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06-16 15:12


¡¡¡¡This article was first featured in Yahoo Finance Tech, a weekly newsletter highlighting our original content on the industry. Get it sent directly to your inbox every Wednesday by 4 p.m. ET. Subscribe

¡¡¡¡In his first-ever court appearance, Apple (AAPL) CEO Tim Cook on Friday laid out his case for why Apple should be the only company to sell apps on the iPhone, saying that allowing third-party app stores would expose consumers to malware and hackers.

¡¡¡¡Testifying in game developer Epic¡¯s antitrust suit against Apple, Cook called the notion of putting third-party app stores on the iPhone ¡°an experiment I wouldn¡¯t want to run.¡± He¡¯s not alone, either. According to New York University Tandon School of Engineering professor Justin Cappos, opening up the iPhone would imperil every iPhone owner.

¡¡¡¡¡°I think there’s a very clear line to draw to say that if you let basically people go and run their own effective app stores,¡± Cappos told Yahoo Finance, ¡°even if they’re installing things like kind of within an app, the potential for malicious code and malicious behavior on the iPhone increases dramatically.¡±

¡¡¡¡Of course, there¡¯s more to Apple¡¯s objection to having third-party app stores on the iPhone than simply protecting consumers. There¡¯s also the 30% fee Apple collects on the sale of many apps and in-app purchases made through the App Store.

¡¡¡¡In other words, while Apple is right that it¡¯s protecting consumers, its App Store dominance is not purely altruistic. And Apple¡¯s argument that it¡¯s safeguarding consumer data might not be enough to shield it from antitrust enforcement over an App Store store that House Democrats found enabled the tech giant to ¡°generate supra-normal profits.¡±

¡¡¡¡In the closely watched suit, Epic claims that Apple abuses its monopoly power over the App Store by forcing developers to use its proprietary payment system and paying Apple a 30% fee on sales of apps and in-app purchases. (Apple charges a 15% commission for developers that make less than $1 million a year.)

¡¡¡¡In a coordinated campaign that kicked off last summer, Epic deployed an update for its game ¡°Fortnite¡± that included the option to pay for in-game currency through Apple¡¯s App Store or Epic¡¯s own payment option, which was, naturally, less expensive.

¡¡¡¡Apple responded by taking down ¡°Fortnite¡± and cutting off Epic from Apple¡¯s developer program. To remedy the situation, Epic filed its antitrust suit against Apple seeking to cut out the 30% fee or allow third-party app stores on the iPhone. Closing arguments in the bench trial were Monday, and Judge Yvonne Gonzalez Rogers is expected to make her decision in the coming weeks.

¡¡¡¡Epic argues that if third-party app stores existed on the iPhone, developers would be able to lower the prices of their apps since they wouldn¡¯t have to account for the 30% Apple charges.

¡¡¡¡But in his testimony, Cook suggested opening up the iPhone would come with grave risks.

¡¡¡¡He provided a stark contrast between the amount of malware on Apple¡¯s iOS versus Google¡¯s (GOOG, GOOGL) Android and Microsoft¡¯s (MSFT) Windows, which do allow third-party app stores.

¡¡¡¡Cook told the judge that while iOS devices account for 1% to 2% of all malware infections, Android and Windows devices account for 30% to 40%. ¡°If you look at malware on iOS versus Android and Windows, it¡¯s literally an off-the-chart level,¡± he said.

¡¡¡¡Cook¡¯s argument is backed up by Nokia¡¯s 2020 Threat Intelligence Report, which states that 26.64% of all malware infections come from Android devices. That¡¯s down from 47.15% in 2019, which Nokia attributes to better security on Android as well as a new focus by malware creators on Internet of Things (IoT) devices.

¡¡¡¡Windows PCs, meanwhile, are responsible for 38.92% of all malware infections. Apple¡¯s iPhone was responsible for just 1.72% of all malware infections ¡ª though that¡¯s up from 0.85% in 2019. The remainder of attacks have impacted IoT devices.

¡¡¡¡Why the differences between the three operating systems? Cappos says it has to do with a number of factors including the rate at which iOS devices are updated to the latest version of the operating system compared to Android and Windows devices, which are typically behind the curve in using the latest software.

¡¡¡¡Operating system updates can patch errors that hackers can exploit with malware, making devices harder to crack. It also doesn¡¯t hurt that Android and Windows are two of the most used operating systems in the world, which makes them especially appealing targets for cybercriminals.

¡¡¡¡Both Apple and Google have automated processes that detect malicious software in their stores, but Google has run into trouble by allowing consumers to access third-party app stores. Most security experts will tell you to avoid downloading apps from third-party stores due to the increased risk of malware.

¡¡¡¡Windows, meanwhile, allows users to download apps through its own Windows Store, or anywhere on the web, which is especially dangerous for consumers who aren¡¯t savvy enough to know if they¡¯re downloading from a legitimate source, or a front for malware.

¡¡¡¡Apple doesn¡¯t break out revenue for its App Store sales, instead lumping it together with its Services segment. Still, that business, which includes Apple TV+, Apple Music+, and iCloud subscriptions, pulled in $53.7 billion in 2020, or roughly 20% of Apple¡¯s $274 billion in total revenue for the year. All of that is to say, Apple¡¯s App Store makes a boatload of money for the company.

¡¡¡¡And that, combined with the company¡¯s App Store controls, may mean that even its safety argument will come up empty in court. Syracuse University College of Law professor Shubha Ghosh told Yahoo Finance that for Apple¡¯s gambit to pay off, it would have needed to show that its business practices justified its security concerns. And a 30% fee and security might not go hand in hand in Judge Gonzalez Rogers¡¯ eyes.

¡¡¡¡But security might not even be a big concern for the judge, explained Cardozo School of Law professor Sam Weinstein. ¡°Antitrust courts don’t care so much about safety ¡ª they care about competition. So I’m wondering if that’s ever been a persuasive argument,¡± he said.

¡¡¡¡It¡¯s now up to Judge Gonzalez Rogers to determine if Apple should be forced to open up iOS to third-party stores. If not, the company could also be required to cut its store fees, or allow app developers to offer their own payment systems, cutting into Apple¡¯s profits.

¡¡¡¡If Apple comes out on top, though, the company still has to contend with regulators in both the U.S. and the European Union, which have been looking into the company¡¯s App Store practices, as well. And then there¡¯s the potential for new antitrust legislation here at home. In other words, Apple shouldn’t count on holding onto its App Store revenue forever.

¡¡¡¡By Daniel Howley, tech editor. Follow him at @DanielHowley

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¡¡¡¡Newcomers ‘Operation: Tango’ and ‘Virtua Fighter 5: Ultimate Showdown’ complete the lineup.

¡¡¡¡Given the Apple-Google duopoly that tends to monetize an outsized share of attention especially among consumers, it might be easy to forget that there are still more than 1.3 billion devices around the world running Windows. That metric is one among many pronouncements as well as ambitious goals Microsoft has rolled out so far this ¡­

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¡¡¡¡Microsoft has officially introduced its first GPT-3-powered feature in a customer product.

¡¡¡¡Stock futures opened slightly higher Wednesday evening to add to gains from the regular session.

¡¡¡¡The fate of Apple¡¯s lucrative App Store was placed in the hands of a California federal judge Monday, following closing arguments from lawyers for the tech giant and its opponent, ¡°Fortnite¡± developer Epic Games, in their widely watched antitrust trial. Epic is asking for an injunction requiring Apple to change its business model, so app developers can get their apps onto iPhones using third-party app stores, cutting out Apple¡¯s 30% fee. Apple says such a change would jeopardize mobile device security, with CEO Tim Cook testifying last week that such a move was ¡°an experiment I wouldn¡¯t want to run.¡±

¡¡¡¡(Bloomberg) — In the latest desperate attempt to deal with fuel shortages that have crippled Venezuela¡¯s economy, government leaders are trying to repurpose two massive oil upgraders to make a main ingredient for gasoline instead.With U.S. sanctions preventing the country from importing naphtha, a petroleum product its refineries use as feedstock, state-owned Petroleos de Venezuela will seek to make its own at upgraders designed to process heavy crude into lighter oil for the international market, according to documents seen by Bloomberg and people with knowledge of the plan, who asked not to be named because the information isn¡¯t public. The plants are the Petropiar partnership with Chevron Corp. and the Petrocedeno venture with Total SE and Equinor ASA.Venezuela¡¯s acute fuel shortage has forced businesses and factories to shut, while drivers line up for hours or even days to fill up. The conversion of the Hugo Chavez-era crude upgraders marks another dramatic departure from a time when the OPEC-founding nation was a top oil exporter, now reduced to one of the poorest nations in the Western Hemisphere under the U.S.-sanctioned Nicolas Maduro regime.The work at the Petropiar and Petrocedeno plants, which strip away sulfur and other impurities from the sludgy heavy crude from the Orinoco Belt, started in April, the people said.It¡¯s unclear how PDVSA can pull the overhaul off without the help of foreign partners or international contractors, which can no longer do business with the battered, cash-strapped state oil producer. The company has struggled to even perform basic maintenance at its plants, which lack replacement parts it hasn¡¯t been able to import.PDVSA, Chevron and Total didn¡¯t immediately reply to requests for comment. A representative from Equinor deferred any questions to PDVSA. Refineries typically make their own heavy naphtha as a stage in the processing of crude into gasoline. PDVSA units have long lost that ability because of broken equipment. The country¡¯s upgraders are in better shape because they were operated with the help of foreign partners until recently. Plus, the processing of heavy oil into so-called synthetic crude at the plants already involved some naphtha production.To convert the upgraders into feedstock suppliers for refineries, which will involve installing new equipment and pipelines, PDVSA is hiring local contractors, the people said. The overhaul will not prevent the plants from also being used for their original purpose of making synthetic crude.The plants will initially feed PDVSA¡¯s Cardon and Puerto La Cruz refineries with 30,000 barrels a day of heavy naphtha, the documents show. A plan to lay pipelines that will allow supplies to reach 112,000 barrels a day are still being discussed with contractors, the people said.It¡¯s not the first time the upgraders have been repurposed since U.S. sanctions have practically shut off Venezuela from the international crude market.PDVSA¡¯s four upgraders were converted into simpler blending plants in mid-2019. The shift meant halting the production of the Petrozuata and Zuata Sweet light-oil blends to focus on Merey 16 heavy oil, mostly sold on the Asian market.More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.?2021 Bloomberg L.P.

¡¡¡¡Yahoo Finance Live chats with Moelis & Company vice chairman and former GOP House Majority Leader Eric Cantor about the outlook for taxes and infrastructure.

¡¡¡¡(Bloomberg) — A decade ago, after hackers were caught infiltrating natural gas pipeline operations and an al-Qaeda video emerged calling for an ¡°electronic jihad¡± on U.S. infrastructure, then-Senator Joseph Lieberman tried to sound the alarm.The system is ¡°blinking red,¡± Lieberman warned his Senate colleagues during debate on the threat in 2012. ¡°Privately owned and operated cyber infrastructure can well be, and probably some day will be, the target of an enemy attack.¡±Led by the Connecticut independent and one-time vice presidential candidate, lawmakers sought to require energy companies to strengthen computer security. But the effort withered under fierce lobbying by oil companies and other corporate interests that succeeded in killing the legislation. That left in place a system of voluntary guidelines that failed to stop last month¡¯s ransomware attack on Colonial Pipeline Co., which paralyzed a major artery for fuel along the East Coast.¡°It¡¯s really a lost opportunity,¡± said Lieberman, now senior counsel at Kasowitz Benson Torres LLP. ¡°The attack on the Colonial Pipeline might not have happened if we passed the legislation.¡±Now, in response to the attack, the Department of Homeland Security is preparing to jettison the voluntary approach and impose cybersecurity requirements on pipelines, according to a person familiar with the plans who asked not to be identified before a formal announcement.That would be a defeat for oil companies and pipeline operators that for more than a decade have successfully fought off federal standards to thwart cyberattacks from legislation or regulatory agencies. Unlike power plants, U.S. pipelines are not required to follow any federal cybersecurity mandates, even though Homeland Security was given the authority to impose them when it was created in the wake of the Sept. 11, 2001 attacks.The Transportation Security Administration, the DHS agency in charge of protecting the nation¡¯s pipelines, will issue a directive this week requiring pipeline companies to report cyber incidents, according to the person familiar with the plans. Additional requirements for safeguarding facilities and responding to attacks are set to be advanced in coming weeks, the Washington Post reported.¡°The Biden administration is taking further action to better secure our nation¡¯s critical infrastructure,¡± DHS said in a statement on Tuesday. ¡°We will release additional details in the days ahead.¡±Until now, the TSA had resisted using its authority to mandate cyberprotection measures.¡°My belief was we could get quicker and better security through working with the industry instead of regulating them because regulations set minimum security standards and industry in many cases was doing more than that,¡± said Jack Fox, who served as the agency¡¯s manager of pipeline security before retiring in 2016.Lieberman¡¯s bill would have imposed cybersecurity performance requirements on privately owned critical infrastructure — and slap fines on companies that fell short. The rules would have been applied to more than pipelines: sectors where a hostile take-down of computer systems could lead to mass casualties, the collapse of financial markets or the disruption of energy and water supplies, were to be included.Even a watered-down version of the bill failed to overcome a Republican-led filibuster.Pipeline CompaniesFor Lieberman, the failure still stings.¡°We would sort of ask ourselves who is driving this aggressive opposition and the answer we were getting was the energy companies and the pipeline companies,¡± he said.Every major U.S. oil company — including Exxon Mobil Corp., Chevron Corp. and ConocoPhillips — lobbied on the legislation, alongside some refiners and at least one pipeline operator. Colonial didn¡¯t lobby on the measure in 2012, according to disclosure forms it filed with Congress. However, groups it belonged to did, including the American Petroleum Institute, the Association of Oil Pipe Lines and the Chamber of Commerce — a political titan that reported spending $103.9 million influencing government policies in 2012.The Chamber opposed the legislation at the time, calling it an overly broad, heavy-handed approach to regulation that threatened to create an ¡°adversarial¡° relationship between the government and private industry instead of fostering collaboration against cyberattacks. The group backed an alternative approach focused on greater sharing of threat information, a stance it continues to endorse today.¡°We support a public-private collaboration that strengthens our cybersecurity in all sectors, including pipelines, to benefit all Americans,¡± said Matthew Eggers, vice president of cybersecurity policy for the Chamber.Cybersecurity experts and government officials have cautioned for years about the consequences of a pipeline hack, including in 2019 when the Office of the Director of National Intelligence issued a report warning a cyberattack could disrupt a pipeline ¡°for days to weeks.¡±Nevertheless, there was widespread business opposition to the Lieberman bill, with almost every affected industry, from financial services to communications, getting involved to warn the proposed cybersecurity mandates would insert the heavy hand of government into corporate affairs.But proponents warned that mandates were essential to ensure there were sufficient safeguards amid a barrage of ever-more sophisticated attacks on private companies running power plants, dams and other critical infrastructure.al-Qaeda VideoWeeks after the bill¡¯s introduction, the Department of Homeland Security warned hackers had spent months trying to infiltrate computer systems for a number of natural gas pipeline operators. ABC News reported the FBI had obtained an al-Qaeda video calling for ¡°electronic jihad¡± against U.S. critical infrastructure. And computer security firm McAfee Corp. warned of coordinated, ongoing cyberattacks on global energy companies in 2011.The hacking episodes foreshadowed how alluring fuel delivery systems are to cyber-criminals, like the Russia-linked group that used DarkSide ransomware to hold Colonial¡¯s computer systems hostage around May 7. The company was forced to shut down its roughly 5,500-mile-long (8,851-kilometers-long) pipeline system, which provides about 45% of the fuel used on the East Coast, spurring outages at filling stations and the payment of a $5 million ransom before service resumed five days later.It¡¯s not clear whether mandates would have thwarted the attack, and investigations are still underway. Colonial has pledged to ¡°review any proposal that takes lessons learned from this event that strengthens or hardens our infrastructure.¡±Oil and pipeline trade groups steadfastly insist now is not the time for prescriptive federal mandates.¡°Any discussion of regulation is premature until we have a full understanding of the details surrounding the Colonial attack,¡± said Suzanne Lemieux, API¡¯s manager of operations security and emergency response. ¡°But we are committed to continuing our robust coordination with all levels of government.¡±The trade association added in a statement it was generally aligned with the Chamber on the issue in 2012 and cautioned against a prescriptive one-size-fits all regulatory approach that it said would be counterproductive.John Stoody, a spokesman for the Association of Oil Pipe Lines, whose members include Colonial Pipeline, said ¡°We want TSA to get right anything they plan to do.¡±¡°For example, an overly broad reporting requirement could overwhelm TSA with hundreds of thousands of cyberattack reports every day that would not do anyone any good,¡± he said.PartnershipChevron said in an emailed statement that federal regulation ¡°should take a risk-based approach¡± that gives companies flexibility to defend against threats. And Exxon noted that the rapid evolution of cyber threats means ¡°any formal and prescriptive cybersecurity requirements for the industry are often outdated upon completion.¡±The Transportation Security Administration has long taken a similar approach. A branch manager in the agency¡¯s office of surface operations last year boasted it involves ¡°very few regulations¡± and a ¡°cooperative approach to industry adoption of security measure,¡± according to a presentation archived on the agency¡¯s website.The TSA opted not to regulate the pipeline sector because it felt a partnership with industry was more efficient, said Fox, the retired TSA manager of pipeline security.¡°A regulation takes months or years to change,¡± Fox said in a phone interview. ¡°With this partnership we could make a phone call and say we need you to do such and such and it would be reacted to the next day.¡±Republican FilibusterFox said he didn¡¯t think the Lieberman bill would have prevented the Colonial cyberattack.¡°You can regulate whatever you like,¡± Fox said. ¡°We have regulations on speed limits and gun control and all kinds of things so if you regulate something it does not means it¡¯s not going to happen.¡±Ultimately in 2012, Lieberman and Collins watered down their bill in a desperate bid to win over Republicans to get it passed. They dropped mandates and fines in favor of a measure that would create only optional requirements.But even the pared-back bill wasn¡¯t enough. Continued concerns about liability and privacy haunted the legislation, and the Chamber opposed the new version too. It was twice defeated by a Republican-led filibuster, ultimately falling nine votes shy of the 60 needed to cut off debate in November 2012.Amy Myers Jaffe, a Tufts University professor and author of ¡°Energy¡¯s Digital Future,¡± said the Colonial cyberattack may be the pipeline industry¡¯s ¡°Macondo moment.¡±That¡¯s a reference to the Gulf of Mexico oil well that blew out in 2010, killing 11 workers and unleashing the worst oil spill in U.S. history.An overly cozy relationship between federal regulators and oil companies was blamed for contributing to the disaster, Jaffe said. ¡°It¡¯s shocking to me to think that an industry that likes to brag about its safety records would ever have lobbied against having government-run standards that are mandatory for cyber-security in vital energy infrastructure.¡±More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.?2021 Bloomberg L.P.

¡¡¡¡We believe the RBNZ will maintain its monetary policy settings, and highlight the improving economy.

¡¡¡¡India’s government exceeded its legal powers by enacting rules that companies such as WhatsApp say will force them to break end-to-end message encryption, the messaging app owned by Facebook argued in a court filing seen by Reuters. WhatsApp has filed a lawsuit in a Delhi court against the government to quash a provision of a new regulation that mandates companies to divulge the “first originator of information”, arguing in favour of protecting privacy. In a statement on Wednesday, WhatsApp said it would engage with the Indian government to find “practical solutions” and protect users, but its court filing shows it has taken a firmer stance against Prime Minister Narendra Modi’s administration.

¡¡¡¡China’s banking regulator has asked lenders to stop selling investment products linked to commodities futures to mom-and-pop buyers, three people with knowledge of the matter told Reuters, to curb investment losses amid volatile commodity prices. It has also asked lenders to completely unwind their existing books for these products, which they manufacture and sell to individual investors, said the sources, who are involved in and have been briefed on the decision. The China Banking and Insurance Regulatory Commission’s (CBIRC’s) order to exit these products has not been reported before.

¡¡¡¡(Bloomberg) — The Singapore government may step in to introduce property curbs if home prices keep rising, according to the city-state¡¯s richest property family, marking the first time a developer has waded in on the issue.City Developments Ltd. Chairman Kwek Leng Beng ¡°noted that the residential market has been performing well though he cautioned that if property prices continue to rise, there may be a time that further cooling measures could be introduced to control the prices,¡± records from the company¡¯s annual shareholder meeting show. The gathering was held on April 30, with the notes filed at the Singapore Exchange on Monday.Singapore¡¯s property market has rebounded sharply in recent months, making the sector a bright spot as the economy recovers from the pandemic. Prices of properties ranging from public apartments to private units and luxury bungalows have been rising, with some hitting records.That has prompted growing speculation that authorities may take steps to calm the market and prevent it from running ahead of the economy. But a recent Covid-19 outbreak may test the market¡¯s resilience as the city-state returns to lockdown-like conditions last imposed a year ago.At the shareholder meeting, Chief Executive Officer Sherman Kwek expressed optimism about the prospects of CDL¡¯s residential projects and office properties in Singapore.The number of home units sold in the city-state has recovered to a healthy level despite the pandemic, said Kwek, who is the chairman¡¯s son. Transaction volume last year equaled that of 2019, with close to 10,000 units sold for the entire market. And there¡¯s still pent-up demand, especially among buyers who are upgrading from public to private apartments, he said.¡°While there is uncertainty surrounding whether the government would implement new cooling measures, the overall residential market remains very stable,¡± the notes said, citing the CEO¡¯s comments.More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.?2021 Bloomberg L.P.

¡¡¡¡Banks and financial regulators should facilitate the tokenization of the financial system, DBS CEO Piyush Gupta said during Consensus 2021.

¡¡¡¡(Bloomberg) — China is clamping down on some corn imports amid concern that overseas purchases have spiraled out of control, prompting several feed mills to cancel their U.S. cargoes.Chinese customs authorities are restricting imports into free trade zones, which aren¡¯t counted toward an official annual purchase quota, according to people with knowledge of the matter. Total U.S. corn cancellations are estimated to be less than 1 million tons, said two of the people, who asked not to be identified as the matter is private.The increased scrutiny by Beijing over its corn imports comes as the broader market focuses on whether the country will continue its heightened purchases of raw materials from grains to metals to fossil fuels. Prices across a variety of products have soared this year partly because of Chinese demand, raising import costs and sparking fears over inflation in the Asian nation.Corn futures in Chicago fell as much as 2% before erasing losses as traders determined the scrapped purchases aren¡¯t big enough to alter an already tight supply situation. Some market watchers claim China, which is forecast to import a record amount of corn this year, is trying to get a better deal after prices recently surged above $7 a bushel for the first time since 2013.¡°China is playing a negotiating game,¡± said David Martin, founder of Martin Fund Management in New York.China¡¯s crackdown on corn purchases is targeted at businesses that have set up blending facilities in the free trade zones, according to the people familiar with the matter. These facilities allow firms to mix the imported corn with other raw materials to produce livestock feed that enable them to profit from zero-tariff imports, the people said.Calls to Chinese customs outside business hours went unanswered.Illinois corn farmer Matt Bennett, a co-founder of commodities brokerage and consulting firm AgMarket.net, noted that China has a pattern of crop-import cancellations only to start ¡°buying the daylights out of stuff.¡±The canceled shipments are a small amount compared to more than 20 million tons of American corn that China has purchased this season. The Asian nation has been a key source of demand for the grain to feed its recovering hog herd, helping to push prices to multiyear highs. Imports from the U.S. have soared as Beijing also seeks to fulfill its commitments for the ¡°phase one¡± trade deal signed with the U.S. in January 2020.The latest move by China ¡°is likely to have only a very small impact on China¡¯s compliance with the overall purchase commitments on the phase one agreement,¡± said Chad Brown, an expert at the pro-trade Peterson Institute for International Economics in Washington. ¡°Corn is just too small a portion of the overall deal.¡±Corn QuotasChina allocates annual corn import quotas to state and private firms. State-owned Cofco Corp. may at times receive an allowance to buy an additional amount that it resells domestically to private mills or to replenish state reserves.The quotas for 2021 are set at 7.2 million tons. Imports outside the quota are possible, but may incur tariffs of up to 65% of the purchase price. Shipments into bonded zones are exempt from duties.The proliferation of businesses that are shipping corn into bonded zones and blending them for animal feed has alarmed authorities, who are seeking to control imports and maintain the quality of feed products.Last month, Shandong province shut down a feed producer located at a local bonded zone after its product was found to have fallen short of protein requirements. The plant mainly blended corn with a low amount of distillers dried grains, or DDGS, said one of the people.All the cancellations will be of old U.S. corn crop from the 2020-21 marketing year, the people said. More than 15 million tons of American corn have been purchased for state stockpiles from old and new crops, two of the people said.(Adds comment on U.S.-China trade relations in the 10th paragraph.)More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.?2021 Bloomberg L.P.

¡¡¡¡(Bloomberg) — China¡¯s battle to maintain order in financial markets is getting tougher as money floods into everything from commodities to housing and stocks.In May alone, the government vowed to tackle speculation in metals, revived the idea of a property tax, oversaw hikes in mortgage rates in some cities, banned the mining of cryptocurrencies and played down calls within the central bank for a stronger yuan.Authorities are zeroing in on the risks of assets overheating as they maintain a relatively loose monetary policy to support the economic recovery from the pandemic. Targeted intervention is likely to weigh on pockets of China¡¯s financial markets as the Communist Party seeks to avoid volatility in the run up to the July 1 centenary of its founding.¡°The policy trend is now focused on ensuring financial stability,¡± said Alex Wolf, head of investment strategy for Asia at JPMorgan Private Bank. ¡°Beijing will want to resolve bubbles risks at the outset, in a targeted manner, using strong rhetoric and small adjustments to policy. That appears to be enough for now.¡±Much of the world is facing inflationary pressures as rebounding economies drive demand for goods. Central bankers in the U.S. and Europe are making it clear they view the gain in consumer prices as temporary, and that ultra-low interest rates will remain in place for the foreseeable future.China¡¯s bond market isn¡¯t pricing in higher borrowing costs any time soon. The yield on 10-year sovereign debt has fallen to an almost nine-month low. But at about 3.1%, that¡¯s a decent return for global investors, and the resulting inflows add to the vast pool of domestic funds trapped by capital controls. So-called hot money drives asset prices ever higher.Beijing is finding some success with its targeted approach: commodities futures have fallen from their records in recent weeks and digital currencies have slumped. Bitcoin is down about 30% this month in a rout partly triggered by Elon Musk¡¯s musings on the environmental costs of digital assets.Like whack-a-mole, however, crackdowns in some parts of China¡¯s financial markets lead to other assets rising. The CSI 300 Index of stocks surged more than 3% on Tuesday, helped by record flows through the Hong Kong trading channel and unprecedented buying of China¡¯s second-largest exchange-traded fund. That¡¯s boosting the allure of the yuan, which is at its strongest against the dollar in almost three years.This may all be part of a grand strategy by the Communist Party. A rally in equities could take the heat out of the commodities market, while an appreciating yuan would lower the cost of imported raw materials. That would temper inflationary pressures and allow the central bank to maintain its accommodative stance. ¡®Strong¡¯ financial markets would also reflect well on the Party — and President Xi Jinping — as the 100th anniversary approaches.The risk for Chinese policy makers is if price increases are sustained and driven by forces beyond Beijing¡¯s control. That may compel the People¡¯s Bank of China to take more aggressive action, such as draining liquidity or hiking interest rates.The PBOC has pledged to exit pandemic-era stimulus at a slow and measured pace. This is already happening, as seen by a notable slowdown in credit. China also trimmed this year¡¯s quota for the debt sales that typically fund infrastructure, and softened its push on fixed-asset investments. The central bank has provided minimum liquidity to lenders even as credit defaults pile up.It seems officials prefer to take increasingly aggressive steps at the micro level, rather than at the macro level. This is especially true of the commodities market. On Wednesday, Reuters reported the banking regulator asked lenders to stop offering commodity futures products to retail investors.¡°When you have a closed capital account like China and you loosen policy through the credit channel, the money stays contained domestically,¡± said JPMorgan¡¯s Wolf. ¡°It then needs to find a place. It can be housing, it can be stocks — it moves across the financial system. This is one of the biggest constraints to policy and is why China has been quick to remove stimulus this year.¡±More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.?2021 Bloomberg L.P.

¡¡¡¡(Bloomberg) — The amount of cash sloshing around in U.S. dollar funding markets looks unlikely to abate anytime soon and that¡¯s set to put downward pressure on short-term rates until next year unless officials act to alter the situation.That¡¯s the view of strategists at Bank of America Corp., who foresee further increases in usage of the Federal Reserve¡¯s reverse repurchase agreement operation — a facility that¡¯s become a go-to place for parking cash. While it offers absolutely zero yield, the facility at least doesn¡¯t charge investors for the privilege of keeping cash there, which is effectively what happens when yields go negative.That¡¯s something that has happened in other parts of the money markets, with the abundance of cash driving down yields on instruments ranging from repurchase agreements to Treasury bills, in some cases below zero. And that in turn has fueled demand at the so-called RRP facility, which on Wednesday surged to $450 billion, the third-highest on record.¡°The U.S. front end is awash with cash and there is limited reprieve in sight,¡± Bank of America strategists Mark Cabana and Olivia Lima wrote in a note to clients ahead of the most recent operation. ¡°The wave of Fed cash is likely to continue drowning out any material front-end yield.¡±The glut at the front-end has been spurred by the central bank¡¯s ongoing asset-purchase program, commonly referred to as quantitative easing, as well the drawdown of the Treasury¡¯s general account. The latter has been driven by the looming debt-ceiling reinstatement, which is due to take place at the end of July, and the flow of pandemic stimulus funds to taxpayers. Federal relief payments to state and local municipalities are also adding to the glut, and that is being exacerbated as regulatory constraints encourage banks to turn away deposits, directing that cash into money-market funds.The Bank of America strategists, writing in a note to clients Wednesday, highlighted a number of potential options for officials to lean against the influx and alleviate the persistent downward pressure on the front end. These include:Potential tinkering by the Federal Reserve with so-called administered rates — the offered yield on its RRP facility and interest on excess reserves, or IOERThe Fed allowing Treasury bills in its portfolio to matureThe Fed to start tapering its asset purchasesThe Treasury planning to hold a higher cash balance after the debt-ceiling hurdle is overcomeBut absent measures along these lines, they see cash continuing to pile up at the RRP facility, where around three quarters of new cash has landed since March, in their estimation. Cabana and Lima predict that usage could climb to $475 billion by the end of this month — which would be above the record high from 2015 — and reach more than $800 billion by the end of July.This also means that with persistently low interest rates, trading opportunities in the front-end are limited. Cabana and Lima are ¡°now less convinced¡± that there will be steepening of the September-to-December curve for spreads between forward rate agreements and overnight index swaps, while they also expect March 2022 FRA-OIS spreads to tighten further. The market witnessed a flurry of activity on Wednesday potentially related to this call, with a large buy flow in September 2021 eurodollar futures helping to drive volumes on that contract well above average.(Updates with result of Wednesday¡¯s operation.)More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.?2021 Bloomberg L.P.

¡¡¡¡(Bloomberg) — The prediction was vintage Jack Ma, as provocative as it was prescient.¡°This is the era of the internet,¡± the Chinese billionaire proclaimed in October 2013, just weeks after his plan to take Alibaba Group Holding Ltd. public in Hong Kong had been scuttled by regulators. ¡°It no longer belongs to Li Ka-shing.¡±Ma¡¯s dig at the famed Hong Kong tycoon raised plenty of eyebrows at the time, but few would disagree with him now. The past few years have seen a remarkable shift in fortunes between China¡¯s tech-savvy moguls and their old-school Hong Kong counterparts — a trend that shows few signs of fading any time soon.Even as Xi Jinping¡¯s government moves to curb the clout of Ma and some of his peers, the combined wealth of China¡¯s 10 richest people has surged threefold since 2016 to $425 billion, according to the Bloomberg Billionaires Index. For Hong Kong, it doubled to $218 billion during the same period. Li, once Asia¡¯s richest person, is now ranked No. 13, several spots below Ma, who eventually listed Alibaba in New York in 2014.The changes underscore the fading relevance of Hong Kong businessmen who built their empires on real estate, ports, infrastructure, telecommunications, aviation and retail.At their peak, when the former British colony was the indispensable gateway to a rapidly developing mainland China, Li and his peers were courted by Beijing for their business acumen and access to overseas capital. These days their political clout is waning and their businesses are increasingly viewed by investors as stale.What¡¯s more, Hong Kong¡¯s future as a financial hub is facing an existential threat as China¡¯s Communist Party chips away at the ¡°one country, two systems¡± framework that has underpinned the city¡¯s success for decades.One consequence has been a dramatic slide in the stock-market valuations for Hong Kong¡¯s biggest conglomerates. Over the past five years, five of the city¡¯s top groups — CK Hutchison Holdings Ltd., New World Development Co., Henderson Land Development Co., Sun Hung Kai Properties Ltd. and Wharf Holdings Ltd. — have consistently traded at deep discounts to their net assets.Their shares now fetch just 0.5 times book value on average, versus 10 for the five companies controlled by some of China¡¯s richest tycoons, data compiled by Bloomberg show.¡°The main businesses of the large Hong Kong companies don¡¯t have much growth,¡± said Andy Wong, founding partner at LW Asset Management in the city. ¡°Investors prefer to focus on growth more than on a company¡¯s value,¡± he said, adding technology-driven sectors are attractive, especially after the pandemic.While private family offices of some of the city¡¯s tycoons have pivoted to high-growth investments, their listed businesses have been slow to catch up. On the other hand, their counterparts across the border have leveraged technology to provide a range of consumer services and create wealth. Chinese tycoons have also benefited from the $14.3 trillion economy¡¯s quick recovery from Covid. China was the only major economy to expand last year, while Hong Kong saw back-to-back contractions in 2019 and 2020.Most of China¡¯s richest billionaires come from the tech industry, including Tencent Holdings Ltd.¡¯s Pony Ma, Bytedance Ltd. founder Zhang Yiming and NetEase Inc.¡¯s William Ding. The wealth of Zhong Shanshan, China¡¯s current richest person and founder of bottled water giant Nongfu Spring Co. is almost $69 billion, more than double that of Li¡¯s.Many of Hong Kong¡¯s business empires owe their success to government policies that encouraged only a small group of deep-pocketed developers to bid at auctions of land parcels, a system that turned Hong Kong into the world¡¯s most expensive property market. The windfall from rising prices allowed the tycoons to diversify into utilities, retail, ports and infrastructure.But that formula has been difficult to replicate in larger markets like mainland China due to high capital requirements, local competition and regulatory barriers, said Richard Harris, founder of Hong Kong-based Port Shelter Investment Management.For instance, Sun Hung Kai Properties Ltd.¡¯ land bank in mainland China is just about 2.3% of that held by Country Garden Holdings Co. owns, a Guangdong-based developer controlled by billionaire Yang Huiyan.The result is that many of the city¡¯s tycoons have focused on defending their current turf rather than expanding into new businesses, Harris said. ¡°Many of them are quite happy making sure they don¡¯t lose¡± what they have, he said.Yet even that has proven difficult in recent years as Hong Kong¡¯s economy was battered by anti-government protests and the pandemic.Sun Hung Kai Properties, the developer led by billionaire brothers Raymond and Thomas Kwok, reported the biggest decline in underlying profit since 2013 for the year ended June. Swire Pacific Ltd., one of city¡¯s two centuries-old British trading firms, recorded an underlying loss last year, the first since listing in 1959. Its flagship Cathay Pacific Airways Ltd. is struggling despite a government-led rescue.CK Hutchison, the flagship of the diversified empire Li built after his family fled to Hong Kong from the mainland as refugees in 1940, saw its first profit drop since a revamp of the conglomerate in 2015. As tensions rise between China and the West, the CK group is facing headwinds overseas. Australia blocked it from acquiring a local gas pipeline operator over national security concerns in 2018.Some of Hong Kong¡¯s conglomerates have started looking further afield for growth opportunities. New World Development Co., which is into infrastructure building, hotels and shopping malls, is accelerating its expansion into insurance, health care and education in mainland China. Chief Executive Officer Adrian Cheng has said he wants to grow the non-property service businesses. Much of the effort ¡°revolves around non-traditional businesses,¡± a spokeswoman said.Swire Pacific is investing in health-care groups in mainland China. Jardine Matheson Holdings Ltd., the owner of luxury hotel group Mandarin Oriental International Ltd., is partnering with private equity firm Hillhouse Capital Management Ltd. to look for investment opportunities in Greater China and Southeast Asia.Representatives for Sun Hung Kai declined to comment, while CK group and Wharf didn¡¯t respond to requests for comment. Swire said the group¡¯s financial strength and ability to invest remain strong, and is looking at new sectors. Henderson Land said it¡¯s been diversifying from property, with a strong presence in Hong Kong and China, and has been incorporating sustainable technologies.Li¡¯s personal investment vehicle, Horizons Ventures, has been investing in plant-based food, renewable energy and digital services. The firm¡¯s early bet in Zoom Video Communications Inc. surged to $11 billion last year during the pandemic, or one-third of Li¡¯s wealth. He was also an early backer of Facebook Inc., Spotify Technology SA and Siri.The post-pandemic recovery will be crucial for Hong Kong¡¯s tycoons to consider similar bets on emerging industries, according to Falcon Chan, a partner at Deloitte China.¡°It¡¯s critical to think about what¡¯s the next big bet,¡± Chan said. ¡°What some of these big guys do in the next one or two years will have a tremendous impact if they want to pivot.¡±More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.?2021 Bloomberg L.P.

¡¡¡¡China’s Huawei Technologies said it will launch its new Harmony operating system for smartphones on June 2, its biggest move yet aimed at recovering from the damage done by U.S. sanctions to its mobile phone business. U.S. sanctions banned Google from providing technical support to new Huawei phone models and access to Google Mobile Services, the bundle of developer services upon which most Android apps are based. The new HarmonyOS will only go some way to mitigating the impact of the 2019 sanctions that also barred Huawei from accessing critical U.S.-origin technology, impeding its ability to design its own chips and source components from outside vendors.

¡¡¡¡Financial regulators should undertake a detailed cross-border probe into how the collapse of U.S. investment fund Archegos cost mostly foreign banks more than $10 billion, Bank of England policymaker Anil Kashyap said on Wednesday. Kashyap, a finance professor at Chicago Booth business school and an external member of the BoE’s Financial Policy Committee, also warned that new European Union bank capital rules could have “tragic” outcomes if abused. Archegos defaulted on margin calls in March, leaving banks nursing heavy losses after a fire sale of the shares that had been meant to act as collateral.