>>> TradeGate Pre-Market Indications

DAX:
  • Deutsche Post (DPW TH) +0.5%
    • Watch European Delivery Stocks After Blow Out Quarter for FedEx
MDAX:
  • Freenet (FNTN TH) +1.2%
  • Aixtron (AIXA TH) +1%
  • Grenke (GLJ TH) -2.3%
    • Grenke Stock Sinks as Short Seller Criticizes Leasing Firm (2)
SDAX:
  • LPKF (LPK TH) +1.8%
  • Hamburger Hafen (HHFA TH) +1.1%

WWD : All About the Journey: Amazon Luxury Looks to Tmall for Inspiration

All About the Journey: Amazon Luxury Looks to Tmall for Inspiration
Amazon's new app is about a lot more than simply selling luxury goods.

The app points squarely to Amazon’s ambition to own a share of the “discovery experience,” online, to mine the sort of data it doesn’t currently have access to, and to cross-market to its precious Prime customers.
Industry figures say the race is on among online retailers — and service providers such as Afterpay and Klarna — to become go-to platforms for brand discovery and storytelling. While these sites may be transactional, they also aspire to be hangouts, social spaces and places where customers can learn and engage with brands.


“Discovery, in a safe space, is a concept that is huge in Japan and China. And these sites want to own the discovery experience,” said Mo White, a London-based business consultant with a background in online retail, digital marketing and brand building.
It’s no wonder that Amazon, a marketplace for nearly every consumer product imaginable, would break into luxury via an app.
Luxury Stores wants to be the glossy, sealed-off environment — away from the car accessories and the fridge freezers — where Amazon can celebrate the fabulousness of fashion, where it can create brand stories and tempt Prime customers who maybe hadn’t considered buying luxury in the past.


An in-app screen of the Oscar de la Renta shop on Amazon Luxury Stores.
Oscar de la Renta is the first designer to open a store on the app, which will stock the pre-fall and fall/winter 2020 collections, including ready to wear, handbags, jewelry, accessories and a new perfume, with children’s wear coming soon, according to Amazon.
The online giant said U.S. Prime members can browse exclusive styles from Oscar de la Renta “throughout the season.” In addition, they’ll receive early access to the fall 2020 collection, which is only available in de la Renta’s boutiques and web site.
To mark the brand’s launch on the app, Amazon created a video meant “to entertain and engage” customers — and got all the cool London kids on board. The video features the model and actress Cara Delevingne and was directed by Bunny Kinney, editorial director of Dazed. It was styled by the American celebrity stylist Jason Bolden.
The site will also offer a “View in 360” interactive feature allowing customers to explore styles in 360-degree detail to better visualize fit, making shopping for luxury “easier and more engaging,” according to Amazon.
Alibaba’s Tmall has long known what keeps people lingering on the site — and coming back for more: Tmall employs an army of influencers to keep viewers interested and engaged, it livestreams content and offers up short, snappy videos to ensure that customers’ eyes remain locked on screens for as long as possible.
“Amazon is probably thinking, ‘If Alibaba can do it in China, why can’t Amazon do it in America?’” said one source, pointing out that Amazon dwarfs Alibaba in terms of revenue. With takings of $296.3 billion in 2020, Amazon is more than four times larger than Alibaba, although its operating profit, at $14.1 billion, is only slightly higher than that of its Chinese rival.
An invitation-only app helps to enrich that customer journey of discovery. Not only is an app easy for Amazon to control and expand, customers feel more invested than they would browsing on a desktop.


An in-app screen from the Oscar de la Renta shop at Amazon’s Luxury Stores.
In addition, sources told WWD that Amazon is already planning to work with the luxury brands on the app for TV, film and streaming projects going forward — all important offerings to Prime subscribers.
It is also already creating content around young designers: Jonny Cota, the “Making the Cut” winner, saw his Metamorphosis collection launched in April on Amazon after he won the site’s fashion reality competition series and $1 million prize. He’s being mentored by Amazon and, crucially, also has access to its sales data.
Becoming a place of discovery — and infotainment — isn’t Amazon’s only play: White also believes that the new, by-invitation app will also provide “clean” data for Amazon, which will be examining shopping behavior, conversion rates and how many “non-fashion” Prime members are willing to snap up Oscar’s fit-and-flare styles and dangly earrings.
Based on the data, the online giant has an opportunity to cross-market brands within the app, and match customers to specific products.
The brands benefit in myriad ways: Amazon is understood to be giving them full control over the look and feel of their virtual stores, allowing them to sell as much as they please, control when or if they go on markdown and — crucially — leverage Amazon’s speedy delivery and customer service platform.
With the wholesale model in crisis, and online sales soaring during lockdown, the Amazon proposition must have proven irresistible for the smaller — and less buzzy — brands in particular, many of which have been struggling with the always-present risk of earlier and deeper markdowns at the multibrand retailers.
Amazon is offering the look and feel of a direct-to-consumer site, backed up by its delivery muscle — the warehouses across the U.S., the air cargo fleet, the same-day service. Logistics is a major draw for high-end brands, which all know how impatient their customers can be.
Alex Bolen, chief executive officer of Oscar de la Renta, said he went with Amazon because of its “relentless focus on improving the customer experience through constant innovation, utilizing technology and customer feedback. We admire Amazon’s customer-centric focus and look forward to telling our brand’s story in compelling and engaging ways to even more customers through the Luxury Stores experience.”
Unlike Oscar de la Renta, many luxury brands polled by WWD rebuffed Amazon’s offer of joining the app — including the Kering and LVMH Moët Hennessy Louis Vuitton ones — preferring to rely on their own databases, marketing knowhow, e-commerce and wholesale relationships, instead of getting mixed up with a company that’s still best known for books, everyday consumer goods — and utilitarian web site driven by algorithm rather than style or design.
But whatever Amazon’s real play is here, luxury competitors are keeping a beady eye on the retail behemoth.
“Never underestimate Amazon, it’s such a successful business,” Neves said. “Our data and our conversations with brands indicate they [Amazon] are still far away from getting traction from the industry,” Neves said. “But we’ll keep a watchful eye.”
The private equity owners of Matchesfashion are most certainly keeping a watchful eye, too.
Earlier this week, Matches hired Jason Weston as chief operating officer. He joined the company from Amazon, where he held various leadership roles, overseeing special projects in Europe and the giant’s Prime Now one-hour deliveries. Weston’s boss is Ajay Kavan, also a former Amazon executive, who joined the retailer as ceo earlier this year.
Bernstein’s Luca Solca said he believes Amazon could “play a significant role in multi-brand fashion and luxury digital distribution,” given that it satisfies certain criteria.
He said the by-invitation-only format is clever and creates a “separate venue à la Tmall’s Luxury Pavilion,” but that Amazon also needs a certain set of brands to give the initiative critical mass. He said Oscar de la Renta alone looks like a “soft opening” to him, so the online giant will clearly need to pull in some hotter names.
Solca also pointed to the value of the Amazon app’s concession model, which gives the brands control of their pricing and the fact that Amazon has exclusive sourcing deals with brands.

FT : The 21 best menswear stores in the world

The 21 best menswear stores in the world
From a specialist shoe shop in Florence to a Paris tailor or a vintage dealer in Japan, our expert guide to independent retailers should fit every shape of style
  1. Drake’s, London
  2. Massimo Alba, Milan
  3. Bryceland’s & Co, Tokyo
  4. Connolly, London
  5. Anderson & Sheppard Haberdashery, London
  6. Beige Habilleur, Paris
  7. Liverano & Liverano, Florence
  8. The Armoury, Hong Kong
  9. Husbands, Paris
  10. Clutch Cafe, London
  11. Broadway & Sons Gothenburg
  12. Nigel Cabourn, London
  13. Laboratory/Berberjin, Tokyo
  14. 18Montrose, London
  15. Leclaireur, Paris
  16. Hervia Bazaar, Manchester
  17. If, New York
  18. Skoaktiebolaget, Stockholm
  19. Stefano Bemer, Florence
  20. E.Marinella, Naples
  21. Optimo, Chicago

>>> What to look at today - 16th of September 2020

Asian stocks were little changed on Wednesday as investors awaited a Federal Reserve meeting to gauge the extent of central bank support for the economic recovery. Crude oil extended gains.
Shares were little changed in Japan, China, Hong Kong and South Korea, while Australia outperformed. S&P 500 futures edged higher after the benchmark rose for a third consecutive session, as gains in technology shares helped offset a late slide in financials. Nasdaq 100 contracts erased earlier losses seen in the wake of news that Facebook Inc. might face a possible U.S. antitrust lawsuit. Treasuries and the dollar were steady.
US After Hours FDX +7.8% up big on large earnings beat; ADBE +2.4% also up on earnings; AMCX +17.7% as exec chairman departs

Nikkei +0.02% Hang Seng -0.13% CSI -0.60% Shanghai -0.36% Shenzen -1.03%

Eur$ 1.1850 CNH 6.7707 CNY 6.7727 JPY 105.27 GBP 1.2898 CHF 0.9078 RUB 75.1424 WTI$ 38.95 +1.75%

S&P +0.07% Nasdaq +0.17% EuroStoxx -0.09% FTSE -0.68% Dax +0.01% SMI

Macro :
- A $79 Billion Gold ETF Halts Record Run as Haven Demand Abates
- Hurricane Sally Strengthens to Category 2 , NHC Says
- Swiss Set to Reject ‘Worse Than Brexit’ Immigration Measures

Keep an eye on :
- ALXN US : Alexion Gains as Betaville Speculates on Biogen Interest
- AGL IM : Autogrill Sees EU1.8b Rev. Over 2028-2036 From Amsterdam Airport
- BKIA SM : Bankia Can Change Capital Calculation; Will Lift CET1 by 160 Bps
- BETCO SS : Better Collective Founders and CFO to Sell ~2.5m Shares: Terms
- BVB GY : Borussia Dortmund to Let Several Thousand Attend Home Matches
- BNR GY : Brenntag Sees Full Year Oper Ebitda EU1.00 Bln to EU1.04 Bln
- CATB SS : Swedish Hedge Fund IPM Recruits Goldman Bankers for New Strategy
- CMCOM NA : CM.com Offering Prices 2.12m Shares at EU15/Share
- DPW GY : FedEx 1Q Adjusted EPS Beats Highest Est.; Shares Rise 4.8%
- DIA SM : DiaSorin’s Simplexa Covid-19 Test Gets CE Marked for Saliva Use
- FB US : FTC Preparing Possible Antitrust Suit Against Facebook: DJ
- FKR IM : Falck Renewables to Offer EU200M Green Convertible Bonds: Terms
- GALP PL : Galp Completes Creation of Solar Energy Joint Venture With ACS
- GLJ GY : Grenke: Viceroy Accusations Unfounded, Will Start Legal Action
- 5HU GY : Hensoldt AG IPO Price Range EU12 to EU16 a Share
- IMCD NA : IMCD EU400M New Share Sale Order Book Is Covered: Terms
- INTC US : Intel Sued for Misleading Investors on Progress of New Chip
- BAER SW : Julius Baer in ‘Advanced’ Talks to Resolve FIFA Matter in U.S.
- LHA GY : Lufthansa CEO Prepares Staff for Deeper Cuts to Jobs and Fleet
- ML FP : South America Car OEM Tire Aug. Demand Drops 32%: Michelin
- RWAY IM : RAI Way Holder to Offer 8.5m Shrs via Goldman Sachs
- ROG SW : Roche: FDA Approves Expanded Use of Cintec Plus Cytology Test
- ROTH FP : Rothschild & Co First Half Net Income EU60 Mln, -55% Y/y
- SFER IM : Salvatore Ferragamo 1H Operating Loss EU74M, Est. Loss EU92M
- RDSA NA : Shell Shuts Production From Appomattox Platform Due to Storm
- SWON SW : SoftwareONE First Half Gross Profit CHF370.8 Mln, -2.2% Y/y
- GLE FP : SocGen Confident Provisions Will Be Lower In 2H: Finance Head
- SEV FP : Meridiam Chairman: CNP Likely to Join Bid for Suez France Water
- SEV FP : Suez Agrees to Sell EU1.1B Recycling Ops to Schwarz Group Unit
- ZURN SW : Zurich Sees Claims Inflation From U.K. Judgment as Not Material

>>> Europe : Brokers Upgrades & Downgrades - 16th of September 2020

>>> Up
* Ahold Delhaize Raised to Neutral at JPMorgan; PT 23 euros
* Asos Raised to Reduce at AlphaValue
* BAE Raised to Buy at Jefferies; PT 600 pence
* Cellnex Raised to Buy at Grupo Santander; PT 59.50 euros
* Corero Network Security Raised to Buy at Cenkos Securities
* Handelsbanken Raised to Overweight at Morgan Stanley
* Lundbeck Raised to Neutral at Goldman; PT 214 kroner
* MBB SE Raised to Buy at Berenberg; PT 100 euros
* RSA Raised to Buy at HSBC; PT 570 pence
* Telia Raised to Buy at SEB Equities; PT 41 kronor
* VAT Raised to Neutral at JPMorgan; PT 165 Swiss francs

>>> Down
* Asos Cut to Neutral at CaixaBank BPI; PT 5,014 pence
* Avance Gas Cut to Sell at Cleaves Securities
* Bankia Cut to Neutral at Citi; PT 1.35 euros
* BW LPG Cut to Sell at Cleaves Securities
* Casino Cut to Neutral at JPMorgan; PT 30 euros
* Unite Group Cut to Hold at Jefferies; PT 1,070 pence
* Wm Morrison Supermarkets Cut to Underweight at JPMorgan
* Yara Cut to Equal-Weight at Morgan Stanley; PT 345 kroner

>>> Initiation
* Fluidra Rated New Buy at Berenberg; PT 17.50 euros
* JDE PEET'S Rated New Buy at SocGen; PT 41 euros
* Telenor Reinstated Buy at Danske Bank Markets; PT 185 kroner
* Tenaris ADRs Rated New Sector Outperform at Scotiabank; PT $16

>>> Call
* BAE Well-Placed to Meet Challenges, Upgrade to Buy: Jefferies
* Ferragamo 1H Profitability Beat, Focus on Costs Helps: Jefferies
* Fluidra a Buy as Pandemic Boosts Home Pool Demand: Berenberg
* Handelsbanken Becomes Top Pick, Raised at Morgan Stanley
* U.K. Student Housing Forecasts Pessimistic, Unite Cut: Jefferies
*

FT : Who wants to be a Spac millionaire?

Who wants to be a Spac millionaire?
Putting a dollar figure on the elusive concept of the so-called promote

Opendoor: Palihapitiya convinces start-up to try a backdoor IPO
Go on CNBC, they said. You’ll get some great publicity, they said. 

If there is a support group for Spac founders where they can share tips, surely Bill Ackman and Chamath Palihapitiya could tell their peers that doing a television interview on CNBC doesn’t always garner the attention you want. 

Yes, we’re talking about special purpose acquisition companies again. The reason? Spacs are the breakout product on Wall Street during these strange coronavirus times. Or as the rapper Megan Thee Stallion (pictured below) would say, it’s been a hot Spac summer.

Palihapitiya, who was raising money via Spacs before it was fashionable, has just landed his second deal — a $4.8bn merger with SoftBank-backed property start-up Opendoor. 

While doing the usual round of interviews, the former Facebook executive had an extremely awkward exchange with Andrew Sorkin on CNBC on Tuesday morning, over how much he was making in fees through the deal. The question of founder fees and Spacs is subject of much confusion at the moment, as a mainstream audience is being lured into a complicated product. Here’s the deal: what Palihapitiya was making isn’t technically a fee. 

When sponsors first launch a Spac, they will pay a nominal price for what is known as “founder stock”. If the Spac executives don’t find a target, they won’t get proceeds from the liquidation of the Spac — unlike investors who buy shares on the public market — so it acts as a reward (often, a generous one) for putting money at risk. 

On the other hand, if a deal is done, the founders receive shares equivalent to 20 per cent of the Spac’s proceeds for putting the deal together. It can therefore be a huge windfall for relatively little capital. 

That brings us to Palihapitiya’s CNBC interview and the “$70m in fees” he confessed to be making from the Opendoor deal. Can founder shares be egregious? Yes. We’ve written extensively about this and about Spac sponsors who say they’re trying to get rid of this feature or at least put investors and sponsors on equal footing. 

Are they unusual? Not among Spacs. In fact, it’s pretty much the benefit that keeps Spac sponsors coming back for more. Palihapitiya has done three, and there’s a rumoured fourth one. If DD readers cast their mind back to last summer, Palihapitiya (pictured above) oversaw one of the most high-profile Spac deals to date in a merger with Richard Branson’s Virgin Galactic. 

Let’s not forget that former Citigroup dealmaker Michael Klein, who has launched four Spacs, uses his firm M Klein & Co as an adviser on the deals, reaping millions of dollars in fees. 

What really happened with Palihapitiya’s interview on CNBC is that he put a dollar figure on the elusive concept of the so-called promote and all of a sudden it crystallised in people’s minds just how lucrative this business of setting up a Spac can be. 

Finally, if anyone needs a reminder that the road to Spac stardom is not always paved with gold, take a look at Tuesday’s DD on Nikola. 

FT reporters on Tuesday revealed that the US Department of Justice has also been making inquiries into claims levelled against Nikola, the truckmaker start-up that went public via a Spac earlier this year. 

WSJ : Apple Unveils New Watch, Fitness Service, Bundled Subscription Options

Apple Unveils New Watch, Fitness Service, Bundled Subscription Options
Company’s first virtual-only product event showcases latest iPad, watch that can measure blood oxygen




Watch Series 6 and a New iPad Air (But No iPhones): Apple’s Event Lineup
In an unusual fall event, Apple left out the iPhone but revealed new details about the new Watch Series 6 and SE, Fitness+ subscription service and redesigned iPad Air. WSJ’s Joanna Stern breaks down what you need to know. Photo illustration: Laura Kammermann/WSJ
Apple Inc. AAPL 0.16% showed off a new smartwatch that can measure blood oxygen as well as a virtual fitness service and bundled subscription options in an online event Tuesday that lacked the pizazz of the company’s standard September product unveilings.
The Cupertino, Calif., tech company held its first virtual-only product introduction from its headquarters, where past events have attracted crowds of journalists, employees and guests to help hype the latest offerings.
Chalk up Apple’s keynote event to another annual rite changed by the coronavirus pandemic. Instead of Chief Executive Tim Cook unveiling the company’s latest flagship iPhone, as he has done every September since 2012, Apple showed its Watch Series 6, starting at $399, and a new midtier offering called Watch SE, with fewer abilities than the high-end version and starting at $279.
The company also showcased its burgeoning services available to consumers, including through several new options to bundle subscriptions to music, TV, cloud storage, gaming and other offerings. Apple has turned to services revenue as iPhone sales continue to decline. Services made up more than 20% of Apple’s sales in the April-to-June quarter, up from about 10% in the same period five years ago, according to FactSet.

“It’s been gratifying to see the important role our products have played in helping people come together, carry on and move forward,” Mr. Cook said as the one-hour, highly produced event began. “We know that life won’t always be like this, and we’re all looking forward to better days.”
SHARE YOUR THOUGHTS
What are your thoughts on the new products and services Apple unveiled? Join the conversation below.
The company revealed an updated iPad Air, starting at $599, with a new touch-ID button on the side that unlocks the screen and faster computing power. The latest smartphone is expected to be revealed next month after Covid-19-related delays pushed back production.
Investor reaction suggested some disappointment with the muted event as Apple’s shares fell during intraday trading before closing slightly up on the day.
“It was just an OK presentation—it lacked the normal iPhone buzz,” said Keith Gangl, a portfolio manager for Gradient Investments, which has more than $2.6 billion in assets under management, including Apple. “Not disappointed, but I certainly wasn’t excited.”
The new iPad Air, starting at $599, with faster computing power.
PHOTO: APPLE
The expanded digital services Apple unveiled Tuesday will help bolster the idea that it can drive more revenue from subscription-based products, Mr. Gangl said.
Those include a streaming fitness offering called Fitness+. The $9.99-a-month service is connected to the company’s watch and aims to help users track and improve their performance. Fitness+ also offers virtual workout classes with videos on the iPhone or television.
The company also detailed a new bundling of digital subscriptions dubbed Apple One as it works to bolster its software business beyond the iPhone, which makes up about 50% of sales. The bundle starts at $14.95 a month and includes Apple Music, TV, Arcade and iCloud storage.
The new bundling service almost immediately renewed criticism that Apple was unfairly using its power over its platform against competitors—claims that Apple has pushed back against as they intensified this summer.
“Once again, Apple is using its dominant position and unfair practices to disadvantage competitors and deprive consumers by favoring its own services,” streaming-music service Spotify Technology SA —which offers its own bundled packages that include Hulu—said.

Apple defended its new bundle, saying it would recommend a plan to customers “that saves you the most money based on the subscriptions you already have” and highlighted how it could help families.
Family plans were a theme of the day. Apple offered bundled services for households as well as a new plan allowing parents to use their own iPhones to set up smartwatches for children, giving them access to incoming phone calls while their parents can track their location.
The new products arrive as demand for tablets such as the iPad has surged while the pandemic has upended daily life and left many people stuck at home. Global shipments of such devices increased 26% last quarter compared with a year earlier, according to research firm Canalys, which attributed the increased industry demand on remote work, learning and leisure.
Apple doesn’t break out unit sales but said revenue from the iPad rose 31% during the April-through-June period compared with a year ago.
Its new smartwatch could help Apple strengthen its already dominant position in that market, where research firm Strategy Analytics estimates it held 53% of the global share of such devices last quarter.
How Apple Became the World’s Most Valuable Publicly Traded Company
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Apple reached a staggering $2 trillion market valuation in August, despite years of doubt from critics over whether the tech giant could continue to succeed after the death of Steve Jobs. Here’s a look at Apple’s rise to the very top. Illustration: Jacob Reynolds/WSJ
Apple’s smartwatch, which first went on sale in 2015, has evolved from a heavily emphasized fashion accessory to a device more focused on health and fitness.
The ability to track blood oxygen has become a hot feature in the latest smartwatches, said Neil Mawston, analyst for Strategy Analytics. “Health care and fitness are top of mind for consumers right now, so an updated watch that addresses those features will prove popular for Apple,” he said in an email.

Blood-oxygen data have emerged as a useful tool for people to gauge the effects of a Covid-19 infection on the lungs’ ability to oxygenate blood. The data have helped some people assess whether to seek hospital treatment if blood-oxygen readings fall too much. Wearables manufacturers including Alphabet Inc.’s GOOG 1.46% Google, which owns Fitbit, have sought to incorporate blood-oxygen readings into the latest watches. They are normally measured with a device called a pulse oximeter.
Apple said Tuesday that its new top-of-the-line watch uses a sensor to shine light on blood vessels in the wrist and, combined with algorithms, calculates the color of blood to enable a reading of oxygen levels. The data can be produced in 15 seconds, the company said.
Apple Fitness+ is connected to the Apple Watch and offers virtual workout classes with videos on the iPhone or television.
PHOTO: APPLE
Despite the potential for the watch and iPad, the market remains focused on the next generation of iPhones, for which analysts predict enormous growth opportunities.
Almost 40% of the 950 million iPhone customers haven’t upgraded to a new device in the past 3½ years, said Dan Ives, an analyst for Wedbush Securities. He and others are betting the anticipated first offering of a 5G-capable iPhone might lead customers to replace those older devices.
“I believe it translates into a once-in-a-decade type upgrade opportunity for Apple,” Mr. Ives said.
He called Tuesday’s event “the drum roll to the main event.”

WSJ : Chinese Companies in Pentagon Spotlight Hire Global Banks to Sell Dollar B

Chinese Companies in Pentagon Spotlight Hire Global Banks to Sell Dollar Bonds
ChemChina and Three Gorges pursue bond deals after designation by Defense Department as ‘Communist Chinese military companies’

Two Chinese state-owned firms recently labeled by the U.S. Defense Department as “Communist Chinese military companies” are selling billions of dollars in bonds with the help of Western banks.

The label doesn’t impose any legal restrictions and in itself has no bearing on whether a company can do business in the U.S. Still, legal experts and financial analysts said the sale was notable because the labeling could be a signal of sanctions to come and could pose reputational risks for the banks that are running the sale and investors who buy the bonds, even though they aren’t breaking any U.S. laws.

The bond sales by China National Chemical Corp. and China Three Gorges Corp. also indicate that the Pentagon designation for now isn’t hindering international fundraising. U.S., European and Chinese banks are managing the sale and marketing the bonds to global investors.

“While it is unclear what specific policy outcome the Pentagon had in mind when publishing this list, it will take notice that banks continue to do business with these Chinese companies,” said Benjamin Kostrzewa, an international trade lawyer at Hogan Lovells.

He said that could play into decisions on whether to take further steps to limit the Chinese groups’ access to U.S. markets. In addition, he said: “Banks may face reputational risks if the U.S. government takes swift action against the Chinese companies,” such as adding them to lists of sanctioned entities.

On Tuesday, power company China Three Gorges priced $1 billion of dollar bonds, according to a term sheet seen by The Wall Street Journal. The day before, ChemChina priced $2.4 billion of dollar bonds along with the equivalent of $593 million in bonds denominated in euros.

Units of Bank of America Corp. BAC -1.83% and Goldman Sachs Group Inc. GS -1.66% are working on ChemChina’s bond offering, as are various European and Chinese institutions. JPMorgan Chase JPM -3.11% & Co. and Morgan Stanley MS -1.49% are among underwriters for the Three Gorges deal.

An official at one of the banks said there were no restrictions barring firms from doing business with companies on the Pentagon list. Representatives for the rest declined to comment.

“If American firms are arranging deals for strategically sensitive Chinese companies that are being targeted by parts of the U.S. government, we cannot rule out…tensions with their home regulator if additional sanctions are placed or if things heat up to the next level,” said Brayan Lai, senior research analyst for CreditSights.

The Pentagon in August named both borrowers as “Communist Chinese military companies,” a designation that stems from legislation passed in 1998. It said it aimed to highlight and counter efforts to modernize China’s People’s Liberation Army via “military-civil fusion,” the use of advanced technology acquired or developed by civilian entities.

In an emailed statement, the Pentagon said it released the information to comply with its statutory requirements, “advance due diligence, and enhance the security and resiliency of our defense industrial base.”

“We encourage U.S. government entities, companies, investors, academic institutions, and like-minded partners to use this list as a tool for conducting due diligence with regard to partnerships with these entities, particularly as the list grows,” it added.

An earlier list in June applied the same label to 20 other companies. The administration has taken a number of steps to restrict what it says is the flow of goods to China’s military. The Pentagon didn’t respond to a request for comment.

The Pentagon labeling could be aimed at discouraging other companies from doing business with them, lawyers at Arent Fox wrote in a July briefing. It could also in theory lay the groundwork for presidential sanctions barring U.S. counterparts from engaging in most U.S. commercial activity with the named companies, the lawyers wrote.

China’s Foreign Ministry has said the list was made without proof or a legal rationale, and that the U.S. was abusing state power to attack Chinese companies. ChemChina and Three Gorges didn’t respond to phone and email requests for comment.

ChemChina’s offering document said the listing didn’t mean it had been subject to export controls or economic sanctions, and it was able to pay and collect funds as usual.

S&P Global Ratings said it saw no immediate impact on ChemChina’s creditworthiness. Similarly, in a research note, CreditSights said the list had no immediate ramifications but increased the risk of other U.S. actions, such as a block or freeze of property or businesses located in the U.S. or in key allied nations.

A Hong Kong-based investor at a U.S. asset manager said the list was concerning for firms like his with large ChemChina bondholdings, since these investments could fall in value if the company were to come under sanctions that damage its financial health. He also said his company’s holdings of the bonds could lead to reputational problems.

He said his institution had contemplated trimming its holdings of ChemChina bonds. However, he said the company’s bonds offered a higher yield than similar Chinese dollar debt that was hard to ignore.

FT : UK company producing a 20-second coronavirus test: is it for real?

UK company producing a 20-second coronavirus test: is it for real?
iAbra touted Heathrow as its ‘launch customer’ but doubts arise over the technology

Rapid and reliable coronavirus tests have so far defeated the combined research skills and financial firepower of the richest countries and corporations.

Yet a company with four employees, whose head office is registered to a ground-floor flat in the village of Toddington, 40 miles north of London, claims to have developed a saliva test that takes just 20 seconds to process.

If it works, it could offer a route out of the coronavirus crisis and prove a remarkable testament to the ingenuity of a man with no formal scientific education.

But the early excitement also shows our collective desperation for a silver bullet and willingness to suspend disbelief.

The “Virolens” test was unveiled last week by an obscure British tech company called iAbra. People take a simple mouth swab, which is dropped into a black box. Inside the box — iAbra says — is a digital camera attached to a microscope that can examine the sample and see if it contains any Covid-19. It displays the answer within seconds.

The device is manufactured in Hartlepool, in the north-east of England, by a listed UK company, TT Electronics, whose share price rose more than 40 per cent on last week’s announcement, valuing it at £439m.

Heathrow airport and Leidos, a $13bn US software company, were touted as the test’s “launch customers”.

Greg Compton, iAbra’s 33-year-old chief executive and the lead architect of the test, last week said the company had also seen “huge demand from universities in the US” and declared the test “a significant step forward in the battle against Covid-19”.

As it hosted the product launch last week, Heathrow was certainly enthusiastic. Chief executive John Holland-Kaye said that iAbra’s technology was “potentially more accurate” than standard PCR tests, and encouraged the government to “fast track this technology”.

But both Heathrow and Leidos said they had not actually placed any orders for the test, though Leidos said it was in “active negotiations”.

“If we made a slight, slight miswording of [our release], I apologise for everybody, but fundamentally, we’re trying to do a good thing for humanity as quickly as possible,” Mr Compton told the Financial Times. He described TT Electronics’ share price jump that followed the news as “chicken feed” in the grand scheme of things.


The Virolens test is “based on microscopic holographic imaging and artificial intelligence (AI) software technology”, according to iAbra, which is a highly specialised field of structural biology. The company says the technology “uses a digital camera attached to a microscope to analyse saliva samples, with the data run through a computer which is trained to identify the virus from other cells”.

“We only need 10 viral particles in a sample to give a positive result,” Mr Compton told the FT. “By the end of January, we would be able to test everyone in Europe per month.”

iAbra seems an unlikely company to deliver such a product. Mr Compton, who grew up in Bedfordshire and left school aged 17, said he was “always a computer kid”, and wrote his first computer program aged seven. He had several IT jobs, first at Italian telecoms company Tiscali, then at Capita and BSkyB, but never any formal training.

He said he came up with the idea for the Covid-19 testing technology while standing at Dubai airport with his sister.

None of the other employees has any expertise in viruses or microscopy, though one has a PhD in physics.

In a promotional video, iAbra’s head of manufacturing and operations, Shane Tingey, whose background is in aviation, explains that he got the job after getting a phone call from his sister-in-law saying that Mr Compton needed to “talk to someone about manufacturing”. “If anyone had said to me, ‘Do you want to come and change the world?’ I wouldn’t have believed them,” he says in the video.

Questions have been raised over just how reliable this new technology is, given that it has not received any external regulatory validation nor does there seem to have been any oversight of the underlying data for the company’s claims for the test’s accuracy.

“We’ve put out our analytical specificity trials, and we’re following up with clinical trials,” Mr Compton told the FT, “but all this takes time”.

“I’ve taken huge personal risks from a financial perspective, in order to bring this to market,” he said.

One scientist said he was immediately concerned by the wording of the company’s release, which suggested that the virus is “another cell”, and therefore showed “either carelessness or frightening ignorance”.

Despite Mr Holland-Kaye’s enthusiasm, Heathrow now says it has no insight into the test’s accuracy. Virolens is one of three rapid tests that has been trialled at the airport in recent weeks, with the results from all of them sent off to the government’s CONDOR research programme.

“If it turns out that one of the suppliers’ tests is not accurate . . . then obviously it wouldn’t be used,” Heathrow told the FT. When asked why Mr Holland-Kaye had called the test “potentially more accurate” than existing swab tests, the company said: “That type of statement would have been provided to any of the three suppliers that we did the trial with . . . It’s not that we’re endorsing iAbra specifically.” 

Mr Compton said he spent years perfecting the code for the algorithm behind iAbra’s AI technology, and that partnering other companies that specialise in microscopes was a “marriage made in heaven”.

But it is not entirely clear how the company calculated the test’s accuracy, and it seems that it may have misrepresented the involvement of virologists at the University of Bristol. 

iAbra sent the FT a presentation with some information on the methodology used to check the accuracy of the tests, though several scientists said it did not contain enough information to explain how the company had reached its conclusions on the test’s specificity and sensitivity.

“We’ve put a method out there and a platform, and the next set of announcements will be about the detail around trials,” said Mr Compton. “We understand that it’s important to get confidence around the system.”

In its initial press release, the company said, “the Virolens® system has a 99.8% sensitivity and 96.7% specificity, based on the results of an internal in vitro validation study, designed by the University of Bristol, demonstrating an exciting proof of concept”.

But academics at the University of Bristol said they were not involved in any study that tested the sensitivity and specificity of the tests and complained about the wording of the release. Bristol university virologist David Matthews only provided samples of the Covid-19 virus to the company and was not in any way involved in its validation, he said.

Mr Compton said that researchers at Bristol university had done more than simply provide samples and that they had helped the company design its study. Any misrepresentation in the press release had not been “done with any malice”, he added.

Jon Deeks, professor of biostatistics at Birmingham university, said, “we are in a pandemic, people are dying from the disease, and a company decides that it is reasonable to mislead us all to make their test look like the best thing available”, referring to the claims being made for the test’s accuracy. “Legally, they can probably get away with this, but there cannot be any consideration that this is morally acceptable.” 

Mr Compton said that this characterisation was “incredibly unfair”. “We’re trying to do our best to make stuff better. We have a community of naysayers who would like us to suffer for months,” he added. 

Peter Török, professor of optical physics at Imperial College London and a specialist in digital holographic microscopy, described the scientific information provided by the company as a “mishmash of different things”. While he said that the technology was theoretically possible, he noted that there was not yet enough evidence to substantiate the company’s claims.

For TT Electronics, the manufacturing contract has the potential to transform a company that engineers and manufactures sensors and semiconductors at sites across the UK. Richard Tyson, TT Electronics’ chief executive, described the technology as “very exciting” and said, “we genuinely feel this could be game-changing”, though the company acknowledged it had no involvement in validating the accuracy of the test.

“Our team in Hartlepool has been working on this product for about three months and has significant expertise in the manufacture of electronic devices for a variety of applications,” the company added. “Like any medical device, Virolens needs external approval. We have been clear there are milestones to pass on external and regulatory testing.”

US chip giant Intel, which also partnered iAbra on the creation of the AI engine for the testing technology, posted an article about the test on its website on Thursday that has since been removed. It did not provide a comment on why the article had disappeared.

The credentials of the technology are further muddied by apparent connections to an organisation that spent decades working on hoaxes about the fictional monster Big Foot.

Lord Global Corporation, formerly called Bigfoot Projects Inc, is financing the distribution of Virolens machines in Australia, Latin America and south-east Asia through KeyOptions, an Australian firm that “helps provide meaningful metrics that have impact on your operations and profitability as well as keeping people safe and secure”, according to its website.

Joseph Frontiere, chief executive of Lord Global, told the FT he had taken over control of the listed company this year and it was now an entirely separate operation with no connections to the former business. It is in the process of changing the entity’s name to 27Health Inc, subject to approval from US regulators.

Lord Global’s “chairman of the board” — and indeed the only other person working at the company — is 24-year-old Alexandra Aizenshtadt, who is Mr Frontiere’s wife. Ms Aizenshtadt’s LinkedIn profile explains that she “enjoys a strong worldview and deep background analysing trends and communicating their complex concepts”.

But regardless of iAbra’s connection to a company with such a colourful history, scientists remain concerned by the dangers inherent to rolling out Covid-19 tests before they are properly validated.

Lawrence Young, professor of molecular oncology at Warwick university, sounded a note of scepticism on the “barrage of these tests being introduced or speculated about”.

“It’s a bit like the wild west with this testing,” he said. “It’s quite worrying.”