Business
iQiyi, ‘Netflix of China,’ Allegedly Committed Securities Fraud
News Analysis
China streaming video leader iQiyi, the “Netflix of China,” is accused by a research firm and a short seller of committing a similar securities fraud exposed at Luckin Coffee, the “Starbucks of China.”
Global financial research firm Wolfpack Research issued a public report stating that iQiyi, Inc. has “massively [inflated] its user numbers and revenue while at the same time hiding the fraud from auditors and investors by overpaying for content, acquisitions, and other assets” prior to its high-profile March 2018 initial public offering in the United States that raised over $2.25 billion.
Beijing-based iQiyi was founded in 2010 as part of China’s multinational internet-related services and artificial intelligence giant Baidu, Inc. The company has generated over 30 original production series. In 2015, it bought the streaming rights to eight of China’s top shows, and several entertainment series from Taiwan and South Korea.
With 455 million monthly average users (MAUs), compared to 167 million MAUs for Netflix, iQiyi’s market capitalization almost doubled in its first month of trading to over $23.3 billion. Wall Street analysts attributed the turmoil from the Sino-U.S. trade war and the COVID-19 pandemic for pushing the stock valuation down to $12.7 billion.
Wolfpack Research was launched last year by activist short seller Dan David. Its mission is to expose U.S. and foreign publicly listed companies that engage in fraud and other wrongdoings.
The due diligence firm received support from short sheller Muddy Waters Capital in exposing iQiyi. Muddy Waters shorted iQiyi by betting that its stock price will decline.
Investment firm Muddy Waters exposed Luckin Coffee’s fraudulent activities in January. The stock of Luckin Coffee plunged by over $5.5 billion after the company admitted on April 2 that its chief operating officer and other insiders may have fabricated $310 million in sales in 2019. The Luckin stock crash has also endangered the balance sheets of Haitong Securities, Morgan Stanley, and Credit Suisse that loaned Luckin’s…
Business
Russia’s Booming Economy is Straining a Vital Trading Route with China
Russia’s railway industry is experiencing a significant downturn, with a nearly 30% investment cut and a 5% freight volume decline, complicating trade with China amidst the economic impacts of the Ukraine war.
Downward Trend in Russia’s Railway Industry
Russia’s railway industry is currently experiencing a significant downturn, largely due to the impacts of the ongoing conflict in Ukraine. According to MMI Research, this sector is facing its biggest slowdown since the Great Financial Crisis, with freight volumes dropping by 5% in the first 11 months of 2024. The war-driven economy has hindered trade, particularly with China, which heavily relies on rail transport.
Investment Cuts and Economic Consequences
Investment in Russia’s railways is set to decrease by almost 30% next year, dropping to 890 billion rubles (approximately $8.5 billion). This reduction is attributed to high interest rates, currently at a record 21%, which further complicate financing options. The state-owned Russian Railways is reconsidering future investments, indicating potential cuts by another third through 2030.
Challenges Affecting Trade with China
The decline in rail capacity poses significant challenges for Russia’s trade with China. As Western sanctions push Russia to diversify its trade routes, rail transport has become increasingly vital for moving goods. However, supply bottlenecks, exacerbated by the need to transport war-related materials, threaten to disrupt this crucial trading relationship further.
Source : Russia’s overheated economy is squeezing one of Moscow’s key trading channels with China
Business
Democrat Claims Musk is Undermining Spending Bill Due to China Restrictions – The Hill
A Democrat claims Elon Musk influenced the reduction of a spending bill due to its restrictions on China, suggesting his actions impacted the legislation’s progress and funding allocation.
Allegations Against Musk
A prominent Democrat has accused Elon Musk of deliberately sabotaging a significant spending bill in response to China-related restrictions. This accusation comes amid ongoing tensions between the U.S. and China, particularly regarding technology and trade policies. The claims suggest that Musk’s influence is affecting critical legislative processes, raising concerns among lawmakers about foreign influence in American politics.
Implications for Legislation
The potential ramifications of Musk’s alleged actions could be significant. As a major player in the tech industry, his decisions can sway public opinion and impact the economy. Lawmakers fear that if influential figures like Musk oppose necessary legislation, it might hinder efforts to address vital issues such as national security and economic stability.
Political Reactions
The controversy has sparked debates among both Democrats and Republicans, highlighting the intersection of technology and politics. Many are demanding greater transparency and accountability from tech giants. As the situation unfolds, lawmakers may need to reassess their strategies to ensure that essential legislation moves forward uninterrupted.
Source : Democrat accuses Musk of tanking spending bill over China restrictions – The Hill
Business
HSBC Chairman to Head Key UK Business Delegation to China
HSBC Chairman Mark Tucker will lead a UK business delegation to China next month to boost trade and investment, amid concerns over national security and improving UK-China relations.
HSBC Chairman Leads UK Delegation to China
HSBC Chairman Mark Tucker will lead a pivotal British business delegation to China next month, marking the first significant visit since 2018. The trip aims to enhance Chinese investment in the UK, guided by Chancellor Rachel Reeves. Tucker, a seasoned financier with extensive Asia experience, is regarded as essential in resetting UK-China relations.
Reviving Economic Dialogue
Tucker will accompany senior bankers in seeking to rejuvenate trade, specifically focusing on financial services. Although there are apprehensions among some UK lawmakers regarding national security threats posed by closer ties to Beijing, the UK Treasury spokesperson confirmed Chancellor Reeves’ upcoming discussions on economic cooperation in Beijing.
A Shift in UK-China Relations
Since suspending most dialogues following China’s imposition of a national security law in Hong Kong, UK-China relations have soured. Nevertheless, the Labour government is prioritizing improved ties with China, emphasizing investment opportunities. Reeves asserts the necessity of a pragmatic approach to benefitting national interests amid ongoing concerns voiced by some lawmakers about security risks.
Source : HSBC Chairman to lead pivotal UK business delegation to China
- Russia’s Booming Economy is Straining a Vital Trading Route with China
- Democrat Claims Musk is Undermining Spending Bill Due to China Restrictions – The Hill
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