Chinese telecoms equipment maker Huawei Technologies is making business resilience its top priority with a push to develop its software capabilities as it seeks to overcome U.S. restrictions that have devastated its smartphone business. Huawei was put on an export blacklist by former U.S. President Donald Trump in 2019 and barred from accessing critical technology of U.S. origin, affecting its ability to design its own chips and source components from outside vendors. The ban put Huawei's handset business under immense pressure.
(Bloomberg) -- Bitcoin neared an all-time high on Monday as bullish sentiment gathered steam ahead of a listing by the largest U.S. cryptocurrency exchange.The token rose as much as 2.6% to $61,229, the highest in nearly a month, before falling back to trade little changed. On March 13, Bitcoin reached a record of $61,742. The cryptocurrency is up almost ninefold in the past year, a return that towers above that of more familiar assets like equities or bullion.Against the backdrop of Wall Street’s growing embrace of crypto, the direct listing of digital-token exchange Coinbase Global Inc. is fanning interest. Coinbase is due to go public on the Nasdaq on April 14, the first listing of its kind for a major cryptocurrency company and a test of investor appetite for other start-ups in the sector.Meanwhile, exchange tokens, such as Binance Coin, are seeing their value rise ahead of Coinbase’s public debut as well. Binance’s, known as BNB, rose 23% Monday, according to CoinMarketCap.com. Huobi Token and KuCoin Token, among others, also gained.“A crypto company moving to IPO is a big milestone,” said Nick Jones, CEO and co-founder at cryptocurrency wallet Zumo. “It’s moves like this that make consumers feel safer with crypto and ultimately boost confidence in the space.”A growing list of companies are looking at or even investing in Bitcoin, drawn by client demand, price momentum and arguments that it can hedge risks such as faster inflation. Tesla Inc. earlier this year disclosed a $1.5 billion investment in Bitcoin and more recently started accepting it as payment for electric cars.Elsewhere, Goldman Sachs Group Inc. has said it’s close to offering investment vehicles for Bitcoin and other digital assets to private wealth clients. Morgan Stanley plans to give rich clients access to three funds that will enable crypto ownership. The deck of exchange-traded funds tracking the token is expanding, while Paypal Inc. and Visa Inc. have begun using cryptocurrencies as part of the payments process.A study by Dutch asset manager Robeco suggests that despite its high volatility, a 1% allocation to Bitcoin in a diversified multi-asset portfolio could be beneficial given its resemblance to gold and its near zero correlation to other asset classes.“In recent months, a clear and emphatic narrative that Bitcoin is becoming a store of value in the form of digital gold has developed,” according to Jeroen Blokland, a portfolio manager at Robeco.Other cryptocurrencies, such as second-ranked Ether, have also been climbing. The overall value of more than 6,600 coins tracked by CoinGecko recently surpassed $2 trillion.(Adds paragraph about exchange tokens)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.
Traders took a pause after the S&P 500 and Dow logged fresh record highs last week.
(Bloomberg) -- Looks like Wall Street is about to get 100 billion new reasons to believe in Bitcoin.Coinbase Global Inc., the fast-growing exchange at the center of the speculative frenzy in cryptocurrencies, is expected to go public this week at a staggering valuation of about $100 billion. That’s more than the venerable New York Stock Exchange and Nasdaq Stock Market combined -- for a company that didn’t even exist a decade ago.If all goes according to plan, Wednesday’s scheduled direct listing on Nasdaq will cement Coinbase’s position as the Big Board of the U.S. crypto scene and a potent symbol of the risks and rewards of the new era of digital money. Its founders, Brian Armstrong and Fred Ehrsam, own stakes worth $15 billion and $2 billion, respectively, according to Bloomberg estimates.The bottom line at the San Francisco-based exchange would seem to justify the sky-high valuation, at least recently. Coinbase said last week it expects to report first-quarter profit of $730 million to $800 million, more than double what it earned in all of 2020. And revenue in the first three months of 2021 probably surpassed all of the $1.3 billion total for last year. That compares with the $5.6 billion of revenue Nasdaq generated last year.Coinbase has 56 million verified users and adds about 13,000 new retail customers a day, according to cryptocurrency analytics firm Messari.“Coinbase is one of the most prominent cryptocurrency exchanges in the world,” Mira Christanto, an analyst who covers the company for Messari, said in a research report. “The market has shown that investors are hungry for crypto exposure through equity markets.”It’s an astounding ascent for a company started in a San Francisco apartment in 2012 by Armstrong and Ehrsam, who met online in a Bitcoin forum on Reddit. The apparent demand for Coinbase shares mirrors the appetite for all things crypto: Bitcoin has surged almost eightfold in the past year, hitting a record $61,742 in mid-March.The opportunity for Coinbase now is to capture the increasing number of institutional and corporate customers, such as MicroStrategy Inc. and Tesla Inc., that are buying Bitcoin for the long haul.“That’s going to be the Holy Grail for them if they can hold on to that business, because those folks are seen more as holders than traders,” said Julie Chariell, a senior analyst at Bloomberg Intelligence for fintech and payments firms.Providing additional products such as custody services might mean Coinbase could look more like a bank than an exchange in a few years, according to Chariell. “It’s a broader play, getting to be a one-stop shop for whatever you want to do with your crypto assets,” she said.Coinbase spokesman Elliott Suthers declined to make any company officials available for comment, citing the “quiet period” Coinbase is required to maintain before its Nasdaq listing.It’s been a long and sometime grueling road to the planned debut, and there are still risks to its business model.Coinbase disclosed in filings for the share sale that it had received a subpoena from the Securities and Exchange Commission. According to a person familiar with the matter, the inquiry was related to XRP, the digital token created by Ripple that’s the subject of an SEC lawsuit alleging it was sold as an unregistered security.That same month, the SEC announced it was suing Ripple and two of its founders for violating U.S. securities laws. Coinbase was forced to de-list XRP, which at the time was the third most-valuable cryptocurrency in the world.It’s difficult to tell how the loss of XRP affected Coinbase’s earnings because Bitcoin at the same time was skyrocketing to records, said Bloomberg Intelligence’s Chariell. A greater risk would be the need to de-list many of the alt coins Coinbase now offers if the SEC case determines XRP is a security.“It is a risk, definitely, but I just don’t think it’s a big risk at this point,” she said.Despite the XRP scrutiny, Coinbase’s expansion plans seem to be working. In 2020, coins on the exchange other than Bitcoin and Ether accounted for the largest revenue share, at 44%, according to its SEC filing.“It made economic sense for Coinbase to list high-demand tokens due to higher competition from other exchanges,” Messari’s Christanto said.Bitcoin LinkAnother risk: Coinbase’s fortunes tend to correspond to Bitcoin’s volatile history. The exchange only turned a profit last year as institutional demand for crypto assets propelled Bitcoin and other coins such as Ether to new highs. The recent lean years, known as the crypto winter, stretched from 2018 to 2019, with Bitcoin hitting a low of about $3,100 in December 2018. Until then, Coinbase was known for listing only the big hitters in the crypto world, including Bitcoin, Litecoin and Ether.Coinbase’s prospects won’t come down to a single token like XRP. The majority of its revenue comes from trading fees, with retail customers charged an average of 1.4% and institutional clients about 0.05%, according to Christanto.To get it through the lean years, Coinbase has conducted seven fundraising rounds for a haul of more than $500 million since September 2012, Messari research shows. That’s on top of the revenue from selling Bitcoin and Ether, which more than tripled last year to $134 million, according to Messari.All of that has provided a strong financial position for Coinbase to list publicly. Based on figures provided by the company, Chariell calculated that 5.5 million monthly users equates to $3 billion in 2020 revenue. The top 12 fintech firms to go public in the last six months have had price-to-sales ratios of 36 times, she said. Multiplying that by 2020 revenue gets you a very large number.“You’re easily over $100 billion in market cap,” she 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.
(Bloomberg) -- Bond traders searching for a chink in the armor of central banks are starting to look Down Under, where a likely showdown over yield-curve control is set to test the power of policy makers to contain the next wave of reflation bets.The global trading day for bonds begins in earnest in Sydney each morning, giving developments in Australia’s $600 billion sovereign debt market an out-sized impact on sentiment. It was the scene of a dramatic “flash crash” last year when the yield program was announced, illustrating the potential for turmoil.While the Reserve Bank of Australia has largely tamed markets since then, as the economy’s recovery strengthens, wagers against the RBA’s ability to keep yields lower look poised to rise.“If inflation expectations do start to un-anchor, then I think the RBA will be one of the first central banks to be tested by bond traders,” said Shaun Roache, an economist at S&P Global Ratings in Singapore. “The RBA is a canary in the coal mine for central banks as it is ahead in its labor market recovery.”The RBA brought short-sellers quickly to heel when the global bond rout emboldened them to test its grip on yield control in February. After weeks of aggressive positioning by traders, the bank nudged up the cost of speculating on rising rates and the yield on benchmark three-year bonds fell neatly back into line with its 0.1% target.But keeping the market at bay next time may prove more difficult, as vaccination campaigns gather pace in major economies and the U.S. recovery nears an “inflection point,” emboldening traders. Pressure is already apparent in Australia’s three-year swap rate, which is increasing the costs of managing interest-rate risks for corporate borrowers.If yield control fails in Australia, it may fade away as a potential option for other monetary authorities in need of more policy ammunition. Especially because yield control’s record in Japan -- the only other country to officially employ it -- is patchy.Pinning the rate of one key bond maturity has helped the Bank of Japan reduce borrowing costs in general and also allowed it to slow the pace of bond purchases. But it has come at a cost. The nation’s debt market is lambasted as dysfunctional and an economic recovery strong enough to revive inflation looks as far away as ever.Widening GapBeneath the surface, problems are building Down Under too. While the RBA has its thumb on one specific bond line, there is a large gulf between the yield on this security and those maturing slightly later. There’s also a widening gap to rates on the suite of derivatives linked to three-year yields that flow through into borrowing costs for companies and consumers.The three-year swap rate surged through February and March, rising to four times the RBA’s target for three-year bonds amid pressure from higher U.S. yields and a rebounding economy at home.Australia’s bond futures tell a similar story. The yield implied by three-year futures doubled in the two weeks to Feb. 26 and remains elevated, even after retreating from its high point.“Lack of liquidity, a central bank that’s digging its heels in -- all that, for us, means there’s going to be more volatility in Aussie rates,” said Kellie Wood, a fixed-income portfolio manager at Schroders Plc’s Australian unit. “The RBA has succeeded in terms of round one. But we are starting to see cracks,” said Wood, who expects the market to challenge the 0.1% target again.Stephen Miller, an investment consultant at GSFM, an arm of Canada’s CI Financial Corp., agrees that higher yields may arrive in Australia sooner than the RBA thinks. “It will be powerless if the U.S. curve shifts upwards and other rates markets follow,” said Miller.Not everyone is prepared to bet against the RBA.For Fidelity International’s Anthony Doyle, taking on the RBA may be a recipe for steep losses if past lessons from the European Central Bank and U.S. Federal Reserve are anything to go by.Nine years ago, then ECB President Mario Draghi vowed to do “whatever it takes” to save the euro, leading to quantitative easing and bond purchases that are still in place. The Fed said more than a year ago that it would buy unlimited amounts of Treasuries to keep borrowing costs at rock-bottom levels, and it’s still holding firm.Holding the Cards“I don’t think it’s ever wise to fight anyone that has a printing press,” said Doyle, a cross-asset investment specialist at Fidelity in Sydney. “The RBA as a house holds all the cards. If they want yields lower, they’ll get it.”This caution is shared by JPMorgan Asset Management’s Kerry Craig.For now, the central bank “definitely has enough dry powder,” said Craig, a strategist in Melbourne. But he is concerned that with monetary policy and markets around the world moving in sync, “you can only fight so much if U.S. rates or global rates go higher -- it’s going to drag Australian ones up.”Yet Governor Philip Lowe isn’t doing everything he could to damp doubts over the RBA’s resolve. His reluctance to make an early switch in the yield target to bonds maturing in November 2024, from ones due in April 2024, is fueling debate about how soon the policy could be wound back.Lowe said at the conclusion of the latest board meeting on April 6 that a decision would be made later this year, without being more specific. He also indicated that the RBA expected to maintain “highly supportive monetary conditions” until at least 2024, even though the number of Australians with a job has returned to pre-pandemic levels.“We don’t think they’ll extend yield-curve control” beyond the current April 2024 bond, said Wood, who warned of potential taper tantrums.Lowe’s February win against short sellers, and a slide in yields at home and abroad over recent weeks, has given the RBA space to breathe. But it’s likely only a matter of time before bond traders come back for round two.“Everybody’s watching how this is going to unfold,” said S&P’s Roache. “The RBA may not want this role, but it is taking quite a starring role I think among global central banks.”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.
Singapore state investor Temasek Holdings and BlackRock, world's largest asset manager, said on Tuesday they have launched a partnership to invest in firms with products and technologies that will reduce carbon emissions. BlackRock and Temasek are committing a combined $600 million in initial capital to invest in multiple funds launched by the partnership, called 'Decarbonization Partners', which has a fundraising target of $1 billion for its first fund and will also raise third-party capital, the companies said in a joint statement.
(Bloomberg) -- After China imposed a record antitrust fine on Alibaba Group Holding Ltd., the e-commerce giant did an unusual thing: It thanked regulators.“Alibaba would not have achieved our growth without sound government regulation and service, and the critical oversight, tolerance and support from all of our constituencies have been crucial to our development,” the company said in an open letter. “For this, we are full of gratitude and respect.”It’s a sign of how odd China’s crackdown on the power of big tech has been compared with the rest of the world. Mark Zuckerberg and Tim Cook would likely not express such public gratitude if the U.S. government were to hit Facebook Inc. or Apple Inc. with record antitrust fines.Almost everything about China’s regulatory push is out of the ordinary. Beijing regulators wrapped up their landmark probe in just four months, compared with the years that such investigations take in the U.S. or Europe. They sent a clear message to the country’s largest corporations and their leaders that anti-competitive behavior will have consequences.For Alibaba, the $2.8 billion fine was less severe than many feared and helps lift a cloud of uncertainty hanging over founder Jack Ma’s internet empire. The 18.2 billion yuan penalty was based on just 4% of the internet giant’s 2019 domestic revenue, regulators said. While that’s triple the previous high of almost $1 billion that U.S. chipmaker Qualcomm Inc. handed over in 2015, it’s far less than the maximum 10% allowed under Chinese law. Alibaba’s shares rose more than 8% Monday in Hong Kong.“We’re happy to get the matter behind us,” Joseph Tsai, co-founder and vice chairman, said on an investor call on Monday. “These regulatory actions are undertaken to ensure fair competition.”The fine came with a plethora of “rectifications” that Alibaba will have to put in place -- such as curtailing the practice of forcing merchants to choose between Alibaba or a competing platform -- many of which the company had already pledged to establish. But Tsai said regulators won’t impose radical changes to its e-commerce strategy. Instead, he and other executives pledged to open up Alibaba’s marketplaces more, lower costs for merchants while spending “billions of yuan” to help its clients handle e-commerce.Tsai said the company is unaware of any other antitrust investigations into the company, except for a previously discussed probe into acquisitions and investments by Alibaba and other tech giants.“The required corrective measures will likely limit Alibaba’s revenue growth as a further expansion in market share will be constrained,” Lina Choi, a senior vice president at Moody’s Investors Service, said in a note. “Investments to retain merchants and upgrade products and services will also reduce its profit margins.”Alibaba Chief Executive Officer Daniel Zhang on Saturday declared his company now ready to move on from its ordeal, while China’s Communist Party mouthpiece People’s Daily issued assurances that Beijing wasn’t trying to stifle the sector.The Hangzhou-based firm “has escaped possible outcomes such as a forced breakup or divestment of assets. The penalty will not shake up its business model, either,” said Jet Deng, an antitrust lawyer at the Beijing office of law firm Dentons.Beijing remains intent on reining in its internet and fintech giants, a broad campaign that’s wiped more than $250 billion off Alibaba’s valuation since October. The e-commerce giant’s speedy capitulation underscores its vulnerability to further regulatory action -- a far cry from just six years ago, when Alibaba openly contested one agency’s censure over counterfeit goods on Taobao and eventually forced the State Administration for Industry and Commerce to backtrack on its allegations.On Monday, shares in Alibaba’s fellow internet giants from social media titan Tencent Holdings Ltd. to food delivery leader Meituan and JD.com Inc. fell on fears they could draw similar scrutiny. “It’s exactly what the market is thinking right now: Tencent and Meituan are next in line if the same standards are to be applied, but even the worst won’t be so bad,” said Zhuang Jiapeng, a fund manager at Shenzhen JM Capital Co.Beyond antitrust, government agencies are said to be scrutinizing other parts of Ma’s empire, including Ant Group Co.’s consumer-lending businesses and Alibaba’s extensive media holdings. And the shock of the crackdown will continue to resonate with peers from Tencent and Baidu Inc. to Meituan, forcing them to tread far more carefully on business expansions and acquisitions for some time to come.What Bloomberg Intelligence SaysChina’s record fine on Alibaba may lift the regulatory overhang that has weighed on the company since the start of an anti-monopoly probe in late December. The 18.2 billion yuan ($2.8 billion) fine, to penalize the anti-competitive practice of merchant exclusivity, is equivalent to 4% of Alibaba’s 2019 domestic sales. Still, the company may have to be conservative with acquisitions and its broader business practices.-- Vey-Sern Ling and Tiffany Tam, analystsClick here for the full research.The investigation into Alibaba was one of the opening salvos in a campaign seemingly designed to curb the power of China’s internet leaders, which kicked off after Ma infamously rebuked “pawn shop” Chinese lenders, regulators who don’t get the internet, and the “old men” of the global banking community. Those comments set in motion an unprecedented regulatory offensive, including scuttling Ant’s $35 billion initial public offering.It remains unclear whether the watchdog or other agencies might demand further action. Regulators are said, for instance, to be concerned about Alibaba’s ability to sway public discourse and want the company to sell some of its media assets, including the South China Morning Post, Hong Kong’s leading English-language newspaper.Read more: China Presses Alibaba to Sell Media Assets, Including SCMPChina’s top financial regulators now see Tencent as the next target for increased supervision, Bloomberg News has reported. And the central bank is said to be leading discussions around establishing a joint venture with local technology giants to oversee the lucrative data they collect from hundreds of millions of consumers, which would be a significant escalation in regulators’ attempts to tighten their grip over the country’s internet sector.“The high fine puts the regulator in the media spotlight and sends a strong signal to the tech sector that such types of exclusionary conduct will no longer be tolerated,” said Angela Zhang, author of “Chinese Antitrust Exceptionalism” and director of the Centre for Chinese Law at the University of Hong Kong. “It’s a stone that kills two birds.”For now, it appears investors are just glad it wasn’t worse. In its statement, the State Administration for Market Regulation concluded Alibaba had used data and algorithms “to maintain and strengthen its own market power and obtain improper competitive advantage.” Its practice of imposing a “pick one from two” choice on merchants “shuts out and restricts competition” in the domestic online retail market, according to the statement.The firm will be required to implement “comprehensive rectifications,” including strengthening internal controls, upholding fair competition and protecting businesses on its platform and consumers’ rights, the regulator said. It will need to submit reports on self-regulation to the authority for three consecutive years.The company will have to make adjustments but can now “start over,” Zhang wrote in a memo to Alibaba’s employees Saturday.“We believe market concerns over the anti-monopoly investigation on BABA are addressed by SAMR’s recent decision and penalties,” Jefferies analysts wrote in a research note entitled “A New Starting Point.”Indeed, The People’s Daily said in its commentary Saturday that the punishment was intended merely to “prevent the disorderly expansion of capital.”“It doesn’t mean denying the significant role of platform economy in overall economic and social development, and doesn’t signal a shift of attitude in terms of the country’s support to the platform economy,” the newspaper said. “Regulations are for better development, and ‘reining in’ is also a kind of love.”(Updates with shares and commentary from the fifth 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.
WASHINGTON (Reuters) -U.S. President Joe Biden met with executives from major companies on Monday to discuss the global chip shortage that has hit automakers and spurred Intel Corp to announce it plans to make chips for car plants at its factories in the next six to nine months. During the meeting, Biden said he had bipartisan support for legislation to fund the semiconductor industry.
U.S. President Joe Biden met with executives from major companies on Monday to discuss the global chip shortage that has hit automakers and spurred Intel Corp to announce it plans to make chips for car plants at its factories in the next six to nine months. During the meeting, Biden said he had bipartisan support for legislation to fund the semiconductor industry.
(Bloomberg) -- Air Canada reached a deal with the Canadian government for loans and equity worth nearly C$5.9 billion ($4.7 billion), a package to help the airline get through the pandemic and restore flights to remote parts of the country. The state, which sold off its ownership interest in the 1980s, will once again own a piece of Canada’s largest airline, buying C$500 million of shares at a discount. Prime Minister Justin Trudeau’s government also negotiated warrants as part of a broad financing agreement that makes Air Canada eligible for five new credit facilities totaling C$5.38 billion, according to a company statement.In return for the money, Air Canada agreed to restrict share buybacks and dividends, keep employment at April 1 levels and follow through on a deal to buy 33 Airbus SE A220s made at a factory in Quebec. Executives won’t be allowed to earn more than C$1 million.And the airline will resume service on routes its suspended to distant locations such as Gander, Newfoundland and Yellowknife, in the country’s far north. The long-anticipated announcement will ease tensions between the industry and Trudeau’s government, which since last March has barred most foreign travelers from entering the country and recently made the rules even tougher.Air Canada repeatedly complained that its home country was the only Group of Seven member without an aid plan specifically for the aviation sector -- although the company has used federal wage subsidies available to all industries hit by the pandemic.“We wanted a good deal, not just any deal. And getting a good deal can sometimes take a little time,” Finance Minister Chrystia Freeland said at a news conference Monday evening.Air Canada also committed to paying back customers who didn’t take flights they had booked because of Covid-19. One of the credit facilities, a C$1.4 billion line, is dedicated to financing refunds.‘Solid Guarantees’ Air Canada will issue 21.6 million new shares. While the equity component is “somewhat surprising,” the package is “the money that’s needed,” said Robert Kokonis, managing director of Toronto-based aviation consulting firm AirTrav Inc.“It’s going to take a lot of aid for carriers. We’ve been through a lot. We’ve been on standby while airlines in countries around the world have received one or more aid packages,” Kokonis said. Freeland said talks are ongoing with other airlines, including WestJet Airlines Ltd., controlled by Toronto-based investment firm Onex Corp. Tour operator Transat AT Inc. also needs money and has said it’s talking to the government after a deal to be taken over by Air Canada fell apart. “Wherever and whenever the federal government provides public aid, the supported company will have to give solid guarantees, as Air Canada did, that the public interest will be respected, workers protected, and travelers’ interest defended,” Freeland said.As of March 18, government financing for the airline industry globally -- including loans and equity stakes in exchange for cash -- has totaled more than $183 billion, according to Ishka Ltd., an aviation finance and investment consultancy.Before Monday’s agreement, Canada’s most visible lifeline to the industry was a combined C$375 million in emergency loans to Sunwing Airlines Inc. and Sunwing Vacations Inc., a small vacation operator.Air Canada said it will only draw down the new credit facilities “as required”. The package includes C$2.48 billion in unsecured loans. “This program provides additional liquidity, if required, to rebuild our business to the benefit of all stakeholders and to remain a significant contributor to the Canadian economy through its recovery and for the long term,” Chief Executive Officer Michael Rousseau said in a statement.(Updates with new details, analyst quote.)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 US tech giant is buying artificial intelligence firm Nuance, best known for developing Apple's Siri.
(Bloomberg) -- Iron ore futures in China extended an advance as imports surged to a five-month high, signaling robust demand as the country grapples with rising commodity prices.Imports topped 100 million tons for the first time since October, with first-quarter volumes surging 8% from a year earlier, according to customs data released Tuesday. Steel product imports rose to the highest this year and steel exports jumped to the highest since 2017.Iron ore has rallied on tight near-term supply, and a surge in steel prices as China pushes to rein in the sector’s carbon emissions has boosted profitability at mills. While the latest trade data signals robust demand, investors are focused on the extent to which the country’s green push will restrict steel production. China also plans to strengthen controls on raw materials markets to help limit costs for companies amid a broader surge in commodity prices.While environmental regulations including production restrictions may weaken iron ore prices, the “downside is limited given relatively tight fundamentals in the global iron ore market,” China International Capital Corporation Ltd. said in a note.On the supply side, daily average iron ore exports from Brazil were 1.32 million tons in the first six business days of April, compared with 1.2 million in the same month last year. Shipments from Port Hedland rose to a nine-month high in March.Iron ore futures in Dalian climbed as much as 0.9% before trading 0.2% higher at 1,015.5 yuan a ton by 11:30 a.m. local time. Futures in Singapore declined 1.1% to $164.90 a ton. Rebar futures in Shanghai jumped 2.6%, while hot-rolled coil advanced 2.5%.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.
It's one of several such applications before the U.S. Securities and Exchange Commission.
(Bloomberg) -- European stocks retreated from a record high as investors eyed the upcoming earnings season for signs of the strength of economic growth, while M&A news supported individual shares.The Stoxx 600 Index closed down 0.5% in London, with the U.K.’s FTSE 100 Index falling 0.4%, even as lockdown measures eased in England. Technology, travel and miners were among the biggest decliners.Deals were in focus, with Suez SA up 7.7% and Veolia Environnement SA gaining 9.7% after agreeing to acquire its rival, ending a bitter takeover battle. DiaSorin SpA was also a standout, jumping 9.6% after agreeing to buy Covid-19 test maker Luminex Corp. for about $1.8 billion.European stocks have made fresh headway in April, touching a series of record highs as investors bet on an economic recovery, for which the upcoming earnings season will prove to be a crucial test. At the same time, investors are mulling whether the relatively slow vaccine push in continental Europe and prolonged lockdowns risk becoming an obstacle for the market rally.Hani Redha, a portfolio manager at PineBridge Investments, said the timetable for the vaccine rollout in Europe is still good, and the region’s stocks are starting to price in an inflection point in the second half.“I’ve felt that the weather makes a big difference with this virus and the kind of activities we can continue with and how much economic movement there can be,” Redha said by phone. “As long as we can get our act together and hit targets before next winter, I think that we’re going to be okay.”Strategists at Goldman Sachs Group Inc. were also positive on the prospects for European equities, raising their 12-month target for the Stoxx 600 Index to 470 from 450 points, implying 7.5% of upside from Friday’s close, citing an accelerating vaccine rollout and confidence in better growth.You want more news on this market? Click here for a curated First Word channel of actionable news from Bloomberg and select sources. It can be customized to your preferences by clicking into Actions on the toolbar or hitting the HELP key for assistance.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) -- Microsoft Corp. is buying speech-recognition pioneer Nuance Communications Inc. in an all-cash deal valued at $19.6 billion, gaining artificial-intelligence technology aimed at helping doctors predict patients’ needs and upgrading hospitals’ digital record-keeping.The software giant is offering to purchase Nuance at $56 a share, a 23% premium to Friday’s close, according to a statement Monday, which confirmed an earlier Bloomberg report. The deal marks Microsoft’s largest acquisition since LinkedIn Corp.The transaction value is derived by the $56 a share multiplied by about 350 million fully diluted shares of Nuance, including stock options and stock awards. The acquisition will decrease earnings by less than 1% in the year that begins July 1 and start to add to profit the following year, Microsoft said.Microsoft is tapping the company tied to the Siri voice technology to develop solutions that free doctors from note-taking and better determine health-care needs. It has been working with Nuance for two years on AI software that helps clinicians capture patient discussions and integrate them into electronic health records, and combining the speech technology company’s products into its Teams chat app for telehealth appointments.“The Nuance deal is a strategic no-brainer,” Wedbush Securities analyst Dan Ives wrote in a note Monday. It “fits like a glove into its health-care endeavors at a time in which hospitals and doctors are embracing next-generation AI capabilities,” Ives said, also praising Nuance Chief Executive Officer Mark Benjamin for leading a turnaround that has made his company a “unique asset” for Microsoft.Under Benjamin, Nuance has narrowed its focus and separated peripheral businesses, such as Cerence Inc., the automotive AI unit that was spun off two years ago. It also sold its imaging division to Thoma Bravo’s Kofax for $400 million, and zoomed in instead on partnerships with health-care providers and the biggest electronic medical records companies.Although the companies have partnered for two years, “together we can really bend the curve around health care – really improve the health outcomes and reduce costs,” Microsoft CEO Satya Nadella said in an interview. “Every provider, that’s what they want coming out of this pandemic, they want to look for a trusted partner, in this case the combination of Nuance and Microsoft, to help them.”Microsoft has been trying to make inroads into the health-care sector, selling more cloud software to hospitals and doctors. As AI software gets better at parsing language and predicting medical needs, Nuance and Microsoft may be able to develop technology that searches for certain words in health records to make better suggestions to doctors for patient care. The acquisition is likely to deepen competition between Microsoft and Amazon.com Inc. The retail giant in recent years has pushed to sell its cloud-computing services and Alexa voice software to health-care companies. And Amazon and Alphabet Inc.’s Google are both also investing heavily in the field of artificial intelligence.As of Friday, Nuance’s shares had climbed 3.4% this year, giving the company that laid the groundwork for the technology used in Apple Inc.’s Siri a market value of almost $13 billion. The gain still trailed the 9.9% jump in the S&P 500 Index, while Microsoft added 15%. Microsoft shares were little changed Monday in New York, and Nuance rose 17%.Microsoft expects the deal to close this calendar year, and Nuance’s Benjamin will join Microsoft, retaining the CEO title and reporting to Microsoft cloud chief Scott Guthrie. Nuance’s financial results will be included as part of Microsoft’s intelligent cloud unit.Nuance, whose products include Dragon speech-recognition software, had net income of $91 million on revenue of $1.48 billion for its fiscal year ending Sept. 30., after losing $217 million the previous year.Nuance already has partnerships with large electronic medical records companies like Epic Systems Corp. and Cerner Corp., and Microsoft plans to continue those, Nadella said. The goal is “absolutely not” to try to replace those companies, he said. “If anything we want to double down on our partnership with Epic and Cerner.”Nuance and Microsoft also plan to offer the Dragon Ambient Experience software, used to ease how clinicians document patient care, in other industries where AI tools to turn speech into records can be useful, Benjamin said.Microsoft has also been increasingly focused on health care. In May, the software maker unveiled a package of industry-specific cloud software, and has also hired executives with medical backgrounds and researching machine learning and AI tools for areas including clinical trials.“The more we worked together, the more we realized that we’re solving some of the greatest, most challenging and complex scenarios and speed matters,” Benjamin said in an interview.Coincidentally, one of Microsoft’s Boston-area offices is located right next to Nuance’s headquarters.Still ActiveWith a market value of $1.93 trillion, the most in the world after Apple, Microsoft remains active on the deals front.Last month, Bloomberg News reported that the software giant was in talks to acquire Discord Inc., a video-game chat community, for more than $10 billion. It also bought video-game maker Zenimax Media Inc. for $7.5 billion in cash in a deal that closed this year.The Nuance deal would rank as Microsoft’s second-largest acquisition, behind the 2016 LinkedIn purchase at an equity value of more than $26 billion, according to data compiled by Bloomberg. The company, which had more than $130 billion in cash and short-term investments at the close of last year, said it will continue its stock buyback program, despite spending cash on Nuance.Microsoft entered the artificial intelligence space decades ago with research projects and an early focus by co-founder Bill Gates on finding ways to make it easier for people to speak to computers using plain English.The Nuance purchase will complement efforts in recent years, where Microsoft has assigned thousands of employees to its AI work and released tools customers can use to build applications that understand and translate speech, recognize images and detect anomalies. The company views AI as a key driver of future sales of cloud services.(Updates with analyst’s comment in fifth 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) -- Jack Ma’s Ant Group Co. will drastically revamp its business, bowing to demands from Chinese authorities that want to rein in the country’s fast-growing Internet giants.Ant will now effectively be supervised more like a bank, a move with far-reaching implications for its growth and ability to press ahead with a landmark initial public offering that the government abruptly delayed late last year.The overhaul outlined by regulators and the company on Monday will see Ant transform itself into a financial holding company, with authorities directing the firm to open its payments app to competitors, increase oversight of how that business fuels it crucial consumer lending operations, and ramp up data protections. It will also need to cut the outstanding value of its money-market fund Yu’ebao.The directives come as China’s regulators pledge to curb the “reckless” push of technology firms into finance and crack down on monopolies online. The twin pillars of Ma’s empire -- Ant and e-commerce giant Alibaba Group Holding Ltd. -- have been at the center of the increased scrutiny, sending a message to the country’s largest corporations and their leaders to fall in line with Beijing’s priorities.Several government agencies, including the People’s Bank of China, and regulators overseeing the banking and securities sectors met with Ant to dictate the changes. The company will plan its growth “within the national strategic context,” and make sure that it shoulders more social responsibility, Ant said in its statement.Regulators have also slapped a record $2.8 billion fine on Alibaba this month after an anti-trust probe found the e-commerce company abused its market dominance.“The darkest hour for Alibaba has passed, but I wouldn’t say so for Ant Group,” said Dong Ximiao, chief researcher at Zhongguancun Internet Finance Institute. “The latest announcement clarified the framework for Ant’s restructuring, but the tone is still harsh and some of the requirements are tougher than expected. I don’t think the overhang is removed for Ant investors at this stage.”While the revamp leaves Ant’s main businesses intact, regulators are making it harder for the firm to exploit synergies that allowed it to direct traffic from its payments service Alipay -- which has a billion users -- to other financial services including wealth management, consumer lending and even on-demand neighborhood services and delivery.Authorities now require Ant to cut off any improper linking of payments with other financial products including its Jiebei and Huabei lending services. Ant said it will fold those units into its consumer finance arm, apply for a license for personal credit reporting, and improve consumer data protection.Ant could add more credit borrowing options on Alipay instead of setting Huabei as the default or preferred option, Thomas Chong, a Hong Kong-based analyst with Jefferies Financial Group Inc., wrote in a report, adding that synergies between Huabei and Yu’ebao could be affected.“Ant’s growth prospects just became a lot more challenging, given it will be much more difficult to capitalize on its scale,” said Mark Tanner, founder of Shanghai-based consultant China Skinny. “These growth challenges, in addition to the wider concerns about the tech sector regulators, makes their IPO value and attractiveness a shadow of what it was.”Ant Chairman Eric Jing promised staff last month that the company would eventually go public. Bloomberg Intelligence analyst Francis Chan has estimated the firm’s valuation may drop about 60% from the $280 billion it was pegged at last year given the rule changes being contemplated in areas including payments.Payments FocusChanges to the payments business were among the top priorities regulators outlined, with Ant pledging to return the business “to its origin” by focusing on micro-payments and convenience for users.Earlier this year, China proposed measures to curb market concentration in online payments, which Ant and rival Tencent Holdings Ltd. have transformed with their ubiquitous mobile apps that are used by a combined 1 billion people.The central bank said in draft rules that any non-bank payment company with half of the market in online transactions or two entities with a combined two-thirds share could be subject to antitrust probes.If a monopoly is confirmed, the central bank can suggest that cabinet impose restrictive measures including breaking up the entity by its business type.Mobile payments are only part of what contribute to online transactions, but they have become the most important platform in China, fueling growth in other services.Investors are also awaiting final rules aimed at curbing online consumer lending, which were unveiled late last year.Given all the changes still down the track, an Ant IPO remains “far, far away,” said Zhongguancun Internet Finance Institute’s Dong.“The PBOC statement emphasizes risks and correction, while Ant Group’s statement sounds positive to investors,” Shujin Chen, the Hong Kong-based head of financial research at Jefferies, wrote in a report. “Ant will be the first financial holding company in China, a milestone in fintech regulation. Ant sees a clearer roadmap to restructure, although some details remain unclear.”(Updates with Ant comment in fifth paragraph, analyst comment in tenth)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.
EUR/USD declined below 1.1900 and is testing the next support level at 1.1880.
The full-size luxury EQS sedan will launch on Thursday and could completely change the public perception of Mercedes, Deutsche Bank analysts said.
(Bloomberg) -- Alibaba Group Holding Ltd. said that it’s unaware of any other probes by China’s antitrust regulator after the e-commerce giant was slapped with a record fine for its business practices.Apart from inquiries into mergers, acquisitions and strategic investments that span the entire internet industry, the company isn’t aware of any other investigations into its business by the State Administration for Market Regulation, executives told analysts on a conference call Monday. Going ahead, the firm will focus on providing better services for its customers and merchants while complying with regulators.“We experienced this scrutiny and we’re happy to get this matter behind us,” Vice Chairman Joseph Tsai told analysts. Large-scale internet companies are doing a lot of things to grow the economy, he added, “and we’re in the middle of this, promoting government policy.”Beijing fined Alibaba a record $2.8 billion after wrapping up a landmark probe into China’s e-commerce leader in just four months, versus the years such investigations take in the U.S. or Europe. That sent a clear message to the country’s largest corporations and their leaders that anti-competitive behavior will have consequences.Following the probe into the e-commerce platform, regulators will now be keen to look at other areas where unfair competition may exist, Tsai said. They are also focusing on data privacy and protection, something that the firm is cooperating with the government on.For Alibaba, the fine was less severe than many feared and helps lift a cloud of uncertainty hanging over founder Jack Ma’s internet empire. The 18.2 billion yuan penalty was based on just 4% of the internet giant’s 2019 domestic revenue, regulators said. While that’s triple the previous high of almost $1 billion that U.S. chipmaker Qualcomm Inc. handed over in 2015, it’s far less than the maximum 10% allowed under Chinese law.The fine came with a plethora of “rectifications” that Alibaba will have to put in place -- such as curtailing the practice of forcing merchants to choose between Alibaba or a competing platform -- many of which the company had already pledged to establish.Record Alibaba Fine Shows China’s Big Tech Can’t Fight BackAlibaba on Monday said it doesn’t rely on exclusivity to retain merchants and doesn’t expect “material negative impact” from changes to such arrangements. Only a small number of flagship stores had been under exclusive arrangements previously, but businesses today are operating on multiple platforms, Chief Executive Officer Daniel Zhang said.The impact of the fine will be reflected in the company’s earnings for the March quarter. Alibaba has also set aside billions of yuan of additional spending to support initiatives for merchants, executives said.(Updates with more details from the call starting in fifth 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) -- President Joe Biden’s proposed infrastructure makeover is getting a thumbs up from one of the world’s biggest sovereign wealth funds.Mubadala Investment Co. considers the U.S. to be “an unbelievable market,” and the opportunities there might prompt Abu Dhabi’s $232 billion wealth fund to commit money toward infrastructure in the country, Chief Executive Officer Khaldoon Al Mubarak said on Monday during a virtual conference.“The United States is a country that has incredible infrastructure requirements and is now taking the opportunity of the stimulus packages, combined with zero interest rates, to really stimulate a significant upgrade,” he said.Biden has called for sweeping investments in electric vehicles, renewable power and the electric grid as part of a broad blueprint to bolster the U.S. economy while combating climate change. The plans, part of a $2.25 trillion infrastructure and stimulus blueprint unveiled by the president, are meant to catalyze investments in a clean energy economy.“Countries are seeing now better ways, more efficient ways to build up infrastructure, particularly in countries where there is a dire need to either an upgrade or new infrastructure,” Mubadala’s CEO said. “That opens the door for creative ways to allow the private sector, to allow investors to invest in that space and generate an acceptable rate of return.”Pension and sovereign wealth funds around the world are rotating into alternative assets to bolster yields in the low interest-rate environment and as a hedge against volatile stock markets.Mubadala was among a few sovereign investors that last year seized on opportunities from a dislocation in markets caused by the coronavirus pandemic, with Al Mubarak saying it made more investments in 2020 than in any other previous year. To help achieve its target of doubling in size to nearly half a trillion dollars in the next decade, Mubadala is focusing on infrastructure among other “future-oriented asset classes” and alongside continued investment in renewables and other clean technologies.“The U.S. will be a very interesting place to invest in infrastructure,” Al Mubarak said. “Investors all over the world will look at this as an opportunity.”Funds from Gulf states have been chasing overseas investments to reduce reliance on their oil-dependent home markets. Kuwait’s $124 billion pension fund is reducing its allocation to stocks in favor of alternatives and sees “lots of opportunities” in infrastructure over the next few years, especially in the U.S., its director general said in November.For Mubadala, Europe is another place “that has tremendous requirements when it comes to infrastructure and upgrades,” according to Al Mubarak.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.