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Aug 6 (Reuters) - Leoch International Technology Ltd :
* ZHAO HUAN RESIGNS AS EXECUTIVE DIRECTOR Source text for Eikon: Further company coverage:
Aug 6 (Reuters) - Leoch International Technology Ltd :
* ZHAO HUAN RESIGNS AS EXECUTIVE DIRECTOR Source text for Eikon: Further company coverage:
Volumes on the CoinDesk 20 eight spot BTC venues was over $8 billion for the first time since Feb. 23.
Crypto and gold aren't in zero-sum competition for investors' attention, says Russell Starr, CEO of Trillium Gold Mines.
A trio of ether ETFs were approved by Canadian regulators last week.
GBP/USD settled above the resistance at 1.3835 and is testing the next resistance at 1.3865.
(Bloomberg) -- U.S. stocks fell for a second day as rising virus cases around the world led to renewed concern over the continued economic impact, overshadowing a batch of solid corporate results.The S&P 500 extended its slide from an all-time high, with investors showing caution ahead of the brunt of the earnings season. All eyes will be on whether an anticipated rise in profits will bring with it forecasts for stronger growth ahead. International Business Machines Corp. climbed after reporting its largest revenue growth in 11 quarters, while United Airlines Holdings Inc. paced a selloff in travel stocks on a bigger-than-expected loss. Netflix Inc. plunged in postmarket trading as its first-quarter subscriber growth fell short of the average analyst estimate.Other corporate highlights:Johnson & Johnson posted stronger-than-expected sales, while Travelers Cos.’s earnings beat estimates and Philip Morris International Inc. raised its outlookProcter & Gamble Co. is boosting the prices of some consumer products as the household-goods behemoth grapples with higher commodity costsWhile American equities are trading at a valuation that’s about 35% above the average of the past decade, investors are focused on what’s forecast to be the best earnings season in two years. One of their biggest concerns is whether companies are equipped to handle mounting inflation pressures as the economic recovery gains momentum.“Earnings season is ramping up, and there’s this concern about how the multinationals will give their guidance in view of the fact that we haven’t drawn a line under Covid yet,” said Fiona Cincotta, senior financial markets analyst at City Index. “That is just starting to unnerve investors. Demand for riskier assets has come off.”For David Donabedian, chief investment officer at CIBC Private Wealth Management, the stock market has been just taking a breather after a big rally, but there are still reasons to be bullish.“The economic recovery has taken hold, the earnings recovery has taken hold, everything we’ve seen from first-quarter earnings so far has been that it’s going to be a blowout quarter,” he said.Elsewhere, the dollar rose for the first time in seven sessions, while the Treasury 10-year yield dropped to the lowest level in more than five weeks.Here are some key events to watch this week:EIA crude oil inventory report on Wednesday.European Central Bank rate decision and President Christine Lagarde briefing on Thursday.U.S. releases new home sales data Friday.These are some of the main moves in markets:StocksThe S&P 500 decreased 0.7% at 4 p.m. New York timeThe Nasdaq 100 dipped 0.7%The Dow Jones Industrial Average decreased 0.8%The Russell 2000 dropped 2%The Stoxx Europe 600 sank 1.9%The MSCI World index dipped 0.9%CurrenciesThe Bloomberg Dollar Spot Index advanced 0.2%The euro was little changed at $1.2035The Japanese yen appreciated 0.1% to 108.09 per dollarBondsThe yield on 10-year Treasuries fell four basis points to 1.56%Germany’s 10-year yield fell three basis points to -0.26%Britain’s 10-year yield fell two basis points to 0.731%CommoditiesWest Texas Intermediate crude fell 1.5% to $62.44 a barrelGold climbed 0.5% to $1,779.10 an ounce.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- After a historic antitrust crackdown on China’s biggest tech companies last week, investors are betting there is more pain ahead.GAM Investments, BNP Paribas Asset Management and JP Morgan Asset Management Inc. see more regulatory tightening in China’s clampdown on monopolistic practices, putting pressure on the country’s leading internet stocks over the next few months. The Hang Seng Tech Index, where many Chinese tech giants are listed, has already lost about a quarter of its value from a rout that began mid-February.The shockwaves from Beijing’s bid to quell abuses of information and market dominance among industry leaders have left global investors pondering the prospects of China’s internet firms. The antitrust crackdown has exacerbated a global tech selloff sparked by rising bond yields, as traders forecast tighter liquidity conditions at home and abroad and lower company valuations.“Regulations for China internet companies, especially the big ones, will continue to tighten in 2021,” said Marcella Chow, global market strategist at JP Morgan Asset. “This uncertainty may act as a cap for some companies temporarily.”China slapped a record $2.8 billion fine on Alibaba Group Holding Ltd. after a four-month long investigation into the e-commerce giant’s market practices, then ordered an overhaul of Ant Group Co. Over the past week, more than 30 tech giants issued pledges to obey antitrust laws after Beijing gave them a month to conduct reviews and comply with government guidelines.READ: Jack Ma’s Double-Whammy Marks the End of China Tech’s Golden AgeAlibaba shares have slumped 23% in Hong Kong from a peak in October. Food delivery platform Meituan and tech giant Tencent Holdings Ltd., which have been on analyst radars for regulatory probes, are down 36% and 18%, respectively, from their peaks earlier this year. By contrast, the Nasdaq 100 index is up more than 8% this year despite entering a technical correction in March.Looking ahead, China’s tech companies are likely to move far more cautiously on acquisitions, over-compensate on getting signoffs from Beijing, and levy lower fees on the domestic internet traffic they dominate. This coincides with some facing delisting threats and sales curbs in the U.S., and others reverberating from a selloff sparked by Archegos Capital Management.Valuations too are serving as a deterrent for investors. Even after its decline, the Hang Seng Tech Index is trading at about 38 times its 12-month earnings estimates versus the 29 times multiple of its American counterpart.“We have already applied a valuations discount to the whole Chinese internet sector to factor in higher regulation risks,” said Jian Shi Cortesi, a Zurich-based fund manager at GAM. The $132 billion asset manager has reduced its exposure to the sector in the past few months amid high valuations, she added.The Hang Seng Tech Index was down as much as 1.1% on Monday. Tencent shares fell as much as 1.9% after Citigroup Inc. and Morgan Stanley lowered their target prices on expectations that advertising revenues will take a hit as apparel-brand and online-education providers cut spending.Keep the FaithThat said, Beijing has moved far faster with its antitrust reforms than the U.S. and Europe have in similar efforts. The landmark case against Microsoft Corp.’s alleged software monopoly took more than half a decade of back-and-forth before settling in 2004. Current hearings involving U.S. tech titans from Google to Facebook Inc. span several fronts, multiple cases and plaintiffs, and may not see the inside of a courtroom for years to come.In contrast, Beijing regulators torpedoed Ant’s IPO the month after Ma’s infamous speech, published new rules shortly after intended to curb monopolistic practices across its internet landscape, then launched its probe into Alibaba on Christmas Eve.“Clarity reduces uncertainty, so this is a positive,” said Joshua Crabb, a portfolio manager at Robeco in Hong Kong.That has helped give investors more optimism for the long term. Money managers see the potential for tech companies to boost earnings as digital technologies catch on for everything from e-commerce and entertainment to social media, a trend that has been accelerated by the pandemic.Meanwhile, mainland traders have kept the faith. They still hold about 6.5% stake in Tencent, the highest in at least three years, according to calculations by Bloomberg based on exchange data.“Post this round of regulation scrutiny, we believe the Chinese internet industry will resume healthy growth,” GAM’s Cortesi said.(Updates with performance of Hang Seng Tech Index, Tencent in tenth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Chinese delivery giant Meituan has raised $9.98 billion from a record top-up placement and a convertible bonds sale as it doubles down on efforts to fight the likes of Alibaba Group Holding Ltd. in newer areas such as online groceries.The nation’s third-largest internet company has sold 187 million shares in a top-up placement at HK$273.80 each, near the top end of its marketed range, and also raised $400 million from shareholder Tencent Holdings Ltd., according to terms of the deal obtained by Bloomberg News. The $7 billion new stock issuance is the largest-ever such sale by a Hong Kong-listed company, data compiled by Bloomberg show. Meituan has also sold $2.98 billion in zero-coupon convertible bonds.Meituan’s shares were volatile on Tuesday, trading up 1.2% as of 10:28 a.m. in Hong Kong, after having fallen as much as 1.8% earlier. The placement price represents a discount of 5.3% to the stock’s closing price Monday. The convertible bonds are divided in two tranches -- $1.48 billion six-year notes and $1.5 billion seven-year paper, the terms showed.“There were some rumors about the placement last week, now that overhang is gone,” said Steven Leung, executive director at UOB Kay Hian (Hong Kong) Ltd. “Demand for the placement was strong near the top end of the range. I heard the issue was taken up very quickly.”The stock and bond sales come as Meituan grapples with the cost of competing against the likes of Alibaba and Pinduoduo Inc. in newer spheres such as community e-commerce and online groceries. The company has warned it will remain in the red for several more quarters despite record revenues as it spends heavily on new initiatives.Meituan intends to use the proceeds from the offerings for technology innovations, including the research and development of autonomous delivery vehicles, drones delivery, and other cutting-edge technology, and general corporate purposes, the terms showed.“It makes sense to raise money to make more of a shift into autonomous delivery, seek to delve into more technology-focused areas especially under the backdrop of the anti-monopoly” drive, said Zhou Luyun, an analyst at Northeast Securities Co. in Shanghai. “The pricing shows that the market buys this blueprint.”Community buying is one of Meituan’s chief expansion areas, where buyers in the same neighborhood enjoy bulk discounts on fresh produce. But the firm faces entrenched competition from other Internet giants.All three main ratings agencies lowered their outlook on Meituan after it reported earnings last month, with S&P Global Ratings and Moody’s Investors Service saying that its large investments in community e-commerce would come at a heavy cost, generate negative free cash flow and dampen earnings.“After this placement, some short-term investors could sell the stock and shares could trade in a range of HK$250-HK$300 for a while,” said Paul Pong, managing director at Pegasus Fund Managers Ltd. “In the medium to longer term, online platform operators like Meituan and Tencent still have a solid growth outlook.”Meituan’s focus on developing fast-growing new businesses comes as China’s economic recovery has helped the world’s largest meal-delivery service increase orders, while its hotels and travel businesses have benefited from a rebound in domestic travel when the country reined in the pandemic.The company has begun using self-driving vehicles for grocery delivery in the Chinese capital since the Covid-19 outbreak last year, with at least 15,000 orders being completed so far, Wang Xing, the company’s chief executive officer, told analysts during a conference call in March. Wang said Meituan is also experimenting with how to deliver food using drones in the southern Chinese city of Shenzhen.Tencent is delving deeper into Meituan at a time global investors are souring on the Chinese tech sector due to heightened regulatory scrutiny. Meituan had lost some $123 billion of its value from a Feb. 17 high through Monday, pummeled by fears that Beijing’s crackdown on Jack Ma’s Internet empire will expand beyond Alibaba and Ant Group Co. to engulf other sector leaders like Tencent and Meituan.“They are going into new areas including group purchases and those need a lot of capital and they need a war chest to compete,” said Kerry Goh, chief investment officer at Kamet Capital Partners Pte. “Valuations are still pretty decent compared to a year ago.”Bank of America Corp. and Goldman Sachs Group Inc. are joint global coordinators and joint bookrunners for both the bond and equity offerings. CLSA Ltd. and UBS Group AG are also joint bookrunners for the top-up placement.(Updates Meituan’s share move in the third paragraph, adds another quote in the fourth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Users on Ethereum, Binance Smart Chain, Huobi ECO Chain or OKEx Chain would be able to convert digital assets on one of these networks to an identical asset on a different chain.
The office-sharing provider will hold the cryptocurrency on its balance sheet and pay landlords and third-party partners in crypto.
(Bloomberg) -- The first sign of trouble came last week: A small group of investors circulated a letter lambasting Barclays Plc for helping to raise hundreds of millions of dollars to build two privately owned prisons in Alabama -- two years after the bank publicly vowed to cut financing ties with the for-profit industry.Before long, the initial marketing efforts for the municipal-bond sale showed signs of sputtering. A socially responsible business group threw the London-based bank out in protest, and students and activists in Alabama began an email campaign to derail the financing.Together, the outcry turned what was supposed to be a relatively routine deal into an embarrassing black eye for the investment banking giant.It also marked a rare victory for activists and investors focused on environmental and social causes in the $3.9 trillion municipal securities market, where it is highly unusual for a bank to pull out of a deal just before it’s sold.“It’s absolutely a huge, unprecedented step forward,” said Christina Hollenback, founding partner of Justice Capital, which was part of a group of investors that sought to derail the bond offering. “It’s sending a really strong message to the finance industry overall.”ESG CloutThe bank’s decision is a sign of the growing power of investors focused on financing projects that advance social and environmental causes. With billions of dollars flowing into so-called ESG funds, that’s created a lucrative new line of business that banks are eager to court.The prison business has long been targeted by activists who say the profit-motive gives an incentive to cut costs, hurting rehabilitation efforts.The disparities in the broader criminal justice system have also drawn renewed scrutiny since the Black Lives Matter movement was galvanized by the killing of George Floyd by a Minneapolis police officer, whose trial is wrapping up this week. In Alabama, those disparities are especially evident: Black people make up over half of the inmate population, about twice their share of the overall state population, according to state and U.S. Census figures.Biden to Order Justice Department to End Private Prison UseThe $634 million bond sale was set to raise money for a CoreCivic owned company, Government Real Estate Solutions of Alabama Holdings LLC, to finance the new prisons that it’s building for the Alabama Department of Corrections. The state is planning to lease and run the facilities.State-run FacilitiesBarclays initially defended its role in the bond sale, saying it was not at odds with its decision in 2019 to cut off new financing for private prison companies since the facilities would be run by the state. Bloomberg News was first to report Barclays’ involvement in the deal earlier this month.CoreCivic and Alabama officials said the project would alleviate overcrowding in the state’s prison system and improve conditions for inmates. The state was sued by the U.S. Department of Justice in December for failing to protect male prisoners from violence and unsanitary conditions. The new facilities are intended to help remedy that.Both said the project will move forward even though the financing has been temporarily derailed. On Monday, KeyBanc Capital Markets, another manager, also said it was resigning from the transaction.“The reckless and irresponsible activists who claim to represent the interests of incarcerated people are in effect advocating for outdated facilities, less rehabilitation space and potentially dangerous conditions for correctional staff and inmates alike,” said Amanda Gilchrist, a spokesperson for CoreCivic.Key Alabama lawmakers urged Governor Kay Ivey to scrap the deal all together. Steve Clouse, a Republican who chairs the budget committee in the state’s House of Representatives, said it would be better for the legislature to authorize a bond sale for the state to build and own the prisons, AL.com reported.Deal StrugglesThe deal’s woes began last week when investors from firms including Justice Capital, Trillium Asset Management and AllianceBernstein LP signed onto a letter that asked investors not to purchase the securities because the purpose was to perpetuate mass incarceration. The letter cited the “historically incompetent” management of prisons by the state.The publicly offered portion of the deal struggled to gain traction as Barclays sought to sell the securities last week, despite a strong influx of cash into the municipal-bond market. That portion of the debt sale was downsized by about $200 million and the bank increased the yields being offered on the sale in an effort to lure buyers.Some investment firms declined to participate because they didn’t want to purchase bonds being sold for prison projects, citing concerns with environmental, social and governance risks or certain investment mandates that their firms or funds have, according to people familiar with the deal who asked not to be identified.Others had broader concerns. The bonds were being sold through a Wisconsin agency called the Public Finance Authority, which rents out its access to issue municipal debt to businesses all over the country and has a high default rate compared to other issuers. On Monday, PFA, which had been brought in by Barclays as the conduit for the sale, also said it would no longer be part of the transaction.Private OfferingStill, there was strong demand for a debt offering that would have been privately placed with investors, according to a person familiar with the matter. That portion of the sale was estimated at $215.6 million based on initial bond documents.Then on Thursday, the American Sustainable Business Council and partner organization Social Venture Circle, which represents 250,000 businesses to advocate for responsible practices and policies, announced that they would rescind Barclays’ membership in the group. Then a coalition of activist groups, including Alabama Students Against Prisons and Communities Not Prisons, began emailing people who work at Barclays in an effort to scuttle the deal.On Monday, Barclays capitulated. “While our objective was to enable the State to improve its facilities, we recognize that this is a complex and important issue,” the bank said in a statement. “In light of the feedback that we have heard, we will continue to review our policies.”(Updates with lawmakers call to end the lease-financing project in the fourteenth and fifteenth paragraphs.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- India’s second largest private lender ICICI Bank Ltd. is making its biggest hiring push in investment banking and institutional equities in four years, as it anticipates a rise in companies going public.The Mumbai-based firm plans to add five mid-to-senior level hires in each of the two units, which currently have 130 bankers in total, according to Ajay Saraf, head of investment banking and institutional equities at ICICI Securities Ltd. The new roles will be concentrated in sectors such as technology and health care, he said.“We have not hired these kinds of numbers since 2017,” Saraf said in a phone interview last week. “We see investor interest disproportionately higher for these sectors in the next 12 months.”Shares of ICICI Securities jumped as much as 4.6% on Tuesday to their highest level since Feb. 4. The move outpaced the rise in India’s benchmark Sensex index which climbed as much as 1.1%.India is joining the global share sale frenzy thanks to ample liquidity in the market with foreign investors and even retail buyers looking for new ideas to invest in. The booming local tech scene, which earlier in April minted six unicorns in a single week, is also expanding the initial public offering pipeline for bankers.So far in 2021, nearly $3 billion has been raised through IPOs in India, the best start to the year since 2018, according to data compiled by Bloomberg. It could even surpass 2020’s $4.6 billion haul as companies such as Zomato Pvt., Policybazaar and Nykaa E-Retail Pvt. are set to go public in Mumbai as as soon as this year, Bloomberg News has reported.ICICI Securities ranks first for equity offerings in India so far in 2021, according to the Bloomberg league table, a leap from 2020 when it finished 10th.Saraf expects there to be more deals to go around as high-quality firms come to market in the next three to six months.“The deal activity on the primary market will be stronger than 2021,” he said. “The number of transactions will be widespread but the rise in volume will depend on the issuers’ decisions on the size.”The banker doesn’t see those listings taking the form of special purpose acquisition companies. Investors have flooded into SPACs, vehicles that raise money from public listings in order to merge with private companies, and Indian targets are not immune to the frenzy. The country’s biggest renewable power producer ReNew Power agreed to merge with a U.S. SPAC in February, giving it an $8 billion enterprise value, and some bankers in India predict more blank-check firm deals to come.Saraf is skeptical of a sharp rise in SPAC activity in the country. “What you need for a SPAC is the size, and path to profitability,” he said. “Not many companies pass that muster in India.”(Updates with share price move in the fourth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Prices could rise in some parts of the UK after the supermarket's takeover, the competition watchdog says.
(Bloomberg) -- Carry traders blindsided by bouts of dollar strength are looking beyond the currency to fund their bets -- even if it means giving up some returns.Borrowing dollars to buy assets in higher-yielding currencies, a usually profitable strategy in emerging markets, proved loss-making in the first quarter as U.S. yields surged. That pushed money managers including Fidelity International and AMP Capital to cut dollar-short positions and fund their arbitrage with euro or yen, given the low interest rates in those currencies.While that helped traders protect their carry returns, it also underscored the need to have a broad basket of funding currencies to tide over dollar volatility. Now, even as the dollar weakens again and Treasury yields moderate, they continue to finance part of their emerging-market investments with other currencies.“Having a diversified basket of funding currencies against emerging-market long carry positions has the advantages of lower risk and an overall better Sharpe ratio on the trade versus one that’s funded solely out of the U.S. dollar,” said Nader Naeimi, the head of dynamic markets at AMP in Sydney. “I am happy to stick with a diversified basket.”Returns DichotomyA Bloomberg index of carry-trade returns from eight developing-nation currencies, funded by short positions in the greenback, fell 3.1% in the first quarter, the first decline in a year.Meanwhile, a strategy that involves borrowing the lowest-yielding currencies to invest in higher-yielding assets jumped 3.4% in the first three months of the year.At the core of this divergence was the dollar’s resurgence. A near-consensus call at the end of last year for a weaker U.S. currency came undone as the prospects for a sharp recovery in the world’s largest economy drove 10-year Treasury yields up by the most since 2016. With an accelerated vaccine rollout and unprecedented fiscal stimulus, the rebound is set to outpace its developed peers.While the Federal Reserve has been reluctant to push back against higher yields, the European Central Bank has ramped up bond-buying and the Bank of Japan has pledged to keep the yield curve stable and low.Beyond DollarWhile the start of the second quarter has flipped that trade -- dollar-funded carry trades are outperforming again with a 2.2% return this month -- traders still bet on volatility in the U.S. currency. So last quarter’s tactical dash into the euro and yen as funding currencies is now morphing into a strategic choice to reduce dollar dependency.Fidelity International, which sees carry opportunities in Brazilian real and Ghanaian cedi, prefers “to diversify the funding of these positions away from exclusively using the U.S. dollar,” said Paul Greer, a money manager in London at the firm, which oversees about $700 billion.“In the near term, we think the dollar will appreciate against G10 peers as the U.S. continues to demonstrate global leadership on growth recovery,” he said. “Looking further ahead, we expect the dollar to resume its medium term trend of depreciation, which should be supportive of the EM carry trade.”The U.S. currency has strengthened against 17 of 22 emerging-market currencies this year. In comparison, the euro has dropped against nine of the same group and the yen is weaker against 18 of those currencies.Investors looking for interest-rate arbitrage in emerging markets need not necessarily go to Japan or Europe to raise funds. There are plenty of low-rate currencies within the developing world that can do the job.Greer of Fidelity uses the Polish zloty and Hungarian forint as carry-funding currencies. Alessio de Longis, the New York-based head of tactical asset-allocation solutions at Invesco Ltd., drives his wagers with short positions in the currencies of South Korea, Taiwan, Chile and the Czech Republic. His basket is gaining this year, even though his long positions included some of the world’s worst-performing currencies such as the Brazilian real and Turkish lira.World’s Worst Currencies Pay Off for Debt Veteran at Invesco Even those who continue to fund their carry trades mostly with the dollar are turning wary of that strategy.”It’s been pretty painful,” said Edwin Gutierrez, head of emerging-market sovereign debt at Aberdeen Standard Investments in London. “The second quarter could be more of the same.”(Updates carry return funded by short-dollar positions in ninth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
The student debt burden among older Americans is growing at an alarming rate.
The DOGE frenzy appears to have spread to decentralized finance, where several imitator tokens have chalked up staggering single-day gains.
Overstock CEO Jonathan “JJ” Johnson says he's hoping that one day tZero, a much smaller trading platform that offers some services similar to Coinbase, will be a legitimate rival to the crypto behemoth that just listed on the Nasdaq Inc. last Wednesday with a valuation that briefly hit around $100 billion.
China will suspend the ability of foreign investors to trade if they cause serious market volatility through massive capital flows in a short period of time, a senior Chinese regulatory official has said. "Many people are asking whether foreign ownership will affect the stability of our stock market," said Fang Xinghai, vice-chairman of the China Securities Regulatory Commission, at the Boao Forum for Asia on Monday. "What if massive amounts of foreign capital come in and go out? I can tell you that we will take precautionary measures." Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team. Fang Xinghai, vice-chairman of the China Securities Regulatory Commission, says regulators are wary about the potential for market disruption by foreign hedge funds. Photo: Simon Song alt=Fang Xinghai, vice-chairman of the China Securities Regulatory Commission, says regulators are wary about the potential for market disruption by foreign hedge funds. Photo: Simon Song> "We had a provision when we designed the Stock Connect that if a foreign investor comes in and causes significant volatility in the stock market, we can temporarily stop it from trading," he said. Stock Connect has a daily quota restricting the maximum net value of cross-boundary trading flows, with daily "northbound" flows into China limited to 52 billion yuan (US$7.9 billion) and "southbound" flows to Hong Kong capped at 42 billion yuan. Besides Stock Connect, foreigners can also invest in China A-shares via the Qualified Foreign Institutional Investor and RMB Qualified Foreign Institutional Investor programmes. Fang's comments come as foreign investors have increased their purchases of Chinese stocks, encouraged by liberalised rules last year that gave more leeway to overseas funds to repatriate their dividends and capital gains from the world's second-largest stock market. Following the easing of rules last year, a survey by Standard Chartered released last month showed 59 per cent of respondents would increase their allocations of Chinese assets in the coming 12 months. Foreign investors bought a net 16.3 billion yuan worth of Chinese A-shares via Stock Connect on Monday, the second highest net purchases this year, after having bought a net 24.7 billion yuan last week, exceeding the 18.7 billion for the month of March as a whole, according to the official Securities Daily. Driven by declining short-term interest rates and upbeat corporate earnings, the A-share market is expected to "continue to rebound", said Southwestern Securities in a note. But if capital was to start flowing out on a massive scale, there is a risk the Chinese currency would depreciate and trigger further capital outflows. This happened on a modest scale in February and March, with the yuan's exchange rate against the US dollar dropping more than 1 per cent as a result. Last month, FTSE Russell, the global index, data and analytics provider, added China A-Shares to the FTSE MPF Index Series, the core equity benchmarks used by the Mandatory Provident Fund industry. China's domestic equities had already joined MSCI's benchmark indexes in 2017. At the end of last month, foreigners owned 5 per cent of Chinese A-shares, still a "relatively low" level, said Fang. "With more foreign capital coming in recent years, our stock market has been running much smoother, as foreign capital is playing a more important role in market pricing ... We will continue to create conditions to lure more foreign investments," said Fang. Chinese authorities have a "clear view" about the priorities of foreign investors and are not worried about individual investors, whose proportion of overall stock ownership is very small and will not affect the financial stability, Fang said. The country also welcomes foreign mutual funds, pension funds and insurance companies, which have the highest proportion of A-shares among foreign investors. But Chinese regulators are wary about the potential for market disruption by foreign hedge funds and so their operations will be watched closely, said Fang. "Once massive volatility is caused by some investors, their trading will be suspended to prevent further volatility," he said. This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2021 South China Morning Post Publishers Ltd. All rights reserved. Copyright (c) 2021. South China Morning Post Publishers Ltd. All rights reserved.
(Bloomberg) -- China’s yuan is overvalued, and that could end up stoking global inflation.The yuan ranks as the most overvalued among 32 major currencies in real effective exchange rate terms, an analysis of JPMorgan Chase & Co. indexes show. As Chinese exports are ubiquitous across a range of goods, the strength could translate into quicker inflation globally, adding to investor expectations for tighter central bank policies.The potential impact from the Chinese currency’s inflation-adjusted strength is a reflection of the nation’s quicker economic recovery from the pandemic, and its importance as the factory of the world. Since July, the yuan has advanced more than 5% against a basket of major trading partners, which includes the euro and the yen.“China could start to lead global inflation higher,” said Kota Hirayama, senior emerging-market economist at SMBC Nikko Securities Inc. in Tokyo. “Reflation is likely to accelerate” with increasing upward pressures on bond yields, he said.The yuan’s real effective exchange rate is about 2.8 standard deviations higher than its five-year average, according to an analysis based on JPMorgan’s indexes. The differential is the widest among 32 major currencies measured.Even though the Chinese currency has also suffered from recent dollar strength, it has held up better than almost every other Asian peer -- a sign of how investors view the economies of China and the U.S. as the twin engines of global growth. And while concerns about the pace of a U.S. recovery is transmitted globally through Treasury yields, China’s impact would come from its exports of goods from electronics, appliances and clothing to medical and chemical products.There are already signs that price pressures are building in China, with its producer-price index rising at the fastest pace since 2018 last month. The U.S. -- the Asian nation’s biggest export market --recorded the biggest advance in the cost of living in almost three years.The flip side of a stronger currency is reduced export competitiveness and slower inflation as import become cheaper. Economists expect gains in China’s shipments to slow through the quarters this year as the effect of a lower base wears off although price pressures are likely to quicken.To be sure, modeling by the Institute of International Finance indicates the yuan is undervalued by 12.8%, according to its latest assessment published in March. The report also shows that the dollar has become increasingly overvalued.JPMorgan’s index of the yuan’s real effective exchange has climbed almost 8% from a June low to hover near an all-time high. The elevated rate is due to the stronger nominal yuan and a faster pace of increase in China’s cost of living compared with other countries, according to Dariusz Kowalczyk, chief China economist at Credit Agricole CIB.“The elevated REER is a challenge for some exporters, but for most it is acceptable given China’s relatively fast productivity gains,” said Kowalczyk. “Productivity gains have by far exceeded real appreciation over the long run, and also in recent years, hence exports are so strong, and should remain so.”The onshore yuan has gained almost 0.5% against the dollar this year, adding to its 6.7% advance in 2020. (Updates yuan’s performance against dollar in last paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
A group of Democratic Senators, led by Elizabeth Warren (D-MA) and Raphael Warnock (D-GA), sent a letter urging the Education Department (ED) to restore defaulted student loans to on-time status amid the ongoing payment pause, Yahoo Finance has learned.
Business owners around Minneapolis, where the Derek Chauvin trial has been held, have been on edge over the last year.