China’s ‘wolf warrior diplomacy’ has come to Wall Street

Xi jinping at CCP 100th anniversary
Chinese President and Chairman of the Communist Party Xi Jinping appears on a large screen as performers dance during a mass gala marking the 100th anniversary of the Communist Party on June 28, 2021 at the Olympic Bird’s Nest stadium in Beijing, China.

  • China’s assertive, nationalistic behavior – known as “wolf warrior diplomacy” – has come to the financial markets.
  • This week Beijing punished a Chinese tech company that listed on the New York Stock exchange, and announced rules to govern all Chinese companies listed abroad.
  • Consider this part of the Chinese Communist Party tightening its grip on power at home, and closing its doors power from abroad.
  • This is an opinion column. The thoughts expressed are those of the author.
  • See more stories on Insider’s business page.

It was only a matter of time before Beijing’s heightened nationalism came to Wall Street.

This week, Chinese authorities punished Didi, a ride sharing company, for its June 30 public debut on the New York Stock Exchange. Shortly after the Didi crackdown, Beijing announced new measures that could restrict Chinese companies going public abroad.

What all this is telling us is that Beijing is no longer going to tolerate its tech stars making foreigners rich on foreign exchanges. And it is further evidence that China is closing its society and economy to the West.

Bring it all back home

In order to more freely list on foreign stock exchanges, Chinese companies create something called a “variable interest entity.” In such an arrangement, a Chinese company creates another company in a tax haven like the Cayman Islands where foreigners can invest. The Chinese company then signs an agreement that gives control and profits to the Cayman entity, from which money is distributed to shareholders and the company back in China. For years, Beijing generally looked the other way when it came to VIEs.

Now, according to Bloomberg, Beijing’s new regulations are designed to limit the ability of Chinese companies to set up these entities. The proposed rules would govern what data can and can’t be shared abroad, target “illegal securities activities,” and set up extra-national laws Chinese companies would have to follow regardless of where they are listed.

Didi shares are down around 20% since it’s IPO, in part because Beijing announced these measures, and in part because it has become a target for authorities at home. On July 2, the Cyberspace Administration of China announced it was investigating Didi. Two days later China’s app stores were ordered to stop allowing users to download Didi. The CAC claims that Didi was illegally collecting user data.

And perhaps that’s true. But it’s also likely that this is a signal that “wolf warrior” aggression – a kind of Chinese diplomacy named after a hyper-nationalistic film- has come to financial markets. Two other Chinese tech companies listed in the US – Kanzhun and Full Truck Alliance – also had their downloads halted by Chinese regulators. The almost 250 Chinese companies worth $2 trillion in market cap listed on major US exchanges should all be watching their backs.

China is closing

There are two main reasons for this seemingly sudden crackdown – one is China’s increasing antagonism with the West, and the other is the Chinese Communist Party’s own desire for power and self-preservation. Together they amount to the reality that China is once again closing its doors to the world, reversing the opening that began in the 1970s.

As part of a larger crackdown on civil society, the Chinese Communist Party has been tightening its control over any sources of power that might challenge it at home. That includes tech billionaires like Alibaba founder Jack Ma, who has recently been publicly brought to heel by Beijing. And it includes tech companies, like Tencent and Pinduoduo, another e-commerce giant.

Targeting tech companies that list abroad also puts pressure on Chinese companies to consider an IPO to list in Shanghai or Hong Kong instead. It is no secret that China’s encroachment into Hong Kong prompted an exodus of financial firms from the city. Making it the new landing place for Chinese tech companies to go public could help it maintain its status as a global financial center.

It is also no secret that the US and China are at risk of what some call “decoupling”– essentially breaking ties and creating a world with separate US or China-centric technologies and financial centers. In some ways, because the two powers have become so antagonistic, this is already happening. Domestically, Beijing has been investing in technological advancements with the hopes making the country a techno-superpower by 2025. Now it’s calling its companies home.

What’s doubly important is that none of the above is primarily about making China rich. It’s all about hoarding power for the CCP. Under President Xi Jiinping that has become Beijing’s motivation above all else, and we should all expect it to act accordingly – even when it means hurting its own domestic companies.

A chilling effect

Last year Congress passed the Holding Foreign Companies Accountable Act, which requires foreign companies listed on US stock exchanges to be audited by the Public Company Accounting Oversight Board’s. If they refuse for three years in a row they can be delisted. Last month, the Senate passed a law that would shorten the time frame to two years in a row.

The problem with this is that so far, Chinese regulators will have absolutely none of it.

This is a stare down. If Chinese companies listed here in the US do not comply they will be delisted. If they do comply Beijing could come down hard on these companies at home. In the meantime recriminations are flying. GOP Sen. Marco Rubio of Florida called the Didi IPO “reckless and irresponsible” weeks before Beijing clamped down on the company, arguing that Didi is a black box.

Rubio and Democratic Sen. Senator Bob Casey of Pennsylvania introduced a bill in May that would prohibit companies from going public on US exchanges if they do not comply with US regulators and submit to an audit from the Public Company Accounting Oversight Board.

All of this pressure from Beijing and Washington will, without a doubt, have a chilling effect on Chinese companies listing here in the United States. So yes, this is another form of decoupling – and it’s coming from both sides of the Pacific.

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What is the New York Stock Exchange? Understanding the biggest marketplace for investors in the world

new york stock exchange
The New York Stock Exchange dates back over 200 years.

  • The New York Stock Exchange (NYSE) is the largest stock exchange in the world.
  • It is a marketplace for investors to buy and sell publicly traded stocks and securities.
  • The NYSE uses an auction-based system that connects buyers and sellers either through electronic trading or physical floor trading.
  • Visit Business Insider’s Investing Reference library for more stories.

What do you picture when you hear the words “stock exchange?” If the words invoke images of busy screens and suits on a bustling trading floor, the reality of the New York Stock Exchange (NYSE) isn’t too far off.

The NYSE is the world’s largest and most well-known stock exchange, with a market capitalization of around $24.5 trillion. It’s the trading home to some of the biggest companies, from prestigious blue-chip stocks to young and exciting high-growth stocks.

Understanding the inner workings of the NYSE can provide key foundational knowledge for investors.

What is the New York Stock Exchange?

GettyImages 668600179
The NYSE facilitates the trade of corporate stocks and other securities.

The NYSE – also referred to as the “Big Board” – is the biggest stock exchange worldwide based on the market capitalization of its listed securities. Formerly operated as a private organization, the NYSE is now a publicly traded company owned by Intercontinental Exchange Inc. It’s ticker symbol is NYSE: ICE.

The NYSE’s headquarters is located on Wall Street in New York City, which is home to the exchange’s iconic physical trading floor. The NYSE provides a central marketplace for buyers and sellers to trade shares of stock in public companies – about 1.5 billion shares a day, to be exact.

The exchange lists many of the world’s biggest companies, with sectors including technology, healthcare, energy, financial services, and more. In fact, you’ll find that much of the S&P 500 and Dow Jones Industrial Average traded on the NYSE.

A brief history of the NYSE

The NYSE first opened on May 17, 1792, when a group of 24 stockbrokers signed the Buttonwood Agreement, a document outlining the rules and regulations of securities trading.

In the beginning there were only five listed securities compared to today’s 2,300 counting. The Bank of New York was the first stock listed on the NYSE.

In 1971, the NYSE officially became a not-for-profit corporation, and officially transitioned to a publicly traded company in 2006, which is what it remains today. It’s taken a series of mergers for the NYSE to garner the size and global traction it claims today. Among the most notable was its 2013 purchase by the Intercontinental Exchange Inc. (ICE), an organization that owns and monitors financial and commodity exchanges, in a deal worth $11 billion.

From stock market crashes dating back to 1929, to trading being halted for four days after the 9/11 attacks, the NYSE has faced many notable and historic challenges. In March 2020, the NYSE closed its trading floors and switched to all-electronic trading due to the coronavirus pandemic. To date, the floor remains only partially open.

How does the NYSE work?

General view of atmosphere during the NYSE opening bell ceremony at the New York Stock Exchange on December 15
The trading floor of the NYSE.

The NYSE operates as an auction, with floor brokers setting the “bid” price, or the price they’re willing to purchase a stock, as they buy shares on behalf of their clients. These clients can include banks, broker-dealers, hedge funds, mutual funds, day traders, and some high net-worth individuals.

On the other side of that relationship lies sellers, who submit an “ask” price that typically exceeds the bid price. Sellers are individuals or organizations that offer securities for purchase, like stocks, bonds, or commodities.

Then there are dealers, who serve as an intermediary between brokers and sellers, pocketing the difference between the bid and ask price as compensation for their work.

When a broker executes a selling order, it isn’t complete until a dealer finds another broker to purchase the order. Because of the complexity of the arrangement, not just anyone can trade on the floor of the stock market. All parties involved are required to attain NYSE approval and carry a trading license.

Over time, the NYSE has evolved and modernized its trading environment. Up until about the 1980s, the NYSE relied on the boisterous open outcry system to communicate trade orders through verbal and physical signals such as hand signals and shouts.

Today, electronic trading is the norm on the floor of the NYSE. The “dealer” is a computer that automatically connects buyers with interested sellers, who each get updated information electronically. However, floor traders are still around to facilitate high-volume trades and set pricing live when necessary.

NYSE listing requirements

Before a public company can be listed on the exchange, it must meet a few stringent requirements. In terms of structural standards, all listed companies are required to have a minimum of 400 shareholders and 1.1 million outstanding shares.

Financially, listed companies must have a share price of at least $4, with the market value of its publicly held shares reaching at least $40 million. On top of that, there are also profitability standards that must be met.

Listed companies are required to earn at least $10 million over the past three years and maintain a global market capitalization that meets or exceeds $200 million.

NYSE hours

The NYSE operates daily from 9:30 a.m. to 4:00 p.m. ET, excluding weekends and public holidays, with extended trading hours trading available, too.

The NYSE is well-known for its opening and closing bells, rung at 9:30 a.m. and 4:00 p.m. respectively, to mark the start and end of the trading day.

These used to be rung by floor managers, but the tradition has evolved into executives from companies listed on the exchange coming to ring the bells daily, often in accordance with relevant marketing events or new mergers or acquisitions.

The financial takeaway

The New York Stock Exchange is the world’s largest and most well-known exchange, facilitating between two and six billion trades per day. It operates following a complex auction-based system between three parties: dealers, sellers, and brokers.

Although the NYSE is a world-renowned exchange today, it’s taken time and expansion to earn the reputation it’s built.

What is the Nasdaq? Understanding the global stock exchange that’s home to the fastest-growing, most innovative companiesWhat is OTC? A beginner’s guide to over-the-counter markets, and the risks and rewards of investing outside the major stock exchangesA guide to stock market indexes: What they measure and how they can guide your investingWhat is a stock market correction? How to make sense of sudden drops in the market

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The New York Stock Exchange is minting crypto art commemorating the first trades of 6 companies that recently went public

NYSE NFT
  • The New York Stock Exchange announced on Monday that it had minted six NFTs.
  • The NFTs represent the first trades of several companies that recently went public on the NYSE.
  • The crypto art pieces are not currently up for sale, but will be gifted to the companies, a source told Insider.
  • See more stories on Insider’s business page.

The New York Stock Exchange (NYSE) announced on Monday that it was getting into crypto art by minting its own digital collectibles designed to commemorate the first public trade of six stocks.

The NYSE is not only the largest stock exchange in the world, but it is also the first to get into crypto art. The collectibles will represent the first trades of Spotify, Snowflake, Unity, DoorDash, Roblox, and Coupang. NYSE said it plans to launch more first-trade collectibles in the future.

The digital collectibles will operate as non-fungible tokens or NFTs. NFTs are digital collectible tokens that allow the buyer to connect their name directly to the creator via the blockchain.

NFTs have boomed in recent months. In February, one crypto art piece sold for nearly $70 million. Since, celebrities and public figures from Twitter CEO Jack Dorsey to singer Shawn Mendes have gotten in on the trend, which has brought in millions for opportunistic creators and resellers of the pieces.

Read more: NFTs, or non-fungible tokens, are the hottest thing in entertainment, art, and crypto right now. Here’s a simple explanation of the craze.

While the NYSE appears to be getting in on the NFT trend, the exchange’s tokens are not up for sale. The NFTs are housed on Crypto.com, a less than month-old NFT trading platform that has already launched crypto art sales for several celebrities including Snoop Dogg and Boy George.

A source familiar with the matter told Insider NYSE does not plan to sell its NFTs, but has already gifted them to the respective companies. The NYSE also plans to mint future NFTs and gift those to the memorialized companies as well, according to the source.

The NFTs for each company feature a short clip containing information about the first trade, including the sale price, date, and a string of numbers representing the first trade quote code.

Stacey Cunningham, the President of NYSE, said the NFTs will help commemorate the very first moments a company joins NYSE by highlighting the data from a company’s very first trade.

“NYSE technology is processing over 350 billion order, quote and trade messages across our markets on our busiest days, more than any other exchange in the world,” Cunningham said in a LinkedIn post. “Only one of those messages marks the NYSE First Trade: the exact moment a company became public, creating an opportunity for others to share in their success.”

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6 important things everyone should know about Robert Reffkin, who left a successful career at Goldman Sachs to take a chance on real estate – and is now poised to become America’s youngest Black billionaire

Compass Co-Founder and CEO, Robert Reffkin
Compass Co-Founder and CEO, Robert Reffkin. Compass

  • Robert Reffkin grew up in Berkeley, CA, with his mom, who is now a Compass agent.
  • After graduating in two years from Columbia, he began his career on Wall Street.
  • Reffkin took Compass public Thursday, making him one of just 8 Black billionaires in the US.
  • See more stories on Insider’s business page.

Robert Reffkin may soon be the youngest Black billionaire in the US after taking his real-estate startup Compass public on Thursday.

The 41-year-old cofounder and CEO has risen to prominence quickly. From growing up in Berkeley, CA with a single mom, to becoming a White House fellow and rising through the ranks at Goldman Sachs before launching Compass, here are some things to know about the up-and-coming executive.

The women in his life have inspired him

Reffkin grew up in Berkeley, CA, as an only child with a single mom, who is now a real estate agent for Compass. In a LinkedIn post Thursday after his company went public on the New York Stock Exchange, Reffkin said, “I started Compass because of my mom, Ruth, a single mom who embodies the entrepreneurial spirit.”

Today, Reffkin lives in New York City with his wife, Benis Reffkin, who is a business and life coach. He dubbed her the “most important person” in his life and an inspiration, in a LinkedIn post from Mother’s Day 2019 that documented how she lived the American Dream. The couple have three kids together.

He’s been a founder before

Reffkin started his first business when he was just 15 years old, according to an article from Columbia College Today. Backed by babysitting and bar mitzvah money, the young founder started a DJ company called “Rude Boy Productions” that brought in a total of $100,000 by the time he graduated from high school, the article said.

In later years, Reffkin founded two philanthropic educational groups prior to starting Compass. One is Success Academy Charter Schools, a school system for low-income Black and Hispanic students in New York City that helps diminish educational disparities.

The second is a 501c3 non-profit called America Needs You, which according to its website, “fights for economic mobility for ambitious, first-generation college students.”

He’s a runner, too

Though he founded two philanthropic organizations, Reffkin’s generosity doesn’t end there. Even his running hobby is helping others.

His “primary philanthropic undertaking” has been running a marathon in each of the 50 states in the US to raise $1 million for youth education and enrichment programs, he said in a bio on America Needs You.

robert reffkin central park
Reffkin running in Central Park in 2014.

Read more: Compass is gearing up for an ambitious $10 billion IPO. We pored over its 261-page S-1 filing and came away with 5 key revelations.

He rose through the ranks on Wall Street

Reffkin graduated from Columbia University in just under two years, according to Fortune, which placed him on the 40 under 40 list in 2014. He then became the youngest business analyst ever hired at McKinsey & Company where he spent two years before returning to his alma mater to get his MBA and then going back to Wall Street as an associate at Lazard.

He then rose through the ranks at Goldman Sachs, eventually becoming the chief of staff for Gary Cohn, the former president and chief operating officer of Goldman. But he left the storied Wall Street firm in 2012 to start his company.

Real estate isn’t his forte

Reffkin left his banking career to start up Compass with the tech entrepreneur Ori Allon. But sources told Insider previously he didn’t actually know much about the industry he was trying to disrupt, saying he had a rudimentary knowledge and didn’t know the difference between a co-op and an apartment.

Doing things he’s uncomfortable with is just part of his personality, though. One person said he’s lacked experience in almost everything he’s ever done but that’s part of what makes him an “extraordinary person.”

His former boss, Cohn, said Reffkin just has an “aura of confidence.”

He may someday run for public office

In 2005, he was a White House fellow under the George W. Bush administration, where he served as the special assistant to the Secretary of the Treasury, John Snow.

He’s always had big ambitions for his career, sources told Insider previously. Those close to him have said he has talked about someday running for public office, such as mayor of New York City.

Read the original article on Business Insider

DoorDash makes trading debut 78% above IPO price

DoorDash delivery driver courier brooklyn bike
  • DoorDash commenced public trading on Wednesday, opening at $182, which was 78% above its initial public offering price.
  • The food-delivery company raised roughly $3.4 billion with its initial public offering after pricing shares at $102 each on Tuesday.
  • The IPO kicks off a slew of debuts slated for December, including offerings from Airbnb and Wish-parent ContextLogic.
  • DoorDash trades on the New York Stock Exchange under the ticker “DASH.”
  • Watch DoorDash trade live here.

DoorDash commenced public trading on Wednesday, opening at $182, which was 78% above its initial public offering price. The stock is listed on the New York Stock Exchange.

The food-delivery company raised roughly $3.4 billion in its initial public offering, selling shares at $102 each. The final pricing exceeded its previously expected range of $90 to $95 per share, and gave DoorDash a valuation of roughly $34.2 billion. That sum handily surpasses the $15 billion valuation it achieved in the private market earlier this year.

DoorDash’s IPO marks one of the year’s biggest offerings and caps a historic year for public debuts. US listings already raised a record $156 billion in 2020, according to Bloomberg data. Airbnb and Wish-parent ContextLogic are still poised to enter the market this month, with the former set to begin trading on Thursday.

Read more: We spoke with Wall Street’s 9 best-performing fund managers of 2020 to learn how they crushed the chaotic market – and compile the biggest bets they’re making for 2021

Overwhelming investor demand placed shares on track to open as high as $195 before trading began. Its ultimate opening level of $182 is more than double the $75 to $85 range DoorDash expected to price shares as recently as Thursday.

DoorDash’s debut establishes it as the highest-valued food-delivery company. The firm trades under the ticker “DASH.” 

While the coronavirus slashed sales across the US economy, stay-at-home orders led DoorDash to thrive through the pandemic. Third-quarter revenue leaped 268% from the year-ago period as a larger portion of Americans turned to food delivery services. 

Read more: Ron Baron earned a $4.2 billion windfall just from investing in Tesla. The legendary investor told us why he still expects a 30-fold return from Elon Musk – and shared the biggest lessons and mistakes of his career

The distribution of a coronavirus vaccine might cut down on deliveries, but soaring COVID-19 cases and reinstated lockdown measures stand to keep the company’s hot streak alive into 2021.

DoorDash climbed as much as 92%, to $195.50, on Wednesday. Goldman Sachs and JPMorgan served as the IPO’s lead underwriters.

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DoorDash prices IPO at $102 per share, will raise $3.4 billion

doordash delivery driver
  • DoorDash priced its shares at $102 apiece on Tuesday ahead of its IPO, CNBC’s Leslie Picker reported. That comes in well above the expected range.
  • The offering is expected to raise $3.4 billion, and it gives the food-delivery company a valuation of $32.4 billion.
  • DoorDash lifted its pricing range on Friday to $90 to $95, from $75 to $85. Its new pricing sets the company up to be one of the year’s biggest debuts.
  • DoorDash is set to trade on the New York Stock Exchange under the ticker “DASH.”
  • Visit the Business Insider homepage for more stories.

DoorDash priced its shares at $102 each on Tuesday ahead of its highly anticipated initial public offering, CNBC’s Leslie Picker reported. The final pricing comes in well above the expected range.

That pricing will allow the company to raise $3.4 billion when it begins trading on Wednesday, according to a regulatory filing. It also gives the firm a $34.2 billion valuation, based on common stock outstanding, and $38.7 billion on a fully-diluted basis. It will mark one of the year’s largest market debuts.

The pricing brings DoorDash well above the roughly $15 billion private valuation it achieved earlier in 2020, which was already a major increase from the $1.4 billion it was worth in 2018.

DoorDash is poised to become the highest-valued food-delivery company when it debuts on the New York Stock Exchange. The company is set to trade under the ticker “DASH.”

Read more: Goldman Sachs says buy these 25 stocks it expects to pay big dividends that will keep growing over the next decade

DoorDash lifted its IPO price range on Friday to $90 to $95, from $75 and $85 per share. Its latest target sets it up to be among the year’s five largest offerings.

IPOs from DoorDash, Airbnb, Wish-parent ContextLogic, and others are set to drive the busiest December on record for public offerings. US listings have already raised a record $156 billion in 2020, according to Bloomberg data, partially fueled by the year’s blank-check frenzy.

Goldman Sachs and JPMorgan will serve as the offering’s lead underwriters.

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Read the original article on Business Insider