Good morning, Broadsheet readers! RBG is working through cancer (again), today is the Strike for Black Lives, and women who knew John Lewis reflect on his legacy. Have a meaningful Monday.
- The conscience of Congress. On Friday, the world lost Rep. John Lewis, the civil rights activist and Congressman whom his colleagues in government called the “conscience of Congress” for his moral leadership and clarity.
Lewis, who was a hero to so many, received an outpouring of grief and love from those who looked up to him and knew him. Many Black women were in agreement about what Lewis meant to them: he paved the way for their activism, fights for justice, and success. (President Barack Obama has said the same.)
A notable reflection came from Oprah Winfrey, who said she and Gayle King had spoken to Lewis last week in his final days fighting pancreatic cancer after false reports of his death at the time. “I had a final chance to tell him what I’ve said every time I’ve been in his presence: ‘Thank you for your courage leading the fight for Freedom. My life as it is would not have been possible without you,’” Winfrey said.
Ava DuVernay, who directed the 2014 film Selma in which actor Stephan James portrayed Lewis during the 1965 marches for voting rights, said she would “never forget what you taught me and what you challenged me to be.” DuVernay also shared some insight into Lewis not just as a larger-than-life figure, but as a humble man who was just as willing to share his senses of humor and fun as he was to fight for what’s right. DuVernay shared a video capturing Lewis’s humble appreciation of the March on Washington program Obama displayed in the Oval Office; it’s a wonderful behind-the-scenes moment, similar to the time he cosplayed as his 25-year-old self marching across Edmund Pettus Bridge with a train of children at Comic-Con.
Lewis was such a towering figure that he was a touchstone for many even before his death prompted these tributes. Last week, I interviewed Rep. Pramila Jayapal about her new book, Use the Power You Have: A Brown Woman’s Guide to Politics and Political Change. In that book, Jayapal writes that she is “an unusual elected official, in that I have been arrested three times for leading and participating in civil disobedience.”
When I asked her about that line, she responded: “I’ve had the honor to serve with John Lewis so I don’t feel like getting arrested—’good trouble’ as he calls it—is out of bounds for us as elected officials. I know some people don’t feel comfortable with it, but I feel it’s very appropriate. … If politics is the art of the possible, then it’s our job as activists and organizers, regardless of where we sit, to push the boundaries of what is seen as possible. Because the possible is not static.”
(You can read the rest of that interview here, where Jayapal also discusses the role of the South Asian community in fighting anti-Black racism, the lessons she learned from the matrilineal society her family came from in Kerala, India, and from parenting a non-binary child.)
I’ll leave you with the words of Bernice King, daughter of Dr. Martin Luther King Jr., on the passing of her father’s friend: “When I visited Uncle John last week, I looked in his eyes and said, ‘Well done.’ I told him that I loved him and that we are going to continue to fight. So I must mourn and move at the same time.”
Gold Pares Weekly Gain After Rally to Record, Silver Retreats
(Bloomberg) — Gold extended its decline from a record, trimming the longest stretch of weekly gains since 2006, as a stronger dollar curbed the metal’s haven appeal. Silver fell after earlier closing in on $30 an ounce.The dollar headed for its first gain in four sessions amid a deepening rift between Washington and Beijing. President Donald Trump signed a pair of executive orders prohibiting U.S. residents from doing business with the Chinese-owned TikTok and WeChat apps beginning 45 days from now. Meanwhile, a high-powered U.S. panel recommended tightening the disclosure requirements for Chinese companies listed on American exchanges.Bullion is still up more than 35% this year, putting it on track for the biggest annual gain in over four decades, as the health crisis, negative real rates, a broadly weaker dollar and geopolitical risks spark a flight to precious metals. Further gains are predicted — Bank of America Corp. reiterated its forecast that gold may reach $3,000 an ounce in 18 months and said it’s “feasible” that silver could hit $35 in 2021.“Gold and silver face stern tests of their character,” said Jeffrey Halley, senior market analyst, Asia Pacific at Oanda Corp., citing U.S. payroll data due later Friday and the boost to the dollar from Trump’s executive orders.Spot gold declined 0.2% to $2,059.20 an ounce at 11:57 a.m. in London after earlier hitting a record $2,075.47. Prices are up for a ninth week. Holdings in exchange-traded funds backed by the metal are at an all-time high.Spot silver dropped 2.1% to $28.3115 after earlier advancing as much as 3.2% to $29.8591, the highest since 2013.Jobs ReportInvestors will now focus on the monthly employment report from the U.S., which is expected to show a slowdown in job gains last month after a surge in coronavirus cases across the country. Global infections passed 19 million.“There is so much noise in the U.S economic numbers at present, with most of them flattering to deceive, that at present the markets should be looking to the longer term,” said Rhona O’Connell, head of market analysis for EMEA and Asia at StoneX Group Inc. However, if the employment report is “strong then it might extend any correction in gold and silver.”Elsewhere, negotiations on a virus relief package ended with the White House and Democrats making no headway on resolving their biggest difference, bringing the talks to the brink of collapse. With no deal immediately in the offing, Trump said Thursday he is ready to sign orders extending enhanced unemployment benefits for the jobless and imposing a payroll tax holiday for employers and workers.Signs that Europe’s biggest economy is finding its feet again may also be putting pressure on bullion. Germany’s industrial output grew slightly more than forecast in June, following figures released on Thursday that showed factory demand was at 90.7% of the level recorded at the end of last year. European Central Bank Chief Economist Philip Lane has cautioned against any premature optimism though, arguing that the region’s third-quarter performance will be key to determining the strength and sustainability of the recovery.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
A White House proposal to delist Chinese companies could upend this year’s IPO market
Despite the rapidly deteriorating relations between China and the U.S., Chinese companies continue to seek out America’s financial markets as a space for initial public offerings. But a new proposal issued by the White House on Thursday could put a stop to that by requiring hopeful Chinese firms to provide documents that Beijing prohibits them from sharing.
“The United States is the premier jurisdiction in the world for raising capital, and we will not compromise on the core principles that underpin investor confidence in our capital markets,” Treasury Secretary Steven Mnuchin said in a statement Thursday, as the While House released recommendations related to Chinese company listings.
The group’s recommendations build on a bill passed by the Senate in May that’s currently awaiting review by the House. The legislation calls for foreign firms that fail to provide the Security and Exchanges Commission (SEC) with audit documents for three years to be delisted from U.S. stock exchanges. The bill was introduced after more than $300 million in fraudulent sales were uncovered at then Nasdaq-listed Luckin Coffee, prompting the Chinese coffeeshop’s forced delisting.
Thursday’s proposal brings that timeline forward slightly, suggesting that noncompliant firms be delisted as early as 2022. Notably, the proposal also recommends the SEC prohibit new companies from listing at all—even prior to 2022—unless they are already able to turn over audit materials. Many of them won’t be.
“Because of the law in China, companies cannot simply hand out the required information to the U.S. regulator,” Clement Chan, managing director of BDO told Fortune in June, when the Senate passed its legislation. Under Chinese law, it is illegal for companies to submit audit information to foreign governments without Beijing’s consent, which it never gives. Beijing often claims company audits are state secrets that can’t be shared.
The SEC has complained about Beijing’s stance for at least a decade but has taken few definitive actions against it. Chinese companies continue to list on U.S. stock markets—25 in 2019, down from 35 in 2018—and U.S. investors continue to pour in cash. Just last week, Li Auto, a Chinese EV company, made a stellar debut on the Nasdaq, raising $1.1 billion despite the political headwinds.
“U.S. investors want to take part in the growth of China’s new economy,” says Fan Bao, chairman and CEO of China Renaissance, an investment bank. Bao says that Li’s successful Nasdaq offering demonstrated that U.S. investors still welcome “quality Chinese assets.”
Experts argue that the rules proposed by the Senate and the President’s working group might not “protect” Americans who invest in Chinese firms as much as they will prevent U.S. stock markets from earning money off of Chinese listings.
Without Chinese firms, U.S. stock markets would lose a major revenue source. Market operators, like the NYSE, charge companies huge one-off listing fees as well as annual administrative fees and transaction fees on every trade. What’s more, the U.S.-listed Chinese companies covered by the Senate bill have a combined market cap of $1 trillion, equal to 3% of the U.S.’s total equity market cap. On average, they collectively trade around $8 billion per day—6% of total U.S. turnover, according to a China Renaissance report.
“These companies have many alternatives. Capital markets are global and most investors are indifferent to where stocks are listed,” says Bob Bartell, global head of corporate finance at Duff & Phelps. Hong Kong has already emerged as a popular alternative for Chinese stocks seeking an IPO or a secondary listing. Retail and institutional U.S. investors can invest directly in Hong Kong-listed stocks, while there are more hurdles for foreign investors seeking stocks listed in mainland China.
China electric car maker Xpeng has raised $900 million in private fundraising over the past month in preparation for a suspected IPO in the U.S. this year. But, given the White House’s new proposal, the Chinese carmaker might have to change course. Chinese peer-to-peer financing firm Lufax is also preparing a U.S. IPO this year, while China’s WeWork alternative, Ucommune, has bailed on a planned IPO but is still eyeing a backdoor listing in the U.S.
For now, Chinese firms are still welcome to list in the U.S. For the working group’s proposals to go into effect, the SEC needs to release an official draft for a public comment period, which can last up to two months. The entire process might stretch beyond the November election, which could usher in a less hawkish administration.
“We think companies may have to wait for further clarification on the recent proposals of the U.S. administration. And we expect negative news flows around the 2020 U.S. election,” says Bruce Pang, head of macro and strategy research at China Renaissance. “The clouded uncertainties and regulatory risk would put companies to ponder long and deeply.”
More must-read international coverage from Fortune:
- Chinese factories’ COVID comeback defies the global downturn
- The U.K. lifted border controls just as COVID took off. Lawmakers call this “a serious error”
- China’s U.S. energy imports are 95% below what it promised in the Phase One trade deal
- Google faces EU antitrust probe over the data implications of its Fitbit buy
- COVID-19 is killing journalists in prisons, compounding the threat of attacks on the press
Pag-IBIG Fund earns P22.8 B in H1 2020
Top officials of Pag-IBIG Fund reported on Monday (27 July) earnings of over P22.8 billion in the first half of 2020.
From January to June, Pag-IBIG Fund’s gross income reached P22.82 billion, driven mainly by earnings from its housing loans and Short-Term Loans (STL), otherwise known as cash loans, and trading gains from its investment activities.
The agency’s net income, meanwhile, amounted to P14.14 billion.
“Coming from a record-breaking year in 2019, Pag-IBIG Fund’s performance in the first half of the year remains decent despite the impact of community quarantines implemented to fight the spread of COVID-19. We are sure to endure these extraordinary times and continue to provide social services to more Filipino workers and continue helping the government with the nation’s economic recovery under the lead of President Duterte,” said Secretary Eduardo D. del Rosario of the Department of Human Settlements and Urban Development (DHSUD) and Chairman of the 11-member Pag-IBIG Fund Board of Trustees.
The agency ended 2019 with its highest ever gross income of P56.90 billion and net income of P34.37 billion. In the first six months of last year, it had already posted P24.59 billion and P16.04 billion in gross and net incomes, respectively. But as the pandemic induced economic slowdown in the first few months of 2020, Pag-IBIG found its gross and net incomes dip by 7 percent and 12 percent, respectively, in the first half of this year compared to the same period last year.
“We had our best year in 2019 and that’s a tough act to follow with the challenge posed by this year. We have been enjoying a string of ‘best-year ever’ and we were poised to achieve another one this year, that is until the pandemic happened,” said Pag-IBIG Fund Chief Executive Officer Acmad Rizaldy P. Moti.
But while the pandemic caused the agency to post lower incomes from housing loans and cash loans this year, he remains hopeful as he pointed out that they are already seeing signs of recovery in the second quarter as quarantines were either eased or lifted. Home loan releases have been on the rise in the last two months. From a low P.88 billion in April, home loan releases increased to P1.2 billion in May and jumped even further to P2.9 billion in June.
“We in Pag-IBIG Fund are confident because our financial position remains stable and strong, even amid these challenging times. A slowdown in business is expected as the pandemic impacted both the availment and payment of our loans, but Pag-IBIG continues to be strong. What is important to us now is being a reliable partner to our members and stakeholders on our shared road to recovery. That is the Lingkod Pag-IBIG way,” Moti added.
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