- Henkel (HEN3 TH) +2.8%
- Henkel Boosts FY Adjusted Ebit Margin Forecast
- Vodafone (VODI TH) +1.4%
- Vodafone’s Bonds May Reverse Underperformance as Disposals Bite
- Deutsche Telekom Raises Profit Outlook With Growth Outside of US
- Novo Nordisk (NOVC TH) +1.1%
- Novo Nordisk Boosts FY Sales at Constant Exchange Rates Forecast
- RWE (RWE TH) +0.9%
- RWE 1H Adjusted Ebitda EU4.54B Vs. EU2.12B Y/y
- Mercedes (MBG TH) +0.8%
- Infineon (IFX TH) +0.8%
- National Grid South West (NNGF TH) +0.8%
- DHL Group (DPW TH) +0.8%
- Munich Re (MUV2 TH) -0.5%
- Munich Re 2Q Profit EU1.15B Vs. EU1.59B Y/y
- MTU Aero (MTX TH) -0.7%
- LEG Immobilien (LEG TH) -0.8%
- LEG Immobilien 1H FFO I EU226M Vs. EU241.4M Y/y
- HelloFresh (HFG TH) -0.9%
- HelloFresh 2Q Adjusted Ebitda Beats Estimates
- K+S (SDF TH) -0.9%
- K+S 2Q Revenue Misses Estimates
- Rheinmetall (RHM TH) -1%
- Rheinmetall 2Q Op. Profit Misses Estimates; FY View Confirmed
- Orsted (D2G TH) -2.5%
- Orsted 2Q Ebitda Misses Estimates
- Siemens (SIE TH) -3.9%
- Siemens Profit Weighed Down by China Drop, Wind-Turbine Loss
DAX:
- Henkel (HEN3 TH) +2.8%
- Henkel Boosts FY Adjusted Ebit Margin Forecast
- Infineon (IFX TH) +1%
- RWE (RWE TH) +0.9%
- RWE 1H Adjusted Ebitda EU4.54B Vs. EU2.12B Y/y
- Mercedes (MBG TH) +0.9%
- Commerzbank (CBK TH) +0.9%
- Munich Re (MUV2 TH) -0.5%
- Munich Re 2Q Profit EU1.15B Vs. EU1.59B Y/y
- MTU Aero (MTX TH) -0.6%
- Rheinmetall (RHM TH) -1.2%
- Rheinmetall 2Q Op. Profit Misses Estimates; FY View Confirmed
- Siemens (SIE TH) -3.1%
- Siemens 3Q Industrial Business Profit Misses Estimates
MDAX:
- SMA Solar (S92 TH) +3.3%
- SMA Solar 1H Ebitda EU125.3M Vs. EU15.9M Y/y
- ProSieben (PSM TH) +1%
- Thyssenkrupp (TKA TH) +1%
- Thyssenkrupp Sees 2023 Profit Trending to High End of Forecast
- Knorr-Bremse (KBX TH) +1%
- Knorr-Bremse Boosts FY Revenue Forecast
- Telefonica Deutschland (O2D TH) +0.8%
- Hensoldt (HAG TH) -0.5%
- LEG Immobilien (LEG TH) -0.6%
- LEG Immobilien 1H FFO I EU226M Vs. EU241.4M Y/y
- K+S (SDF TH) -0.6%
- K+S 2Q Revenue Misses Estimates
- HelloFresh (HFG TH) -0.9%
- HelloFresh 2Q Adjusted Ebitda Beats Estimates
- Jungheinrich (JUN3 TH) -3.7%
- Jungheinrich 2Q Ebit Misses Estimates
SDAX:
- CompuGroup (COP TH) +2.2%
- CompuGroup 2Q Adjusted Ebitda Meets Estimates
- Eckert & Ziegler (EUZ TH) +1.8%
- Eckert & Ziegler 1H EPS EU0.52
- Deutz (DEZ TH) +1.2%
- Deutz 2Q Adjusted Ebit EU30.4M Vs. EU26.8M Y/y
- MorphoSys (MOR TH) +0.5%
- MorphoSys 2Q Monjuvi US Net Product Sales Meets Estimates
- GFT (GFT TH) -0.5%
- GFT Cuts FY Revenue Forecast
- SFC Energy (F3C TH) -0.7%
- Grenke (GLJ TH) -6.1%
- Grenke Sees 2024 Net Income EU95M to EU115M, Saw About EU120M
Equity markets in Asia edged lower Thursday following a tech-led sell-off on Wall Street as investors await US monthly inflation data that will help shape the outlook for the Federal Reserve’s next steps. Shares in South Korea, mainland China and Hong Kong declined, with the Hang Seng technology index falling 1.5% in the morning session. Hong Kong-listed Techtronic Industries Co Ltd tumbled by almost a fifth after the company reported a slump in net income. A region-wide gauge of equities headed for its fourth consecutive daily drop. Japanese and Australian shares posted modest gains after initial declines. US equity futures also advanced, retracing declines on underlying benchmarks on Wednesday. The S&P 500 fell 0.7%, while the Nasdaq 100 dropped 1.1%, weighed down by a 4.7% drop for Nvidia Corp., as investors rethink the artificial-intelligence frenzy that has helped propel tech shares higher this year. Long-dated Treasury yields edged slightly higer in Asia after falling in the previous session as investors showed fresh demand for 10-year paper. On Wednesday, a $38-billion auction for 10-year Treasuries was awarded at 3.999%, the third straight new issue to pay a fixed rate of less than 4%. The two-year yield, which is more sensitive to interest rates, rose six basis points. Australian and New Zealand bond yields traded higher. In China, US restrictions on Chinese investments are expected to be narrower than some had feared, as President Joe Biden imposed limits that would regulate US investments in some Chinese semiconductor, quantum computing and artificial intelligence firms. Alibaba Group Holding Ltd will deliver corporate results, while investors are also focused on Country Garden Holdings Co. after the Chinese developer missed a do. US consumer price index data for July is due later Thursday. Economists anticipate a slight increase in the headline figure, in part linked to higher oil prices, while core inflation is expected to fall, extending a downward trend that Bloomberg Economics believes will support a rate pause when the Fed next meets in September. Most currencies in a group of G-10 counterparts strengthened against the greenback, led by the New Zealand and Australian dollars. The offshore yuan gained for a second day while the yen weakened.
Investors were also focused on rising energy prices. Oil traded flat after two days of gains greater than 1% that pushed crude to a nine-month high. Attention was also fixed on surging European natural gas prices after a 28% rise Wednesday that was attributed to the possibility worker strikes in Australia could reduce supply. Citigroup Inc. analysts predict this could cause European gas and Asian LNG contracts for January to double. The price of rice also surged to the highest level in almost 15 years, as dry weather threatens Thailand’s crop. gold edged higher after falling to its lowest level in a month with the precious metal trading at around $1,917 per ounce. US After Hours DIS +2.9%, APP +23.2%, SONO +10.2%, ALRM +9.8%, WYNN +1.7% higher on earnings; STKL -20.9%, MGNI -15.2%, ILMN -6.1%, TTD -3.9% lower on earnings; KVUE +1.7% to join S&P 500.
Nikkei +0.78% Hang Seng -0.60% CSI +0.01% Shanghai +0.15% Shenzen -0.02%
Eur$ 1.0984 CNH 7.2244 CNY 7.2119 JPY 144 GBP 1.2724 CHF 0.8767 RUB 96.8528 TRY 27.0353 WTI$ 84.562 Gold 1,918 BTC 29,535 +0.18% ETH 1,850.84 -0.04%
S&P +0.38% Nasdaq +0.41% EuroStoxx +0.69% FTSE +0.42% Dax +0.61% SMI +0.33%
Macro :
- Luxury and Travel Stocks May Gain as China Boosts Group Tours
Keep an eye on :
- ARL GY : Aareal Bank 1H Operating Profit EU87M
- ALV GY : Allianz Profit Jumps as Insurance Outshines Asset Management
- ALO FP : Connecticut in $315M Pact With Alstom for 60 Rail Cars
- POST AV : Austrian Post 2Q Ebit Beats Est., Confirms 2023 Targets (1)
- CEC GY : Ceconomy 3Q Sales Misses Estimates
- COP GY : CompuGroup 2Q Adjusted Ebitda Meets Estimates
- CRBN NA : Corbion 1H Adjusted Ebitda Meets Estimates
- CTPNV NA : CTP 1H Adj. EPRA EPS EU0.36 Vs. EU0.30 Y/y
- PBB GY : Deutsche PBB Plans Job Cuts; FY Earnings Outlook Affirmed
- DTE GY : Deutsche Telekom Raises Profit Outlook With Growth Outside of US
- DMRE GY : DEMIRE Sees Investment Properties Fair Value to Fall 5.5% to 6%
- DEZ GY : Deutz 2Q Adjusted Ebit EU30.4M Vs. EU26.8M Y/y
- EUZ GY : Eckert & Ziegler 1H EPS EU0.52
- EVK GY : Evonik 2Q Adjusted Net Income Misses Estimates
- FLTR LN : DraftKings, Flutter Drop on Penn-ESPN Competition Concerns (2)
- FFARM NA : ForFarmers 1H Revenue EU1.61B Vs. EU1.60B Y/y
- GAM SW : NewGame, Bruellan Group Withdraws All GAM EGM Proposals
- G1A GY : GEA Group 2Q Adjusted Ebitda Beats Estimates
- GFT GY : GFT Cuts FY Revenue Forecast
- GLJ GY : Grenke 2Q Net Income Beats Estimates
- HLAG GY : Hapag-Lloyd 1H Revenue EU10.04B Vs. EU16.97B Y/y
- HEN3 GY : Henkel Boosts FY Adjusted Ebit Margin Forecast
- HFG GY : HelloFresh 2Q Adjusted Ebitda Beats Estimates
- HEX NO : Hexagon Composites’ Agility Gets $54M Order for Mobile Pipeline
- INS GY : Instone Real Estate 1H Adjusted Ebit EU43.3M
- ISS DC : ISS Boosts FY Organic Revenue Forecast
- ISS DC : ISS Intends to Divest Most of Its French Business
- JUN3 GY : Jungheinrich 2Q Ebit Misses Estimates
- SDF GY : K+S 2Q Revenue Misses Estimates
- KBC BB : KBC Sees FY Net Interest Income EU5.6B, Saw About EU5.7B,*KBC LAUNCHES EU1.3B SHARE BUYBACK
- KBX GY : Knorr-Bremse Boosts FY Revenue Forecast
- 973 HK : L’Occitane Listing Would Boost Europe as Consumer Hub: ECM Watch
- LEG GY : LEG Immobilien 1H FFO I EU226M Vs. EU241.4M Y/y
- MC FP : Luxury and Travel Stocks May Gain as China Boosts Group Tours
- METN SW : Metall Zug 1H Ebit CHF7.6M Vs. CHF23.5M Y/y
- MLP GY : MLP 2Q Ebit EU5M Vs. EU9.5M Y/y
- MUV2 GY : Munich Re 2Q Profit EU1.15B Vs. EU1.59B Y/y
- MUSTI FH : Musti Group 3Q Operating Profit Beats Estimates
- NOVOB DC : Novo Says Lower-Strength Wegovy Doses Remain Restricted in US
- RABO NA : Rabobank 1H Profit €2.53B Vs. €1.28B Y/y
- RHM GY : Rheinmetall 2Q Op. Profit Misses Estimates; FY View Confirmed
- RYA ID : Ryanair Says New Italy Decree on Airfares ‘Illegal’ (Correct)
- RWE GY : RWE 1H Adjusted Ebitda EU4.54B Vs. EU2.12B Y/y
- SBMO NA : SBM Offshore 1H Adjusted Ebitda Misses Estimates
- SBBB SS : SBB Publishes Clarification Regarding 2Q 2023 Report After Error
- SIE GY : *SIEMENS 3Q INDUSTRIAL BUSINESS PROFIT EU2.75B, EST. EU2.93B
- ENR GY : Siemens Profit Weighed Down by China Decline, Wind-Turbine Loss
- SIGN SW : SIG Names Ann-Kristin Erkens as CFO
- S92 GY : SMA Solar 1H Ebitda EU125.3M Vs. EU15.9M Y/y
- SPM IM : Saipem Gets Contract in Libya Worth About $1B
- TRN IM : Terna Names Francesco Beccali as CFO
- TRN IM : Terna Names Francesco Beccali as CFO
- TKA GY : Thyssenkrupp Raises FY Adj. Ebit Outlook
- VSAT US : Viasat 1Q Adjusted EPS Beats Estimates
- VTSC GY : Vitesco 2Q Adjusted Ebit Beats Estimates
- WIE AV : Wienerberger 2Q Revenue Meets Est.; Cost Steps Balance Slump (1)
- ZURN SW : Zurich Ins. 1H P&C Gross Written Premiums $24.56B
>>> Up
* F-Secure Raised to Buy at Nordea; PT 2.60 euros
* Flutter Raised to Hold at Numis; PT 13,100 pence
* Flutter Raised to Hold at Numis; PT 13,100 pence
* Quilter Raised to Neutral at BNPP Exane; PT 100 pence
* Remy Cointreau Raised to Outperform at BNPP Exane; PT 190 euros
* Sampo Raised to Accumulate at Inderes; PT 44 euros
* Sampo Raised to Buy at ABG; PT 47.50 euros
>>> Down
>>> Down
* ABN Amro GDRs Cut to Underperform at Mediobanca SpA
* Airbnb Cut to Accumulate at Phillip Secs; PT $152
* Chr. Hansen Cut to Hold at DNB Markets; PT 536 kroner
* Chr. Hansen Cut to Hold at DNB Markets; PT 536 kroner
* Equinor Cut to Neutral at SpareBank; PT 370 kroner
* Magellan Midstream Cut to Hold at JonesTrading
* Raisio Cut to Accumulate at Inderes; PT 2.30 euros
* TietoEVRY Cut to Sell at DNB Markets; PT 21 euros
* WastBygg Cut to Hold at Nordea
>>> Initiation
* Edenred Rated New Overweight at Barclays; PT 70 euros
>>> Initiation
* Edenred Rated New Overweight at Barclays; PT 70 euros
* Sika Resumed Neutral at Citi; PT 288.50 Swiss francs
>>> Call
>>> Call
* Edenred a High-Quality Compounder, New Overweight at Barclays
* Sika Offers Quality But at a High Price, Resumed Neutral at Citi
* Sika Offers Quality But at a High Price, Resumed Neutral at Citi
After Hours Summary: DIS +2.9%, APP +23.2%, SONO +10.2%, ALRM +9.8%, WYNN +1.7% higher on earnings; STKL -20.9%, MGNI -15.2%, ILMN -6.1%, TTD -3.9% lower on earnings; KVUE +1.7% to join S&P 500After Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: APP +23.2%, SONO +10.2%, ALRM +9.8%, CPRX +5.2%, AOSL +4.9%, KGS +4.7%, ADMA +4.4%, BLBD +3.9%, DIS +2.9% (also to boost Disney+ and Hulu prices; also to launch ad-supported offering in several countries across Europe and Canada), LAW +2.9%, CENX +2.9%, JAZZ +2.8% (also resumes repurchases under previous program), ODD +2.7%, AVPT +2.4%, MFC +2.2%, BBDC +2.1%, VSAT +2%, PLRX +2%, OR +1.9%, WYNN +1.7%, TTEK +1.5%, ONL +1.2%, NDLS +1.1%, CARG +0.9%, CDE +0.6%, CPA +0.5%, PAAS +0.1%
Companies trading higher in after hours in reaction to news: YELL +12.4% (got alternative financing offers, according to Bloomberg), DWAC +9.3% (reaffirms commitment to merger), SABR +4.7% (several executives disclose insider purchases), KVUE +1.7% (to join S&P 500), BEN +1.4% (reports July AUM), LAZR +1% (stock offering by selling shareholders), MRTX +0.5% (Cancer Discovery publishes data for MRTX1719), CANO +0.3% (reschedules Q2 earnings), SILV +0.2% (to repurchase ~5% of shares)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: ORGN -51%, ORGO -38.9% (also withdraws FY23 guidance), STKL -20.9%, MGNI -15.2%, PRPL -12.5%, BRP -6.5%, ILMN -6.1%, G -5.9%, PLUG -5.9%, TASK -5.8%, DNA -5.7%, INFN -5.1%, PAR -5.1%, TTD -3.9%, QNST -3.8%, PLBY -3.6%, UHAL -2.9%, CERT -2.5%, ETNB -1.8%, HROW -1.5%, OEC -1.5%, CACI -1.4%, RIOT -1%, CLNE -0.2%, ENS -0.1% (also increases dividend), CNNE -0.1%
Companies trading lower in after hours in reaction to news: INVZ -15.3% ($60 mln stock offering), INFN -5.1% (files $100 mln convertible senior notes; files mixed shelf securities offering), BXSL -4.6% (6.5 mln share offering), ENVX -4.1% (files $1 bln mixed shelf securities offering), ARMK -2.6% (stock offering), DOCN -2.3% (to delay its 10-Q), FLYW -2.3% ($250 mln stock offering; also files mixed shelf securities offering), ATSG -2.2% (to offer $350 mln in convertible notes), MRUS -2% (stock offering), SPNT -1.6% (enters standstill agreement with Dan Loeb), BLNK -0.9% (received SEC subpoena relating to various matters), CHRD -0.8% (CFO sold 7632 shares ), MRCY -0.7% (completes delivery of processing hardware for US Army radars), TGI -0.6% (to delay its 10-Q)
Closing Stock Market SummaryThe stock market closed with losses again today. The major indices had been following a similar form to yesterday's trade and looked poised to close on an upswing after rebounding from their lows. The market turned sharply lower ahead of the close, however, and settled near the worst levels of the day.
On Tuesday, the S&P 500 traded down to 4,464 before reversing and finishing the session at 4,499. Today, the S&P 500 traded down to 4,461 before reversing and stopping short of the 4,500 level, which precipitated the late selling interest. The deterioration was broad and orderly with many stocks participating, but mega cap losses had an outsized impact on index performance.
The Invesco S&P 500 Equal Weight ETF (RSP) was up 0.3% around 3:00 p.m. ET, but closed with a 0.3% loss; the Vanguard Mega Cap Growth ETF (MGK) was down 0.5% around 3:00 p.m. ET, but closed with a 1.1% loss; and the market-cap weighted S&P 500 was down 0.1% around 3:00 p.m. ET, but closed with a 0.7% loss.
The S&P 500 energy sector (+1.2%) was the top performer by a decent margin. The information technology sector (-1.5%), meanwhile, closed with the steepest loss.
Outsized moves were generally been reserved for stocks with news catalysts. Twilio (TWLO 59.69, +1.29, +2.2%), Duolingo (DUOL 144.91, +8.91, +6.6%), and Akamai Tech (AKAM 102.99, +8.04, +8.5%) are standouts after reporting earnings while Penn Entertainment (PENN 27.10, +2.26, +9.1%) struck a 10-year exclusive U.S. online sports betting agreement with ESPN, Inc. and ESPN Enterprises.
Treasuries settled mixed ahead of tomorrow's release of the July Consumer Price Index. The 2-yr note yield rose five basis points to 4.80% and the 10-yr note yield fell one basis point to 4.01%.
- Nasdaq Composite: +31.1% YTD
- S&P 500: +16.4% YTD
- Russell 2000: +9.6% YTD
- S&P Midcap 400: +9.7% YTD
- Dow Jones Industrial Average: +6.0% YTD
Reviewing today's economic data:
- The weekly MBA Mortgage Applications Index declined 3.1% with purchase applications falling 3.0% and refinance applications dropping 4.0%.
- The weekly EIA crude oil inventories showed a build of 5.85 million barrels following last week's draw of 17.1 million barrels.
The economic calendar tomorrow includes:
- 8:30 a.m. ET: July CPI (consensus 0.2%; prior 0.2%) and Core CPI (consensus 0.2%; prior 0.2%); weekly Initial Claims (consensus 230,000; prior 227,000) and Continuing Claims (prior 1.700 mln)
- 10:30 a.m. ET: Weekly natural gas inventories (prior +14 bcf)
- 2:00 p.m. ET: and July Treasury Budget (prior -$227.80 bln)
Disney Posts Smaller Streaming Loss, Sees Disney+ Subscriber Base Shrink
Entertainment giant’s revenue rises 3.8% on continued growth at parks unit
Disney DIS -0.73%decrease; red down pointing triangle said its streaming business lost far less money in the latest quarter than it did in previous periods, but reported that its flagship Disney+ streaming service lost domestic subscribers for the second quarter in a row.
The entertainment giant that is home to Mickey Mouse, Captain America, Buzz Lightyear and Luke Skywalker reported that losses in its streaming business narrowed to $512 million in the third quarter from $1.06 billion in the year-earlier period.
The improvement is a sign that cost controls put in place by Chief Executive Robert Iger are starting to show a positive effect: Wall Street analysts polled by FactSet had expected a quarterly loss of $758 million.
Overall, Disney’s revenue rose 3.8% to $22.3 billion, thanks in part to continued growth at the company’s parks business, while operating income remained flat at around $3.6 billion. Analysts surveyed by FactSet had projected revenue of $22.5 billion and operating income of $3.3 billion.
In a statement, Iger said Disney was on track to exceed the goal he laid out in February of cutting $5.5 billion from content and administrative budgets, and chalked up the results to efforts to restructure the company and improve efficiencies. Since the start of the year, Disney has eliminated thousands of jobs as part of an effort to reduce head count by 7,000.
“In the eight months since my return, these important changes are creating a more cost effective, coordinated, and streamlined approach to our operations,” he said. “While there is still more to do, I’m incredibly confident in Disney’s long-term trajectory.”
Shares of Disney slid 1.4% in after-hours trading to $86.20. Before the earnings results, the stock had fallen 19% over the past 12 months.
The company swung to a loss of $460 million from $1.41 billion a year earlier, mostly because of restructuring and impairment charges. Excluding certain items, Disney earned $1.03 per share outstanding, beating analyst expectations of 97 cents a share.
Disney+ had 146.1 million subscribers globally, 7.4% fewer than the 157.8 million it had in the previous quarter. The decline mostly came from India, where Disney last year lost the rights to stream a popular cricket league that had been a major driver of new sign-ups.
In the U.S. and Canada, Disney+ had 46 million subscribers, down from 46.3 million in the previous quarter. It marked the second time ever that the company saw Disney+ lose North American subscribers.
Since launching Disney+ in late 2019, the company has lost more than $10 billion in its direct-to-consumer segment, which also includes Hulu and ESPN+. For nearly three years, Disney has told investors it expects Disney+ to be profitable by September 2024.
Disney’s troubled traditional television business continued its decline. The company’s so-called linear TV segment, which includes sports network ESPN, ABC and cable channels like FX, Freeform and the Disney Channel, saw operating income fall 23% to $1.89 billion, or about $100 million less than what analysts expected.
Once a reliable engine of profit for Disney, linear TV has seen its operating income plunge in recent years as more consumers cut the cable cord and switch to streaming video as their primary source of home entertainment.
Iger recently hired Kevin Mayer and Tom Staggs, both former top lieutenants to Iger, as consultants to advise him on the TV business.
Disney is exploring a menu of options for both ESPN and its other linear networks, which include ABC and cable channels such as Freeform and Disney Channel, people familiar with the matter said. Those options could include selling some networks or bringing on equity partners, or spinning some assets off into a new company.
In recent weeks, Iger has told associates that he wants to reduce Disney’s exposure to the declining cable-TV industry but would prefer to avoid a spinoff of ESPN, and instead attract strategic partners to raise capital and ease the pressure on the business, people who have spoken with him said.
Iger is expected to speak Wednesday afternoon on a conference call with investors and analysts, who will be looking for more clarity about how to fix the TV business, said analyst Michael Nathanson. Disney’s shares have traded for much of this year under $90, a fraction of the price at which they traded about 2½ years ago, when the stock briefly topped $200.
“The market is unsatisfied so far, because we’ve only heard part of what they’re thinking,” Nathanson said. “People are afraid to buy the stock until they get the all-clear sign.”
White House unveils ban on US investment in Chinese tech sectors
Biden cites security threats as he restricts capital for companies linked to Chinese military
The Biden administration will ban US investment into quantum computing, advanced chips and artificial intelligence sectors in China, as it ratchets up efforts to ensure the Chinese military does not benefit from American technology and capital.
President Joe Biden on Wednesday issued an executive order establishing the prohibitions, which will largely affect private equity and venture capital firms as well as US investors in joint ventures with Chinese groups.
A senior US official said it would create a “very targeted” programme that would focus on the three sectors that the Biden administration has also marked out in a series of other technology-related measures aimed at China. It will require firms to inform the government of investments into the three sectors even in cases where the prohibitions will not apply.
“We want to provide bright line guidance on what is prohibited and separately what is notified,” the official said.
The outbound investment order is the latest in a number of actions designed to limit Chinese access to advanced technology in what US national security adviser Jake Sullivan has called a “small yard, high fence” strategy.
Washington has said the rule, which will not take effect until next year, will protect US security. But Beijing has countered that previous US actions are designed to crimp its technological progress.
A second US official said: “This executive order protects our national security interests in a narrowly targeted manner, while maintaining our longstanding commitment to open investment.”
The first official added that the administration did not anticipate expanding the order to other areas such as biotechnology but said it included a requirement to review the affected industries within a year.
The latest move threatens to hurt efforts to resurrect top-level engagement that stalled after a suspected spy balloon flew over the US earlier this year. Biden and President Xi Jinping agreed at the G20 in Bali in October to try to stabilise relations and make sure competition did not veer info conflict.
The order comes as Biden prepares to update sweeping export controls introduced in October to make it harder for Chinese groups to source or manufacture cutting-edge semiconductors and chipmaking tools.
The US has been working with its allies in Asia and Europe to forge as much consensus as possible about the need to restrict investment in China. But the effort has been complicated because other countries are worried that the US move goes too far and, in some cases, because of constraints in their legal systems.
US officials have expressed hope that some countries will act once Washington has led the way. But even some close allies appear to be balking. Japanese officials have privately made clear that Tokyo does not intend to revise legislation governing outbound China investments.
However, US officials said the UK and Germany, and also the European Commission, had expressed interest in developing similar outbound investment regimes.
Republicans criticised the order for not tackling more kinds of investment. Nikki Haley, one of the GOP presidential contenders, said it was “not even a half measure”.
“To stop funding China’s military, we have to stop all US investment in China’s critical technology and military companies, period,” she said.
Another US official said private equity and venture capital had been targeted because they could introduce Chinese groups to other technology companies and experts. “What we are trying to get at here is the intangible benefits,” the official said. “Ultimately China doesn’t need our money.”