Crypto Shrugs Off Regulatory/China Crackdown, Surges Off Weekend-Dip Lows
Disappointing the endless stream of FUD-promoters, crypto markets have rebounded strongly over the weekend despite more China crackdown headlines (good for 'clean' bitcoin) and the Binance ban in UK (meaningless given the entity's structure); perhaps supported by positive comments from Mexico's 3rd richest man:
“[Laughs loudly] No, no, no, no stinky fiat for no reason. Not even a single peso, no paper bills. I would take bitcoin.”"Bitcoin is the new gold, but too much more portable, transport Bitcoin is so much easier than having your in pockets gold bars"
Also on the positive side, seemingly unperturbed by persistent threats of a renewed crypto crackdown from lawmakers, Indian investors have piled $38.8 billion into cryptocurrency over the past year.
Sandeep Goenka, the co-founder of local exchange ZebPay, highlighted growing appetites for digital assets among Indian’s aged 18 to 35, noting a preference to invest in crypto over gold. He told Bloomberg:
“They find it far easier to invest in crypto than gold because the process is very simple. You go online, you can buy crypto, you don’t have to verify it, unlike gold.”
Bitcoin ran from $30,000 on Saturday morning to over $35,000 this morning...
Source: Bloomberg
Even on the back of 5% daily gains, sentiment around Bitcoin is still firmly fear-driven.
While its score has since almost trebled, the feeling among market participants remains “extreme fear” - implying that there is plenty of potential to accommodate large price hikes. The opposite end of the spectrum, “extreme greed,” tends to precede price drawdowns.
But the bounce off $30k seems supportive...
“We’re seeing the $30,000 level on Bitcoin being defended quite well with a number of tests at that level over the past month,” said Vijay Ayyar, head of Asia-Pacific at crypto exchange Luno Pte.“We saw a lot of downward pressure on prices being defended, so this looks quite bullish at this point.”
Ethereum is outperforming Bitcoin in the bounce...
Source: Bloomberg
Ethereum is back above $2000 after falling to almost $1700 over the weekend...
Source: Bloomberg
Pushing back above its 200DMA...
Source: Bloomberg
Additionally, as CoinTelegraph reports, more upside tailwinds in the Ethereum market came in the wake of its major protocol upgrade in July. Dubbed as the London hard fork, the upgrade expects to transform Ethereum from an energy-intensive proof-work network to a speedier, “eco-friendly” proof-of-stake network.
The fork will introduce new Ethereum Improvement Protocols (EIP) that propose to make its fee structure cheaper and its blockchain more scalable to handle a higher number of transactions. The two issues have acted as bottlenecks for Ethereum’s adoption even as it remains the highest-utilized blockchain across the booming stablecoin and decentralized finance (DeFi) sector.
In general, London hard fork’s core proposal - dubbed as EIP-1559 - will cap Ethereum’s gas fees while moderating the volatility of the network’s transaction fees.
EIP-1559 also brings in the so-called “scarcity” feature to the Ethereum ecosystem, which is among key bullish drivers for allocations to the Bitcoin market.
Not all companies are cool enough to join a startup board – nor should they be. Geely Automobile, which turns 24 this month, has dropped plans to supplement its Hong Kong listing by raising up to $3 billion on Shanghai’s technology-focused STAR Market, citing “strategic adjustments.” Other established giants seeking a listing such as Syngenta should take note.
The STAR Market was launched in 2019 to help early-stage tech-focused firms raise funds. China’s first Nasdaq-like registration-based system was meant to remove the heavy-handed regulatory oversight that had created queues of several hundred companies waiting for approval to float on main boards in Shanghai and Shenzhen. Such was its success that the profitable members on the benchmark STAR 50 index trade at a median around 59 times expected net profit, Refinitiv data shows.
This has attracted well-established companies touting their innovation credentials. So despite promises to implement a “registration-based” system, regulators this year began filtering applicants, per media reports. This may have screened out Geely, which already has a $33 billion market capitalisation in Hong Kong. The company does build electric vehicles, and its parent company has invested in flying air taxis as well as gone into the satellite business, but the listed entity is mostly a conventional carmaker.
This could bode ill for agricultural giant Syngenta, bought by state-owned ChemChina in 2017, which has innovative business lines in seed science and the like but is no startup. On June 21 it said it wanted to list on STAR. No fundraising size was given, although its likely market capitalisation would be about $50 billion, Reuters reported citing sources. Assuming Syngenta raised something like the $3 billion Geely had targeted, listings from the two giants would have soaked up funds equivalent to 70% of the $8.5 billion raised on STAR so far this year, per Refinitiv data. That would risk stifling the startup finance STAR is designed to provide.
Tightening the requirements for STAR candidates could help cool an overheated board and deter thematic dilution. Syngenta’s state-owned parent and its expertise in one of China’s strategic priorities could win it approval. As for Geely, it is hardly out of options with founder Li Shufu an adept user of capital markets. Both it and Syngenta might end up in Shanghai yet.
Dial M for Mystery
BT stock was at 185 pence when Drahi unveiled himself as the former state monopoly’s biggest shareholder. At that price, his 1.2 billion shares would have cost 2.2 billion pounds. The Altice Europe founder probably paid less, as BT shares have risen by a quarter since the beginning of May. Even so, that’s still a hefty outlay.
Yet Drahi may not have put up the entire sum. One way to economise is by using a so-called equity collar. This involves using a put option, bought from a bank, giving the investor the right to sell the shares at a lower price. This puts a floor under the investment, enabling the buyer to use more aggressive leverage.
The flipside of the structure is a price cap, via a call option, that lets the counterparty bank buy the shares if they rise beyond a certain amount. The lender typically hedges its exposure by selling an equivalent amount of stock short. This would help explain why the number of BT shares out on loan jumped from 250 million to 1.25 billion in early June.
Drahi is keeping quiet. But if this theory is correct, it would mean the tycoon has acquired 12% of BT’s voting rights but limited his exposure to movements in its share price. That’s at odds with his professed belief in the 20 billion pound company’s bright future.
One possible explanation is that Drahi couldn’t afford to buy the shares outright. That could change if his Altice Europe sells its business in Portugal, which Reuters reported earlier this month could be worth 6 billion euros. Drahi could then reap the rewards from any BT shakeup, like the partial sale of its Openreach broadband network, which generates EBITDA of 3 billion pounds but needs to spend 15 billion pounds laying fibre across the United Kingdom.
Drahi is a fan of these deals. He sold half of Altice’s nationwide Portuguese fibre-optic network to Morgan Stanley at a multiple of 18 times EBITDA in 2019. Such multiples offer a clue to his thinking, although he’s not pushing BT to sell an Openreach stake, Reuters reported on Monday, citing a person familiar with the situation. For now, though, BT’s other shareholders can only guess.
Gapping down
News:
- MIST -4.1% (files for 910,746 share common stock offering by selling shareholders)
- WWR -2.5% (files for $150 mln mixed securities shelf offering)
- XPO -1.9% (plans to make a registered underwritten offering of 5 mln shares of its common stock consisting of an equal number of shares to be offered by XPO and by Jacobs Private Equity, the selling stockholder and an affiliate of Brad Jacobs, XPO's chairman and chief executive officer)
- SWI -1.1% (anticipates completing spin-off of N-able on July 19)
- ATHX -0.7% (files for 40 mln share common stock offering by selling shareholder related to sales agreement with Aspire Capital)
Analyst comments:
- GBT -1.6% (downgraded to Neutral from Overweight at JP Morgan)
- BRFS -1.4% (downgraded to Neutral from Buy at Goldman)
Gapping up
In reaction to earnings/guidance:
- PERI +9.7%
Other news:
- NTLA +55.5% (Intellia and Regeneron Announce Landmark Clinical Data Showing Deep Reduction in Disease-Causing Protein After Single Infusion of NTLA-2001, an Investigational CRISPR Therapy for Transthyretin (ATTR) Amyloidosis)
- AVXL +20.7% (reports ANAVEX2-73 (Blarcamesine) improved both primary cognitive and secondary MDS-UPDRS efficacy endpoints)
- ABUS +14.8% (New Data on AB-729 and AB-836 Programs with Presentation of Five Abstracts at the EASL International Liver Congress 2021 - All Selected for Best of ILC) MNKD +13.9% (policy change allows approval for Medicare patients living with diabetes to use both Afrezza And continuous glucose monitoring devices beginning July 18) DTIL +9.7% (Precision BioSciences and SpringWorks Therapeutics (SWTX) dose first patient in expanded phase 1/2a clinical trial evaluating PBCAR269A with nirogacestat in patients with relapsed/refractory multiple myeloma)
- SNDX +5.4% (receives Fast Track Designation from FDA for the treatment of relapsed/refractory acute leukemias)
- SANA +4.5% (Presents Data at ISSCR 2021 Virtual Annual Meeting Showing Survival of Transplanted Hypoimmune Stem Cells Without Immunosuppression in Non-Human Primates)
- RDHL +3.3% (announced preliminary results of a new preclinical study showing potent inhibition of COVID-19 variants of concern by opaganib (Yeliva))
- MNOV +3.2% (to conduct mouse study under partnership with BARDA to develop MN-166 as a medical countermeasure against chlorine gas-induced lung injury)
- REGN +2.9% (Intellia and Regeneron Announce Landmark Clinical Data Showing Deep Reduction in Disease-Causing Protein After Single Infusion of NTLA-2001, an Investigational CRISPR Therapy for Transthyretin (ATTR) Amyloidosis)
- CSIQ +1.7% (submits application documents for IPO for CSI Solar)
- VGZ +1.5% (receives final $1.0 million payment from Prime Mining Corp)
- HEXO +1.2% (announces closing of the previously disclosed transaction to purchase its first US production facility through a wholly owned US subsidiary)
- IMAX +1% (extending share-repurchase program through June 30, 2022)
Analyst comments:
- NKTR +3.2% (upgraded to Buy from Hold at Stifel)
- MAC +2.5% (upgraded to Buy from Hold at Deutsche Bank)
- NRG +2.4% (upgraded to Conviction Buy from Buy at Goldman)
- CX +2.1% (upgraded to Outperform from Neutral at Bradesco BBI)
- TOL +2% (upgraded to Neutral from Sell at BTIG Research)
- BEP +1.7% (upgraded to Outperform from Neutral at Credit Suisse)
- NCBS +1.7% (upgraded to Overweight from Equal-Weight at Stephens)
- IP +1.2% (upgraded to Overweight from Equal-Weight at Stephens)
Early premarket gappers
- Gapping up:
- NTLA +30.8%, ABUS +16.3%, VGZ +10.5%, MNKD +5.9%, PERI +5.8%, IMAX +1.4%, REGN +1.4%, OCFC +1%, SANA +1%, TNDM +0.6%
- Gapping down:
- MIST -4.1%, SWI -2.9%, WWR -2.5%, ATHX -2%, COTY -1.3%, SMSI -1.1%, SRNE -0.6%
Burberry chief to step down after five years
Marco Gobbetti had led a push to make the brand more upmarket
British luxury group Burberry is to begin the search for a new chief executive after Marco Gobbetti said he would step down after five years in the role.
The company announced on Monday that Gobbetti, who has led a push to make the brand more upmarket, would leave at the end of this year to return to Italy.
“With Burberry re-energised and firmly set on a path to strong growth, I feel that now is the right time for me to step down,” Gobbetti said in a statement.
Burberry chair Gerry Murphy said that the board was “naturally disappointed by Marco’s decision but we understand and fully respect his desire to return to Italy after nearly 20 years abroad”.
Share awards that are unvested by the time Gobbetti leaves will lapse and no more will be granted, the company said.
>>> Up
* Adecco Raised to Buy at HSBC; PT 73 Swiss francs
* Cemex ADRs Raised to Outperform at Bradesco BBI; PT $11
* Danone Raised to Overweight at JPMorgan; PT 75 euros
* Dr. Martens Raised to Buy at HSBC; PT 510 pence
* EDP Raised to Outperform at RBC; PT 5.10 euros
* EDP Raised to Outperform at RBC; PT 5.10 euros
* Entain PLC Raised to Add at AlphaValue
* Grafton PT Raised to 1,470 pence from 1,450 pence at Berenberg
* Puma PT Raised to 120 euros from 117 euros at M.M. Warburg (+)
* Steico PT Raised to 127 euros from 102 euros at Bankhaus Metzler (+)
>>> Down
* Endesa Cut to Underperform at RBC; PT 21.50 euros
>>> Down
* Endesa Cut to Underperform at RBC; PT 21.50 euros
* Iberdrola Cut to Underperform at RBC; PT 10 euros
* LondonMetric Cut to Hold at Panmure Gordon; PT 245 pence (+)
* M&G Cut to Hold at HSBC; PT 250 pence
* St James's Place Cut to Hold at HSBC; PT 1,525 pence
* St James's Place Cut to Hold at HSBC; PT 1,525 pence
* TeamViewer Cut to Neutral at Goldman; PT 37 euros
* Unibail Cut to Sell at SocGen; PT 67.30 euros
>>> Initiation
>>> Initiation
* EDP Renovaveis Rated New Buy at Citi; PT 21.40 euros
* HGears Rated New Outperform at Oddo BHF; PT 33 euros (+)
* Montana Aerospace Rated New Outperform at ZKB (+)
* SUSE Rated New Hold at Jefferies; PT 32 euros
* SUSE Rated New Hold at Jefferies; PT 32 euros
* SUSE Rated New Buy at Goldman; PT 43 euros
* SUSE Rated New Neutral at JPMorgan; PT 35 euros
* SUSE Rated New Buy at Deutsche Bank; PT 40 euros
* SynAct Pharma Rated New Buy at Kempen & Co; PT 125 kronor
>>> Call
>>> Call
* Danone’s Top Line Set to Return to Growth in 2Q, Barclays Says (+)
* European Renewable Utilities Attractive Post-Selloff, RBC Says
* BHP Likely to Approve Canada Potash Project in August, RBC Says
* BHP Likely to Approve Canada Potash Project in August, RBC Says