Chinese regulators will tighten controls of domestic firms listed overseas following a cybersecurity probe of Didi

A Didi logo is seen at the headquarters of Didi Chuxing in Beijing, China November 20, 2020. REUTERS/Florence Lo/File Photo/File Photo
A Didi logo is seen at the headquarters of Didi Chuxing in Beijing on November 20, 2020.

  • Chinese regulators said they will tighten control of domestic firms listed overseas.
  • The move came after the Beijing-led cybersecurity probe against Didi, Reuters reported.
  • On Sunday, China said Didi “has serious violations of laws and regulations” in collecting and using personal information.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Chinese regulators on Tuesday said they will tighten control of domestic firms listed overseas following a recent cybersecurity probe launched by Beijing against ride-hailing giant Didi Global, Reuters first reported.

China officials said they will ramp up the regulation of cross-border data flow, tighten measures on illegal activities in the securities market, and check the sources of funding for securities investments and control leverage ratios, according to Reuters, citing a statement by China’s cabinet.

Fraudulent securities issuance, market manipulation, and insider trading will all be punished, the statement also said.

The announcement comes after the probe of ride-hail giant Didi, which made its US debut on the New York Stock Exchange on June 30.

On Sunday, the Cyberspace Administration of China said that its investigation found that the Didi app “has serious violations of laws and regulations” in collecting and using personal information.

App stores were notified to remove Didi and “strictly follow the legal requirements.”

Didi, the world’s second-largest ride-hailing app by market valuation, said it would comply and make necessary changes.

Didi shares slumped as much as 25% in premarket trading Tuesday, days after its more than $4 billion listing in what was seen as the biggest US share offering by a Chinese firm since Alibaba’s IPO in 2014.

Weeks before, China had already urged Didi to delay its initial public offering, the Wall Street Journal reported.

Read the original article on Business Insider

India’s surging Covid-19 cases shouldn’t dissuade investors from buying emerging markets equities, UBS Wealth Management says

india covid-19 crisis
A relative of a person who died of COVID-19 is consoled by another during cremation in Jammu, India, Sunday, April 25, 2021.

  • India reported more than 300,000 cases of COVID-19 for the sixth consecutive day on Tuesday.
  • Despite COVID-19 risks, UBS says investors should maintain a risk-on stance to emerging markets.
  • India is geared to global trends and long-term growth, according to Mark Haefele, the CIO of UBS global wealth management.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

In a note to clients on Tuesday, UBS Global Wealth Management’s chief investment officer Mark Haefele said that despite a recent rise in COVID-19 cases in India, emerging markets are still attractive for investors.

On Tuesday, India reported more than 300,000 cases of COVID-19 for the sixth consecutive day.

While case figures in Europe and North America continue to fall, South East Asia has seen a dramatic rise in COVID-19 infections over the past three weeks, according to data from the World Health Organization.

The situation is so dire in India that President Biden has said he will send vaccine supplies, masks, oxygen, and therapeutics to help the country battle the virus.

While Haefele did say rising case figures will be a headwind for the region, the chief investment officer also believes there are “several reasons for a continued positive stance on EM (Emerging Markets) equities.”

Here are the three main reasons why Haefele says investors should be “risk-on” when it comes to emerging markets.

“India’s equity market is geared to global trends and long-term structural growth.”

According to UBS, India now has a nearly 10% weighting within emerging market equity indexes, but that weighting is largely tied to IT companies that do business with the US, so much of it could be shielded from the worst effects of COVID-19.

Additionally, UBS says Indian companies are focused on the long-term growth story and don’t actively trade shares in speculative moves, which bodes well for long-term investors.

Haefele also said that precedence shows COVID-19 surges can be “reined in” within a few months. The firm remains overweight Indian equities.

“China tech regulatory risk appears to be clearing.”

China has a near 40% weighting in emerging market equities, making it one of the most important regions for investors.

UBS believes Chinese tech companies have surpassed recent government regulation hurdles and are poised to post “above-average, double-digit earnings growth” over the medium to long term as investors focus more on fundamentals.

“We see tech regulatory risks receding, with policymakers aiming to constrain monopolistic practices, not curb tech growth,” Haefele said.

“A stronger dollar, higher Treasuries won’t upend EM risk assets.”

Emerging market equities usually struggle when the dollar is strong, but according to Haefele and UBS, the dollar is set to continue on a depreciation trend as the global economic recovery favors “pro-risk” currencies like the Euro.

Haefele also believes the fed will maintain dovish policies and Treasury yields won’t rise above 2% this year, which should help stocks around the world outperform.

Haefele advised positioning for reopening and reflation through value and cyclical stocks in Asia, with a focus on capital goods, construction materials, consumer services, transportation, banks, and metals & mining.

“EM value stocks have traded at a heavy discount over the past decade, leaving room for a recovery rally,” Haefele said.

Read the original article on Business Insider