July 9 (Reuters) - San Bian Science & Technology Co Ltd :
* SAYS CHAIRMAN LU XURI RESIGNS DUE TO PERSONAL REASONS Source text in Chinese: https://bit.ly/2N08KmI Further company coverage: (Reporting by Hong Kong newsroom)
July 9 (Reuters) - San Bian Science & Technology Co Ltd :
* SAYS CHAIRMAN LU XURI RESIGNS DUE TO PERSONAL REASONS Source text in Chinese: https://bit.ly/2N08KmI Further company coverage: (Reporting by Hong Kong newsroom)
(Bloomberg) -- China should build more pig farms in Xinjiang as its cotton industry is under threat from declining soil fertility, according to a government researcher, commenting after some international companies avoided fiber produced in the region over allegations of forced labor.Hog farming could become a pillar industry in the region and supply 10% of the nation’s output, up from 1% now, wrote Mei Xinyu, a think-tank researcher at the commerce ministry. Xinjiang already grows more than 80% of the country’s cotton, and some of those pig farms would replace fields sown to the fiber that have been degraded.The suggestion comes after the U.S. banned imports of textile products containing cotton from Xinjiang in protest over alleged ill-treatment of its ethnic Uighur Muslim minority, and several western countries slapped sanctions on China over the same issue.Cotton is the most profitable crop in the region, and rotation to other crops is not in the interests of growers and hard to achieve on a large scale, Mei said on the WeChat account of Beijing News, a government-run newspaper. The only feasible option is to build more hog farms, he said, and they can use local grain to feed the pigs or import supplies from neighboring countries.Xinjiang Production and Construction Corps, a military-affiliated entity, and other groups have already started building several large-scale pig farms, which will increase output significantly in the next two years. In the meantime, animal waste from the farms could be used to boost soil fertility, which has been exhausted by extensive use of chemical fertilizer, said Mei.“The most desirable way to solve this problem is to raise pigs and grow cotton simultaneously, and return a large amount of manure from pig farms to the fields after treatment to enhance soil fertility and increase profits,” Mei said.China should expand hog farms in areas like Xinjiang and Heilongjiang, which are less population-intensive than the inland provinces like Sichuan, Hunan and Henan which dominate the country’s pork production, Mei said. Outbreaks of African swine fever that started in 2018 slashed hog herds by as much as half and sent meat imports spiraling to a record.(Updates with details from the report throughout)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 Coinbase IPO has captivated the markets. But one strategist says the company isn't worth anywhere near the $100 billion some say it is. Here's why.
Taiwan said on Wednesday its chip companies will adhere to U.S. rules after Washington added seven Chinese supercomputing entities last week to an economic blacklist and after a Taipei-based chipmaker halted orders from one of the entities named. The U.S. Commerce Department said the seven Chinese entities were "involved with building supercomputers used by China's military actors, its destabilizing military modernisation efforts, and/or weapons of mass destruction programs." Companies or others listed on the U.S. Entity List are required to apply for licenses from the Commerce Department that face tough scrutiny when they seek permission to receive items from U.S. suppliers.
(Bloomberg) -- Shanghai hedge fund manager Li Bei says she learned quickly that the low-volatility approach to investing behind the rise of Bridgewater Associates was doomed in China for a startup like hers.Steady returns did little to draw investors used to short-term rewards, so she put in her own money, cranked up leverage and produced an industry-leading 258% gain last year.Li is a pioneer in macro hedge fund management in China, where homegrown firms are taking on foreign giants that are struggling to adapt in an industry where even low-fee mutual funds generate sizable returns. While her Shanghai Banxia Investment Management Center only manages about 500 million yuan ($76 million), she says firms like hers are best placed to assess how China is driving the global economy.“We truly feel that Chinese funds have an obvious advantage judging corporate profits and commodity prices,” Li, 37, said in a phone interview from Shanghai. “For us, these are good times to make money.”Chinese macro hedge funds made an average 41% return in 2020, four times the global level, according to data from Shenzhen PaiPaiWang Investment & Management Co. and Eurekahedge. The more than triple gain of Li’s Banxia Stable Fund put her firm at the top of rankings for such funds in China.The stellar year promises to save Li from wounds inflicted by an exodus of investors in 2019 when her 9% return -- still beating an 8.9% global average of peers, according to Eurekahedge -- was dwarfed by local mutual funds during a bull market. The setback forced her to rethink her initial strategy of emulating Ray Dalio’s Bridgewater, an approach that she says included diversifying to limit volatility and providing free research to attract institutional clients.‘Doesn’t Work’“The Bridgewater route doesn’t work in China,” Li said. Offering two complimentary research reports a month didn’t help bring new money, and big institutions also balked at her fund’s small size.When clients were pulling cash from Banxia Stable, Li put in some of her own, and added leverage of between 250% and 300%. The product, managing less than 200 million yuan, replicates asset allocations in her larger Banxia Macro Fund but increases exposure through margin-financed trades in instruments such as stock index and commodities futures.Last year’s success didn’t come easily for Li. After managing money at Bocom Schroder Fund Management early in her career, she won multiple industry awards for her 25% annualized returns running China’s first macro hedge fund at Honghu Investment Management Co. Yet losses in 2016 caused differences with her then-husband Liang Wentao, the firm’s founder. After they parted ways, the mother of two set up Banxia at the end of 2017 and started building client relations from scratch.“She is a very unique China macro manager with the ability to do focused and very deep macro research in specific areas, such as steel,” said William Ma, who was until recently chief investment officer of wealth manager Noah Holdings, which invested in Banxia in January 2018.The level of leverage in the revamped Banxia Stable is closer to what legendary investor George Soros outlined in his autobiography, Li said. If the shift sounds bold and simple, making the right moves during last year’s turbulence to achieve a 63% gain in the underlying strategy required sharp judgment.In January 2020, Li was among the earliest to turn short on stocks and commodities, taking note of not only emerging reports on the new coronavirus but also signs of a weakening economy. “Super-cheap” put options allowed her to add leverage that helped bring a 61% jump in the leveraged Banxia Stable in the first quarter as markets tumbled, she said.Among BestLi’s use of options to construct contrarian macro trades means “her return profile is negatively correlated” to global and local peers, said Ma, who has followed her performance since she worked at Honghu. “She is really one of the best macro hedge fund managers I have ever met,” he said.Along with almost 9,000 local players, Li is competing with more than 30 global firms that are making inroads into China’s 4.5 trillion yuan hedge fund market. Dalio has said he saw the need to invest “a significant portion” of his portfolio in Chinese assets, and Bridgewater raised 900 million yuan in its second China private fund in September, doubling assets.Bridgewater’s All Weather China strategy has posted annualized returns of 22% through July since its 2018 inception. That’s less than Banxia Stable’s 85% in the same period, Li said, while noting the strategies aren’t directly comparable.In a reminder of risks macro hedge funds face when they bet in the wrong direction, Bridgewater’s flagship Pure Alpha II fell 12.6% last year.More than other strategies, the performance of macro funds “depends a lot on the manager’s own judgment,” said Li Minghong, head of fund-of-funds investments at Panyao Capital in Shanghai.Rocky QuarterBanxia Stable fell 13% in the first three months of this year, in part because of an increase in steel prices. Its short positions in ferrous metals were hurt by China’s unexpected move to lower crude steel output and cut capacity, according to its quarterly investor letter. The fund broke even on bonds, and made a small profit on stocks even as the Shanghai Shenzhen CSI 300 Index declined 3%.Banxia wasn’t alone. More than 40% of Chinese hedge funds made a loss in the first quarter, although macro funds managed an average 1% gain, according to PaiPaiWang.Li and her peers face a challenge attracting investors in a nation where macro funds account for just 2% of the 65,129 local private securities funds tracked by PaiPaiWang. She said she’s now meeting more potential customers following last year’s performance, but fund raising remains tough, in part because of Banxia’s short track record. She hasn’t felt any impact from the collapse of U.S. family office Archegos Capital Management, saying her leverage is much lower and portfolio more diversified.The difficulties aren’t shaking her confidence in outperforming the likes of Bridgewater.“They should just hire people like me,” she said. “But I won’t work for them.”(Updates with first-quarter performance of Chinese hedge funds in the fourth-to-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.
(Bloomberg) -- Market turmoil surrounding China Huarong Asset Management Co. intensified on Wednesday as investors interpreted government silence on the embattled firm as a lack of official support.The Communist Party has yet to comment on the distressed-debt manager, which is controlled by the finance ministry, even as concern about a potential restructuring sent its dollar bonds plunging to distressed levels. China’s State Council, the country’s top administrative body, instead reinforced the idea that struggling state-backed companies shouldn’t rely on government support.In a statement late Tuesday, the State Council urged local government financing vehicles to restructure or enter liquidation if they can’t repay their debts. While it’s unclear if the comments were meant to send a veiled message about China Huarong, they added to the perception that the government is taking a tough stance on reining in risks to the financial system.The resulting turbulence in the offshore debt market is having an impact on fundraising for even blue-chip Chinese firms. Tencent Holdings Ltd., which along with other tech giants has also faced increased government scrutiny in recent months, is holding off marketing a planned dollar bond deal Wednesday to raise as much as $4 billion, according to people familiar with the matter.Meanwhile, the selloff in China Huarong’s bonds is deepening, with the notes set for another day of record lows. The firm’s 4.5% perpetual dollar bond fell 9.7 cents on the dollar to 61.2 cents, Bloomberg-compiled prices show. The company, which has yet to publish its full-year earnings after missing a March 31 deadline, has said it has access to liquidity and is making payments on time.“The lack of information is being taken negatively,” said Paul Lukaszewski, head of corporate debt for Asia Pacific at Aberdeen Standard Investments in Singapore. “Investors are increasingly concerned about the broader implications if Huarong’s offshore bonds are pushed into financial restructuring.”Withdrawing support from weak or badly run companies is becoming an increasing trend in China as President Xi Jinping seeks to restrain growth in debt in the world’s second-largest economy. One consequence is that state-owned enterprises have replaced private firms as the country’s biggest source of defaults.SOEs reneged on a record 79.5 billion yuan ($12.1 billion) of local bonds in 2020, lifting their share of onshore payment failures to 57% from 8.5% a year earlier, according to Fitch Ratings. The figure jumped to 72% in the first quarter of 2021.The dilemma for authorities is how to avoid contagion spilling over into the financial system as investors reprice risk and sell bonds previously considered immune from default because of an implicit state guarantee.An onshore default by a state-linked coal producer in November triggered a brief selloff in the nation’s credit market. Further defaults, including by chipmaker Tsinghua Unigroup Co., also caused short-term market volatility.But failure to successfully tackle rising debt levels could fatally undermine the government’s efforts to build a world-class economy to rival that of the U.S.Local government debt is of particular concern. Hidden debt at local levels was elevated to a “national security” issue at China’s annual legislative meetings last month. Local governments had 14.8 trillion yuan ($2.3 trillion) of hidden debt last year, and the figure could climb further this year, according to a government-linked think tank.Like much of China’s debt issues, the problem with local government financing vehicles, or LGFVs, dates back to 2009 and the central government’s response to the global financial crisis. Barred from borrowing through official channels but facing funding shortfalls to pay for infrastructure stimulus, local governments created off-balance sheet financing vehicles.No LGFV has defaulted on a public bond, and sales in 2020 hit a record 4.4 trillion yuan, but cracks have started to appear. Chongqing Energy Investment Group Co. this year failed to repay 915 million yuan of commercial bills.“It is only a matter of time before an orderly breaking of the implicit guarantee for public-issued bonds, including LGFVs,” said Wu Qiong, executive director at BOC International Holdings Ltd.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.
Major global stock indexes scaled new peaks on Wednesday after upbeat U.S. and European earnings pointed to a strong recovery from the coronavirus pandemic, while the dollar dipped to three-week lows as Treasury yields held below recent highs. High-flying growth stocks declined on Wall Street, sending the benchmark S&P 500 and Nasdaq lower in afternoon trade, while underpriced value stocks rose, lifting the Dow to a new record. U.S. import prices increased more than expected in March, lifted by higher costs for petroleum products and tight supply chains in the latest data to show inflation is heating up as economies reopen.
(Bloomberg) -- Credit Suisse Group AG unloaded about $2 billion of stocks tied to the Archegos Capital Management blowup in the second such block sale since the bank wrote down the bulk of its exposure in the first quarter.The stock offerings included Discovery Inc. and Iqiyi Inc., adding to some $2.3 billion worth of shares tied to the debacle that the bank sold last week, according to people familiar with the matter. The trades follow a torrent of similar transactions that had already erased about $194 billion in market value as banks from New York to Zurich and Tokyo unwound leveraged equity bets by Bill Hwang’s family office.Shares of Credit Suisse fell as the sale adds to evidence that the Archegos collapse could impact the bank beyond the first quarter, when it took a 4.4 billion franc ($4.8 billion) writedown, its worst trading hit in more than a decade. While the Swiss bank has substantially reduced its exposure, transactions since the end of March weren’t included in the first-quarter results, a person familiar with the matter has said.Credit Suisse fell as much as 2.2% in early Zurich trading and was 1.2% lower by 9:43 a.m. The stock has lost 15% this year, compared with double-digit gains for an index that includes its European peers.A spokesperson for Credit Suisse declined to comment on the sale and whether the bank plans more such transactions.Hwang’s private investment firm became the center of one of the biggest margin calls of all time late last month, and represented one of the most spectacular failures of risk-management and oversight in recent memory. The downfall of Archegos will result in $10 billion of losses to banks, according to analysts at JPMorgan Chase & Co. The debacle could attract regulatory scrutiny and potential fines for the banks involved, the analysts said this week.Read more: Archegos Ripples Through Banks’ Lucrative Hedge Fund BusinessTuesday’s block trades -- which sold at the lower end of ranges -- included 19 million Class A shares of Discovery sold at $38.40, said one of the people, asking not to be identified discussing a private matter. In addition, 22 million Class C shares of Discovery sold at $32.35 while a stake of 35 million Iqiyi shares went for $15.85.Credit Suisse’s latest sale comes weeks after several rivals dumped their shares to skirt losses. While the firm was one of several global investment banks to facilitate the leveraged bets of Archegos, it was slower than others to unwind the positions and had initially tried to reach some sort of standstill agreement, people familiar with the matter have said.The strategy failed as rivals rushed to cut their losses. Global banks including Goldman Sachs Group Inc. and Deutsche Bank AG have told investors that they shed their Archegos-linked positions with little financial impact.Credit Suisse is now planning a sweeping overhaul of its hedge fund business. It has already announced plans to cut its dividend, suspend share buybacks and scrap bonuses for top executives.(Updates with Credit Suisse shares from third 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) -- Bernard Madoff’s death in prison Wednesday doesn’t change much for his victims, many of whom are still waiting to be made whole on their share of $20 billion that vanished with the con man’s 2008 arrest.The recovery effort, still underway in court more than a decade later, has been remarkably successful at recouping the lost principal, under the circumstances. But that’s little comfort to investors who lost their life savings or otherwise had their lives turned upside down. And none of them will ever see a cent of the $45 billion in fake trading profits Madoff assured them was safely tucked away in their accounts for retirement.“There are still people suffering vitally from what he did,” Burt Meerow, an 82-year-old Vermont retiree who declined to disclose how much he lost, said in an interview about the new king of the Ponzi scheme, also 82 when he died. “The tragedy goes on. He doesn’t.”Another victim, New York artist Alexandra Penney, who published a memoir titled “The Bag Lady Papers” about losing her savings, was blunter.“I’m sorry he’s dead, because I wish he’d been tortured a long while more in jail, and I wish he’d been in solitary,” said Penney, who is renting a home in West Palm Beach, Florida, and who also declined to say how much she lost. “But now that he’s dead I will dance on his grave.”Emotions still run high for Richard B. Shapiro, too. The 67-year-old Hidden Hills, California, real estate investor, who lost “in the seven figures” with Madoff and calls him a “psychopath,” said he’s never forgotten the shock of the news of Madoff’s arrest. He remembers the scam falling apart the way people remember the 9/11 terror attack or President John F. Kennedy’s assassination, he said.“I hope he rots in hell,” said Shapiro, who was introduced to Madoff by a friend and started investing with him in the 1990s. “He got off easier, and I have no compassion for him or his family in any way, shape or form.”Read More: Bernard Madoff, Mastermind of Giant Ponzi Scheme, Dies at 82Shapiro said he ultimately sold the bankruptcy claims for his two Madoff accounts, one for 61.5 cents on the dollar and the other -- too early, he lamented -- for 35, to help kick-start his financial recovery.Madoff, who pleaded guilty to securities fraud in 2009, was serving a 150-year sentence at a federal prison in Butner, North Carolina. Five of his top aides were convicted at trial in 2014. Several others, including his brother Peter, pleaded guilty.Madoff’s Life and TimesApril 29, 1938: Madoff is born in NYC borough of Queens1960: Founds stock brokerage that becomes Bernard L. Madoff Investment Securities1990: Becomes chairman of Nasdaq, serves for three different yearsDec. 11, 2008: Arrested as Ponzi scheme is exposedJune 29, 2009: Sentenced to 150 years in prisonApril 14, 2021: Dies in prison after failing to win early releaseThe Madoff family was marked by tragedy in the years after the scam fell apart. Madoff’s elder son Mark, who was head of sales at the company’s legitimate market-making business, committed suicide in 2010, on the two-year anniversary of his father’s arrest. His younger son Andrew, who as head of equities helped build the company’s proprietary trading desk, died of cancer in 2014. Neither son was charged. The con man’s wife, Ruth Madoff, has been living in obscurity, most recently in Connecticut, after being forced from their luxurious Upper East Side home.“Bernie, up until his death, lived with guilt and remorse for his crimes,” his lawyer, Brandon Sample, said in announcing Madoff’s death. “Although the crimes Bernie was convicted of have come to define who he was, he was also a father and a husband. He was soft spoken and an intellectual. Bernie was by no means perfect. But no man is.”Madoff’s level of remorse has always been in question. Even from prison, Madoff has said in recent years that he ran a proper business for decades and that his biggest early investors were to blame for his crimes by demanding unrealistic returns. He could have proved as much, he argued, if he’d gone to trial.The people who put him behind bars don’t buy it.“Madoff is a good example of the extent to which people who are involved in fraud can often be so deeply invested in their own lies that where the truth ends and the lie begins gets obscured even for them,” said Randall Jackson, a former assistant U.S. attorney in Manhattan who prosecuted Madoff. “I have no doubt Bernie completely understood that his activities were massively fraudulent for many decades and the sum total of his life was an enormous lie.”‘Obsessed Over Drugs’Julian Moore, another former assistant U.S. attorney who was one of the lead prosecutors on the case, said Madoff’s death and the conviction of his top aides “may be closure for some” but still isn’t adequate justice. The government can help prevent a recurrence by being more equitable in its enforcement priorities, he said.“While the nation obsessed over the war on drugs and disproportionately and unfairly prosecuted minorities, white collar defendants like Madoff ran free until the financial collapse of 2008 revealed the emperor had no clothes,” Moore said.To Shapiro, the California real estate investor, it’s even starker.“When I wrote to Judge Chin I said he murdered people,” Shapiro said of a letter he filed for the federal judge who oversaw Madoff’s case. “People died, and those people died penniless. He ruined so many lives. He was a murderer, in my mind.”And “brilliant” in his deception, Shapiro said, wondering at Madoff’s “perfect setup.”“You had to beg him to take your money,” he said.Huge Blow to SECThe Herculean effort to recover cash for the victims through litigation in bankruptcy court has so far repaid nearly 70% of valid claims -- a far better outcome than many expected when the fraud was fresh. Even so, the process has dragged on, creating uncertainty for many and a blizzard of paperwork for others. It has been overseen by New York lawyer Irving Picard, the trustee for Madoff’s company in court. He recovered the funds by suing hundreds of customers who withdrew more money from their accounts than they deposited, spending profits that existed only on paper.Hundreds argued they were victimized a second time by that system. To them, they were spending money they had every right to believe was theirs. Ultimately that’s not how the courts saw it, and hundreds of former Madoff customers sued by Picard have reached settlements to help pay victims who didn’t withdraw their principal. Picard has recovered more than $14 billion, much of it from large early investors who reaped billions from Madoff’s fraud, as well as from banks that effectively did business with a con man and allowed his scheme to continue.Madoff’s admission that he spent years running the massive fraud under the noses of financial regulators was a huge blow to the Securities and Exchange Commission, compounded by the revelation that whistle-blower Harry Markopolos’s repeated warnings to the agency about Madoff fell on deaf ears.Although the scandal broke amid a far larger financial crisis, the SEC has said many of the reforms that followed were in direct response to weaknesses exposed by Madoff.A Damaged IndustryAmong those reforms were efforts to strengthen the SEC’s enforcement division and safeguard investor assets through surprise exams and stricter rules involving account statements and custody of assets. In addition, a whistle-blower office was created at the SEC and at the Commodity Futures Trading Commission to reward insiders and others who provide tips about financial wrongdoing that result in recoveries.Beyond the U.S., investors in Switzerland were among the hardest hit by the scandal, which eventually helped trigger the collapse of the fund-of-funds industry. Such funds, which track and research hedge funds and allocate investors’ cash to them, have seen outflows every year since 2008, while their number has been more than halved since then, according to data compiled by Hedge Fund Research Inc.When investors learned about such exposure to Madoff, they scrambled to pull their money out, sparking a frenzy of withdrawals akin to a bank run and hurting those without exposure. Madoff was poison to funds of hedge funds “that pride themselves on giving investors access to top managers,” said Nicolas Roth, head of alternative assets at Geneva-based private bank Reyl & Cie.Meerow, the Vermont victim, said he’s been more careful and now invests only in what he understands -- though he hasn’t lost all trust in Wall Street.“I don’t think there are a lot of Madoffs running around,” he said.(Adds analysis by Julian Moore under ‘Obsessed Over Drugs’ and Damaged Industry section at bottom.)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) -- A massive troop buildup on the border with Ukraine has turned the once unthinkable idea of U.S. sanctions on Russian sovereign debt into a real possibility for investors.Yields on ruble bonds, known as OFZs, jumped to the highest level in more than a year last week and were edging higher again on Tuesday as the market watched deepening tensions between Moscow and Washington take another turn for the worse.“This makes OFZ sanctions significantly more likely,” said Paul McNamara, an emerging-markets investor at GAM Investments in London. He doesn’t expect a full-scale Russian offensive, but said “there are a lot of outcomes that are worse than the current situation.”The administration of U.S. President Joe Biden was already preparing more penalties on Russia over alleged election interference and hacking before the latest flareup in Ukraine. NATO joined the Group of Seven nations and the European Union on Tuesday in calling for Russia to de-escalate.The threat of OFZ sanctions, often dubbed the “nuclear option,” has been hanging over bondholders for years, but after several false alarms, most investors weren’t considering it a base case. That may now be changing.Analysts at JP Morgan Chase & Co. downgraded the ruble and Russian bonds last week, citing the escalating tensions and the risk that U.S. investors might close long positions on OFZs. The Finance Ministry has had to rely on state-run banks to meet demand at its latest debt auctions after a sale was canceled due to reduced appetite from foreign buyers.What’s Sparking Tension Between Russia and Ukraine?: QuickTakeThe Treasury Department warned in 2018 of global financial market turmoil if Russia’s sovereign debt market were sanctioned because of how deeply tied the Russian market is to global indexes.Since then the California Public Employees’ Retirement System, or Calpers, has cut all of its bond holdings in Russia. Foreigners have curbed their share of the total market to just 20% from about 35% last year as the Finance Ministry sold more debt to locals.Russian officials say the move wouldn’t cause much damage to Russia’s financial markets because local banks and non-U.S. investors would step in to replace those forced to sell. A move to ban U.S. banks from buying new issues of Russian Eurobonds in 2019 did little to dent the Kremlin’s access to foreign funding.An even harsher measure that has been mooted in Washington in the past would be to bar Russian banks from the international financial messaging system used for most international money transfers, a measure that has been used against Iran. Foreign Minister Sergei Lavrov warned last month that Russia needs to find alternatives to the system, known as SWIFT, to make itself less vulnerable.“If it goes to an outright military conflict, I wouldn’t exclude SWIFT sanctions, which would be really disruptive,” said Viktor Szabo, a money manager at Aberdeen Asset Management in London.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.
Gold fell on Wednesday as an uptick in U.S. Treasury yields weighed on bullion's appeal, while investors awaited speeches by several Federal Reserve officials in the wake of data showing higher inflation. Spot gold fell 0.3% to $1,739.00 per ounce, as of 10:45 a.m. EDT (1445 GMT). The uptick in bond yields seem to be "adding some very light pressure to the (gold) market," said David Meger, director of metals trading at High Ridge Futures.
Stocks traded mixed Wednesday afternoon, with traders digesting a slew of earnings results from big banks that largely topped expectations. The Dow set a fresh record high as shares of Goldman Sachs advanced after the company reported better-than-expected quarterly results.
(Bloomberg) -- Just last year, the world’s most valuable startup, ByteDance Ltd., was being squeezed from all sides.The Trump administration wanted the Chinese firm, which owns the ubiquitous TikTok video-sharing platform, to get rid of assets. Beijing was cracking down on tech businesses, and India blacklisted some of its social-media apps.For all the obstacles, ByteDance kept growing. Now its founder, 38-year-old Zhang Yiming, is among the world’s richest people -- a distinction that lately has carried increased risks in China.Shares of the company trade in the private market at a valuation of more than $250 billion, people familiar with the dealings have said. At that level, Zhang, who owns about a quarter of ByteDance, could be worth more than $60 billion, placing him alongside Tencent Holdings Ltd.’s Pony Ma, bottled-water king Zhong Shanshan and members of the Walton and Koch families in the U.S., according to the Bloomberg Billionaires Index.ByteDance, famous for its short-video apps and news aggregator Toutiao, more than doubled revenue last year after expanding beyond its core advertising business into areas such as e-commerce and online gaming. It’s now weighing options for the initial public offering of some businesses.“Zhang is someone who’s known for thinking long-term and not easily dissuaded by short-term setbacks,” said Ma Rui, partner at venture-capital firm Synaptic Ventures. “He is set on building an enduring, global business.”Surging ValuationDuring its last fundraising round, ByteDance reached a $180 billion valuation, a person with knowledge of the matter said. That’s up from $20 billion about three years ago, according to CB Insights. But in the private market, some investors recently were asking for the equivalent of a $350 billion valuation to part with their shares, people familiar have said. The company’s value for private-equity investors is approaching $400 billion, the South China Morning Post reported. That would mean an even bigger fortune for Zhang.ByteDance representatives didn’t respond to requests for comment.It’s a tough time to be wealthy in China as the government seeks to rein in the country’s most powerful corporations and their billionaire founders. Just ask Jack Ma: After opening an antitrust probe, regulators fined Alibaba a record $2.8 billion and the central bank ordered an overhaul of his Ant Group Co. fintech empire so it’d be supervised more like a bank. On Tuesday, China ordered 34 internet companies to rectify their anti-competitive practices in the coming month.While ByteDance hasn’t been singled out as a target, its dominance in social media and war chest for deal-making are sensitive areas the government is looking into.“There are no more silly games in the U.S. with Trump and potential bans or forced asset sales,” said Kirk Boodry, founder of investment research firm Redex Holdings. “But the pressure on tech-share prices and China in particular might make $250 billion a tough sell,” he added, referring to ByteDance’s value in private transactions.Born in the southern Chinese city of Longyan, Zhang, the only son of civil servants, studied programming at Tianjin’s Nankai University, where he built a following on the school’s online forum by fixing classmates’ computers. He joined Microsoft Corp. for a brief stint after graduating, later calling the job so boring he often “worked half of the day and read books in the other half,” according to an interview with Chinese media. He went on to develop several ventures, including a real estate search portal.His breakthrough came in 2012, when working in a four-bedroom apartment in Beijing he created ByteDance’s first hit -- a joke-sharing app later shut down by censors. It then turned to news aggregation before winning over more than 1 billion global users with its short-video platforms TikTok and Chinese twin app, Douyin. In the process, it attracted big-name investors such as SoftBank Group Corp., Sequoia Capital and proprietary-trading firm Susquehanna International Group, making it a rarity among Chinese internet startups that usually get absorbed into the wider ecosystems of Tencent and Alibaba Group Holding Ltd.Novel ConceptOne of Zhang’s earliest supporters, Susquehanna has become ByteDance’s largest outside backer with a 15% stake, according to a Wall Street Journal story in October. The initial bet was made at the start of 2012, when ByteDance’s news app Toutiao was just a concept that Zhang had drawn up on napkins, according to a 2016 blog post by Joan Wang, who led that investment for Susquehanna’s Chinese venture-capital unit.With TikTok facing scrutiny in the U.S. and India, Zhang has put more effort into ByteDance’s nascent and fast-growing Chinese businesses, which range from gaming to education to e-commerce. That helped it increase sales to about $35 billion last year and operating profit to $7 billion, a person familiar with the results said.Investors are eyeing the IPO of some of ByteDance’s businesses after Chinese competitor Kuaishou Technology raised $5.4 billion in February in the biggest internet listing since Uber Technologies Inc., with its market value now nearing $140 billion. Last month, ByteDance hired former Xiaomi Corp. executive Chew Shou Zi as its chief financial officer, filling a long vacant position that will be crucial for its eventual market offering.But for Zhang, it’s not all about immediate payoffs. The affable founder is known for his business philosophy of “delaying satisfactions” as he puts the focus on long-term growth -- a message he stressed again during his spiel to employees at the company’s ninth anniversary celebration last month.“Keep an ordinary mind, that’s something that sounds easy but important to do,” he said. “Put in the plainest words, when hungry, eat, when tired, sleep.”(Adds latest on China crackdown 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.
Coinbase opened for trading on the Nasdaq on Wednesday.
Alibaba’s run-in with Chinese regulators has made things tense for its other technology giants.
Credit Suisse has identified $2.3 billion worth of loans exposed to financial and litigation uncertainties in its Greensill-linked supply chain finance funds, it told investors on Tuesday. Switzerland's second-biggest bank has been reeling from its exposure to the collapse first of Greensill Capital and then Archegos Capital Management within a month. Its asset management unit was forced last month to shut $10 billion of supply chain finance funds that invested in bonds issued by Greensill after the UK firm lost credit insurance coverage shortly before filing for insolvency.
(Bloomberg) -- By certain measures, Turkey looks a lot like Latin America’s worst serial defaulters. But some investors -- including Fidelity International Ltd. and Vanguard Asset Management Ltd. -- are finding plenty to like.Since President Recep Tayyip Erdogan fired his market-friendly central bank governor last month, the cost of insuring Turkish sovereign debt has risen to the highest in emerging markets after Argentina. The lira nosedived and a gauge of one-year default probability jumped to a record on concern about central bank reserves, foreign borrowing needs, and a surge in coronavirus cases that imperils tourist revenue.The new governor, Sahap Kavcioglu, has sought to calm investors ahead of his first interest-rate meeting on Thursday, saying a rollback of his predecessor’s hikes shouldn’t be assumed.For the bulls, the selloff went too far, and Fidelity and Vanguard have both raised their exposure to Turkish hard-currency debt to overweight. Unlike Argentina and Lebanon, which defaulted in 2020, Turkey has sufficient cash buffers, while climbing default swaps are a technical quirk, they say.“We think a Turkish debt default is unlikely in the near-term,” said Paul Greer, a London-based money manager at Fidelity. “Turkey is heavily reliant on foreign capital to fund its natural current account deficit and the external financing requirements of its corporate and financial sectors. To that end, we expect Turkey to continue to demonstrate its willingness and ability to service its foreign and domestic debt obligations.”Investors are gravitating toward the foreign-bond market after Naci Agbal’s shock dismissal on March 20 hammered the local currency and left local-debt investors burned. The gains on Turkey’s dollar bonds are triple the emerging-market average this month, a Bloomberg Barclays index shows. The extra yield Turkey pays on government dollar debt compared with U.S. Treasuries fell one basis point on Tuesday to 505 basis points, a higher premium than that of Nigeria and Egypt.Turkey offers “attractive entry points for alpha opportunities,” Greer said.Rates DebutThe lira is down more than 8% against the dollar this year, the worst performance after the Brazilian real and the Argentinian peso. But there are signs the worst is over for now. The currency gained 0.2% on Wednesday and has been range-bound this week, while credit-default swaps have unwound some of their gains since late March.The swaps’ surge was due more to their use as a hedge by investors trapped in overweight positions than as a true wager on default, according to Nick Eisinger, co-head of emerging-markets active fixed income at Vanguard in London.Compared with defaulted sovereigns, Turkey’s debt burden is comparatively low at 37% of gross domestic product. The equivalent level for Lebanon and Argentina is 172% and 97%, respectively.“Turkey’s financial sector is very well embedded in global financial architecture,” said Sergey Dergachev, senior portfolio manager for emerging-market debt at Union Investment in Frankfurt. Those close ties to European and Gulf lenders means any default would be a huge reputational blow for the lenders.“This is a big difference versus Argentina,” Dergachev said.Akbank TAS, which typically sets the benchmark for other Turkish banks, borrowed about $677 million in a two-tranche syndication last week at a similar cost to a facility in October.Reserves RiskAt the same time, investors are paying close attention to Turkey’s foreign reserves. Before Agbal’s arrival at the central bank in November, the previous Treasury and Finance Minister came under attack for burning through the stockpile in a bid to stem the lira’s losses. Erdogan has said no reserves were lost.One possible danger lies in the central bank’s practice of borrowing tens of billions of dollars from lenders via swaps. While banks are sitting on $221 billion of hard currency deposits, lira weakness could prompt Turks to withdraw their savings from lenders, forcing the central bank to close its swap positions.“They are walking a tightrope, which is why the market is so obsessed about them needing to run tight monetary policy,” said Manik Narain, the head of EM cross-asset strategy at UBS AG.(Updates with currency prices in eighth 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 firm released $5.2 billion of credit reserves, bolstering EPS.
The Coinbase listing is seen as a watershed moment for the cryptocurrency industry.
(Bloomberg) -- U.S. stocks retreated after climbing to an all-time high. Treasuries fell with the dollar. Oil rallied.PayPal Holdings Inc. and Nvidia Corp. paced losses among tech companies in the S&P 500, which had fluctuated for much of Wednesday’s session as traders sifted through earnings from some of the world’s biggest banks. Bitcoin slid in the wake of the debut by cryptocurrency company Coinbase Global Inc. on the Nasdaq.Read: Goldman, JPMorgan Traders Show the Reddit Crowd How It’s DoneWith equities lingering near a record, investors are looking to the earnings season for further catalysts. Expectations of a strong profit rebound have helped markets rally, setting the bar high as reporting gets underway. More broadly, investors are monitoring vaccine developments for any threats to the economic recovery. The Federal Reserve said in its Beige Book that activity has picked up pace amid an improvement in consumer spending.“You’re going to see this tug-of-war continue within markets as investors weigh the prospects of a strengthening economy with the risk of rising inflationary pressures,” said Adam Phillips, managing director of portfolio strategy at EP Wealth Advisors.A quarter that began with retail investors declaring the end of the status quo on Wall Street just ended with big banks tallying surprisingly massive hauls. Goldman Sachs Group Inc. and JPMorgan Chase & Co. -- two of the most gilded names in finance -- kicked off bank earnings season with revenue windfalls from trading and dealmaking, defying warnings from within the industry that good times couldn’t last.Goldman Sachs’s stock jumped, while JPMorgan’s slipped -- undermined by concern over weak demand for loans.Some key events to watch this week:U.S. data including initial jobless claims, industrial production and retail sales come Thursday.China economic growth, industrial production and retail sales figures are on Friday.These are some of the main moves in financial markets:StocksThe S&P 500 fell 0.4% at 4 p.m. New York time.The Stoxx Europe 600 Index gained 0.2%.The MSCI Asia Pacific Index advanced 0.7%.CurrenciesThe Bloomberg Dollar Spot Index fell 0.2%.The euro climbed 0.3% to $1.1979.The Japanese yen appreciated 0.2% to 108.89 per dollar.BondsThe yield on two-year Treasuries rose less than one basis point to 0.16%.The yield on 10-year Treasuries rose two basis points to 1.63%.The yield on 30-year Treasuries climbed two basis points to 2.31%.CommoditiesWest Texas Intermediate crude gained 4.5% to $62.89 a barrel.Gold weakened 0.5% to $1,736.65 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.
Owning a house isn’t the only pathway to financial success and fulfillment.