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Stock futures hold steady ahead of a huge week of Big Tech earnings

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Traders working at the New York Stock Exchange (NYSE), today, Wednesday, April 21, 2021.

Source: NYSE

Stock futures opened little changed after the major averages finished the previous session at record closing highs and ahead of a busy week of earnings reports from technology’s heaviest hitters.

The Dow Jones Industrial Average eased by 5 points, or 0.01%. S&P 500 and Nasdaq 100 futures dipped 0.03% and 0.01%, respectively.

In the previous session, the Dow jumped 238.20 points, or 0.68%, to 35,061.55. The S&P 500 gained 1.01% to 4,411.79 and the Nasdaq Composite climbed 1.04% to 14,836.99.

All three of the major averages finished at record closing highs last week after the markets tumbled at the start of the week on concerns about the spread of the delta variant of Covid and how it would potentially hinder the economic recovery. The uncertainty briefly sent bond yields lower, and investors jumped into tech stocks. Both bonds and equities rebounded quickly by the end of the week.

Tech stocks rose last week on better-than-expected second-quarter earnings reports, as well as the continued spread of the delta variant. Twitter and Snap each surged Thursday following better-than-expected second-quarter earnings reports. Twitter ended Friday 3% higher, while Snap shot up 24%.

One of the busiest weeks of earnings reports is on deck in the week ahead, with Tesla kicking it off after the closing bell. Last week, CEO Elon Musk said the automaker would likely start accepting bitcoin for vehicle purchases again.

Big tech giants Apple, Alphabet and Microsoft are all set to report on Tuesday, and Google, Facebook, and Amazon will also report later in the week.

Investors will be watching the Fed’s two-day policy meeting, beginning Tuesday. The Federal Open Market Committee and the Board of Governors are expected to issue a statement on the stance of monetary policy Wednesday. On Thursday the Commerce Department will report second-quarter GDP data.

On Monday morning the U.S. Department of Housing and Urban Development will release new home sales data and the Federal Reserve Bank of Dallas will release its monthly business activity index for manufacturing in Texas.

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Top Glove shares fall as Covid-induced demand eases

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Shares of Malaysia’s Top Glove, the world’s largest medical glove maker, have fallen by more than 50% this year as the rollout of Covid-19 vaccinations worldwide dampened demand for gloves.

“Like in every business, there’re always highs and lows. And you cannot expect super profits to continue for a long, long time. So, we’re glad that we had a good run last year,” Lee Kim Meow, Top Glove’s managing director, told CNBC’s “Street Signs Asia” on Monday.

The company on Friday announced a 48% year-on-year drop in net profit to 608 million Malaysian ringgit ($145.11 million) in the June-to-August period. Revenue was around 2.1 billion ringgit, 32% lower than a year ago.

The results “were softer on the back of normalising demand, following mass vaccine rollout on a global scale, leading to lower sales volume and [average selling prices], which were not matched by a corresponding reduction in raw material prices,” Top Glove said in its financial statement.

Like in every business, there’re always highs and lows. And you cannot expect super profits to continue for a long, long time.

Lee Kim Meow

Managing Director, Top Glove

In addition, the company’s sales were hit by a U.S. import ban due to allegations of forced labor practices. The ban was lifted earlier this month.  

Top Glove shares in Malaysia fell more than 5% on Monday, extending its year-to-date losses to over 52%.

Other Malaysian glove stocks also declined, with Hartalega, Supermax and Kossan registering losses of between 3% and 5% on Monday.

In comparison, the benchmark stock index FTSE Bursa Malaysia KLCI Index dropped less than 1% on the same day.

Last year, Top Glove shares jumped 290% as it reported record sales and profits, thanks to surging demand for gloves during the pandemic.

Hong Kong stock listing

Top Glove delayed a plan to seek a “dual primary listing” to raise $1 billion on the Hong Kong Stock Exchange after the company was slapped with the U.S. import ban.

Lee told CNBC the company still wants to go ahead with the listing. Top Glove already has a primary listing in Malaysia and a secondary listing in Singapore.

“We felt that for the purpose of long-term business, for the purpose of moving ahead and looking at the advantages of having a listing in Hong Kong, we felt that it’s something that we have to go through,” said the managing director.

“A listing exercise in Hong Kong will put us in a good spot to be where we want to be in order to thrive for our dream to be a Fortune Global 500 company in the year 2030,” he added.

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Quek Siu Rui on IPO plans

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SINGAPORE — Southeast Asia’s online marketplace Carousell will explore all options to grow the business, which includes a likely initial public offering, co-founder and CEO Quek Siu Rui told CNBC on Monday.

Last week, Carousell said it raised $100 million in fresh funds that valued the company at more than a billion dollars, making it a so-called “unicorn.” The new capital will be used to expand across more categories of pre-owned goods as well as markets, and conduct strategic acquisitions to scale up, according to the company.

An initial public offering could potentially be on the cards as well. Media reports this year said the start-up was considering a potential U.S. public listing via a merger with a blank-check company, or a special purpose acquisition company (SPAC). But Quek did not offer any details on Monday.

Carousell co-founders Siu Rui Quek, Marcus Tan and Lucas Ngoo.

Source: Carousell

“In terms of a U.S. listing, in terms of an IPO, with this round of funding, we are actually in a very well-capitalized position for what we need to do, and that really is because of the great support that we have got from our investors,” Quek said on CNBC’s “Squawk Box Asia.”

He explained that a potential IPO could be a way to scale the business alongside other options including raising private capital from strategic investors and partners. “We will evaluate all options in our process of scaling the company,” he said.

“Ultimately we want to make sure that we have a good investor base that will support our long-term growth story, who appreciates our business model and where we’re headed,” Quek added.

Carousell this year hired former Razer executive Edwin Chan as its chief financial officer. Chan oversaw the gaming hardware company’s public listing in Hong Kong in 2017.

A number of high-profile start-ups in Southeast Asia have either announced plans for an IPO or have already listed in the stock market. They include Southeast Asia’s ride-hailing giant Grab, which announced plans for an IPO by merging with a blank-check company, as well as Indonesian e-commerce firm Bukalapak that made its market debut last month.

Last Friday, the Singapore government announced a series of initiatives to attract high-growth companies around the region to list on the Singapore Exchange. That includes a new fund designed to help firms raise capital through public listings, which could potentially be a game-changer for the Singapore stock market.

High-growth start-ups from the region have traditionally chosen to list in the U.S. because of relatively easier access to capital and a wider investor base. Some investors say that local markets do not yet have the capacity to handle mega IPOs, like the one announced by Grab that would value the company at almost $40 billion.

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Lightspeed Venture on India start-up ecosystem and investment outlook

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Investors are betting on Indian start-ups and taking more risks, thanks in part to improvement in India’s infrastructure, according to a venture capitalist.

Dealmaking in South Asia’s largest economy rose in the first seven months of 2021 as many foreign investors with deep pockets flushed Indian start-ups with fresh funds.

“There is a lot of capital flowing into India at this moment,” Vaibhav Agrawal, partner at Lightspeed Venture Partners, told CNBC’s “Street Signs Asia” on Friday.

As many as 828 venture capital funded deals in India were announced between January and July, with a total disclosed value of $16.9 billion, analytics firm GlobalData said last month. That marked a 40.8% jump in deal value compared with all of 2020.

All of this is creating just the ‘perfect storm’ that’s allowing everyone to take more risks, from early stage investors to late stage.

Vaibhav Agrawal

Lightspeed Venture Partners

Agrawal said three things were driving capital inflows into the country.

First, a noticeable improvement in India’s infrastructure has enabled start-ups to create more value and scale up their businesses quicker.

He cited India’s United Payments Interface (UPI) as an example — it is system created by India’s top payments processor, the National Payments Corporation of India, that’s used to facilitate digital payment transactions in the country.

As a result of the coronavirus pandemic, which shifted a lot of day-to-day consumption online, from food deliveries to shopping, Agrawal said that many companies are also benefiting from an improved cost of production per unit of goods.

“We are just seeing higher order values, for example, in e-commerce, higher frequency of ordering, for example, in food commerce companies,” he said. “That is just giving a lot of confidence to investors worldwide.”

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

Debarchan Chatterjee | NurPhoto | Getty Images

India is also at a stage where a slew of start-ups have announced plans to list in the stock market.

Food delivery firm Zomato became the first of a slate of prominent names to be publicly listed. Others in the pipeline include payments giant Paytm, ride-hailing start-up Ola and e-commerce giant Flipkart.

“The big criticism of India’s capital markets has been around exits and liquidity — specially for late-stage investors,” Agrawal told CNBC.

He explained that Zomato’s successful listing in July helped ease some of the fears investors have about the start-ups and their ability to go public.

“Zomato is getting followed by about 20-odd companies that will go [public], so, hopefully, they will do well,” Agrawal said.

“All of this is creating just the ‘perfect storm’ that’s allowing everyone to take more risks, from early stage investors to late stage,” he added.

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