The Governor of Montana has banned the operation of TikTok in the state, stating that it is a potential security risk due to the sharing of user data with the Chinese government. The law does not contain many technical details, but the impact on TikTok could be significant if it inspires copycat measures across the US. Despite the implementation of the law in January, several legal challenges dispute it.
Private airline VistaJet has a $4.4bn debt pile, according to Dan McCrum's deep dive, which looks at the firm's unusual relationship with Bombardier and its founder's aircraft trading activity. Thomas Flohr has spent 19 years building VistaJet into an exclusive club for the wealthy traveller, selling "Jet Cards" that enable passengers to travel in one of its 18 silver Global 7500 business jets. This compares with market leader NetJets which sells fractional ownership. Despite being loss-making, VistaJet's strategy has been supported by leasing firms, bond markets, and the Canadian government as lenders. In addition, the firm was handed a payday by its owner, Flohr. In 2015, he acted as a middleman between Bombardier and VistaJet, ordering 18 Global 7500 jets from his own company, and effectively earning a fee for broker services. Bondholders' documents reveal the group paid $1.1bn to Bombardier and about $224m to Flohr. Despite being warned in EY's opinion on the 2022 accounts, that "there may exist a material uncertainty that may cast significant doubt on the group's ability to continue as a going concern", Flohr told the FT that his stakeholders were happy with VistaJet's financial performance.
Emerging market (EM) stocks are trading at a discount in comparison to developed world equities, with the spread of price/book multiples indicating EM is cheaper compared to developed markets than at any other point this century. Indications are that it is time to rethink how investors approach EM investing, particularly in respect of indexing which looks at market cap.
Indexing can be a challenge in many emerging markets since the larger companies are often formerly state-controlled, monopolies, in utilities or banking–and while they may be the largest companies, their growth prospects aren’t thought to be exciting, so it makes little sense to direct investment there.
In China, it seems that after a four-year rally in consumer tech stocks, Chinese state-owned enterprises (SOEs) have led the markets following a government clampdown. The crackdown has created the opportunity to buy non-SOE companies while they are cheap.
The blockbuster exhibition China’s Hidden Century, opening this week at the British Museum, places responsibility for the violence inflicted on 19th-century China on Britain and other foreign powers, while exuding admiration for China’s resilience and innovation. Exhibition organisers said their four-year research project involved over 100 scholars in 14 countries, and will “open a new page in public understanding of late imperial China”. Its 300 pieces, half of which have never been seen in public before, cover the Qing dynasty from 1796 to 1912, a period of great upheaval in China, ending when a revolution overthrew the last emperor. However, the exhibition walks a diplomatic tightrope; blame is unequivocally placed on foreign powers for provoking the Opium Wars and thereby sparking China’s traumatic “century of humiliation”, a myth central to the Communist Party’s legitimating narrative of China as a successful state. A reappraisal of 19th-century China threatens this narrative.
Ron DeSantis, the Republican Governor of Florida, is expected to announce his candidacy for the 2024 US presidential elections next week. The announcement will mark DeSantis' run as a leading contender for the Republican nomination, directly pitting him against former president Donald Trump, who is also expected to stand. Some high-profile Republican donors had hoped that DeSantis would enter the race earlier to rebut attacks from Trump, which have taken a toll on DeSantis’ standing in some national polls. The Republican party field also includes Nikki Haley, Vivek Ramaswamy, Asa Hutchinson and Tim Scott.
Hong Kong stocks rose due to positive earnings reports from tech giants including Tencent and Baidu, which reported better-than-expected revenue. Alibaba is poised to reveal its latest report. The Hang Seng Index added 0.9%, but the Tech Index sank 0.8% and the Shanghai Composite Index slipped by 0.3%. Two new companies began trading in China, with defense technology manufacturer Aerospace Nanhu Electronic rising 18% and household appliance manufacturer Guangdong Deerma Technology falling 0.5%. Most Asian markets closed higher.
Syngenta Group has withdrawn its IPO application to Shanghai's Star board and will seek a listing on the exchange's main board. "Syngenta Group ... fits better on the main board of Shanghai stock exchange, under its latest registration-based IPO scheme," the company said in a statement. The switch comes after China implemented a registration-based system for listings on all exchanges earlier this year in a bid to speed up access to liquidity.
Alibaba has shared its first earnings report since its restructuring announcement. The conglomerate saw a 2% YoY increase in Q1 revenue, with 208.2bn yuan ($30.3bn), with its net income reaching 23.5bn yuan, up from a 16.2bn yuan loss the previous year. The company also highlighted its plans to complete the listing of Freshippo, its supermarket offering, within the next six to 12 months, and the hangzhou-based firm seeks to finalise the Cainiao IPO in the coming 12 to 18 months. Other plans include external financing for multiple business units and a full spin-off of its Cloud Intelligence Group.
Giorgia Meloni, the Italian Prime Minister and Member of the far-right, has yet to make a decision regarding the nonbinding Memorandum of Understanding (MoU) that Italy signed with China in 2019. The MoU helped start the Belt and Road Initiative, which aims to enhance Chinese influence abroad and better connect intercontinental trade infrastructure. Many Western allies have hardened their stance on China in recent years, causing Meloni to keep her cards a little closer to her chest. Tensions between China and Taiwan have been growing, and Washington is keen to have its close allies follow a strict line on China. Meloni is now faced with a balancing act between Western diplomatic allies and a major trading partner. If the deal isn't renewed, it could be embarrassing for China. However, Fardella sees if the Italian decision will turn into a loss of face for Beijing, retaliation may occur.
Chinese carmaker Geely is set to double its stake in UK luxury sports car company Aston Martin and, after the £234m ($287m) transaction, is set to become Aston Martin’s third largest shareholder. The deal will unlock £95m in funding for the beleaguered car company. Shares in Aston Martin rose as much as 25% following the news.
The London interbank offered rate (LIBOR), which for four decades was the dominant benchmark for determining global interest rates, is set to be replaced by a number of locally-based indices. The move comes after LIBOR hit the headlines in 2012 amid a scandal surrounding rate-fixing. While the benchmarks replacing LIBOR are theoretically seen as more suited to today's finance industry, their incorporation has been difficult, with contracts on hundreds of trillions of dollars having to be renegotiated.
Gold is emerging as the top investment choice for professionals and retail investors as they consider what to do in the event of a US default. Analysts at RBC Capital have indicated that “gold looks like one of the few likely candidates that would bear the burden of resulting market flows from default anxiety.” Data from the World Gold Council shows that central bank purchases of gold hit a record high in Q1 2022, while LBMA-accredited precious metals refiners have reported seeing far higher volumes than usual of large bars. Other investments suggested include the yen, the Swiss franc, and high-quality international equities.
Apple has reduced initial sales targets for its mixed-reality headset by two-thirds from about 3 million units per year to 900,000 units, according to sources. The sales downgrade follows reports from February suggesting the device would cost about $3,000. The headset is expected to be the tech giant's next major product, and likely to be revealed at the World Wide Developers' Conference on 5 June. The headset overlays digital objects onto a view of the real world.
The bank and China SCE Group Holdings Ltd. and Central China Real Estate Ltd. are among those at risk of default despite China's stabilised economy and reopened housing market. KWG Group Holdings Ltd. failed to make its redemption payment and triggered defaults on all of its dollar bonds. Municipalities are tightening up on consumer protection, meaning there may be less scrutiny on pre-sale process from developers. However, local authorities have imposed stricter scrutiny on these cash escrow accounts, causing non-payments from property developers. The struggles for these developers are not over as they rely on support from the government.
Tata Motors-owned Jaguar Land Rover (JLR) is deciding between Spain and the UK as the location for its electric vehicle battery factory, a move seen as critical for the future of Britain's car production in the face of a looming ban on the sale of new petrol and diesel cars. The UK is believed to have offered financial support for the gigafactory, with Chancellor Jeremy Hunt suggesting earlier this week that the country is in line for good news on the EV industry. JLRs biggest competitor, Nissan, is the only other UK company with a domestic battery supply.
US tells UN it will shield Venezuela humanitarian fund from creditors -sources
Reuters
23-05-18 20:00
The US has informed the UN that it will protect a proposed UN-run $3bn Venezuela humanitarian fund from creditors, removing a hindrance to getting the money flowing. The funds had been delayed as questions arose over whether donations were at risk of being seized by lenders to repay debt. The Biden administration clarified recently that the fund could operate within the US financial system and survive without fear of such action. The people familiar with the matter did not specify whether the assurance was communicated orally or in writing.
Six months after announcing a $20bn energy transition deal to curb greenhouse gas emissions and reach net-zero targets a decade early, Indonesia remains in a stalemate with its partners, voiced its frustration with their perceived lack of commitment and received nothing more than a loan from the US for a refinery. The Export-Import Bank, a government agency that assists US goods and services exports, will lend $99.7m to help fund the expansion of Pertamina’s refinery in East Kalimantan province, a move that counteracts the US pledge to end funding fossil fuel projects abroad. The loan also risks increasing Indonesia’s reliance on fossil fuels at the expense of its environmental ambitions. Indonesia was the fifth biggest greenhouse gas emitter worldwide due to deforestation and coal plants, which generated 61% of the country’s power, and renewable energy accounts for only 12% of national power capacity. Ministers from Japan, Canada, France, Germany, Italy, Britain, Norway, Denmark, and the EU were among the partners in the Just Energy Transition Partnership.
Leaders from the G7 nations are set to unleash new sanctions against Russia as they meet for a summit in Japan, though Germany’s Chancellor Olaf Scholz urged for “pragmatic measures” to avoid circumventing sanctions imposed on Moscow. G7 leaders will discuss the possibility of an international peace summit over Ukraine at the meeting. The EU has suggested tracking the trade in Russian diamonds with a view to imposing restrictions at a later stage, while the UK has announced a ban on Russian diamonds and imports of metals from Russia in support of Ukraine. Meanwhile, US President Joe Biden recently met Japanese PM Fumio Kishida to discuss ways of strengthening defence cooperation and counteracting coercive behaviour by China, with whom divisions are appearing within the G7, though leaders are expected to show a unified front regarding a common approach to dealing with the country based on shared values.
Market analysts provide valuable information to investors, but relying too heavily on their forecasts is an imperfect approach to investing. Analysts tend to focus on near-term estimates while overlooking medium-term outlooks. Taking aggregate analyst estimates can be misleading and overshoots GDP growth. Investors should approach estimates with a grain of salt, as companies that outperform or underperform their estimates may not have a similar effect on the market. The estimations of Goldman Sachs Group’s economists say the data suggest a “healthy dose of skepticism” towards analysts’ forecasts and that markets are already applying this skepticism.
Billionaire investor Carl Icahn has lost money every year since 2014, mostly due to hedges made against a fast-rising market to protect his investment empire against another financial crisis, according to analysis by the Financial Times. Since 2017, the prominent activist investor has lost around $9bn due to hedges which would have paid out if asset prices had collapsed. According to the analysis, Icahn lost approximately $1.8bn in 2017 on hedging positions and $7bn between 2018 and Q1 2019. Icahn has bet on a market collapse since the aftermath of the 2008 financial crisis, deploying a strategy that involved shorting broad market indices, corporations, commercial mortgages and debt securities. At times, the notional exposure of his trades surpassed $15bn. This has neutralised approximately $6bn in gains from his activist wagers.
