What game is Blackrock playing?

Discussion in 'Wall St. News' started by themickey, Aug 18, 2021.

  1. themickey

    themickey

    China made billions for Warren Buffett and other big investors. Now they are backing away
    By Zheping Huang and Charlotte Yang September 9, 2022
    https://www.smh.com.au/business/mar...ow-they-are-backing-away-20220909-p5bgoa.html

    For early backers, they’ve been some of the most profitable Chinese stock investments of all time: Tencent, Alibaba Group and BYD.

    But now big-name investors who’ve made billions from these shares are taking money off the table, underscoring growing angst over the prospects for China’s biggest companies as President Xi Jinping tightens the government’s grip on the private sector and the economy falters under persistent Covid lockdowns.

    [​IMG]
    Warren Buffett’s Berkshire Hathaway is trimming its stocks in Chinese electric car startup BYD.Credit:AP

    In the latest development, Naspers – which invests via its Dutch unit Prosus NV – said it is continuing its plan to cut back its stake in Tencent, placing a $US7.6 billion ($11.3 billion) stake in Hong Kong’s clearing and settlement system, the eventual sale of which will help fund a share buyback.

    That comes a month after Japan’s SoftBank Group said it unloaded an enormous slug of Alibaba, the e-commerce pioneer that had long been China’s most valuable company. SoftBank, under pressure from botched startup bets, raised more than $US17 billion through the sale of forward contracts on the stock. Warren Buffett’s Berkshire Hathaway is trimming its stake in electric-vehicle maker BYD.

    The moves, taken together, represent a striking retreat from China’s private sector by investors that had been fervent champions for decades. SoftBank founder Masayoshi Son famously invested about $US20 million in Jack Ma’s Alibaba in 2000 and held through the dot-com bust and the Chinese company’s IPO in 2014. Naspers invested in Tencent in 2001. Buffett, has made billions of dollars from the holding since he invested around $US230 million in 2008. The stake is now worth north of $US8 billion.

    “There’s a big question mark over the growth model of Chinese tech giants like Tencent and Alibaba,” said Ke Yan, analyst with Singapore-based DZT Research. “The government crackdown brought significant uncertainty.”

    Son’s wager was long considered one of the best venture capital investments of all time, with his stake zooming in value to more than $US200 billion. But Alibaba and its affiliate Ant Group were primary targets for the Communist Party’s crackdown, and its shares have plunged more than 70 per cent from their peak in 2020. Son has said he will slash new investments in China because of regulatory uncertainty.

    Naspers’ backing of Tencent was similarly considered a legendary startup investment. In June however, Prosus, the Naspers affiliate, unveiled an “unlimited” program to sell Tencent shares to finance buybacks of its own stock. Berkshire jettisoned total shares of 3.05 million, or 1.4 per cent of its known 225-million-share holding in BYD.

    “There is a great deal of de-risking from China ahead of the party congress,” Jason Hsu, chief investment officer at Rayliant Global Advisors, said referring to the Communist Party gathering that will likely give Xi a precedented-breaking third term as president. “While some are betting on China returning to an aggressive pro-growth mode, many are also betting on a structural shift toward central planning and a SOE-led economic policy focused on employment and common prosperity.”

    Alibaba and Tencent have both seen their businesses deteriorate markedly in the past two years. The two companies reported their first revenue declines ever in the most recent quarter. They’ve also been compelled to put money into government causes and cut back on investments in China’s start-ups.

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    SoftBank founder and CEO Masayoshi Son;s $US20 million investment in Alibaba in 2000 was once valued at more than $US200 billion.Credit:Bloomberg

    Tencent, now China’s most valuable firm, is spending more judiciously after profits fell more than 50 per cent in the most recent quarter. Beijing authorities have been slow to approve new game titles during the crackdown, cutting off a key opportunity for growth. It has been selling off assets, including some of its investments in Chinese online retailer JD.com and Singapore’s Sea Ltd, while upping its stakes in global gaming companies like Ubisoft Entertainment SA.

    Alibaba’s net income fell 50 per cent in the latest quarter as revenue in its core China commerce division contracted for the first time. The company let go of 9,241 employees in the three months through June, according to the company’s latest filing, after cutting 4,375 in the first quarter of the year.

    Layoffs by tech leaders like Alibaba, Tencent and Xiaomi Corp. have exacerbated a jobs crisis in China, pushing youth unemployment to about 20 per cent.

    In recent quarters, SoftBank’s Son has been vocal in his rising concerns about the China market. After watching the value of Alibaba plunge, he pulled back on new investments in addition to selling shares in the e-commerce giant.

    “We have reduced the China dependency in our portfolio, therefore we believe we don’t have to worry too much about the situation in China,” he said during an earnings call in May.

    Alibaba and Tencent were long among the most active financiers for China’s start-ups, helping to propel innovation throughout the economy. However, both companies have had to pull back because of Beijing’s concerns they wielded too much control over their portfolio companies. That swelled their cash holdings, with Tencent holding more than $US40 billion on its balance sheet while Alibaba has more than $US100 billion.

    Bloomberg
     
    #131     Sep 9, 2022
    VicBee and murray t turtle like this.
  2. VicBee

    VicBee

    Very interesting. China struggles with its fundamental core values. A powerful conservative movement in the CCP wants to undue 30 years of economic liberalization and return to conservative social values based on communist dogma. Perhaps they fear losing their grips on both, leading to losing power. Their ability to reverse without meaningful challenges within the CCP or society at large is quite stunning. The dictatorship's show of force over its 1.2 billion population is any dictator wannabe's wet dream.
     
    #132     Sep 9, 2022
  3. themickey

    themickey

    Kind of biblical with Chinese mentality, honour your parents, honour your leaders. (Even when they don't deserve it).
     
    #133     Sep 9, 2022
    murray t turtle likes this.
  4. %%
    OK;
    but they most likely would prefer payment of taxes.
    NOT saying any should smart off to chicoms:D:D Nancy P seems to smart off to any; dont know if she does that to her husband\ but he has been in the news a lot this year:caution::caution:
    Instead of IWM , by Black rock ; i mostly moniter Vanguards VTWO:caution::caution:
     
    #134     Sep 12, 2022
  5. themickey

    themickey

    Markets
    Xi’s Power Grab Spurs Historic Market Rout as Foreigners Flee
    • Stocks, yuan extend losses on Monday as Party congress ends
    • Traders worry leadership filled with Xi allies may disappoint
    By Bloomberg News 24 October 2022
    https://www.bloomberg.com/news/arti...t-after-leadership-overhaul?srnd=premium-asia

    A sense of exasperation swept across Chinese markets as President Xi Jinping moved to stack his leadership ranks with loyalists, with stocks capping their worst day in Hong Kong since the 2008 global financial crisis and the yuan weakening to a 14-year low.

    The Hang Seng China Enterprises Index, a gauge of Chinese stocks listed in Hong Kong, plunged 7.3% in its worst showing after any Communist Party congress since the inception of the index in 1994. Foreign investors fled mainland markets, selling a record amount of equities via trading links in Hong Kong and fueling a nearly 3% loss in the CSI 300 Index. The onshore yuan fell as much as 0.6% to the weakest since January 2008.

    The market meltdown following the reshuffle, which highlighted Xi’s unquestioned grip over the ruling party, shows deep disappointment over a likely continuation of policies staked on Covid Zero and state-driven companies. Tech giants Alibaba Group Holding Ltd., Tencent Holdings Ltd. and Meituan all tumbled more than 11% as investors remained skeptical that Xi and his allies will seek a rejuvenation of private enterprise.

    “The market is concerned that with so many Xi supporters elected, Xi’s unfettered ability to enact policies that are not market friendly is now cemented,” said Justin Tang, head of Asian research at United First Partners.

    [​IMG]


    While the appointment of Xi’s allies to key posts may help accelerate major agendas, the addition of Covid Zero advocates to the Politburo Standing Committee diminishes the chance of any early loosening of Covid restrictions.

    Foreigners sold a net 17.9 billion yuan ($2.5 billion) of mainland shares via trading links with Hong Kong on Monday, a record since data going back to 2016.

    The swoon in Chinese stocks stands in contrast to global shares, which had their best weekly performance since July last week. The Hang Seng China index is trading at the lowest relative to the S&P 500 since 2001, according to data compiled by Bloomberg.

    [​IMG]



    A slew of China’s key economic data -- released Monday after abrupt delays last week --- showed a mixed recovery. The economy grew faster than expected in the third quarter with industrial activity improving despite Covid restrictions and a property slump, but retail sales weakened.

    Economists remain wary about future growth given the rolling Covid lockdowns. Authorities suspended in-person schooling and dining-in at restaurants in a district at the center of Guangzhou, stoking concerns about potential disruption in the southern manufacturing hub.

    “Panic Selling”
    “The Hong Kong market is seeing a panic selling moment,” said Dickie Wong, executive director of research at Kingston Securities Ltd. “While China reported macro data that beat expectation, the market is on a way down, as the leadership reshuffle and tensions between China and US continue to drag down sentiment and adds uncertainty.”

    In the currency market, the onshore yuan is nearing its weak end of the 2% trading limit around the fixing again, signaling a rise in bearish sentiment toward the currency. The People’s Bank of China set the fixing at 7.1230 per dollar on Monday, weaker than the recent pattern of near 7.11 per dollar.

    China’s high-yield dollar bonds, dominated by notes sold by real estate firms, dropped about 1-3 cents on the dollar on Monday, according to credit traders.

    The onshore credit market, however, is a rare bright spot. Some key onshore corporate-bond yields have been at their closest levels to comparable Chinese government debt in about 15 years, boosted by a slew of easing measures to support a slowing economy.

    “The market situation currently might be the worst I’ve even seen in my career. Sentiment is even worse than the 2008 global financial crisis,” said Harris Wan, vice president at iFAST Global Markets.

    — With assistance by John Cheng, Wenjin Lv, Jeanny Yu, Charlotte Yang, Lin Zhu, Tania Chen, Dorothy Ma and Alice Huang
     
    #135     Oct 24, 2022
  6. themickey

    themickey

    Crypto
    FTX crisis bruises BlackRock, VanEck: ‘Crypto industry will need to work twice as hard to rebuild bridges’

    Crypto bosses say crisis shows industry 'still has some growing up to do'
    [​IMG]
    BlackRock's iShares Blockchain and Tech exchange-traded fund was down 7.3%
    Getty Images

    By Alex Daniel Thursday November 10, 2022
    https://www.fnlondon.com/articles/f...ork-twice-as-hard-to-rebuild-bridges-20221110

    Investors in BlackRock’s and other firms’ crypto products saw values plunge on 9 November as the embattled digital assets industry reeled afresh from a crisis engulfing crypto giant FTX.

    BlackRock’s iShares Blockchain and Tech exchange-traded fund, which it launched earlier this year, was down 7.3% on 9 November for the 24 hours previous, according to its website. VanEck’s bitcoin strategy ETF was down 13% for the same period on 10 November.

    For Grayscale, a crypto asset manager, shares in its bitcoin trust relative to the value of the underlying asset held in the fund plummeted to a record 40.9% on 9 November, according to YCharts data.

    CoinShares, Europe's largest crypto asset manager, said on 10 November that despite having withdrawn funds in the last week, its exposure to FTX exchange was still more than one-tenth of the firm's net asset value, at £26m. Its ETP, which tracks the price of FTX's token FTT is down about 90% since 6 November.

    Crypto markets have taken a battering in recent days. Bitcoin fell to $16,287 on 10 November, down 75% since the start of the year after a run on FTX exchange in recent days blew a massive hole in its balance sheet, throwing serious doubt over the company’s survival prospects.

    FTX’s boss Sam Bankman-Fried initially agreed to sell the business to rival crypto exchange Binance on 8 November, as customers rushed to withdraw funds from his trading platform following reports that it faced trouble from losses at a related trading firm, Alameda.

    But Binance, the world's largest crypto exchange, said on 9 November that it is pulling out of the deal. “In the beginning, our hope was to be able to support FTX’s customers to provide liquidity, but the issues are beyond our control or ability to help.

    BlackRock, VanEck, WisdomTree, Grayscale, 21Shares and others offer investment products tracking listed crypto companies or markets.

    BlackRock, VanEck and Grayscale did not immediately respond to requests for comment.

    Usman Ahmad, chief executive of Standard Chartered’s crypto firm Zodia Markets, told Financial News: “It’s hard to believe it has unravelled so quickly, particularly considering the amount of money Sam Bankman-Fried had raised through FTX.”

    As in the crisis caused by the collapse of stablecoin terraUSD and its paired cryptocurrency Luna earlier this year, crypto firms have rushed to limit exposure. Galaxy Digital, the crypto asset manager run by Michael Novogratz, said it has exposure of around $76.8m of cash and digital assets tied to FTX, but that it was in the process of withdrawing nearly two-thirds of that figure earlier in the week.

    Sequoia writes down $150m FTX investment to zero
    In the venture capital space, Softbank, BlackRock and Sequoia Capital are among the firms expected to write off their exposure to FTX amid the crisis. In a 10 November letter to shareholders, Sequoia said it had marked down its $150m investment in the embattled crypto firm to zero.

    “We are in the business of taking risk,” wrote the private equity giant. “Some investments will surprise to the upside, and some will surprise to the downside.”

    Other global giants which bet big on FTX in recent years include Ontario Teachers' Pension Plan, Tiger Global Management, Ribbit Capital, Temasek and Lightspeed Venture Partners.

    Millennium Management founder Izzy Englander, Brevan Howard Asset Management’s Alan Howard and the family office of billionaire Paul Tudor Jones were all angel investors in the company.

    Other investors include Insight Venture Management, NEA Management, Paradigm Medical Industries, Coinbase Ventures, Institutional Venture Partners and Lux Capital Group.

    Hedge fund Third Point and tech-focused private-equity firm Thoma Bravo also put money in during a $900m fundraise in 2021.

    Anatoly Crachilov, chief executive of crypto hedge fund Nickel Asset Management, told FN the industry's credibility has been "severely damaged" by events and that the industry would suffer a "loss of trust" as a result.

    "Given that the first cautious attempts to enter crypto by top-tier global allocators, such as Ontario Teachers in the FTX case, ended in full write-offs, one would safely expect this to throw cold water on any immediate interests to crypto and will create a setback to further allocations to this the sector for a while.

    "Whenever one takes significant responsibility and then burns this responsibility — the remaining players have to clean the mess... The crypto industry will need to work twice as hard to rebuild bridges with the institutional world."

    Crypto 'still has some growing up to do'
    Investment banks like Goldman Sachs, JPMorgan and Nomura have made concerted pushes into the digital assets space in the last year, while BlackRock and Fidelity have led the charge from the asset management side.

    On 10 November, Moody’s warned traditional finance companies against overexposing themselves to the sector.

    “Crypto losses so far by retail and digital asset institutional participants have largely remained contained within the crypto sphere, a credit positive for banks and evidence of banks’ fairly cautious approach to crypto in light of the uncertain regulatory environment,” said Fadi Massih, vice president of Moody’s Investors Service’s Financial Institutions Group.

    “However, should leverage again build substantially in the crypto finance system, it could unsettle the banking system, even if banks continue distancing themselves from direct interaction with the crypto economy.”

    Meanwhile, regulators in the US and the UK, which have already taken a hard line on crypto, are likely to be emboldened by the events. The Wall Street Journal reported that the Securities and Exchange Commission and Justice Department are investigating FTX following its sudden implosion.

    Charley Cooper, a former chief operating officer at the US Commodities Futures Trading Commission, told FN: "This is a big black eye for the industry and a blow to thousands of people and companies who entrusted their money to FTX."

    He added: "For years, critics have alleged that crypto is dangerous and doesn't play by any rules, and that view appears to have been validated."

    Oliver Linch, chief executive of crypto exchange Bittrex told FN the implosion of FTX showed that the industry "still has some growing up to do".

    Many firms will be "directly affected" by the crisis, he added. "On a personal level, it's just heartbreaking to see people being put in this position."

    He said it was "critical" in the coming weeks to work out "exactly what happened, why it happened, and how we can make sure it doesn't happen again".
     
    #136     Nov 13, 2022