TheChek News Flow

Fashion conglomerate Youngor Group and venture capital firm Challenjers Capital each took minority stakes in the New York-based label.

LONDON — Alexander Wang has sold minority stakes to two Chinese investors: fashion conglomerate Youngor Group, and venture capital firm Challenjers Capital.

The financial terms of the deals were not disclosed.

The American Chinese designer, who staged his last show in the Chinatown section of Los Angeles, California, said Monday the investment is “an important milestone for Alexander Wang and a strong testament to the brand’s continued global expansion.”

“When the brand was first established in 2005, I had no idea that it would grow to the scale it has today. Now that the brand’s North American and global retail expansion plans have been launched, I am very excited about the future of the brand and the support from Youngor Group and Challenjers,” Wang said in a statement.

With the investment, the Alexander Wang brand said it will continue to expand its global presence, with a focus on global retail stores and continued investments in e-commerce, marketing and innovation.

Based in Jingbo, Zhejiang Province, Youngor Group scored the fourth spot in the ranking of the 10 biggest listed Chinese fashion companies by 2021 revenues. The list is compiled by Chinese market intelligence firm Askci. Youngor raked in 13.6 billion renminbi, or $2.02 billion, in revenues last year.

Youngor Group started as a men’s tailoring brand 43 years ago. It since has become a multifaceted conglomerate with businesses in apparel, property development, investment, textile manufacturing and global trade.

The brand claims that it has had the highest market share in the shirting and men’s tailoring categories in China for more than two decades.

The company’s fashion unit, which includes Youngor, Youngor Mayor, Hart Schaffner Marx and Hanp, made 6.82 billion renminbi, or $1.01 billion, last year.

Prior to investing in Alexander Wang, it partnered with Norwegian performancewear label Helly Hansen to expand in China, and has invested in the high-end golf lifestyle store S+G, and American streetwear brand Undefeated.

Challenjers Capital was founded in 2014 and has dual currency funds in Chinese renminbi and U.S. dollars with a cumulative asset management scale of more than 10 billion renminbi. It has invested in many well-known consumer brands and more than 200 start-ups so far.

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SDAX:

Porsche shares could be trading by the end of September, early October

BERLIN— Volkswagen AG VOW -4.25% said Monday that it would list its iconic sports car maker Porsche AG POAHY 0.57% in one of the biggest initial public offerings in years and a crucial test of investors’ confidence as high inflation and the war in Ukraine put a damper on the global economy.

The offering could value Porsche at as much as 85 billion euros ($84 billion), according to analyst estimates, injecting fresh cash into VW’s coffers that executives say will help the company bankroll its transition to electric vehicles and self-driving cars.

“The listing of Porsche AG will give fresh tailwind to Volkswagen’s transformation,” VW Chief Finance Officer Arno Antlitz said.

Oliver Blume, who is chief executive of both Porsche and the entire Volkswagen company, welcomed the decision by VW’s supervisory board to move forward with the planned listing, saying it would grant Porsche greater independence.

“This is a historic moment for Porsche,” Mr. Blume said.

Confirming past comments about the planned offering, VW said that in preparation for the listing, Porsche’s stock has been split into 50% ordinary shares and 50% nonvoting preferred stock.

The German auto maker intends to list Porsche on the Frankfurt Stock Exchange and offer 25% of Porsche’s preferred stock to private investors in a public offering aimed for late September or early October.

In a second step, the Porsche family heirs, who own a majority stake in VW, will purchase 25% plus one share of Porsche’s ordinary shares, or voting stock, through their listed family investment fund, Porsche Automobil Holding SE.

Porsche SE has agreed to purchase the shares at the IPO price plus a 7.5% premium. The acquisition of Porsche voting stock gives the Porsche heirs a blocking minority, giving them effective control over major strategic decisions on the company’s board and in shareholder meetings.

The Qatar Investment Authority has signaled its intention to acquire 4.99% of Porsche’s preferred stock, VW said, becoming a cornerstone investor.

VW, which will continue to hold the remainder of Porsche’s stock, said in the event of a successful IPO, 49% of the proceeds from the IPO and the private placement would be distributed to VW shareholders in the form of a special dividend. The dividend would likely be paid in the beginning of 2023, VW said.

The German auto giant said it would now begin meeting individual investors to weigh demand and determine the price for the shares, which could begin trading by the end of the month.

Some investors have warned that the way the IPO is being structured, with only the nonvoting shares sold to the public, could make it difficult for VW to get top dollar for the sports car maker. Investors are concerned that insiders will continue to exercise control over the company at the expense of private investors.

Investors are also concerned that Mr. Blume’s dual role as CEO of both VW and Porsche could lead to conflicts of interest.

At the end of July, an investor poll conducted by Bernstein Research showed that 71% of respondents thought Mr. Blume’s double role would have a negative impact on the Porsche IPO.

Although VW has stated its intention to float the shares, the company said the final decision to do so would depend on market conditions at the time.

Nikkei +0.01% Hang Seng -0.25% CSI +0.62% Shanghai +1.10% Shenzen +0.85%

Eur$ 0.9964 CNH 6.9468 CNY 6.9387 JPY 140.90 -0.26% GBP 1.1590 +0.65% CHF 0.9788 +0.16% RUB 61.4601 TRY 18.2164 WTI$ 88.62 +2.03% Gold 1,718.60 +0.49% BTC 19,812 +0.36% ETH 1,659.30 +3.85%

S&P +0.39% Nasdaq +0.53% EuroStoxx -0.17% FTSE -0.18% Dax -0.09% SMI-0.10%

Macro :

- Austria Plans Energy-Support Measures for Industry: Nehammer

- Germany to Keep Nuclear Plants in Reserve to Ease Energy Crisis

- Germany Keeps Its Nuclear Plants Alive as EU Seeks Crisis Fixes

- OPEC+ Surprise Cut Is Symbolic, Yet Signals More Curbs May Come

Keep an eye on :

- ABN NA : ABN Amro Raises Revolving Consumer Credit Provision By ~EU120M

- AMG NA : AMG in Pact with EcoPro for Battery-grade Lithium Hydroxide

- ANIM IM : Anima Holding Aug. Net Inflows EU28M

- ARAMI FP : Aramis Group Appoints Laboure Hirsch as Group CFO

- BWLPG NO : BW LPG Sees Share Buy-Back Program to Continue Until End of Dec.

- DIE BB : D'Ieteren Boosts FY Adjusted Pretax Profit Forecast

- DUFN SW : Dufry Sees Annual Turnover Growth of 5% to 7% in 2025-2027

- EDP PL : Portugal to Lower Value-Added Tax Rate on Electricity Bills

- EQT US : US Gas Firm EQT Is Said to Near Deal to Buy Appalachia Producer

- HFG GY : Siemens Energy to Replace HelloFresh in Germany’s DAX Index

- MEKKO FH : Marimekko Raises L-T Goals, Focus on Scaling Profitable Growth

- MITRA BB : Mithra Issues 118,704 Shares at ~EU6.31 to Highbridge, Whitebox

- PAH3 GY : Volkswagen Board Says It Will Launch Porsche IPO

- RIO LN : Rio Tinto Reaches ‘Definitive Agreement’ to Buy Turquoise Hill

- RWE GY : Germany Keeps Its Nuclear Plants Alive as EU Seeks Crisis Fixes

- SAF FP : Safran Set To Buy Thales Aeronautical Electrical Systems Unit

- SFER IM : To report Results Postmarket today (6pm)

- ENR GY : Siemens Energy to Replace HelloFresh in Germany’s DAX Index

- SGFY US : CVS Agrees to Buy Signify Health for About $8 Billion (1)

- SN/ LN : Smith & Nephew Shares Rise After Betaville ‘Uncooked Alert’

- HO FP : Safran Set To Buy Thales Aeronautical Electrical Systems Unit

- UBI FP : JP Morgan Chase Raises Stake in Ubisoft to 15.63%: AMF

- UN01 GY : Uniper May Need Even More Funds From Germany as Prices Surge

- VOW GY : Volkswagen Board Says It Will Launch Porsche IPO

The bad news for the pound is not all in the price

Sterling faces further pressure as market worries mount over rising UK imbalances

Like many major currencies, the pound has fallen sharply over the past 12 months. It has dropped from as high as 1.40 against the dollar in the middle of 2021 to 1.15, fractionally above its March 2020 pandemic lows.

Other than briefly in the mid-1980s, it’s never been weaker. Indeed, after a year of trending lower, various sentiment and technical models, not surprisingly, suggest the downside to the pound is now limited.

For contrarian traders, therefore, that’s a signal that now is the time to start building long positions in the pound. The argument is that sentiment is so widely bearish that all the bad news is in the price and the currency is notably oversold.

While generally a rewarding way to approach markets, every once in a while those types of contrarian bets fail. In particular, they typically fail when the macro theme driving the markets is unusually strong, compelling and overwhelming. This is probably one of those times.

The US economy looks destined for recession in 2023. The debate now occurring among many in markets is whether the recession will be mild or severe. In the mild camp are those who cite limited western economic imbalances. Driving the concerns of those worrying about a severe recession are the expected future high levels of interest rates and their impact upon a corporate sector with large shares of zombie companies kept alive only by the low cost of debt.

Either way, recessions lead to a sharp tightening of liquidity, which is something that is about to be accentuated by the US Federal Reserve’s quantitative tightening programme, the unwinding of its great asset buying spree to support the economy and markets. From this month, the Fed’s planned reduction of its balance sheet doubles to $95bn a month from initial levels in June. That, coupled with rising interest rates, drains liquidity from global markets.

In the good times, when liquidity is abundant, economies can run significant economic imbalances. Structural balance sheet factors (whether households, corporates or governments) are rarely of interest to market participants when the good times are rolling. In the downturns, though, they are (almost) all that counts.

Unfortunately for the UK economy (and its incoming prime minister), Britain is the worst offender, among the major western economies, in terms of imbalances.

One good catch-all measure for imbalances is the current account balance — effectively an aggregator of the fiscal, household and corporate sector imbalances. The UK is now (on the latest data) running a deficit equivalent to 8 per cent of gross domestic product. While some question marks exist about the accuracy of the first-quarter data, the trend of the past two years is clear. The country is living, as the former Bank of England governor Mark Carney put it, on the “kindness of strangers”. Going into the financial crisis, that imbalance caused the UK economy problems when it was 3.5 per cent of GDP. In the run-up to the early 1990s recession, it reached about 4.5 per cent of GDP.

Adding to the woes, productivity growth (a measure of true wealth creation) has all but flatlined since 2010, implying the UK economy is not creating much new sustainable income with which to pay its bills.

That poor productivity trend reflects the rise of zombie companies and the over-financialisation of the British economy, as well as the lack of capital investment. In effect, though, it means that much of the economic growth in the past 12 years has been somewhat illusory. That is, either built on more debt, less savings and/or a wealth effect from rising asset prices.

Further adding to its challenges, the country also has a central bank that seems reluctant to embrace the need for higher UK rates (and thereby defend the currency level). And if Liz Truss implements promised tax cuts as prime minister, then imbalances will surely grow.

As such, and given that impending US and therefore global recession in 2023, the dollar’s rapid rise against sterling looks set to continue, with the pound heading for parity against the dollar (and perhaps beyond) over the next six to 12 months. If that is correct, then one hedge (in a world lacking in obvious means of hedging) is to buy insurance against the risk of loss on UK government debt, ie five- and 10-year credit default swap instruments.

At a time of large current imbalances and tight liquidity it becomes essential to “live within your means”. Market worries over the UK will rise as its imbalances increase. The kindness of strangers can only be stretched so far.