When the national equity market prepares to close for this year’s Labor Day celebration, U.S. stocks will have risen to impressive numbers but traded at a record slow pace. This article reports on Standard & Poor’s 500 Index meteoric rise this month.
U.S. stocks rose, finishing the biggest monthly gain since February, amid improving economic data and speculation central banks will continue to spur growth.
The Standard & Poor’s 500 Index added 0.3 percent to a record 2,003.37 as of 4 p.m. in New York today. The index jumped 3.8 percent this month, the best August performance since 2000.
Economic reports showed consumer confidence unexpectedly rose in August, while consumer spending dropped in July for the first time in six months. Euro-area inflation slowed this month to the weakest rate since 2009, increasing pressure on the European Central Bank to add stimulus. American equity markets will be closed on Sept. 1 for the Labor Day holiday.
With the U.S. headed into the Labor Day holiday weekend, the stock market has been experiencing the slowest trading in at least six years. Volume has been below 5 billion shares in each of the past eight days, the longest stretch in data compiled by Bloomberg going back to 2008.
“Investors’ lack of exposure to equities is still what drives the market higher, along with valuations which aren’t stretched,” Paul Atkinson, head of North American equities at Aberdeen Asset Management Plc in Philadelphia, said in a phone interview. The firm oversees $551.4 billion.
The Dow Jones Industrial Average climbed 18.88 points, or 0.1 percent, to 17,098.45. The Nasdaq Composite Index gained 0.5 percent to 4,580.27.
U.S. household purchases decreased 0.1 percent after increasing 0.4 percent in June, Commerce Department figures showed. None of the 79 economists in a Bloomberg survey projected a decrease. Incomes climbed 0.2 percent, the smallest monthly advance this year.
Consumer confidence unexpectedly rose in August, showing a brightening in Americans’ moods as the labor market gains traction. The Thomson Reuters/University of Michigan final sentiment index rose to 82.5 from 81.8 in July. The median projection in a Bloomberg survey of economists called for 80.
“You look through the data we’ve gotten this week, it’s strong, I think what the stock market’s getting is that this lfit is starting to help the consumer,” John Canally, chief economic strategist at Boston-based LPL Financial LLC, said via phone.
European Stimulus
In Europe, consumer prices rose 0.3 percent in August from a year earlier after a 0.4 percent increase in July, the statistics office in Luxembourg said. Unemployment remained at 11.5 percent in July, Eurostat said in a separate report. ECB President Mario Draghi said in a speech at a conference in Jackson Hole, Wyoming that inflation expectations have deteriorated in the euro area and signaled policy makers are ready to add fresh stimulus.
“The ECB meeting is next week and Draghi kind of precommitted at Jackson Hole when he started talking about inflation being below their desired range,” Paul Zemsky, the New York-based head of multi-asset strategies at Voya Investment Management LLC, which oversees $213 billion, said by phone. “If they don’t do something different, global markets will be disappointed.”
Avago Technologies Ltd. (AVGO), a semiconductor-device supplier, climbed 7.5 percent to $82.09 for the biggest gain in the S&P 500 after it reported earnings that topped estimates.
Pacific Sunwear of California Inc., a clothing retailer, slid 9.6 percent to $2.08 after projecting losses in the third quarter that were deeper than analysts’ estimated.
Veeva Systems Inc. (VEEV), the provider of cloud-based business services, jumped 20 percent to $29.97. It boosted its year-end earnings prediction and reported second-quarter earnings that beat estimates.
Nabors Industries Ltd., the oil, gas and geothermal land drilling operator, gained 3.6 percent to $27.21, the most in two months. A Bloomberg Industries report yesterday showed it stand to benefit from exposure to Argentina shale development.
Elizabeth Lesar is a marketing executive who nurtures relationships between individual investors with investment firms to generate optimal revenues using tactile trading styles and curated investment vehicles. Keep posted on Ms. Lesar’s financial endeavors by following this Twitter account.
Alibaba has long been said to be China’s answer to eBay and Amazon. This article features the professional career background of Joseph Tsai, vice chairman and chief dealmaker for the company’s much awaited initial public offering to the US stock market.
At 4:30 on a May morning, Joseph Tsai and three other executives of Alibaba Group Holding Ltd. gathered at a Hong Kong office. With the U.S. stock market just closed, it was time to submit the Chinese e-commerce giant’s prospectus for its initial public offering to the U.S. Securities and Exchange Commission. With bottles of Champagne at the ready, each executive typed a word of the company’s name on a computer. All four then hit the button, sending the 340-page document that began a process that’s likely to culminate soon in what may be the largest initial public offering ever in the U.S.
Chairman Tsai is the guy who stays up until 4:30 a.m. to get things done. As the company’s chief dealmaker, he helped transform Alibaba into a global powerhouse, leading negotiations for most of the early outside investments in the company, including $20 million from SoftBank (9984:JP). He’s also overseen dozens of acquisitions—including more than $4.6 billion worth so far this year, according to data compiled by Bloomberg—that have expanded Alibaba’s business into new territories: online mapping, department stores, and TV content.
The company posted a profit of $1.99 billion in the three months through June. Sales rose to about $2.5 billion. “Alibaba wouldn’t be where it is today without Joe Tsai,” says Porter Erisman, who worked in marketing and communications at Alibaba in the early days and just released a documentary on the company’s beginnings.
Tsai’s top priority now is to persuade investors to buy the company’s stock. He’s been involved in shaping every aspect of the offering, including the design of the company’s corporate structure and the choice of investment banks to underwrite the deal. Tsai will be well rewarded if the IPO is successful. His stake of 2.9 percent could be worth as much as $4.5 billion, based on analyst estimates of the company’s value. Through a spokesman, Alibaba, Tsai, and Ma declined to comment. People who have direct knowledge of the events, who asked not to be named, provided information for this story.
In a corporate structure Tsai helped devise, Alibaba will be governed by a group of 27 managers who will have the exclusive right to nominate a majority of the board of directors. Alibaba’s biggest shareholders, SoftBank and Yahoo!(YHOO), support the arrangement, even though they will not have representatives in the management group. After two years of discussions with the company, Hong Kong’s Securities & Futures Commission rejected the proposal, ruling that it gave too much power to a small group of shareholders. That decision led the company to move its IPO to the New York Stock Exchange; the SEC has not objected.
China prohibits foreign investors from owning shares of companies in certain industries, including the Internet. Chinese companies get around the restrictions by using variable interest entities, or VIEs, which give overseas investors the economic gains and losses of the China-based parts of the business through contracts rather than direct ownership. All of the major Chinese Internet companies that list on U.S. exchanges use the structure, including search firm Baidu (BIDU), online retailer JD.com, and Weibo, a microblogging service.
Still, VIEs are in a legal gray area because China has no official rules governing their use, so Tsai took extra precautions to protect investors. Unlike earlier Chinese companies, which went public with as much as 99 percent of their revenue assigned to the VIE, less than 12 percent of Alibaba’s revenue and 8 percent of its assets are allocated to its VIE. “Alibaba Group is one of the best in terms of minimizing the amount of business conducted in the VIE,” says Paul Gillis, a professor at Peking’s Guanghua School of Management.
Born into a family of prominent lawyers in Taiwan in 1964, Tsai came to the U.S. when he was 13. He spoke little English when he enrolled in the Lawrenceville School, an elite boarding school in New Jersey. By the time he graduated, he had no accent and was playing lacrosse. He went on to play the sport at Yale, where he defied conventional jock protocol by wearing a pink triangle on his chest in support of gay rights. When members of the team teased him, he replied that it was just the right thing to do. “Joe always did what he thought was right,” says Jeff Gordon, a teammate. “And he was a steadying presence for all of us.” An Alibaba spokesman says Tsai now prefers to avoid commenting on political and social issues.
After graduating from Yale Law School in 1990, Tsai worked as a tax attorney at Sullivan & Cromwell in New York. Three years later he went to work at a small buyout firm, doing deals, then moved to Hong Kong for the Swedish holding company Investor. It was in this role that he first met Ma in 1999 in Hangzhou, China, after being introduced by a friend. He was so impressed with Ma’s energy and drive that he quit his $700,000-a-year job at Investor to help launch Alibaba. Tsai, the only Western-educated member of the management team, served as the company’s chief financial officer for more than a decade before becoming vice chairman in 2013.
In mid-July, Tsai juggled his IPO responsibilities while watching the World Lacrosse Championship in Denver, where the Hong Kong and Chinese teams that he helped build were playing. Gordon, who stays in touch with Tsai through his Facebook account, attended the games with him. “He hasn’t changed one iota,” Gordon says. “Did I expect him to be a very significant contributor to the world’s economy in some way, shape, or form? Of course. It’s how hard he worked, how smart he was, his ability to see differences in others and become their brother.”
New York marketing executive Elizabeth Lesar forges and nurtures relationships between investment firms and investors for revenue optimization on all ends of the deal. Learn more about Ms. Lesar or read more about the US stocks, securities, and fund market by following this Google+ page.
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