Wednesday 02 Aug 2023 https://theedgemalaysia.com/node/677057 BlackRock, MSCI queried by US lawmakers over China investment By Silla Brush & Jenny Leonard / Bloomberg 01 Aug 2023 BlackRock, MSCI queried by US lawmakers over China investment (Aug 1): A US congressional committee is investigating BlackRock Inc and MSCI Inc for allegedly helping to facilitate American investment into Chinese companies that the government has blacklisted for human rights abuses and aiding the military. The House Select Committee on the Chinese Communist Party demanded information by mid-August from BlackRock about the inclusion of Chinese companies in its mutual and other funds, according to a letter the panel sent on July 31 to BlackRock chief executive officer Larry Fink. The panel identified companies that present national security risks, use or support forced labour or are affiliated with China’s military and security apparatus. The committee estimated that five BlackRock funds, for example, have more than US$429 million (RM1.94 billion) invested in Chinese companies “against the interests of” the US. “It is unconscionable for any US company to profit from investments that fuel the military advancement of America’s foremost foreign adversary and facilitate human rights abuses,” Representative Mike Gallagher, a Republican from Wisconsin, and Raja Krishnamoorthi, an Illinois Democrat, wrote in the letter. BlackRock said in an emailed statement that it is one of 16 asset managers offering US index funds investing in Chinese companies. “With all investments in China and markets around the world, BlackRock complies with all applicable US government laws,” the company said in a statement. MSCI said in a statement that the company is reviewing the committee’s requests, which were first reported by the Wall Street Journal. US officials are weighing new proposals to screen and possibly prohibit investment in China’s semiconductor, quantum-computing and artificial intelligence sectors, people familiar with the plans have said recently. China’s government said last month that it would respond to any new limitations on investment.
Touch chinese equities and you get burnt. Their accounting practices are a joke anywas. Even the owner of Alibaba said so, knowimg that it would hurt his firm.
Markets Foreign investors' net selling of China shares hits 9-year high Trade via Stock Connect link with Hong Kong sags on property crisis, slowing economy Concern about the macroeconomic outlook and real estate problems in China has been prodding overseas investors to unload Chinese shares. © Reuters TAICHIRO SUNAGA, Nikkei staff writerSeptember 30, 2023 https://asia.nikkei.com/Business/Ma...-net-selling-of-China-shares-hits-9-year-high HONG KONG -- Foreign investors continue to dump Chinese stocks of companies in mainland China. In the July-September period, they sold 80.1 billion yuan ($10.97 billion) more shares than they purchased through Stock Connect, the trading link between Hong Kong and exchanges in Shanghai and Shenzhen, hitting the largest quarterly net selling since the mutual market access program started in 2014. Concern about the macroeconomic outlook and the real estate problems in China has been prodding overseas investors to unload Chinese shares, especially those of financial institutions and personal consumption-related companies. According to a Nikkei analysis of major Chinese stocks ranked high in terms of trading value, foreign investors sold 7.6 billion yuan more in shares of China Merchants Bank than they bought in the July-August period. The large net selling of the commercial bank stock has continued in September. As the bank is heavily reliant on loans to personal borrowers and mortgage loans, investors are strongly concerned about the adverse effects on it of the delayed recovery of the Chinese economy and the property crisis in China. Net selling of shares in Ping An Insurance amounted to 4.3 billion yuan in the July-September period, reflecting the insurer's large exposure to property businesses. Kweichow Moutai, which attracted active buying early in the year, shifted to a net selling of 1.5 billion yuan in the three-month period, owing to the stagnant consumer spending in China. Although the leading maker of the spirit Maotai baijiu should benefit from China's long holiday season from Friday of the Mid-Autumn Festival and the Chinese Nation Day, there are few signs of active buying orders now. Foreign investors also sold 2.3 billion yuan more in shares in China Tourism Group Duty Free than they bought in the July-August period, and the trend continued in September. In addition to stagnant household spending, the duty-free shop operator, which earns 80% of its revenue from Hainan Island, may lose its duty-free license, the foundation of its business, in light of a plan to make the entire resort island into a duty-free special zone, said Xiong Li of Daiwa Corporate Strategic Advisory. Foreign investors are active net buyers of shares in electric vehicle-related stocks, placing expectations on the growth of global markets for EVs and appreciating Chinese manufacturers' competitiveness. Net buying of shares in Contemporary Amperex Technology (CATL), a maker of EV batteries, totaled 4.9 billion yuan in the July-September period. More shares in EV maker BYD were purchased than sold by 4 billion yuan. But the net buying of CATL shares is starting to lose momentum as investors sold more shares than bought in September. As a whole, overseas investors sold more shares in companies in mainland China than they bought in the July-September period for the second consecutive quarter. The trend of net selling is expected to continue until the Chinese economy shows signs of getting on a recovery track thanks to positive effects of policy measures taken by the Chinese government.
In case of a bank you never know how Liquid they really are. But Chinese banks are on another level in this regard.
Aladdin is the westernized pronunciation. The original Arabic is Allah Udin. It is a very common name all over the Muslim world just like Ali or Mohammad.
‘Run as fast as you can’: What a viral post on giraffes says about China’s markets By Li Yuan February 20, 2024 Like many Chinese people, Jacky hoped that he could make enough money investing in China’s stock markets to help pay for an apartment in a big city. But in 2015 he lost $US30,000 ($45,900), and in 2021 he lost $US80,000. After that, he shut down his trading account and started investing in Chinese funds that track stocks in the United States. It’s a perilous time for investors in China. Their main vehicle, so-called A shares of Chinese companies, fell more than 11 per cent in 2023 and have continued their losses this year. Many investors have instead flocked to the exchange-traded funds that track foreign markets and that have been performing much better. Beijing is pulling out all the stops as it looks to boost its flailing sharemarket.Credit: AP Putting money in stocks is inherently risky. But Chinese investors are experiencing something especially alarming: financial losses in the markets, declining home values and a government that doesn’t want any public discussion of what’s happening. With their frustrations piling up, Chinese investors recently found a way to vent that wouldn’t be quickly censored. They started leaving comments on an innocuous post about giraffe conservation on the official Weibo social media account of the US Embassy in China. They lamented the poor performance of their portfolios and revealed their broader despair, anger and frustration. The giraffe post has been liked nearly 1 million times since February 2, much more than what the embassy’s Weibo posts usually get. Many of the comments also offered admiration for the United States, as well as unhappiness about their own country. “The different stock markets’ performances reflect the distances between America and China in terms of national power, technology, humanity and sense of well-being,” a commenter wrote. The comments demonstrate a growing loss of confidence by the Chinese public in the stock market, the country’s economic prospects and the Chinese Communist Party’s ability to govern. “Their reactions are more than about losing money in the markets,” said Jacky, an analyst in the manufacturing industry who is earning half of what he was making two years ago and is juggling several jobs. “The venting probably serves as an outlet for their accumulated frustrations in life.” Another investor I spoke to, Leo, a portfolio manager at an asset management company in Beijing, has been investing in China’s stock markets for nearly a decade. In November, he started closing out his positions. Now, like Jacky, he is placing his bets on overseas markets. Leo said he used to hope that China’s internet giants Alibaba and Tencent would become $US1 trillion companies like Amazon, and that investors like him would benefit from their growth. “That dream was shattered” after the government cracked down on tech in 2020, he said. “I can only look to the overseas markets now.” The US Embassy’s Weibo comments section once served as an online punching bag for nationalistic Chinese who blamed the United States for their country’s problems. Now it’s called the Western Wall of China’s A shares investors. Chinese investors have aired their frustrations about their homeland on an innocuous post about giraffe conservation on the official Weibo social media account of the US Embassy in China.Credit: Weibo “Under the protection of the US government,” wrote one commenter, “the giraffes are 10,000 times happier than the Chinese stock investors.” In a tightly controlled society like China’s, it’s rare to see such a robust expression of public sentiment. The comments could also serve as a harbinger if the economy doesn’t recover soon. Despite being bombarded by propaganda and intimidated by the government, people may continue to question their government and find creative ways to express their discontent. It’s always tough to gauge public sentiment in China. People dare not publicly say anything critical about their government. Now even critical comments about the economy are censored and punished. That’s why both Jacky and Leo asked me to use only their English names for fear of reprisal. Still, online outbursts by large groups of people can offer clues about public sentiment. Take, for example, the grief that followed the death of Li Wenliang, a doctor who blew the whistle in the early days of the pandemic. And the widespread mourning after the unexpected death last year of former Premier Li Keqiang, a reformist politician who accomplished little under the country’s leader, Xi Jinping. Those episodes showed the public’s disapproval of censorship and doubt about the direction that Xi is taking the country in. The comments on the US Embassy’s Weibo account belong in this category. Valuable insights into what people are feeling occasionally emerge in unexpected places. A recent survey by the Canton Public Opinion Research Centre offered a bleak picture from the southern city of Guangzhou, a metropolis of nearly 19 million people and a hub of technology, manufacturing and trade. In a 2023 survey of 1000 residents, the centre found that the city’s “economy and the society were confronted with unprecedented challenges and pressure.” There is growing dissatisfaction with how Xi Jinping and his government are dealing with the crisis.Credit: Getty The research centre’s report said residents’ assessment of the economy, because of unemployment and falling incomes, was as low as it was in 2015, when China’s markets tanked. Satisfaction with the growth of the private sector dropped below 30 per cent, the lowest level since the question was first asked in 2008. Most residents said they didn’t expect their incomes to improve in 2024, and more than 20 per cent said they believed they were “likely” to lose their jobs. News coverage about the survey was censored, and the report can’t be found on the centre’s website. The survey results wouldn’t be surprising to investors. Jacky, who is in his mid-30s, lost his job at a private equity firm in 2022. He had to take a deep pay cut when he moved back to manufacturing. He fears he is “on the verge of falling off a cliff.” ‘Run as fast as you can’ Leo, who was born in Beijing in the mid-1980s, said he had grown up as a nationalistic “little pink”. The first crack in his confidence, he said, was in 2021 when the government went after internet companies. The second crack appeared when the government abruptly ended its “zero-COVID” policy in December 2022 without preparing the population with effective vaccines or medications. Then in late July, the markets and the private sector failed to respond to government measures to stimulate the economy. The US Embassy’s Weibo comments section once served as an online punching bag for nationalistic Chinese who blamed the United States for their country’s problems. Now it’s called the Western Wall of China’s A shares investors. Leo’s change is remarkable. He said local Beijing residents like him and the people with whom he had gone to high school were among the stoutest supporters of the Communist Party’s rule because they benefited from the city’s expansion and the country’s growth. When a group of Leo’s classmates met up in June, he said, they couldn’t believe that two of them, a couple, were migrating to Canada. When they met again last month, he found that a few of his classmates had opened bank accounts in Hong Kong, which, unlike the mainland, has banks that are connected to the global financial system. They asked him how to convert their savings in renminbi to US dollars and transfer them to Hong Kong. “They’re preparing for the worst-case scenarios,” he said. “No one laughed at the two classmates who migrated to Canada any more. In fact, we’re jealous of them.” I asked Leo what would have to change for him to invest again in the A shares market. He said the big problems that had made him flee remained unsolved: the imploding real estate sector, enormous local government debts and a fast-ageing population. He said that he wanted the government to loosen its grip on private enterprise and disband Communist Party branches that had proliferated inside companies, and that he wanted the private sector to start to invest again. Until then, he will keep his money out of China’s markets. And what investing advice would he give to his families and friends? “Run as fast as you can,” he said, “even at a loss.” This article originally appeared in The New York Times.
Blackstone and BlackRock founders agree on investing’s next big thing Some of the biggest names in global finance converged on Melbourne on Tuesday to kiss the ring of the super sector. One topic dominated. Apr 16, 2024 https://www.afr.com/chanticleer/bla...on-investing-s-next-big-thing-20240416-p5fk40 Robert Kapito, president and co-founder of the $US10.5 trillion ($16.4 trillion) investment giant BlackRock, strode to the stage with his tongue just slightly in his cheek. “We are so excited to be here in the land of innovation, Victoria. And I am excited David asked me to fly here for 30 minutes from the States,” he said with a grin. Robert Kapito of BlackRock and Steve Schwarzman of Blackstone. The David in question was David Elia, the chief executive of industry super fund Hostplus, who was one of the driving forces behind the first-ever Asia Pacific Innovation and Finance Symposium in Melbourne on Tuesday, along with Gilbert+Tobin partner, Janet Whiting. While ostensibly a Victorian government event, it also provided a chance for some of the biggest financial services companies to come and kiss the ring of Australia’s $3.5 trillion superannuation sector, which calls Melbourne home. Hence why Kapito was willing to fly to Australia for just 30 minutes. As were Apollo co-president Jim Zelter, Cornell Capital’s Henry Cornell, Maverick Capital founder Lee Ainslie and Blackstone’s head of real estate, Kathleen McCarthy, all of whom went out of their way to praise Australia’s retirement sector. Blackstone CEO and co-founder Steve Schwarzman, joined the event by video, but was no less effusive about his friends in the super sector. In a thoughtful interview conducted by Elia, the billionaire ranged over everything from the US presidential election (a battle of nearly complete opposites), relations between China and the US (“This is a little bit like two porcupines trying to make love. How do you do that? The answer is carefully”), and how to get ahead on finance (remember it’s an apprenticeship culture, and get the numbers 100 per cent right). But Schwarzman really lit up when he revealed the big investing opportunity that he described as being “like something I’ve never seen”. In 2021, Blackstone paid $US10 billion for data centre operator QTS. Today, Schwarzman told Elia, the business is now six times bigger than it was at acquisition. Such is the pace of growth in the business – spurred, of course, by the artificial intelligence revolution – that Schwarzman expects it can grow “another few times” in the coming months, “given some of the discussions and the amount of money that’s been invested in this area is breathtaking”. This AI boom is coming with challenges, not least of which is the risks posed by the technology. “The people who are pretty much scared of the technology are the people who are inventing it,” Schwarzman said. “It’s the first time I’ve seen business people rooting for regulation.” As has also been well-documented, the energy required to power and cool data centres is surging, creating calls across the world (including in Australia from NextDC chief executive, Craig Scroggie) for nuclear power to be deployed to power the AI boom. “The amount of electricity that these data centres use is exceptionally high,” Schwarzman says, adding that, when combined with the electric vehicle boom, some parts of the US are “starting to run out of electricity”. This theme was taken up by Kapito, who said with interest rates at current levels, investors happily sitting on cash needed to be careful that they don’t get run over by the wave of capital – some $US9 trillion in money market funds and another $US9 trillion in cash and cash equivalents – that will eventually flood back into public and private markets. ‘Cash is dangerous’ “Cash is dangerous over the long-term life of a portfolio,” Kapito added. So where would Kapito be looking? His watchword was convenience. Given consumers want everything instantly, the best businesses must be able to sell instantly. To do that, they need computer chips and data, which in turn will drive demand for data centres. “If you were thinking about real estate, where would you buy real estate today? I would buy in places that I can actually build data centres that are around energy,” Kapito said. While Kapito was singing from the same hymn sheet as Schwarzman, he was also talking his own book. In January, BlackRock paid $US12.5 billion to buy infrastructure fund manager GIP. But Kapito was steadfast in his view that a shift towards a more data-heavy, AI-powered world would require a rethink of energy and infrastructure, particularly as the energy transition rolls on. “We really believe every area of the world is going to go through an evolution or revolution – rebuilding industries, retooling them for energy.” In a pitch to his Melbourne super industry audience,Kapito said the infrastructure opportunity would favour longer-duration investments that have a yield – “and that screams retirement to me”. But like Schwarzman, Kapito ended with a note of warning on AI. “This is going to be very hard to control. So we have to figure out how … we use it in a way that reflects our behaviour and our values,and that’s going to be a harder job than you think when you consider the global situation.”