Apr.12 -- Lina Choi, senior vice president at Moody’s Investors Service, discusses Alibaba Group Holding Ltd.’s record fine over antitrust issues, her outlook for the company and for China’s tech sector. She speaks on “Bloomberg Markets: China Open.”
Shares in tech giant Alibaba climbed more than six percent Monday as the ecommerce titan reassured investors that a record $2.78 billion antitrust fine imposed by China would have little impact on its operations.
China's regulatory-imposed revamp of Jack Ma's Ant Group, transforming the hot fintech into a financial holding company, appears to have dented some investor appetite for any plans to revive what would have been the world's biggest IPO. The overhaul comes two days after affiliate Alibaba Group Holding Ltd, which owns around a one-third stake in Ant, was hit with a record $2.75 billion antitrust penalty as China tightens controls on its internet giants. Several U.S.-based investors and others who watch China's markets said the developments seemed to limit the prospects of Ant, lowering its expected profitability and valuation.
(Bloomberg) -- China just slapped a record antitrust fine on Alibaba Group Holding Ltd. The company thanked the government and investors breathed a sigh of relief.Alibaba’s American depositary receipts climbed 9.3% on Monday in New York, their biggest jump in almost four years. For Jack Ma, the founder of the e-commerce giant, it meant his fortune increased by $2.3 billion to $52.1 billion, according to the Bloomberg Billionaires Index.The $2.8 billion fine is less severe than some investors feared and is based on only 4% of the company’s 2019 domestic sales, far less than the maximum 10% allowed under Chinese law. While the internet giant will have to adjust the way it does business, its vice chairman said regulators won’t impose a radical overhaul of its e-commerce strategy and its chief executive officer declared Alibaba ready to move on.“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.”Ma, who up until last year was China’s richest person, has lost billions since his nation’s regulators began an anti-monopolistic campaign, halting the initial public offering of his Ant Group Co. payments company just two days before it was scheduled to go public. He is now China’s third-richest person after Zhong Shanshan of bottled-water company Nongfu Spring Co. and Tencent Holdings Ltd.’s Pony Ma.Separately, China’s central bank ordered Ant to become a financial-holding company that will be regulated more like a bank. The move, announced on Monday, will have far-reaching implications for the firm’s growth and its ability to press ahead with an initial public offering. Alibaba shares opened 3.4% higher in Hong Kong on Tuesday.(Updates to include Ant overhaul and stock move in last paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Australian authorities have identified a second case of a rare blot clot likely linked to the AstraZeneca coronavirus vaccine.
Alibaba, the Chinese e-commerce juggernaut, appears ready to move forward as regulatory concerns start to subside.
China's largest e-commerce operator said it would roll out new measures and incentives to help keep businesses on its platforms.
The regulator's statement offers the most detailed look so far at how companies like Alibaba use a controversial business tactic.
Millions are participating in the Kumbh Mela even as India overtakes Brazil in Covid infections.
Alibaba stock looks like it's on sale after pulling back sharply off highs. But after a hefty fine from Chinese regulators, is BABA stock a buy right now?
(Bloomberg) -- India’s deepening coronavirus crisis slammed the nation’s stocks and currency on concern it will deliver a fresh blow to an economy that’s only just recovering from the worst contraction in nearly seven decades.The Indian rupee dropped past 75 to a dollar for the first time since August 2020, while the benchmark S&P BSE Sensex Index declined 3.4%, the most in almost two months. India reported a record 168,912 new infections for a day, taking the tally to 13.53 million cases, the government said Monday.Many provinces across the nation, from the financial hub Mumbai to capital New Delhi, are bringing back stricter restrictions on movement of people to curb the surge in cases. Reports are emerging of hospital beds running short and immunization centers turning away people as they run out of vaccines.That and a vaccine shortage “are unnerving markets and no one is sure whether lockdowns will help bring cases under control,” said Deepak Jasani, head of retail research at HDFC Securities. Given the uncertainty, “the incentive to try and bottom-fish at this point is limited for traders.”Taking a BeatingThe NSE Nifty 50 Index dropped 3.5%, making India’s key stock indexes the worst performers in Asia on Monday. All 19 sector sub-indexes compiled by BSE Ltd. slipped, led by a gauge of property and industrial shares.India’s virus resurgence has prompted some brokerages to reconsider their preference for stocks, which are most sensitive to the economic recovery. Nomura cut the weight of financials and cement shares in its model portfolio, while Jefferies downgraded Indian banks to underweight from overweight.Not everyone is pessimistic. India’s long-term outlook remains strong and any decline in equities due to infections should be used as an entry point by investors, according to Prabhudas Lilladher Ltd. India’s gross domestic product is forecast to grow by as much as 12.5% this fiscal year, which would make it the world’s fastest-growing major economy.Bonds held on to last week’s gains, with the yield on the benchmark 10-year notes near the lowest since mid-February, amid optimism the central bank may keep its policy accommodative for long to support the economy. The rupee fell 0.4% to close at 75.0550 per dollar on Monday.“We expect the rupee to weaken versus the USD as have other EM currencies,” and given the slow progress of vaccination, the economy “will be slower to recover,” R Venkataraman, managing director at IIFL Securities, wrote in a note.(Updates with closing prices; adds IIFL analyst’s comment in last paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
What happened What a difference a month makes! Barely a month ago, shares of dry bulk shipping stock Castor Maritime (NASDAQ: CTRM) turned sharply higher on news that the Baltic Exchange Dry Index (BDI) was continuing to set new highs.
China has imposed a sweeping restructuring on Jack Ma's Ant Group, the fintech conglomerate whose record $37 billion IPO was derailed by regulators in November, underscoring Beijing's determination to rein in its internet giants. The overhaul, in the works for several months, includes Ant turning itself into a financial holding firm, a move expected to curb its profitability and valuation by curtailing some of its freewheeling businesses. It comes two days after Ma's Alibaba Group Holding Ltd, of which Ant is an affiliate, was hit with a record $2.75 billion antitrust penalty as China tightens controls on the booming "platform economy".
(Bloomberg) -- Dollar-denominated funding markets are already facing myriad challenges that are distorting supply and demand, and these effects are only going to intensify as a return of the U.S. government’s statutory borrowing limit gets closer.Rates for short-term dollar borrowing have been driven to zero and below, weighed down by Federal Reserve asset purchases, a drawdown of the U.S. Treasury’s mammoth cash pile and a shift from bank deposits to money-market funds. The reimposition at the end of July of the debt ceiling, which was suspended in 2019, is threatening to exacerbate this dynamic as its return also affects how much spare cash the Treasury can legally hold.The reinstatement will force the Treasury to wind down its cash balance to levels near the previous suspension, or roughly $120 billion to $130 billion, from $924 billion now. That would push more cash into the market, while simultaneously yanking supply out of the market with bill paydowns.While JPMorgan Securities strategists Teresa Ho, Alex Roever and Ryan Lessing estimate that gap between supply and demand is currently around $585 billion, there’s room for this to widen.‘Too Much Cash’“Anyway you slice it, there is too much cash looking for a home and not enough products to invest in and that’s what’s keeping everything tight,” said Gennadiy Goldberg, senior U.S. interest rates strategist at TD Securities. The debt ceiling “will just make Treasury’s headache even worse.”The longer these idiosyncrasies persist, it’s going to force the U.S. central bank to intervene to maintain control over the short end -- particularly its key policy target, the effective federal funds rate. The Fed seems to already be taking steps through changes to the mechanics of its facility for overnight reverse repurchase agreements.Last month the Fed instructed the Federal Reserve Bank of New York to boost the size of the counterparty limit for the overnight reverse repo facility, or O/N RRP, to $80 billion from $30 billion, a move that could help prevent short-term rates from slipping even lower.Lorie Logan, executive vice president at the New York Fed, said in an April 8 speech that the bank could adjust the eligibility requirements for its daily operation to allow for broader participation from the money fund community.Adjustments Ahead?Policy makers still have the ability to tweak the Fed’s interest on excess reserves rate, the offered level on the O/N RRP, or both. In minutes from the March Federal Open Market Committee meeting, Chairman Jerome Powell noted the potential for downward pressure on money-market rates and suggested it “might be appropriate” to make adjustments at upcoming meetings or even between gatherings to ensure the fed funds rate remains “well within the target range.”The recent FOMC minutes suggest the Fed recognizes that the overnight repo rate is a “more important operational parameter than the IOER at present,” Wrightson ICAP economist Lou Crandall wrote in a note to clients. Wrightson expects that any initial adjustment to the O/N RRP -- and potentially IOER -- would be 2 basis points, while the second choice is a 3 basis-point tweak.The fact that the FOMC is “laying the groundwork so explicitly for a potential adjustment” reinforces the belief that the Fed will be quicker to respond to downward technical pressure on overnight rates than in the past, Crandall wrote.JPMorgan strategists, who said in February the Fed wouldn’t have to make any adjustments to its tools until mid-year, now say policy makers could make a tweak sooner. They aren’t alone in such thinking.“It’s certainly on the Fed’s radar that the pressure is building,” TD’s Goldberg said. “They want to make sure the levy at the lower bound of the target range is powerful enough to contain this flood of cash.”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.
Indian shares tumbled more than 3% and the rupee hit an eight-month low on Monday as a relentless surge in COVID-19 cases and a possible lockdown by a large state threatened to derail a recovery in Asia's third-largest economy. India reported another record daily surge in coronavirus infections and overtook Brazil to be the second worst-hit country by the health crisis on Monday.
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.
The dollar was nearly unchanged, but U.S. Treasury yields moved higher, which put downward pressure on gold prices. This came following a 60-minute interview that aired on Sunday with Fed Chair Jerome Powell. Despite a growing economy the Fed Chair reaffirmed the central bank’s commitment to keeping loose monetary policy in place for the entire year.
Despite bull-market-driven demand for the company’s bitcoin mining machines, Canaan’s Q4 revenue plummeted due to COVID-related supply chain issues.
(Bloomberg) -- For Ahmad BinDawood, last year’s share offering in the eponymous Saudi grocery business was a chance to shape his legacy at the family firm he’s worked at since the age of eight, while cementing a $3.1 billion fortune built over the decades by his father and uncles.As the October public offering of BinDawood Holding Co. got underway, details emerged of some $76 million in previously undisclosed loans made by the Saudi company to family members. In a departure from the traditional secrecy associated with the kingdom’s family firms, Jeddah-based BinDawood revealed everything, put the IPO on hold and gave buyers the chance to take their money back.As the loans were quickly repaid, the sale resumed and eventually raised about $500 million for the family, attracting $29 billion in bids along the way.“We have to be very transparent with investors,” BinDawood said in an interview in Riyadh last month. “If there is any disclosure at any time that we need to make, we will go ahead and do it. So we took this on the shoulder and decided to announce it.”The success of the IPO has helped establish BinDawood, 37, as one of a new breed of Saudi executives rising within a corporate world that was largely off-limits to foreigners until a few years ago. What’s more, it has made him emblematic of a drive to shake up traditional ways of doing business, dovetailing with Saudi Crown Prince Mohammed bin Salman’s goal of transforming the oil-rich kingdom into a regional business hub.That mold-breaking character can even be seen inside BinDawood stores. The past few months have seen the company doing prominent Valentine’s Day and Easter promotions, a move unthinkable just a few years ago in a country that has historically adhered to a strict Wahhabist interpretation of Islam.Prince Mohammed’s commitment to reshaping the economy isn’t all working in BinDawood’s favor. A sudden decision to triple value added tax last year hit consumer spending. Higher customs duties and fees on expatriates are driving up costs for Saudi firms, too. And all at a time when the Covid-19 pandemic has been stoking unemployment.“We remain cautious of near-to-mid term growth across the consumers space as market size shrinks on potential expat depopulation,” said Mehwish Zafar, a senior equity analyst at Arqaam Capital in Dubai who has a “hold” recommendation on the shares. Like-for-like sales growth will probably be negative until at least 2022, he said, with growth only coming from new store openings or acquisitions.Shares in BinDawood jumped more than 30% in the days immediately after the sale. They have since slipped back, showing as of Monday a gain of about 11.5% from the listing price.It’s a performance that has helped buttress the family’s bid to diversify into other assets while strengthening the core business, a goal identified by Ahmad BinDawood as key to avoiding the kind of strife his father feared might undermine the business as it passed to a new generation.“The majority of family businesses don’t survive the transition to the third generation, and that’s something that concerned my father a lot,” BinDawood said.Pilgrims ProgressThe rise of the BinDawood business has been some 40 years in the making. Once a small-time vendor of Arabian perfumes and groceries to pilgrims visiting the Islamic holy sites of Mecca and Medina, it is now a nationwide concern spanning supermarkets and hypermarkets, hotels and distribution centers. The grocery business alone employs more than 10,000 people across 74 stores.Ahmad BinDawood’s own destiny was sealed as soon as his father, Abdulrazzag BinDawood graduated in the 1980’s from the King Fahd University of Petroleum and Minerals in Dhahran. Instead of following his peers into the oil industry, he decided to join his brothers Ismail and Abdullah in their burgeoning retail trade.Which is why Ahmad found himself on the front line at such a young age. At just eight, he was helping to sell items to the pilgrims during his school holidays, envious of friends who were away avoiding Saudi Arabia’s scorching summers.“Our friends were traveling and off enjoying themselves and sometimes we would would ask: why not us?” BinDawood said. “But that experience built the passion in us to stay in the business that our father and our uncles built.”A decision to push into online shopping and delivery helped prepare the firm for lockdowns during the coronavirus pandemic, but couldn’t outweigh the hit from the absence of religious tourists who were prevented from entering the kingdom for much of the year. While profit climbed almost 7% last year, it had slumped more than 53% in the fourth quarter as Saudi Arabia reimposed travel restrictions.BinDawood is still optimistic that shoppers will return as travel resumes, though how quickly pilgrims come back to Saudi Arabia in anything like their previous numbers remains uncertain.Next up may be the purchase of a rival grocery chain to expand into neighboring countries, BinDawood said. At the same time, the IPO proceeds will help further develop the BinDawood Group family office, which Ahmad’s father is now running. That fortune, which is split across several family members, is estimated at about $3.1 billion, according to the Bloomberg Billionaires Index.“The IPO had two main angles to it -- sustainability and continuity of the business first, and second the diversification for the family,” he said. “We are in the process of building the family office and bringing in the right talent.”More family businesses are likely to follow in BinDawood’s footsteps. The IPO of Saudi Aramco in 2019, which many Saudis never thought they would see, “has been a massive driver in motivating families to take their operating businesses public to help grow their enterprises and generate new wealth,” said Tayyab Mohamed, co-founder of London-based family office staffing firm, Agreus Group.For all the challenges, Ahmad BinDawood is optimistic, citing his life-long involvement in the business as a foundation for success.“Retail is embedded in our DNA now,” he said.(Updates share performance 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.
(Bloomberg) -- Net bullish wagers on rising commodity prices fell to the lowest since December last week, raising questions about the commodity supercycle.Money managers are trimming what had been the largest wager for rising commodity prices in at least a decade as stumbling economic reopening efforts force a reconsideration of the popular recovery trade. A recent bond rout raised worries over inflation and surging bulk shipping rates are seen capping any further upswing.There’s a sense that “we have yet to get rid of the coronavirus, with rising cases and extended lockdowns delaying the expected growth sprint,” said Ole Hansen, head of commodities research at Saxo Bank. “The surge in Treasury yields, a stronger dollar and worries that China may tighten liquidity in order to curb inflation are also contributing factors.”Hedge funds’ net bullish positions on a basket of 20 commodities have decreased for six weeks in a row, according to the latest Commodities Futures Trade Commission and ICE data compiled by Bloomberg. That comes after money managers boosted the figure to the highest in data going back to 2011, while prices in the Bloomberg Commodity Spot Index rose to nearly the highest in eight years in February.Commodities had seen a resurgence in interest early this year as major investment banks flagged the start of a new structural bull cycle -- with some even calling for a supercycle comparable to ones that peaked in the 1970s and early 2000s.The idea was that raw materials would benefit as the world emerged from the pandemic and fiscal stimulus programs would sustain a downtrend in the U.S. dollar, thereby making commodities priced in the greenback more attractive. While a return to normal is anticipated, hiccups in recent months surrounding economic reopening plans are clouding the near-term outlook. Meanwhile, the dollar came back from its lows this year alongside rising bond yields.In the last week, investor outflows were most pronounced for oil, with funds weighing whether demand will be strong enough to absorb returning supply in coming months. OPEC and its allies decided earlier this month to gradually ease unprecedented output curbs from May to July, while further out, the market may see more Iranian supply come back if it returns to a nuclear deal.Adding further pressure, volatility-targeted funds like commodity trading advisers underwent “widespread deleveraging” after global benchmark Brent futures’ briefly jumped above $71 a barrel following an attack on Saudi oil facilities in March, Ryan Fitzmaurice, commodities strategist at Rabobank, said in a note Friday.Now, a squeeze on vessels to carry some commodities around the world is adding another risk for investors to consider. The cost of shipping unpacked commodities like grains and iron ore, known as dry bulk, is up more than 50% this year.The move up in shipping costs “makes it more expensive to move things around, which goes contrary to the idea of a supercycle,” Eddie Tofpik, head of technical analysis and senior markets analyst at ADM Investor Services International Ltd., said at an online event last month.Still, calls remain for commodities to continue their price rebound this year after this period of consolidation.“Commodities remain the best performing asset class of 2021,” Goldman Sachs Group Inc. analysts wrote in a report Friday. “We view this consolidation as nothing more than a fleeting speed bump created by logistical bottlenecks in vaccine roll-outs.”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.
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