Ant Group is exploring options for founder Jack Ma to divest his stake in the financial technology giant and give up control, as meetings with Chinese regulators signaled to the company that the move could help draw a line under Beijing's scrutiny of its business, according to a source familiar with regulators' thinking and two people with close ties to the company. Reuters is for the first time reporting details of the latest round of meetings and the discussions about the future of Ma's control of Ant, exercised through a complicated structure of investment vehicles. The Wall Street Journal previously reported that Ma had offered in a November meeting with regulators to hand over parts of Ant to the Chinese government.
Warren Buffett's famous economic measurement shows Orman might be onto something.
The Biden administration is seeking to leverage a secret weapon in its bid to get corporate America to pay for a sweeping jobs and infrastructure package: the nation's some 30 million small businesses. The White House's effort, previously unreported, seeks to harness the political popularity of small businesses and the current agitation among them over a tax structure many view as generous to larger, billion-dollar corporations like Walmart Inc and Amazon.com Inc over Main Street establishments. In doing so, the White House believes it has allies that will serve as an antidote to the large national trade groups – like the U.S. Chamber of Commerce and The Business Roundtable – who have come out in favor of infrastructure investment but strongly against President Joe Biden's plan to raise the corporate tax rate from 21% to %28.
(Bloomberg) -- The Reddit user who helped fuel the surge in GameStop Corp.’s stock price this year has doubled down on his bet by exercising his call options and buying even more shares.Keith Gill, who goes by monikers “Roaring Kitty” and “DeepF___gValue,” posted a screenshot of his portfolio showing that he has exercised 500 GameStop call options expiring Friday at a strike price of $12, giving him 50,000 more shares. The stock closed at $154.69 on Friday.On top of that, Gill bought another 50,000 shares of the video-game retailer, effectively doubling his holdings to 200,000 shares from 100,000 at the beginning of the month. His total investment in GameStop is now worth more than $30 million, giving him a profit of nearly $20 million.Gill’s mother, Elaine Gill, reached by phone at his childhood home in Massachusetts, confirmed the Reddit screenshots posted by her son.Gill rose to fame this year as one of the most influential voices on Reddit and YouTube amid an effort by retail traders to squeeze GameStop short-sellers. He testified at a congressional hearing in February, where he said he didn’t call for anyone to buy or sell the shares for his profit.The comments came as he was hit with a lawsuit that accused him of misrepresenting himself as an amateur investor. The suit alleges that he was actually a licensed securities professional who manipulated the market for profit, which he denied.GameStop Chief Executive Officer George Sherman, who is expected to leave, disposed of almost $12 million in shares, with the proceeds earmarked by the company to pay compensation-related taxes, according to a regulatory filing Friday. Earlier this week, he forfeited about 587,000 shares after failing to meet performance targets.The company is looking for a new CEO as part of a shake-up spurred by activist investor and Chewy.com co-founder Ryan Cohen, a person with knowledge of the matter has said.As part of a corporate overhaul spearheaded by Cohen, the company has brought in new executives, including chief officers for growth and technology as it seeks to move away from its brick-and-mortar business.GameStop, based in the Dallas suburb of Grapevine, Texas, has suffered with the video-game industry’s shift to online distribution. With gamers downloading or ordering software and gear online, there’s less reason to make a trip to a physical store.Shares of GameStop are up 721% so far this year, though they are less than half of the peak level in January. On Tuesday, the company announced plans to retire senior notes due in two years, leaving it virtually debt free.(Updates with background on company’s debt. A prior version corrected description of GameStop CEO’s stock transactions.)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.
U.S. technology and growth stocks have taken the market's reins in recent weeks, pausing a rotation into value shares as investors assess the trajectory of bond yields and upcoming earnings reports. Technology has been the top-performing S&P 500 sector in April, rising 8% versus a 5% rise for the benchmark index. Big tech-related growth stocks in other S&P 500 sectors such as Amazon Inc, Tesla Inc and Google-parent Alphabet Inc have also charged higher.
A pension fund filed a lawsuit against Credit Suisse Group AG on Friday in a U.S. court, accusing the Swiss bank of misleading investors and mismanaging risk exposure to high-risk clients, including Greensill Capital and Archegos Capital Management. The pension fund, City of St. Clair Shores Police & Fire Retirement System, based in St. Clair Shores, Michigan, filed the class action lawsuit in federal court in Manhattan, alleging violations of federal securities laws.
(Bloomberg) -- China’s financial regulator said operations at China Huarong Asset Management Co. are normal and the company has ample liquidity, marking the first official comments aimed at easing investor concerns over the financial health of the nation’s largest bad-debt manager.The state-owned company is actively cooperating with its auditor and will complete its annual report as soon as possible, the China Banking and Insurance Regulatory Commission said in a statement. Huarong’s dollar bonds climbed, extending their rally from record lows on Thursday. A dearth of communication from Huarong and regulators on the company’s plight has unnerved investors who are seeking more details on its finances, its overhaul plans and its level of support from Beijing.Huarong, which owes $42 billion to local and offshore bondholders, jolted Asian credit markets after failing to meet a March deadline for releasing its 2020 earnings. The company was already under a shadow after its former chairman, Lai Xiaomin, was executed earlier this year after being found guilty of bribery. Under his leadership, Huarong expanded into areas including securities trading and trusts in a significant shift away from the company’s original mandate of helping banks dispose of bad debt.Huarong said earlier this week it had “adequate” liquidity and has repaid all bonds that matured on time, yet the company has declined to comment on its plans for future payments. The lack of clarity has fueled investor concerns about the potential for a debt restructuring that would be China’s most consequential since the late 1990s. Huarong’s dollar bond maturing in November climbed 4.3 cents on the dollar to 82.6 cents as of 5:35 p.m. in Hong Kong. Its yield, which approached 100% on Thursday, fell to 39%.The company’s offshore bonds began rebounding on Thursday, after reports that Huarong had funds for a full repayment of a S$600 million ($450 million) offshore note due April 27. The company’s onshore securities unit has wired funds to repay a local bond maturing Sunday, people familiar with the matter said on Friday. Huarong and its subsidiaries need to repay or refinance some $7.4 billion of local and offshore bonds this year. The company counts Warburg Pincus, Goldman Sachs Group Inc. and Malaysia’s sovereign wealth fund among its shareholders, according to data compiled by Bloomberg. The stock has dropped 67% since its 2015 listing in Hong Kong and has been halted from trading since the start of April.Hu Jianzhong, chief supervisor at Huarong, said at an event in Beijing on Friday that China will see more difficulties in bad-asset disposal market over the next three to five years as the volume rises and prices fall. Hu didn’t mention Huarong’s debt situation in the speech and declined to comment on the company’s bond repayment plan or the timing for its annual report on the sidelines of the event.The nation’s distressed loan managers are facing mounting pressure as the pandemic has made it harder to dispose of assets, according to a closely watched survey by China Orient Asset Management Co. released on Friday.Increasing credit losses at the managers themselves threaten to hurt profits and have adverse impact on their capital strength over the long term, China Orient, one the nation’s four state-owned bad-debt managers, said in the report. It also warned of growing difficulties with maturity mismatches as the companies’ liabilities are mostly short-term.Financial IndustrySeparately, China’s regulator said on Friday that the country’s banks saw their non-performing loans climb to 3.6 trillion yuan ($552 billion) as of March 31, up 118.3 billion yuan from the end of 2020. The NPL ratio eased to 1.89%, 0.02 percentage point lower than at the end of 2020.With the coronavirus largely contained and the economy rebounding, Chinese policy makers have renewed a campaign to restrain leverage and curb risks, especially in the closely managed financial and real estate sectors. Last year’s stimulus pushed debt to almost 280% of annual economic output.The central bank last month asked major lenders to curtail loan growth for the rest of this year after a surge in the first two months stoked bubble risks, people familiar with the matter have said.The economy accumulated much of its record debt pile after the global financial crisis, when it binged on credit to avoid the economic slumps ravaging the West. Efforts in 2017 to restrain debt growth, especially in the shadow-banking industry, led to higher money-market rates and a slump in government bonds.(Adds background 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.
(Bloomberg) -- The unprecedented oil inventory glut that amassed during the coronavirus pandemic is almost gone, underpinning a price recovery that’s rescuing producers but vexing consumers.Barely a fifth of the surplus that flooded into the storage tanks of developed economies when oil demand crashed last year remained as of February, according to the International Energy Agency. Since then, the lingering remnants have been whittled away as supplies hoarded at sea plunge and a key depot in South Africa is depleted.The re-balancing comes as OPEC and its allies keep vast swathes of production off-line and a tentative economic recovery rekindles global fuel demand. It’s propping international crude prices near $67 a barrel, a boon for producers yet an increasing concern for motorists and governments wary of inflation.“Commercial oil inventories across the OECD are already back down to their five-year average,” said Ed Morse, head of commodities research at Citigroup Inc. “What’s left of the surplus is almost entirely concentrated in China, which has been building a permanent petroleum reserve.”The process isn’t quite complete. A considerable overhang appears to remain off the coast of China’s Shandong province, though this may have accumulated to feed new refineries, according to consultants IHS Markit Ltd.Working off the remainder of the global excess may take some more time, as OPEC+ is reviving some halted supplies and new virus outbreaks in India and Brazil threaten demand.Still, the end of the glut at least appears to be in sight.Oil inventories in developed economies stood just 57 million barrels above their 2015-2019 average as of February, down from a peak of 249 million in July, the IEA estimates.It’s a stark turnaround from a year ago, when lockdowns crushed world fuel demand by 20% and trading giant Gunvor Group Ltd. fretted that storage space for oil would soon run out.Stockpile SlumpIn the U.S., the inventory pile-up has effectively cleared already.Total stockpiles of crude and products subsided in late February to 1.28 billion barrels -- a level seen before coronavirus erupted -- and continue to hover there, according to the Energy Information Administration. Last week, stockpiles in the East Coast fell to their lowest in at least 30 years.“We’re starting to see refinery runs pick up in the U.S., which will be good for potential crude stock draws,” said Mercedes McKay, a senior analyst at consultants FGE.There have also been declines inside the nation’s Strategic Petroleum Reserve, the warren of salt caverns used to store oil for emergency use. Traders and oil companies were allowed to temporarily park oversupply there by former President Trump, and in recent months have quietly removed about 21 million barrels from the location, according to people familiar with the matter.The oil surplus that gathered on the world’s seas is also diminishing. Ships were turned into makeshift floating depots when onshore facilities grew scarce last year, but the volumes have plunged, according to IHS Markit Ltd.They’ve tumbled about by 27% in the past two weeks to 50.7 million barrels, the lowest in a year, IHS analysts Yen Ling Song and Fotios Katsoulas estimate.A particularly vivid symbol is the draining of crude storage tanks at the logistically-critical Saldanha Bay hub on the west coast of South Africa. It’s a popular location for traders, allowing them the flexibility to quickly send cargoes to different geographical markets.Inventories at the terminal are set to fall to 24.5 million barrels, the lowest in a year, according to ship tracking data monitored by Bloomberg.For the 23-nation OPEC+ coalition led by Saudi Arabia and Russia, the decline is a vindication of the bold strategy they adopted a year ago. The alliance slashed output by 10 million barrels a day last April -- roughly 10% of global supplies -- and is now in the process of carefully restoring some of the halted barrels.The Organization of Petroleum Exporting Countries has consistently said its key objective is to normalize swollen inventories, though it’s unclear whether the cartel will open the taps once that’s achieved. In the past, the lure of high prices has prompted the group to keep production tight even after reaching its stockpile target.Mixed BlessingTo consuming nations the great de-stocking is less of a blessing. Drivers in California are already reckoning with paying almost $4 for a gallon of gasoline, data from the AAA auto club shows. India, a major importer, has complained about the financial pain of resurgent prices.For better or worse, the re-balancing should continue. As demand picks up further, global inventories will decline at a rate of 2.2 million barrels a day in the second half, propelling Brent crude to $74 a barrel or even higher, Citigroup predicts.“Gasoline sales are ripping in the U.S.,” said Morse. “Demand across all products will hit record levels in the third quarter, pushed up by demand for transport fuels and petrochemical feed-stocks.”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.
Morgan Stanley lost nearly $1 billion from the collapse of family office Archegos Capital Management, the bank said on Friday, muddying its 150% jump in first-quarter profit that was powered by a boom in trading and deal-making. Morgan Stanley was one of several banks that had exposure to Archegos, which defaulted on margin calls late last month and triggered a fire sale of stocks across Wall Street. Morgan Stanley lost $644 million by selling stocks it held related to Archegos' positions, and another $267 million trying to "derisk" them, Morgan Stanley Chief Executive James Gorman said on a call with analysts.
The discussion, which centered around how the pandemic-battered industry could get back into business, comes after the CDC said passengers and crew would need COVID-19 vaccine shots and more frequent testing, but did not give a timeline on when it will lift its ban on cruises. Carnival Corp, the industry's largest player, had said the instructions were "unworkable" and threatened to shift home ports of its cruise ships to other parts of the world if the United States did not allow it to start sailing. Industry leaders showed their frustration with the guidelines relating to vaccination requirements and sought to set up a working group with industry and CDC, the agency said in a statement about the meeting that took place on Monday.
Excess cash in the financial system has pressured overnight interest rates, in some instances pushing them negative, which, analysts said, could prompt the Federal Reserve to lift the short-term rates it manages. The overnight repurchase rate, which measures the cost of borrowing short-term cash using Treasuries or other debt securities as collateral, dropped to as low as -0.06% in late March and hit that level again on Wednesday, before stabilizing at around 0.01% on Friday. The U.S. secured overnight financing rate (SOFR), a short-term reference rate replacing the benchmark London interbank offered rates (LIBOR), has been pinned to 0.01% since about March.
The direction of the June U.S. Dollar Index on Friday is likely to be determined by trader reaction to 91.555.
'Sell in May and go away,' advises the trading maxim. But with stocks at record highs, one trader at the New York Stock Exchange is recommending a related but different strategy.
(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.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.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.
Taiwan has never sought to use foreign exchange rates to gain an unfair trade advantage, the central bank said on Sunday, after the U.S. Treasury said Taiwan tripped thresholds for possible currency manipulation under a 2015 U.S. trade law. Taiwan's tech-focused exports have soared during theCOVID-19 pandemic because of global demand for laptops, tablets and other equipment to support the work-from-home boom, driving its trade surplus with the United States and jacking up the value of the Taiwan dollar.
Bitcoin tumbled more than 4% on Friday after Turkey's central bank banned the use of cryptocurrencies and crypto assets for purchases citing possible "irreparable" damage and transaction risks. In legislation published in the Official Gazette, the central bank said cryptocurrencies and other such digital assets based on distributed ledger technology could not be used, directly or indirectly, to pay for goods and services. The decision could stall Turkey's crypto market, which has gained momentum in recent months as investors joined the global rally in bitcoin, seeking to hedge against lira depreciation and inflation that topped 16% last month.
The explosions took nearly a quarter of Bitcoin's hashrate offline, but the network is operating normally and these miners could be back online in as soon as a week.
The cost of renewable energy is plunging, but there are still sound reasons to encourage its adoption through subsidies.
For all the insouciance with which markets treated Washington's latest sanctions on Russia, its move to target Moscow's main funding avenue - the rouble bond market - has in some ways, crossed the Rubicon, potentially with far-reaching consequences. Drawing on experiences of sanctions imposed previously, including after the 2014 Ukraine crisis and the Mueller report on Russia's alleged U.S. election meddling, money managers haven't rushed to dump Russian assets en masse. The rouble, which fell as much as 2% at one point on Thursday, has clawed back losses and is on its way to recording its best week this year; Russian bond yields, on local as well as international markets, have fallen.
In a new interview, BNY Mellon Wealth Management CEO Catherine Keating tamped down concern about inflation, saying the price hikes will be temporary. She pointed to two trends that predate the pandemic: an aging population and rising debt.