Posts Tagged ‘Goldman Sachs’

JP Morgan and Ford cancel plans for Saudi investor event

October 15, 2018

JP Morgan & Chase Co Chief Executive Jamie Dimon and Ford Motor Co Chairman Bill Ford canceled plans to attend a Saudi investor conference, the companies said on Sunday, the latest such high-profile announcements after the disappearance of Saudi journalist Jamal Khashoggi.

Image result for Jamie Dimon, photos

Jamie Dimon — FILE photo

The cancellations could add pressure on other U.S. firms like Goldman Sachs Group Inc, Mastercard Inc and Bank of America Corp to reconsider their plans to attend the investor event.

Neither JP Morgan nor Ford would elaborate on the reasons for the decision not to attend the Future Investment Initiative conference in Riyadh later this month, and did not comment on whether concerns about the disappearance of Khashoggi were a factor.

Khashoggi, a U.S. resident and Washington Post columnist critical of Riyadh’s policies, disappeared on Oct. 2 after entering the Saudi consulate in Istanbul. Turkey believes he was murdered and his body removed. Saudi Arabia has denied that.

The investment summit in Riyadh typically attracts executives from some of the world’s largest companies and media organizations. But it has rapidly become a vehicle for those firms to express their concerns over Khashoggi’s disappearance.

U.S. President Donald Trump has threatened “severe punishment” if it turns out Khashoggi was killed in the consulate, although he said Washington would be “punishing” itself if it halted military sales to Riyadh.

Major news organizations such as CNN, the Financial Times, the New York Times, CNBC and Bloomberg have pulled out of the conference. The Fox Business Network, the lone Western news outlet still heading to the conference, told Reuters on Sunday it was reviewing that decision.

Uber Technologies Inc Chief Executive Dara Khosrowshahi, Viacom Inc CEO Bob Bakish and billionaire Steve Case, one of the founders of AOL, said they were no longer going .

Goldman Sachs, Mastercard and Bank of America did not respond to requests on Sunday on whether they were still attending the event.

Citigroup Inc and Credit Suisse Group AG declined to comment on Sunday on their plans.

Bill Winters, CEO of Asia, Africa and Middle East-focused bank Standard Chartered Plc was still planning to go, the company said on Sunday.

The absence of media and technology executives is likely to case a shadow over the three-day event, dubbed “Davos in the Desert.” It has become the biggest show for investors to promote Saudi Crown Prince Mohammed bin Salman’s reform vision.

“Whilst it is disappointing that some speakers and partners have pulled out, we are looking forward to welcoming thousands of speakers, moderators and guests from all over the world to Riyadh,” a Future Investment Initiative representative said last week.

Reporting by Jarrett Renshaw in New York; Additional reporting by Joseph White in Detroit and David Henry in New York; Editing by Peter Cooney



China Wants to Strike Back on Trade. Big U.S. Deals Could Suffer.

October 8, 2018

Qualcomm, the American chip maker, spent two years hammering out a $44 billion deal to acquire a Dutch semiconductor manufacturer. Then, as the trade war with the United States erupted, Chinese regulators effectively killed it.

Now China is looking for new ways to retaliate in the intensifying trade drama — and experts warn that some corporate deals with American buyers could be in jeopardy.

A number of global deals involving American companies are under review by Chinese market regulators. Among the biggest is Walt Disney Company’s $71 billion acquisition of 21st Century Fox, which has an Oct. 19 deadline. United Technologies — owner of Pratt & Whitney, the jet engine maker, and other industrial businesses — is waiting to close a $30 billion purchase of Rockwell Collins, the aerospace parts maker.

China’s antitrust regulators disclose little about their deliberations. But some companies worry that this opacity could provide cover for retaliation in response to tariffs that the United States has placed on Chinese goods — and wonder if long-negotiated deals could become collateral damage in the trade war.

By  Alexandra Stevenson
The New York Times

Walt Disney Company’s acquisition of 21st Century Fox is being weighed by Chinese regulators, who have an Oct. 19 deadline. Credit Lucy Nicholson/Reuters

“Given the level of trade tensions now, in some exceptional cases you cannot exclude the possibility that individual transactions may be implicated,” said Fay Zhou, a partner at the law firm Linklaters in Beijing.

Officials at China’s antimonopoly agency, the State Administration for Market Regulation, did not respond to requests for comment.

American companies have prospered by exploring new markets and taking risks to extend their global reach. But President Trump warned last week that these were early days in his trade strategy — “China wants to talk, very badly, and I said, ‘Frankly, it’s too early to talk” — and American companies may encounter some backlash from Beijing.

China is looking for ways to retaliate because it has more or less run out of American imports to tax. China matched Mr. Trump’s initial tariffs on about $50 billion in Chinese goods, but last month he placed a 10 percent tax on $200 billion of Chinese goods. China doesn’t import enough from the United States to match that dollar for dollar.

So China has only so many avenues to inflict pain. They could include slow inspections for imports at Chinese ports and tighter regulatory scrutiny of American companies doing business in China.

A model of an engine from Pratt & Whitney, a subsidiary of United Technologies, which is seeking China’s approval of its purchase of Rockwell Collins. Credit Brent Lewin/Bloomberg

Deals are a ripe area, too.

“This is a way for China to put pressure on American corporations to get them to work on the U.S. government,” said Chen Zhiwu, a professor of finance and the director of the Asia Global Institute at the University of Hong Kong.

Blocking American deals comes with some cost. Aggressive regulators could spur foreign companies to retreat from China just when economic growth there is slowing.

A Qualcomm booth at an exposition in China this year. Regulators there blocked the company’s deal to buy NXP Semiconductors.  Credit China Stringer Network, via Reuters

“China has valid reasons to be angry with the Trump administration’s protectionist tariffs,” said Fred Hu, the chairman of Primavera Capital Group and a former chairman of Goldman Sachs for China. But, he added, “it is unlikely to direct its anger at American businesses.”

“On the contrary, China is trying to cultivate ties with them,” Mr. Hu said.

Regulators in China have a wide scope for denying deals by American buyers, even if Chinese companies aren’t involved. Chinese officials can block a deal for any new venture that they deem would have too much market control in China. The country’s broadly defined antimonopoly law allows regulators to consider more than what an individual deal might cost consumers or a specific Chinese business.

“Authorities are obliged to consider not just the competition merits of a deal but also the impact of a deal on China’s national economy,” said Ms. Zhou, a former official at the Chinese Ministry of Commerce, which until recently was in charge of greenlighting deals.

China’s approach has been reciprocated, to a point. American regulators have taken a tighter stance on international deals that they believe could benefit China or its companies. In August, Congress strengthened the ability of the government’s Committee on Foreign Investment in the United States to block foreign deals.

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“The party has been more interested in containing American influence in the cultural space and entertainment space,” Mr. Chen, of the Asia Global Institute, said. “Blocking such a deal would serve to keep the American influence away and also make a point to America.”

Trade war weighs on China industrial profits

September 27, 2018
Trade war has started to sting China’s manufacturers, ING economist and Goldman Sachs say
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By Edward White in Taipei

Profit growth at China’s large industrial companies slowed to a five-month low last month in what analysts say is a sign the US-China trade dispute is hurting the world’s second-largest economy.
Industrial profits rose 9.2 per cent year on year in August, according to the National Bureau of Statistics, down sharply from growth of 16.2 per cent in July. That was the slowest pace since March and marked the fourth straight month of slowing growth.

Iris Pang, ING economist, said the latest data showed that the trade war between the world’s two largest economies – which escalated this week with the imposition on Monday of a new US 10 per cent tariff on about $200bn of Chinese imports – has started to sting China’s manufacturers.“It is difficult to find an excuse not to blame the trade war,” she said, adding factories with foreign investment appeared to be among the worst hit.

Ms Pang added:


Foreign-owned factories have faced slower profit growth (+7.6% YoY) than Chinese-owned private enterprises (+10.0% YoY), and of course more so compared to state-owned enterprises (SOEs) at 26.7% YoY.
We believe that the higher profit growth of SOEs come from some projects that could be related to fiscal stimulus, eg, railway infrastructure projects.And those no so profitable infrastructure projects, eg, anti-pollution, could be under local government financial vehicles, which are not considered as local government entities but corporate entities.


Analysts at Goldman Sachs said the drop in industrial profit growth also reflected a “high base” from August 2017. While profit growth was slower in some metal manufacturing sectors and chemical and carmaking, earnings from electrical machinery manufacturing accelerated.

“Looking ahead, we continue to see headwinds to industrial profit growth in the rest of the year, based on our expectation of gradual moderation in industrial production growth, as well as potentially slower [producer price] inflation,” Goldman Sachs analysts said.

Tesla Criminal Probe Into Musk Tweet Seen Opening Pandora’s Box

September 19, 2018

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All it took to draw the U.S. Justice Department into investigating Tesla Inc.was a single tweet by Chairman Elon Musk. But now that prosecutors have a toehold, they can dig in to look for other signs of misconduct at the electric-car maker.

The investigation is in its very early stages and where it leads is anyone’s guess. Many securities fraud probes over the years have started with a bang like the one that knocked as much as 6.6 percent off Tesla’s shares with Bloomberg’s report of the probe on Tuesday.

Some of those are flash news reports that trickle off without charges. At the other extreme are companies like Theranos Inc., which pumped up its valuation with what the government said were false promises, leading to charges against founder Elizabeth Holmes and another senior executive.

“Criminal investigations are never good if you’re a public company because they open up a Pandora’s box and prosecutors will follow threads wherever they lead,” said Paul Pelletier, a former Justice Department prosecutor.

The New York Times on Tuesday reported that Goldman Sachs Group Inc. and private equity firm Silver Lake both received subpoenas from the Securities and Exchange Commission seeking materials about the companies’ interactions with Tesla, citing people briefed on the subpoenas. Goldman Sachs and Silver Lake declined to comment.

Tesla Cooperating

Tesla said it’s cooperating with the Justice Department, noting that it received queries but no subpoena.

The initial scrutiny surrounds Musk’s tweet on Aug. 7 that he had money lined up to take the company private. Shares jumped. Later, he and his board said there was no formal proposal for the funding and they abandoned the plan.

The Securities and Exchange Commission quickly opened a civil investigation into the tweet and issued a subpoena for information, people familiar with the matter told Bloomberg. That was followed by the Justice Department probe. Neither the SEC nor federal prosecutors have accused Musk of any wrongdoing.

To prove criminal securities fraud, prosecutors would have to show not only that Musk’s statements were false, but that they were made willfully. That would require establishing that Musk purposely planned to inappropriately drive the shares higher or prevent them from going lower.

Can Elon Musk Tweet That? The SEC Is Digging In: QuickTake

One area investigators would look for such evidence is in emails or other internal documents, according to former federal prosecutors.

Musk has often vented his frustrations with short sellers on social media. In May, Musk tweeted that he was expecting the “short burn of the century” and suggested that investors who were betting against the company start “tiptoeing quietly to the exit …”

The “funding secured” tweet did in fact trip up bearish sellers when the company’s shares rallied more than 10 percent. Government investigators will be trying to determine whether there was any connection to that statement and his desire to hurt short sellers.

Once federal prosecutors begin looking into Musk’s comments, they may also examine other things, including why the company’s new chief accountant picked up and left after just a month on the job — though he saidat the time he had “no disagreements with Tesla’s leadership or its financial reporting.” Under securities fraud laws, prosecutors could go back five years and more if they find evidence of a conspiracy.

Very often what starts out as an investigation of one subject takes a completely different turn, said Michael Koenig, who prosecuted former Qwest CEO Joseph Nacchio for insider trading.

‘Wait a Minute’

“When we were investigating Qwest, we initially thought there were accounting fraud and revenue recognition type issues,” said Koenig, now a partner at Hinckley, Allen & Snyder. “As we started digging into it, however, we realized, ‘Wait a minute. Joe Nacchio is selling large amounts of his stock at the same time he’s telling the general public that the company is doing great, when he knew it was not.’”

Nacchio served four years and five months in prison after his 2007 conviction in the case.

A more recent example, according to Koenig, is the Hillary Clinton email investigation, which was reopened by the FBI after agents came across possible undiscovered evidence while investigating former New York congressman Anthony Weiner for sexting with a minor.

The lack of a subpoena from the Justice Department doesn’t mean its investigation is limited, according to Pelletier. Prosecutors can piggyback on the SEC’s subpoena to get a hold of whatever information Tesla discloses, obviating the need to issue a grand jury subpoena of its own, he said.

“That’s the normal course of action when the SEC has already issued a subpoena,” Pelletier said.

Elon Musk Shoots for Mars, Strains His Balance Sheet: QuickTake

The SEC already was investigating whether Musk’s vehicle production forecasts misled investors before the regulator started scrutinizing whether he had secured funding for a Tesla buyout, Bloomberg News reported on Aug. 9.

Some of Musk’s predictions have been way off. Musk said during a May 2016 earnings call that, during the second half of 2017, he expected Tesla would produce 100,000 to 200,000 Model 3 sedans — the lower-priced car that’s pivotal to the company generating profit. Tesla ended up building fewer than 3,000 Model 3s in last year’s second half.

The Justice Department’s interest in Tesla isn’t good for investors, who saw the company’s share price drop just after the investigation was revealed. But the probe doesn’t mean that Palo Alto, California-based Tesla will go the way of Theranos.

Unlike Theranos, Tesla manufactures popular automobiles. While the SEC and the Justice Department might find that the company and some of its executives exaggerated Tesla’s financial performance, government officials would probably be hesitant to inflict a critical blow on a company that employs more than 35,000 people globally.

Morgan Stanley Sees $2.5 Billion Equity Raise for Tesla

The nature and depth of any exaggerations by Tesla will ultimately determine how the company is treated.

If Musk’s conduct at Tesla is deemed to be a case where the CEO’s unregulated passion led him to hyperbolic claims, the resulting penalties are likely to be serious, but measured. But if evidence emerges that a win-at-all-costs mentality from the top led some executives to cook the books, the penalties could be severe.

— With assistance by Dana Hull

Goldman Sachs Doesn’t Share Wall Street Fears of 2020 Recession

September 17, 2018

Goldman Sachs Group Inc. economists are proving more relaxed than Wall Street rivals about the risks of a U.S. recession come 2020.

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While Bridgewater Associates Inc. and JPMorgan Chase & Co. are starting to fret that tighter fiscal and monetary policies will create problems for the world’s biggest economy in two years’ time, Goldman Sachs sees just a 36 percent chance of recession over the next three years. That risk is below the historical average.

“There has been increasing investor interest in the chance of a recession in the U.S. over the next few years,” Goldman Sachs economists led by Jan Hatzius said in a report published on Sunday. “Our model paints a more benign picture.”

Read More: Warnings keep coming about a downturn in 2020

They reckon growth will stay robust and are less worried than they were that financial conditions had become unsustainably easy.

Still, they noted that the U.S. still has the power to pull down other economies. If America is in a recession, the chance other developed economies will suffer the same fate over the subsequent year is almost 70 percent, according to Goldman Sachs’s analysis of four decades of data.

“Historical experience suggests that recessions in the U.S. have gone hand in hand with recessions elsewhere,” Hatzius’s team said. “But even though the U.S. cycle matters for other economies, we remain sanguine about the outlook.”

Bitcoin Falls Off a Cliff Again as Cryptocurrency Slump Deepens

September 6, 2018

Cryptocurrencies dropped sharply for the second time in less than 24 hours, sinking toward a nine-month low amid concern that broader adoption of digital assets will take longer than some anticipated.

Bitcoin, the largest cryptocurrency, tumbled as much as 9.8 percent and was trading at $6,408 as of 11:41 a.m. in Hong Kong, according to Bloomberg composite pricing. The Bloomberg Galaxy Crypto Index, a gauge of the largest digital currencies, traded near its lowest level since November 2017 as rival coins Ripple, Ether and Litecoin also fell.

Cryptocurrency bulls who counted on an expanding user base to drive up prices have been dealt a string of disappointments. Business Insider reported on Wednesday that Goldman Sachs Group Inc. was pulling back on near-term plans to set up a crypto trading desk, while trading platform ShapeShift AG said on Tuesday that it will begin asking users for personal information — a policy that may drive away customers who value anonymity. The moves follow last month’s decision by U.S. regulators to reject another round of Bitcoin exchange-traded funds.

“A lot of retail investors’ hopes for a bigger institutional presence were really being driven by Goldman Sachs,” Stephen Innes, head of trading for Asia Pacific at Oanda Corp., said by phone from Singapore. “This is just a negative, negative sign as far as liquidity goes.”

Read more on Goldman’s crypto business.

While many banks and institutional investors are dipping their toes into the world of cryptocurrencies, concerns about everything from money-laundering to market manipulation and unclear regulations have prevented more widespread adoption. The market value of virtual currencies tracked by has dropped more than 75 percent from its January peak to about $203 billion.

The next key level to watch for Bitcoin is $5,000, according to Innes, who said a drop below that threshold may cause losses to accelerate.

Germany (Merkel) cools on Macron eurozone budget proposal

August 30, 2018
“Nothing on euro area reform  is agreed until everything is agreed”.
Pool of money for single currency area a central plank of French president’s EU policy
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French president Emmanuel Macron and German chancellor Angela Merkel jointly agreed in May to the idea of a eurozone budget © Bloomberg

Guy Chazan in Berlin and Jim Brunsden in Brussels 

Germany is cooling on the idea of a eurozone budget, one of French president Emmanuel Macron’s central demands, saying priority should be given to other initiatives to boost the currency bloc’s resilience.

Jörg Kukies, Germany’s deputy finance minister, said in an interview that plans to equip the euro area with its own pot of money to fight financial firestorms should not distract from broader talks on the EU’s next multiannual budget, which is set to run from 2020-27.

“Why should we weaken the EU by establishing a parallel structure?” Mr Kukies told the Financial Times, adding that the “most pressing issue” was to figure out “how the EU budget can contribute to stabilisation, competitiveness and convergence”.

This is “a more relevant question than carving out a separate budget for the eurozone”, he said.

The tougher German line is bad news for Mr Macron, who has made a common pool of money for the single currency area a central plank of his EU policy.

The French president has argued for a permanent “fiscal capacity” that would be financed by national contributions and also — potentially — new EU taxes and levies. It would be used to foster growth and competitiveness in the currency bloc and to stabilise countries hit by economic shocks.

Mr Macron has said that this budget should be equivalent to several percentage points of the eurozone’s gross domestic product, so running into hundreds of billions of euros.

France has made clear that its plans are fundamentally different to the EU budget, which totals about 1 per cent of the bloc’s GDP, and which is largely made up of seven-year spending programmes covering everything from agricultural subsidies to scientific research.

The French president and his government have urged Berlin to get behind the plan, and appeared to secure a breakthrough in May when German chancellor Angela Merkel and Mr Macron jointly agreed to the idea of a “eurozone budget” funded by “national contributions, allocation of tax revenues and European resources”. It would, the pair said, invest in “innovation and human capital”.

But Mr Kukies said that Germany’s priority would be to look at more targeted initiatives in the EU’s next multiannual budget that could help countries in difficulties. “We clearly support the idea that a currency area also requires fiscal instruments,” he said.

One such proposal, made by German finance minister Olaf Scholz, is for a “reinsurance fund” for national unemployment schemes.

The idea is that a recession-hit eurozone country with high unemployment, whose social security system has come under strain, could borrow from such a fund, and then pay the money back once it had resolved its problems.

Some governments are sceptical that even this idea has a chance of being realised.

One senior eurozone diplomat said that the unemployment insurance scheme was too complex to be taken up any time soon. “It’s something that will be talked about for years and years,” the diplomat said.

EU finance ministers will debate what approach to take on the eurozone budget idea at a meeting in Austria next week.

The budget is one of several big ideas for reforming the eurozone that are being debated by national capitals. EU leaders in June agreed to press ahead with efforts to strengthen the currency bloc, but the push has proved divisive, with Italy wary of efforts by Germany and other northern EU capitals to make banks and other investors in a country’s sovereign debt take losses if the government has to seek an international bailout.

France and Germany in May agreed to pursue the idea of special “collective action clauses” that would make it harder for individual creditors to resist debt restructuring deals. But Rome fears such a measure might make investors jumpy, driving up its borrowing costs.

At a meeting of eurozone finance ministers in July, Giovanni Tria, Rome’s finance minister, insisted that nothing on euro area reform “is agreed until everything is agreed”.

Mr Kukies, a former Goldman Sachs banker, acknowledged that this question of sovereign risk “has the potential to be controversial”.

“The question we have to clarify in the second half of this year is: to what extent is there the flexibility and the willingness to proceed with that?” Mr Kukies said.

Additional reporting by Mehreen Khan

Elon Musk drops Tesla take-private idea

August 25, 2018

Electric carmaker founder says his investors told him: ‘Don’t do this’

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© Reuters

By Shannon Bond in San Francisco and James Fontanella-Khan in New York

Tesla will remain a public company, chief executive Elon Musk said late on Friday, abandoning a proposal he made just weeks ago to delist the electric car company.

The decision, which was communicated to the Tesla board on Thursday, comes nearly three weeks after the eccentric co-founder stunned the world with a nine-word tweet claiming that he was considering taking the company private.

“I believe the better path is for Tesla to remain public,” Mr Musk wrote in a blog post on Tesla’s website on Friday night. He said the board had indicated its agreement.

Mr Musk said he reached his decision after discussions with shareholders and advisers from Silver Lake, Goldman Sachs and Morgan Stanley about how his ambition might be achieved.

“Given the feedback I’ve received, it’s apparent that most of Tesla’s existing shareholders believe we are better off as a public company,” he wrote. “Although the majority of shareholders I spoke to said they would remain with Tesla if we went private, the sentiment, in a nutshell, was ‘please don’t do this’.”

He added: “I knew the process of going private would be challenging, but it’s clear that it would be even more time-consuming and distracting than initially anticipated.”

Six of Tesla’s board members confirmed in a statement that Mr Musk had informed them of his decision and they added that the chief executive had their full support.

“The board and the entire company remain focused on ensuring Tesla’s operational success . . . and we fully support Elon as he continues to lead the company moving forward.”

No mention was made about adding a chief operating officer to assist him with the daily running of the company.

People close to the board told the Financial Times last week that the company was considering hiring a second-in-command to help Mr Musk and alleviate some pressure off his back.

Mr Musk’s sudden proposal came by tweet on August 7, when he wrote “Am considering taking Tesla private at $420. Funding secured.” It sent shockwaves through the company’s investor base, lifting shares as much as 10 per cent immediately after the tweet before sending them back down as uncertainty grew over the seriousness of Mr Musk’s claim.

The tweet came about an hour after the Financial Times reported that Saudi Arabia’s Public Investment Fund had amassed a $2bn stake in Tesla this year. Mr Musk later explained that his statement about funding referred to conversations he had held with the PIF about taking Tesla private.

But doubts over the funding have put the company, its board and its chief executive under scrutiny by the US Securities and Exchange Commission and have attracted potential class-action lawsuits from investors who bought shares after the tweet.

JPMorgan slashed the price target for Tesla’s shares this week by more than a third to $195, having raised it in the wake of Mr Musk’s tweet about going private at $420.

Even in retracting his plan, Mr Musk did not back down from his conviction that he could follow through on the plan to go private. “My belief that there is more than enough funding to take Tesla private was reinforced during this process,” he wrote.

Mr Musk’s behaviour in recent weeks has raised questions from investors and analysts. In an emotional interview with the New York Times, he said an “excruciating” year at Tesla had weighed deeply on his personal life and health. He described 120-hour work weeks, days spent inside his factory and reduced contact with his children and friends.

To several observers, Mr Musk’s tweets announcing that he planned to take the company private appeared to be in pursuit of a personal vendetta against short-sellers, who are betting that the company’s stock value is destined to fall due to Tesla’s poor performance.

The decision to keep Tesla public will be welcomed by institutional investors who believe the company’s shares could rise much higher but who could have been forced to sell their positions if Mr Musk went forward with his take private plan.

Catherine Wood, chief executive and chief investment officer of ARK Invest, a $5.9bn active ETF manager and Tesla shareholder, on Thursday urged Mr Musk not to take Tesla private.

“Taking Tesla private today at $420 per share would undervalue it greatly, depriving many investors of the opportunity to participate in its success,” she wrote in an open letter to Mr Musk.


Crypto Trading Firm Rents World’s Priciest Offices, Paper Says

August 22, 2018
  • BitMEX joins famous finance names in Hong Kong skyscraper
  • Hayes founded trading platform in 2014 after being laid off
The Cheung Kong Center

Photographer: Paul Yeung/Bloomberg

A cryptocurrency trading platform co-founded by former Citigroup Inc. trader Arthur Hayes just rented the world’s most expensive offices, a Hong Kong newspaper reported.

BitMEX leased the 45th floor of the Cheung Kong Center, the Hong Kong Economic Times reported Wednesday, citing people it didn’t identify. The skyscraper is home to Goldman Sachs Group Inc.Barclays Plc, Bank of America Corp., the securities regulator, Bloomberg LP and billionaire Li Ka-shing’s empire.

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Cryptocurrency firms are trying to vault from the fringes of finance to the mainstream despite a 65 percent slump in Bitcoin prices from December’s peak raising questions about the industry’s sustainability. Splashing out on expensive offices may be a sign of how trading venues like BitMEX can prosper even when volatile markets cause investors pain.

Hayes didn’t respond to emails seeking comment.

Back in January, when Bloomberg interviewed Hayes, BitMEX was in sparsely-decorated offices in a logistics and warehouse district on the other side of Victoria Harbor. Rents in the building were HK$25 ($3.18) per square foot , according to an advertisement in a nearby real estate agency. That compares with a record HK$225 per square foot for the Cheung Kong space cited by the Hong Kong Economic Times.

Laid off from Citigroup, Hayes was inspired to co-found the business in 2014 after he discovered he could make “easy money” by exploiting price differences for Bitcoin in Hong Kong and China. Today, BitMEX offers leveraged contracts bought and sold in the cryptocurrency.

According to the Hong Kong Economic Times, the firm’s expansion plans spurred the decision to rent an entire floor of the Cheung Kong Center — about 20,000 square feet — after BitMEX earlier considering taking only half that.

Unlike Bitcoin, Hong Kong’s property prices have only been moving in one direction. The Central district has the world’s highest office occupancy costs, according to CBRE Group Inc., which cited a survey from the first quarter. It was the third year in a row that Hong Kong had topped the survey. London’s West End was in the No. 2 spot.

— With assistance by Benjamin Robertson