(BN) Heard of China’s Fake Rolexes? Now There’s a Fake Goldman Sachs

Heard of China’s Fake Rolexes? Now There’s a Fake Goldman Sachs
2015-08-27 02:25:59.801 GMT


By Shai Oster
(Bloomberg) -- China has been accused of pirating movies,
handbags, Rolexes -- even cars. Add Goldman Sachs to the list.
Goldman Sachs (Shenzhen) Financial Leasing Co. has been
operating in the city just across the border from Hong Kong
using a nearly identical English and Chinese name as the New
York-based financial institution, Goldman Sachs Group Inc. It
claims on its website to be one of the city’s largest financial
leasing firms.
A receptionist answering the phone at the Shenzhen company
who declined to give her name said it’s not affiliated with the
U.S. bank and wouldn’t offer how it got its name, emphasizing it
includes Shenzhen. It’s the first time she’s been asked the
question, she said.
A filing with the Shenzhen government indicates the company
has been operating since May 2013. The company uses the same
Chinese characters, gao sheng, as the real Goldman Sachs, and
its English font is evocative of the U.S. bank’s.
Connie Ling, a Hong Kong-based spokeswoman for Goldman
Sachs, confirmed there are no ties between the U.S. investment
bank and the Shenzhen company and said Goldman is looking into
the matter.
It’s not the only bank facing brazen name-borrowing. In a
more extreme example, a 39-year-old man in eastern China’s
Shandong province was arrested earlier in August after setting
up a fake branch of China Construction Bank, including card
readers, teller counters and signs, according to the Xinhua news
agency.
Shenzhen’s Goldman Sachs came to light through a letter
sent by a U.S. casino workers union to Chinese officials. The
International Union of Operating Engineers said it sent a letter
to Wang Qishan, head of the Chinese Communist Party’s Central
Commission for Discipline Inspection, which is spearheading the
biggest anti-corruption crackdown in decades.

Money Laundering

The letter called on China’s government to investigate
Goldman Sachs (Shenzhen), which it said is a financial services
company linked to a group of gambling companies controlled by
the family of Cheung Chi-tai. Prosecutors in at least two other
court cases alleged he has ties to Chinese organized crime
gangs, known as triads. Cheung is awaiting trial and his next
court appearance is scheduled for September.
Cheung is a prominent figure in Macau junkets, which
facilitate loans to Chinese high rollers in the only Chinese
territory where gambling is legal. Casino revenue has fallen as
China’s anti-corruption drive has affected junkets.
“Macau’s current gambling regulatory structure we believe
is ill-equipped to monitor and adequately regulate a junket’s
outside partnerships and financing arrangements,” Jeffrey
Fiedler, the U.S. union representative, said in the Aug. 25
letter.

Possible Ties

The union has been trying to pressure Chinese and U.S.
regulators to investigate Macau, where American casinos such as
Las Vegas Sands Corp. have big operations, for possible ties to
organized crime and money laundering.
Three phone calls to the office of the CCDI in Beijing went
unanswered. An operator with CCDI’s hotline for public reporting
said she’s not familiar with the case.
The company’s office is located in a relatively new
gleaming high-rise office park along a tree-lined street on the
western fringe of Shenzhen, a former fishing village turned
global manufacturing powerhouse.

Gold Control

The union said the Shenzhen company is controlled by a Hong
Kong-based gold trader unaffiliated with the investment bank.
Its connection to Cheung is through relatives, the letter said.
The Shenzhen Goldman Sachs’s website was inaccessible as of
Wednesday, though it could be viewed in screen grabs captured by
the union.
“There have been quite a few cases where Chinese
individuals or organizations have registered in China the
trademark of an existing and established overseas brand,” Paul
Haswell, a Hong Kong-based partner at law firm Pinsent Masons,
said in an e-mail.
If history is any guide, Goldman doesn’t have much chance
of changing its Shenzhen doppelganger. Basketball legend Michael
Jordan lost a case against a Chinese sportswear company that
used the Chinese version of his name.
Apple Inc. paid $60 million to settle a trademark dispute
with a Chinese company that had applied to block the sale of
iPad computer tablets in 2012.
“It’s notoriously difficult for an overseas claimant to
persuade the Chinese courts that there has been trademark
infringement,” said Haswell. “There’s still a practice of
whoever registers first wins.”

For Related News and Information:
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Michael Jordan’s Trademark Loss In China Shows Need to Protect
Brands
Kering’s Gucci Wins Order Barring Alibaba Merchants’ Fake Goods
Top Stories:TOP<GO>

--With assistance from Keith Zhai in Beijing.

To contact the reporter on this story:
Shai Oster in Hong Kong at +852-2977-4615 or
soster@bloomberg.net
To contact the editors responsible for this story:
Peter Elstrom at +81-3-3201-3532 or
pelstrom@bloomberg.net
Sheridan Prasso, Stephanie Wong

(BofA-ML) Semis - Starting to price in bear cases

Semis - Starting to price in bear cases

* Chances are the Semis sell-off is in its last innings…
Semis have corrected with little differentiation in performance ytd, which is typical for mid-cycle inventory and share price corrections such as in 2004, 2006, late 2007/early 2008 (ex GFC), 2010, 2011 and 2012. The magnitude of EPS downward revisions could be approaching a bottom – in the past, the current level of revisions has often coincided with pending troughs for share prices. The sector’s peak to trough decline since May is now 25%, close to the historic average since 2004 (28%), although it has happened a lot quicker compared to previous corrections (88 days vs average 184). While BAML’s Semis team has highlighted the risk of further estimate cuts for 4Q, stocks may be approaching a floor assuming this remains a modest de-stocking cycle and does not turn into a global macro shock. At the least, we would expect the relative underperformance of Semis vs markets (which have been ‘catching down’ in the last few days) beginning to subside. We highlight ASML & ARM as quality compounders in European Semis that long-term investors should consider buying.

* ASML (Buy): Reflecting EUV bear case
At ~EUR78, we believe the stock is discounting a scenario of 16x our 2019 EUV bear case EPS of EUR6 (EUR96/share discounted at 7% WACC). ASML could return all FCF generated between now and then via dividends & buybacks, which we estimate have a cumulative yield of ~40% at the current share price. Buying and holding the stock now
and ASML only delivering along our EUV bear case scenario would still imply a 4-year TSR of 65%. In a more likely EUV base case scenario (EUR9 in 2019 EPS at 16x), the 4- year TSR would rise to 128%. Based on recent meetings with TSMC, the risk of shortterm order cuts from foundries seems low, while we highlighted last week that rising
capex announced by #2 & 3 memory players Hynix and Micron improves visibility of a ‘longer-for-stronger’ memory capex cycle. Net net, we view the risk-reward as attractive for long-term investors wanting to buy a likely monopoly franchise in Tech.

* ARM (Buy): Discounting 2% 2016-20 PD royalty growth
As we highlight in our accompanying note, investor concerns about a growth slowdown in mobile have driven a de-rating to the stock’s 10-year trough P/E (ex GFC). We believe ARM’s share price is now discounting a pessimistic ~2% 2016-20E PD royalty revenue CAGR, implying an unlikely industry revenue decline of >10% p.a for the next few years.

* Wait & see with the ‘super-cyclicals’ IFX & STM
For Infineon & STMicro (both Neutral), risks to industrial automation and more late– cycle Auto demand plus the now weakening $ could prolong the impact of a cyclical downtrend. For Infineon, we view the risk-reward as neutral with the stock 10% below our base case scenario and ~20% above our bear case. For STMicro, we believe its current share price at FY16e EV/sales of 0.8x is discounting c.6% operating margins, broadly inline with our estimate of 6.8%. While the dividend yield at 5.7% is attractive, we consider 1) Lack of clarity on DPG demand/restructuring, 2) Downside concerns in China autos (where STM has #1 market share), and 3) FX now turning into a headwind at $/EUR 1.15.

(CS) European Auto OEMs : Reversal of currency tailwinds to put European

Reversal of currency tailwinds to put European earnings at risk; cut estimates and TPs

* European earnings at risk – maintain negative view. 
We maintain our negative sector view, as recent RmB devaluation not only cuts margins on China exposure, but also on Europe. Deterioration (normalisation) in Europe's trade balance (major trade currencies depreciated versus the euro) is set to put pressure European earnings due to lower utilisation and overall a more challenging pricing environment. In our view, the market still fails to discount this risk. Estimates cut >10% for the sector, which puts us c.15% below the street. FCA (OP) remains our most preferred name in the sector.

* Europe's trade balance set to deteriorate: 
We see material risk to European production and utilisation rates as currency tailwinds on exports are set to reverse/normalise (euro appreciated by c. 8.5% since April lows already). Lower net exports should offset any domestic demand improvement in 2016E, which leaves overall industry utilisation rates at best flat YoY. Worsening supply/demand balance within Europe likely creates more price pressure, which in turn means lower margins.

* Germany to struggle the most. 
Supportive currency development combined with strong dynamics in export markets like the UK/US (one-third of total) provided meaningful tailwinds for German OEMs. We see 2015 as a turning point for the German industry, and we expect production in 2016E to decline by 3% YoY driven by lower export volumes, which are unlikely to be
compensated by accelerating domestic demand. Thus, we expect the industry utilisation rate to decline to 82%, which is the lowest since 2009.

* Peaking profit cycle – cutting estimates >10%. 
We cut our earnings on average by >10% for the period 2015-2018E to reflect lower assumptions for China and Europe. Our biggest cuts are at PSA/Renault, as both have the highest leverage to the European cycle. Our 2016E estimates put us 15% below the street on average. In our view, the market is overly optimistic on European earnings recovery and underestimates the negative implications from reduced net exports/pricing.

>>> EuroStoxx Inidcated Higher this morning - we should fill the Gap left open

>>> EuroStoxx Inidcated Higher this morning - we should fill the Gap left open on the last few days - Watch the 3247.26 point (where it's trading now)...US rallied on Carry Trade set up noise, Europe should underperform US on the next few days...There is a Resistance on Dax 2% higher...I will use today's move to start hedge portfolio again...Jackson Hole Symposium today...Shanghai still flattish after trading much higher today

>>> What to look at today - 27th of August 2015

Dow+3.95% S&P+3.90% Nasdaq+4.24% Russell+2.54% VIX 30.32 ( -15.82%)
US Market closed sharply higher after 6days of losses. Market stayed in a slow mode on the first few hours of trading, even don't really react do Dudley comments. Market started to rally at the same time that the USD began rallying against Euro & JPY, suggesting the return of Carrt flows, US 10y traded up to 2.19%, spike in yield kept utilities behing the borad market. Tech Sector was leading the move, with Mega Cap spiking AAPL +5.74% FB +5.05% GOOGL +7.72% (GS Upgrade). Energy traded higher too even if Crude settle lower @ $38.68 (-1.6%), higher this morning @$39.45 (+2.20%)...Volume were again above 1bil shares @ 1.25bil...well above average...US AFter Hours NQ +63.4%, EDAP +11.6%, PVH +5.0%, WDAY -7.2%, VNET -5.9%, WSM -5.6%, GES -4.3% following earnings/guidance...In Asia, the positive developments also emerged from China, with PBOC injecting another CNY150B in 7-day reverse repos and doing so at a lower yield of 2.35% v 2.50% prior - the first time that yield was lowered since Jun 29th. Separately, earlier today, Chinese pres citing State Information Center researcher Zhu Baoliang noting GDP can grow around 7% in the future and fundamentals are sound. BOJ's Kuroda reiterated the view that inflation target can be met despite the oil price decline, signalling that while the central bank is prepared to adjust QQE, the current pace of QQE will meet price objective. BOJ also stated there is no plan for further easing at this time despite the recent speculation that the easing may be boosted due to low oil prices.

Nikkei +1.23% Hang Seng +2.21% Shanghai -0.5% ( after gaining 3%)

Eur$ 1.1347 CNY 6.4067 JPY 119.92 GBP 1.5493 EURCHF 1.0813 RUB$ 68.52 WTI 39.51 (+2.36%)

S&P Flat EuroStoxx +1.48% Dax +1.62% SMI +1.71%

Macro :
- China’s Ability to Stem Rout Hindered by Interest-Rate Flaw
- Tsipras’s Election Gamble Risks Backfiring as Greeks Get Jaded

Keep an eye on :
- ADS GY : Adidas CEO Says Not Feeling Any Impact From China Crisis: FAZ
- ALO FP : GE’s Alstom Purchase Could Lead to Loss of 10,000 Jobs: Figaro
- BALN SW : Baloise 1H Net Income CHF249m, Est. CHF247m; Sees 8%-12% FY ROE
- BAS GY : BASF, SKC in Talks for S. Korea Hydrogen Peroxide Plant: Yonhap
- EN FP : Bouygues Raises FY Telecom Outlook, Confirms for Construction
- CRH LN :CRH to Buy C.R. Laurence for Total Consideration of $1.3b
- BC IM : Cucinelli 1H Ebitda In Line With Ests.
- FGR FP : Eiffage 1H Rev. EU6.6b vs EU6.5b Y/y
- FIE GY : Fielmann Sees 2015 Unit Sales, Rev., Profit Rising
- GTO NA : Gemalto 1H Adj. Net EU105.7m vs Est. EU143m
- GKP LN : Gulf Keystone Unbooked Revenue $117m to End-1H
- IBAB BB : Ion Beam 1H Net EU14.5m vs EU7.44m; Raises 2015 Rev. Forecast
- MS IM : Mediaset Offering Appealing Entry Level, Upgraded at Mediobanca
- RI FP : Pernod FY Organic Sales Growth Misses, Has EU404m Absolut Charge
- SU FP : Schneider CEO Says No Need to Cut Forecasts on China Stock Mkt
- SYNN VX : Syngenta Confident in Prospects, Says Monsanto Undervalued It