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This Upstart Chinese Brokerage Is Now Bigger Than Credit Suisse

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(Bloomberg) — East Money Information Co., founded by a 49-year-old former stock commentator, is one of the big winners in China’s wildest stock frenzy in half a decade.

Shares in the online broker and market data provider have rocketed 78% this year, giving it a market value of more than 200 billion yuan ($29 billion). That puts it among the world’s biggest traded institutional brokers, making it more valuable than even Credit Suisse Group AG, according to data compiled by Bloomberg.

Its founder, a former analyst and columnist who goes by his pen name, Qi Shi, has become very rich. After starting the firm in 2005 as Shanghai Dong Cai Information Technology, his 21% stake is now worth $6.2 billion. His father and wife, the second- and third-largest shareholders, own another 5% combined.

Like the popular Robinhood Markets Inc. app in the U.S., East Money has found a sweet spot with tech-savvy youth as millions, stuck at home amid the coronavirus, turned to stock trading. Its revenue swelled 67% in the first half of 2020 and its net income more than doubled. Unlike the crowded U.S. scene, where Robinhood and E*Trade Financial Corp. are slashing fees to zero, the company has been able to keep charging customers on trades, but at a lower rate than the traditional brokers.

It has a leg up on its local rivals, analysts and investors say, being the only Chinese internet broker with licenses to trade stocks and sell mutual funds, which make up 90% of its revenue. The firm runs a popular chat forum, called Guba, where millions of investors swap stock tips and rumors, while it also sells market data to institutional investors.

“The stock rally is linked to the rarity of its business model,” said John Zhou, Shanghai-based managing director and fund manager at MQ Investment, who has East Money as one of his top 10 Chinese stock holdings. “It’s a financial data provider and broker, it fits in both camps and is the only player in its own field.”

Qi was not available for an interview and the company declined to comment. It also declined to divulge how many users it has, but Daiwa Capital Markets estimates its stock app has about 11.4 million monthly active users and its mutual fund app about 10.9 million. Among Chinese stock-market apps it only lags behind Hithink RoyalFlush Information Network Co.’s 17.3 million clients, Daiwa said in an August report.

In a rare interview with China Business News in 2014, Qi Shi, which means “as a matter of fact” in Chinese, said his push to create an online platform for communication and information for investors stemmed from being an “introvert.”

From its start as an information provider, East Money branched out in 2015, obtaining a license when it bought broker Tongxin East Fortune Securities Co Ltd. It secured a mutual fund license in 2018, allowing it to run its own funds on top of selling third-party products.

8,000 Funds

Clients can pick from more than 8,000 mutual funds from 140 asset managers on the site. Its transactions jumped 83% to 568 billion yuan in first half of this year, surpassing even the 334 billion yuan in sales by Industrial and Commercial Bank of China Ltd., the nation’s largest bank.

The firm charges 0.25% on stock trades and offers a rate as low as 0.15% on mutual fund transactions.

Max Wang, a 29-year-old working in sales at a fund manager in Shanghai, is an avid user. He first found the site when he was an intern back in 2015, using it to check prices and data, and then started making purchases.

“It basically has every mutual fund product for sale so you don’t need to open many accounts with various brokers,” Wang said. “I find some features very smart. With one click they can automatically allocate my idle money to various selective money-market funds to diversify risks.”

Stock trading fees are low across China, with securities firms charging fees from just above zero to about 0.25%, while top brokers such as Huatai Securities Co. and Guangfa Securities Co. charge above 1% on some popular mutual funds.

Of the 31 analysts that follow the firm, 28 have a buy rating. Daiwa analysts led by Leon Qi maintained an underperform rating in August, citing East Money’s now unappealing valuation of 7.3 times forward price-to-book ratio. The average for Chinese brokers is 1.59 times, according to data compiled by Bloomberg.

The analyst is also more bullish on Hangzhou-based RoyalFlush because it spends more on research and development, has a more diverse revenue base and isn’t saddled by the costs and risks of owning a brokerage.

‘Killer’ Chat

But Dai Danmiao, a Shenzhen-based analyst with Guosen Securities Co., said East Money has a strong point in its “killer” stock-forum chat site. “Users are very attached given its high social network element, they can easily open a stock account after active discussions on certain stocks with one click,” Dai said.

While Dai said the broker is at the mercy of volatile markets and faces competition from companies such as Ant Group, which obtained license to sell funds in 2015, its broad array of products and user loyalty put it at an advantage.

For now, its users are sticking. “There are other investing websites and apps such as Alipay which are also handy,” said Max Wang. “But I have got used to East Money’s website and app over the years, I don’t think I will switch easily.”

(Adds details on fees in 15th paragraph.)

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U.S. Home Shopping Boom Buoys Shipping Lines Half a World Away

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GlobeNewswire

Michael Holston Stresses New Animal Education

Miami, Florida, Sept. 22, 2020 (GLOBE NEWSWIRE) — Educational videos, regardless of topic, have always been pretty dull in the past. It is tough to get people to feel fully engaged without exciting content. These videos tend to fail at inspiring a new generation to learn about a topic. Animals can be some of the most interesting topics in the world, but only if they are covered the right way. Michael Holston, a man many people know online as The Real Tarzann, is looking to do just that. His journey, as well as his way of providing educational information, is unconventional, but he is gaining a massive following along the way. He now has focused his platform on inspiring a new generation and educating in a way that might work in the long term. Hands-on learning It all started with Michael Holston as a kid with a passion for animals. He took what few opportunities came his way to volunteer his time and work with different organizations to get his foot in the door. Whether it is working with domesticated animals or some of the deadliest in the world, Holston put together videos that can capture the attention of millions. However, dig deeper beyond the shock value and viral shots, and Holston is providing interesting animal education for all ages. While videos and photographs are not going to replace true education, it can inspire those who have the same passion to go to the next step. It is a major reason why Holston is now using his platform to educate and inspire. He also is hoping to raise money for non-profit organizations and schools in need of help. Formal animal education Certain topics are underfunded around the globe, with animal education being one of them. Holston is working to build schools to provide better animal education so that more people can be comfortable around animals. With such a broad audience, he knows that plenty of people have this desire to be smarter, and a smarter world around animals can help preserve living spaces for them as well. It’s a win-win situation for all, which is why he is so passionate about building schools in different locations around the world. This also means finding the right teachers for those schools, and hiring locally makes the most sense. These are the people who know animals around the area better than anyone, and they can share that same type of passion to drive others every single day. Non-profit organizations From education to fighting against animal abuse, there are numerous non-profit organizations that Michael Holston directly worked with. He believes that many of these organizations have great ideas, but the funding is not there to make the change they would like. There is still a lot of animal abuse going on in different parts of the world, and Holston is hoping that with his reach, he can make an impact on changing things little by little. A lot of the non-profits Michael Holston works with started with a visit in person. After getting a better idea of the grassroots campaign, he became invested in helping them turn the corner and get to a new level. Even if just a fraction of his followers take the time to research and invest what they are about, it is a considerable change. Local cleanups Holston calls south Florida home, and that part of the world is also home to many unique types of wildlife. What seems like a pretty basic concept is something a lot of people overlook so often. Part of proper animal education is just knowing how to make a positive impact around a local setting. Cleaning up the environment and doing little things to make a positive impact can start to add up if all of Holston‘s followers pitch in. Cleaning up benefits humans as well, and it seems like a true no-brainer for many. Now that he has kickstarted a few local cleanups in South Florida, he is hoping to expand to other parts of the world as well. CONTACT: contact@therealtarzann.com

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Many small companies can borrow without Main Street

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WASHINGTON — Federal Reserve Chair Jerome Powell says that many mid-size U.S. businesses are now able to borrow from banks, suggesting that the need for a Fed lending program that was designed to serve struggling medium-size companies has waned.

In remarks prepared for delivery Tuesday to the House Financial Services Committee, Powell said there are 230 loans, accounting for a total of about $2 billion, that have been provided or are in the pipeline under the Fed’s Main Street Lending Program. Powell’s testimony was released Monday by the Fed.

Still, that sum is far short of the $600 billion that the Fed had initially set aside for the Main Street program. The Treasury Department and the Fed allocated $75 billion from congressionally approved taxpayer funds to support the Main Street program; any losses up to that amount would be covered by Treasury.

“Main Street loans may not be the right solution for some businesses, in part because…these loans cannot be forgiven,” Powell said. “The evidence suggests that most creditworthy small and medium-sized businesses can currently get loans from private-sector financial institutions.”

The Fed chair has said that Main Street was intended to help companies that were too large for the Paycheck Protection Program, which provided forgivable loans to small companies, and too small for the Fed’s corporate bond purchases, which are intended for businesses large enough to issue their own bonds.

The central bank has faced criticism for not making the Main Street program easier to use for banks, which evaluate and issue the loans. The Fed buys 95% of the loan from the banks, reducing their credit risk.

On Tuesday, Powell will testify to the House committee along with Treasury Secretary Steven Mnuchin in a hearing focused on the implementation by the Fed and Treasury of emergency programs that Congress established in its $2 trillion relief package approved in March.

Christopher Rugaber, The Associated Press

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Stocks sink as September gloom continues

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Stocks sank Monday, following global equities lower and setting the three major indices up to extend last week’s sharp declines. The extended drop came as concerns over stagnating coronavirus case improvement stoked fears of more lockdowns, and as political uncertainty nudged investors away from risk assets.

The Dow fell more than 700 points, or 2.7%, just after noon on Monday, adding to a cumulative more than 350-point slide in the index from Thursday to Friday last week. The S&P 500 dropped more than 2% after ending last week at its lowest level in six weeks last week. As of Friday’s closing level, the S&P 500 was down more than 7% from its recent record high from Sept. 2, and was on track to log a four-session losing streak, or its longest since February.

“So far, the market has over-shot our expectations for a 4% to 6% haircut from recent highs on near-term extended valuations, as well as economic and Covid-19 risks. That said, the declines through last Friday are not all that surprising,” John Stoltzfus, chief investment strategist for Oppenheimer Asset Management, said in a note Monday. “It is that September — traditionally but not always — can be tough month for stocks. The S&P 500 had delivered a massive rally rising 60% from the lows on March 23 through September 2. Markets tend to overshoot to the upside as well as to the downside.”

Other analysts pointed to developments – and in some cases, a lack of progress – in Washington, D.C. as contributors to the pullback.

“The root causes of the recent drawdown in US large caps are [first], recent weakness in real-time economic indicators, [second] the lack of movement on a fiscal stimulus package that could offset #1 and [third] the Fed’s lackluster forecasts in its Wednesday release of the Summary of Economic Projections,” Nicholas Colas, Co-founder of DataTrek Research, wrote in a note Monday morning.

Shares of major bank stocks including JPMorgan Chase (JPM), HSBC (HSBC) and Deutsche Bank (DB) slid following a report that they and other financial institutions for decades facilitated fund transactions used for allegedly criminal activities, and failed to report suspicious activity.

Meanwhile, heavily weighted big tech stocks extended the past several weeks’ worth of declines, with Apple (AAPL), Facebook (FB), Amazon (AMZN) and Microsoft (MSFT) shares each lower in intraday trading. Oracle (ORCL) was the exception among tech names, after the company announced Friday that it was chosen to become TikTok’s “secure cloud technology provider,” and in doing so take a 12.5% stake in the social media service. Shares rose more than 1%.

So-called “reopening stocks” also renewed their declines, as fears over coronavirus cases both in the US and abroad led to jitters over a second wave of the pandemic and more business re-closures. Covid-related deaths in the US neared 200,000, and new cases have risen significantly in Arkansas, Colorado, Idaho, Montana, Nebraska and North Dakota over the past week. Former FDA Commissioner Scott Gottlieb told CBS’s “Face the Nation” on Sunday that he thinks “we have at least one more cycle with this virus heading into the fall and winter.” In Europe, countries including France and Germany have been grappling with marches higher in daily cases, and the World Health Organization warned last week of a “very serious situation unfolding” in Europe over the virus.

Cruise stock Royal Caribbean Group (RCL) fell more than 7% in intraday trading, and airlines including United Airlines (UAL), Southwest (LUV) and Delta (DAL) were each down at least 6%.

12:04 p.m. ET: US household net worth rose by a record $7.6 trillion in Q2 after stimulus boost

The Federal Reserve said Monday that US household net worth surged by a record $7.6 trillion in the second quarter this year, following an influx of coronavirus-related government stimulus payments and run-up in the stock market. The increase brought household wealth to $118.9 trillion by the end of quarter ended in June.

10:26 a.m. ET: Stocks extend declines, Dow drops 700+ points

The three major indices extended declines Monday morning, adding to the last three weeks’ worth of drops. The Dow sank further, dropping more than 750 points, or 2.7%, to well below 27,000.

The S&P 500 also slid more than 2%, with the energy, materials and industrials sectors leading the declines.

Overseas equities also slumped. Germany’s DAX (^GDAXI) index slid 4.5% for its biggest drop since March.

9:33 a.m. ET: Stocks open sharply lower, Dow sheds 400+ points

Here were the main moves in markets as of 9:33 a.m. ET:

  • S&P 500 (^GSPC): -51.81 points (-1.56%) to 3,267.66

  • Dow (^DJI): -502.67 points (-1.82%) to 27,154.75

  • Nasdaq (^IXIC): -153.07 points (-1.37%) to 10,638.94

  • Crude (CL=F): -$0.97 (-2.36%) to $40.14 a barrel

  • Gold (GC=F): -$42.70 (-2.18%) to $1,919.40 per ounce

  • 10-year Treasury (^TNX): -3.3 bps to yield 0.661%

7:45 a.m. ET: Nikola shares plummet after founder Trevor Milton resigns as executive chairman

Shares of newly public electric truck-maker Nikola (NKLA) slumped in early trading after its executive chairman and founder Trevor Milton unexpectedly announced his resignation, after a short-seller released a scathing report alleging Milton had for years deceived investors about the company.

“I asked the Board of Directors to let me step aside from my roles as Executive Chairman and a member of Nikola Board of Directors. The focus should be on the Company and its world-changing mission, not me. I intend to defend myself against false allegations leveled against me by outside detractors,” Milton wrote in a statement posted on his Twitter account at 2:21 a.m. ET Monday morning. 

Nikola’s stock, which had risen to as high as $50.05 per share after announcing a partnership with General Motors (GM) earlier this month, saw shares slide to below $24 per share in early trading. GM shares were off 3.8% in pre-market trading.

7:36 a.m. ET Monday: Stock futures sell off in early trading

Here were the main moves in equity markets, as of 7:36 a.m. ET Monday:

  • S&P 500 futures (ES=F): 3,257.25, down 59 points or 1.78%

  • Dow futures (YM=F): 27,041.00, down 561 points or 2.03%

  • Nasdaq futures (NQ=F): 10,729.00, down 198 points, or 1.81%

  • Crude (CL=F): $40.32 per barrel, -$0.79 (-1.92%)

  • Gold (GC=F): $1,936.90, -$25.20 (-1.28%)

  • 10-year Treasury (^TNX): yielding 0.663%, or down 3.1 bps

NEW YORK, NEW YORK – MARCH 20: Traders work on the floor of the New York Stock Exchange (NYSE) on March 20, 2020 in New York City. Trading on the floor will temporarily become fully electronic starting on Monday to protect employees from spreading the coronavirus. The Dow fell over 500 points on Friday as investors continue to show concerns over COVID-19. (Photo by Spencer Platt/Getty Images)

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