United States will limit Chinese investment into tech businesses

[Greg S]

Bottom line: The United States and China are in the middle of a trade battle that is going to change the way the tech industry is operating. Investor capital is no longer going to flow freely with few restrictions across international borders.

Drafts from the US Treasury Department are being made that could prevent entities with more than 25 percent Chinese ownership from buying technology-based companies located in the United States. The exact percentage used for restrictions on purchasing is still subject to change. Chinese giants such as Tencent, JD.com, Xiaomi, Huawei, and more would all be blocked from making major investments into US firms.

As part of an ongoing trade battle between the United States and China, tariffs on $34 billion of Chinese goods are nearly ready to be leveraged. Beginning on July 6, new tariffs will go into effect as a response to accusations that China is abusing joint venture partnerships and misusing US tech firms' intellectual property.

In order to implement strict controls on trade, the Treasury Department can invoke the International Emergency Economic Powers Act of 1977 (IEEPA). Under the act, extremely broad authority is given to restrict assets from falling into the hands of any group that could potentially be a threat to national security. Previously, IEEPA was used following the September 11 attacks in 2001 to quickly cut off sources of funding to terrorist organizations.

For tech firms, the new restrictions would aim only to prevent new acquisitions and investments from occurring. Deals made between US and Chinese businesses in the past would not be affected. Under the proposal, there is no differentiation between businesses in China that are considered privately owned versus companies with government involvement.

Additionally, "enhanced" export controls on goods being shipped to China are being considered. Tracking of sensitive products can include shipments to high risk countries where reshipping in attempt to avoid export restrictions is commonplace. Further details on which goods will face highly regulated export rules are expected to be available by June 30.

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https://www.techspot.com/news/75225-united-states-limit-chinese-investment-tech-businesses.html

 

[seeprime]

Shell companies will easily solve this issue. Limits are only for those that don't know how to get around them.

 

[MilwaukeeMike]

Shell companies will easily solve this issue. Limits are only for those that don't know how to get around them.

Right... and the lawyers will be defining a 'tech' company soon as any company with a website.

Joke as we may though, the stock markets in the US are all down a LOT today. Probably the worst day in a few months. That means the people who are betting their money on how well the economy will do in the future think it will do worse after this decision.

 

[davislane1]

Shell companies will easily solve this issue. Limits are only for those that don't know how to get around them.

Right... and the lawyers will be defining a 'tech' company soon as any company with a website.

Joke as we may though, the stock markets in the US are all down a LOT today. Probably the worst day in a few months. That means the people who are betting their money on how well the economy will do in the future think it will do worse after this decision.

Intraday and even weekly moves are meaningless. They're sales tricks to sucker news traders out of their money.

 

[iamcts]

Shell companies will easily solve this issue. Limits are only for those that don't know how to get around them.

Right... and the lawyers will be defining a 'tech' company soon as any company with a website.

Joke as we may though, the stock markets in the US are all down a LOT today. Probably the worst day in a few months. That means the people who are betting their money on how well the economy will do in the future think it will do worse after this decision.

Intraday and even weekly moves are meaningless. They're sales tricks to sucker news traders out of their money.

Well, the largest bull run in history was essentially axed in January due to poor policy, and the downward trend seems to be continuing.

 

[davislane1]

Well, the largest bull run in history was essentially axed in January due to poor policy, and the downward trend seems to be continuing.

http://futures.tradingcharts.com/chart/SP/W

Trend's not over. It will resume the uptrend once (if not before) it touches the 2600 area on the S&P (or relevant level on Dow/Nasdaq). Anyone who tells you "the bull run is over" doesn't know how to read a chart or trade. Can't even begin talking about that until it breaks below ~2530.*

Source: I've been actively trading since 2011 and was looking to get short last week.

*The one caveat is the 2800-2840 area. If the return to that area fails to go higher, that's the signal of a trend change. Not the knee-jerk reactions to policy announcements.

 

[kapital98]

Restricting foreign investment is a terrible idea. In particular, this investment means more to the Chinese due to lax immigration standards for wealthy businessmen. This is money startups need to grow.

However, these trade policies have little impact on recession/depression due to trade being a tiny part of our economy.

--

As for the above discussion, the stock market is a very weak predictor of real changes in the economy. So whether it goes up or down (barring severe fluctuations) doesn't mean anything. At least in the short run, the tax cuts and low interest rates should spur economic activity (though, to be clear, the tax cuts are terrible fiscal policy in the long run).

 

[MilwaukeeMike]

Intraday and even weekly moves are meaningless. They're sales tricks to sucker news traders out of their money.

Maybe - but I'd bet they are people taking their profits until the uncertainty shakes out. Same thing happened the day Trump was elected - everyone goes 'Whoa! that wasn't expected!' and there's a sell off. Once they realize the sky isn't falling, trading goes back to the way it was.

 

[davislane1]

Maybe - but I'd bet they are people taking their profits until the uncertainty shakes out. Same thing happened the day Trump was elected - everyone goes 'Whoa! that wasn't expected!' and there's a sell off. Once they realize the sky isn't falling, trading goes back to the way it was.

That's part of it. In short, the markets are manipulated (we already knew this) and good news/bad news is part of how big players do their business. "Trump did WHAT?!" = d*umb money shorts/takes profit and pushes price into key institutional buying areas.

Real trend changes happen "unexpectedly." Typically when major holders see or put something major in the pipeline, long before any fundamental analysis or policy stuff hits the news.