WWD : H&M Removed From All Major Chinese Platforms Over Xinjiang Cotton Ban

H&M Removed From All Major Chinese Platforms Over Xinjiang Cotton Ban
PVH Corp., Fast Retailing, Nike, Gap and Inditex had also previously distanced themselves from Xinjiang cotton and could be targeted next.

SHANGHAI — H&M has suddenly been blocked from all major Chinese e-commerce platforms including Tmall, Taobao, JD.com and Pinduoduo over its stance to remove Xinjiang cotton out of its supply chain.

Searching for the brand on any of the platforms shows no results. It’s not known if this is a temporary or permanent ban of the Swedish retailer. The brand’s physical stores do not appear to have been impacted thus far.

H&M had originally revealed its decision last year to disavow Xinjiang cotton, but this controversy seems to have been prompted by a Weibo post from the Communist Youth League, part of China’s ruling party, on Wednesday, which said: “Spreading rumors to boycott Xinjiang cotton, while also wanting to make money in China? Wishful thinking!” The post included H&M’s response to the decision taken by the Better Cotton Initiative in March to no longer license its cotton from Xinjiang, in both English and Chinese.

H&M China’s brand ambassadors Huang Xuan and Song Qian revealed online that they were no longer working with the brand, stating they were “firmly opposed to any attempt to discredit the country” — although a source told WWD that Huang’s ambassadorship in fact had ended some time ago.

H&M’s decision to stop using cotton from China’s Xinjiang region was rooted over concerns over allegations of mass forced labor camps in the region. At the start of the year, the U.S. government stated that Beijing’s repression of Uighur and other Muslims in the region constituted “genocide.” Other fashion labels that have publicly distanced themselves from Xinjiang cotton include Tommy Hilfiger and Calvin Klein parent PVH Corp.; Fast Retailing, parent of Uniqlo; Nike; Gap, and Zara owner Inditex. Official e-commerce storefronts for brands under these companies seem to be operating and appear in search results per usual.

While these companies addressed the issue some time ago, the sudden targeting seems to be in retaliation to the ratcheting up of tensions over the issue in recent days. The U.S., Canada, the U.K. and the European Union, coordinated this week for the first time to condemn the country’s alleged human rights violations toward Xinjiang’s Uighur minority and launched sanctions on some Chinese government-affiliated individuals. The Chinese government responded in kind, issuing its own counter-sanctions against Western officials.

Xinjiang has few apparel factories but it is key in cotton production, accounting for 20 percent of global supply. While much of that is used for goods sold in China, cotton is mixed and distributed globally, putting brands in a difficult position. They are asked to prove that the cotton in the goods they bring into the U.S. was not grown in Xinjiang, while also trying not to anger China.

In response, H&M put out a statement on Weibo that said: “H&M Group has always managed our global supply chain in an open and transparent manner, ensuring that our suppliers worldwide comply with our sustainability commitments such as the “OECD Guidelines for Responsible Business Conduct” and do not represent any political position.

“The H&M Group does not source cotton directly from any supplier. We are committed to long-term investment and development in China, currently working with over 350 manufacturers in China to provide sustainable apparel products to Chinese and global consumers.”

China has a long track record of punishing companies and public figures for opposing political views, particularly over the issues of Tibet, Taiwan, Hong Kong and Xinjiang.

While fashion brands have previously run into trouble in the country over geopolitics, this incident represents a harsher level of punishment than seen before. Versace, Coach and Givenchy have been targeted by Chinese authorities in previous years for failing to explicitly refer to Hong Kong and Macau as part of China.

In 2019, a Versace T-shirt that listed store locations across the world became the subject of ire. It printed Beijing and Shanghai, followed by the country name, China, but formatted Macau and Hong Kong differently, which angry netizens interpreted as suggesting the regions are separate entities. Macau and Hong Kong are former colonies that are now governed as Chinese special administrative regions.

FT : Chinese tech stocks fall sharply on rising regulatory concerns

Chinese tech stocks fall sharply on rising regulatory concerns
Alibaba, Tencent and Baidu shares drop on fears of US delistings and control over data

Chinese technology stocks dropped sharply on growing concerns of possible delistings from US exchanges and reported plans by Beijing to take control of companies’ user data.

The Hong Kong-listed shares of Alibaba, the Chinese ecommerce group, were down 4.2 per cent by midday on Thursday, while those of internet business Tencent dropped 2.3 per cent. Shares in Baidu, the search engine group that debuted in the city this week, tumbled almost 9 per cent.

Hong Kong’s Hang Seng Tech index, which tracks shares in big Chinese tech groups, fell as much as 5 per cent.

The losses came after the US Securities and Exchange Commission said on Wednesday that it was taking initial steps to force foreign companies listed in New York to provide access to financial audits or risk being forcibly delisted after three years of non-compliance. Beijing has long denied US regulators access to Chinese companies’ books.

Analysts said sentiment was also hit on Thursday by a Bloomberg News report that China’s government had proposed creating a joint venture to oversee all user data harvested by the country’s tech companies.

If implemented, the plan would mark a substantial escalation of a regulatory crackdown on China’s tech sector, which state media and top officials have criticised for amassing too much power and influence.

“Without a shadow of a doubt you’re going to see a correction” of Chinese tech shares, said Andy Maynard, a Hong Kong-based trader at China Renaissance, an investment bank. “I literally don’t have a buy order [for Alibaba].”

Maynard added that the latest round of bad news for Chinese tech groups had piled additional pressure on share prices already hit by a global shift in investor attention from high-growth companies to cheaper, unloved stocks that are expected to benefit as the global economy recovers from Covid-19.

Louis Tse, managing director at brokerage Wealthy Securities in Hong Kong, said the SEC’s move would put pressure on China to respond to demands for access to audit reports at a time of growing acrimony between Washington and Beijing.

“China doesn’t want [companies] to disclose anything for national security reasons,” he said. “That is a very big question that has to be answered by the Chinese side.”

The threat of delisting has not stopped Chinese tech groups from selling shares on Wall Street, with these companies raising about $1.3bn from New York listings this year. Their shares rose 22 per cent on average on their first trading day, according to data from Dealogic.

“A lot of parties have a huge interest in these Chinese IPOs,” Tse added, pointing to the fee revenues enjoyed by the Wall Street investment banks. “How can they give that up?”

The broader Hang Seng index was little changed on Thursday.

>>> TradeGate Pre-Market Indications

DAX:
  • No major moves
MDAX:
  • Porsche SE (PAH3 TH) +1.2%
    • Porsche SE an Attractive Investment Route Into VW: Commerzbank
  • Aroundtown (AT1 TH) +0.5%
    • Aroundtown Sees 2021 FFO I EU340M to EU370M
  • Siemens Healthineers (SHL TH) -1.4%
    • Siemens Healthineers Raises EU2.34 Billion in Capital Increase
  • Evotec SE (EVT TH) -1.8%
    • Evotec SE Sees 2021 Adjusted Ebitda EU105M to EU120M
  • Varta (VAR1 TH) -2.9%
SDAX:
  • SAF-Holland SE (SFQ TH) +5.4%
    • SAF-Holland SE Sees 2021 Sales EU1.05B to EU1.15B
  • SMA Solar (S92 TH) +3.7%
    • SMA Solar FY Dividend Per Share EU0.30
  • Deutsche PBB (PBB TH) -1.1%
  • LPKF (LPK TH) -1.2%
  • Hamburger Hafen (HHFA TH) -7.4%
    • Hamburger Hafen FY Profit After Tax EU42.6M

>>> Europe : Brokers Upgrades & Downgrades - 25th of March 2021

>>> Up
* AT&S Raised to Buy at Commerzbank; PT 37 euros
* AUTO1 PT Raised to 70 euros from 65 euros at RBC
* Aviva Raised to Buy at Berenberg; PT 478 pence
* BASF Raised to Add at AlphaValue
* Bechtle Raised to Buy at LBBW; PT 185.75 euros
* Bureau Veritas Raised to Overweight at JPMorgan; PT 26 euros
* EQT Raised to Buy at SEB Equities; PT 300 kronor
* Keywords Studios Raised to Buy at Berenberg; PT 3,110 pence
* Kojamo Raised to Buy at DNB Markets; PT 18.40 euros
* Nordex Raised to Reduce at AlphaValue
* Segro Raised to Sector Perform at RBC; PT 900 pence
* Unite Group Raised to Add at Peel Hunt

>>> Down
* Danone Cut to Add at AlphaValue
* Handelsbanken Cut to Hold at DNB Markets; PT 103 kronor
* Hapag-Lloyd Cut to Underperform at Jefferies; PT 100 euros
* Kuehne + Nagel Cut to Market Perform at Bernstein
* Swedbank Cut to Hold at DNB Markets; PT 170 kronor

>>> Initiation
* Aker Carbon Capture Rated New Buy at HSBC; PT 20 kroner
* Aker Carbon Capture Rated New Outperform at RBC; PT 17 kroner
* Aker Solutions Reinstated Outperform at RBC; PT 20 kroner
* CBo Territoria Reinstated Strong Buy at Portzamparc
* Porsche SE Rated New Buy at Commerzbank; PT 104 euros
* Schindler Rated New Neutral at JPMorgan; PT 270 Swiss francs
* Siemens Gamesa Rated New Outperform at Bernstein; PT 38 euros
* SSAB Reinstated Buy at Goldman; PT 48 kronor
* Technip Energies Rated New Sector Perform at RBC; PT 15 euros
* Vestas Reinstated Outperform at Bernstein; PT 1,415 kroner
* Vinci Reinstated Buy at Deutsche Bank; PT 101 euros
* Vodafone Resumed Overweight at Morgan Stanley; PT 200 pence
* Voestalpine Reinstated Neutral at Goldman; PT 34 euros

>>> Call
* Assa Abloy Value Seen Unlocked, Price Target Raised at Jefferies
* Porsche SE an Attractive Investment Route Into VW: Commerzbank
* Keywords Raised at Berenberg on Momentum ‘Too Strong to Ignore’
* Segro Upgraded at RBC With Multiples Now Less Demanding
* Peel Hunt Confident on Student Property Demand, Upgrades Unite
* Trelleborg Gets Street-High PT, Value Attractive: Morgan Stanley
* Vodafone Offers Deepest Value in European Telcos: Morgan Stanley
* Handelsbanken Terminates Coverage of Equinor, Hydro and Yara

>>> What to look at today - 25th of March 2021

Asian stocks fluctuated and U.S. futures ticked higher Thursday as traders assessed the economic rebound from the health crisis. Oil pared a rally sparked by shipping disruption after a container vessel blocked the Suez Canal.
Japan’s shares outperformed and China swung between gains and losses. Tencent Holdings Ltd. and Alibaba Group Holding Ltd. struggled after U.S. regulators revived threats to remove China’s largest corporations from their bourses. S&P 500 and Nasdaq 100 futures edged up after a rotation into cyclicals weighed on the tech gauge overnight. European contracts fell. The dollar was steady.
West Texas Intermediate crude fell back below $60 a barrel, having added more than 5% Wednesday. Tugs and diggers are trying to dislodge the ship that ran aground in this critical waterway for global trade.
Investors will be on the lookout for the seven-year Treasury auction in U.S. hours, as poor demand for this maturity at last month’s sale triggered a spike in yields. The 10-year benchmark rate crept higher in Asia trade.
Investors are mulling which sectors of the stock market are best-placed to benefit from faster growth, while monitoring the risks of higher inflation. Treasury Secretary Janet Yellen and Federal Reserve Chair Jerome Powellbalanced their positive assessments of the recovery with reminders that it still has a long way to go in a second day of Congressional testimony.
“The reflation trade will have further legs to run,” Lale Akoner, BNY Mellon Investment Management senior market strategist, said on Bloomberg TV. “We do see higher inflationary pressures building, higher interest rates and softer dollar to continue.”
Meanwhile, the U.S. Securities and Exchange Commission has started an inquiry into the blank-check acquisition frenzy, according to a report. And Bitcoin fell as much as 4.7%, to the lowest in about two weeks.
On the virus front, AstraZeneca Plc reported a slightly lower efficacy for its vaccine in a U.S. study. U.S. cases surpassed 30 million, according to data from Johns Hopkins University. Brazil surpassed 300,000 deaths from Covid-19, the second-most in the world.
US After Hours RH +8.6%, FUL +6%, JEF +4.8% up big on earnings; RAD -18% down sharply on weak guidance; KBH -4.3% lower on earnings

Nikkei +1.14% HAng Seng -0.21% CSI -0.21% Shanghai -0.22% Shenzen -0.12%

Eur$ 1.1819 CNH 6.5342 CNY 6.5351 JPY 108.97 GBP 1.3684 CHF 0.9359 RUB 76.4330 TRY 7.9309 WTI$ 60.01 -1.91% GOLD 1,735 BTC 53,000 -3200

S&P +0.22% Nasdaq +0.20% EuroStoxx -0.24% FTSE -0.13% Dax -0.17% SMI

Macro :
- Bitcoin Miners Are on a Path to Self-Destruction: Noah Smith
- EU Deploys Region’s Largest VC Fund to Create Local Unicorns

Sapcs :
- Bill Gates-Backed Vicarious Said in Talks to Merge With D8 SPAC

Keep an eye on :
- DRI GY : 1&1 Drillisch FY Dividend Per Share Matches Estimates
- ATA FP : Blast From the Past: Atari’s Comeback on NFT Mania in Peril
- AT1 GY : Aroundtown Sees 2021 FFO I EU340M to EU370M
- BYW6 GY : Baywa Sees 2021 Rev., Oper. Ebit Slightly Above Previous Year
- CABK SM : Caixabank, Bankia May Cut as Many as 8,000 Jobs: Cinco Dias
- CWC GY : Cewe Stiftung Sees 2021 Ebit EU72M to EU84M
- CNHI IM : Nikola Adds Citi as Underwriter in Filing for Possible Offering
- DWNI GY : Deutsche Wohnen Sees 2021 Adjusted Ebitda About EU700M
- DWS GY : DWS Sustainability Officer Let Go After Just Six Months in Role
- EVT GY : Evotec SE Sees 2021 Adjusted Ebitda EU105M to EU120M
- FSKRS FH : Fiskars Boosts 2021 Comparable Ebita Forecast
- FYB GY : Formycon Drug More Efficient Against Covid Variant in Tests
- GLPG NA : Galapagos COO Bart Filius Adds Title of President
- HHFA GY : Hamburger Hafen Sees 2021 Ebit EU153M to EU178M
- HMB SS : TechCrunch: H&M removed from Chinese apps over Xinjiang cotton boycott https://t.co/8a4gzalXjJ by @ritacyliao
- HELN SW : Helvetia FY IFRS Net CHF281.7M Vs. CHF538.1M Y/y
- IBAB BB : Ion Beam FY Adjusted Ebit EU40.4M Vs. EU87,000 Y/y
- JEN GY : Jenoptik Sees 2021 Ebitda Margin 16% to 17%
- MTGB SS : Modern Times to Buy Mobile Gaming Firm Ninja Kiwi For ~$186m
- MTGB SS : MTG Offering of 9.66m Shares Prices at SEK112.9/Share
- PFV GY : Pfeiffer Vacuum FY Ebit EU45.3M Vs. EU65.2M Y/y
- SFQ GY : SAF-Holland SE Sees 2021 Sales EU1.05B to EU1.15B
- SANT GY : S&T Maintains 2021 Ebitda At Least EU140M, Est. EU151.5M
- SCR FP : Scor CEO Faces Market Manipulation Complaint in France: Covea
- SCR FP : Scor Says Covea Complaint Is ‘Misleading and Baseless Maneuver’
- G224 GY : Scout24 Sees 2021 Operating Ebitda Margin About 60%
- SENS SW : Sensirion Sees Mid-Term Ebitda Margin in Mid- to High-Tens
- SGL GY : SGL Sees 2021 Sales Revenue EU920M to EU970M
- SHL GY : Siemens Healthineers Raises EU2.34 Billion in Capital Increase
- S92 GY : SMA Solar FY Dividend Per Share EU0.30
- SWED SS : Swedbank’s Mortgage Payments Excluded in Stats Sweden Feb. Data
- SWON SW : SoftwareONE Sees 2021 Gross Profit Growth >10% at Constant FX
- UTDI GY : United Internet FY Dividend Per Share Misses Estimates
- VEI NO : Veidekke Sees Commercial Building Output Falling Until End 2022
- WAC GY : Wacker Neuson Sees 2021 Revenue EU1.70B to EU1.80B
- Z01 GY : Zooplus 4Q Ebitda Beats Estimates

FT : Powell sees ‘orderly’ market adjustment to brighter US outlook

Powell sees ‘orderly’ market adjustment to brighter US outlook
Fed chair dismisses fears that rise in long-term borrowing costs could hamper economic recovery

Jay Powell, the Federal Reserve chair, has dismissed fears that the recent rise in long-term borrowing costs could be unhealthy for the US recovery, saying markets had adjusted in an “orderly” manner to a brighter economic outlook.

During testimony to the Senate banking committee on Wednesday, Powell sought to stamp out concerns, raised mainly by Republican lawmakers, that the economy could overheat as a result of Joe Biden’s $1.9tn fiscal stimulus package.

Long-term US government debt yields have lept since the start of the year, with the benchmark 10-year note trading at 1.63 per cent, far above the 0.9 per cent level seen in January. However, after hitting a 14-month high of 1.75 per cent last week, the market has stabilised in recent days.

While Fed officials have said they are monitoring the shifting market, they have hit back against warnings that the rise in yields has been so stark that it warranted alarm or intervention by the central bank.

“There’s been an underlying sense of an improved economic outlook, and that has to be part of why rates would move back up from the extraordinary low levels that we’re at — back up towards levels that we’re more likely to see, and that has been an orderly process,” Powell said in response to a question from Richard Shelby, a Republican senator from Alabama.

“I would be concerned if it were not an orderly process or if conditions would have tightened to the point where they might threaten our recovery,” he added.

A recent string of decent Treasury auctions has also helped to steady the market. On Wednesday, the Treasury department was able to offload $61bn of five-year notes at a yield of 0.85 per cent. While only slightly higher than the initial 0.847 per cent yield set prior to the auction, it marked a significant improvement from a poorly-bid sale of 7-year notes last month that set off a bout of frenetic trading.

The Treasury is looking to offload another $62bn of 7-year notes on Thursday — an auction investors will be watching closely. 

Republicans on the Senate committee seemed sceptical about the Fed’s willingness to keep monetary policy extremely loose — with its main interest rate close to zero and $120bn in monthly debt purchases — until ambitious economic recovery benchmarks were met.

“I do worry that the Fed may be behind the curve when inflation, inevitably picks up,” said Pat Toomey, the Republican senator from Pennsylvania.

Powell responded to those concerns by saying the Fed did not expect a burst in economic activity this year to “produce substantially higher prices or that the effects will be persistent”. Rather, the central bank thought higher inflation would be “transitory or temporary”.

Powell was joined at the virtual hearing by Janet Yellen, his predecessor as Fed chair who now serves as Treasury secretary.

During the hearing, Yellen said the recently approved fiscal stimulus package could potentially return the US economy to full employment by next year.

But she faced repeated criticism from Republican lawmakers for giving the IMF the green light to issue $650bn in new special drawing rights in order to boost the balance sheets of low-income countries with a hefty dose of reserve currency to help them through the pandemic.

In one heated exchange, Yellen was repeatedly interrupted by John Kennedy, the Republican senator from Louisiana, as she sought to fend off his accusations that a new SDR issuance would cost US taxpayers $180bn and funnel money to US strategic adversaries like China and Venezuela.

“I don't know where you got a number like that from,” Yellen said, arguing that the budgetary cost to the US would be “a wash”.

She also defended the need for the SDR allocation as a policy matter.

“I would say that the current crisis has increased the need for global reserves, and that’s the IMF’s assessment. The global economy suffered a very severe, severe collapse in 2020,” Yellen said. “This allocation will help countries meet this need for reserves.”

WSJ : A Commercial Real-Estate Investor Pivots to Digital-Related Assets

A Commercial Real-Estate Investor Pivots to Digital-Related Assets
Colony Capital sells its warehouses and hotels and puts its money in cell towers, data centers and other digital infrastructure

Colony Capital Inc. has made one of the biggest pivots in the real-estate business. Over the past two years, the former investor in commercial real estate has sold warehouses, hotels and other traditional properties and plowed the proceeds into data centers, cell towers and fiber-network assets.

In short, the company, capitalizing on the continuing revolution in wireless communications, has transformed itself into an owner of digital-related real-estate assets and provider of digital networks—particularly 5G.

Chief Executive Marc Ganzi has led this shift, amassing $30 billion in digital-infrastructure assets. His former company, Digital Bridge, merged with Colony Capital in 2019, at which time 80% of Colony’s assets were in traditional real estate, Mr. Ganzi says. Since then, 60% of the merged company’s assets have become data centers, cell towers, fiber networks and small cells, or transmitters that can be placed on structures or buildings to expand the range of wireless signals.

Colony will seek to accelerate its move into infrastructure for phone and data services across the U.S. and globally as the rollout of 5G services continues. Autonomous vehicles, farm equipment, public-safety networks and hospitals all will need 5G services, and Colony is placing its infrastructure with these customers and others in mind.

The company’s strategy is to lease its portfolio of digital infrastructure assets to telecom carriers and other business customers, including those looking for digital storage capacity. Mr. Ganzi says his company entered a lease agreement with Dish Network Corp. that will allow Dish to deploy its 5G technology in connection with Colony’s 250,000 cell towers and antennas in the U.S. Dish signed its agreement with Vertical Bridge REIT LLC, a Colony portfolio company, to use fiber provider Zayo. Colony’s fund Digital Colony Partners was the lead investor in the 2019 acquisition of Zayo.

As Colony signs on additional carriers to use some of the same networks and infrastructure, Mr. Ganzi says, it reduces costs for all.

Some people see the wireless-infrastructure business as boring, Mr. Ganzi says, because it deals with long-term leases, investment-grade customers and building something that will last for generations.

“My job is obviously to be the cheerleader of this company,” he says, “but I find there’s a massive amount of excitement in our organization as we build these next-generation networks.”

Mr. Pacheco is a Wall Street Journal reporter in New York. He can be reached at

>>> US After Hours Summary: RH +8.6%, FUL +6%, JEF +4.8% up big on earnings; RAD

After Hours Summary: RH +8.6%, FUL +6%, JEF +4.8% up big on earnings; RAD -18% down sharply on weak guidance; KBH -4.3% lower on earnings

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: RH +8.6%, FUL +6%, JEF +4.8%, SCVL +3.7%, CNXC +2.2%, GRWG +1%, HA +0.9%, CE +0.6%

Companies trading higher in after hours in reaction to news: NBIX +10.8% (to join the S&P MidCap 400), LOVE +9.3% (in sympathy with strong RH earnings), OI +6.4% (to join the S&P SmallCap 600), CBOE +1.9% (to acquire Chi-X Asia Pacific), TCDA +1.5% (Point72 Asset Management discloses 5.0% stake), RC +0.8% (declares additional $0.10/share prorated dividend following completion of merger), SNDX +0.7% (files for $75 mln mixed securities shelf offering), AYX +0.2% (announces distribution partnership with Tech Data), IBM +0.2% (AMZN and Red Hat announce general availability of Red Hat Openshift Service on AWS), COO +0.1% (names new Chairman)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: RAD -18%, EOLS -10.4%, KBH -4.3%, AMWL -1.8%

Companies trading lower in after hours in reaction to news: EVFM -14.2% (stock offeirng), SYBX -3.4% (to advance SYNB8802 into Phase 1B proof of concept study), WBA -3% (in sympathy with RAD guidance), CVS -0.8% (in sympathy with RAD guidance), LB -0.4% (L. Wexner sells approx. 3.05 mln shares held in trusts), EFX -0.2% (acquires i2verify), KWR -0.1% (CFO departs), NGVT -0.1% (names new CFO), MTD -0.1% (acquires PendoTECH), KHC -0.1% (health watchdog objects to healthy claims made in ads, according to Reuters)