CHINESE

People take pictures of paramilitary officers marching in formation in Tiananmen Square in Beijing
People take pictures of paramilitary officers marching in formation in Tiananmen Square in Beijing, China May 16, 2019. REUTERS/Thomas Peter

May 26, 2019

By Cate Cadell

BEIJING (Reuters) – It’s the most sensitive day of the year for China’s internet, the anniversary of the bloody June 4 crackdown on pro-democracy protests at Tiananmen Square, and with under two weeks to go, China’s robot censors are working overtime.

Censors at Chinese internet companies say tools to detect and block content related to the 1989 crackdown have reached unprecedented levels of accuracy, aided by machine learning and voice and image recognition.

“We sometimes say that the artificial intelligence is a scalpel, and a human is a machete,” said one content screening employee at Beijing Bytedance Co Ltd, who asked not to be identified because they are not authorized to speak to media.

Two employees at the firm said censorship of the Tiananmen crackdown, along with other highly sensitive issues including Taiwan and Tibet, is now largely automated.

Posts that allude to dates, images and names associated with the protests are automatically rejected.

“When I first began this kind of work four years ago there was opportunity to remove the images of Tiananmen, but now the artificial intelligence is very accurate,” one of the people said.

Four censors, working across Bytedance, Weibo Corp and Baidu Inc apps said they censor between 5,000-10,000 pieces of information a day, or five to seven pieces a minute, most of which they said were pornographic or violent content.

Despite advances in AI censorship, current-day tourist snaps in the square are sometimes unintentionally blocked, one of the censors said.

Bytedance declined to comment, while Weibo and Baidu did not respond to requests for comment.

SENSITIVE PERIOD

The Tiananmen crackdown is a taboo subject in China 30 years after the government sent tanks to quell student-led protests calling for democratic reforms. Beijing has never released a death toll but estimates from human rights groups and witnesses range from several hundred to several thousand.

June 4th itself is marked by a cat-and-mouse game as people use more and more obscure references on social media sites, with obvious allusions blocked immediately. In some years, even the word “today” has been scrubbed.

In 2012, China’s most-watched stock index fell 64.89 points on the anniversary day https://www.reuters.com/article/us-china-stocks-tiananmen-idUSBRE8530F720120604, echoing the date of the original event in what analysts said was likely a strange coincidence rather than a deliberate reference.

Still, censors blocked access to the term “Shanghai stock market” and to the index numbers themselves on microblogs, along with other obscure references to sensitive issues.

While companies censorship tools are becoming more refined, analysts, academics and users say heavy-handed policies mean sensitive periods before anniversaries and political events have become catch-alls for a wide range of sensitive content.

In the lead-up to this year’s Tiananmen Square anniversary, censorship on social media has targeted LGBT groups, labor and environment activists and NGOs, they say.

Upgrades to censorship tech have been urged on by new policies introduced by the Cyberspace Administration of China (CAC). The group was set up – and officially led – by President Xi Jinping, whose tenure has been defined by increasingly strict ideological control of the internet.

The CAC did not respond to a request for comment.

Last November, the CAC introduced new rules aimed at quashing dissent online in China, where “falsifying the history of the Communist Party” on the internet is a punishable offence for both platforms and individuals.

The new rules require assessment reports and site visits for any internet platform that could be used to “socially mobilize” or lead to “major changes in public opinion”, including access to real names, network addresses, times of use, chat logs and call logs.

One official who works for CAC told Reuters the recent boost in online censorship is “very likely” linked to the upcoming anniversary.

“There is constant communication with the companies during this time,” said the official, who declined to directly talk about the Tiananmen, instead referring to the “the sensitive period in June”.

Companies, which are largely responsible for their own censorship, receive little in the way of directives from the CAC, but are responsible for creating guidelines in their own “internal ethical and party units”, the official said.

SECRET FACTS

With Xi’s tightening grip on the internet, the flow of information has been centralized under the Communist Party’s Propaganda Department and state media network. Censors and company staff say this reduces the pressure of censoring some events, including major political news, natural disasters and diplomatic visits.

“When it comes to news, the rule is simple… If it is not from state media first, it is not authorized, especially regarding the leaders and political items,” said one Baidu staffer.

“We have a basic list of keywords which include the 1989 details, but (AI) can more easily select those.”

Punishment for failing to properly censor content can be severe.

In the past six weeks, popular services including a Netease Inc news app, Tencent Holdings Ltd’s news app TianTian, and Sina Corp have all been hit with suspensions ranging from days to weeks, according to the CAC, meaning services are made temporarily unavailable on apps stores and online.

For internet users and activists, penalties can range from fines to jail time for spreading information about sensitive events online.

In China, social media accounts are linked to real names and national ID numbers by law, and companies are legally compelled to offer user information to authorities when requested.

“It has become normal to know things and also understand that they can’t be shared,” said one user, Andrew Hu. “They’re secret facts.”

In 2015, Hu spent three days in detention in his home region of Inner Mongolia after posting a comment about air pollution onto an unrelated image that alluded to the Tiananmen crackdown on Twitter-like social media site Weibo.

Hu, who declined to use his full Chinese name to avoid further run-ins with the law, said when police officers came to his parents house while he was on leave from his job in Beijing he was surprised, but not frightened.

“The responsible authorities and the internet users are equally confused,” said Hu. “Even if the enforcement is irregular, they know the simple option is to increase pressure.”

(Reporting by Cate Cadell. Editing by Lincoln Feast.)

Source: OANN

Tibetan spiritual leader the Dalai Lama arrives for his visit to the Tibet Institute Rikon in Rikon
FILE PHOTO: Tibetan spiritual leader the Dalai Lama arrives for his visit to the Tibet Institute Rikon in Rikon, Switzerland September 21, 2018. REUTERS/ Arnd Wiegmann

May 26, 2019

BEIJING (Reuters) – China should hold talks with Tibet’s spiritual leader, the Dalai Lama, U.S. Ambassador to China Terry Branstad told Chinese officials during a trip to the Himalayan region where he criticized Beijing for interfering in religious freedom.

Branstad visited Tibet last week, the first such trip by a U.S. ambassador since 2015, amid escalating trade and diplomatic tension between the two countries.

His visit followed the passing of a U.S. law in December that requires the United States to deny visas to Chinese officials in charge of implementing policies that restrict access to Tibet for foreigners, legislation that was denounced by China.

Branstad met Chinese government officials and Tibetan religious and cultural figures, and “raised our long-standing concerns about lack of consistent access” to Tibet, the U.S. Embassy in Beijing said in an emailed statement on Saturday.

“He encouraged the Chinese government to engage in substantive dialogue with the Dalai Lama or his representatives, without preconditions, to seek a settlement that resolves differences,” an embassy spokeswoman said.

“He also expressed concerns regarding the Chinese government’s interference in Tibetan Buddhists’ freedom to organize and practise their religion,” she said.

Beijing sent troops into remote, mountainous Tibet in 1950 in what it officially terms a peaceful liberation and has ruled there with an iron fist ever since.

The Dalai Lama fled to India in early 1959 after a failed uprising against Chinese rule, and Beijing still brands him a dangerous separatist. China says its leaders have the right to approve his successor, as a legacy from China’s emperors.

But the 83-year-old Nobel peace laureate monk, who lives in exile in the northern Indian hill town of Dharamshala, has said that his incarnation could be found in India after he dies, and that any other successor named by China would not be respected.

Tibetan tradition holds that the soul of a senior Buddhist monk is reincarnated in the body of a child on his death.

China’s Foreign Ministry said last week that the government welcomed Branstad’s visit, but that China hoped the ambassador would not take any “prejudices” with him on the trip.

In December, China criticized the United States for passing the Reciprocal Access to Tibet Act, which seeks to promote access to Tibet for U.S. diplomats and other officials, journalists and other citizens by denying U.S. entry for Chinese officials deemed responsible for restricting access to Tibet.

The U.S. government is required to begin denying visas by the end of this year.

(Reporting by Michael Martina; Editing by Nick Macfie)

Source: OANN

Illustration picture showing U.S. dollar and China's yuan banknotes
A U.S. dollar banknote featuring American founding father Benjamin Franklin and a China’s yuan banknote featuring late Chinese chairman Mao Zedong are seen among U.S. and Chinese flags in this illustration picture taken May 20, 2019. REUTERS/Jason Lee/Illustration

May 25, 2019

BEIJING (Reuters) – The United States has called on China to curb the development of its state-owned enterprises (SOEs), a demand that China sees as an “invasion” on its economic sovereignty, Chinese state news agency Xinhua said on Saturday.

Trade tensions between Washington and Beijing escalated sharply earlier this month after the Trump administration accused China of having “reneged” on its previous promises to make structural changes to its economic practices.

Washington later slapped additional tariffs of up to 25% on $200 billion of Chinese goods, prompting Beijing to retaliate.

As trade talks stalled, both sides have appeared to be digging in. China has denied it had walked back on its promises but reiterated it would not make concessions to “matters of principles” to defend its core interests, although no full details were given.

“At the negotiating table, the U.S. government presented a number of arrogant demands to China, including restricting the development of state-owned enterprises,” Xinhua said in a commentary.

SOEs in China enjoy not only explicit subsidies but also hidden benefits such as implicit government guarantees for debts and lower interest for bank loans, analysts and trade groups say.

“Obviously, this is beyond the scope of trade negotiations and touches on China’s fundamental economic system,” Xinhua said.

“This shows that behind the United States’ trade war against China, it is trying to invade China’s economic sovereignty and force China to damage its core interests.”

The commentary added the United States has made unfounded accusations including that Beijing had forced technology transfers from foreign firms operating in China, saying this is all evidence that the U.S side is “forcing China to change its development path.”

(Reporting by Yawen Chen and Ryan Woo; Editing by Frances Kerry)

Source: OANN

A leader of localist group Hong Kong Indigenous Ray Wong leaves a court in Hong Kong
Ray Wong, one of the leaders of localist group Hong Kong Indigenous, leaves a court in Hong Kong, China, September 23, 2016, with nine other defendants after pleading not quilty on charges relating to Mongkok riots during Lunar New Year. REUTERS/Bobby Yip

May 25, 2019

BEIJING (Reuters) – China has made “solemn representations” to Germany after it granted refugee status to two Hong Kong activists facing rioting charges in the Chinese-ruled city, demanding it correct its “mistakes”, state news agency Xinhua reported on Saturday.

Xinhua said the Hong Kong office of China’s foreign ministry summoned Germany’s Acting Consul General to Hong Kong David Schmidt for an emergency meeting on Friday, where a representative expressed “strong dissatisfaction and resolute opposition”.

The two Hong Kong activists – Ray Wong, 25, and Alan Li, 27 – were former members of Hong Kong Indigenous, a group advocating Hong Kong’s independence from China. They were charged for rioting linked to a protest that turned violent in February 2016.

The pair, who later skipped bail and fled to Germany in 2017 via Taiwan, told Reuters this week they were granted refugee asylum status in Germany in May 2018.

“(China) urges the German side to recognize its mistakes and change its course, and not to accept and condone criminals, and interfere in Hong Kong affairs and China’s internal affairs,” Xinhua said.

The German consulate said this week it was aware that the two Hong Kong residents were staying in Germany, although it could not provide details on individual cases.

Hong Kong activists have become increasingly defiant in recent years, concerned about creeping interference from Beijing despite a promise of special autonomy for the city, which returned to Chinese rule in 1997.

Scores of activists have been jailed on various charges including contempt of court and public nuisance. Critics said Hong Kong authorities have brought such charges to stifle freedom of expression and assembly.

Hong Kong’s Chief Executive Carrie Lam has also expressed “deep regrets and strong objections” to the German authorities.

Hong Kong authorities deny persecuting activists.

(Reporting by Yawen Chen and Ben Blanchard; Editing by Frances Kerry)

Source: OANN

Ramaphosa takes the oath of office at his inauguation as South African president, at Loftus Versfeld stadium in Pretoria
Cyril Ramaphosa takes the oath of office at his inauguation as South African president, at Loftus Versfeld stadium in Pretoria, South Africa May 25, 2019. REUTERS/Siphiwe Sibeko

May 25, 2019

By Nqobile Dludla

PRETORIA (Reuters) – Trade unionist-turned-businessman Cyril Ramaphosa was sworn in as South Africa’s president on Saturday, vowing to create jobs and tackle deep-rooted corruption that has strangled economic growth.

Ramaphosa, who becomes the country’s fourth democratically elected president since the end of apartheid, took the presidential oath before a crowd of about 32,000 people in a rugby stadium in the capital, Pretoria.

“Today our nation enters a new era of hope and renewal,” said Ramaphosa, 66, wearing a dark suit and flanked by foreign leaders including Congolese President Felix Tshisekedi and Chinese Premier Li Keqiang.

“Let us forge a compact for growth and economic opportunities, for productive land and wider opportunities … A compact of an efficient, capable and ethical state. A state that is free from corruption,” said Ramaphosa, a former anti-apartheid activist and trade union leader who has wide-ranging business interests.

Ramaphosa’s African National Congress (ANC) clinched a 57.5% majority in a general election earlier in May, down from 62% in 2014 as voters turned against the ruling party due to revelations about government corruption and record unemployment.

Ramaphosa narrowly won the ANC leadership race in late 2017 and replaced scandal-plagued predecessor Jacob Zuma as state president in February 2018, a year before the latter’s term was due to expire.

Since then he has struggled to mend factions in the party opposed to his reform plans, especially at cash-strapped state power supplier Eskom. His promises to punish party members accused of corruption have also stuttered.

The challenges facing Ramaphosa were highlighted on Friday by the resignation of Eskom’s chief executive, who quit only a year since he was appointed to stabilize the utility and keep the lights on after nationwide blackouts.

Also on Friday, S&P Global Ratings kept South Africa’s credit rating unchanged one notch below investment grade.

The economy is set for a first quarter contraction after mining and manufacturing weakened, prompting the central bank to cut its 2019 growth forecast to 1%, well below the rate of at least 3% needed to bring down debt, budget deficits and joblessness.

“The challenges our country faces are huge and are real but they are not insurmountable. They can be solved and I stand here to say they are going to be solved,” Ramaphosa said in his speech on Saturday.

Many in the crowd at Pretoria’s packed Loftus stadium were optimistic.

“I love my president Cyril Ramaphosa. I know that as long as we have him here he is going to give us jobs and change many things,” said Patience Shabangu, 45, a volunteer at a local clinic.

Political analysts say a key test of Ramaphosa’s ability to deliver reforms will be his announcement of new cabinet, which is expected to take place next week.

“The speech was an honest and brutal reflection of South Africa’s recent problems. But it was also optimistic,” said Daniel Silke, director of the Political Futures Consultancy.

“He will be judged on a very high bar and the next step is the cabinet. If it contains any semblance of the dead wood from the past he will be severely critiqued,” Silke added.

(Writing by Mfuneko Toyana; Editing by Helen Popper)

Source: OANN

Ramaphosa takes the oath of office at his inauguation as South African president, at Loftus Versfeld stadium in Pretoria
Cyril Ramaphosa takes the oath of office at his inauguation as South African president, at Loftus Versfeld stadium in Pretoria, South Africa May 25, 2019. REUTERS/Siphiwe Sibeko

May 25, 2019

By Nqobile Dludla

PRETORIA (Reuters) – Trade unionist-turned-businessman Cyril Ramaphosa was sworn in as South Africa’s president on Saturday, vowing to create jobs and tackle deep-rooted corruption that has strangled economic growth.

Ramaphosa, who becomes the country’s fourth democratically elected president since the end of apartheid, took the presidential oath before a crowd of about 32,000 people in a rugby stadium in the capital, Pretoria.

“Today our nation enters a new era of hope and renewal,” said Ramaphosa, 66, wearing a dark suit and flanked by foreign leaders including Congolese President Felix Tshisekedi and Chinese Premier Li Keqiang.

“Let us forge a compact for growth and economic opportunities, for productive land and wider opportunities … A compact of an efficient, capable and ethical state. A state that is free from corruption,” said Ramaphosa, a former anti-apartheid activist and trade union leader who has wide-ranging business interests.

Ramaphosa’s African National Congress (ANC) clinched a 57.5% majority in a general election earlier in May, down from 62% in 2014 as voters turned against the ruling party due to revelations about government corruption and record unemployment.

Ramaphosa narrowly won the ANC leadership race in late 2017 and replaced scandal-plagued predecessor Jacob Zuma as state president in February 2018, a year before the latter’s term was due to expire.

Since then he has struggled to mend factions in the party opposed to his reform plans, especially at cash-strapped state power supplier Eskom. His promises to punish party members accused of corruption have also stuttered.

The challenges facing Ramaphosa were highlighted on Friday by the resignation of Eskom’s chief executive, who quit only a year since he was appointed to stabilize the utility and keep the lights on after nationwide blackouts.

Also on Friday, S&P Global Ratings kept South Africa’s credit rating unchanged one notch below investment grade.

The economy is set for a first quarter contraction after mining and manufacturing weakened, prompting the central bank to cut its 2019 growth forecast to 1%, well below the rate of at least 3% needed to bring down debt, budget deficits and joblessness.

“The challenges our country faces are huge and are real but they are not insurmountable. They can be solved and I stand here to say they are going to be solved,” Ramaphosa said in his speech on Saturday.

Many in the crowd at Pretoria’s packed Loftus stadium were optimistic.

“I love my president Cyril Ramaphosa. I know that as long as we have him here he is going to give us jobs and change many things,” said Patience Shabangu, 45, a volunteer at a local clinic.

Political analysts say a key test of Ramaphosa’s ability to deliver reforms will be his announcement of new cabinet, which is expected to take place next week.

“The speech was an honest and brutal reflection of South Africa’s recent problems. But it was also optimistic,” said Daniel Silke, director of the Political Futures Consultancy.

“He will be judged on a very high bar and the next step is the cabinet. If it contains any semblance of the dead wood from the past he will be severely critiqued,” Silke added.

(Writing by Mfuneko Toyana; Editing by Helen Popper)

Source: OANN

Chinese Foreign Ministry spokesman Lu Kang answers questions about a major bus accident in North Korea, during a news conference in Beijing
Chinese Foreign Ministry spokesman Lu Kang answers questions about a major bus accident in North Korea, during a news conference in Beijing, China April 23, 2018. REUTERS/Jason Lee

May 24, 2019

By Michael Martina and Ben Blanchard

BEIJING (Reuters) – China on Friday accused U.S. officials of lying to the public about their trade war, as rising tensions between the world’s two largest economies kept financial markets in a state of unease.

Talks to end the trade dispute collapsed earlier this month, with the two sides in a stalemate over U.S. demands that China change its policies to address a number of key U.S. grievances, including theft of intellectual property and subsidies for state enterprises.

Washington has slapped higher tariffs on $200 billion in Chinese goods, prompting Beijing to retaliate, and effectively banned U.S. firms from doing business with Huawei Technologies Co Ltd, the world’s largest telecom network gear maker.

“Domestically in the United States there are more and more doubts about the trade war the U.S. side has provoked with China, the market turmoil caused by the technology war and blocked industrial cooperation,” Chinese Foreign Ministry spokesman Lu Kang said.

U.S. officials “fabricate lies to try to mislead the American people, and now they are trying to incite ideological opposition,” he said, when asked about U.S. Secretary of State Mike Pompeo’s recent criticism of Huawei.

In an interview with CNBC on Thursday, Pompeo said Huawei was connected to the Chinese government, dismissing Huawei chief executive Ren Zhengfei’s assertions that his company would never share user secrets.

“The company is deeply tied not only to China but to the Chinese Communist Party. And that connectivity, the existence of those connections puts American information that crosses those networks at risk,” Pompeo said.

Huawei has repeatedly denied it is controlled by the Chinese government, military or intelligence services.

Pompeo said he believed more American companies would cut ties with the tech giant, while the United States has been rallying its allies to persuade them not to use Huawei for their 5G networks.

U.S. President Donald Trump said on Thursday that U.S. complaints against Huawei might be resolved within the framework of a U.S.-China trade deal, while at the same time calling the Chinese company “very dangerous.”

Lu said he did not know what Trump was talking about.

“Frankly, I’m actually not sure what the specific meaning of the U.S. leader, the U.S. side, saying this is,” he said.

World equity markets rebounded on Friday from heavy selling in the previous day’s session. The U.S. dollar was trading lower against a basket of currencies and prices of safe-haven U.S. government debt fell. [MKTS/GLOB]

NO TALKS SCHEDULED

With no further talks between Washington and Beijing scheduled, investors are nervously eyeing the prospect of an escalation in the tit-for-tat tariffs the two countries have slapped on each other’s products.

The seeds of the current impasse were sowed when Chinese officials sought major changes to the draft text of a deal that the Trump administration says had been largely agreed.

Trump, who has embraced protectionism as part of an “America First” agenda, has threatened to slap tariffs of up to 25% on an additional list of Chinese imports worth about $300 billion.

Meanwhile, China’s move to impose higher tariffs on a revised $60 billion list of U.S. goods is set to go into effect on June 1.

Financial markets fear the trade war could badly damage global supply lines and prompt a further slowdown of the world economy. Economists say the tariffs will curb growth in the United States and China, two of the more solid economies.

China can maintain healthy, sustainable economic growth even as it suffers some impact from the trade friction, a senior official from China’s state planner told state television on Friday.

“China’s healthy, steady and sustainable growth can be maintained in the medium- and long-term,” said Ning Jizhe, vice chairman of the National Development and Reform Commission.

The Trump administration says it is monitoring any possible impact of tariffs on U.S. consumers. It also announced this week a new aid package of about $15 billion to help U.S. farmers, exceeding the up to $12 billion that was rolled out last year.

American farmers, a key Trump constituency, have been among the hardest hit in the trade war. Soybeans are the most valuable U.S. farm export, and shipments to China dropped to a 16-year low in 2018.

(Reporting by Michael Martina and Ben Blanchard; Writing by Paul Simao; Editing by Rosalba O’Brien)

Source: OANN

Traders work on the floor at the NYSE in New York
Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., May 23, 2019. REUTERS/Brendan McDermid

May 24, 2019

By Sinéad Carew

(Reuters) – The escalating U.S.-China trade war has sent dividend-rich sectors like utilities higher, but investors don’t need to get all defensive just yet, according to strategists who say there are plenty of growth stocks with some insulation from China.

Some investors are seeking safety in domestic U.S. growth stocks ranging from software and online advertising to aerospace and recruitment since President Donald Trump’s May 5 tweets showed that U.S. talks with China were in trouble.

While the prospect of a prolonged trade war has shaken the market, investors are also trying to protect themselves from the risk that they could miss out on gains in the event that the United States and China reach a surprise agreement.

Because of the difficulty handicapping the chance of a U.S.-China deal, John Praveen Portfolio Manager at QMA in Newark, New Jersey, said he would not “completely sell out” of stocks. But he said: “if I was 5% overweight stocks, I might reduce it to 3 pct and see if I could reduce exposure to semiconductors and technology.”

“If you’re looking to avoid the pure dividend play and avoid the China trade narrative, you have to look at stocks that are a pure play on the U.S. economy,” said Peter Kenny, founder, Kenny’s Commentary LLC in New York.

Broadly speaking, investors have been raising their defenses. While the S&P has fallen roughly 4% since Trump announced his plan to raise tariffs on Chinese goods in early May, utilities – a low-growth sector with reliably high dividends – has risen more than 2%.

But growth-hungry investors are seeking more nimble companies with little exposure to overseas sales or Chinese imports even in the beaten down technology sector, where semiconductor stocks have lead the recent declines.

Online advertising platforms and cloud software are two technology segments that would not be directly affected by China tariffs, according to Daniel Morgan, portfolio manager at Synovus Trust in Atlanta.

In online advertising, Morgan favors Twitter, Facebook and Snap Inc over Google parent Alphabet, which suspended business with China’s Huawei this week as a result of the trade battle.

He also likes software providers such as Salesforce.com, which derives 70% of its revenue from the Americas and only 10% from Asia-Pacific. However, Salesforce.com has fallen more than 5% since the Trump tweets.

Another option is Workday Inc, which has risen about 4% since May 5 and derives 75% of its revenue from the United States.

Steve Lipper, senior investment strategist at Royce & Associates favors U.S.-facing companies offering services such as recruiting and merger advice due to a strong U.S. labor market and solid merger activity.

But while U.S.-facing recruitment firms such as Kforce and ASGN Inc may not be hurt directly by the trade war, Robert W. Baird analyst Mark Marcon notes that they would suffer if tariffs caused the economy to weaken.

Instead, Marcon favors domestic payroll software companies such as Automatic Data Processing Inc and Paychex Inc, which tend to do better than recruiters in a downturn. But even if their fundamentals remain strong, payroll companies like Paycom and Paylocity could be vulnerable in a selloff due to relatively high valuations, Marcon said.

In industrials – a sector with heavy exposure to China – Burns McKinney, a portfolio manager at Allianz Global Investors in Dallas likes defense stocks such as Raytheon and Lockheed Martin, which could benefit if U.S.-Iran hostilities keep intensifying.

Since sectors like utilities have risen so much, Royce’s Lipper is favoring less obvious safe choices.

“Be wary when the consensus view is already reflected in valuations,” said Lipper, but he added: “The U.S. economy is so diverse that there are always areas that are insulated from whatever you have a concern about.”

(Reporting By Sinéad Carew; Editing by Alden Bentley and Nick Zieminski)

Source: OANN

Traders work on the floor at the NYSE in New York
Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., May 23, 2019. REUTERS/Brendan McDermid

May 24, 2019

By Sinéad Carew

(Reuters) – The escalating U.S.-China trade war has sent dividend-rich sectors like utilities higher, but investors don’t need to get all defensive just yet, according to strategists who say there are plenty of growth stocks with some insulation from China.

Some investors are seeking safety in domestic U.S. growth stocks ranging from software and online advertising to aerospace and recruitment since President Donald Trump’s May 5 tweets showed that U.S. talks with China were in trouble.

While the prospect of a prolonged trade war has shaken the market, investors are also trying to protect themselves from the risk that they could miss out on gains in the event that the United States and China reach a surprise agreement.

Because of the difficulty handicapping the chance of a U.S.-China deal, John Praveen Portfolio Manager at QMA in Newark, New Jersey, said he would not “completely sell out” of stocks. But he said: “if I was 5% overweight stocks, I might reduce it to 3 pct and see if I could reduce exposure to semiconductors and technology.”

“If you’re looking to avoid the pure dividend play and avoid the China trade narrative, you have to look at stocks that are a pure play on the U.S. economy,” said Peter Kenny, founder, Kenny’s Commentary LLC in New York.

Broadly speaking, investors have been raising their defenses. While the S&P has fallen roughly 4% since Trump announced his plan to raise tariffs on Chinese goods in early May, utilities – a low-growth sector with reliably high dividends – has risen more than 2%.

But growth-hungry investors are seeking more nimble companies with little exposure to overseas sales or Chinese imports even in the beaten down technology sector, where semiconductor stocks have lead the recent declines.

Online advertising platforms and cloud software are two technology segments that would not be directly affected by China tariffs, according to Daniel Morgan, portfolio manager at Synovus Trust in Atlanta.

In online advertising, Morgan favors Twitter, Facebook and Snap Inc over Google parent Alphabet, which suspended business with China’s Huawei this week as a result of the trade battle.

He also likes software providers such as Salesforce.com, which derives 70% of its revenue from the Americas and only 10% from Asia-Pacific. However, Salesforce.com has fallen more than 5% since the Trump tweets.

Another option is Workday Inc, which has risen about 4% since May 5 and derives 75% of its revenue from the United States.

Steve Lipper, senior investment strategist at Royce & Associates favors U.S.-facing companies offering services such as recruiting and merger advice due to a strong U.S. labor market and solid merger activity.

But while U.S.-facing recruitment firms such as Kforce and ASGN Inc may not be hurt directly by the trade war, Robert W. Baird analyst Mark Marcon notes that they would suffer if tariffs caused the economy to weaken.

Instead, Marcon favors domestic payroll software companies such as Automatic Data Processing Inc and Paychex Inc, which tend to do better than recruiters in a downturn. But even if their fundamentals remain strong, payroll companies like Paycom and Paylocity could be vulnerable in a selloff due to relatively high valuations, Marcon said.

In industrials – a sector with heavy exposure to China – Burns McKinney, a portfolio manager at Allianz Global Investors in Dallas likes defense stocks such as Raytheon and Lockheed Martin, which could benefit if U.S.-Iran hostilities keep intensifying.

Since sectors like utilities have risen so much, Royce’s Lipper is favoring less obvious safe choices.

“Be wary when the consensus view is already reflected in valuations,” said Lipper, but he added: “The U.S. economy is so diverse that there are always areas that are insulated from whatever you have a concern about.”

(Reporting By Sinéad Carew; Editing by Alden Bentley and Nick Zieminski)

Source: OANN

It’s only 9 am in New York but Friday’s session has already featured a frantic flurry of trade-war-related headlines that have – at least in the market’s view – overshadowed Theresa May’s tearful announcement that she will be stepping down as PM.

Beijing repudiated President Trump’s Thursday claim about a ‘speedy’ trade deal, saying there were no plans for a Trump-Xi meeting. US stock futures pared gains on that headline. Also, US firms ratcheted up the pressure on Huawei, with Microsoft joining the contingent of chip and tech companies that is planning to cut ties with Huawei over Washington’s blacklisting.

And now, the South China Morning Post is reporting that China’s largest chipmaker is withdrawing its ADRs from the New York Stock Exchange, and will subsequently trade only in Hong Kong. The company said ‘low trading volumes’ and the ‘cost of maintaining the listing’ motivated its decision.

China’s biggest maker of semiconductors is to withdraw from the New York Stock Exchange as the increasingly ferocious trade war with the US spills over into the technology sector.

Semiconductor Manufacturing International Corp (SMIC) said on Friday evening it has notified NYSE of its intention to apply on June 3 to delist its so-called American depositary receipts from the bourse. In a filing to the Hong Kong stock exchange, where its shares are listed, SMIC cited low trading volumes of its ADRs and the costs of maintaining the listing and complying with reporting requirements and related laws.

The delisting is expected to happen after June 13, and trading of the chip maker’s US securities will shift to the over-the-counter market, the statement said.

The sudden move comes as Washington steps up efforts to cut off its technology from China, with trade negotiations between the world’s two largest economies still deadlocked.

Just a few days ago, Steve Bannon told the SCMP that he would like to see Chinese companies shut out from American capital markets. It appears Beijing is doing him one better.

Meanwhile, a growing number of sell-side strategists now see a protracted trade war as the ‘base-case’ scenario. The latest assessment from Rabobank concluded that it’s extremely unlikely that either side will offer an olive branch in the near future: “That ship has sailed.”

China is battening down the hatches for a “Long March” and doesn’t even want to talk to the US. In fact, Xi and Trump might not even meet at the end of June in Osaka, in which case there is no obvious off-ramp.

Hovering in the background is Steve Bannon’s ‘superhawkishness’. President Trump has already accomplished something incredible: He’s united a disparate group of business leaders and politicians from both parties behind his hard-line approach. This might give him the cover he needs to ignore the market, at least until things start getting really bad.

In the meantime, expect more Chinese companies will demonstrate their ‘independence’ from American markets.

A Canadian court has tried to stop Alex Jones from focusing on a trans child case which has quickly turned into a free speech battle.

Source: InfoWars


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