(Bloomberg) — Oil gave up early gains in Asia, along with gold, after France said that the U.S. and Russian presidents agreed to a summit meeting over Ukraine. West Texas Intermediate plunged as much as 0.8%, reversing a more than 2% advance, after U.S. President Joe Biden and Russian President Vladimir Putin agreed to the …
Oil, Gold Cede Gains on Prospects for Biden-Putin Ukraine Summit Read More »
(Bloomberg) — U.S. equity futures rose and Asian stocks pared losses Monday as traders evaluated the possibility of a summit on Ukraine between President Joe Biden and his Russian counterpart Vladimir Putin. Nasdaq 100, S&P 500 and European contracts erased falls to climb about 1%, while an Asia-Pacific equity index came off its lows but …
U.S. Futures Rise on Proposed Biden-Putin Summit: Markets Wrap Read More »
(Bloomberg) — Chinese technology shares had their worst two-day drop since July due to renewed fears Beijing may roll out more restrictions for private enterprise.
Tencent Holdings Ltd. shares sank 5.2% on Monday, pummeled by speculation about an unspecified, impending crackdown on China’s largest social media and gaming firm that company spokesman Zhang Jun later denied. Traders pointed to everything from warnings from regulators over the weekend about scams in the metaverse — a virtual-reality based social media concept — to talk about yet more curbs on the gaming industry. Zhang said the online rumors were unfounded, without elaborating.
Separately, Chinese authorities told the nation’s biggest state-owned firms and banks to start a fresh round of checks on their financial exposure and other links to Jack Ma’s Ant Group Co., Bloomberg reported after markets closed. Alibaba Group Holding Ltd., which owns a third of Ant, fell 3.9% prior to the report.
Hong Kong’s Hang Seng Tech Index, which tracks the biggest Chinese tech firms, lost 5.9% over two sessions, most since July. The decline started Friday when Meituan plunged as much as 18% after Beijing rolled out a new policy to curb the delivery giant’s service fees.
“There is concern about new regulatory reforms,” said Justin Tang, head of Asian research at United First Partners. “Prior to Meituan, there was a sense of ‘this is it in relation to reforms.’ Investors are now thinking that there could be more to come.”
The China Banking and Insurance Regulatory Commission warned on Friday against fund-raising and investment products related to the metaverse concept, citing their speculative nature. An metaverse industry body vowed on Monday that the sector should be developed to serve the real economy.
China’s New Crackdown Shows $1.5 Trillion Tech Rout Not Over Yet
Tencent shares have lost 40% since a peak in January last year. The gaming giant, along with peers such as Alibaba and Meituan, were caught in Beijing’s crosshairs as China cracked down on monopolistic behaviors and tightened its grip on user data. The yearlong clampdown has wiped out more than $1.5 trillion in market value from the nation’s tech sector.
“The market is very fearful that more crackdown will come and that could leave technology companies very little room to turn around their businesses,” said Castor Pang, head of research at Core Pacific-Yamaichi. “The metaverse fears shows that the market is worried that tech firms may not be able to grow a new business rapidly, like how they did in the past in China. That’s really dampening the already-fragile sentiment.”
Investors will find out just how much the clampdown has impacted the profitability of some of the biggest tech firms as they release earnings in coming weeks. Alibaba will report on Thursday.
“Nerves are on edge this week as Alibaba reports earnings — in the midst of war, additional Hong Kong curbs and regulatory oversight,” said Wai Ho Leong, strategist at Modular Asset Management.
(Updates with Tencent, Alibaba news in the second and third paragraph.)
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
(Bloomberg) — Former Secretary of State Michael Pompeo is scheduled to travel to Taiwan next month, one of the most senior U.S. dignitaries to visit the democratically ruled island in recent years.
Pompeo has accepted an invitation from the Taipei-based Prospect Foundation, the group’s president, Lai I-chung, said Monday. The former top U.S. diplomat and potential Republican presidential contender will visit Taiwan from March 2-5, the Foreign Ministry in Taipei said Monday.
Pompeo will meet with President Tsai Ing-wen on March 3, the Liberty Times reported. The former secretary of state will also meet senior management figures from Taiwan Semiconductor Manufacturing Co. and China Steel Corp., although details of those meetings will remain private, the publication said.
Pompeo, who served as secretary of state under President Donald Trump from April 2018 to January 2021, was one of the administration’s most vocal advocates for a more confrontational policy toward China. That period included visits to Taipei by two Cabinet-level officials, the most senior American delegations since the U.S. switched official ties to Beijing in 1979.
Higher-ranking American officials than Pompeo have visited Taiwan after leaving office, including former President Bill Clinton in 2005 and former Vice President Dick Cheney in 2017.
Beijing claims the island as Chinese territory and protests such visits, considering them a violation of U.S. agreements on avoiding formal ties with Taipei. Tsai’s ruling Democratic Progressive Party meanwhile views Taiwan as an already de facto sovereign nation awaiting wider international recognition.
“Pompeo has long been sanctioned by China due to his anti-China actions and deeds,” Chinese Foreign Ministry spokesman Wang Wenbin said at a regular press briefing in Beijing on Monday. “The DPP authorities’ attempts to achieve independence with the help of the U.S. will only end up getting themselves burnt.”
The visit comes as Pompeo’s name circulates as a potential contender for the Republican nomination in 2024, a bid that could be complicated by any comeback attempt by Trump. Pompeo is currently a distinguished fellow at the conservative Hudson Institute.
In the final days of Pompeo’s tenure, the State Department scrapped decades-old restrictions on how U.S. diplomats could interact with their Taiwanese counterparts. Pompeo will be joined by Miles Yu, his former policy adviser, the Liberty Times said.
(Updated with comments from China’s foreign ministry in seventh paragraph.)
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
(Bloomberg) — Australian utility AGL Energy Ltd. rejected a multibillion-dollar takeover bid from Brookfield Asset Management Inc. and technology billionaire Mike Cannon-Brookes, who plan to accelerate the closure of the company’s polluting coal-fired power plants.
Brookfield and Cannon-Brookes’s investment firm Grok Ventures have a A$20 billion ($14 billion) transition plan to shift AGL to clean energy and “remains optimistic that an agreement can be reached,” the consortium said in a statement. AGL shares jumped 11% to close at the highest since July.
“The board should continue to engage with Brookfield and Cannon-Brookes, however they will need to considerably increase the offer if they want to get the investment community onboard, even though we agree with the ideals they propose,” said Jamie Hannah, deputy head of investments and capital markets at Van Eck Associates Corp, which owns shares in AGL.
A proposal of A$7.50 a share, a 4.7% premium to Friday’s closing price, “materially undervalues” the company, Sydney-based AGL said in a statement. The company’s own plan to split off its coal assets into a separate unit would deliver better shareholder value, and offers a more responsible path to decarbonization, the utility said.
Public debate on climate change in Australia and the role of coal, which still provides most of the country’s electricity, intensified after wildfires in late 2019 and early 2020. Though Prime Minister Scott Morrison set a net-zero emissions target last year, his government has been criticized for favoring a slower energy transition. He has been pushed by some investors to exploit the nation’s abundant sun and wind to more rapidly build out a green power industry.
AGL, formed in 1837, is responsible for the largest share of Australia’s scope one greenhouse gas emissions, and this month disappointed climate campaigners when it announced plans to bring forward the decommissioning of two giant coal plants by only a few years.
“If successful, this will be one of the biggest decarbonization projects in the world,” said Cannon-Brookes, co-founder of software developer Atlassian Corp. and Australia’s fourth-richest person. AGL accounts for more than 8% of Australia’s emissions, he said. “This proposal will mean cheaper, cleaner and more reliable energy for customers.”
Brookfield’s plan would replace seven gigawatts of AGL’s fossil fuel generation capacity with at least eight gigawatts of clean energy and storage capacity, enabling the utility to hit net zero emissions by 2035, according to the consortium.
AGL’s existing plans would keep two key coal-fired plants running into 2033 and 2045 respectively. Under its proposed demerger, Accel Energy, which will house the company’s fossil fuel generation assets, would target a cut in scope one and two greenhouse gas emissions by as much as 60% by 2034.
The firm’s value almost halved last year as it was hit by plunging costs of wind and solar generation that have dragged down power prices, and waning investor appetite for polluting assets. Utilities globally are attempting to respond to an accelerating energy transition, and AGL previously outlined its proposal to split off its coal-fired power plants into a separate unit and repurpose some sites as low-carbon energy hubs.
Brookfield plans to invest via its Brookfield Global Transition Fund, which is in the final stages of raising about $15 billion. It values AGL’s equity at A$5 billion ($3.6 billion). The deal would provide an opportunity to build a dominant position as a clean energy generator in Australia and to secure an electricity retailer that serves about 4.5 million customers.
Rival Origin Energy Ltd. said last week that its Eraring coal plant could retire in 2025, seven years earlier than previously planned. The faster exit of power assets has drawn criticism from Morrison’s government, which argues the moves could put the affordability and reliability of Australia’s electricity supplies at risk.
Read more: Coal Power Exit in Australia Accelerates as Origin Eyes Shutdown
“Our government is very committed to ensure we sweat those assets for their life to ensure that businesses can get access to the electricity and the energy they need at affordable prices,” Morrison said Monday.
(Updates with closing share price in second paragraph)
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
(Bloomberg) — Pakistan has toughened laws to curb so-called fake news by regulating posts on social media platforms like Twitter Inc. and Meta Platforms Inc.’s Facebook, a move seen as an attempt to crack down on journalists and opponents of the government.
President Arif Alvi approved an ordinance to amend the country’s Prevention of Electronic Crimes Act that allows anyone to file a complaint against a social media post. It also increased the jail term for the act from three to five years and made spreading fake news online a non-bailable offense, law minister Farogh Naseem said at a press conference Sunday.
The changes to the law follow online misinformation about a rift between Prime Minister Imran Khan and the first lady and violent language used against former Chief Justice of Pakistan Gulzar Ahmed on social media, according to Naseem.
“This is simply a move to further silencing dissenting voices. It’s very serious. They have sharpened the law,” said Haroon Baluch, senior program manager at Bytes for All, a digital rights organization. “Now you will see more self-censorship.”
Separately, the authorities last week arrested Mohsin Jamil Baig, the editor of wire service Online News Agency, for comments made on a television show after a complaint made by a federal minister Murad Saeed.
“The government action is unwarranted and deplorable and undermines democratic, political and media freedoms,” Pakistan Federal Union of Journalists said in a statement. The union plans to challenge the ordinance in court and start a protest.
The decision comes days ahead of a planned protest by opposition parties to dislodge Khan from power through a series of rallies and a possible no-confidence move in parliament’s lower house. Pakistan’s second-largest opposition group, the Pakistan Peoples Party, plans a 10-day march from the southern city of Karachi on Feb. 27 that will travel to several cities before reaching capital Islamabad.
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
(Bloomberg) — ZF Friedrichshafen AG is poised to overtake Continental AG as the auto-parts rivals navigate fierce headwinds to tackle the disruptive shift to electric and self-driving vehicles.
The German supplier to the likes of BMW AG and Porsche met its profit-margin target last year amid a double-digit jump in revenue, even as the further fallout from the Covid-19 pandemic and major supply shortages weighed on the industry.
“It was an exceptionally challenging year for our company,” Chief Executive Officer Wolf-Henning Scheider said in an interview at ZF’s headquarters overlooking Lake Constance. “We could have generated more revenue, but growth was held back by headwinds like the chip shortage, rising raw material costs or much higher freight rates.”
Revenue last year rose by at least 10% and the operating profit margin was between 4.5% to 5.5%, Scheider said. The privately-held engineering group will report detailed full-year earnings on March 17. The rise indicates revenue of about 36 billion euros ($40.9 billion) or higher, which would exceed Continental’s targeted sales of as much as 33.5 billion euros for 2021. Continental lowered its outlook in October and last year separated its powertrain operations.
Tracing its origins back to airship pioneer Ferdinand von Zeppelin, the company is under pressure to pivot to the electric and self-driving age. ZF specializes in making high-performance transmissions for upscale combustion cars, a component that risks becoming gradually obsolete in the move to battery-powered vehicles.
As companies navigate the shift, early radical decisions have been rewarded. U.S. supplier Delphi in 2017 spun off its powertrain business to focus on its autonomous vehicle efforts. Aptiv Plc now has a market value of nearly $40 billion, while Sweden’s Autoliv Inc. in 2018 separated its electronics unit that now trades as Veoneer Inc. In contrast, Continental took until last year to carve out its powertrain business with its share price more than halving since 2018.
ZF catapulted itself into the upper echelons of global automotive suppliers with the $12.9 billion acquisition of TRW Automotive to focus on electric-vehicle components and safety systems. In 2020, it bought Wabco Holdings Inc. in a $7 billion deal to add commercial-vehicle technology. The company has stopped allocating funds to the development of new combustion-engine technology two years ago.
ZF remains “open toward acquisitions, even if in the next 3 to 4 years they might not be on a scale like the Wabco deal,” Scheider said, while divestments are an option too. “We review our portfolio continuously to see if we’re still the best owner for a business unit.”
Incorporating Wabco forced ZF to weigh painful restructuring decisions to cut costs when the Covid-19 pandemic erupted at the same time. Labor unions warned global headcount might be cut by as many as 15,000 people, roughly 10% of the workforce. Management had signaled cutbacks might be needed to reduce the risk of breaching credit covenant agreements.
The talks over headcount reductions and the future of factories have progressed but aren’t finalized entirely yet, Scheider said, expecting headwinds including the ongoing chip shortage to last for some time.
“New technology like electric mobility, autonomous driving or software offer more revenue potential for ZF than we generate with existing technology,” Scheider said. “Our business in 2030 should be bigger than now.”
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
(Bloomberg) — Alphabet Inc.’s Google has reached a settlement for an undisclosed amount with Chelsey Glasson, who said she faced discrimination by the search giant after she became pregnant.
Glasson sued Google in 2020 after repeated efforts to report pregnancy discrimination were ignored, she said in October. She estimated her legal fight would cost more than $100,000 and take a heavy toll on her mental health. Glasson said her experience at Google left her with insomnia, panic attacks and heart palpitations.
Google did not immediately respond to a request for comment. Glasson confirmed the settlement but didn’t provide details.
Google Whistle-Blower Details Tough Road to Hold Tech to Account
Worker welfare and labor relations have become more important at big tech firms in recent times, punctuated by whistle-blower revelations such as those from former Facebook employee Frances Haugen. Glasson has advocated for better protection and resources for whistle-blowers, using her own case as an example of the difficulties they face.
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
(Bloomberg) — Former Secretary of State Michael Pompeo is scheduled to travel to Taiwan next month, one of the most senior U.S. dignitaries to visit the democratically ruled island in recent years.
Pompeo has accepted an invitation from the Taipei-based Prospect Foundation, the group’s president, Lai I-chung, said Monday. The former top U.S. diplomat and potential Republican presidential contender will visit Taiwan from March 2-5, the Foreign Ministry in Taipei said Monday.
Pompeo will meet with President Tsai Ing-wen on March 3, the Liberty Times reported. The former secretary of state will also meet senior management figures from Taiwan Semiconductor Manufacturing Co. and China Steel Corp., although details of those meetings will remain private, the publication said.
Pompeo, who served as secretary of state under President Donald Trump from April 2018 to January 2021, was one of the administration’s most vocal advocates for a more confrontational policy toward China. That period included visits to Taipei by two Cabinet-level officials, the most senior American delegations since the U.S. switched official ties to Beijing in 1979.
Higher-ranking American officials than Pompeo have visited Taiwan after leaving office, including former President Bill Clinton in 2005 and former Vice President Dick Cheney in 2017. Beijing claims the island as Chinese territory and protests such visits, considering them a violation of U.S. agreements on avoiding formal ties with Taipei.
The visit comes as Pompeo’s name circulates as a potential contender for the Republican nomination in 2024, a bid that could be complicated by any comeback attempt by Trump. Pompeo is currently a distinguished fellow at the conservative Hudson Institute.
In the final days of Pompeo’s tenure, the State Department scrapped decades-old restrictions on how U.S. diplomats could interact with their Taiwanese counterparts. Pompeo will be joined by Miles Yu, his former policy adviser, the Liberty Times said.
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
(Bloomberg) — China’s home price declines eased for a second month in January, offering a rare glimmer of hope to the embattled property sector.
New home prices in 70 cities, excluding state-subsidized housing, fell 0.04% last month from December, when they dropped 0.28%, National Bureau of Statistics figures showed Monday. Prices in large cities rose.
Sentiment in China’s home market has been dented by a worsening liquidity crisis among real estate developers following a regulatory clampdown on excessive leverage. Shares of Chinese developers slumped Monday after Zhenro Properties Group Ltd. warned it may not meet its obligations, another negative surprise only weeks after it announced plans to redeem a perpetual bond.
Chinese authorities have recently been tweaking some of their tightening measures in a bid to arrest the property slowdown, which has been hurting growth in the world’s second-largest economy. Banks in several Chinese cities have cut mortgage down payments for some homebuyers, local media reported last week, in a move that may boost flagging housing demand.
“The data set is a small positive signal that the quarter-long credit easing in the property sector has curbed an abrupt slowdown,” said Yan Yuejin, research director at E-house China Research and Development Institute. “If the credit loosening continues, we can pin hopes on a more evident warm-up in the second quarter.”
Home prices have begun to pick up across national hubs and regional economic centers. The four largest cities saw prices climb 0.65% on average last month, the biggest increase since June. Values gained 0.06% in so-called tier-2 cities following three months of declines.
Still, values in tier-3 cities slipped 0.21%, the fifth consecutive monthly drop. And prices across the nation in the secondary market declined 0.28%, down for a sixth month.
A Bloomberg Intelligence index of Chinese developer stocks dropped as much as 2.8% on Monday morning, after Zhenro said late Friday that it may not have enough cash to meet its debt payments next month.
Even with home values showing signs of stabilizing, a slump in sales is continuing to add pressure on builders’ cash flows. The top 100 developers saw sales drop 40% in January from a year earlier, according to preliminary data from China Real Estate Information Corp.
Rates Maintained
Chinese banks refrained from cutting interest rates for a third straight month Monday, following the central bank’s lead. The People’s Bank of China maintained the interest rate for one-year policy loans last week while injecting a net 100 billion yuan into the banking system through loans.
“There is room for further monetary easing, but it does not seem to be imminent,” said Frances Cheung, rates strategist at Oversea-Chinese Banking Corp. in Singapore.
Although some in the market are expecting more support from fiscal policy this year, the property market downturn is putting a strain on the finances of China’s local governments, which rely on land sales for much of their income. Some local authorities are predicting their general revenue this year will be significantly weaker than an expected national economic growth target of at least 5%, according to a Bloomberg analysis of budget reports.
For many developers, it’s unlikely that the crisis will end soon. Yu Liang, chairman of China Vanke Co., urged staff to prepare for a battle that could make or break the firm, the South China Morning Post reported last week. Global credit rating firms are withdrawing their assessments on property bonds, while a string of auditor resignations is adding to doubts over financial transparency weeks before earnings season.
(Updates with analyst comment in fifth paragraph, breakdown in sixth)
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.
