Didi departure from NYSE marks end of Wall Street romance with Chinese big tech

NEW YORK, United States - The Chinese ride-hailing giant Didi Chuxing's announcement that it will delist its shares from the New York Stock Exchange marks the end of a cushy relationship between Wall Street and Chinese tech giants, who are under siege from authorities in Beijing and regulators in America.

Only 5 months transpired between Didi's going public in New York in June and word Friday that it will prepare a Hong Kong listing. During that time its market value has fallen by 63 percent.

Didi's move comes in the wake of a sweeping Chinese regulatory crackdown in the past year that has clipped the wings of major internet firms wielding huge influence on consumers' lives -- including Alibaba and Tencent.

After Friday's announcement, heavyweight Chinese online retailers whose stocks are sold on the New York exchange, such as Alibaba, JD.com and Pinduoduo, dropped sharply.

Shares in Alibaba -- whose arrival on Wall Street in 2014 to a loud fanfare kicked off the parade of Chinese firms listing in the Big Apple -- fell to their lowest level in nearly five years as rumors circulated that, after Didi leaves, Alibaba might be next.

Technically, even as Didi Chuxing moves its listing to Hong Kong, holders of its shares in New York retain those stakes. Their investment does not simply vanish.

But "people are very fearful about regulations and the Chinese government," said Kevin Carter, portfolio manager at EMQQ. "And that has really, really affected sentiment. People are scared."

Coincidentally, on Thursday US market regulators announced the adoption of a rule allowing them to delist foreign companies if they fail to provide information to auditors.

The move is aimed primarily at Chinese firms, and requires them to disclose whether they are "owned or controlled" by a government.

"While more than 50 jurisdictions have worked... to allow the required inspections, two historically have not: China and Hong Kong," Securities and Exchange Commission chairman Gary Gensler said.

'Sensitive data' 

The Global Times, a newspaper close to the Chinese Communist Party, criticized the new US regulation in an opinion piece Friday.

"If the US sets unequal conditions on national security for competition between the two countries by demanding Chinese listed companies hand over audits for inspection so as to spy on China's internal situation and store huge amounts of sensitive data acquired by Chinese companies, China won't accept that," the unsigned piece said.

Many of these New York-listed shares are held not by private citizens but rather by institutional investors.

"Some funds can only have shares that are traded on US markets," said Gregori Volokhine, president of Meeschaert Financial Services. "This is what is putting pressure on shares."

And for many market watchers, Didi, described as China's answer to Uber, will not be the last Chinese tech giant to delist from New York.

"It is not specific to Didi because for months we have seen the communist party's grip on companies tighten," said Volokhine.

Shortly after Didi went public in New York, the reservation platform Full Truck Alliance and the job-search site Kanzhun were investigated by China's cybersecurity watchdog.

The Chinese government has also tightened regulations on companies that offer families private tutoring. This has hurt companies listed in New York.

According to figures in May from a US government agency, a total of 248 Chinese companies are listed in the United States, with a combined market capitalization of 2.1 trillion dollars.

"After an active start to the year, Chinese companies have largely stopped tapping the US IPO market since June, due to regulatory and policy roadblocks in both countries," said Matthew Kennedy, a strategist with Renaissance Capital.

This week Spark Education, a big Chinese online small-class teaching firm, withdrew its planned IPO in the US.

"The way things are, one can say there will be no more new Chinese IPOs and the ones in the pipeline will be withdrawn one by one," Volokhine said. Renaissance Capital says there are 35 companies in that pipeline.

In leaving the US market, Chinese companies are giving up an investor base like no other in the world -- with $52.5 trillion in assets under management, compared to $7.1 trillion in China, according to a study last year by McKinsey and Company, a management consulting firm.

Carter said this political pressure on Chinese companies creates an odd situation in which the stars of the Chinese tech world are plummeting on the stock market, but not because of their earnings reports.

"And these companies are still making profits. And then those profits are still growing," he said.

"The revenue growth for the year is over 30 percent. Not for every company, but a bit collectively. No matter where the stock is, no matter where the stocks trade, that's still the case," he said.

Agence France-Presse

Stock markets mixed as China-US tensions return to fore

Equities were mixed Wednesday as profit-taking and worries about deteriorating China-US relations were weighed against optimism over the gradual reopening of economies around the world.

Hong Kong extended losses as police fired pepper-ball rounds as anti-China protesters took to the city's streets, with investors fearing the demonstrations could erupt into the worst unrest since last summer.

The broad trend across global markets has been upward for weeks as virus deaths and infections ease in most countries and governments begin to reopen their battered economies, fanning hopes for a recovery in the second half of the year.

Confidence has also come from mind-boggling amounts of stimulus and central bank pledges of support, with the latest coming from the eurozone, where European Commission President Ursula von der Leyen is due to unveil a trillion-euro revival plan for the bloc.

However, there was little fresh desire for risk assets with eyes on the simmering row between the world's top two economies, fuelled by Donald Trump's barracking of China over its role in the pandemic, and made worse this week by Beijing looking to tighten its grip on Hong Kong.

The financial hub was thrown back into the spotlight Friday when Chinese officials proposed a controversial security law that many fear could ring the death knell for the city.

And Trump appeared to agree, with his press secretary Kayleigh McEnany telling a briefing he had said it is "hard to see how Hong Kong can remain a financial hub if China takes over".

Washington has already said it could terminate its preferential trading status over the issue.

Markets are also fretting over reports that the US has warned it will impose sanctions on Chinese entities and officials if it goes ahead with the law.

While China and Hong Kong leader Carrie Lam have sought to ease worries about the extent of the law plans, Jeffrey Halley at OANDA warned that no matter how they try to dress it up "the passage of the security legislation from Beijing will have consequences for the beleaguered (city) and will further darken relations between the US and China."

Concerns about the growing crisis have weighed on the yuan, losing almost three percent this year, with observers suggesting it could hit a record low.

- Hong Kong protest worries -

Meanwhile, there are concerns about another flare-up in the city as lawmakers prepare to discuss a law that bans insulting China's national anthem.

Seven months of sometimes violent demonstrations last year hammered the local economy and raised questions about its future.

Hong Kong fell 0.4 percent, Shanghai lost 0.3 percent and Sydney fell 0.1 percent, while Kuala Lumpur dropped more than one percent as Malaysia struggled to contain its virus. There were also losses in Jakarta, Bangkok and Singapore.

But Tokyo, Mumbai, Manila, Seoul, Taipei and Wellington saw gains.

In early trade, London, Paris and Frankfurt were all higher. The gains in Paris as dealers brushed off a warning from officials that France's economy could contract 20 percent in the second quarter.

Still, National Australia Bank's Tapas Strickland, said in a note: "Risk sentiment continues to surge as activity lifts following the gradual easing of containment restrictions around the world, while vaccine hopes remain high with 10 different vaccines currently at the human trial stage."

He also cited comments from Federal Reserve official James Bullard that the third quarter "very likely, right behind the worst quarter, will be the best quarter of all time on the growth perspective".

Wall Street, where the New York Stock Exchange trading floor reopened after two months of closure, finished higher, with the Dow gaining 2.2 percent.

Oil markets slipped on China-US tensions, and after reports said Russia could begin easing up on its supply cuts in July.

Massive reductions by Moscow and other major producers including Saudi Arabia have helped fuel a surge in prices over the past month, with WTI doubling since the end of April.

But analysts said the commodity will likely continue to win support from the easing of lockdowns, which is expected to boost demand as people get back on the road.

- Key figures at around 0810 GMT -

Tokyo - Nikkei 225: UP 0.7 at 21,419.23 (close)

Hong Kong - Hang Seng: DOWN 0.4 percent at 23,301.36 (close)

Shanghai - Composite: DOWN 0.3 percent at 2,836.80 (close)

London - FTSE 100: UP 0.7 percent at 6,112.97

Euro/dollar: DOWN at $1.0954 from $1.0984 at 2040 GMT Friday

Dollar/yen: UP at 107.51 yen from 107.54 yen

Pound/dollar: DOWN at $1.2292 from $1.2335

Euro/pound: DOWN at 89.11 pence from 89.04 pence

West Texas Intermediate: DOWN 2.3 percent at $33.55 per barrel

Brent North Sea crude: DOWN 2.2 percent at $35.37 per barrel

New York - Dow: UP 2.2 percent at 24,995.11 (close)

Agence France-Presse

US stocks follow European equities lower

New York–Wall Street stocks Tuesday finished lower, following European markets downward after political turmoil in Greece revived worries about the eurozone.

The Dow Jones Industrial Average lost 55.16 points (0.31 percent) to fall below 18,000 at 17,983.07.

The broad-based S&P 500 dropped 10.22 (0.49 percent) to 2,080.35, while the tech-rich Nasdaq Composite Index fell 29.47 (0.61 percent) to 4,777.44.

Equity markets in Britain, France and Germany each fell more than 1.2 percent after Greece’s Prime Minister said a snap election for president planned for Jan. 25 would determine whether the country leaves the eurozone.

US consumer confidence rose in December, while home-price increases were more modest in October, data showed.

Analysts said trade was limited ahead of Thursday’s New Year’s holiday.

“Basically, the volume is light and there is no specific theme that is driving the stock market,” said Hugh Johnson of Hugh Johnson Advisors.

“It’s more or less just trend-less and volatile. I wouldn’t attach much significance to what’s going on today.”

Civeo, which provides workforce accommodations to oil and natural resources companies in Canada and Australia, sank 52.6 percent, citing the weak oil-investment environment. Civeo projected 2015 revenues of $540-$600 million, much below the $817 million forecast by analysts.

Real-estate investment trust American Realty Capital Properties rose 7.4 percent after activist investor Corvex Management disclosed a 7.1 percent stake in the company and said it would press for changes to boost shareholder return.

Bond prices fell. The yield on the 10-year US Treasury fell to 2.19 percent from 2.21 percent Monday, while the 30-year dipped to 2.76 percent from 2.78 percent. Bond prices and yields move inversely.

source: business.inquirer.net

Poor earnings at Sprint, Priceline push US stocks lower

NEW YORK–Shares of Sprint and Priceline tumbled Tuesday following disappointing earnings to help push the broad US equity market down, but buyers sent the blue chips of the Dow higher.

The Dow Jones Industrial Average finished up 17.60 points (0.10 percent) at 17,383.84.

The broad-based S&P 500 dropped 5.71 (0.28 percent) to 2,012.10, while the tech-rich Nasdaq Composite Index fell 15.27 (0.33 percent) to 4,623.64.

Sprint sank 16.5 percent as it announced it was slashing 2,000 jobs after reporting a $765 million loss in its fiscal second quarter.

Priceline tumbled 8.4 percent as it forecast fourth-quarter earnings of $9.40-$10.10 per share, well below the $10.91 projected by analysts. Rival online travel companies TripAdivsor (-1.7 percent) and Expedia (-2.4 percent) also fell.

Tuesday’s trade followed lackluster US economic data. New orders for US manufactured goods dropped $2.8 billion, or 0.6 percent, to $499.4 billion in September, the Commerce Department reported.

The US trade deficit widened in September to $43.0 billion as exports slowed and imports remained flat from the previous month.

Chinese e-commerce giant Alibaba rose 4.2 percent after it reported a 15 percent gain in third-quarter profits to $1.1 billion in its first earnings release since going public.

Petroleum stocks fell as US oil prices sank further below $80 a barrel. Dow member Chevron fell 1.2 percent, oil services company Weatherford International lost 7.6 percent and drilling company Transocean dropped 5.3 percent.

Delta Air Lines jumped 4.2 percent after reporting a three percent rise in consolidated passenger unit revenue in October, a closely watched industry benchmark. American Airlines and United Continental both gained 1.7 percent.

Apparel-maker Michael Kors slumped 8.4 percent on a disappointing outlook. The company forecast earnings of $1.31-$1.34 per share, compared with analyst projections for $1.34.

Bond prices rose. The yield on the 10-year US Treasury fell to 2.34 percent from 2.35 percent Monday, while the 30-year dropped to 3.05 percent from 3.07 percent. Bond prices and yields move inversely.

source: business.inquirer.net

US stocks finish flat on mixed data

NEW YORK–US stocks finished little changed Monday following mixed economic data as markets paused after last week’s records.

The Dow Jones Industrial Average fell 24.28 points (0.14 percent) to 17,366.24.

The broad-based S&P 500 dipped 0.24 (0.01 percent) to 2,017.81, while the tech-rich Nasdaq Composite Index gained 8.17 (0.18 percent) to 4,638.91.

The Institute for Supply Management’s purchasing managers’ index for October manufacturing rose to 59.0, with companies saying activity is picking up more than expected going into the yearend holiday shopping season.

But the Commerce Department reported Monday that US construction spending fell a second straight month in September, for a 0.4 percent annual decline, surprising analysts who expected a pickup.

“It’s not surprising (investors) are digesting a little bit after the highs” last week, said Mace Blicksilver, director of Marblehead Asset Management.

Chinese online vending giant Alibaba surged 3.25 percent to a new high, one day ahead of its first earnings after IPO.

Social messaging service Twitter, meanwhile, sank 3.0 percent, and Facebook lost 1.5 percent.

Petroleum industry stocks suffered as US oil prices fell to their lowest level since June 2012.

Dow members ExxonMobil and Chevron lost 1.5 percent and 2.6 percent, respectively, while oil services companies Diamond Offshore and Baker Hughes fell 5.7 percent and 2.0 percent.

Covance shot up 25.9 percent on news that it will be acquired by Laboratory Corp. of America for $5.6 billion to create a giant in healthcare diagnostics. LabCorp fell 7.4 percent.

Sapient soared 42.0 percent on news it will be acquired by French public relations giant Publicis for $3.7 billion.

Bond prices fell. The yield on the 10-year US Treasury rose to 2.35 percent from 2.34 percent Friday, while the 30-year rose to 3.07 percent from 3.06 percent Friday. Bond prices and yields move inversely.

source: business.inquirer.net

US stocks rise as investors assess earnings

NEW YORK—The stock market rose for the fifth time in six days Thursday as higher earnings from several big US companies helped investors shrug off discouraging news about jobs and retail spending.

Goodyear Tire & Rubber surged to its highest level in almost six years after the company’s earnings beat analysts’ forecasts. CBS also jumped after the broadcaster beat Wall Street’s profit expectations and speed up its stock buyback program.

Investors’ focus has returned to company earnings after concerns about growth in emerging markets and the health of the U.S. economy pushed the Standard & Poor’s 500 index to its lowest level in more than three months at the start of February. Analysts at S&P Capital IQ expect that earnings at companies in the index increased last quarter at the fastest pace in a year.

“The momentum from earnings continues,” said Andres Garcia-Amaya, a global market strategist at JPMorgan Funds.

The Standard & Poor’s 500 index rose 10.57 points, or 0.6 percent, to 1,829.83. The Dow Jones industrial average climbed 63.65 points, or 0.4 percent, to 16,027.59. The Nasdaq composite rose 39.38 points, or 0.9 percent, to 4,240.67.

Stocks also got a lift from deal news.

Time Warner Cable surged $9.50, or 7 percent, to $144.81 after the company agreed to be acquired by rival Comcast for $45.2 billion in stock. The deal would combine the top two cable TV companies in the United States. Comcast fell $2.27, or 4.1 percent, to $52.97.

The biggest gains in the S&P 500 were posted by utility companies. Gains in these stocks suggest investors are looking to play it safe. Utilities don’t have the best growth prospects, but they pay steady dividends and operate in stable industries.

Stocks opened lower Thursday following lackluster reports on the U.S. job market and retail sales.

The number of people seeking unemployment benefits rose 8,000 last week to 339,000, the Labor Department said. Economist had forecast claims of just 330,000.

A separate report showed that cold weather caused US retail sales to drop in January as Americans spent less on autos and clothing and at restaurants during a brutally cold month. The Commerce Department says retail sales fell 0.4 percent last month, the second straight decline after a 0.1 percent drop in December.

The stock market inched higher throughout the morning. Major indexes turned positive by late morning as investors assessed a handful of encourage corporate earnings reports.

Goodyear Tire & Rubber surged $2.77, or 11.5 percent, to $26.94 after it reported a big earnings gain. Strong sales in the company’s core North American market helped the tire maker’s results.

CBS rose $2.76, or 4.5 percent, to $64.61 after reporting fourth-quarter earnings and revenue growth that beat Wall Street’s expectations. Advertising revenue was flat, but there was growth in content licensing thanks to the sale of shows such as “Hawaii Five-O” for domestic reruns.

Despite the recent signs of stabilization, the stock market is still going through a pullback driven largely by the Federal Reserve’s decision to cut back on its economic stimulus program, said Barry Knapp, the head of U.S. equity portfolio strategy at Barclays.

The stimulus underpinned the stock market’s rally last year, but policy makers have reduced it at each of their last two meetings. The Fed has scaled back its bond purchases from $85 billion a month to $65 billion a month.

Typically, pullbacks that are prompted by a change in Fed policy last between two and three month and push stocks lower by as much as 9 percent, according to Knapp.

“It seems a little too soon for (stocks) to have worked their way through this yet,” said Knapp. “We don’t think the uptrend is going to resume right away, stocks will probably still struggle a bit in the first half of the year.”

In government bond trading, the yield on the 10-year note fell to 2.73 percent from 2.76 percent on Wednesday. The price of oil was little changed at $100.35 a barrel. Gold gained $5.10, or 0.5 percent, to $1,300.10 an ounce.

Among other stocks making big moves:

— Whole Foods dropped $4, or 7.2 percent, to $51.46 after the grocery chain reported fiscal first-quarter profit and revenue that came in below analysts’ forecasts. The company, known for its organic and natural food offerings, also lowered its earnings projections for the year again as the company faces more and more competition.

— Cisco Systems fell 58 cents, or 2.5 percent, to $22.27, after the company reported late Wednesday that weaker revenue and special charges weighed down its second-quarter earnings.—Steve Rothwell

source: business.inquirer.net

US stocks end mostly lower after deluge of data

NEW YORK—US stocks Wednesday ended mostly lower after markets weighed a stream of generally solid economic data ahead of Friday’s big jobs report.

The Dow Jones Industrial Average lost 24.85 points (0.16 percent) at 15,889.77.

The broad-based S&P 500 fell 2.34 (0.13 percent) to 1,792.81 while the tech-rich Nasdaq Composite Index inched up 0.80 (0.02 percent) to 4,038.01.

Markets were in negative territory most of the day after payrolls firm ADP reported strong jobs growth, the US trade deficit declined and October new-home sales notched a 25.4 percent rise compared with the prior month.

On the downside, the Institute for Supply Management’s purchasing managers index for service sector activity fell to 53.9, below the 55 consensus estimate.

But markets pared losses after the Federal Reserve released its Beige Book report, which painted a generally good picture of the economy in the wake of October’s partial government shutdown.

Analysts are awaiting Friday’s monthly jobs report, which could signal whether the Federal Reserve is likely to accelerate a plan to scale back its bond-buying program.

Anthony Conroy, head of global trading at Bank of New York Convergex, said traders are in “more of a profit-taking mood” in anticipation a Fed taper, most likely early in 2014.

“Everybody is looking to every data point trying to get a sense of what the Fed is going to do,” Conroy said.

Conroy does not expect major market swings before the Fed winds up its next policy meeting on December 18.

Agriculture equipment manufacturer Deere & Co. rose 3.2 percent after announcing it was boosting its share buyback program by $8 billion.

Retailer JC Penney fell 4.5 percent despite reporting a 10.1 percent jump in comparable-store sales in November over last year. Sterne Agee called the sales a “step in the right direction,” but said the result was “certainly not heroic” in light of aggressive promotions.

Apparel retailer Express plummeted 23 percent after projecting fourth-quarter earnings of 66-71 cents per share, well below the 78 cents seen by analysts.

Fertilizer company CF Industries shot up 10.7 percent after suggesting it would maintain or accelerate its ongoing share buyback program.

Bond prices fell. The yield on the 10-year US Treasury rose to 2.84 percent from 2.78 percent Tuesday, while the 30-year increased to 3.91 percent from 3.84 percent. Bond prices and yields move inversely.

source: business.inquirer.net

Twitter set to make a splash on Wall Street – Special

NEW YORK – Wall Street is aflutter over Twitter, set to make the most anticipated stock market debut since Facebook in a huge test for social media and the technology sector.

No official date has been set, but Twitter appears on a fast track which could see its initial public offering priced as early as Wednesday for trading on Thursday, according to some reports.

The company will trade under the “TWTR” symbol on the New York Stock Exchange, breaking from the Nasdaq market used by a large number of tech companies.


There is considerable excitement about the IPO because Twitter is “a unique product that no one can replicate,” said Michael Pachter, head of equity research at Wedbush Securities.

Pachter and his colleagues said in a research report that they expect high demand.

“We believe that the market is likely to generate appetite for more than $1 billion in stock,” they said.

“The simple rules of supply and demand suggest that by limiting the supply of shares offered to the public in its IPO, Twitter will be unable to satisfy demand.”

And Twitter appears to have learned a lesson from Facebook’s debacle in May 2012, marked by trading glitches, accusations about secret information and a plunge in the share value for months after the IPO.

“The Facebook situation last year was a perfect storm of an overheated private market, a fully priced offering, a massive amount of shares brought to market, all compounded by an historical technical glitch,” said Lou Kerner, founder of the Social Internet Fund.

“That confluence of events is not likely to occur again.”

As of its latest update, Twitter will seek to raise up to $1.6 billion — one tenth the value of the Facebook IPO — by offering 70 million shares in a range of $17 to $20.

That is a relatively small chunk of Twitter’s capital, and implies a market value between $9.3 billion and $11.1 billion — a conservative figure compared with some of the private market trades in Twitter so far.

Analysts say Twitter, unlike Facebook, will not flood the market, and that with demand exceeding supply the price will rise.

The early Twitter investors may not get maximum value right away, but could benefit over time from a rise in the share price.

Star quality, but questions on monetization

Twitter does have a star quality that is likely to fuel interest, because it is a key platform for celebrities, politicians and journalists.

In its investor presentation, the company used President Barack Obama’s widely retweeted message of “four more years” after his 2012 re-election, and noted how activist investor Carl Icahn’s single tweet about buying Apple shares moved the stock market.

A crucial question for Twitter, as for Facebook, is how deftly the company is able to monetize its platform.

Twitter has some 232 million active users around the world, but has lost money steadily since 2010, according to IPO documents. The losses amounted to $133 million on $422 million in revenues in the first nine months of the year.

Twitter makes most of its money from advertising, chiefly in the form of “promoted tweets.” A recent revamping of its display opens the door to bigger display-type ads.

The investment firm Sterne Agee notes that “Twitter’s scale and deeply engaged user base create valuable opportunities for advertisers to leverage the platform.”

Analysts point out that Twitter can allow companies to advertise for free, or pay for promoted tweets and benefit from analytics that target people based on their interests and profiles.

“Twitter is a niche business that will not likely be used by ‘everybody’ vs. Facebook, which essentially is,” said a report from Pivotal Research Group analyst Brian Wieser.

“However, at the same time we expect that advertisers will continue to value Twitter for its unique attributes and should conceivably allocate budgets from sources intended towards digital goals.”

Risks of an ‘unproven’ model

But the report goes on to say that Twitter faces big risks including “a relatively unproven advertiser proposition, the prospects of wild swings in investor sentiment, difficulty scaling the business profitability, rush sellings at a time when early investor lock-ups expire (and) government regulations primarily related to privacy.”

Still, Pivotal sets a target price of $29 a share, or 46 percent above the high end of the offering price range.

Others note that it is hard to evaluate Twitter’s financial potential because three-quarters of its users are outside the United States where digital advertising is just taking hold.

“Many international ad markets are years behind the US in terms of the maturity of the digital ad market,” noted Hillside Partners, an investment firm specializing in technology companies.

source: business.inquirer.net