Sanctions-hit Chinese firms surge as global buyers swoop in

[qwerrty]

---
reuters.com

Analysis: Sanctions-hit Chinese firms surge as global buyers swoop in
Samuel Shen, Tom Westbrook

4-5 minutes


SHANGHAI/SINGAPORE (Reuters) - Asian and European investors are snatching up discounted Chinese stocks hit by a U.S. investment ban, finding bargains as giant American funds bail out and shrugging off concerns that the sanctions could hurt the companies’ prospects.

FILE PHOTO: The company logo of China Telecom is displayed at a news conference in Hong Kong, China August 20, 2018. REUTERS/Bobby Yip/File Photo/File Photo

Swiss investment bank UBS said clients were interested in taking advantage of the selldown. In a week that saw Vanguard and BlackRock announce divestments, cash has poured in to lift Hong Kong-listed shares of Chinese telecoms by more than 15%.
China Mobile is heading for its best week in nearly 12 years. State-owned oil company CNOOC Ltd is up 16% and chipmaker SMIC 10%. All three are subject to the sanctions and have been, or risk being, removed from global indexes.
The flows and price moves point to deep faith abroad and especially at home in the worth of the 35 Chinese companies, and subsidiaries, that Americans are barred from holding after November 2021. It also raises questions over how painful the sanctions will prove.
“I think it’s worth monitoring the market closely these days because there will be forced liquidations triggered,” said UBS’ head of China strategy Wendy Liu. “We do have European investors interested in stocks blacklisted by the U.S.”
U.S. funds are scrambling to sell following a November order from President Donald Trump banning buying companies deemed to have links with China’s military. He clarified on Wednesday that the ban extends to owning the stocks.
Passive investors are also responding to the removal of more than a dozen companies from benchmarks compiled by MSCI, FTSE Russell and S&P Dow Jones Indices.
Vanguard and BlackRock have given few details of their divestments and have not detailed exactly which stocks they have sold. Vanguard has said it has sold to comply with the rules and BlackRock said its index funds have responded to index changes.
“Opportunity exists now,” said portfolio manager Dave Wang at Singapore’s Nuvest Capital, which has increased exposure to state-owned firms in the construction and energy sectors in China since the U.S. sanctions were announced.
“Profit outlook is trending upwards, while valuation has been depressed and lots of pessimism is priced in due to the (U.S.) list.”
HOME BUYERS
Support for the sanctioned companies seems to run strongest in China, where brokers have issued buy recommendations and some retail investors mentioned patriotism along with profit as their motive for buying.
Ding Ning, a retail investor on investment website Xueqiu.com, estimates China Mobile already offers a good dividend and “if you take into account the potential valuation repairment, supporting share prices for the country would generate handsome returns”.
Cash flows into Hong Kong from the mainland hit record levels this week as Chinese investors snapped up sanctioned companies listed there.
Holdings by mainland Chinese in China Mobile, China Unicom, China Railway Construction Corp and CNOOC have more than tripled since the companies fell under the remit of sanctions, among other heavy inflows to affected stocks.
But though the stocks have rallied, prices are still lower than before the companies were sanctioned, and they face months more of selling as well as loss of access to the world’s deepest pool of capital. There is also a lot of uncertainty around the details of the rules.
But U.S. fund managers say investors are taking no chances.
“The prevalence of U.S. firms all along the financial supply chain means that liquidity will dry up,” said David Loevinger, California-based managing director at asset manager TCW’s emerging markets group.
“This is forcing investors to sell now while they still can.”
And that means picking their moment before November to part with the sanctioned sections of their exposure to the world’s best-performing big economy.
“I think the fundamentals don’t change. They’re still sound,” said Paul Sandhu, head of multi-asset quant solutions in Asia at France’s BNP Paribas Asset Management. “The burden of these sanctions has really fallen on U.S. investors.”
Additional reporting by Gaurav Dogra in Bengaluru and Rodrigo Campos in New York; Editing by Vidya Ranganathan and Jacqueline Wong

 

[TaiShang]

---
reuters.com

Analysis: Sanctions-hit Chinese firms surge as global buyers swoop in
Samuel Shen, Tom Westbrook

4-5 minutes


SHANGHAI/SINGAPORE (Reuters) - Asian and European investors are snatching up discounted Chinese stocks hit by a U.S. investment ban, finding bargains as giant American funds bail out and shrugging off concerns that the sanctions could hurt the companies’ prospects.

FILE PHOTO: The company logo of China Telecom is displayed at a news conference in Hong Kong, China August 20, 2018. REUTERS/Bobby Yip/File Photo/File Photo

Swiss investment bank UBS said clients were interested in taking advantage of the selldown. In a week that saw Vanguard and BlackRock announce divestments, cash has poured in to lift Hong Kong-listed shares of Chinese telecoms by more than 15%.
China Mobile is heading for its best week in nearly 12 years. State-owned oil company CNOOC Ltd is up 16% and chipmaker SMIC 10%. All three are subject to the sanctions and have been, or risk being, removed from global indexes.
The flows and price moves point to deep faith abroad and especially at home in the worth of the 35 Chinese companies, and subsidiaries, that Americans are barred from holding after November 2021. It also raises questions over how painful the sanctions will prove.
“I think it’s worth monitoring the market closely these days because there will be forced liquidations triggered,” said UBS’ head of China strategy Wendy Liu. “We do have European investors interested in stocks blacklisted by the U.S.”
U.S. funds are scrambling to sell following a November order from President Donald Trump banning buying companies deemed to have links with China’s military. He clarified on Wednesday that the ban extends to owning the stocks.
Passive investors are also responding to the removal of more than a dozen companies from benchmarks compiled by MSCI, FTSE Russell and S&P Dow Jones Indices.
Vanguard and BlackRock have given few details of their divestments and have not detailed exactly which stocks they have sold. Vanguard has said it has sold to comply with the rules and BlackRock said its index funds have responded to index changes.
“Opportunity exists now,” said portfolio manager Dave Wang at Singapore’s Nuvest Capital, which has increased exposure to state-owned firms in the construction and energy sectors in China since the U.S. sanctions were announced.
“Profit outlook is trending upwards, while valuation has been depressed and lots of pessimism is priced in due to the (U.S.) list.”
HOME BUYERS
Support for the sanctioned companies seems to run strongest in China, where brokers have issued buy recommendations and some retail investors mentioned patriotism along with profit as their motive for buying.
Ding Ning, a retail investor on investment website Xueqiu.com, estimates China Mobile already offers a good dividend and “if you take into account the potential valuation repairment, supporting share prices for the country would generate handsome returns”.
Cash flows into Hong Kong from the mainland hit record levels this week as Chinese investors snapped up sanctioned companies listed there.
Holdings by mainland Chinese in China Mobile, China Unicom, China Railway Construction Corp and CNOOC have more than tripled since the companies fell under the remit of sanctions, among other heavy inflows to affected stocks.
But though the stocks have rallied, prices are still lower than before the companies were sanctioned, and they face months more of selling as well as loss of access to the world’s deepest pool of capital. There is also a lot of uncertainty around the details of the rules.
But U.S. fund managers say investors are taking no chances.
“The prevalence of U.S. firms all along the financial supply chain means that liquidity will dry up,” said David Loevinger, California-based managing director at asset manager TCW’s emerging markets group.
“This is forcing investors to sell now while they still can.”
And that means picking their moment before November to part with the sanctioned sections of their exposure to the world’s best-performing big economy.
“I think the fundamentals don’t change. They’re still sound,” said Paul Sandhu, head of multi-asset quant solutions in Asia at France’s BNP Paribas Asset Management. “The burden of these sanctions has really fallen on U.S. investors.”
Additional reporting by Gaurav Dogra in Bengaluru and Rodrigo Campos in New York; Editing by Vidya Ranganathan and Jacqueline Wong

I am happy that US regime oporessed China Inc in the US. Many returned Shanghai and Hong Kong cities to be listed.

 

[qwerrty]

I am happy that US regime oporessed China Inc in the US. Many returned Shanghai and Hong Kong cities to be listed.

they think 'murica is the world. they can do whatever they want.


“The Trump years highlighted our vulnerabilities, and we need to address those even if he’s gone,” said a commission official. “It’s about the EU’s place in the world — having the means to be an economic and financial power commensurate with our size.”

ft.com

EU sets out plans to curb reliance on dollar in post-Trump era
Jim Brunsden and Sam Fleming in Brussels and Philip Stafford in London January 16 2021

4-6 minutes



Brussels is set to warn that global markets are too reliant on the dollar as it seeks ways of curbing Europe’s vulnerability to US sanctions and other financial risks, in a challenge to the currency’s supremacy just days before Joe Biden’s inauguration as president.
A draft European Commission policy paper seen by the Financial Times reveals the depth of EU frustration after four years of the administration of Donald Trump, whose policies underscored the dominance of the US and its currency in the global financial system.
In particular, the paper highlights the EU’s difficulties in asserting its independence in the face of sanctions against Iran imposed by Mr Trump, citing them as proof of the need to “shield” the bloc from “the effects of unlawful extraterritorial application” of such measures.
“The Trump years highlighted our vulnerabilities, and we need to address those even if he’s gone,” said a commission official. “It’s about the EU’s place in the world — having the means to be an economic and financial power commensurate with our size.”
Mr Trump’s Iran strategy had a direct impact on financial infrastructure based in Europe, such as the Swift payment messaging system and the Euroclear and Clearstream securities depositories.

Washington’s Iran sanctions meant Brussels had to set up a special-purpose vehicle to facilitate payments for legitimate trade between the EU and the Islamic republic — a process fraught with difficulty.
“The EU should develop measures to shield EU operators in the event a third country compels EU-based financial-market infrastructures to comply with its unilaterally adopted sanctions,” the paper says.
The document underscores the EU’s ambition to bolster its self-reliance in a range of sectors, including finance, after the Trump administration ripped up transatlantic norms. But it is set to be adopted by the EU commission on the eve of Joe Biden being sworn in as US president on Wednesday, and as the EU pledges to seek a new era of co-operation with Washington after the acrimony of the Trump years.
Other plans in the paper that are aimed at boosting the bloc’s strategic autonomy include tighter policing of foreign takeovers using the EU’s new system for screening foreign direct investment.
Proposed takeovers should be vetted to see if they “would render the EU target company more prone to abide by such extraterritorial sanctions”, the document says, on the basis that the acquisitions could then be blocked on national security grounds.
According to the draft, the EU also needs to find ways of boosting the role of the euro in light of lessons learnt from the Covid-19 pandemic. The paper warns that “global financial markets are too reliant on the US dollar to cushion financial tensions and stability risks”.

EU officials cautioned that the draft could be revised before the text is adopted by the European Commission on Tuesday.
The bloc has long sought to promote greater use of the euro, for example in commodity contracts, to bolster its financial and economic autonomy.
Specific steps set out in the paper include using a planned review of EU regulation of financial benchmarks to encourage them to be denominated in euros. Most are based on dollars.
Policymakers want to find energy alternatives to crude oil, where the main benchmarks such as Brent and WTI are tied to the dollar. The paper cited gas, where a euro-based contract traded in Amsterdam is fast emerging, and hydrogen as markets where the euro’s role should be developed.
Brussels believes a stronger global role for the euro would “shield the economy from foreign exchange shocks and reduce reliance on other currencies”.
“It would also help achieve globally shared goals such as the resilience of the international monetary system, a more stable and diversified global currency system, and a broader choice for market operators, all making the global economy less vulnerable,” the paper says.
The commission is also concerned that the bloc has become increasingly reliant on non-EU investment banks that “in times of financial crisis . . . may choose to reduce their presence in the EU and to focus on their domestic market”.
Other parts of the paper reiterate the EU’s ambitions to be more independent of UK financial-market infrastructure after Brexit — notably UK-based clearinghouses.

 

[TaiShang]

they think 'murica is the world. they can do whatever they want.


“The Trump years highlighted our vulnerabilities, and we need to address those even if he’s gone,” said a commission official. “It’s about the EU’s place in the world — having the means to be an economic and financial power commensurate with our size.”

EU understood that US regime's lecturing of free markets, common security and ideological unity is all fake as those notions are usable at the first instance.

For US, anything is expandable. Europeans included.

 

[qwerrty]

EU understood that US regime's lecturing of free markets, common security and ideological unity is all fake as those notions are usable at the first instance.

For US, anything is expandable. Europeans included.

they think with new president the EU will join hands with them to beat china up and destroy their interests like that dumb guy, australia... the EU is all friendly with china is all because of comrade trump.. very silly assumption.

 

[TaiShang]

they think with new president the EU will join hands with them to beat china up and destroy their interests like that dumb guy, australia... the EU is all friendly with china is all because of comrade trump.. very silly assumption.

EU would be stupid to do belly-dancing to the tune of US regime. They can't predict which crazy may replace Biden. They can't even tell if Biden will not be both senile and crazy.

 

[Beast]

EU got pride. They got a heritage longer than Americans. European expect to lead American instead of being led.

European sick of being command around by americans.

Remember at height of covid-19 outbreak. All american do is to ship out millions of test kit and let european suffer.

US Air Force Flew Half a Million Coronavirus Test Swabs From Italy to Tennessee

Similar missions to distribute COVID-19 test kits are expected in coming days.

www.defenseone.com

---
reuters.com

Analysis: Sanctions-hit Chinese firms surge as global buyers swoop in
Samuel Shen, Tom Westbrook

4-5 minutes


SHANGHAI/SINGAPORE (Reuters) - Asian and European investors are snatching up discounted Chinese stocks hit by a U.S. investment ban, finding bargains as giant American funds bail out and shrugging off concerns that the sanctions could hurt the companies’ prospects.

FILE PHOTO: The company logo of China Telecom is displayed at a news conference in Hong Kong, China August 20, 2018. REUTERS/Bobby Yip/File Photo/File Photo

Swiss investment bank UBS said clients were interested in taking advantage of the selldown. In a week that saw Vanguard and BlackRock announce divestments, cash has poured in to lift Hong Kong-listed shares of Chinese telecoms by more than 15%.
China Mobile is heading for its best week in nearly 12 years. State-owned oil company CNOOC Ltd is up 16% and chipmaker SMIC 10%. All three are subject to the sanctions and have been, or risk being, removed from global indexes.
The flows and price moves point to deep faith abroad and especially at home in the worth of the 35 Chinese companies, and subsidiaries, that Americans are barred from holding after November 2021. It also raises questions over how painful the sanctions will prove.
“I think it’s worth monitoring the market closely these days because there will be forced liquidations triggered,” said UBS’ head of China strategy Wendy Liu. “We do have European investors interested in stocks blacklisted by the U.S.”
U.S. funds are scrambling to sell following a November order from President Donald Trump banning buying companies deemed to have links with China’s military. He clarified on Wednesday that the ban extends to owning the stocks.
Passive investors are also responding to the removal of more than a dozen companies from benchmarks compiled by MSCI, FTSE Russell and S&P Dow Jones Indices.
Vanguard and BlackRock have given few details of their divestments and have not detailed exactly which stocks they have sold. Vanguard has said it has sold to comply with the rules and BlackRock said its index funds have responded to index changes.
“Opportunity exists now,” said portfolio manager Dave Wang at Singapore’s Nuvest Capital, which has increased exposure to state-owned firms in the construction and energy sectors in China since the U.S. sanctions were announced.
“Profit outlook is trending upwards, while valuation has been depressed and lots of pessimism is priced in due to the (U.S.) list.”
HOME BUYERS
Support for the sanctioned companies seems to run strongest in China, where brokers have issued buy recommendations and some retail investors mentioned patriotism along with profit as their motive for buying.
Ding Ning, a retail investor on investment website Xueqiu.com, estimates China Mobile already offers a good dividend and “if you take into account the potential valuation repairment, supporting share prices for the country would generate handsome returns”.
Cash flows into Hong Kong from the mainland hit record levels this week as Chinese investors snapped up sanctioned companies listed there.
Holdings by mainland Chinese in China Mobile, China Unicom, China Railway Construction Corp and CNOOC have more than tripled since the companies fell under the remit of sanctions, among other heavy inflows to affected stocks.
But though the stocks have rallied, prices are still lower than before the companies were sanctioned, and they face months more of selling as well as loss of access to the world’s deepest pool of capital. There is also a lot of uncertainty around the details of the rules.
But U.S. fund managers say investors are taking no chances.
“The prevalence of U.S. firms all along the financial supply chain means that liquidity will dry up,” said David Loevinger, California-based managing director at asset manager TCW’s emerging markets group.
“This is forcing investors to sell now while they still can.”
And that means picking their moment before November to part with the sanctioned sections of their exposure to the world’s best-performing big economy.
“I think the fundamentals don’t change. They’re still sound,” said Paul Sandhu, head of multi-asset quant solutions in Asia at France’s BNP Paribas Asset Management. “The burden of these sanctions has really fallen on U.S. investors.”
Additional reporting by Gaurav Dogra in Bengaluru and Rodrigo Campos in New York; Editing by Vidya Ranganathan and Jacqueline Wong

American investors will curse trump and the fat pompeo.