Congress could kick China listings off U.S. stock exchanges, but it won’t happen overnight


The bill rushed unanimously through the U.S. Senate and spun into the news cycle as if it were a certainty.

As the thinking goes, the House and then the president will shuffle this legislation into law, forcing Chinese companies listed on U.S. exchanges to play by the same transparency rules as those from other parts of the world.


Senate bill would require Chinese companies to establish that they are not owned or controlled by a foreign government and submit to an audit that the Public Company Accounting Oversight Board can review.

Normally, powerful entities would make the passage of this “anti-China” bill an uphill battle. The Nasdaq
NDAQ,
+1.18%
,
the NYSE
ICE,
+0.98%
,
the Securities and Exchange Commission and Wall Street in general largely oppose the move and the yanking of billions of dollars from their pocketbooks. And House Speaker Nancy Pelosi said Thursday that her side of the Capitol was willing to look at the issue, but no vote was promised.

But the legislation comes amid a striking U.S. political competition of sorts to show who is toughest on China — and during the crucial few months before the presidential election.

Also from Tanner Brown:U.S.-China relations are bad and getting worse, with major ramifications for trade and investment — and the U.S.’s presidential election

Even if a variation of the bill does eventually pass, already-listed firms will have three years to comply. That is ample time for China to increase the attractiveness of its own bourses, and for Chinese companies to prepare for a relatively smooth landing back home — likely Hong Kong for larger already-listed companies, and the growth boards for smaller startups, according to Peking University’s Paul Gillis.

China has already opened more attractive doors for public fundraising. After the decade-old Nasdaq-like ChiNext welcomed tech startups in Shenzhen, neighboring Shanghai learned from the pains and successes of that venture and unveiled the Science and Technology Innovation board, or Star Market, last year. Its niche is profit-losing tech-focused startups that show promise and otherwise might list in New York.

As of now, some 200 Chinese companies are listed in the U.S. — some in ways more transparent than others — possess a total market value of more than $1.8 trillion, according to the U.S.-China Economic and Security Review Commission.

Their departure would represent a big flight of capital from U.S. exchanges, a diminution of U.S. tax revenue, a loss to investors and, some would argue, a prestige hit for Wall Street as the center of global finance.

But it would also mean those willing to buy into U.S.-listed firms from China wouldn’t be duped like they were recently by Luckin Coffee, whose shares
LK,
-30.84%

resumed trading this week after a six-week freeze. Luckin’s American depositary receipts tumbled 36% on Wednesday from their closing price on April 6, after which trading was halted by Nasdaq. The stock plummeted 89% in the first quarter of this year. It ended the week at $1.38, against a closing level above $40 as recently as March 6.

Nasdaq has informed the onetime Starbucks
SBUX,
-0.55%

rival that it faces delisting after it disclosed that some employees fabricated $300 million in sales. Luckin is appealing the decision, but if it’s delisted investors would lose essentially all equity, a “wipeout” for which one analyst warned investors to prepare.

A Luckin Coffee location in Beijing on Jan. 15, before the fast-expanding chain — billed as a potential Starbucks slayer — was engulfed by controversy.


Bloomberg

Opinion:Luckin Coffee shows how risky Chinese IPOs can be, but investors are just not listening

“A lot of these companies, by the way, have already had scandals and cost investors a lot of money, because of their failure to be transparent in their reporting,” White House economic adviser Larry Kudlow told Fox News. “The Chinese government forbids that kind of transparency.”

The painful delisting decision may still be bothering Wall Street and the SEC, but lawmakers appear ready for action.

“We want investors to understand what they’re investing in,” said Sen. John Kennedy, a Louisiana Republican and a co-sponsor of the Senate bill. “And those reports have to be accurate or you get in a lot of trouble.”

Tanner Brown covers China for MarketWatch and Barron’s.



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Americans splurge at Walmart, Target as stimulus checks kick in By Reuters


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© Reuters. President and CEO of Walmart Doug McMillon takes part in a strategic and policy CEO discussion with U.S. President Donald Trump in the Eisenhower Execution Office Building in Washington

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By Aishwarya Venugopal

(Reuters) – The Trump Administration’s coronavirus relief payment provided a fillip to sales of major retailers in April as millions of Americans used the money to buy everything from video games to sewing machines even as the country struggles with record job losses.

Walmart (N:) and Target Corp (N:) noted in their earnings call this week that quarterly comparable sales, which rose about 10%, got a major boost from increased demand for non-essentials at the end of last month.

“Call it relief spending, as it was heavily influenced by stimulus dollars,” Walmart Chief Executive Doug McMillon said on Tuesday, citing a jump in sales of clothing, televisions, video games, sporting goods and toys.

The U.S. government doled out relief checks of $1,200 in late April to help tens of millions of households cover essentials and cope with the financial distress brought on by the coronavirus pandemic as job losses reached 20 million.

However, as lockdown restrictions were eased, Americans moved away from stockpiling staples and instead splurged on discretionary big-ticket items, helping boost margins for retailers.

The shift also helped specialty retailers such as Best Buy (N:) and Advance Auto Parts Inc (N:).

“We did see an increase on the week of the stimulus, but the week after the stimulus was better … And then two weeks after was better than one week after. So we are seeing that sequential improvement,” Advance Auto Chief Executive Tom Greco said.

Target CEO Brian Cornell said the company saw an increase in online and store traffic, both tied to the extra cash, but cautioned that the bump could be short-lived.

Edward Jones analyst Brain Yarbrough concurred, saying, “I wouldn’t expect the trends you’ve seen in late April and potentially in the beginning of May to continue. That wouldn’t be realistic.”

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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UK corporate insolvencies fall as virus support plans kick in: KPMG By Reuters


© Reuters.

LONDON (Reuters) – The number of corporate insolvencies in Britain fell a third in April compared to the year before even as the COVID-19 pandemic hammered the economy, figures compiled by KPMG showed on Friday, as government support packages kept firms afloat.

The spread of the novel coronavirus – and lockdown measures introduced to contain it – has ravaged the British economy, with Britons told to stay indoors and many non-essential businesses told to close. The Bank of England said on Thursday it could cause the biggest economic slump in over 300 years.

Britain is due to begin a limited easing of lockdown measures next week but a rapid reopening of the economy is not on the cards as Prime Minister Boris Johnson looks to avoid a second peak of infections.

To support businesses through the lockdown, finance minister Rishi Sunak has announced a raft of schemes, including a job retention plan allowing employers to furlough staff while government pays up to 80% of their wages.

KPMG head of restructuring Blair Nimmo said that the measures had prevented a deluge of companies entering administration but cautioned that the route out of the crisis was uncertain and that, for some, insolvencies might have been merely delayed.

“It gave companies the opportunity to go into a mothball or hibernate state whilst they waited to see what the outcome would be and how they could access the support schemes,” Nimmo told Reuters, adding that courts had also not been processing winding up orders in the same way.

“It doesn’t mean to say that the companies won’t have issues moving forward.”

The analysis of insolvency notices by KPMG’s Restructuring practice showed that 61 companies fell into administration during April 2020 compared to 91 in April 2019.

Some high profile firms have gone into administration since the pandemic struck, including Carluccio’s restaurants in late March and retailers Oasis, Warehouse and Debenhams in April.

Nimmo said that casual dining and retail had already faced substantial difficulties even before the coronavirus lockdown, which would not be alleviated by temporary government measures.

He said that some firms that would have gone out of business in April even without the COVID-19 pandemic had been saved by the government’s schemes, but the measures had also rescued otherwise viable companies from the effects of the outbreak.

“In some cases, the schemes will only help to delay the inevitable,” Nimmo said. “But in other cases they may actually be able to avoid it.”

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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Billie Eilish, Billy Porter help kick off rain-hit Oscar red carpet By Reuters


© Reuters. Billie Eilish, Billy Porter help kick off rain-hit Oscar red carpet

By Jill Serjeant

LOS ANGELES (Reuters) – Heavy rain marred the start of the Oscars on Sunday, sending workers scurrying to hold off leaks on the red carpet as Hollywood’s biggest night got underway.

Chilly weather and dark clouds over Hollywood brought a downpour just before A-list stars began arriving at the Dolby Theatre. Despite workers using long sticks to push away rain pooling off the plastic covering the red carpet, some rain dripped in, making the going squishy.

However the parade of celebrities went ahead, with Billy Porter, who was co-hosting the red carpet pre-show, sporting a gold feathered sleeveless top, flowing orange skirt and platform shoes.

Five-time Grammy winner Billie Eilish, due to perform on Sunday, sported a white wool Chanel coat, baggy pants and sneakers topped off with long black-painted nails and her trademark green hair.

Director Spike Lee saluted Los Angeles Lakers basketball star Kobe Bryant, who was killed in a helicopter crash late last month, by wearing the gold number 24 embroidered on the back and front of his purple tuxedo.

The cast of best picture nominee “Parasite” arrived en masse on a night that could see the South Korean movie make history as the first in a foreign language to win the best picture Oscar.

“Regardless of the outcome, we are just so happy for these nominations,” director Bong Joon Ho told reporters of the social satire’s six nods.

The coveted best picture prize, to be announced at the end of the three-hour show, is thought to be a three-way race between “Parasite,” British director Sam Mendes’ immersive World War One movie “1917” from Universal Pictures , and Quentin Tarantino’s love letter to show business, “Once Upon a Time in Hollywood,” from Sony Pictures (T:).

“The smart bet is definitely ‘1917,’ but I do not rule out the possibility of something else winning, whether that be ‘Parasite’ or ‘Once Upon a Time in Hollywood,’ or ‘Jojo Rabbit’,” Scott Feinberg, awards columnist for The Hollywood Reporter, said ahead of the show.

Dark comic book movie “Joker” from Warner Bros (N:), which has a leading 11 nominations, Netflix (O:) divorce drama “Marriage Story” and the streaming service’s mob epic “The Irishman,” race-car drama “Ford v Ferrari” from 20th Century Studios (N:), and novel adaptation “Little Women” from Sony Pictures, round out the competition for the top prize.

The winners are chosen by the 8,000 members of the Academy of Motion Picture Arts and Sciences, and the show has no host for a second year.

Netflix boosted its Hollywood credentials by getting a leading 24 nominations this year, including for drama “The Two Popes,” animated movie “Klaus,” and documentary “American Factory.” But the coveted best picture Oscar may elude it yet again on Sunday, awards watchers say.

A poor year for diversity, with Cynthia Erivo the only actor of color in the race and an all-male director field, has revived the #OscarsSoWhite debate of four years ago.

Erivo, who played slavery-era freedom fighter Harriet Tubman in “Harriet,” is likely to lose out in the best actor category to Renee Zellweger, who has swept up awards this season for her performance as an aging Judy Garland in “Judy.”

Brad Pitt has stormed back as a leading Hollywood man after a period out of the public eye during his bitter divorce from Angelina Jolie, and is seen as a shoo-in for the supporting actor Oscar for his laid-back stuntman role in “Once Upon a Time in Hollywood.”

Joaquin Phoenix is the favorite to win his first Oscar for a disturbing performance as a loner clown who turns to violence in “Joker,” while Scarlett Johansson is nominated for her roles in both “Jojo Rabbit” and “Marriage Story.” No actor has won two Oscars on the same night

The Academy Awards will be televised live from Hollywood on ABC television, starting at 8 p.m. EST/5 p.m. PST (0100 GMT on Monday).





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Earnings volatility set to kick in as coronavirus worries mount By Reuters


© Reuters. FILE PHOTO: A street sign for Wall Street is seen outside the New York Stock Exchange in Manhattan, New York City

By April Joyner

NEW YORK (Reuters) – Concerns over the outbreak of coronavirus from China have largely overshadowed corporate results, but the back half of the earnings season could hold greater sway over the performance of individual stocks.

Earnings-related stock moves have been smaller this season in comparison with the average over the past 12 quarters, according to data from options research company ORATS.

The muted moves reflect a broader trend of subdued volatility that had limited price fluctuations in a range of assets over the last several months. Some of that calm was disrupted this week, as mounting concerns over the spread of the coronavirus on Friday dealt the benchmark S&P 500 () stock index its biggest daily percentage loss since October.

The dampened earnings-related moves have benefited options sellers, who profit when the change in share price is smaller than expected.

Yet betting that earnings-related moves will remain subdued could soon become more costly.

Options traders have priced in more volatility for broader exchange-traded funds. Implied volatility on the SPDR S&P 500 ETF Trust (P:), which shows expectations for future stock swings, has climbed since mid-January, according to data from Trade Alert. That rise coincides with mounting concerns over the potential economic impact of the coronavirus outbreak.

“The options market is reflecting this new risk, this coronavirus risk,” said Ophir Gottlieb, chief executive of Capital Market Laboratories in Los Angeles.

Moreover, risks from the virus outbreak are beginning to spill over into earnings commentary. Companies such as Starbucks Corp (O:), Levi Strauss & Co (N:) and Oreos maker Mondelez International Inc (O:) have warned of a financial hit from the outbreak. As such remarks pile up, they could also bump up volatility among shares of certain companies, Gottlieb said.

“Some CEOs are openly saying, ‘Hey, things are going to be a little harder,'” Gottlieb said.

At the same time, the fourth and fifth weeks of the six-week earnings season have usually reaped the greatest rewards for traders buying options in anticipation of outsized stock moves, according to ORATS data.

Earnings-related moves tend to be greater in those weeks in part because smaller companies, whose stocks are often more volatile, tend to report later in the season, said Matt Amberson, founder of ORATS, in Portsmouth, New Hampshire.

Options for several S&P 500 () companies reporting next week – including Chipotle Mexican Grill Inc (N:), Twitter Inc (N:) and Coty Inc (N:) – show a gap of several percentage points between investors’ expectations for share moves and past share performance after quarterly reports.

It appears that the cost of buying options on individual stocks ahead of a company’s earnings report is “getting cheaper when it should be getting more expensive,” Amberson said.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.





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