Monday Morning Reads
- China’s Economy Surges Ahead
- Warning to the United States
- Slump Bottoms
- Atari Is Launching A Cryptocurrency
- Disney Adds Warnings
- Will Strong Earnings Confirm an Economic Rebound?
- Trading Through the Pandemic
China's largest payments company is gearing up for a dual listing in Hong Kong and Shanghai in what could become the world's biggest IPO on record. Ant Financial has already obtained clearance for the mainland portion of the deal from Shanghai's STAR Market (pending approval from the China Securities Regulatory Commission), but secured CSRC approval overnight for the Hong Kong leg (pending approval from the Hong Kong stock exchange). Ant, backed by Chinese e-commerce major Alibaba (NYSE:BABA), could raise about $35B through the concurrent IPOs - at a valuation of at least $280B - surpassing Saudi Aramco's (ARMCO) $29.4B record set last December.
Company insiders reportedly want Ant Financial to complete its IPO before the U.S. presidential election on Nov. 3, to avoid running into ensuing choppy financial markets. Its bankers must also grapple with any potential delays stemming from a debate in Washington over restrictions on the payments giant, in discussions that also surround China's Tencent (OTCPK:TCEHY). The potential speed bumps aren't breaking the confidence of Hong Kong stockbrokers, however, which see the blockbuster IPO going so smoothly that they're offering mom-and-pop investors to buy the stock with as much as 20 times leverage.
An increasing coronavirus case count appears to be coming alongside increasing chances of fiscal stimulus, as U.S. stock index futures start the week with an advance of 1%. President Trump said on Sunday he wanted a "bigger" stimulus package than even House Speaker Nancy Pelosi (who gave a Tuesday deadline for talks), and suggested he "could quickly convince" Republicans to get on board. On the earnings front, Halliburton (NYSE:HAL) and IBM (NYSE:IBM) today will kick off a busy week for earnings, while Fed Chair Jerome Powell is scheduled to speak at the IMF's annual meeting on digital currencies.
It's time to prepare for a "no-deal" Brexit, U.K. Prime Minister Boris Johnson said Friday, though senior cabinet minister Michael Gove struck a more conciliatory tone on Sunday, saying the door was "still ajar" if the bloc was willing to compromise. Game of chicken? EU diplomats and officials have cast Johnson's move as little more than rhetoric, portraying it as a frantic bid to secure concessions before a last-minute deal is done. Meanwhile, British officials are reportedly preparing to water down Johnson's controversial Internal Market Bill after the EU took legal action over the proposed legislation.
With COVID-19 cases surging in much of Europe, governments continue to impose greater measures aimed at curbing a second wave. Switzerland announced mask mandates and banned large-scale public gatherings, while Belgium tightened restrictions and curfews, with its health minister warning of a "coronavirus tsunami." Elsewhere, Italy approved fresh anti-coronavirus controls, Ireland was set to approve its tightest measures since April, and tougher U.K. lockdowns are likely coming to Wales and Manchester.
The Shanghai Composite closed the session down 0.7% following third-quarter GDP data that missed estimates, up 4.9% versus 5.5% growth forecast by analysts. Despite the headline disappointment, Chinese data for the month of September alone came in better than expected. Unemployment fell to 5.4%, industrial output grew 6.9% Y/Y, while retail sales grew 3.3% amid a broader upturn in consumption.
The National People's Congress, China's top legislative body, passed an Export Control Law on Saturday, which will go into effect on December 1. According to the rule, China may take countermeasures against any country or region that abuses export-control measures and poses a threat to national security and interests. It also adds to Beijing's regulatory arsenal, which already includes a tech export restriction catalog and an unreliable entity list, amid growing competition with the U.S. over access to technology.
Japan will partner with the U.S. and Europe to take on any market abuses by the four Big Tech companies - Google (GOOG, GOOGL), Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN) and Facebook (NASDAQ:FB). That's according to Kazuyuki Furuya, the new chairman of the Fair Trade Commission, Japan's antitrust watchdog. "This is an area I will push through aggressively," he added, calling out Google's $2.1B bid to acquire Fitbit (NYSE:FIT), a move aimed at taking on Apple and Samsung (OTC:SSNLF) in the wearable market.
The EU is set to vote tomorrow on the labeling of products like "veggie burger" and "veggie sausage," as well as "yogurt-style" and "cheese-like" for plant-based alternatives to dairy products. Farming and meat lobbyists say the terms mislead people and amount to a "cultural hijacking" of the meat industry, while major food companies, including Unilever (NYSE:UL) and Nestle (OTCPK:NSRGY), say the claims are ridiculous and contradict the bloc's drive to help consumers choose more sustainable food. If passed, implementation of the proposals would then be negotiated with the member state governments in the European council, with a final decision potentially coming before the end of the year.
What else is happening...
Political ad spending passes record $6.7B, a boon for local TV.
In Asia, Japan +1.1%. Hong Kong +0.6%. China -0.7%. India +1.2%.
In Europe, at midday, London -0.2%. Paris +0.9%. Frankfurt flat.
Futures at 6:20, Dow +0.8%. S&P +0.9%. Nasdaq +1.2%. Crude -0.7% to $40.84. Gold +0.5% at $1915.10. Bitcoin +0.4% to $11468.
Ten-year Treasury Yield +3 bps to 0.77%
Today's Economic Calendar