April, saying it plans to use the proceeds to fund growth, which may include mergers or takeovers. Zomato is offering 1.23 billion shares, valuing the IPO at 93.75 billion rupees. That includes issuing fresh shares worth up to 90 billion rupees as well as up to 3.75 billion rupees worth of stock sold by existing shareholders.

Reuters reported that last week Zomato’s IPO drew $46.3 billion in bids and was more than 38 times oversubscribed, with big institutional investors placing major bets.

Zomato, along with rival start-up Swiggy, dominates India’s $4.2 billion food delivery market, which is highly competitive but also very fragmented.

Apart from food delivery, Zomato also lets users book tables and aggregates reviews for restaurants. Tech giant Uber sold its India food delivery business to Zomato last year in an all-stock transaction that gave the U.S. company a stake in the start-up. Zomato’s other prominent backers include Indian internet company Info Edge, Alibaba-affiliate Ant Group and Singapore state investor Temasek.

In its prospectus, the Indian tech company said it faces intense competition from chain restaurants that have their own online ordering platforms. Other competitors include cloud kitchens and restaurants that operate their own delivery fleets, as well as offline ordering done by phone.

For the year ended March 31, Zomato reported a loss of 8.16 billion rupees — an improvement from the previous year’s 23.86 billion rupee loss. But, the company’s revenue from operations slipped 23.46% on-year to 19.94 billion rupees.

Zomato is the first of a slate of prominent local start-ups to go public at a time when Indian markets have shown their resilience despite economic uncertainty from the pandemic.

Payments giant Paytm has filed for a $2.2 billion IPO while others like e-commerce firm Flipkart and ride-hailing start-up Ola are exploring listing options. One venture investor previously told CNBC that 2021 would “herald the beginning of a new era for the Indian start-up ecosystem,” with a number of significant IPOs to come.

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Nightclubs are the new Covid battleground

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Clubbers queue around the block at a few minutes to midnight waiting for Covid-19 restrictions to be dropped and for Pryzm nightclub to open its doors once more on July 18, 2021 in Brighton, England.

Chris Eades | Getty Images News | Getty Images

LONDON — Nightclubs and bars are fast becoming the new battleground in the fight against Covid-19 as the nocturnal economy re-opens in some countries and coronavirus cases soar, particularly among the young.

Covid is seeing a resurgence in Europe as the highly infectious delta variant spreads among the unvaccinated and partially-immunized population, which is predominantly young as they were the last in line to receive a vaccine.

At the same time, a number of European countries decided to revive their night time economies, allowing bars and clubs to reopen to the public again, some after 16 months of closure which put many out of business.

In England, nightclubs were allowed to reopen as the clock struck midnight on Sunday with thousands of revelers soaking up the lights, music and lack of face masks and social distancing. Experts are already warning that England’s move is risky, particularly as other countries that reopened before it have now shut up shop (or club) again.

U-turns elsewhere

Other countries allowed their nightclubs to reopen in June, including the Netherlands and Spain, but both made rapid revisions and reversals given the Covid situation.

In the Netherlands, nightclubs reopened on June 26 but the government soon regretted the decision, performing a U-turn just two weeks later, closing them down again on July 10 as Covid cases surged in the country, particularly among the young. More than 1,000 Covid infections were linked to one music festival in the Dutch city of Utrecht earlier in July.

Read more: Dutch try to stamp out rule-breaking in bars and cafes as Covid infections soar

On having to close its club doors until August 13, Melkweg, a venue in Amsterdam, described the move as “an annoying decision” but said that “due to the increasing number of infections, we believe that we cannot yet guarantee a safe environment for the public, employees and artists.” 

Lawrence Young, a virologist and professor of molecular oncology at Warwick Medical School at the U.K.’s University of Warwick, told CNBC on Wednesday that the country’s experience was a warning to England.

“If you look at the data from the Netherlands, it’s quite clear that it is that nightclub scene that has fueled this infection rate. It’s clear that opening up, in the way that they did, particularly with the nighttime economy, has been a real driver to massive levels of infection. They saw an eightfold increase [in cases] in a week and most of that is in the 18-29 year olds,” he noted.

“I don’t want to appear to be a doomster but when you look at the pictures from England at the turn of midnight [when clubs reopened on Sunday] it is really frightening and for me it really is inevitable that we’re going to have to reintroduce restrictions of some description” particularly, he said, while there were 18 to 30 year-olds not yet vaccinated or fully immunized.

The virus ‘is not overcome’

Young men with alcohol drinks in their hands make fun and shout on Barceloneta beach promenade on July 17 2021. Police evicts crowds from Barceloneta beach after Catalonia decreed the return of a 1am curfew given the rebound in Covid-19 cases as a result of the delta variant of the coronavirus.

SOPA Images | LightRocket | Getty Images

On forcing clubs in Barcelona to close in early July — just a couple of weeks after they had reopened — Catalonia’s regional government spokesperson Patricia Plaja noted that “we cannot pretend that we have overcome the virus. The data is worrying and the number of infections is growing at an exponential rate far beyond what we can afford.”

Gustavo Ferrer, co-owner and director of the Macarena Club in Barcelona, which had to shut its doors earlier in July, told CNBC Thursday that having to close “has been very hard for us, we have been closed for many months.”

The order to close was all the more frustrating, he said, because “we thought that the authorities had studied the situation well and had everything under control, but it was not like that and after two weeks we had to close again.”

Read more: The beta Covid variant is causing concerns in Europe. Should we be worried?

Ferrer said the Macarena hopes to be open again in mid-August or early September with vaccine passports and antigen tests a way to get the industry back on its feet.

The British government announced at the start of the week that it was planning on making Covid vaccination compulsory for nightclub goers and other crowded venues in England from the end of September. This prompted criticism from the industry including from Michael Kill, CEO of the Night Time Industries Association, who commented on Twitter Tuesday: “So ‘Freedom Day’ for clubs lasted around 17 hours then.”

Doctors are worried

Lutterodt said governments need to ensure that there are proper procedures in place before opening night time industries “if we are to avoid another spike in cases and re-closing of nightclubs which have really suffered throughout this pandemic.”

As it is, however, he added that he was concerned a reopening of clubs will create “the perfect storm for an increase in cases and subsequent hospitalization especially over the autumn and winter months where we know the NHS (the National Health Service) is usually under tremendous pressure.”

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Elon Musk says he plans to hold bitcoin long-term on The B-Word panel

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Despite his recent criticism of bitcoin mining and its environmental impact, billionaire Elon Musk confirmed that he personally owns the cryptocurrency and has held it long-term.

Though he didn’t specify exact amounts, Musk shared that bitcoin is his largest cryptocurrency holding, above ethereum and dogecoin, on Wednesday during “The B-Word” conference.

The Tesla and SpaceX CEO also said he has no plans to sell any of his bitcoin anytime soon.

“If the price of bitcoin goes down, I lose money. I might pump, but I don’t dump. I definitely do not believe in getting the price high and selling or anything like that,” Musk said. “I would like to see bitcoin succeed.”

Though experts warn that cryptocurrency is a risky, speculative investment, if you own or are going to buy bitcoin, other experts agree that Musk’s long-term holding strategy may be the best practice.

Understand the risks

Before deciding to invest in bitcoin, or any other cryptocurrency, you should first learn about and understand the risks involved.

Read more about cryptocurrencies from CNBC Pro

“For someone new, it’s important for them to still understand that it’s a very volatile asset class,” Anjali Jariwala, certified financial planner, certified public accountant and founder of Fit Advisors, tells CNBC Make It. “You have to be comfortable with the swings and you have to be comfortable also losing your money.”

The crypto space is still widely unregulated and not entirely mainstream, so when investing, “you have to make sure that it’s money that you can really afford to lose,” she says.

Invest for the long-term

Then, if you ultimately decide to invest in bitcoin, experts recommend sticking with a long-term strategy rather than attempting to trade in the short-term.

“That is definitely the best strategy if you are going to own bitcoin,” Amy Arnott, a portfolio strategist at Morningstar, tells CNBC Make It. “The problem with trying to trade based on daily or weekly price moves is it’s so volatile that you could easily get whipsawed.” She recommends planning to hold for at least 10 years.

Transaction costs for cryptocurrency can be relatively high, so buying and holding can be beneficial in that regard as well, Arnott says.

Jariwala agrees. “In order to take away some of the stress and anxiety around the huge price fluctuations, a better approach is to view [bitcoin] as something that you’re gonna hold on to for a while,” she says.

Though it may be tempting to trade alongside social media buzz, experts warn against it. “You want to have an approach that you can stick with consistently and an approach where you don’t have to constantly be watching the market or watching your Coinbase account to make your investment decisions,” Jariwala explains.

Keep your crypto investment small

It’s also important to diversify beyond cryptocurrency and limit it to a relatively small portion of your portfolio.

When her clients express interest in investing in cryptocurrency, Jariwala first assesses how much “extra money” they have available. “My rule of thumb is no more than 3% of your overall allocation in this asset class,” she says.

“I would be less worried about diversification in that [crypto] portfolio, because to me, the crypto account is essentially their play account,” Jariwala says. “We’ve allocated a portion of their portfolio that even if that account goes to zero, it’s not going to impact the other financial goals that they set because we’re appropriately saving and investing for those buckets elsewhere.”

Like Jariwala, Arnott also recommends keeping bitcoin to a relatively small percentage of your portfolio. “It’s such a volatile asset that even if you add a very small percentage to your portfolio, it can dramatically increase your portfolio’s risk profile and potential drawdowns,” she says.

Start off slow

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