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Alibaba approves stock split ahead of reported Hong Kong IPO

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A monitor displays Alibaba Group signage on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on Monday, Jan. 7, 2019.

Michael Nagle | Bloomberg | Getty Images

Alibaba shareholders voted overwhelmingly in favor of a stock split that the e-commerce giant said could help with further fundraising activities.

That stock split, which must come into effect before July 15, 2020, will see one ordinary share split into eight. That would mean the current number of ordinary shares — which stands at 4 billion — will increase to 32 billion. The vote took place at Alibaba’s annual general meeting late on Monday.

It comes as Alibaba is reportedly looking into an initial public offering (IPO) in Hong Kong which could raise as much as $20 billion.

In the stock split proposal, which was released last month, Alibaba said the move would boost the number of shares at a lower price, but importantly also “increase flexibility in the Company’s capital raising activities, including the issuance of new shares.”

That appears to be a nod toward a potential secondary listing in Hong Kong. Alibaba is already listed in New York after it went public in 2014. However, the tech giant declined to comment on reports of a Hong Kong listing.

Gil Luria, director of research at D.A. Davidson & Co., said Alibaba may be thinking about an IPO sooner rather than later, arguing the firm is not getting “favorable multiples” in New York and the U.S.-China trade conflict could lead to “scrutiny” on their American listing.

“I’d say there is a sense of urgency, the stock split appears to be a step in the direction of getting that Hong Kong listing. I’d expect it relatively soon, given that Hong Kong has lifted the restrictions that originally encouraged Alibaba to list in New York,” Luria told CNBC’s “Squawk Box Asia” on Tuesday.

Alibaba chose New York over Hong Kong in 2014 because the latter’s rules could not accommodate the Chinese company’s dual-class share structure — which allow for weighted voting rights and give company founders and insiders more control. Hong Kong Exchanges and Clearing, the company that runs the stock exchange, recently reformed those rules, paving the way for Alibaba’s secondary listing.

There are several reasons that companies carry out stock splits. One is to increase the number of shares with the hope of attracting new investors. Another is to lower the price of each share if a company feels that it has become too high.

When Alibaba went public in the U.S. in 2014, it priced its shares at $68 a piece. Alibaba shares closed above $173 on Monday.

Alibaba doesn’t necessarily need the cash from the listing but analysts said it could give it a boost to invest in new areas.

“As it relates to their listing, clearly, they’re very cash rich company but this does give them presence in the region from a listings standpoint and gives them capital that they can put to good use,” Joseph Berger, CEO of Pacific Epoch, told CNBC’s “Street Signs” on Tuesday.

CNBC’s Stella Soon contributed to this report.

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China warns US to stop wrong trade actions or face consequences

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China said on Saturday it strongly opposes Washington’s decision to levy additional tariffs on $550 billion worth of Chinese goods and warned the United States of consequences if it does not end its “wrong actions”.

The comments made by China’s Ministry of Commerce came after the U.S. President Donald Trump announced on Friday that Washington will impose an additional 5% duty the Chinese goods, hours after Beijing announced its latest retaliatory tariffs on about $75 billion worth of U.S. goods, in the latest tit-for-tat moves in their bilateral trade dispute.

“Such unilateral and bullying trade protectionism and maximum pressure violates the consensus reached by head of China and United States, violates the principle of mutual respect and mutual benefit, and seriously damages the multilateral trade system and the normal international trade order,” China’s commerce ministry said in a statement on Saturday.

“China strongly urges the United States not to misjudge the situation or underestimate determination of the Chinese people,” it added.

Trump’s latest tariff move, announced on Twitter, said the United States would raise its existing tariffs on $250 billion worth of Chinese imports to 30% from the current 25% beginning on Oct. 1, the 70th anniversary of the founding of the communist People’s Republic of China.

At the same time, Trump announced an increase in planned tariffs on the remaining $300 billion worth of Chinese goods to 15% from 10%. The United States will begin imposing those tariffs on some products starting Sept. 1, but tariffs on about half of those goods have been delayed until Dec. 15.

Trump was responding to Beijing’s decision on Friday night that it was planning to impose retaliatory tariff on $75 billion worth of U.S. imports ranging from soybean to ethanol. China will also reinstitute tariffs of 25% on cars and 5% on auto parts suspended last December.

The White House economic adviser said earlier in the week the Trump administration was planning in-person talks between U.S. and Chinese officials in September. It is unclear if the bilateral meeting would still take place.

The year-long trade war between the world’s two largest economies has roiled financial markets and shaken the global economy.

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Protesters march near Biarritz demanding action from G-7 leaders

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French activist Jean-Baptiste Redde, aka Voltuan (R) holds a placard reading ‘stop climate crime’ next to a demonstrator dressed as a traditional Basque shepherd, during a march in Hendaye, south-west France on August 24, 2019, to protest against the annual G7 Summit attended by the leaders of the world’s seven richest democracies, Britain, Canada, France, Germany, Italy, Japan and the United States.

GEORGES GOBET | AFP | Getty Images

Thousands of anti-globalisation and environmental activists joined yellow vest protesters and Basque separatists on Saturday near the French coastal resort of Biarritz to demand action from G7 and other world leaders set to meet there.

Protesters converged on the nearby town of Hendaye on the French border with Spain to protest against economic and climate policies pursued by the world’s leading industrial nations and to promote alternatives.

“The top capitalist leaders are here and we have to show them that the fight continues,” said Alain Missana, 48, an electrician wearing a yellow vest — symbol of the anti-government demonstrations that have been held in France for months.

“It’s more money for the rich and nothing for the poor. We see the Amazonian forests burning and the arctic melting. The leaders will hear us,” he said.

Fires are devastating large swathes of the forest which is considered a vital bulwark against climate change.

Protesters waved banners for causes ranging from gay rights to Palestine, but their messages were aimed firmly at the leaders of the United States, Germany, France, Britain, Canada, Japan and Italy who are set to begin three days of talks on Saturday.

“No to the G7. For another world,” one banner read. “Heads of state the Amazon is burning. Act now,” said another.

The protesters marched under bright-blue summer skies from Hendaye to the town of Irun, Spain, some 30 km (18 miles) south of the G7 venue Biarritz.

More than 13,000 police officers, backed by soldiers, are guarding the Biarritz summit site and police had feared that anarchist groups might have tried to derail Saturday’s protest, which has been billed as a peaceful, family event.

Four police officers were lightly wounded on Friday after protesters fired a homemade mortar near the anti-G7 counter summit in Hendaye. Police arrested 17 people for hiding their faces.

There was no immediate sign of any radical groups on Saturday and the police presence was light.

Protesters came from all parts of France and beyond including from across the border, where Basque separatists were also keen to show their solidarity.

“The counter-G7 demonstration is in this Basque region and we want people to see we are part of it,” said Alfredo Akuna, a 46-year-old engineer from San Sebastián who wore traditional Basque clothing.

“We’re involved in many movements including anti-capitalism and anti-fascism so it’s important to be here to show that.”

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EU will retaliate if US imposes tariffs on France over digital tax

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The European Union will “respond in kind” if the U.S. imposes tariffs on France over digital tax plan, Donald Tusk, president of the European Council said on Saturday.

Speaking at the G-7 leaders meet in Biarritz in France, Tusk said if President Donald Trump uses tariffs for political reasons then it can be risk for the whole world, including the EU, Reuters reported. 

Earlier on Saturday, Trump criticized the French digital tax aimed at big U.S. technology companies and threatened again to retaliate by taxing French wine.

Speaking to reporters at the White House before leaving for a Group of Seven summit in France, Trump said he is not a “big fan” of tech companies but “those are great American companies and frankly I don’t want France going out and taxing our companies.”

“And if they do that … we’ll be taxing their wine like they’ve never seen before,” he said according to Reuters.

France passed a 3% tax in July that targets roughly 30 big tech companies including Facebook, Amazon and Google. The levy applies to companies with more than 750 million euros ($830 million) in annual revenues from “digital activities,” including 25 million euros ($27 million) from within France.

Reuters contributed to this report.

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