Daily Agenda: Chinese Stock Investors Seeing Red

Norway’s central bank cuts rates; U.K. retail sales jump; J.P. Morgan’s Jimmy Lee dead at 62; Alibaba wraps up offering for new finance wing.


The tape was red today for Chinese equities with both the Shanghai and Shenzhen composite indexes off by roughly 4 percent while the tech-heavy ChiNext index declined by more than 6 percent. A rapidly expanding calendar of initial public offerings — including 11 new listings today alone — suggests that many Chinese investors continue to hold a bullish outlook for the long term despite the pullback. With A-shares listed on domestic exchanges continuing to trade at a huge premium to Hong Kong listings, many analysts have begun to refer to the biggest bull market globally as a bubble driven by increasing amounts of margin debt. Shanghai Stock Exchange data shows that at month end in March, short-term borrowing versus stock positions was up by 144 percent year-over-year.

Alibaba completes offering for huge new finance firm. Media reports today indicated that a financial services affiliate of Alibaba Group Holding has completed a private funding round that will value the financial entity at more than $40 billion. Details have not been disclosed though China Development Bank Capital Co. is believed to be among the investors.

Norway cuts rates. The Norges Bank, Norway’s central bank, reduced the nation’s benchmark interest rate to 1 percent from 1.25 percent. In an accompanying statement Bank governor Øystein Olsen noted that the economic outlook had deteriorated somewhat in an environment with little inflation risk. Separately, the Swiss National Bank today kept its deposit rate at record-low levels but indicated that it was prepared to cut rates if the economic situation deteriorated.

California says Uber drivers are employees. Mobile phone ride-sharing service Uber, which recently completed a round of financing putting the value of the private company at $50 billion, was dealt a blow by California regulators yesterday when the California labor commission ruled that an Uber driver is an employee, not a contractor. Company spokespeople say the firm intends to appeal the ruling.

U.K. retail sales rise; pound reacts. The U.K. pound rose to a multimonth high against the U.S. dollar in trading this morning following a report from the Office for National Statistics showing stronger-than-anticipated May sales data. Excluding auto fuel, retail numbers increased 0.2 percent for the month, versus consensus forecasts for a contraction.

Eurogroup to meet. After a speech to the German parliament today in which Chancellor Angela Merkel said that a resolution with Greece remains possible today’s Eurogroup meeting in Brussels will focus on negotiations with Greece. In recent days the government in Athens has maintained that it will not budge from the most recent terms offered, despite a looming default.

J.P. Morgan’s Lee dies. J.P. Morgan Chase Vice Chairman James “Jimmy” Lee, Jr. died on Wednesday at the age of 62. Over the course of his 40-year career as a Wall Street dealmaker, Lee was instrumental in the development of syndicated lending.

Job numbers improve. Weekly initial jobless claims data from the Department of Labor declined by more than economists’ consensus forecasts, with 12,000 fewer newly unemployed. At 267,000, this marks the 15th consecutive week in which claims have remained below 300,000.