Namaste, Sat Sri Akaal, and Salaam. 🫡

Happy morning folks. Today we’re diving into -
- Jio and Blackrock’s billion-dollar marriage,
- Amazon’s heavy push into fast fashion,
- and Ambani’s hunt for 5G rollout funds.

Our read time today is 3 minutes and 41 seconds - faster than Gujarat got massacred yesterday. 🏏

Let's dive in. 👇

Market Vibe Check

Jio Financial and Blackrock get ready to go ham on wealth management. 💸

TLDR -
- Blackrock and Ambani are working on an asset management JV.
- They’re going splitskies - 50/50 - $150 million each.
- Both are betting big on the impending financialization of India.

The classic Indian dada-ji investment universe spans across two assets - gold and FDs.

But gone are those days.

Jio Financial Services and Blackrock are spending $300mn together to build a digital-first asset management offering.

Blackrock manages $10 trillion - and they’ve made billions by sitting on the sidelines and enabling OTHERS to invest.

That’s precisely the playbook they’re using in India.

They want to give retail investors access to markets from small ticket sizes with a risk cap - and print tons of ₹₹₹ while doing so.

As of today, only 3% of Indian household income goes to stock markets.

That number is gonna go nowhere but up - which is wild when you consider that other (albeit more developed) countries such as the US and UK have 35-40% of income going toward markets in some way or the other.

Amazon takes on India’s fast-fashion market with a low priced business. 🛒

TLDR -
- Amazon just launched ‘Bazaar’ - their fast fashion online market.
- Anyone bridging the gap between aspiration and affordability is scaling and growing like CRAZY in India.
- A burgeoning middle class means more consumption, and this rising tide lifts all ships up.

There’s this saying that you can never go broke in these 3 industries - roti, kapda, and makaan. (food, clothing, and housing)

Amazon sure as hell can’t do roti or makaan, which is why they’re going all in on kapda - with the launch of their own affordable fast fashion store in India.

It’s called Bazaar, and they’re promising cheap clothes, quick delivery, and low prices. By cheap, they mean dirt cheap - you have shirts and shoes which start from 129 INR (about $1.6 USD).

This growing popularity of affordable fast-fashion is increasingly driving purchases on many Indian shopping apps, making it crucial for Amazon to have a strong play in a category where it has traditionally struggled.

Fashion is interestingly the e-commerce category which has seen the most growth since 2019, and it just surpassed Mobiles/Electronics by market share in India.

Any fashion brand which is putting aspiration and affordability into their positioning is KILLING it in India -
- USPA is India’s largest fashion brand, because you get a ‘Ralph Lauren’ feel at 1/4th the cost
- Zara and H&M are enjoying their largest growth from India alone
- Uniqlo is growing at a 50% a year clip and is doubling down on stores like crazy

It’s pretty clear that Tier-2 and Tier-3 have the money to spend, but can’t seem to find enough places to do it at.

Jio hunts for 5G rollout funds. 🔥

TLDR -
- Jio is raising $2bn of debt to fund their 5G infra plans.
- This is gonna go toward buying all the tech that they need from Ericsson.
- Biggest two problems - INR depreciation and a LONG list of monetization issues.

Jio is playing a massive 5G game, and they’re putting some money where their mouth is.

Ambani and Co. are raising $2 billion from a consortium of banks including BNP Paribas and UBS.

This money is gonna be used to pick up all the 5G cells that Jio needs for their network (primarily from Ericsson) and to fund some other tech infrastructure.

Sounds brilliant, but there are 2 big things that could go wrong.

1 - Rupee depreciation

INR depreciation is the “hidden cost” of living in India - this debt is denominated in USD, so repayments will also be in USD.

The exchange rate weakens 4-7% a year, so that burdens Jio with an effective 4-7% EXTRA interest rate.

2 - Monetization is far out

5G monetisation in India is AT LEAST 2-5 years away.

There are barely any 5G devices on the network and phone makers are only JUST coming out with their 5G enabled models.

These are (obviously) a little more expensive, which means that they sell slower in India’s price-elastic market.

In other news… ☕

America grants Samsung a $6.4 billion grant to boost US manufacturing (BBG)

Goldman traders deliver a 28% profit surge (NYT)

Oil prices decline over war hichkich (Mint)

Elon Musk plans to charge new users to post on X (TC)

Tesla gets ready to cut 10% of global employees (FT)

And that’s the tea the chai for today.

Thanks for reading, and we hope you enjoyed it.

Lots of ❤️,

Team CC