>>> TRadeGate Pre-MArket Indications

DAX:
  • Infineon (IFX TH) +1.8%
    • Watch Chips on Nvidia Beat, Cautious Applied Materials Outlook
  • Wirecard (WDI TH) +1.7%
  • Lufthansa (LHA TH) +1.7%
  • Bayer (BAYN TH) +1.5%
    • BLM Approves Bayer Unit Proposed Phosphate-Mine Project in Idaho
  • VW (VOW3 TH) +1.1%
MDAX:
  • Puma (PUM TH) +2%
  • Evotec SE (EVT TH) +1.6%
  • United Internet (UTDI TH) +1.4%
  • Commerzbank (CBK TH) +1.3%
  • 1&1 Drillisch (DRI TH) +1.1%
  • Siltronic (WAF TH) +1%
  • Telefonica Deutschland (O2D TH) +0.8%
SDAX:
  • Borussia Dortmund (BVB TH) +1.6%
  • S&T (GROA TH) +1.5%
  • SGL (SGL TH) +1%
    • SGL Downgraded to Reduce at Kepler Cheuvreux; PT 3 Euros

>>> What to look at today - 16th of Aug. 2019

Most Asian stocks posted modest gains and U.S. and European futures climbed Friday, as a tumultuous week of heightened trade uncertainty and fears over global growth draws to a close. Treasury yields steadied after Thursday’s declines.
Shares climbed in China and Hong Kong and edged higher in Japan. Stocks in South Korea were lower after a holiday. Earlier, the S&P 500 Index rose after a volatile Thursday session with above-average volume. New Zealand’s 10-year yield dropped below 1% for the first time and Japan’s 10-year yield slipped to the lowest since 2016. The dollar was little changed.
US After Hours VIAV +6.5%, NVDA +6%, DDS -11.6%, GLOB -6%, AMAT -1.2% among earnings/guidance movers

NKY +0.10% HAng Seng +1.15% CSI +1.07% Shanghai +0.75% Shenzen +1.23%

Eur$ 1.1104 CNH 7.0490 CNY 7.0369 JPY 106.10 GBP 1.2116 CHF 0.9785 RUB 66.0407 TRY 5.5600 WTI$ 55.33 +1.60%

S&P +0.57% EuroStoxx +0.46% FTSE +0.73% Dax +0.50% SMI +0.80%


Macro :
- French, Dutch Banks Preferred If ECB Does Cut Rates, RBC Says

Keep an eye on :
- ACA LN : Acacia Mining Resumes Export of Gold From North Mara
- AAOG LN : Alpha Blue Ocean to Propose New Element Chairman Ahead of EGM
- AIR FP : France’s BEA to Aid Probe Into Crash-Landing of Russian Jet
- BAS GY : BASF’s $3 Billion Unit Sale Loses Steam as Buyout Firms Exit
- BAYN GY : BLM Approves Bayer Unit Proposed Phosphate-Mine Project in Idaho
- BME SM : Swiss Stock Exchange Is Said to Weigh Buying EU-Based Bourse (1)
- DEQ GY : Deutsche Euroshop First Half FFO Per Share EU1.21
- FTK GY : Goldman, UOB Said Interested to Buy FinTech Group: Handelsblatt
- GLPG NA : Gilead, Galapagos Say EMA Validates Application for Filgotinib
- INS GY : Instone Real Estate Sees 2022 Adjusted Revenue Above EU1 Bln
- ITV LN : ITV to Broadcast Spain’s La Liga Soccer Under Stopgap Deal
- IWG LN : WeWork IPO Outcome Will Be Crucial for IWG Shares, RBC Says
- SDF GY : K+S Wastewater Pipeline Replaced by Cheaper Underground Storage
- OLT NO : Olav Thon Eiendomsselskap 2Q Pretax NOK273 Mln, -23% Q/q
- OV SS : Oncology Venture Gets IDE Approval From FDA For LiPlaCis Study
- RATOB SS : Ratos First Half EPS SEK0.93
- ROG SW : Roche’s Cancer Drug Rozlytrek Gets U.S. FDA Approval
- SDRL NO : Seadrill, GDI Enter in Venture to Manage Qatar Jackups

>>> Europe : Brokers Upgrades & Downgrades - 16th of Aug. 2019

>>> Up
* DEFAMA AG Upgraded to Accumulate at SRC Research; PT 17 Euros
* Fielmann Upgraded to Buy at HSBC; Price Target 70 Euros
* Hiscox Upgraded to Overweight at Morgan Stanley; PT 17.80 Pounds
* Holmen Upgraded to Buy at SEB Equities; PT 230 Kronor
* Maersk Upgraded to Buy at Fearnley; Price Target 8,100 Kroner
* Spar Nord Upgraded to Buy at ABG; PT 63 Kroner
* Veidekke Upgraded to Buy at DNB Markets; PT 95 Kroner

>>> Down
* Elia Downgraded to Neutral at Citi
* MTU Aero Downgraded to Hold at Berenberg
* Ryanair Downgraded to Underperform at MainFirst; PT 8 Euros
* SGL Downgraded to Reduce at Kepler Cheuvreux; PT 3 Euros
* SGL Downgraded to Hold at Bankhaus Lampe; PT 4 Euros
* Vifor Pharma Downgraded to Neutral at Goldman; PT 151 Francs
* Voestalpine Cut to Equal-weight at Morgan Stanley; PT 29 Euros
* XXL Downgraded to Sell at Goldman; PT 21 Kroner
* Zealand Pharma Cut to Sell at Handelsbanken; PT 145 Kroner

>>> Initiation


>>> Call
* Hiscox De-Rating Creates an Opportunity to Buy: Morgan Stanley
* Voestalpine Earnings Recovery Seen Protracted: Morgan Stanley

>>> US After Hours Summary: VIAV +6.5%, NVDA +



After Hours Summary: VIAV +6.5%, NVDA +6%, DDS -11.6%, GLOB -6%, AMAT -1.2% among earnings/guidance movers

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: PAGS +7.1%, VIAV +6.5%, NVDA +6.2%, CRMT +2.5% (ticking higher)

Companies trading higher in after hours in reaction to news: GE +3.2% (CEO Larry Culp bought $2 mln worth of stock today following the fraud allegations from Harry Markopolos), VRAY +2% (COO disclosed the purchase of 60K shares), ACB +1.9% (modestly rebounding), THC +1.1% (ticking higher; Glenview/Larry Robbins discloses increased active stake)

Select chip names are higher following NVIDIA (NVDA) earnings (ETFs SOXX +0.8%, SMH +0.5%): XLNX +1.6%, MRVL +1.5%, INTC +1%, CY +0.6%

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: DDS -11.6%, GLOB -5.9%, AMAT -1.2%

Companies trading lower in after hours in reaction to news: N/A

WSJ : Trump Eyes a New Real-Estate Purchase: Greenland

Trump Eyes a New Real-Estate Purchase: Greenland
In conversations with aides, the president has—with varying degrees of seriousness—floated the idea of buying the autonomous Danish territory


WASHINGTON—President Trump made his name on the world’s most famous island. Now he wants to buy the world’s biggest.
The idea of the U.S. purchasing Greenland has captured the former real-estate developer’s imagination, according to people familiar with the deliberations, who said Mr. Trump has, with varying degrees of seriousness, repeatedly expressed interest in buying the ice-covered autonomous Danish territory between the North Atlantic and Arctic oceans.
In meetings, at dinners and in passing conversations, Mr. Trump has asked advisers whether the U.S. can acquire Greenland, listened with interest when they discuss its abundant resources and geopolitical importance, and, according to two of the people, has asked his White House counsel to look into the idea.
Some of his advisers have supported the concept, saying it was a good economic play, two of the people said, while others dismissed it as a fleeting fascination that will never come to fruition. It is also unclear how the U.S. would go about acquiring Greenland even if the effort were serious.
With a population of about 56,000, Greenland is a self-ruling part of the Kingdom of Denmark, and while its government decides on most domestic matters, foreign and security policy is handled by Copenhagen. Mr. Trump is scheduled to make his first visit to Denmark early next month, although the visit is unrelated, these people said.
The White House and State Department didn’t respond to a request for comment. Officials with Denmark’s Royal House and the Danish embassy in Washington didn’t immediately respond to requests for comment, nor did officials with Greenland’s representative office in Washington and Greenland’s prime minister’s office.

A massive iceberg standing at the mouth of the Ilulissat Icefjord in early August near Ilulissat, Greenland. PHOTO: SEAN GALLUP/GETTY IMAGES
While it is unclear how far the president will push the idea, U.S. officials view Greenland as important to American national-security interests. A decades-old defense treaty between Denmark and the U.S. gives the U.S. military virtually unlimited rights in Greenland at America’s northernmost base, Thule Air Base. Located 750 miles north of the Arctic Circle, it includes a radar station that is part of a U.S. ballistic missile early warning system. The base is also used by the U.S. Air Force Space Command and the North American Aerospace Defense Command.
The U.S. has sought to derail Chinese efforts to gain an economic foothold in Greenland. The Pentagon worked successfully in 2018 to block China from financing three airports on the island.
People outside the White House have described purchasing Greenland as an Alaska-type acquisition for Mr. Trump’s legacy, advisers said. The few current and former White House officials who had even heard of the notion described it with a mix of anticipation and apprehension, since it remains unclear how far the president will push the idea.
It unleashed a cascade of questions among his advisers, such as whether the U.S. could use Greenland to establish a stronger military presence in the Arctic, and what kind of research opportunities it might present.

Though it has vast natural resources across its 811,000 square miles, Greenland relies on $591 million of subsidies from Denmark annually, which makes up about 60% of its annual budget, according to U.S. and Danish government statistics.
Icebergs in eastern Greenland in mid-August. PHOTO: MSTYSLAV CHERNOV/ASSOCIATED PRESS
Though Greenland is technically part of North America, it is culturally and politically linked to Europe. Following World War II, the U.S. under President Harry Truman developed a geopolitical interest in Greenland and in 1946 offered to buy Greenland from Denmark for $100 million. But Denmark refused to sell. And that was the second failed attempt—the State Department also launched an inquiry into buying Greenland and Iceland in 1867.
At a dinner with associates last spring, Mr. Trump recounted that someone had told him at a roundtable that Denmark was having financial trouble over its assistance to Greenland, and suggested that he should consider buying the island, according to one of the people.
“What do you guys think about that?” he asked the room, the person said. “Do you think it would work?”
The person described the question less as a serious inquiry and more as a joke meant to indicate “I’m so powerful I could buy a country,” noting that since Mr. Trump hadn’t floated the idea at a campaign rally yet, he probably isn’t seriously considering it. The person believed the president was interested in the idea because of the island’s natural resources and because it would give him a legacy akin to former President Dwight Eisenhower ’s admission of Alaska into the U.S. as a state.

An iceberg floats in a fiord near the town of Tasiilaq. PHOTO: LUCAS JACKSON/REUTERS
Secretary of State Mike Pompeo was scheduled to visit Greenland in May with the aim of discussing long-term peace and sustainable economic developments, particularly since “we’re concerned about activities of other nations, including China, that do not share these same commitments,” a senior State Department official said at the time. Mr. Pompeo was also scheduled to visit the New York Air National Guard in Kangerlussuaq, who provide support to U.S. scientists that are conducting research on Greenland’s ice cap.
His entire trip was called off at the last minute due to escalating tensions with Iran.
Kenneth Mortensen, a real-estate agent in Nuuk, Greenland’s capital, said that the running joke in Greenland currently is that Mr. Trump is traveling to Denmark with the sole intention of buying their island. But he noted that Mr. Trump might run into some trouble.
“You can never own land here,” Mr. Mortensen said, as all land is owned by the government. “In Greenland, you get a right to use the land where you want to build a house, but you can’t buy.”
“Of course, buying Greenland is a different issue altogether,” he added. “I’m not sure about that.”

WSJ : Rise of Electric Cars Threatens to Drain German Growth

Rise of Electric Cars Threatens to Drain German Growth
Industry executives worry that a transition away from fuel-powered vehicles threatens jobs, tax revenue
Workers assemble sports cars at a Porsche factory in Stuttgart-Zuffenhausen, Germany. RALPH ORLOWSKI/REUTERS

STUTTGART, Germany—Concern is rising in Europe’s automobile heartland about the economic impact of the industry’s move to electric vehicles from gasoline-powered cars.
Officials and executives in Germany fear the country’s big car companies and rich ecosystem of suppliers and service providers are insufficiently prepared for the transition, and that their leadership may not be assured in an electric-car world, threatening jobs, tax revenue and even growth.
Assembling electric cars isn’t as complex or labor intensive as making traditional vehicles and relies partly on imported technology. At the same time, China has made rapid forays in electrification and is shaping up as a potentially formidable competitor in the field.
The trepidation is particularly acute in the city of Stuttgart, hub to one of the country’s biggest automotive clusters at the heart of the nation’s dynamic south. It comes as Europe’s largest economy is showing signs of weakness amid a chill in global trade.
“We are very concerned,” Nicole Hoffmeister-Kraut, Baden-Württemberg state’s economics minister, told The Wall Street Journal last week as she toured local suppliers. “The competition with the U.S. and China is getting harder all the time. Our goal must be to keep production and jobs in Baden-Württemberg.”
In a whitewashed Stuttgart garage 136 years ago, Gottlieb Daimler and Wilhelm Maybach invented the internal combustion engine that has powered the global auto industry ever since. But the likes of DaimlerAG , Volkswagen AG , and BMW AG are now busy ditching this heritage, working toward the mass-production of electric models.
Porsche in September will begin production of the Taycan, its first all-electric roadster. Weeks later, Porsche’s parent, Volkswagen, will start churning out its ID model, billed as the new People’s Car. Daimler and BMW are revving up their own electric offerings.
Charging UpIn Europe, electric vehicles are gaining on carsfueled by conventional means.Share of new cars by fuel typeSource: AlixPartnersNote: Data are projections
%GasolineDieselElectric2018’20’22’24’26’28’300204060
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Would you buy an electric car? Why or why not? Join the conversation below.
Industry consultants AlixPartners predicts fuel-powered cars will make up just 56% of new cars sold by 2030, down from 95% now. The biggest shift will be in Europe, where regulators are pushing tough restrictions on greenhouse-gas emissions.
The German government’s Institute for Employment Research predicts that if electric vehicles were to account for just 23% of all new cars sold by 2035, the country would lose €20 billion ($22.4 billion) in output, or 0.6 percentage point of GDP, and 13% of its current auto-industry workforce.
This industry now employs some 870,000 people nationwide, almost half of them in Stuttgart. They work at companies including Robert Bosch GmbH, piston-maker Mahle AG, and hundreds of smaller businesses that form the region’s automobile cluster.

And it isn’t just Germany.
There are 309 automotive production and assembly plants across Europe, of which 72 are engine plants. Altogether, the sector supports 13.8 million jobs in Europe, or 6.1% of total European Union workforce and 11.4% of all manufacturing jobs.
A view of e-Golf electric cars at a Volkswagen factory in Dresden, Germany. PHOTO: FILIP SINGER/SHUTTERSTOCK
That is around twice the number of U.S. jobs that depend on car makers. Most of these are well-paid middle-class jobs.
In Stuttgart, where the Mercedes-Benz badge shines from the highest buildings, the mood is dark as suppliers and manufacturers report slumping sales and earnings in the wake of global economic turbulence and the fear of job cuts is palpable.

“The mood is bad. It is a combination of market developments, China, and the consequences of Trump’s trade policies,” said Stefan Wolf, chief executive of ElringKlinger AG , a small, publicly listed supplier of engine-insulation materials.
ElringKlinger generated €1.7 billion in sales last year and employs around 10,000 people. It is betting on fuel-cell vehicles. But Mr. Wolf complains that the German manufacturers are dragging their feet while Asian producers such as Toyota Motor Co. are taking the lead.
Europe—especially Germany—is so dependent on the automotive industry for jobs, tax revenue and economic output that even a small shock to the sector can be felt across the entire economy.
Late last year, when auto makers had to ramp down production because of difficulties in implementing new greenhouse-gas emission requirements, the loss of revenue was a sizable contributor to a one-quarter contraction in the German economy, by far Europe’s largest. The government this week said it shrank again in the second quarter.
Germany’s postwar economy was built on thousands of small engineering companies perfecting niche products—mostly capital goods and often linked to the car industry—and selling them globally, creating jobs and wealth at home.
Now, the auto suppliers in Stuttgart and around the country are trying to remain relevant.
The Mercedes star shines on a building at the headquarters of Daimler in Stuttgart.PHOTO: MARIJAN MURAT/DPA/ZUMA PRESS
Gehring Technologies GmbH began 90 years ago producing drilling machines and later developed honing machines that help make engines lighter and more efficient. Three years ago, the company spent months studying the electric car, looking for its niche. In 2018, it merged with CopperING GmbH, a German-Italian maker of technology used to make electric motors.
Combining Gehring’s cylinder expertise with CopperING’s technology, the companies have developed machines to build a crucial hairpin-shaped part in electric motors called the Stator. They now build the machines to make the parts and sell them to larger auto suppliers.
“We are now starting to take orders,” said Gehring CEO Sebastian Schöning. He is optimistic, but success for Germany and Europe’s automotive industry is anything but certain.
One problem, said Roman Zitzelsberger, head of the state chapter of the IG Metall trade union, is that too few auto suppliers are taking steps to prepare for the huge changes that will come as the industry’s focus shifts even more toward electric vehicles.
Citing an IG Metall survey of businesses in the state, Mr. Zitzelsberger said around 39% of the suppliers in Baden-Württemberg still had no idea what they would do if their business with internal combustion engines ended tomorrow.
“The greatest catastrophe would be if the industry fell asleep at the wheel,” he said. “It is crucial for jobs that companies like Daimler make a massive push into this technology and build locally.”

WSJ : Huawei Technicians Helped African Governments Spy on Political Opponents E

Huawei Technicians Helped African Governments Spy on Political Opponents
Employees embedded with cybersecurity forces in Uganda and Zambia intercepted encrypted communications and used cell data to track opponents, according to a Wall Street Journal investigation

KAMPALA, Uganda—Huawei Technologies Co., the world’s largest telecommunications company, dominates African markets, where it has sold security tools that governments use for digital surveillance and censorship.
But Huawei employees have provided other services, not disclosed publicly. Technicians from the Chinese powerhouse have, in at least two cases, personally helped African governments spy on their political opponents, including intercepting their encrypted communications and social media, and using cell data to track their whereabouts, according to senior security officials working directly with the Huawei employees in these countries.
In Kampala, Uganda, last year, a group of six intelligence officers struggled to contain a threat to the 33-year regime of President Yoweri Museveni, according to Ugandan senior security officials. A pop star turned political sensation, Bobi Wine, had returned from Washington with U.S. backing for his opposition movement, and Uganda’s cyber-surveillance unit had strict orders to intercept his encrypted communications, using the broad powers of a 2010 law that gives the government the ability “to secure its multidimensional interests.”
Bobi Wine, whose full name is Robert Kyagulanyi, is a musician and opposition member of the Ugandan Parliament. Above, performing in November. PHOTO: ISAAC KASAMANI/AGENCE FRANCE-PRESSE/GETTY IMAGES
According to these officials, the team, based on the third floor of the capital’s police headquarters, spent days trying to penetrate Mr. Wine’s WhatsApp and Skype communications using spyware, but failed. Then they asked for help from the staff working in their offices from Huawei, Uganda’s top digital supplier.
“The Huawei technicians worked for two days and helped us puncture through,” said one senior officer at the surveillance unit. The Huawei engineers, identified by name in internal police documents reviewed by The Wall Street Journal, used the spyware to penetrate Mr. Wine’s WhatsApp chat group, named Firebase crew after his band. Authorities scuppered his plans to organize street rallies and arrested the politician and dozens of his supporters.

The incident in Uganda and another in Zambia, as detailed in a Journal investigation, show how Huawei employees have used the company’s technology and other companies’ products to support the domestic spying of those governments.
Since 2012 the U.S. government has accused Huawei—the world’s largest maker of telecom equipment and second-largest manufacturer of smartphones—of being a potential tool for the Chinese government to spy abroad, after decades of alleged corporate espionage by state-backed Chinese actors. Huawei has forcefully denied those charges.
The Journal investigation didn’t turn up evidence of spying by or on behalf of Beijing in Africa. Nor did it find that Huawei executives in China knew of, directed or approved the activities described. It also didn’t find that there was something particular about the technology in Huawei’s network that made such activities possible.
Details of the operations, however, offer evidence that Huawei employees played a direct role in government efforts to intercept the private communications of opponents.
Huawei has “never been engaged in ‘hacking’ activities,” said a Huawei spokesman in a written statement. “Huawei rejects completely these unfounded and inaccurate allegations against our business operations. Our internal investigation shows clearly that Huawei and its employees have not been engaged in any of the activities alleged. We have neither the contracts, nor the capabilities, to do so.”
Huawei’s headquarters in Kampala, Uganda. PHOTO: SUMY SADURNI FOR THE WALL STREET JOURNAL
The spokesman added: “Huawei’s code of business conduct prohibits any employees from undertaking any activities that would compromise our customers or end users data or privacy or that would breach any laws. Huawei prides itself on its compliance with local regulations and laws in all markets where it operates.”
In Zambia, according to senior security officials there, Huawei technicians helped the government access the phones and Facebookpages of a team of opposition bloggers running a pro-opposition news site, which had repeatedly criticized President Edgar Lungu. The senior security officials identified by name two Huawei experts based in a cyber-surveillance unit in the offices of Zambia’s telecom regulator who pinpointed the bloggers’ locations and were in constant contact with police units deployed to arrest them in the northwestern city of Solwezi.

The ruling Patriotic Front posted on its Facebook page in April that police officers working with “Chinese experts at Huawei have managed to track” and arrest the bloggers. The party’s spokesman confirmed to the Journal that the case was handled by the Cybercrime Crack Squad, the unit at the telecom regulator.
The revelations focus attention on the surveillance systems Huawei sells governments, often branded “safe cities.” The company says it has installed the systems in 700 cities spread across more than 100 countries and regions.
In Zambia, Huawei’s products are part of the country’s Smart Zambia initiative to implement digital technologies across government departments.
Huawei, in the statement, said it had never sold safe city solutions in Zambia and hasn’t conducted business with Zambia’s Cybercrime Crack Squad.
Chinese government officials have played a key role in facilitating deals for Huawei in Africa, attending meetings and escorting African intelligence officials to the company’s headquarters in Shenzhen, according to senior African security officials.
While many of the projects are rudimentary, Huawei has sold advanced video-surveillance and facial-recognition systems in more than two dozen developing countries, according to data gathered by Steven Feldstein, an expert in digital surveillance at Boise State University and a former Africa specialist at the State Department.
Huawei lists foreign firms among its partners in its safe-city products, including U.S. smart-sensor manufacturer and systems integrator Johnson Controls International PLC and iOmniscient Pty. Ltd., an Australian producer of AI systems that analyze video, sound and smell. Johnson Controls declined to comment. iOmniscient said it has provided behavioral analytics products through Huawei in the Middle East but not in Africa.
Continental Drift
Huawei is Africa's dominant supplier of mobile internet networks and state surveillance systems.
Surveillance projects
Offices and network projects
TUNISIA
TUNISIA
MOROCCO
ALGERIA
LIBYA
EGYPT
EGYPT
SENEGAL
MALI
GHANA
GHANA
NIGERIA
NIGERIA
ETHIOPIA
UGANDA
UGANDA
GUINEA
CAMEROON
IVORY
COAST
IVORY
COAST
KENYA
KENYA
RWANDA
CONGO
TANZANIA
CAMEROON
ZAMBIA
ANGOLA
ZAMBIA
MOZAMBIQUE
ZIMBABWE
NAMIBIA
Offices*
4G mobile
MADAGASCAR
SOUTH
AFRICA
SOUTH
AFRICA
5G mobile
Note: Projects include completed deals, MOUs and proposed deals. *Subsidiaries and representative offices
Sources: RWR Advisory Group, Steven Feldstein/Boise State University, staff reports (projects); Huawei, Factiva (offices)
National security systems that make use of video surveillance, internet monitoring and cellphone-metadata collection have become widespread. Huawei’s elite systems move beyond that level. According to senior security officials, embedded, hands-on Huawei technicians train security forces and cyber-surveillance units that regularly snoop on political opposition.
“The big question has been whether Chinese companies are just doing this for the money, or whether they’re pushing a specific kind of surveillance agenda,” Mr. Feldstein said, after being briefed on findings by the Journal. “This would suggest it’s the latter.”
Africa’s importance to China “is at least as much about Beijing’s longer-term vision for recruiting foreign countries to embrace Chinese norms of governance in the digital sphere and in terms of its illiberal political values,” said Andrew Davenport, an executive at RWR Advisory Group, a Washington, D.C.-based risk management firm that tracks the international activities of Chinese and Russian firms.

The Journal’s investigation included classified police documents and parliamentary committee documents, and interviews with more than a dozen senior security officials working with Huawei in African countries, and with diplomats, cyber-defense officials and opposition activists who say they have had their communications compromised.
Uganda’s government confirmed Huawei technicians were working with its police and intelligence agencies to bolster national security but declined to comment on the allegations of intercepting communications.
“We are not at liberty to publicly reveal the specifics,” said Ofwono Opondo, a government spokesman. Mr. Opondo denied that the government is targeting Bobi Wine, saying the opposition lawmaker “isn’t such an important issue” to warrant heightened surveillance.
Dorothy Mukasa, director of Unwanted Witness, a Ugandan organization working to fight online censorship.PHOTO: CLÉMENT BÜRGE/THE WALL STREET JOURNAL
Zambia’s ruling party spokesman, Antonio Mwanza, said Huawei technicians, based inside the Zambia Information & Communications Technology Authority, or Zicta, regulator, were helping the government combat opposition news sites.
“Whenever we want to track down perpetrators of fake news, we ask Zicta, which is the lead agency. They work with Huawei to ensure that people don’t use our telecommunications space to spread fake news,” he said.
Ugandan officials said that Huawei representatives have stopped attending technical briefings since the Journal submitted questions to the Chinese company.

China’s Foreign Ministry said in a written statement that it is common practice for countries to cooperate on policing. “Some African countries have enthusiastically built ‘safe cities’ in order to improve the lives of their people and their business environments,” the ministry said. “To equate this positive effort with ‘surveillance’ smacks of ulterior motives.”
Huawei’s founder, Ren Zhengfei, publicly denied in January that the company spied on behalf of the Chinese government. It was the launch of a global public-relations blitz to counter negative press sparked by the arrest in Canada of Huawei’s CFO and a Trump administration pressure campaign to persuade allies to ban Huawei gear from next-generation 5G networks.
“Neither Huawei, nor I personally, have ever received any requests from any government to provide improper information,” Mr. Ren said at a gathering of foreign journalists.
Surveillance cameras are common around Kampala. PHOTO: SUMY SADURNI FOR THE WALL STREET JOURNAL
In May, President Trump escalated the campaign, signing an executive order that allows the U.S. to ban telecommunications gear and services from “foreign adversaries,” a term widely interpreted to refer to Huawei. The Commerce Department added Huawei to the “Entity List,” citing national security concerns, which effectively bars companies from supplying U.S.-made technology to Huawei without a license. The president said last week that business with Huawei may be a factor in U.S.-China trade negotiations.
Huawei has connected hundreds of millions of African consumers since first doing business in Kenya in 1998. It has built telecom networks in some 40 African nations by offering inexpensive deals often financed by loans with favorable terms and by providing on-the-ground customer service. Huawei now dominates Africa’s internet business. In recent years, it has expanded into digital-surveillance systems.
Zambian senior security officials said that in the country’s new $75 million data center, Huawei employees work with the Cybercrime Crack Squad, sitting in cubicles where they monitor and intercept digital communications from a broad spectrum that includes criminal suspects, as well as opposition groups, activists and journalists.
In Uganda’s capital, Huawei has helped build 11 monitoring centers used to fight crime, according to the national police deputy spokeswoman. A new six-story, $30 million hub due to open in November will be linked to more than 5,000 of the company’s cameras equipped with facial-recognition technology.
In one of the rooms at Uganda’s police headquarters, Huawei has its red logo affixed to the wall. “They teach us to use spyware against security threats and political enemies,” said one official at the unit.
A few years ago, the East and Southern African nations appeared to be regional models for web freedom: few rules policed social-media usage or restricted freedom of the press, and there was more competition in the marketplace. Programmers and aspiring entrepreneurs from top U.S. colleges flocked to Kampala to launch startups.
World Power
Huawei has quickly become the largest maker of telecom equipment.
Market share, global telecom equipment revenue
100
%
Huawei
80
Other
60
Nokia
40
Ericsson
20
Cisco
ZTE
0
2007
’08
’09
’10
’11
’12
’13
’14
’15
’16
’17
’18
Source: Dell’Oro Group
Around 2012, Uganda’s President Museveni began to see the web more as a political risk than an economic opportunity, according to senior government officials and classified documents published by Unwanted Witness, a Ugandan organization working to fight online censorship. Concerned about the mobilizing power of social media and what he called public immorality online, he asked his intelligence agencies to find better tools to monitor the web and muzzle online dissent.
As a crash in commodity prices heaped pressure on Mr. Museveni ahead of his fifth election campaign in 2016, Uganda began to deploy surveillance software, including FinFisher, made by Anglo-German company Lench IT Solutions, which they inserted into the Wi-Fi networks of several of Kampala’s top hotels to penetrate the phones of politicians, journalists and activists, according to the senior government officials and Unwanted Witness.
Lench IT didn’t respond to requests for comment.
The technology had limitations: It didn’t infiltrate devices that didn’t connect to the targeted Wi-Fi networks and couldn’t crack encrypted messaging services like WhatsApp.
Mr. Museveni won the 2016 election but in spring 2017 faced fresh protests over his move to abolish the age limit for the presidency. Mr. Museveni directed then-police chief, Kale Kayihura, to approach the Chinese government to help expand digital surveillance, according to senior security officials.
Huawei had arrived in Uganda in the early 2000s. It won its first major government contract in 2007 and gave the Ugandan government 20 surveillance cameras valued at $750,000 in 2014. At a donation ceremony attended by Chinese government officials, Mr. Museveni thanked Huawei “for its contribution to corporate social responsibility.”
The following year Huawei signed a deal to become the Ugandan government’s sole information-communications partner.
Ugandan President Yoweri Museveni met with China’s President Xi Jinping in Beijing in September. PHOTO: LINTAO ZHANG/AGENCE FRANCE-PRESSE/GETTY IMAGES
Within weeks of Mr. Museveni’s 2017 order to expand digital snooping on the opposition, Uganda’s communications regulator contracted Huawei to explore setting up a surveillance center with assistance from security agencies, according to senior Ugandan officials.
By May, Uganda’s police force had sent dozens of officers for technical training in Beijing, accompanied by senior Huawei Africa-based employees and a senior Chinese Embassy official, Chu Maoming. After three days the group was flown to the company’s Shenzhen headquarters, where Huawei executives shared details on the surveillance systems it had built across the world, according to Ugandan security officials who were present.
Mr. Chu played a crucial intermediary role in the talks. He accompanied the delegation to meetings with China’s Public Security Agency in the ministry’s cube-like complex near Tiananmen Square, where they were shown the capabilities of the Chinese surveillance state. Mr. Chu then flew with the group to Shenzhen and sat in on meetings with Huawei executives, according to the Ugandan officials present.
China’s Foreign Ministry didn’t address Mr. Chu’s specific involvement in the deal but said in its statement that when the Chinese government welcomes foreign delegations, “it will organize visits according to their wishes, including to companies.” The ministry said such arrangements are common practice around the world. The Chinese Embassy in Kampala didn’t respond to requests for comment.
Huawei executives recommended to Uganda it look at a surveillance system in Algeria, where the aging autocrat Abdelaziz Bouteflika was trying to stare down simmering opposition after almost 20 years in power, according to the Ugandan officials. Mr. Bouteflika was ousted in April this year.
In September 2017, a team of senior Ugandan security officials was dispatched to study the video surveillance system in Algiers, which included mass monitoring and cyber-surveillance centers.
“We discussed hacking individuals in the opposition who can threaten national security,” one of the officials said, adding that Algerians are advanced in that field.
Uganda is expanding digital surveillance and tightening censorship. PHOTO: SUMY SADURNI FOR THE WALL STREET JOURNAL
The Ugandan and Algerian forces jointly prepared a classified report, reviewed by the Journal, that calls Algeria’s system “Huawei’s intelligent video surveillance system” and says it is “an advanced system and provides one of the best surveillance applications.”
Later that month, Mr. Kayihura, the police chief at the time, signed a cooperation agreement with Algeria to have an Algerian team advise on the rollout of Uganda’s Huawei-implemented surveillance program. The project’s lead Algerian adviser was described by the Algerians as a cyber expert trained in Huawei’s headquarters in Shenzhen, according to senior Ugandan officials.
Huawei, in the statement, said it had never sold safe city solutions in Algeria.
Algeria’s Foreign Ministry didn’t respond to multiple emails and calls for comment. Multiple visits and calls to the Algerian Embassy in Uganda yielded no comment.
Mr. Kayihura, who has been under house arrest since June 2018 and has been charged with several offenses including illegally distributing government weapons to civilian militia, couldn’t be reached for comment.
In May 2018, Uganda’s Mr. Museveni signed a $126 million deal with Huawei for the safe-cities project after a classified bidding process involving two Chinese companies, paying $16.3 million up front and financing most of the rest with a $104 million loan from Standard Chartered Bank, according to documents presented to a parliamentary committee. Work began in July to construct a digital surveillance unit at Kampala’s police headquarters and to install hundreds more street cameras.
A product brochure on the Huawei website this year said the first phase of Uganda’s project would connect 83 police stations in the capital and be expanded to another 271 police stations across the country.
Some lawmakers raised concerns about the project and its lack of transparency. “There appears to be a policy to hand over the country’s entire communications infrastructure to the Chinese,” Maxwell Akora, an opposition party member of the Ugandan Parliament’s Information, Science and Communication Technology Committee, said in an interview. “It’s unwise given our concerns about spying and creating backdoor channels.”
Fancy TalkIn addition to Huawei's power in mobileinternet networks, the company'sphones—which cost more than many on themarket—are also becoming more popular.Huawei's smartphone market share in its topAfrican marketsSources: Ramazan Yavuz, IDC
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Before the Huawei project got rolling, in early 2017, Uganda’s security services received a delivery of spyware, according to Ugandan senior security officials. The spyware was modeled on a product called Pegasus, created by Israeli firm NSO Group. Similar products are sold under different names by a number of cyber-intelligence firms. The spyware can penetrate encrypted messages in smartphones, according to Amnesty International.
The Ugandans received training from five Israeli government technicians. Ugandan intelligence officers said they were taught how to use the spyware for reading emails and texts but not encrypted communications.
The Israeli government didn’t respond to a request for comment.
“The training was short-lived and not very sophisticated like what we got from the Chinese,” one senior Ugandan security official said.
Bobi Wine, in his office in Kampala, has become a leader in the opposition to the Museveni rule. PHOTO: SUMY SADURNI FOR THE WALL STREET JOURNAL
Uganda’s first cyber unit opened in November 2018, and Huawei technicians were seconded from the Shenzhen headquarters to train Ugandans how to use the Huawei infrastructure and software and tools in part from other companies to monitor the web, according to Ugandan senior security officials.
Ugandan social media monitors began to send alerts to security chiefs if they detected “offensive communication,” a euphemism for antigovernment rhetoric, on citizens’ accounts, the officials said.
The capability gave Ugandan security officials more visibility into opposition activists’ communications as a wave of protests erupted from a new source: the rapper-turned-activist Bobi Wine. In July and August 2018, Mr. Wine, whose legal name is Robert Kyagulanyi Ssentamu and who had been elected to Parliament in 2017, brought tens of thousands of people into the streets for a series of concerts at which he called for Mr. Museveni to step down. He was arrested and badly beaten, then traveled to the U.S. for medical treatment, where he got support from several congressmen.
In early December 2018, after Mr. Wine returned, a group of Ugandan intelligence officers in the cyber unit picked up wiretapped phone conversations between the pop star and several of the country’s most high-profile opposition lawmakers, according to Ugandan senior security officials.
Mr. Wine appeared to be arranging for the politicians to give speeches at his concerts. But the cyber team monitoring the calls had a problem. They couldn’t decipher the details of the plans because Mr. Wine was speaking to his team using a coded street slang.
A senior police commander relayed a presidential order to access Mr. Wine’s encrypted written and spoken communications, including those through WhatsApp and Skype, to a six-man cyber team based at police headquarters, according to the security officials. They spent days trying to penetrate the communications using the spyware but failed.
They asked for help from Huawei technicians—who then cracked Mr. Wine’s encrypted communications using the spyware within two days, the security officials said.
“It was very clear he was organizing a political event, not a music show. We had to act quickly,” one of the officials said.
In a WhatsApp chat group, Uganda’s cyber team saw a list of 11 lawmakers Mr. Wine was planning to secretly insert into the concert program. The rally, at Mr. Wine’s beach club, was scheduled unusually early to throw off the security services. Using information from the cyber hub, hundreds of police swarmed the venue, arresting dozens of organizers and attendees. Some were arrested before they could reach the club.
Police officers arrest a Bobi Wine supporter in April. PHOTO: BADRU KATUMBA/AGENCE FRANCE-PRESSE/GETTY IMAGES
“We were shocked. They knew everything about the event and the speakers, who we hadn’t announced,” Mr. Wine said.
One of the security officials showed the Journal screenshots of Mr. Wine’s WhatsApp chats with the Firebase crew where participants were exchanging details on the planned events. The official said the operation would have been impossible without the skills of Huawei’s technicians.
Mr. Wine, whose attempts to organize subsequent rallies have also been foiled, said the surveillance has spread to his family, his entourage and the people who frequent bars where his music is played. He now switches between several phones and uses devices of sympathetic members of the public, but he said he is outgunned by Mr. Museveni’s expanding machine.
“The deal with Huawei is a survivor strategy to consolidate power,” he said in an interview in his Kampala home. “It’s an all-out assault.”
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A similar story unfolded in Zambia.
The first phase of the project, worth $440 million and mostly financed by the Export-Import Bank of China, began in 2015 after President Edgar Lungu traveled to Beijing to meet President Xi Jinping. Since 2016, Huawei has led the construction of an information and communication technologies training hub and hundreds of cellphone and data connection towers.
Huawei has also established a data center complex at Zicta, the telecom regulator, said Brian Mushimba, Zambia’s minister of transport and communications, in a telephone interview with the Journal.
Huawei offices in Lusaka, Zambia. PHOTO: WALDO SWIEGERS/BLOOMBERG NEWS
On the second floor of Zicta’s gray-colored facility, behind biometric scanners, Huawei employees are embedded within Zambia’s new data center, which houses the Cybercrime Crack Squad, Zambian security officials said. Established in February, around half of the 40-strong staff at the data center are Huawei employees, two Zambian officials there said.
In April, President Lungu’s office ordered a crackdown on news sites that had published a string of damaging stories. Zambia was for decades seen as one of Africa’s most stable and permissive democracies, but in recent years it has moved to muzzle opposition media, shuttering some of the country’s top newspapers and television channels and pushing antigovernment voices onto Facebook sites and WhatsApp forums.
Mr. Lungu’s press secretary, Amos Chanda, called the head of the cyber squad, Mofya Chisala, and a senior chief Huawei technician for help, Zambian intelligence officers said.
Mr. Chanda said he had “no recollection of the events or meetings” with the cyber squad or Huawei officials. Mr. Chisala didn’t respond to requests for comment.
Huawei technicians helped intercept the communications of opposition bloggers running a news site named Koswe, or “The Rat,” which had repeatedly criticized Mr. Lungu, the two Zambian officials in the Cybercrime Crack Squad said.
The Huawei staff accessed the bloggers’ Facebook pages, where they found their phone numbers, and then used spyware from another company to look into and locate the devices.
On April 18, a team of cyber officials, police intelligence and Zicta experts huddled in Mr. Chanda’s office, on the ground floor of the presidential mansion. Two Huawei technicians opened their laptops to display screens showing live trace routes of several mobile phones linked to the targeted bloggers’ Facebook pages, on maps that also charted Huawei phone antennas, Zambian intelligence officials said.
A satellite and telecommunications tower in Lusaka, where Huawei’s products are part of the country’s Smart Zambia initiative to implement digital technologies. PHOTO: WALDO SWIEGERS/BLOOMBERG NEWS
The cyber squad alerted the police in the northwestern provinces where Huawei had pinpointed the opposition bloggers.
Over the next few days, Huawei experts helped Zambian officials track the targets from the Zicta data center offices, maintaining real-time contact with police officers in the field, the intelligence officials said.
Finally, police swooped in on sites on the outskirts of the copper mining town Solwezi. One suspect was typing on his laptop when officers burst in and seized his electronic devices.
“We found one of the suspects editing a long, malicious article which he was about to post,” one of the intelligence officials said.
One official on the cyber squad said the Zambians have “nowhere near the expertise” of Huawei.

Corrections & Amplifications
Uganda’s security services in early 2017 received a delivery of Pegasus-style spyware. An earlier version of this article incorrectly implied the services received the Pegasus brand of spyware. (Aug. 14, 2019)