FT : Grindr/Kunlun: the break up

Grindr/Kunlun: the break up
Despite a forced sale, the gay dating app looks attractive. Lonely hearts are big business

What makes Chinese ownership of gay social media app Grindr a threat to US national security? Blackmail is one possibility. Homosexuality is not illegal in either country but there are more than 70 countries where it is still considered a crime. Users may have other, more personal, reasons to keep accounts secret. Few would relish their photos and messages being made public.

But the forced sale of Grindr by Beijing Kunlun Tech is also connected to growing rivalry between US and China on technology and fears about the volume of personal data handled by social media apps. Grindr has more than 3m daily users who supply the location-based dating app with names, photographs, email addresses, personal messages and health data. The US is right to think carefully about who can access this.

The Committee on Foreign Investment in the US, or Cfius, has the power to unwind more deals concerning companies with access to personal information but there are no obvious deals that match Grindr’s. Either way, US social-media start-ups stand little chance of finding Chinese buyers from now on.

In spite of the forced sale, Grindr still looks attractive. Lonely hearts are big business. Tinder doubled revenue in the last year and shares in its owner Match Group are up 70 per cent since the start of 2018.

Kunlun bought Los Angeles-based Grindr in January last year for a reported $240m, two years after taking a majority stake. When it suggested floating the company last summer it boasted that the app had posted three years of profits thanks to premium subscriptions. If Grindr accounted for 4 per cent of Kunlun’s net profits in 2017, this suggests net profits of about $7m.

Larger rival Match Group seems a good candidate for buying Grindr. But Facebook might be convinced to take a look too. With a newly launched dating platform in need of publicity and a $41bn hoard of cash and marketable securities to use, the social network could be tempted to partner up.

WSJ : U.K. Says Huawei Gear Has Major Security Flaws Report says Chinese tech gi

U.K. Says Huawei Gear Has Major Security Flaws
Report says Chinese tech giant hasn’t made cybersecurity a priority

LONDON—British officials accused Huawei Technologies Co. of repeatedly failing to address security flaws in its products and said the company hasn’t demonstrated a commitment to fixing them.

The findings, contained in a report published Thursday, subjects the Chinese telecom-equipment giant to fresh international scrutiny as it tries to fend off American accusations that its gear poses a cybersecurity threat.

In the report, U.K. officials said they were particularly concerned that Huawei hasn’t implemented companywide cybersecurity practices that it vowed to put in place in 2012, the same year a report from the U.S. Congress labeled Huawei a national security threat.

The congressional report effectively banned Huawei from the U.S. But many other foreign markets, like the U.K., embraced Huawei, the world’s largest maker of telecommunications equipment used by wireless carriers.

The U.S. government has based its recent campaign to blacklist Huawei world-wide on the claim that Beijing could order the company to spy or disrupt communications. Washington has pressured its allies to join its ban, but many countries—like Germany—haven’t followed suit, seeking specific proof that Huawei is a cybersecurity threat.

The U.K. report doesn’t offer any proof along those lines. But it makes a separate claim: that the company hasn’t made cybersecurity a priority and that its products might have security flaws that anyone, not just the Chinese government, could exploit.

British officials said Huawei’s “poor software engineering” is the problem, adding that they don’t believe “the defects identified are a result of Chinese state interference.”

A Huawei spokesman said “we understand these concerns and take them very seriously.” He reiterated that Huawei has committed $2 billion over five years to overhauling its engineering processes and that “a high-level plan for the program has been developed and we will continue to work with U.K. operators” and British cybersecurity authorities during implementation.

In 2012, John Suffolk, Huawei’s global security and privacy officer and the U.K.’s former information-security chief, said company processes that ensure cybersecurity was “part of our DNA.” Huawei officials have often pointed to his 24-page report as a sign of Huawei’s commitment to security.

U.K. officials said in their Thursday report that Huawei didn’t follow through on its 2012 pledges and as a result, they aren’t confident about the company’s recent promises to overhaul its cybersecurity practices. “Strongly worded commitments from Huawei in the past haven't brought about any discernible improvements,” the report said.

The report, written by the U.K.’s National Cyber Security Centre, is an annual update on a Huawei-run lab near Oxford, England, that examines the Chinese company’s products used in British networks. It identified several specific, technical issues with Huawei’s products and said the company hasn’t fixed many of them.

The report said that given Huawei’s record, it is probable that the lab would find more vulnerabilities in the future, especially with new products.

“It is highly likely that security risk management of products that are new to the U.K. or new major releases of software for products currently in the U.K. will be more difficult,” the report said.

The findings could have global ramifications. Wireless carriers world-wide are on the verge of upgrading to 5G, the cellular technology that could enable driverless cars and internet-connected factory components. Britain, with one of the world’s most respected cybersecurity agencies, has also had some of the most extensive experience among Western nations in testing Huawei gear.

British officials said Huawei was slow to address problems identified in a previous review. Last summer, officials identified engineering shortfalls that they said led to discrepancies between Huawei software examined in the lab and software used in British networks. It found that Huawei’s engineering processes couldn’t re-create the same software from scratch twice—a key prerequisite for an adequate test of Huawei gear.

Because the inspectors in the lab can’t replicate the software used in British networks, they can’t determine if Huawei’s equipment has security flaws.

In recent months, U.K. officials grew impatient with Huawei for not rolling a fix out more quickly. The Thursday report said the $2 billion investment promised from Huawei, “while welcome, is currently no more than a proposed initial budget for as yet unspecified activities.”

British cybersecurity officials continue “to be able to provide only limited assurance that the long-term security risks can be managed in the Huawei equipment currently deployed in the U.K,” the report said.

Britain, where Huawei gear is popular with all of the country’s major telecom carriers, is in the middle of a review of its telecom supply chain. That review is separate from the report issued Thursday. Officials have publicly suggested they won’t ban Huawei outright, but could recommend partial restrictions.

Huawei has launched a counteroffensive to the U.S. campaign. Huawei’s founder and CEO has said the company has never spied for the Chinese government and never would. The company has also sought to soothe worries about the security of it products by setting up labs in Britain, Germany and Belgium, all designed to let government officials inspect Huawei’s hardware and software.

The lab in Britain, Huawei’s oldest and most important major Western market, was the first to open, in 2010. It employs Huawei employees, all British nationals with top-secret security clearance, and is overseen by board with officials from both the government and Huawei, as well as representatives from British carriers.

The report from British cybersecurity officials said its findings aren’t a statement about the security of Britain’s networks. The report doesn’t dictate policy, but rather highlights problems and recommends how the government and telecom providers can address them.

U.K. officials have said they share American concerns that Beijing could order Huawei to spy or conduct cyberattacks, but believe they can minimize those risks with security measures—such as the lab near Oxford—and by requiring wireless providers to use equipment from multiple suppliers in their networks. Huawei has two major rivals, Finland’s Nokia Corp. and Sweden’s Ericsson AB.

>>> TradeGate Pre-Market Indications

DAX:
  • Lufthansa (LHA TH) +0.7%
  • SAP (SAP TH) +0.3%
  • Daimler (DAI TH) +0.3%
    • After BAIC’s Earnings, Bernstein Questions a Daimler Stake Boost
  • Thyssenkrupp (TKA TH) +0.2%
  • Deutsche Bank (DBK TH) +0.2%
    • A Decade of Deutsche Bank Investigations: $18 Billion Legal Tab
  • Siemens (SIE TH) -0.1%
    • Spain Regulator Sanctions 15 Companies For Rail Works Cartels
  • Deutsche Telekom (DTE TH) -0.2%
    • T-Mobile Counsel Meets FCC Chair Pai and Promises 5G Network
  • Infineon (IFX TH) -0.4%
  • Wirecard (WDI TH) -1.4%
  • Bayer (BAYN TH) -1.9%
    • Bayer Loses Second Trial Over Claims Roundup Causes Cancer
MDAX:
  • Deutsche PBB (PBB TH) +2.4%
    • Deutsche PBB Upgraded to Buy at Bankhaus Lampe
  • Evotec (EVT TH) +2.1%
    • Evotec Full Year Revenue 3.2% Above Estimates
  • Dialog Semi (DLG TH) +0.8%
    • Dialog Semi at Non-Deal Roadshow Hosted By Kepler Cheuvreux
  • Commerzbank (CBK TH) +0.6%
    • Commerzbank Staff Ratchets Up Opposition to Deutsche Bank Merger
  • Evonik (EVK TH) +0.6%
  • ProSieben (PSM TH) flat
  • Aroundtown (AT1 TH) -0.9%
    • Aroundtown Full Year Dividend Per Share Misses Estimates
  • United Internet (UTDI TH) -1.9%
    • United Internet Options Imply Elevated Post-Earnings Volatility
  • 1&1 Drillisch (DRI TH) -3.4%
    • 1&1 Drillisch Access Event Set By Hauck & Aufhaeuser for April 4
  • Hochtief (HOT TH) -6.2%
    • Hochtief Offering by Holder Prices EU4.35m Shares at EU131/Share
SDAX:
  • Varta (VAR1 TH) +2.2%
  • Heidelberger Druck (HDD TH) +1.6%
  • Schaeffler (SHA TH) +0.9%
  • Aixtron (AIXA TH) +0.6%
  • Cancom (COK TH) +0.3%
  • Suedzucker (SZU TH) -0.3%
    • Suedzucker’s Investors and Staff Feel Pain of Sugar Slump (1)
  • Steinhoff (SNH TH) -0.7%
    • Steinhoff to Sell 74.9% of Shares of Unitrans
  • Nordex (NDX1 TH) -0.9%
  • Pfeiffer Vacuum (PFV TH) -4.2%
    • Pfeiffer Vacuum Full Year Dividend Per Share Misses Estimates
  • SMA Solar (S92 TH) -4.6%
    • SMA Solar Sees First Quarter Ebitda Loss EU5 Mln To EU0

>>> What to look at today - 28th of March 2019

Stocks declined again across much of Asia as the precipitous decline in developed-market sovereign bond yields continued to unnerve investors about the economic outlook.
Yields on 10-year Treasuries hit a fresh 15-month low on Thursday in Asia, Australian ones recorded the lowest on record, and Japan’s dropped to the lowest since August 2016. Japanese shares led losses in the region, sliding about 1.7 percent. Losses were more modest in South Korea and China, while India and Australia saw gains and Hong Kong snuffed out early declines. European equity futures were little changed. U.S. futures fell after the S&P 500 Index dropped on Wednesday. The yen headed higher as haven demand emerged.
US After Hours  LULU +10.8%, PVH +9.5%, VRNT +7.8%, FIVE +2.5% following earnings/guidance; QTNA +17% after ON acquisition news

Nikkei -1.61% Hang Seng +0.23% CSI -0.45% Shanghai -0.90% Shenzen -0.77%

Eur$ 1.1258 CNH 6.7345 CNY 6.7289 GBP 1.3192 CHF 0.9951 GBP 1.3192 RUB 64.7760 TRY 5.4523 WTI$ 59.11 -0.50%

S&P -0.05% EuroStoxx +0.28% FTSE +0.38% Dax +0.16% SMI +0.49%

Macro :
- Bank Earnings Estimates Need to Come Down, Morgan Stanley Says
- Euroclear Hires Goldman to Study How Holders Can Cash Out: FT
- ECB Would Need Monetary-Policy Case for Tiering Rate, Praet Says

Keep an eye on :
- ABN NA : ABN Amro Sells 75% in Stater to Infosys; Sees Gain on Disposal
- ADL GY : Adler EPRA NAV Up 33% in ’18; Sees Performance Improving in 2019
- AED BB : Aedifica Cuts Holding in Apartment Unit Immobe to 25% From 50%
- ALV GY : *PIMCO, OTHER PG&E CREDITORS SAID TO PITCH $35 BILLION EXIT PLAN
- ARCAD NA : Arcadis Buys Majority Stake in EAMS Group; No Financial Terms
- AT1 GY : Aroundtown Full Year Dividend Per Share Misses Estimates
- ATL IM : Hochtief Holder Atlantia to Offer EU575m Shrs via Goldman Sachs
- ATC NA : Altice Closes Sale of 49.99% in SFR FTTH to Omers-Led Group
- ATEB BB : Atenor Buys 5,000 Sq.-Meter Plot in Budapest for Office Project
- ATT SS : Attendo Sees Increased Costs ~SEK 200M Related to Finland Ops
- BAYN GY : Bayer Loses Second Trial Over Claims Roundup Causes Cancer
- BLT LN : BHP Group Is Said to Weigh Bid for Blackstone-Backed Bluewater
- BON NO : Bonheur’s FOO to Buy 50% Stake in United Wind Logistics
- CAI AV : CA Immo Full Year Ebit Beats Estimates
- CWC GY : Cewe Stiftung 2019 Ebit Forecast Midpoint Misses Lowest Estimate
- CTI LN : Cathay Unit Lansen to Sell Remaining Starry Shares RMB12.61 Min.
- CLA FP : Claranova Expects to Achieve EU600m in Rev. Within 5 Yrs
- CBK GY : Deutsche Bank Is Said Wary of Commerzbank’s Loan Book in Merger
- DTE GY : T-Mobile Counsel Meets FCC Chair Pai and Promises 5G Network
- DGOC LN : Diversified Gas to Acquire Some Gas Assets for $400 Million
- DRI GY : 1&1 Drillisch Full Year Revenue Matches Estimates
- EVT GY : Evotec Full Year Revenue 3.2% Above Estimates
- EXO IM : Exor Full Year Net Assets $19.7 Bln
- GBLB BB : Ergon Capital Partners Raises EU580m Commitments for Fourth Fund
- BAER SW : Julius Baer May Make More ‘Strategic’ Cost Cuts, CEO Hodler Says
- KU2 GY : Kuka to Cut 350 Jobs After Sales, Orders Dwindled in 2018
- MBTN SW : Meyer Burger Holder Oxford PV to Offer Up to 62.3m Shrs
- MBTN SW : Meyer Burger Holder to Offer Shares at CHF0.60-0.61/Share
- UG FP : Peugeot Ratings Raised One Level to Investment Grade at Moody’s
- UG FP : PSA Accelerates in China Auto Aftermarket With Longstar Purchase
- PFV GY : Pfeiffer Vacuum Full Year Dividend Per Share Misses Estimates
- RNO FP : MMC CEO Says He Has Heard Nothing on Nissan-Renault Merger Talks
- RNO FP : Suga: Nissan-Renault Discussions Need to Satisfy All Parties
- REP SM : Repsol Says Brufau Plans to Leave Board After Next 4-Year Term
- SANT GY : S&T Confirms 2019 Forecast, Seeks Expansion and Purchases (1)
- AM3d GY : SLM Solutions Names Meddah Hadjar as CEO, SLM Solutions FY2019 Revenue Forecast Below Expectations
- S92 GY : SMA Solar Sees First Quarter Ebitda Loss EU5 Mln To EU0
- GLE FP : SocGen Sees Trading Malaise Enduring on Low Investor Appetite
- SWEDA SS : Alecta Unhappy With Swedbank Handling of Laundering Claims (1)
- TGYM IM : Technogym Full Year Revenue Meets Estimates
- UTDI GY : United Internet Full Year Ebitda Matches Estimates
- VOD LN : Vodafone’s Ghana Unit Converts Parent’s $500M Loan to Equity
- VOW GY : VW’s Seat Brand Returns May Rise to 4% on New Models: De Meo

>>> Europe : Brokers Upgrades & Downgrades - 28th of March 2019

>>> Up
* BAT Upgraded to Buy at Citi
* CYBG Upgraded to Equal-weight at Barclays; PT 2.20 Pounds
* Deutsche PBB Upgraded to Buy at Bankhaus Lampe
* DNB Upgraded to Buy at Citi
* Imperial Brands Upgraded to Buy at Citi
* Royal Unibrew Upgraded to Buy at SEB Equities; PT 620 Kroner

>>> Down
* CTS Eventim Downgraded to Hold at Baader Helvea; PT 44 Euros
* KWS Saat Cut to Hold at Kepler Cheuvreux; Price Target 60 Euros
* Mediaset Espana Downgraded to Neutral at Citi
* XXL Downgraded to Sell at SpareBank; PT 26 Kroner

>>> Initiation
* Cellnex Resumed at Morgan Stanley With Overweight; PT 31 Euros
* Great Portland Rated New Underperform at RBC; PT 5.25 Pounds
* Intu Rated New Sector Perform at RBC; PT 1.05 Pounds
* Metro Bank Rated New Underweight at Barclays; PT 6.50 Pounds
* Mountain Alliance Rated New Outperform at MainFirst
* Workspace Rated New Sector Perform at RBC; PT 10 Pounds
* Zooplus Rated New Underweight at Barclays; PT 100 Euros

>>> Call

>>> Asian Update

Asia Market Update: Equities trade generally lower in Asia, government bond yields decline; Slowdown concerns remain in the headlines, US/China trade talks start today


General Trend:
- Chinese financial, property and energy shares are among the early decliners
- Telecom services index out performs in China; ZTE rises over 10% post earnings
- China bank earnings in focus: China Construction Bank declines post earnings
- ICBC is expected to report results later today, Bank of China and Agbank seen on Friday
- China property developer Vanke rises over 2%, announced stock offering to repay foreign debt
- Financial, Energy and Resources companies rise in Australia
- Marine/Transportation and Securities Brokers under perform in Japan
- Japanese automakers trade broadly lower
- Japan’s Gunma Bank declines over 7% after profit warning
- Yen gains amid lower bond yields and equity declines
- Kiwi (NZD) rebounds from the initial losses seen after weaker business confidence data
- Indonesia plays down contagion concerns related to Turkey
- US/China due to hold trade talks in China on March 28-29th (Thursday-Friday)
- Upcoming end of Japan’s fiscal year in focus (March 31st)

***Headlines/Economic Data***
Australia/New Zealand
-ASX 200 opened slightly lower
- (NZ) New Zealand 8-month Budget Surplus NZ$2.26B, NZ$347M wider than forecasted
- (NZ) New Zealand Fin Min Robertson: economy is well placed to weather a global downturn
- (NZ) New Zealand Mar ANZ Activity Outlook: 6.3 v 10.5 prior (lowest level since August); Business Confidence: -38.0 v -30.9 prior; Inflation expectations 2.05% v 2.06% prior
- (AU) Australia Feb Job Vacancies: 1.4% v 1.6% prior
- (NZ) New Zealand sells NZ$200M v NZ$200M indicated in April 2025 bonds, avg yield 1.4456% v 1.9118% prior, bid to cover 2.4x v 4.4x prior

Japan
-Nikkei 225 opened -0.9%
- (JP) Japan Investors Weekly Net Buying of Foreign Bonds: ¥1.8T v -¥595.3B prior; Foreign Buying of Japan Stocks: -¥1.1T v -¥1.59T prior
-(JP) Japan Chief Cabinet Sec Suga: Nissan/Renault merger needs to satisfy all parties
-8697.JP Confirms basic agreement to merge with TOCOM, no terms disclosed, expected to close in Sept
-(JP) Japan MoF sells ¥2.1T v ¥2.1T indicated in 0.10% (0.10% prior) 2-yr JGBs, avg yield: -0.175% v -0.167% prior, bid to cover 5.28x v 6.08x prior
- (JP) Japan Fin Min Aso: Fiscal year budget aimed at smoothing demand around the upcoming sales tax increase (after the close yesterday)

Korea
-Kospi opened -0.7%
- (KR) US Sec State Pompeo: Time we see real action by North Korea on nuclear talks
- (KR) US Commander in S. Korea, Army Gen. Robert Abrams, North Korea's nuclear and missile activities have been "inconsistent" with its pledge to denuclearize, the commander of US forces in South Korea - Yonhap
-000660.KR To invest KRW1.2T for new chip manufacturing complex, targeting to start construction from 2022

China/Hong Kong
-Hang Seng opened -0.2%; Shanghai Composite opened -0.4%
-(CN) Trump Administration Official: China tariffs will be key sticking point and will be resolved as part of the deal; no specific time frame set for trade deal, talks could conclude anytime from April to June
-(CN) China Premier Li: Have not adopted loose monetary policy to stimulate growth, policies are paying off, Economic indicators steady in first 2 months of the year, market expectations are improving; Cannot rule out some fluctuation in quarterly economic growth this year, enough policy tools to deal with any slowdowns
- (CN) China Feb Swift Global Payments CNY: 1.9% v 2.2% prior
- (CN) Pork stocks in Shandong said to decline amid impact of African swine fever outbreak - HK Press
- 2202.HK Announces placement of 263M H shares at HK$29.68/shr for HK$7.8B
- 2628.HK Reports FY18 (CNY) Net 11.4B v 32.3B y/y, Total Rev 627.4B v 643.4B y/y
- (CN) China PBoC Open Market Operation (OMO): Skips for 7th consecutive session; Net drains CNY0B v CNY0B prior
- (CN) China PBoC sets yuan reference rate: 6.7263 v 6.7141 prior (weakest setting since Feb 20th)
- (US) US President Trump: We're going to make 'very good' deal with China - US media interview
- (CN) China General Administration of Customs: To cut import VAT tax by CNY225B ($33.5B) in 2019, effective April 1 - Xinhua

North America
- (US) Fed's George (hawk, voter): Support Fed outlook to be patient on policy in a good place for it, current outlook for inflation looks benign; sees 2019 GDP ~2.0%
-(US) DOE CRUDE: +2.8M V -0.5ME; GASOLINE: -2.9M V -2.5ME; DISTILLATE: -2.1M V -1ME

Europe
- (UK) Parliament approves legislation to delay date of Brexit (as expected); Vote count was 441 to 105
- (UK) UK Parliament indicative votes: no majority reached on any indicative votes (as expected); MP Letwin proposes parliament should vote again on Monday to reconsider these matters
- (UK) PM May told Tory MPs that she'll hand over leadership once Brexit is delivered; does not offer a specific timetable for stepping down
- (UK) Democratic Unionist Party (DUP) leader Foster says she regrets DUP cannot support PM May's Brexit deal while it poses a threat to the integrity of the UK – press
- (UK) Tory Lawmaker Rees-Moog: If PM May brings Brexit deal to vote, will support DUP


***Levels as of 1:20 ET***
- Nikkei 225, -1.6%, ASX 200 +0.7%, Hang Seng -0.1%; Shanghai Composite -0.3%; Kospi -0.7%
- Equity Futures: S&P500 -0.3%; Nasdaq100 -0.3%, Dax -0.3%; FTSE100 +0.3%
- EUR 1.1259-1.1243 ; JPY 110.53-110.11 ; AUD 0.7100-0.7073 ;NZD 0.6823-0.6780
- Gold -0.1% at $1,316/oz; Crude Oil -0.3% at $59.23/brl; Copper flat at $2.862/lb

>>> US After Hours Summary: LULU +10.8%, PVH +9.5%, VRNT +7.8%, FIVE +


After Hours Summary: LULU +10.8%, PVH +9.5%, VRNT +7.8%, FIVE +2.5% following earnings/guidance; QTNA +17% after ON acquisition news

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: LULU +10.8%, PVH +9.5%, VRNT +7.8%, FIVE +2.5%, SNX +1.7%

Companies trading higher in after hours in reaction to news: QTNA +17.1% (ON Semiconductor [ON] to acquire Quantenna for $24.50 per share in an all cash transaction), STIM +5% (light volume; NeuroStar Advanced Therapy to receive reimbursement approval in Japan), AMRN +4.4% (extending late move higher following favorable American Diabetes Association recommendation), ACAD +1.2% (announces publication of results from Phase 2 study of trofinetide in pediatric Rett syndrome)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: FUL -1.5% (light volume)

Companies trading lower in after hours in reaction to news: ARA -18.6% (to restate certain financial results amid Audit Committee review; CFO resigns), NLSN -11.8% (NY Post reported that Blackstone dropped from bidding process), EYPT -10% (proposed public offering of common stock), ODP -5.1% (Office Depot and Support.com will pay $35 million to settle FTC allegations), RYB -2% (light volume; downgraded to Hold at Jefferies), CVRS -1.7% (files for 14,384,840 share common stock offering by holders)

Brazilian names extending today's decline in after-hours trade (EWZ -2%): VIV -2.7%, VALE -2.4%, ELP -2.3%, GOL -1.3%, PBR -1.2%, GGB -1.1%, ITUB -1.1%, TSU -1%, BSBR -1%