China’s Tech Crisis Could Hit Wall Street’s Wallet

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China’s IPO pressure is quickly moving beyond Chinese ride-hailing giant Didi Chuxing, which government officials banned from app stores just days after selling its stake in the US. new legal requirements all technology companies that plan to list their shares abroad, and erecting barriers Around fintech firms are some of the country’s biggest startup successes.

At the same time, President Biden Reportedly preparing to warn American companies The growing risks of doing business in Hong Kong are further eroding relations between the US and China. While bankers were assessing what this whole stance meant—the economy had beaten politics before—DealBook started calculating.

A slowdown in Chinese IPOs will affect insurer fees. Chinese companies traded in New York have been quite lucrative for Wall Street in recent years. Investment banks have already brought in about $460 million in insurance revenue this year, according to Dealogic. Expected more: Bloomberg predictions About 70 companies based in Hong Kong and China have been decided to go public in New York.

  • US listings of Chinese companies have accounted for about 8 percent of Goldman Sachs’ insurance fees so far this year. On today’s earnings call, Goldman is likely to face questions about the impact of China’s IPO pressure. Chinese listings in the US accounted for more than 12 percent of Goldman’s insurance revenue in the previous five years.

Portfolios of investment firms can also suffer. If an American IPO is off the table, at least for now, hedge funds and private equity firms doubling down on Chinese investments in pursuit of growth could see the value of those holdings plummet. (Investment firms can, of course, take Chinese companies public in China, but the shallow pool of investors and proximity to the government may make this a less desirable route.) It is difficult to quantify the exact amount of investment firms’ exposure to China, but it seems . important.

  • According to PitchBook, US private equity firms were involved in deals worth $45 billion in Greater China in the five years to 2019. Carlyle and Warburg Pincus have been among the biggest investors in recent years.

Not all investors fear the pressure in China: “Our stance towards China has not changed in our optimism,” said an executive of Singaporean state investor Temasek. told Bloomberg. Local rivals against Chinese tech giants like Didi are also taking advantage of the situation. seize market share.

Americans are increasingly worried about inflation. one New York Fed research Data released yesterday found that consumers expect the fastest price increases in recent years. The government is expected to announce consumer prices today. rose again last month, after jumping 5 percent in May.

Global authorities are skeptical of Covid boosters. US officials said they needed it after meeting with Pfizer executives yesterday. more time and data To determine if a third vaccination will be required. WHO urged rich countries to take action. donate doses to the poorer rather than reserve them for the empowerers.

The Trump Organization takes on the roles of its CFO Trump’s family business Allen Weisselberg removed Days after he and his real estate company were accused of tax evasion by New York prosecutors, he is on top of dozens of affiliates. It’s unclear whether this will lead to a larger managerial change.

Shares of Virgin Galactic fell to Earth. A day after Richard Branson crossed the boundary of the atmosphere, he saw shares of the space tourism company drop 17 percent. Reason: Virgin Galactic announced a $500 million share sale, to finance more advanced tools and more spaceports.

France is penalizing Google for its treatment of the news media. The country’s competition authority blamed the tech giant violation orders Negotiated with publishers for the right to cite their articles in search results and fined nearly $600 million. This is the latest example of regulators crashing American tech giants around the world.

– Elon Musk to a lawyer representing shareholders suing Tesla On the acquisition of SolarCity in 2016. Typically, the Tesla chief’s statement in the Delaware court was full of provocative statements: At one point, he said, “To be completely honest, I don’t want to be the boss of anything.”


If recent headlines are to be believed, a global minimum corporate tax rate is approaching reality. Finance ministers from a group of 20 officially supported a 15 percent minimum tax framework, and the European Union, delaying the digital tax It could break the deal.

But there is still a long way to go before the legislatures of more than 130 countries adopt the plan. The US and EU are among the potential dangers.

“A major drawback is the complexity of everything” said Daniel Bunn, a global policy expert at the Washington-based Tax Foundation and a former member of Republican senators. The biggest ideological hurdle seems to be that the new approach doesn’t simplify or stabilize, he said. These are two things that Republicans and many business leaders have long wanted from the US tax code. The plan is likely to include a new tax treaty that would require a two-thirds majority in the Senate.

  • Senator Pat Toomey, a Republican of Pennsylvania, said in a statement that the “race to the bottom” of countries competing “to achieve a tax code that attracts investment and maximizes growth” is a race that the United States “must lead”. prevent.”

Ireland, Estonia and Hungary may halt business in EU Every country in the bloc will have a veto, and those with tax rates below the recommended minimum are skeptical. (Here’s a handy summary corporate tax rates around the world.) Oxford Economics recently studied the public finance figures of European countries and concluded that “winners will outnumber losers and the largest economies benefit the most”. Therefore, France and Germany can apply pressure over smaller distances.

Even if an agreement is reached, the effect may be modest. Only 78 of the world’s 500 largest companies would pay more under one of the plan’s two key pillars. According to a recent analysis. In total, the tax will raise another $87 billion, with $28 billion from Apple, Microsoft, Alphabet, Intel and Facebook. If the entire tax package is approved, it will affect more companies, but reduce overall S&P 500 earnings by only 1 percent. That’s one-tenth of next year’s expected profit growth, so “it’s nothing, especially for a market that is doing this well and is at these high valuations,” said eToro’s Ben Laidler.

This is already a significant achievement.” They’ve gotten to this point, said Will Morris of PwC’s global tax policy team. But he said countries must reach “not only a broad but also a deep agreement” for the plan to work in practice. This may take some time.


Number of movie theaters in the USA pre-pandemic decline effectively shut down the industry for months. And when quarantines came, many studios prioritized streaming movies on their own streaming services, both because they had no other options and to lure in subscribers. For some, this change spelled doom for movie theaters.

‘Black Widow’ suggests broadcast and theater can coexist, Brooks Barnes of The Times writes. The latest Marvel blockbuster made $80 million in ticket sales in the U.S. and Canada, and another $78 million abroad, between Thursday night and Sunday. (Disney’s cut was about $98 million.) This means that about 17 million people watched the movie in theaters. The movie earned another $60 million through the Disney+ streaming service, and subscribers were able to rent it for $30 on top of their $8 monthly fee.

Brooks writes that some see the massive turnout at Disney+ as a sign that the leverage is shifting to streaming services, but on the other hand:

Amid the rising coronavirus infections as a result of the Delta variant, it’s nothing to sneeze at when 17 million people decided to drop their bubbles and sit with strangers in a theater when they could only press a button in their halls. For now, theatrical distribution remains a major source of income and cannot be ignored if studios are looking to monetize big-budget shows.

Opportunities

  • Troubles at electric truck company Lordstown Motors shed a harsh light on former Goldman Sachs executive David Hamamoto, who helped get SPAC public. (NYT)

  • Broadcom is reportedly in talks to acquire SAS Institute, an analytics software company, for at least $15 billion. (WSJ)

  • Alibaba is among the companies that are said to be considering a bid of approximately $8 billion for Unisplenour, a cloud computing company. (Reuters)

  • Berkshire Hathaway has canceled its agreement to purchase pipeline assets from Dominion Energy amid antitrust fears. (Bloomberg)

Policy

  • EPA documents show that the agency approved the use of toxic chemicals for fracking a decade ago, despite concerns about their safety. (NYT)

  • A senior Volkswagen executive said the new EU regulations would make selling electric cars more profitable than petrol cars. (FT)

  • The US will soon send monthly checks for up to $300 per child to most families as part of President Biden’s plan to target child poverty. (NYT)

  • To oppose the use of black money in Washington, a progressive advocacy group is relying on black money. (axioms)

best of the rest

  • Facebook is racing to court digital influencers – but it lags far behind TikTok and YouTube. (NYT)

  • Timber prices continue to fall, a sign that post-pandemic inflation may be easing. (Bloomberg)

  • Remote workers are destroying the world’s most beautiful resorts. (Business Content)

  • Millennial nostalgia alert: An anonymous bidder paid $1.56 million for a 25-year-old Super Mario 64 game cartridge (NYT)

  • “Why Jane Goodall Still Has Hope for Us Humans” (NYT)

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