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Latam Air Files Chapter 11 Bankruptcy, Stymied by Lockdowns

Tue, 05/26/2020 - 01:01

(Bloomberg) -- Latam Airlines Group SA, Latin America’s largest air carrier, sought bankruptcy court protection in New York after the Covid-19 pandemic grounded flights across the region.The Chapter 11 petition allows Latam to keep operating while the Chilean carrier works out a plan to pay creditors and turn around the business. Latam, whose shareholders include Chile’s Cueto family and Delta Air Lines Inc., continues to operate on a reduced schedule, and it has commitments for a bankruptcy loan of up to $900 million.The money is coming from shareholders including the Cuetos, the Amaro family and Qatar Airways, according to a company statement. Latam also has about $1.3 billion in cash on hand.Airlines the world over -- and those in Latin America in particular -- have been hit hard by the coronavirus outbreak, which triggered travel bans and made people reluctant to fly. Avianca Holdings SA, the largest air carrier in Colombia, filed for Chapter 11 bankruptcy earlier in May, burdened by the sharp drop in fliers and its own onerous debt load.Latam’s affiliates in Brazil, Paraguay and Argentina aren’t part of the bankruptcy case, which was filed in the Southern District of New York.Still, the impact will be felt widely, with Santiago-based Latam previously serving more than 70 million passengers a year on more than 300 aircraft. It also carried more than $7 billion of debt.Latam has already eliminated more than 1,850 jobs in Chile, Colombia, Ecuador and Peru in recent weeks from its global workforce of about 40,000 people, after cutting 95% of its passenger operations. In some bankruptcy scenarios, an airline can reject aircraft leases, and Latam has more than 20 jetliners on order from Airbus SE and half a dozen from Boeing Co.“Exceptional circumstances have led to a collapse in global demand and has not only brought aviation to a virtual standstill, but it has also changed the industry for the foreseeable future,” Chief Executive Officer Roberto Alvo said in a statement.Latam listed assets of more than $21 billion and total liabilities of almost $18 billion in its bankruptcy petition.So far, Latam hasn’t had access to government bailout packages designed help offset virus-related distress. Talks are underway with governments in Chile, Brazil, Colombia and Peru about additional financing and assistance, the airline said.Brazilian BanThe task was made more urgent this past weekend by U.S. President Donald Trump’s order to restrict non-U.S. citizens arriving from Brazil to slow the spread of the coronavirus. Brazil accounts for about a third of Latam’s revenue.Latam traces its roots to Lan Airlines, founded in Chile in 1929 and privatized in 1989 during the last years of the Pinochet dictatorship. Latam was born in 2012 after Lan announced plans to merge with Tam for about $3.3 billion two years earlier.The Cueto family -- which is Latam’s largest shareholder and holds two seats on its board of directors -- acquired a stake in 1992 and control of the business in 1994. At that time, another major shareholder was current Chilean President Sebastian Pinera, who sold his own 26% stake early in his first term as president in 2010.Last year, Latam signed a $2.25 billion pact to sell a stake to Delta Air Lines, expanding Delta’s footprint in South America. The Chilean carrier has been planning to gradually ramp up flights over the next two months, with the goal of reaching 18% of pre-crisis capacity in July.Latam retained Cleary Gottlieb Steen & Hamilton as legal counsel, FTI Consulting Inc. as financial adviser and PJT Partners Inc. as investment banker.The case is Latam Airlines Group SA, 20-11254, U.S. Bankruptcy Court for the Southern District of New York (Manhattan)(Updates with liabilities, advisory firms and case citation, starting in the ninth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.


How Are Covid-19 and Tensions With U.S. Affecting China Deals?

Tue, 05/26/2020 - 00:54

May.26 -- Richard Gu, partner at law firm Linklaters Zhao Sheng, looks at how are the coronavirus outbreak and the political tensions with the U.S. affecting deals involving Chinese businesses. He speaks with Tom Mackenzie and Yvonne Man on "Bloomberg Markets: Asia."


U.S. Stock Index Futures Extend Gains Amid Reopening Optimism

Tue, 05/26/2020 - 00:48

(Bloomberg) -- U.S. stock-index futures extended gains in Asia as investors weighed the prospects of economies reopening with simmering trade tensions between Washington and Beijing.Contracts on the S&P 500 rose to 3,000.50, the highest since March 6, as of 1:04 p.m. in Tokyo, adding to gains during overnight trading from their closing level of 2,953.00 on May 22. The underlying S&P 500 closed at 2,955.45 on Friday. U.S. financial markets were shut Monday for Memorial Day.“It’s the grand re-opening that matters, with the S&P 500 within earshot of the psychologically fundamental 3,000 mark,” Stephen Innes, chief global markets strategist at AxiCorp, wrote in a research note. “If traders can put some headroom above that level, the view that this rally is only a bounce from oversold will most certainly give way to the wall of money argument, triggering another considerable round of bear market capitulation.”U.S. index futures extended gains on Monday after German businesses surveyed by Ifo showed cautious optimism in May, with a gauge of expectations rising after the previous month’s plunge. The report preceded data showing South Korea’s consumer confidence jumped in May from the lowest level since the global financial crisis as progress in curbing the coronavirus outbreak somewhat eased concerns about the economy.Japan’s stock market advanced as the nation inched toward resuming more activities Tuesday after a dropoff in virus cases led the government to end its state of emergency and bring a new focus to rebuilding a battered economy. Meanwhile, Hong Kong’s leader defended China’s moves to impose sweeping national security laws in the territory amid renewed protests and growing international concern over what it would mean for the city’s future autonomy.“A full reopening of Japan, and vaccine hopes from the United States, has shunted Hong Kong worries to the back of the equity market’s minds,” Jeffrey Halley, senior market analyst at Oanda Asia Pacific., wrote in a note. “What is clear is that the peak-virus trade continues to maintain its strong positive momentum.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.


Food Delivery Giant Meituan’s Sales Beat Estimates

Tue, 05/26/2020 - 00:18

(Bloomberg) -- Meituan Dianping’s shares soared after it reported a smaller than expected 13% slide in revenue that drove hopes the world’s largest meal delivery business is starting to recover as China emerges from Covid-19 lockdowns.Its shares climbed as much as 9.7%, extending strong gains since China began to return to normal in mid-March and propelling Meituan’s market value to more than $100 billion. That surge came after Meituan reported better-than-expected sales of 16.8 billion yuan ($2.4 billion) in the three months ended March. Morgan Stanley and CICC were among the brokerages that lifted their targets on Meituan, citing resilience across business lines and easing competition.Backed by Tencent Holdings Ltd., Meituan’s sprawling services from food delivery to in-store dining and hotel booking were among the most vulnerable to nationwide shutdowns. But its businesses had begun to climb out of the trough, offsetting severe slumps in areas such as hotels, executives told analysts on a Monday conference call. As of March’s final week, more than 70% of restaurants surveyed had recovered more than half their normal order volumes, while 30% had exceeded pre-pandemic levels, Chief Executive Officer Wang Xing said.“COVID-19 had a negative impact on Meituan but results beat on top-line and bottom line by a wide margin,” Bernstein analysts led by David Dai wrote. In food delivery, the “long run potential is still there and the profitability level can be much higher” after the company pushes advertising, they added.Longer term, the internet services giant will have to grapple with China’s worsening economy, which may further dent consumer spending. Subsidies and measures to help restaurants and merchants during the outbreak will again pressure profitability in the June quarter, executives said.Meituan reported a lower-than-projected net loss of 1.58 billion yuan, but that was after three successive quarters of profit.“Looking into the next three quarters, we believe there will still be challenges as there are still uncertainties and potential downside from the ongoing evolution of the COVID-19 situation,” Wang said on the call. “Meanwhile, a large number of local service merchants are still struggling for survival. Short-term profitability is not our top priority.”What Bloomberg Intelligence SaysMeituan’s near-term growth may weaken as its in-store dining, hotel and travel businesses take time to fully recover from China’s coronavirus outbreak. Operating efficiency will likely improve in the longer term as the company expands its market-leading scale and competition with Alibaba moderates. Broadening service categories and providing technology solutions for merchants will aid sales and profit growth.\- Vey-Sern Ling and Tiffany Tam, analystsClick here for the research.Before the outbreak, Meituan had pushed aggressively into adjacent arenas from online travel to ride-hailing. While revenue from the business that encompasses hotels and travel plunged 31% plunge during the March quarter, Meituan’s much smaller new initiatives segment -- which includes bike- and car-hailing -- grew sales 4.9%, aided by the launch of a new grocery delivery service. Hotels remained hardest-hit: in the week of May 11, domestic room nights were at about 70% pre-pandemic levels.While Meituan is expanding offerings to sell things like handsets and farm produce, rivals including Ant Group and SF Express, both backed by Alibaba Group Holding Ltd., are elbowing their way into Meituan’s core takeout business. Alibaba’s food-delivery arm Ele.me is also engaging in a subsidy battle with the startup for market leadership.(Updates with target increases by brokerages in second paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.


Daimler to invest in Chinese EV battery maker Farasis' $480 million IPO: sources

Mon, 05/25/2020 - 23:51

Daimler AG plans to invest in Farasis Energy's planned $480 million IPO, aiming to ensure a stable supply of batteries from the Chinese firm as it ramps up electric vehicle production, three people familiar with the matter said. The two firms struck a deal last year for Farasis to supply Daimler with lithium-ion battery cells and Farasis is building a factory in Germany. Daimler and Farasis declined to comment on the potential IPO investment.


Asian Health-Care Stocks Are Expensive, Citi PB's Peng Says

Mon, 05/25/2020 - 23:49

May.25 -- Ken Peng, Asia Pacific investment strategist at Citi Private Bank, talks about the state of the region's markets, the implications of the political tensions between the U.S. and China, and the opportunities he sees. He speaks with Yvonne Man and Tom Mackenzie on "Bloomberg Markets: Asia."


Japan’s Hottest Stock Is Tiny Maker of $40 Million Machines

Mon, 05/25/2020 - 23:09

(Bloomberg) -- The list of Intel Corp.’s annual supplier award winners tends to read like a who’s-who of the semiconductor industry’s biggest names. This year, it included a little-known Japanese company whose machines have become indispensable in the race to improve semiconductors and whose stock has been rocketing up as a result.Lasertec Corp. is the world’s only maker of testing machines required to verify chip designs for the nascent extreme ultraviolet lithography (or EUV) method of chipmaking. In 2017, Lasertec solved a key piece of the EUV puzzle when it created a machine that can inspect blank EUV masks for internal flaws. Last September, it cleared another milestone by unveiling equipment that can do the same for stencils with chip designs already printed on them. This March, Intel gave the tiny Yokohama-based company an award for innovation, its first after decades of doing business together.“That’s a major milestone for us,” Lasertec President Osamu Okabayashi said in an interview. “It means a lot to be recognized this way as a supplier.”The company’s stock has soared about 550% since the start of 2019, more than twice the gain of the second-best-performing security in the benchmark Topix index. Shares increased about 4% Tuesday, pushing its rise this year to more than 60%.Intel declined to say if it was buying EUV equipment from Lasertec, which already supplies test gear to its rivals Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Co. The three chip fabricators are the only ones so far to announce EUV plans, because the technology is so complex and expensive. Okabayashi would only say that his company has “two or more” EUV customers.“This can be read as a sign that Lasertec’s tools are indispensable to Intel’s EUV roadmap.” said Damian Thong, an analyst at Macquarie Group Ltd.Read more: Japan’s Star Electronics Stock Will Be Vital to Intel, SamsungEUV is just entering the mass production phase after two decades in development, but investors are already betting Lasertec will be one of the key beneficiaries. The move to EUV overcomes key hurdles to shrinking manufacturing geometries of semiconductors, allowing more and smaller transistors to be crammed onto silicon. It promises to unleash another wave of gadgets that are slimmer, cheaper and more powerful.Last month, Lasertec raised its annual order forecast for the second time this year to 85 billion yen ($789 million) in the period ending June, nearly double the amount it received in fiscal 2019. The company is headed for the fourth straight year of record revenue and profits. Sales will climb 39% to 40 billion yen and profit will jump 76%, according to its estimates. And that’s likely to be just the beginning.Samsung earlier this month said it is building a 5-nanometer fabrication facility that will use EUV to make processors for applications ranging from 5G networking to high-performance computing from the second half of next year. Taiwan’s TSMC is pushing ahead with plans to adopt 3-nanometer lithography mass production in 2022 and announced plans to build an advanced fab in the U.S. Intel’s first product made using EUV is expected late next year.Their primary focus is on so-called logic processors, used to power devices and networking applications, but the new manufacturing technique will eventually filter through into the production of DRAM and other memory chips.Read more: Samsung Takes Another Step in $116 Billion Plan to Take on TSMC“Logic makers will be first to adopt EUV, with memory makers following later,” Okabayashi said. “The real volume of orders will come when they reach mass production stage. Right now it’s 7- and 5-nanometer chips. 3-nanometer is still in development stage.”Okabayashi expects each customer will probably need several of his testers, which could cost well over $40 million apiece and take as long as two years to build. A chipmaker would need at least one machine in its mask shop to make sure the stencils come out right. Another would go into a wafer fab to keep an eye on the microscopic wear and tear that result from concentrated light being projected repeatedly through the chip design stencils.“Lasertec is still trying to get a feel for this market and how big it can be,” Macquarie’s Thong said. “Their stock is moving on expectation of future orders. But there is little actual visibility on the scale of this market, so Lasertec retains a lot of capacity for surprise.”(Updates with share price in fourth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.


Oil prices rise on supply cut hopes, easing of coronavirus lockdowns

Mon, 05/25/2020 - 22:15

Oil prices climbed on Tuesday, boosted by increasing faith in the market that producers will to stick to commitments to cut crude supply while demand picks up with more cars back on the road as coronavirus lockdowns are eased around the world. Brent crude futures were up nearly 1.7%, or 59 cents to $36.12, adding to a 1.1% gain on Monday in thin holiday trading. "There's definitely a feeling those cuts have come through as well as you could expect," said Daniel Hynes, senior commodity strategist at Australia and New Zealand Banking Group.


Only a Few Hedge Funds Made Money in March and April. Here’s How

Mon, 05/25/2020 - 21:42

(Bloomberg) -- Father-of-six Nicolas Bryon didn’t get much sleep in March but it wasn’t family duties keeping him up. As global markets crashed, the Sydney-based hedge-fund manager rose every hour to check on his positions and execute trades.After weeks of broken sleep, his Atlantic Pacific Australian Equity Fund was up 23.6% for March and April, making it one of the rare hedge funds globally that made money in both periods. The two wildly different months messed with even some of the biggest money managers. In March, several bears reaped fortunes by betting on falling markets, only to lose money in April when government stimulus revived stocks.Globally, just 13% of hedge funds made money in both months, according to data compiled by Bloomberg. A number of those that did exhibited similar traits: an ability to trade across different geographies or asset classes and a hyper-vigilance toward monitoring positions.“I’m generally quite conservative,” Bryon said, who manages around A$33 million ($22 million). He favors firms with solid fundamentals that have restructured their costs and recapitalized through stock issues or loans.Bryon said he watches 24/7 for any signs the virus may shut down economies that have just started to reopen, like China. That attentiveness allowed him to quickly tip out and in out of stocks such as gaming giant Aristocrat Leisure Ltd., whose shares plunged 36% in March only to bounce 20% in April.AVM Global Opportunity Fund Chief Investment Officer Ashvin Murthy has delivered annualized returns of 9.9% since the fund’s inception in 2016, below the outsized gains of some peers. But he sees no shame in being boring and produced a 3.02% increase in March and another 3.14% in April -- his fund has made money in 11 of the past 12 months.Sleep BetterFor Murthy, who manages around $50 million for clients including family offices in Europe and Asia, making smaller than his usual bets in the right direction has resulted in larger payouts thanks to market volatility. He currently owns a lot of government bonds, and cash.In late February, he made money by shorting equities and going long on the U.S. dollar. By late March, when the Federal Reserve had started pushing through measures to add liquidity, he snapped up gold and investment-grade bonds.“Most hedge funds that get the spotlight are the ones that are super levered so in a bull market, they all look sexy,” Singapore-based Murthy said, adding that he doesn’t invest more than he’s willing to lose -- a risk-averse strategy quite different from the high-volatility plays Asia often sees. “I’m okay with being boring, I probably sleep better at night.”Other funds that did well in both March and April had China to thank.Pinpoint Asset Management Ltd.’s nearly $1.1 billion Pinpoint Multi-Strategy Master Fund increased 0.3% in March and almost 1% in April by holding onto its investments in some of China’s leading companies.5G, Education“Covid-19 has negatively affected many industries,” Pinpoint’s Hong Kong-based investor relations manager Jennifer Wong said. “It’s our belief that industry leaders, who have better access to resources, finances and human capital, will continue to gain market share at the expense of weaker peers.” She declined to disclose specific names.Pinpoint is bullish on stocks linked to China’s 5G telecommunications network roll-out as well as online and offline education firms, including those that provide extra-curricular tutoring.Panview Capital Ltd.’s Asia hedge fund also excelled in part due to China, rising less than 1% in March and about 4.5% in April. The Hong Kong-based firm, which began trading with external capital in January, cut India investments and shifted some of its portfolio to China instead, a person familiar with the matter said, declining to be identified because the details are private.Here are a few others that made money in both March and April.Ocean Arete Ltd., a Hong Kong-based manager that oversees $1 billion. It returned 2.1% in March and 3.4% in April. Its macro hedge fund started March owning risky assets, including global stock indexes, but cut those positions as equity markets began to plunge. As government stimulus measures kicked in toward the end of March, it rebuilt long positions in U.S. and Chinese stocks to ride the April rebound waveCloudAlpha Capital Management Ltd.’s hedge fund advanced 1.9% in March and 4.2% in April, taking this year’s gain to almost 49%, according to a client newsletter. That was thanks to a bullish position in Tesla Inc. and some well-timed shorting of Luckin Coffee Inc.Infini Capital Management Ltd.’s multistrategy hedge fund surged 33% in March and rose another 25% in AprilThe $650 million Snow Lake Asia Fund was up 1.9% in March and 12.3% in April. The firm’s $1.5 billion China fund returned 4.4% in March and 9.9% in AprilWT Asset Management Ltd., the $1.5 billion firm led by Wang Tongshu, gained 1.9% in March and more than 3% in AprilFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.


Speculators Target Hong Kong’s Currency on Outflow Concern

Mon, 05/25/2020 - 20:34

(Bloomberg) -- Fears that capital will flee Hong Kong are visible just about everywhere in the city’s financial markets, yet the currency remains resistant for now.Speculators are betting on significant depreciation with derivatives, sending a measure of bearishness to near its highest level of the year. Volume on Hong Kong dollar options soared to $3.7 billion on Friday, with a third of the trades betting the pegged currency would hit or break the weak end of its trading band.Conviction that turbulence will get worse is also evident in the swaps market, where the spread between local and U.S. rates reached levels last seen in the 1990s. One-year forward points closed at the highest since 1999, suggesting a spike in demand to hedge against depreciation in the currency, which remains close to the strong end of its trading band against the greenback.The sudden bearishness is crashing against the city’s elevated borrowing costs, which have kept the long Hong Kong dollar carry trade profitable since November. Liquidity in the financial system remains relatively tight for now, keeping the city’s interbank rates wide versus those in the U.S. Plans from some of China’s biggest companies to sell shares in Hong Kong in June should make that more pronounced by increasing the demand for cash.Hong Kong is the epicenter of escalating U.S.-China tensions following Beijing’s shock decision last week to impose a law to curb dissent in the city. That stoked the Hong Kong dollar’s biggest drop in six weeks and the worst stock rout since 2008. The Trump administration is considering responses that could include revoking Hong Kong’s special trade status, a risk that threatens to undermine the city’s standing as a global financial hub.The key question is how the Hong Kong dollar’s yield advantage over the greenback can act as a support for the currency.“Some capital inflows chasing new listings in the city could offset some fund outflows this quarter,” said Ken Cheung, chief Asian currency strategist at Mizuho Bank Ltd. “However, the main risk is how the U.S. will deal with Hong Kong’s special status.”The Hong Kong dollar’s recent strength was upended last week as China confirmed it would effectively bypass the city’s legislature to implement its controversial national security laws, which critics say will erode freedoms of speech, assembly and the press. The currency had traded near the strong side of its narrow band since April largely thanks to a popular trade where hedge funds sold the greenback for the city’s higher-yielding dollars.As long as that strategy remains profitable and popular, weakness in the currency will be limited. Share sales from NetEase Inc. and JD.com Inc. in June will mop up liquidity as traders set aside funds to buy stock, driving up borrowing costs in Hong Kong. The premium between one-month Hibor and the U.S. equivalent is near the widest since 1999, meaning traders will still lose money if they sell the city’s currency against the greenback.June will also be a month when local banks hoard cash to meet quarter-end regulatory checks, driving up demand for Hong Kong dollars. Listed Chinese companies will buy the city’s currency to pay dividends in the summer, also pushing up interest rates. The Hong Kong dollar traded 32 pips from the strong end on Tuesday, down from 78 pips last week.That delicate balance will depend in part on how the U.S. responds to China’s actions.“Investors have been quite concerned with capital outflows,” said Carie Li, an economist at OCBC Wing Hang Bank Ltd. “We haven’t seen signs of that yet and I don’t think Hong Kong will see massive fund exodus unless the U.S. makes an extreme response to the law. The panic will likely last for one to two weeks.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.


Australian Dollar range bound in quiet start to the week

Mon, 05/25/2020 - 20:00

Posted by OFX AUD - Australian Dollar In the context of recent volatility, the Australian dollar remained relatively range bound through trade on Monday, bouncing between support at 0.6520 and resistance at 0.6550. Markets remained largely muted to start the week as both the US and UK enjoyed extended weekends, while headline … Continue reading "Australian Dollar range bound in quiet start to the week"The post Australian Dollar range bound in quiet start to the week appeared first on .


Stock market news live updates: Stock futures open higher, Dow futures gain 200+ points

Mon, 05/25/2020 - 18:13

Stock futures rose Monday evening, pacing toward advances Tuesday when traders return from the Memorial Day holiday weekend in the U.S.


Hong Kong Finance Has a Security Blanket

Mon, 05/25/2020 - 18:00

(Bloomberg Opinion) -- China’s decision to impose a national security law on Hong Kong has spurred speculation of capital flight and an erosion of the city’s status as an international financial center. As a venue for share offerings, at least, the near-term future is looking bright. For that, the territory can thank worsening U.S.-China relations.U.S.-listed Chinese technology companies are lining up to sell stock in Hong Kong, seeking refuge from an environment that has become increasingly less hospitable. Nasdaq-traded JD.com Inc. and NetEase Inc. are planning secondary listings in the city next month, following a trail blazed by Alibaba Group Holding Ltd. in November. Optimism that more companies will join them drove shares of Hong Kong’s exchange operator up more than 6% on Monday.There’s every reason to expect these stock offerings to do well, and push Hong Kong back up the rankings of the world’s largest fundraising centers. So far this year, the city is the sixth-largest market by capital raised. It topped the table for the whole of 2019 when New York-listed Alibaba sold $13 billion of stock, underscoring the existence of a strong local investor base for China’s most successful companies.The reception for Alibaba suggests that Asian institutional investors want to be able to trade China’s leading enterprises in their own time zone. JD and NetEase are also among the nation’s technology champions. Beijing-based JD competes with Alibaba in e-commerce, while Hangzhou-based NetEase is behind some of the most popular mobile games in China. Beyond these two, search-engine operator Baidu Inc. is considering delisting from Nasdaq and moving to an exchange nearer home, Reuters reported last week. The coronavirus has exacerbated tensions between Washington and Beijing, while scandals such as fabricated sales at Luckin Coffee Inc. have spurred politicians to push for tighter regulation, giving Chinese companies an incentive to list elsewhere.Hong Kong is an obvious choice. The city burnished its appeal for U.S.-traded companies last week when the compiler of the city’s benchmark Hang Seng Index said it would change its rules to admit secondary listings and companies with dual-class share structures. Stocks that join the benchmark can expect inflows from passive investors such as exchange-traded funds that track the index.Citigroup Inc. reckons that 23 of the 249 Chinese stocks traded in the U.S. meet Hong Kong’s criteria for a secondary listing, which require companies to have a market value of $5.2 billion or, alternatively, a combination of $129 million in annual sales and a $1.3 billion market cap. JD tops the group with a value of $73 billion.An even more alluring prize would be inclusion of secondary listings in Hong Kong’s stock-trading links with the Shanghai and Shenzhen exchanges, which would enable mainland Chinese investors to buy these shares. Alibaba wasn’t included in the stock connect, to the disappointment of some investors. China’s government could yet decide to make this happen.It’s a reminder that Beijing has levers at its disposal to help shore up Hong Kong’s economy and financial industry, which accounts for a fifth of the city’s gross domestic product — as it did after the SARS epidemic in 2003, when half a million people demonstrated against the Hong Kong government’s first, aborted attempt to introduce national security legislation. Hong Kong Exchanges & Clearing Ltd. surged the most in 18 months Monday even as unrest returned to the city. Listing of American depositary receipts may double the exchange operator’s revenue, Morgan Stanley said. The Hang Seng Index, meanwhile, stabilized after slumping 5.6% on Friday.An exodus of businesses, people and capital may yet imperil Hong Kong’s role as an international financial center. The IPO outlook suggests that, rather than a sudden demise, that’s likely to be a long drawn-out process.  This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Nisha Gopalan is a Bloomberg Opinion columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.


What is the average American salary?

Mon, 05/25/2020 - 17:56

Stocks Climb With U.S. Futures; Dollar Steady: Markets Wrap

Mon, 05/25/2020 - 17:34

(Bloomberg) -- Stocks in Europe and Asia gained along with American equity-index futures as investors weighed more signs of economies reopening around the world against the rise in U.S.-China tensions. The dollar was steady, and crude oil added to last week’s strong advance.Construction and industrial-goods shares led a broad advance in the Euro Stoxx Index. Bayer AG leaped almost 8% after Bloomberg reported it reached agreements to resolve some cancer lawsuits over its Roundup weedkiller. Contracts on all three major U.S. gauges rose more than 1%. In Asia, Hong Kong shares inched higher after Friday’s slump, following police clashes at the weekend with protesters marching against China’s move to crack down on dissent. Benchmarks in Tokyo and Sydney led advances in the region’s stocks.Volumes were light with holidays in the U.S. and U.K., as well as some Asian and Latin American markets including Singapore and Sao Paulo. Futures on the 10-year note were little changed. China set its daily yuan reference rate at the weakest level since 2008 after the increasing acrimony drove the currency to a seven-month low on Friday. A benchmark of emerging-market stocks headed for its first rise in three sessions.While fresh turmoil in Hong Kong is threatening to damage an already souring Sino-U.S. relationship, investors are looking to the reopening of economies from Japan to Australia and the U.S. to provide impetus to global stock markets, which remain about 30% higher than the March lows. A rise in a gauge of German business expectations provided another glimmer of hope for equity bulls.“One big threat to the recovery in markets is the escalating war of words between the U.S. and China,” said Shane Oliver, head of investment strategy at AMP Capital Investors Ltd. in Sydney. “The main focus will likely remain on continuing evidence that the number of new Covid-19 cases is slowing in developed countries, progress towards medical solutions, the reopening of economies and signs that economic activity is picking up.”Here are some key events coming up:U.S. markets are closed Monday for Memorial Day holiday, while the U.K. is shut for the Spring bank holiday.Earnings continue with companies including Nissan Motor, British Land, Royal Bank of Canada and HP Inc.Singapore’s parliament on Tuesday is expected to announce another stimulus package.Thursday brings the U.S. jobless claims reading for the week ended May 23.Federal Reserve Chairman Jerome Powell participates in a virtual discussion on Friday.These are the main moves in markets:StocksThe Euro Stoxx Index gained 2.3%.Futures on the S&P 500 rose 1.2% as of 5:32 p.m. in New York.The MSCI Asia-Pacific Index climbed 0.9%.Japan’s Topix index advanced 1.7%.Hong Kong’s Hang Seng rose 0.1%.CurrenciesThe Bloomberg Dollar Spot Index 0.1% to 1,244.11.The yen was little-changed at 107.73 per dollar.The euro was little-changed at $1.0895.BondsGermany’s 10-year yield was little-changed -0.494%.CommoditiesWest Texas Intermediate crude added 1.4% to $33.72 a barrel.Gold dipped 0.2% to $1,731.95 an ounce.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.


Sanofi to Sell Regeneron Stake Worth About $13 Billion

Mon, 05/25/2020 - 15:12

(Bloomberg) -- Sanofi is selling a stake in Regeneron Pharmaceuticals Inc. valued at about $13 billion, giving the French drug giant more firepower to invest in fast-growing fields such as cancer.Regeneron has agreed to repurchase $5 billion of its stock from Paris-based Sanofi, the companies said on Monday. Regeneron said that the French company also plans to sell approximately 12.8 million shares, a holding worth more than $7 billion based on Friday’s closing price. That will mark the largest public equity offering in the heath-care industry on record.The announcement is part of Sanofi Chief Executive Officer Paul Hudson’s revamped strategy. The company said in December that it would end its hunt for new diabetes and heart disease drugs, helping save more than $2 billion, and focus on lucrative areas such as oncology. Deals would be the fastest way to build up its stable of medicines in cancer, analysts at HSBC said last year.“We believe the proceeds from this transaction will help further our ability to execute on our strategy to drive innovation and growth,” Hudson said in a statement.Sanofi holds about 23.2 million shares of Regeneron’s stock, or 20.6% of the U.S. pharmaceutical company. Sanofi, which first purchased shares of the Tarrytown, New York-based company in 2004, will continue to own about 400,000 shares.Bank of America Corp. and Goldman Sachs Group Inc. are the underwriters of the stake sale. Regeneron said it will fund the share repurchase with $3.5 billion of cash and $1.5 billion of financing from Goldman Sachs Bank USA.Sanofi and Regeneron said there will be no change to their ongoing partnerships. Through their longstanding collaboration since 2003, the companies have brought five medicines to market, and have additional drug candidates currently in clinical development.‘Increased Flexibility’In December, Sanofi and Regeneron announced their intent to restructure collaborations for two drugs, the cholesterol-buster Praluent and the arthritis medicine Kevzara.Hudson also said at the time that Sanofi could raise funds by selling its stake in Regeneron after a lock-up period expires at the end of 2020. “As the lockup expires, your flexibility increases,” he said. “We will look at the equity and decide where it can yield the best return for us as an organization.”Regeneron announced later that month that it planned to cut staff as it restructured its partnership with the French drugmaker.The deal will also likely reignite speculation that Sanofi may buy back L’Oreal SA’s 9.4% stake in the drug company. That, in turn, raises the possibility that L’Oreal would buy back a 23% stake that Nestle SA holds in the French cosmetics maker.Covid-19 CollaborationBoth Sanofi and Regeneron have positioned themselves as front-runners in the race to develop therapies and vaccines to battle the coronavirus pandemic. Sanofi has received funding from the U.S. government to expedite research and development and scale up production capabilities for its high-profile vaccine candidates.Read More: U.S. Likely to Get Sanofi Vaccine First If It SucceedsSanofi is also working with Regeneron to evaluate how Kevzara could help very sick Covid-19 patients in respiratory distress. Initial trial results have suggested that the drug may help only the most critically ill patients⁠ -- the severest of the severe⁠ -- while those with slightly less dire cases of the disease likely won’t see a benefit.The companies are moving forward with a big trial focused on the most serious Covid-19 cases, with results expected in June.(Updates with details on the deal throughout)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.


 
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