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Aug 26, 2020

Market Insider | Biggest Moves Premarket: Stocks making the biggest moves in the premarket: Dick's Sporting Goods, Apple, Salesforce & more

Peter Schacknow

Take a look at some of the biggest movers in the premarket:

Dick's Sporting Goods (DKS) – The sporting goods retailer earned $3.21 per share for the second quarter, well above the consensus estimate of $1.30 a share. Revenue was also well above forecasts, with comparable-store sales up 20.7% compared to a 9.9% FactSet consensus estimate. Dick's also saw e-commerce sales nearly triple during the quarter.
Apple (AAPL) – Wedbush raised its price target on Apple to a Street-high $600 per share from $515 a share, on expectations of what it calls an iPhone 12 "supercycle." Wedbush maintained its "outperform" rating on the stock. (CRM) – Salesforce reported quarterly earnings of $1.44 per share, more than double the 67 cents a share consensus estimate. The business software company's revenue also exceeded Street forecasts, and it also raised its full-year revenue forecast as it benefits from the increase in remote work and e-commerce.
Keurig Dr Pepper (KDP) – Morgan Stanley upgraded Keurig Dr Pepper to "overweight" from "equal weight," citing an increase in at-home coffee consumption among other factors.
Urban Outfitters (URBN) – Urban Outfitters surprised analysts by reporting a profit of 35 cents per share for its latest quarter, compared with expectations of a 40 cents per share loss. The apparel retailer also reported better-than-expected revenue despite a 13% drop in comparable-store sales, benefiting from an increase in digital sales amid pandemic-related store closures.
Nordstrom (JWN) – Nordstrom lost $1.62 per share for the second quarter, wider than the loss of $1.48 per share that analysts were anticipating. The department store operator also saw revenue come in below consensus, with net sales falling 53% from a year earlier as stores closed due to the pandemic.
Roku (ROKU) – Citi initiated coverage of the streaming video device maker with a "buy" rating, pointing to expectations of strong account growth as well as rising economic value per account.
Toll Brothers (TOL) – Toll Brothers beat estimates by 19 cents a share, with quarterly earnings of 90 cents per share. The luxury home builder's revenue also exceeded consensus. Orders surged more than 26% during the quarter, and Toll also gave an upbeat forecast for home deliveries during the current quarter.
Teva Pharmaceutical (TEVA) – The Justice Department charged the drugmaker of conspiring with other pharmaceutical companies to raise prices for generic drugs. Reuters reports that the charges came after Teva refused a settlement that would have required it to admit wrongdoing and pay a penalty. Teva said it firmly rejects the allegations and will vigorously defend itself in court.
Hewlett Packard Enterprise (HPE) – HPE reported quarterly earnings of 32 cents per share, 9 cents a share above estimates. Revenue beat Wall Street forecasts as well. The enterprise computing company also resumed forward guidance, giving a better-than-expected forecast for the current quarter and the full year.
Bed Bath & Beyond (BBBY) – Bed Bath & Beyond will cut about 2,800 jobs as part of a restructuring, in a move that the housewares retailer expects will save about $150 million per year.
Carnival Corp. (CCL) – Carnival's Princess Cruises unit canceled cruises scheduled for early 2021 for two of its ships, the Island Princess and Pacific Princess, citing Covid-19 related restrictions. This comes a day after Carnival's Cunard brand extended cancellations for that line's cruises through mid-May 2021.
Intuit (INTU) – Intuit reported quarterly profit of $1.81 per share, beating the consensus estimate of $1.05 a share. The financial software company's revenue also above Wall Street forecasts. The maker of TurboTax, QuickBooks and Mint saw an 83% sales surge, with activity picking up following the completion of a delayed tax season.

DealBook: How TikTok’s Talks With Microsoft Turned Into a Soap Opera

Mike Isaac and Andrew Ross Sorkin

Credit...Tony Luong for The New York Times
Neither side wanted a big deal. But what began as talks about a small investment ballooned with interventions from President Trump.
TikTok has sued the U.S., saying an executive order against it had deprived it of due process.Credit...Tony Luong for The New York Times
SAN FRANCISCO — When Microsoft began talking this summer with the popular video app TikTok and its Chinese parent company, ByteDance, no one had any intentions of pursuing a blockbuster deal.
With tensions swirling between the United States and China, along with the complexities of running a social media company, any large acquisition appeared too treacherous to navigate. So Microsoft discussed taking a small stake in TikTok and becoming one of the app’s minority investors, said four people briefed on the conversations.
Even a small deal would be a win-win, the thinking went.
For Microsoft, a minority investment would potentially bring TikTok over to using its Azure cloud computing service, immediately making the app one of Microsoft’s biggest cloud clients, said the people, who declined to be identified because the details are confidential. (TikTok has been using Google’s cloud computing services to power its videos.)
For ByteDance and TikTok, a deal with Microsoft could help propel the valuation of the app’s business outside China to as high as $80 billion, the people said. It would also provide TikTok with the endorsement of a blue-chip American company to mollify the Trump administration, which had called TikTok’s Chinese ties a national security threat.
Yet what started as discussions about a small investment morphed into a big, messy, political soap opera. Pushed by President Trump, who has ordered TikTok’s U.S. operations to be sold or to cease operating, ByteDance is now discussing selling parts of TikTok’s global operations to several potential bidders. And with so many groups jumping into the talks to get a piece of any deal, all are trying to drive their own interests and agendas.
Apart from Microsoft, the bidders include Oracle, the enterprise software company, the people with knowledge of the talks said. Bankers and investors, some authorized and some simply trying to gin up a deal, have also called Netflix and Twitter about buying TikTok, they said, though it is unclear if those companies have a genuine interest in an acquisition. Microsoft, with the deepest resources and a market value of more than $1.6 trillion, still appears the furthest along for now, the people said.
Credit...Shannon Stapleton/Reuters
The sale scenarios on the table are head-spinning, the people said, because all of the parties — ByteDance, TikTok, their investors, and the bidders — want to get the most out of any deal. The talks have covered everything from selling just TikTok’s North American operations all the way to every part of TikTok, minus ByteDance’s Chinese-only video app Douyin, they said.
A deal price is unclear, though numbers have ranged from $20 billion to $50 billion depending on what parts of TikTok will be sold, the people said. The talks are fluid and no deal may ultimately be reached.
Even if one does take place, a TikTok sale — which has become a referendum on the U.S.-China relationship — may still be disrupted if Beijing or Mr. Trump weigh in. Mr. Trump has been highly involved, including talking to Microsoft’s chief executive, Satya Nadella, and saying that Oracle could handle buying TikTok. In an Aug. 6 executive order, he imposed a deadline for TikTok’s U.S. operations to be sold by Sept. 15.
On Monday, TikTok sued the U.S. government, arguing that the executive order had deprived it of due process. The suit could give TikTok more time to operate in the United States if the courts order it, a stalling tactic that may help the app wait it out past the Nov. 3 election.
Steven Davidoff Solomon, a law professor at the University of California in Berkeley, who contributes to The New York Times, said the United States’ forcing such a huge company to sell itself was “really unprecedented.” He added, “This is a forced sale, and ByteDance is trying to keep it from being as much of a fire sale as possible.”
This account of TikTok’s deal discussions was based on interviews with more than a dozen people who were involved in or were briefed on the situation. They spoke on condition of anonymity because they were not authorized to speak publicly.
Representatives from TikTok and ByteDance, Microsoft, Netflix, Twitter, Oracle and the White House declined to comment.
A spokesman for China’s Foreign Ministry, Wang Wenbin, called Mr. Trump’s executive order a “naked act of bullying,” and added that the U.S. government would eventually “reap what it sows.”
TikTok, which ByteDance created partly out of a $1 billion purchase of the lip-syncing app in 2017, has become a phenomenon in the United States and elsewhere. More than 100 million Americans regularly use the app, the company has said, especially teenagers and twentysomethings.
Last year, as tensions between the United States and China grew worse, the Trump administration began scrutinizing TikTok and ByteDance. In November, the Committee on Foreign Investment in the United States, a powerful panel known as Cfius that reviews foreign acquisitions, opened an inquiry into ByteDance’s deal to buy after lawmakers voiced concerns that TikTok was giving data on its American users to Beijing.
Credit...Jeenah Moon for The New York Times
TikTok has denied that it helps Beijing. To reduce the U.S. pressure, Zhang Yiming, ByteDance’s chief executive, began consulting with a small group of investors in his internet company, including Sequoia Capital and General Atlantic. ByteDance, which is privately held, has been valued at about $100 billion.
Doug Leone, one of Sequoia’s partners, and Bill Ford, chief executive of General Atlantic, became Mr. Zhang’s bridge to the White House, the people with knowledge of the talks said. In their conversations, the Trump administration had specific stipulations: First, it wanted TikTok to overhaul its governance and shareholder structure to reduce ByteDance’s ownership of the app. Second, it wanted guarantees that TikTok’s American user data be stored on U.S. servers.
The firms needed a major U.S. tech partner to get the deal done, the people close to the talks said. Mr. Zhang and the investors figured that Facebook, Google and Amazon were under too much antitrust scrutiny. But Microsoft, with its cash hoard of $137 billion, cloud expertise and strong government relationships, could work.
Mr. Zhang, a former Microsoft engineer, reached out to Microsoft executives to gauge their interest, said one person with knowledge of the talks. Sequoia and General Atlantic declined to comment.
By July, Microsoft joined the talks. At the time, the discussions centered on Microsoft making a minority investment in TikTok, the people said. Between the U.S.-China tensions and the pressures of operating a social media company, Microsoft executives were hesitant about a big deal, said people briefed on the conversations. ByteDance and Mr. Zhang also wanted to retain some ownership of TikTok, they said.
Credit...Doug Mills/The New York Times
Yet as the talks progressed, Microsoft grew warmer on a potentially larger deal with TikTok. While Microsoft has lots of data about industries like gaming and workplace software, it has little information about people’s social media behavior. TikTok’s user interaction information could strengthen Microsoft’s data science operation, the people briefed on the talks said.
TikTok could also be linked to Microsoft’s $7 billion advertising business. Together, that could make a meaningful difference to Microsoft’s growth, they said.
ByteDance and Microsoft came to see an acquisition of TikTok’s U.S. operations as a cleaner option, they added. Microsoft could allow TikTok to operate as a stand-alone unit, similar to how it had treated past large acquisitions, such as its $2.5 billion acquisition of the company behind the video game Minecraft in 2014 and its $26 billion purchase of professional networking site LinkedIn in 2016.
All the while, Trump administration officials were keeping an eye on the situation. Last month, Treasury Secretary Steven Mnuchin, who is chairman of Cfius and holds the final word on the panel’s recommendations of ByteDance’s purchase of, spoke with TikTok and Microsoft about how TikTok’s data should be on U.S. servers, three of the people said.
On July 31, Mr. Mnuchin presented the Cfius analysis of the deal to Mr. Trump, two people said. The recommendation: that ByteDance be ordered to sell TikTok to an American owner, with Microsoft acquiring most of TikTok’s business and the stakes held by ByteDance’s Chinese shareholders winnowed to a minority investment.
A spokesman for the Treasury and Mr. Mnuchin declined to comment.
Credit...Ian C. Bates for The New York Times
But aboard Air Force One later that day, President Trump said he planned to ban TikTok entirely. Several of Mr. Trump’s advisers were furious at the derailment of their recommendation, saying that China hawks like Peter Navarro, the White House director of trade and manufacturing policy, had exerted too much influence, according to White House officials and others close to the president.
In a statement, Mr. Navarro said, “Nobody exerts ‘influence’ over President Donald J. Trump. He listens carefully to a wide range of often sharply competing views and then he makes the best and most informed decision.”
The next 72 hours were chaotic. News leaked that Microsoft was in talks to acquire TikTok. Private equity firms and bankers circled. That briefly included Stephen A. Schwarzman, chief executive of the Blackstone Group, said people familiar with the talks. Blackstone declined to comment.
That weekend, Mr. Trump called Mr. Nadella about TikTok. Mr. Trump said ByteDance had 45 days to complete a sale of TikTok’s business in the United States. He added that any deal should help the U.S. government in some way, perhaps in the form of job creation or other economic benefits, or some kind of offering to the Treasury Department.
Privately, officials at Microsoft and TikTok were shocked. The 45-day window put TikTok at a disadvantage in negotiating the best deal. Mr. Trump also seemed to be arguing for “tipping the waiter,” essentially offering a percentage of the deal to the Treasury, the people said.
On Aug. 2, Microsoft issued a statement about its pursuit of TikTok and said it would provide “proper economic benefits to the United States, including the United States Treasury.” It did not elaborate on what that meant.
A few days later, Mr. Trump signed his executive order to block TikTok if it was not sold by mid-September. A week later, he issued another executive order giving ByteDance 90 days to close such a deal.
Since then, other potential suitors have emerged, including Oracle. ByteDance, backed into a corner by the White House, wants the best price for TikTok — and not only from one bidder in Microsoft. And sensing ByteDance’s weakness, more potential acquirers are kicking the tires on the hot, fast-growing app. All of that may turn off Microsoft from a purchase.
Even as deal discussions have continued, TikTok sued the U.S. government on Monday over Mr. Trump’s executive order.
“We far prefer constructive dialogue over litigation,” the company said in a statement. But given the executive order, it said, “we simply have no choice.”
Mike Isaac reported from San Francisco, and Andrew Ross Sorkin from New York. Reporting was contributed by Ana Swanson, Maggie Haberman, Michael J. de la Merced, Raymond Zhong and Alan Rappeport.

Analysis | The Cybersecurity 202: NSA and Cyber Command chief pledges muscular defense of November election

Joseph Marks

In one particular such “hunt forward” mission, military hackers visited the tiny Balkan nation of Montenegro, which has been targeted by Russian-linked hackers. “Working side by side with Montenegrin partners, the team saw an opportunity to improve American cyber defenses ahead of the 2020 election,” the pair write.
The preparation also includes sharing reams of information with the Department of Homeland Security to help harden election systems against hacking and with the FBI to help shut down disinformation operations.
The article offers a rare inside look at how the notoriously secretive agencies are preparing for the most closely watched election in history from a cybersecurity perspective. It also describes how military hackers have increasingly gone on offense to knock back threats from Russia and elsewhere since Cybercom was created a decade ago.
And it carries an unspoken promise: Military and intelligence officials are far better prepared and will punch back far harder against election interference this time than in 2016, when Russian efforts upended Hillary Clinton’s campaign and severely damaged public faith in the electoral process.
This says to the political classes and the policy classes, ‘We know this mission and we’re focused on it,’ ” Robert Chesney, a former Justice Department official and University of Texas law professor, told me.

Former intelligence leaders have generally acknowledged the government was too slow to push back in 2016. 

Nakasone’s predecessor Adm. Mike Rogers joined that group yesterday when he said in a NPR interview that U.S. officials underestimated how broadly Russia intended to interfere in the election
While we had some level of knowledge in the summer of 2016, I don't think we fully appreciated the level of effort,” Rogers said.
In particular, intelligence leaders underestimated the effect that Russia’s social media manipulation could have on voters, said Rogers, who led NSA and Cybercom until May 2018 and has not spoken extensively about election security efforts since leaving the post.
“I wish we had taken more direct, more public action sooner as opposed to doing so after the election itself,” he said.

The government has surged its election security work since then and the 2018 midterms were free of any major disruptions. 

Nakasone and Sulmeyer's article describes deploying troops to several unnamed countries in advance of the midterm elections, which helped thwart “a concerted effort” to undermine the contests.
“Together with its partners, Cyber Command is doing all of this and more for the 2020 elections,” they write.
The comments won quick praise from some agency defenders. Here's Rep. Dutch Ruppersberger (D-Md.), former top Democrat on the House Intelligence Committee, whose district includes NSA's home at Fort Meade, Md.
The midterm efforts also included an offensive Cybercom effort that temporarily shut down a major Russian troll factory, as President Trump recently confirmed.
But officials have expressed concern Russia may be saving its most serious efforts for the presidential contest. DHS's top cybersecurity official Chris Krebs warned in 2018, for instance, that the midterms may be merely a “warm up” game for the general election.

Intelligence agencies are already warning about efforts to interfere in the contest that is just three months away. 

Most recently, intelligence agencies assessed that Russia is using “a range of measures” to interfere in the election aimed at hurting Democratic nominee Joe Biden. China, meanwhile, prefers Biden and is engaged in rhetoric that is critical of the Trump administration, officials have said.
When it comes to trying to hack into actual voting systems, officials have not seen the  “level of coordinated, determined cyberactivity from adversaries” that they did in 2016, Krebs has said. But that could change significantly before Election Day.

Partisanship around election interference itself could play into Russian efforts to convince Americans that the vote is corrupted.  

Trump’s son Donald Trump Jr. pointed to the most recent intelligence assessment during the first night of the Republican National convention to argue that “Beijing Biden is so weak on China that the intelligence community recently assessed that the Chinese Communist Party favors Biden.” He neglected to mention that the assessment says Russia is working against Biden and in favor of his father.
Former Florida attorney general Pam Bondi (R) continued the assault on the convention's second night, leveling a slew of accusations suggesting that Biden is corrupted by family business interests in China.
And Trump’s regular refrain that he’ll only lose if Democrats “rig” the election is also sure to damage public confidence.
Democrats, meanwhile, have savaged Trump, saying he hasn’t done enough to combat Russian interference. They’ve also charged that a Republican Senate investigation into Hunter Biden’s work in Ukraine is acting as a filter for Russian disinformation efforts — a charge the investigation’s leaders have firmly denied.

The keys

Democrats are wary of Trump’s controversial pick to lead DHS. 

The president will nominate acting Secretary Chad Wolf as the department's permanent leader, he said in a tweet.
“I think given his past actions, he’s an awful choice,” Sen. Charles E. Schumer (D-N.Y.) told reporters.
Wolf was installed as the interim secretary 10 months ago in a move that a government watchdog called unlawful, Nick Miroff reports. Wolf has played little visible role in the department's cybersecurity work but has been hammered by progressives for his role using federal law enforcement to counter protests in Portland, Ore., and elsewhere. He also participated in an RNC event last night swearing in new citizens at the White House that critics said violated restrictions on federal employees conducting political activity.
Rep. Bennie G. Thompson (D-Miss.), chairman of the House Homeland Security Committee, accused Trump of using the nomination to protect the White House from legal questions around Wolf's appointment.
“It has taken President Trump far too long — over 500 days — to nominate someone to permanently run the Department of Homeland Security,” Thompson said. “Since every policy decision Mr. Wolf made since November may be challenged because he lacked proper authority, this is also an attempt to limit the Administration’s exposure to legal challenges. ”
Homeland Security Committee Republicans praised Wolf:

Canada hasn’t formally banned Huawei — but that’s what’s happening.

By continually delaying a decision on whether to ban Huawei from Canadian 5G networks, officials there are effectively putting companies in a position where they can’t risk contracting with the Chinese telecom, Reuters's David Ljunggren reports.
The inaction allows Prime Minister Justin Trudeau’s government to stay on the good side of U.S. officials, who have long urged such a ban, without significantly offending China, Ljunggren reports.
So far two of the country's biggest telecom providers have ditched Huawei for Sweden's Ericsson and Finland's Nokia for their 5G buildouts.
Canada is the last of the “Five Eyes” intelligence-sharing partnership to make a decision about Huawei. The partnership also includes the United States, the United Kingdom, Australia and New Zealand. Part of Canada's hesitation is a fear of further upsetting diplomatic relations with China, David reports. China retaliated against Canada's arrest of one of a Huawei executive by arresting two Canadian citizens on spying charges.
“They’ve done the political calculus and said, ‘The best thing for us is to do nothing, and if we do nothing we don’t upset the Chinese, we don’t upset the Americans’,” said a person familiar with what government officials are saying.

Human rights activists are trying to block the export of controversial surveillance technology to Hong Kong. 

The software from the Israeli firm Cellebrite has already been used to break into the phones of 4,000 Hong Kong citizens including politicians and activists as China ramps up its control of the region, Patrick Howell O'Neill at MIT Technology Review reports.
Israeli human rights activists hope their petition to Israel's minister of defense puts legal and political pressure on Cellebrite to stop exports to the Hong Kong government. The group alleges Cellebrite never got an export license for the sale.
Cellebrite's controversial technology is used by law enforcement around the world, including in the United States. The company claims to be able to unlock any iPhone, making it a valuable tool for law enforcement.

States should allow election officials to begin processing ballots at least seven days before the election, a new report recommends. 

The Bipartisan Policy Center’s Task Force on Elections, which comprises state and local election officials from across the country, also recommends that officials:
  • Remove excessive absentee ballot verification measures, such as requiring witnesses or a notary, to help make absentee voting accessible to all voters. States should instead rely on signature verification—a process already used by thirty-one states.
  • Rely on automated processes for unofficial results reporting to reduce the likelihood of human error.
  • Communicate any changes to results reporting processes—especially those relating to how potential errors will be addressed—to the public as soon as possible.
  • Provide ballot tracking tools for voters to increase voter confidence and transparency.
More cybersecurity news:


  • The Republican Convention will take place through Thursday.

Secure log off

First Lady Melania Trump had a message about cyber-bullying at last night's convention:

US Market | Futures Indicator: S&P 500 futures are flat after benchmark notches another record

Maggie Fitzgerald

U.S. stock futures were mixed early Wednesday after the S&P 500 closed at a new record high.
Dow futures implied an opening loss of around 50 points. The S&P 500 futures contract stood just below the flatline while Nasdaq 100 futures traded in positive territory.
Software company Salesforce reported blowout earnings after the bell on Tuesday. The soon-to-be Dow member rose more than 13% in extended trading after beating on the top and bottom lines of its second-quarter results.
Salesforce will replace Exxon Mobil, Amgen will replace Pfizer and Honeywell International will replace Raytheon Technologies in the Dow average, S&P Dow Jones Indices said Monday. The changes are driven by Apple’s coming stock split, which will reduce the technology weighting in the price-weighted average.
HP Enterprise, homebuilder Toll Brothers and retailer Urban Outfitters jumped after the bell following their better-than-expected earnings. 
On Tuesday, the Dow Jones Industrial Average lost 60 points as Apple, the gauge’s biggest influence, snapped a five-day winning streak. The tech giant closed the session down about 0.8%.
The S&P 500 gained 0.36%, to notch its 17th record close of 2020. The Nasdaq Composite also closed at a record after popping 0.76%. Shares of Facebook rose more than 3%.
China and the U.S. resumed trade talks on Tuesday. In a statement, the Office of the U.S. Trade Representative said that both sides made “progress and are committed to taking the steps necessary to ensure the success of the” phase one trade deal.
Markets were “bolstered by converts finally joining the party, by recent persistent declines in Covid cases, the halo of ongoing new treatments, and renewed progress on trade negotiations with China,” Jim Paulsen, chief investment strategist at the Leuthold Group, told CNBC.
Later this week, the Federal Reserve will hold its annual symposium on monetary policy. Wall Street will look for clues on further stimulus and where the economy is headed out of the event. Investors will be looking specifically for Powell’s comments on inflation and its impact on the dollar. 

News | Business | China | Smartphone Industry: Huawei cold-shouldered in India

Mercedes Ruehl and James Kynge 

The Big Story — Exclusive
The cost to China of a brutal border clash with Indian troops in June is becoming ever clearer. The latest victims are Huawei and other Chinese telecoms equipment companies that are being phased out of India’s booming market, including that for 5G networks, according to Amy Kazmin and Stephanie Findlay of the FT in New Delhi.
Although New Delhi has not issued any formal written ban on equipment suppliers such as Huawei and ZTE, industry executives and government officials say key ministries have indicated that local telecoms service providers should avoid using Chinese equipment in future investments.
Key implications: The impact on Chinese tech companies could be considerable. Huawei has been one of the three biggest telecoms equipment suppliers in India (see Smart data), which is the world’s second biggest mobile market with more than 850m users. It has had significant contracts with Bharti Airtel, Vodafone and state-owned BSNL.
A government official said the administration of Narendra Modi was highly wary about Chinese investment in sensitive infrastructure. The two nuclear-armed neighbours have tens of thousands of soldiers massed along their disputed border high on the Tibetan plateau, after a June clash left at least 20 Indian soldiers dead.
Upshot: “The thinking is: ‘let’s do tough rather than talk tough’,” the official told the FT. “We don’t want to make life miserable for consumers. But when it comes to big public contracts and critical infrastructure, we would prefer non-Chinese companies. That message has gotten through to Indian business.”

Mercedes’ top 10

  1. Jack Ma’s Ant Group launched what could be the world’s biggest IPO with a dual listing in Hong Kong and Shanghai. Read the FT’s take here and the Nikkei Asian Review’s here. In other IPO news, flash memory maker Kioxia — formerly Toshiba Memory — is set to be Japan’s biggest listing in 2020.
  2. An interesting take from the Nikkei Asian Review on the demise of personal shoppers, known as daigou in China, who for years helped Chinese consumers get their hands on cheaper luxury products abroad.
  3. “Unlike.” Facebook is planning legal action after Thailand’s government forced the US social media company to block a group deemed critical of the country’s monarchy. The move comes as Thai student protests ramp up.
    © AP
  4. Berlin-based Delivery Hero is on a charm offensive to get its acquisition of Woowa Brothers — the company behind South Korea’s most popular food delivery app — over the line. Read the FT interview with Niklas Ostberg, Delivery Hero boss, here.
  5. Sino-US tensions are hitting the college endowments and pension funds that have helped fuel China’s tech industry over the past decade. Just six US-dollar funds with exposure to China have sought to raise capital this year, down from 21 last year, according to researcher Preqin.
  6. Japan’s Rakuten has been trying to make a move into banking in the US to boost its ecommerce business. American banks, wary of retailers engaging in banking, are not having a bar of it.
  7. Another addition to Asia’s “super app” bandwagon: India’s Tata Group said in an interview with the FT that it was bringing together its disparate consumer services on one platform by as early as December.
  8. Taiwan is the latest country to issue a number of restrictions on Chinese tech companies in recent weeks, the latest being on the Taiwanese arm of Alibaba’s Taobao ecommerce site.
  9. WATCH: The FT’s Washington bureau chief Demetri Sevastopulo and #techAsia editor James Kynge discuss why TikTok and WeChat are the new front line in the US-China tech war.
  10. Which mask, you ask? The Nikkei Asian Review brings us the verdict from the world’s fastest supercomputer in Japan on the most effective types of face masks. Apparently, masks made of non-woven fabric are best protection against the virus.

When sages speak

  • This overview of US-China decoupling by Torsten Riecke for Merics, a Berlin-based think-tank, delves into how two competing “technospheres” for the world might look.
  • Here’s a helpful backgrounder on China’s electric vehicle market by Ilaria Mazzocco at Macro Polo, a think-tank at the Paulson Institute in Chicago. The build out of the EV industry in a decade represents Chinese industrial policy 101.
  • Some interesting perspectives are relayed here by Gateway House, an Indian think-tank, on tech competition between India and China.

Best of comment

After India’s Supreme Court reached a landmark decision in early March that essentially lifted a two-year-old ban on cryptocurrency transactions, the country has seen numerous homegrown and foreign cryptocurrency businesses revive or start up from scratch, like a spring awakening after a long period of hibernation, writes Ken Koyanagi, editor-at-large at the Nikkei Asian Review.
Many of the entrepreneurs and investors are pushing ahead with their bets despite fears of another complete ban or severe restrictions on cryptocurrency trading. Local media reports say the government aims to submit a bill to parliament before the November holiday season, which, when enacted, will regulate or possibly ban cryptocurrencies.
Undeterred, Indian investors are rushing back into the cryptocurrency trading scene.
According to, a cryptocurrency information website, combined monthly trading volume between the Indian rupee and bitcoin, the biggest cryptocurrency by market capitalisation, has nearly doubled between March and July at two large peer-to-peer crypto asset trading platforms — LocalBitcoins of Finland and Paxful of the US. Their total volume in March was equivalent to $8.14m. By July the figure had reached $16.26m.

Art of the deal

  • Tencent is close to taking Leyou Technologies private in a deal that would value the Chinese gaming group at about $1.3bn.
  • A unit of Telekom Indonesia is in advanced talks on injecting capital into Gojek, the Indonesian super app decacorn, according to people familiar with the situation.
  • Beijing-based iSpace, a private space launch start-up, has raised $174m in a fundraising that is thought to be the biggest yet for a private space company.
  • Chinese electric vehicle manufacturer XPeng said it hopes to raise up to $1.1bn in an IPO in New York, milking the enthusiasm for EVs even as US-China relations remain strained.
  • Health is where the action is. Xuanzhu Biopharmaceutical, a research and development subsidiary of Hong Kong-listed Sihuan Pharmaceutical, has raised $116m in Series A funding led by the Chinese government-owned State Development and Investment Corporation.


Until last week, Tsai Ming-kai, the Taiwanese billionaire once known as China’s “bandit phone king”, was on a roll, writes Kathrin Hille in Taipei.
The founder and chairman of chip design house MediaTek had already seen his personal wealth jump by 80 per cent last year. The launch of the company’s “Dimensity” chipset for 5G smartphones and Washington’s blacklisting of Chinese technology group Huawei from buying from US chipmakers had sent MediaTek’s shares soaring.
This year, things looked even brighter. The US in May barred chip manufacturers from selling to Huawei any custom-made semiconductors produced with US equipment. For Huawei, the most obvious solution was MediaTek’s off-the-shelf smartphone chipsets, a development that would have boosted the Taiwanese company’s fortunes immensely.
But that dream was shattered last week when the US Department of Commerce closed the loopholes in its May sanctions against Huawei by prohibiting the sale without a licence of chips made using US software or equipment to the Chinese company. Given the prevalence of US technology in the semiconductor industry, this would include chipsets sold by MediaTek. Now Taiwan’s fourth-largest chip design company has more at stake than many other Huawei suppliers.

Smart data

Charts showing market shares of India telecoms, Global 5G and Huawei revenues
Huawei stands to lose access to one of the world’s biggest telecoms markets as official opposition builds in India (see The Big Story). But the implications for Indian telcos are also severe.
Of them, Bharti Airtel and Vodafone Idea — whose current 4G network was built mostly by Chinese suppliers Huawei and ZTE — are especially exposed. The three alternatives to Chinese 5G kit makers — Ericsson, Nokia and Samsung — charge significantly higher prices than Huawei.
The indebted industry may not be able to afford to switch quickly. Vodafone Idea, 44 per cent owned by UK’s Vodafone, has net debt of more than Rs1tn ($13bn), nearly six times this year’s estimated ebitda. Bharti Airtel has less leverage, but like Vodafone Idea it has little or no free cash flow. Just covering interest payments and then buying 5G spectrum at next year’s government auction will be a stretch — never mind paying higher prices.

News | Business | Markets |Exchange Traded Funds: What we learnt from fixed-income ETFs during the Covid sell-off

Dave Baxter

While equity exchange traded funds showed no obvious signs of stress during this year’s sell-off, the picture looked vastly different in the bond space. In March, some of the biggest corporate bond ETFs’ shares traded at discounts of more than 5 per cent to net asset value (NAV), having not exceeded discounts of 0.1 per cent in January.
Investors wishing to raise cash in the teeth of a crisis may well have balked at the prospect of such deep discounts. But the official explanation asserts that the problems lie with the underlying fixed-income market and how it arrives at prices, rather than ETFs, which appear to have worked as a price discovery tool and a pressure valve for an illiquid market.
The Investment Association (IA), the UK trade body for asset managers, draws a stark contrast between the underlying bond market and bond ETFs in a policy briefing on the subject. It notes that price discovery for fixed-income securities can be difficult because the bond market itself is fragmented and not standardised, with no closing auction period. Bonds are traded over the counter (OTC), or via a network of dealers and brokers, rather than on an exchange.
As such, the NAVs for underlying holdings that ETFs (and open-ended bond funds) refer to are often based on a theoretical bond price that is “indicative, reasonably estimated and as close as possible to a fair value”. The theoretical price might not be what a bond actually trades for, especially in times of stress when valuations are fluctuating rapidly.
This article was previously published by Investors Chronicle, a title owned by the FT Group.
Research suggests enormous volumes of bond ETF shares successfully changed hands in March, with exchanges allowing investors to buy and sell ETF shares without actually trading bonds. A white paper from Invesco, an ETF provider, states that US-listed bond ETFs traded a total of $738.8bn on exchange in March, with just $19.8bn redeemed in the primary bond market over the period.
This means that $719bn of fixed-income ETF shares changed hands without a real bond actually being sold — a strong defence of ETF liquidity. High trading volumes also occurred on the back of market improvements: on April 9, the day the US Federal Reserve announced additional stimulus plans, trade in the iShares $ Corporate Bond Ucits ETF (LQDE) was more than nine times its average daily volume, according to figures provided to the IA.
Even with investors able to trade fixed-income ETF shares in bulk, the discounts on show may have seemed alarming. However, the argument runs that the theoretical prices achieved in the underlying bond market were stale and unrealistic, while the prices on ETF shares reflected actual trading activity.
This view is not limited to ETF cheerleaders. The Bank of England, in its Interim Financial Stability Report for May, states that prices on bond ETFs “appear to have provided information about future changes in underlying asset markets, offering evidence that they incorporated new information more rapidly than the NAV of assets held within their, and equivalent, funds”.
In its own assessment the Bank for International Settlements adds: “Compared with the relative staleness of bond prices and NAVs, ETF prices can be useful tools for market monitoring and valuable inputs to risk management models that require up-to-date assessments.”
In other words, ETFs provided an element of price discovery that was lacking in the underlying market. It is also “entirely possible that the cash bond market would have collapsed” had ETFs not been around to relieve the selling pressure, Invesco argues.
The official argument also deals with claims that the arbitrage mechanism was found wanting. Normally arbitrage can prevent ETF share prices from diverging too wildly from NAVs. If an ETF's shares trade at a discount to NAV, for example, market participants should be able to buy the shares cheap and separately sell its constituent parts at a higher price for a risk-free profit.
$719bn value of ETF fixed-income shares that changed hands in March without a real bond actually being sold
While some of the discounts looked steep at the time, the IA has argued that there was “no obvious arbitrage opportunity” because market participants agreed that the ETF prices were based on actual tradeable bond values.
By contrast, ETF shares trading at premiums or discounts to NAV can sometimes reflect other developments, such as when a UK-listed ETF trades at different hours to its underlying market (and misses some price movements). High transaction costs can also sometimes lead to slight premiums and discounts.
Invesco has argued that now is the time to focus on improving how bonds are priced. The asset manager notes that more over the counter (OTC) markets should have central reporting of trades and prices, with this data distributed to market participants with minimal delay. Pricing should also have more emphasis on traded prices rather than “stale” quotes. The events of March, they add, should provide “ammunition” for a change.

News | Business | Scottish Economy: What are the Scottish government's Gers figures?

6-7 minutes - Source: BBC

Scotland pound bills stacks background. Image copyright Getty Images
The Scottish government's latest Government Expenditure and Revenue Scotland (Gers) report is to be published on Wednesday morning.
The report estimates the difference between what Scotland raises in taxation and what is spent on its public services, and has been at the centre of the independence debate in recent years.
Last year's figures put Scotland's public spending deficit at £12.6bn, which was £1.2bn lower than the previous year. The deficit for the UK as a whole was £23.5bn.
The new report will cover the 2019/20 tax year, which ended on 5 April - so the full economic impact of the coronavirus pandemic will not be reflected in the figures.

How did Gers come about and how has it been used?

The Gers figures were first published in 1992 under the then UK Prime Minister John Major.
Conservative ministers in the Scottish Office thought it would help inform the debate on devolution - or would at least help them make the case against the establishment of a Scottish Parliament.
Oil prices were low at the time and they thought the numbers would show how much more Scotland gained from the UK Treasury than it sent south in tax revenues.
Even though the figures have been compiled by the Scottish government since devolution in 1999, there is still an annual battle to interpret the numbers from either side in the independence debate.
At the time of the independence referendum in 2014, the Scottish government's White Paper described Gers as "the authoritative publication on Scotland's public finances".
The SNP's recent Growth Commission report on the finances of an independent Scotland also accepted the Gers figures as its starting point.
Meanwhile, opponents of independence have used the figures to point to a "Union dividend" - arguing that Scotland can only afford its relatively high levels of public spending because it is part of the UK.

Does Gers tell us what an independent Scotland would look like?

No. The Gers figures are not meant to be anything other than a way of showing the current position under the present arrangements.
Economists at the respected Fraser of Allander Institute say that Gers "presents a useful starting point for a discussion regarding the challenges and opportunities that Scotland would face".
And BBC Scotland's economics editor Douglas Fraser says: "One way of looking at them is to measure how big Scotland's deficit would be, if the country were to have been both independent and if its public finances were performing exactly as they did within the UK.
"It would probably perform rather differently if Holyrood pulled the tax, spending and borrowing levers in different ways to the Treasury in London.
"It could have pulled those levers in a smarter way, or left a bigger deficit.
"Everything around this is contested. But what can be said is that this helps illustrate the health or weakness of Scottish public finances."

How is Gers calculated?

The Fraser of Allander Institute has tried to explain how Gers is compiled by Scottish government statisticians.
It points out that data on the spending side of the equation is not estimated, but some UK spending is allocated to Scotland on a proportional basis.
The total spend is made up of Scottish and local government services and UK welfare spending and pensions in Scotland.
It also includes UK government spending in non-devolved areas in Scotland such as defence, and allocates a proportion of the UK's debt interest payments to Scotland.
For revenues, there have been complaints that the data used is not collected for Scotland and has to be estimated from UK figures.
This has been less of an issue in recent years, with Scottish income tax, council tax, business rates, the profits made by Scottish Water, landfill tax, land and building transactions tax and local authority user charges and fees included.
There are other revenues - particularly those collected by HMRC - where estimation is needed.
The Fraser of Allander Institute says "estimates are not unusual in economic statistics".
And the Scottish government says that Gers is a National Statistics publication, which means that it is "produced independently of Scottish ministers and has been assessed by the UK Statistics Authority as being produced in line with the Code of Practice for Official Statistics.
"This means the statistics have been found to meet user needs, to be methodologically sound, explained well and produced free of political interference."
The Scottish government has published answers to a list of frequently asked questions about its Gers figures here.

How does Scotland compare to the rest of the UK?

One of the problems with the Gers figures has been that there were no other official regional breakdowns to compare to Scotland's, so the comparison had to be made to the UK as a whole.
But that has recently changed with the ONS publishing regional breakdowns which show that, outside of London and the east and south east of England, most parts of the UK are estimated to raise less revenue than is spent on their behalf.
Last year's Gers figures said that Scotland's tax take was about £307 per person less than the UK figure - while spending was about £1,660 per person higher than for the UK as a whole.
However, only London and the surrounding areas were thought to raise more per head than Scotland.
And it has long been the case that Scotland has received more money to deliver services such as health, education and economic development because of the geographical challenges it faces in these areas.
Scotland also has a slightly higher number of people entitled to benefits associated with issues such as long-term ill health.

News | Business | Financial Issues: Firms 'must do more' amid coronavirus complaints

3-4 minutes - Source: BBC

Plane taking off from Heathrow Airport Image copyright Getty Images
Image caption Holiday refund issues were a common problem
More than 3,500 complaints about financial issues relating to the coronavirus outbreak have been submitted to the financial ombudsman.
The service said firms "must do more" to ensure consumers and small businesses were treated fairly.
The number of complaints from small businesses, often about support loans and insurance, already outnumber the total from the last financial year.
The cases are still being investigated and some might prove to be unfounded.
However, the ombudsman said it expected many more issues to be raised by people left financially stretched by the economic fall-out from the virus.
Anyone in the UK has the right to take unresolved complaints to the ombudsman for adjudication.
While the service said many financial firms coped well in trying conditions, the list of complaints highlighted consumers' key concerns during recent months.
Chief among them were ruined holiday plans, and subsequent claims to insurers and credit card providers. Frustrations over refunds for cancelled weddings and concerts also featured.
Complaints from small businesses were often about insurance cover for interrupted trade.
Caroline Wayman, chief ombudsman and chief executive of the service, said: "Covid-19 has had a huge impact on virtually all elements of our lives, including our finances.
"Since measures to control the virus in the UK were put in place, we've been hearing from people who aren't happy with how their financial provider has treated them.
"Some financial businesses must continue to do more to ensure they are treating their customers fairly."
A spokesperson for the Association of British Insurers said: "Despite the unprecedented operational challenges, insurers have been delivering to customers during a very stressful period.
"This includes expecting to pay a record £275m in travel cancellations under travel insurance, £900m to those firms covered for Covid-19, as well as settling £2bn in motor claims during the second quarter of the year. The priority for insurers remains to ensure that claims are dealt with as quickly and efficiently as possible."

News | Business | Chinese Financial Tech.:China's mighty Ant heads for a mega market debut

Peter Hoskins

Chinese financial technology group Ant has unveiled plans for a stock market debut. Image copyright Getty Images
Chinese financial technology group Ant has unveiled plans for a stock market debut that may raise a record $30bn (£23bn).
The company, affiliated with online retail giant Alibaba, says it will sell shares in Hong Kong and Shanghai.
The announcement comes amid rising tensions as the Trump administration cracks down on Chinese firms.
While many in the West won't have heard of Ant, it is best known in China for the mobile payments powerhouse Alipay.

What is Ant Group?

Headquartered in the Chinese city of Hangzhou, Ant was launched in 2004 by e-commerce giant Alibaba and its founder Jack Ma.
Since then Alipay has become China's dominant mobile payments business.
Along with mobile payments, more than 700m people a month and 80m businesses use the service to pay bills, buy insurance and invest in mutual funds.
Meanwhile Alibaba, which owns a 33% stake in Ant, is increasingly folding its services into the Alipay app.
David Dai, senior analyst at asset managers Bernstein in Hong Kong, told the BBC why the company is such a major player in China's digital payments industry.
"Together with Tencent, Ant processes some 200 trillion RMB (£22.5tn; $28.8tn) of payment and transfers annually. That's more volume than Visa and Mastercard combined."
But, according to the company's own online profile, it's not size that matters but longevity: "We do not pursue size or power; we aspire to be a good company that will last for 102 years."

How big could the share sale be?

While Ant's announcement didn't reveal its valuation of the company or how much it plans to raise in its stock market debut, analysts see the firm being worth as much as $300bn. That would give it a valuation higher than many of America's biggest banks.
"I expect Ant to get to a $250bn to $300bn market capitalisation. Compare that with Citigroup which I believe is a little above $100bn. The world's largest financial Institutions are now in China," Shaun Rein from China Market Research Group told the BBC.
With the company expected to sell shares equating to a stake of between 10% and 15%, it could be the biggest Initial Public Offering (IPO) in history.
"Ant will raise around $30bn and I think will be the world's largest IPO ever, beating out Saudi Arabia's Aramco from last year that went public just north of $29bn," Mr Rein added.

Why is the location of the IPO important?

Ant Group plans to make its market debut on the Shanghai Stock Exchange's Star board, which is seen as the Chinese equivalent of America's Nasdaq, and the Hong Kong Stock Exchange.
While the company has not said why it picked those stock exchanges, it is notable that it did not choose to list in the US or one of the major European financial centres.
The announcement came at a time of rising tensions between Beijing and Washington over a range of issues including China's handling of the coronavirus pandemic, the Hong Kong security law and their ongoing trade dispute.
The Trump administration has recently increased its attacks on Chinese technology companies in the US as the president signed two executive orders to ban video-sharing app TikTok and messaging platform WeChat.
Bao Vu, investment director at RE Lee Capital, told the BBC why Ant choosing Shanghai and Hong Kong is a major win for China's financial services industry: "The location of the listing is very important to China's ambition to have an alternative to the US exchanges."
"If the listing is successful, it would pave the way for other technology firms to list outside the US, which is the only real alternative at the moment," he added.

News | Asia | North Korea: Kim Jong-un warns over typhoon and coronavirus

4-5 minutes - Source: BBC

Kim Jong-un chairs a meeting on 25 Aug Image copyright Reuters
Image caption Kim's appearance contradicts recent rumours that he was gravely ill
Kim Jong-un has warned North Korean authorities to prepare for the dangers posed to the country by the coronavirus pandemic and a looming typhoon.
Mr Kim's appearance at a party meeting comes after widespread speculation over his health.
North Korea has not confirmed any Covid-19 cases and it is thought that a large outbreak would have a devastating effect on the impoverished nation.
Meanwhile Typhoon Bavi is expected to hit North Korea later this week.
Speaking at a meeting of the politburo on Tuesday, Mr Kim, who was smoking a cigarette, said there were "some shortcomings" in the state's efforts to keep out the "malignant virus", state media reported, without giving details.
Pyongyang for a long time insisted said were no infections in the country, though this was doubted by observers. No cases have been declared, but its media have not repeated the claim for several weeks now.
After a suspected case, there had been a lockdown in one border city near South Korea but the infection was never officially confirmed.
Kim Jong-un's appearance came amid rumours about his health and that he had delegated some of his authority to his sister Kim Yo-jong.
Speculation about the health of the North Korean leader is not unusual but has so far always turned out to be false.
While the world's tabloids obsess over Kim Jong-un - who is clearly fine - there are bigger concerns. The state and its 25 million people are clearly not fine.
Typhoon Bavi could cause damage in a country already reeling from one of the longest monsoon seasons on record. Torrential rain in August brought widespread flooding.
And now the BBC's weather centre is predicting storm surges of between 200-300mm of rain just weeks before the autumn rice harvest.
Ten million people are said to suffer from food insecurity in North Korea, according the UN. That means they live from harvest to harvest. They cannot afford more crops to be damaged.
North Korea has also gone from insisting it had zero cases of Covid-19 to holding yet another high level meeting to discuss ways to mitigate the effects of the virus.
We still don't know if outbreaks are under control in the secretive state, which closed its borders to the world in January.
Just last week, Mr Kim admitted that his big economic plan, which was due to come to fruition in 2020, had failed and he was having to come up with a new one. A rare admission from a North Korean leader that he has come up short.
Trade with China, the nation's biggest benefactor and ally, was down over 20% in July, according to Chinese customs data. Border closures to prevent coronavirus entering the country have had an impact on the vital supply chain.
NK News has also reported that foreign embassy staff and the majority of NGO's in the country have left due to the severe virus restrictions.
2020 has been a bad year for most of the world. But for North Korea it has the potential to be devastating and there are very few organisations available in the country to notice and help.

News | Politics | China: Hong Kong pro-democracy lawmakers arrested

3-4 minutes - Source: BBC

Lam Cheuk-ting and Ted Hui Chi-fung (file photo) Image copyright Getty Images
Image caption Lam Cheuk-ting (left) and Ted Hui Chi-fung were arrested at home in the early hours
Two Hong Kong opposition lawmakers are among 16 people arrested over anti-government protests, as a crackdown on democracy supporters widens.
Lam Cheuk-ting and Ted Hui Chi-fung from the Democratic Party were arrested at their homes on Wednesday morning.
Mr Lam is accused of rioting over a July 2019 incident when masked men attacked protesters after a rally.
He was one of dozens injured in the attack, where police were accused of failing to protect democracy activists.
A police source told the BBC that a total of 16 people, including the two lawmakers, had been arrested in the operation on Wednesday.
These latest arrests come two weeks after police arrested media tycoon and vocal Beijing critic Jimmy Lai under a controversial national security law that China recently imposed on Hong Kong.
Mr Lai was paraded through his Apple Daily newsroom in handcuffs as some 200 police raided the office as part of an operation that also saw nine other activists arrested, including Agnes Chow, a prominent youth activist.

Accusations over earlier protests

The verified Facebook pages of the two opposition politicians - both critics of Beijing - confirmed their arrests on Wednesday.
A tweet from Mr Lam's team said he was accused of rioting at Yuen Long train station on 21 July last year.
It added that police also accused him of conspiring to damage property and obstruction of justice on 6 July last year.
Mr Hui's office released video footage of his arrest, reported AFP, where officers said they were charging him with attempted obstruction of justice, access to a computer with criminal or dishonest intent and criminal damage over the 6 July protest.
The violent attack on pro-democracy protesters returning home from the 21 July rally, at a train station in Yuen Long in north-west Hong Kong, was captured by victims and bystanders on mobile phones.

Media captionA large group of masked men in white T-shirts stormed Yuen Long station
The footage, which went viral on social media, showed groups of men dressed in white shirts and suspected to be triad gangsters beating passengers with rods.
Police were late to arrive on the scene and the incident contributed to growing mistrust of the force at a time Hong Kong was faced with widespread protests.
Police have so far arrested 44 people on suspicion of involvement in the Yuen Long mob attack, seven of whom have been charged with rioting, according to Reuters.
On Wednesday, Twitter users reacted with outrage at Mr Lam's arrest.
"We know you were protecting citizens on the train on that day," wrote one. Another posted that the move kept "the actual instigators at large".