Finance

A security personnel stands guard at the opening session of Baidu’s annual AI developers conference Baidu Create 2019 in Beijing, China, July 3, 2019.
Jason Lee | Reuters

New York-listed Chinese stocks jumped Friday after a report that China is considering sharing key information that would allow the firms to continue trading publicly in the U.S.
Beijing regulators are working to give U.S. authorities complete access to audits of Chinese companies listed publicly in New York, Bloomberg reported Friday. The China Securities Regulatory Commission also told CNBC in a statement that it met with some accounting firms in the country, telling them to consider preparing for joint inspections.

Alibaba jumped 7.2%, JD.com added 6.7%, Baidu gained 9.1%, and Pinduoduo rallied 11.5% before the bell Friday.

U.S.-listed Chinese stocks

The access could come as soon as the middle of this year, Bloomberg reported.
Chinese regulators are creating a “framework” that would let most companies stay listed in the U.S., according to Bloomberg. However, certain firms with “sensitive data” could be delisted, the report said.
The move comes after the U.S. Securities and Exchange Commission added Chinese search engine company Baidu to its list of U.S.-traded China stocks that could be delisted if American regulators are not allowed to review three years worth of financial audits. 
Earlier in March, China signaled support for U.S.-listed Chinese companies and said regulators are progressing toward a cooperation plan on U.S.-listed Chinese stocks.

Last summer, Chinese regulators stepped up their oversight on U.S.-listed Chinese stocks. Regulators reportedly asked Chinese ride-hailing giant Didi to delist from the U.S. months after the company’s IPO.
—CNBC’s Evelyn Cheng contributed to this report.

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The China Securities Regulatory Commission said in a statement to CNBC Friday that it convened this week a meeting with some accounting firms and told them to consider preparing for joint inspections.
Chinese and U.S. regulators’ consultations on audit supervision and cooperation are overall going well, the commission said.
Since March, the U.S. Securities and Exchange Commission has started to name specific U.S.-listed Chinese stocks for failing to adhere to the Holding Foreign Companies Accountable Act.

The China Securities Regulatory Commission and U.S. securities regulators have been locked in a dispute over allowing U.S. review of Chinese company audits, threatening delisting in coming years.
Costfoto | Future Publishing | Getty Images

BEIJING — China has sent another signal of progress toward resolving an audit dispute that’s threatened U.S.-listed Chinese companies with delisting.
The China Securities Regulatory Commission said in a statement to CNBC Friday that it convened a meeting this week with some accounting firms and told them to consider preparing for joint inspections.

Chinese and U.S. regulators’ consultations on audit supervision and cooperation are overall going well, the commission said.
Since March, the U.S. Securities and Exchange Commission has started to name specific U.S.-listed Chinese stocks for failing to adhere to the Holding Foreign Companies Accountable Act. Passed in 2020, the act would allow the SEC to delist Chinese companies from U.S. exchanges if American regulators cannot review company audits for three consecutive years.
“We continue to meet and engage with PRC authorities in an effort to achieve a cooperative agreement that provides the PCAOB with the access required to inspect and investigate completely auditors headquartered in mainland China and Hong Kong,” the U.S. Public Company Accounting Oversight Board (PCAOB) said in a statement.

“Speculation about a final agreement between the PCAOB and the People’s Republic of China (PRC) authorities on PCAOB access to audit firms headquartered in China and Hong Kong is premature,” the PCAOB statement said.
Accounting firm KPMG declined to comment. Deloitte, PwC and EY did not respond to CNBC’s requests for comment.

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Check out the companies making headlines before the bell:
GameStop (GME) – GameStop plans to seek shareholder approval to boost the number of shares outstanding in order to enable a stock split. The videogame retailer is proposing an increase to 1 billion shares from 300 million. The stock surged 16.6% in the premarket.

Apple (AAPL) – J.P. Morgan Securities removed the stock from its “Analyst Focus List,” saying a moderation in consumer spending may limit benefits from the iPhone SE launch and the potential for upside in services revenue. However, the firm retained an “overweight” rating on the stock.
BlackBerry (BB) – BlackBerry earned an unexpected profit for its latest quarter, but the communications software company’s revenue fell below analyst forecasts. The revenue miss came as growth in its cybersecurity unit flattened. Shares slid 4.4% in premarket trading.
Wynn Resorts (WYNN) – The resort and casino operator’s stock added 1.6% in the premarket after Citi upgraded it to “buy” from “neutral.” Citi cites increasing clarity over regulations and licenses in Macau as well as an attractive valuation.
Li Auto (LI) – Li Auto rallied 6.6% in premarket trading after the China-based electric vehicle maker reported 31,716 vehicles deliveries in March, more than double the year-ago total.
Nio (NIO) – The China-based electric vehicle company Nio reported deliveries of 9,985 vehicles in March, an increase of 37.6% from a year ago. Nio shares jumped 5.8% in premarket trading.

Hycroft Mining (HYMC) – The small-cap mining company – best known for an investment from movie theater chain AMC Entertainment (AMC) – added 3% in the premarket after reporting a smaller-than-expected quarterly loss. AMC shares rallied 4.6%.
Poshmark (POSH) – The online clothing marketplace operator’s stock slid 2.2% in premarket trading after Stifel cut its rating to “hold” from “buy.” Stifel said the company faces numerous growth challenges despite healthy profit potential and a highly engaged user base.

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“Given the strong start of the year and the anticipated government support, we revise up our growth forecast from 4.7% to 5.0% for 2022,” Xiangrong Yu, chief China economist at Citi, said in a report late Thursday.
The new forecast is closer to the official GDP target of around 5.5% announced in early March.

Real estate and related sectors account for at least 25% of China’s economy, according to Moody’s.
Costfoto | Future Publishing | Getty Images

BEIJING — China’s economy faces so much new pressure from Covid that Beijing may increase stimulus — boosting overall growth, Citi said Thursday.
“Given the strong start of the year and the anticipated government support, we revise up our growth forecast from 4.7% to 5.0% for 2022,” Xiangrong Yu, chief China economist at Citi, said in a report late Thursday.

The new forecast is closer to the official gross domestic product target of around 5.5%, which was announced in early March. For January and February, China reported better-than-expected growth in retail sales, fixed asset investment and industrial production.
The upgrade to Citi’s GDP forecast comes on the back of expectations of investment in projects such as infrastructure and affordable housing, according to the report.
The official Purchasing Managers’ Indexes — which measure market conditions — for manufacturing and services businesses both fell into contraction territory in March. That’s the first time both indexes have done so since February 2020.
“The current Omicron wave is the worst outbreak since Wuhan, but its impact on PMI appears lighter than implied by the severity of the outbreak,” Yu said Thursday. “The data shows that the impact of the containment measures is substantial on demand and services but milder on production and construction.”

“China [is] adapting to minimize the economic costs while implementing the ‘dynamic zero-Covid’ policy,” he said.

In March, China faced its worst wave of Covid-19 since the initial shock of the pandemic in 2020. Major cities like Shanghai and Shenzhen have had to impose lockdowns and quarantines to control outbreaks of the highly transmissible omicron variant.
The Caixin manufacturing PMI, a third-party study that covers more smaller businesses than the official survey, also fell into contraction territory in March and its lowest since February 2020, according to data released Friday.

Support for property sector

One of the actions Yu expects policymakers to take is supporting the struggling, massive real estate industry. Beijing can’t afford to wait any longer on efforts to stabilize the property market with measures such as looser credit policies, he said.
Housing sales slumped in the last several months as Beijing clamped down on developers’ high reliance on debt for growth. Real estate and related sectors have accounted for at least 25% of China’s economy, according to Moody’s.

Read more about China from CNBC Pro

Yu and other economists also expect the People’s Bank of China will this month cut interest rates or the amount of reserves banks need to have on hand.
“China [has a] very ambitious growth target to meet by the end of the year,” Carlos Casanova, senior Asia economist at UBP, said Thursday on CNBC’s “Capital Connection.”
“If they fail to implement another round of rate cuts in April,” he said, “unfortunately that is bad news because that 5.5% [goal then] would become very difficult to achieve.”

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The Beijing-based American Chamber of Commerce in China and its Shanghai counterpart surveyed 167 members operating in China, including 76 manufacturers, this past Tuesday and Wednesday.
The metropolis of Shanghai, where many foreign businesses are located, entered a two-part lockdown this week as municipal authorities sought to control a brewing number of Covid cases.
The survey found that 54% of respondents have lowered 2022 revenue projections for the year following the latest Covid-19 outbreak. More than 80% of manufacturers reported slowed or reduced production, as well as supply chain disruptions.

The metropolis of Shanghai, where many foreign businesses are located, entered a two-part lockdown this week as municipal authorities sought to control an outbreak in China’s worst Covid wave in two years.
Hector Retamal | Afp | Getty Images

BEIJING — China’s worst Covid wave since the initial shock of the pandemic has cut into annual revenue projections for roughly half of American businesses in the country, a survey showed Friday.
The Beijing-based American Chamber of Commerce in China and its Shanghai counterpart surveyed 167 members operating in China, including 76 manufacturers, this past Tuesday and Wednesday.

The metropolis of Shanghai, where many foreign businesses are located, entered a two-part lockdown this week as municipal authorities sought to control a brewing number of Covid cases. Those measures followed shorter lockdowns in the tech hub of Shenzhen, the manufacturing hub of Dongguan and travel restrictions across the country.
The survey found that 54% of respondents have lowered 2022 revenue projections for the year due to the latest Covid-19 outbreak.
Among manufacturers, more than 80% reported slowed or reduced production, as well as supply chain disruptions.
Nearly all, or 99%, of respondents said the latest outbreak had affected them.

Since the pandemic began in 2020 and China tightened restrictions on international travel, foreign businesses in China have complained of long quarantine requirements upon arrival and difficulties of bringing in senior management or technical staff.

If China’s current Covid-19 restrictions remain in place for the next year, half of respondents to this week’s AmCham survey said they would reduce investment. Nearly 75% of respondents said maintaining those restrictions would reduce their revenue and profit.
And nearly 20% of manufacturers said they would move manufacturing or operations out of mainland China if the Covid-19 restrictions remained.

Read more about China from CNBC Pro

While just about half of respondents overall were satisfied with China’s efforts to control Covid’s spread, the top three aspects of dissatisfaction were the length of required quarantines, restrictions on travel to China and the lack of flights to China.
The top three recommendations from survey respondents were to allow for home quarantine or other options, simplify requirements for coming to China and allow more flights into the country.
The number of new Covid cases and deaths reported in mainland China remains well below that of major countries.

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Advice and the Advisor

Both resignations and job openings were near record highs in February, and the layoff rate was near a historic low.
Employer demand for workers remains high and is fueling the trend known as the Great Resignation.
However, demand may cool in 2022 as the Federal Reserve raises interest rates and if the war in Ukraine weighs on the U.S. economy.

A Now Hiring sign is displayed at a restaurant in Arlington, Virginia, on March 16, 2022.
Stefani Reynolds | Afp | Getty Images

The pandemic-era trend known as the “Great Resignation” remains a prominent feature of the labor market, as favorable conditions lead workers to quit their jobs at near-record levels in search of better (and ample) opportunities elsewhere.
Nearly 4.4 million Americans quit their jobs in February, the U.S. Department of Labor said Tuesday.

That’s about 100,000 more people than quit in January, and just shy of the 4.5 million record set in November.

“These quits are still extremely high, and that shows the Great Resignation is still in full swing,” said Daniel Zhao, senior economist at the career site Glassdoor.
The high demand for workers shows little sign of abating but may have plateaued, he added.
“It wouldn’t be a surprise to see that cool down in 2022,” Zhao said. “But that’s not to say we should expect the Great Resignation to disappear overnight.”

‘Quits’ and job openings

Resignations, or “quits” — which are generally voluntary separations initiated by workers — serve as a measure of employees’ willingness or ability to leave jobs, according to the Labor Department.

Job openings, like resignations, have also lingered near record highs, helping fuel workers’ confidence in finding new gigs elsewhere.
There were 11.3 million job openings in February — essentially unchanged from January and down slightly from December’s record of more than 11.4 million.
Job openings reflect employer demand for workers and tend to move up and down with resignations, Zhao said.
The layoff rate — a measure of layoffs relative to the overall level of employment — also remains near historic lows, at 0.9% in February.

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The layoff rate has been at or under 1% for the past year. It hadn’t previously touched 1% since record keeping started in 2000.
Meanwhile, 202,000 people filed a new claim for unemployment benefits last week, the Labor Department said Thursday. That trend is below the historical average, said Robert Frick, corporate economist at Navy Federal Credit Union.
The U.S. unemployment rate fell to 3.8% in February, its lowest level since February 2020. The Labor Department is issuing its March jobs report on Friday.

Demand for workers

These data points — “quits,” job openings, layoffs and benefits — reflect a job market that’s been strong for workers.
Employer demand for labor picked up steam in the spring and early summer 2021, as Covid-19 vaccines started rolling out broadly in the U.S. and the economy began emerging from its pandemic hibernation.
That high demand has outpaced the ready supply of workers, and businesses have raised wages at their fastest clip in years to compete for talent. Others have expanded their hiring pool.

“There is a brutal battle for lower-skilled employees occurring,” Ron Hetrick, senior economist at Emsi Burning Glass, a job market analytics firm, said. “Companies that usually require college degrees are starting to drop those requirements, meaning they’re now entering into the fray to find the same worker that other companies have trouble hiring.”
Most people who quit are switching jobs rather than leaving the labor force altogether, according to Nick Bunker, an economist at job site Indeed. The number of people hired in February exceeded resignations by about 2.3 million people, the Labor Department said.

Plateau?

However, there are signs the Great Resignation trend may have topped out at the end of 2021. Resignations and job openings seem to be plateauing, a sign that employer demand may wane throughout 2022, Zhao said.
The Federal Reserve, the U.S. central bank, started raising its benchmark interest rate in March (which will raise borrowing costs for companies and households). The Fed is aiming to cool off the economy and rein in inflation, which is running at a 40-year high. The war in Ukraine may also have dampening effect on the economy.
“It’s possible that with the benefit of hindsight, we’ll say December 2021 was the peak of employer demand in this cycle, before rate hikes, geopolitical uncertainty and other risk factors slowed the economy,” Zhao said.
“[But] as long as employer demand remains high, I fully expect the Great Resignation to continue,” he added. More

A pedestrian wearing a protective mask walks past a Walgreens store in San Francisco, California.
David Paul Morris | Bloomberg | Getty Images

Check out the companies making headlines in midday trading.
Walgreens — The drug store chain fell about 5% after the company reported its quarterly results. Despite recording a beat on earnings, it did not raise its forecast for the year The company’s president said on its earnings call Thursday that demand for Covid testing has slowed since January, and it could take time for its healthcare investments to pay off.

Baidu — Shares for the tech company tumbled roughly 7%. Baidu was added to the Securities and Exchange Commission’s list of U.S.-traded China stocks that could be delisted should the internet search company fail to disclose financial audits to U.S. regulators.
AMD — The chipmaker lost 7.1% after Barclays downgraded the stock to equal-weight and lowered its price target from $148 to $115. The bank cited “cyclical risk across several end markets,” including PC and gaming as contributors to the downgrade.
Dell Technologies and HP — Shares of the computer equipment companies fell after Morgan Stanley downgraded Dell to equal-weight and HP to underweight. The bank cited ongoing macro uncertainty and a “cautious hardware outlook” among the reasons for the downgrade. Dell fell 5.4%, while HP shed 5%.
PVH — Shares of the Calvin Klein parent fell 6.4% after Morgan Stanley downgraded the stock to equal-weight from overweight. “Expect the stock to remain range-bound for now,” the firm said.
Amylyx Pharmaceuticals — The stock lost 13.5% after a Food and Drug Administration panel voted to not recommend the approval of an experimental ALS drug developed by Amylyx. The panel said study data failed to prove that the drug was effective in fighting the disease.

Occidental Petroleum — Shares rallied about 2% after CEO Vicki Hollub purchased 14,191 of her own company’s shares. The moves come after Warren Buffett’s recent buying spree in the outperforming energy stock.UBS — The bank’s stock rose 1.2% after Goldman Sachs initiated UBS with a buy rating. Goldman said the rise of fintech is a positive for the banking industry.
— CNBC’s Tanaya Macheel, Sarah Min and Samantha Subin contributed reporting

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“NO PAYMENT, NO gas”, growled a Russian government spokesman on March 29th. Angered by the West’s economic sanctions, President Vladimir Putin ordered that “unfriendly” countries must start paying for Russian natural gas in roubles, a demand that ministers from the G7 group of countries refused. Gas prices began to rise at the prospect that Mr Putin would turn off the taps. On March 30th Germany began bracing for the worst, taking its first step towards gas rationing. By the end of the day, however, the German government said it had received assurances that European firms would not have to make payments in roubles.Even if an embargo has been averted, the latest confrontation surely strengthens Europe’s desire to relax Mr Putin’s grip on the economy. The EU has vowed to slash imports of natural gas from Russia, which made up some 40% of its consumption of the fuel last year, by two-thirds by the end of 2022. Ursula von der Leyen, the head of the European Commission, dreams that the EU can “get rid” of Russian imports entirely within a few years. Can America, one of the world’s largest natural-gas exporters, help fill the gap?When the Trump administration tried to persuade European officials to reduce their reliance on Russian energy by implementing policies to import more liquefied natural gas (LNG) from America—which it dubbed “molecules of freedom”—the proposal was ridiculed. Yet President Joe Biden finds himself doing something very similar to his predecessor. On March 25th he and Ms von der Leyen announced a “groundbreaking” plan to help end the EU’s reliance on Russian gas. It calls for American help in securing an additional 15bn cubic metres of LNG for Europe this year (equal to roughly a tenth of total European imports of Russian gas in 2021). It also promises to “ensure additional EU market demand” for 50bn cubic metres per year of the fuel from America by 2030.Industry insiders have greeted the ambitious plan with scepticism. One reason is that American gas companies face severe infrastructure constraints. The share of American exports going to Europe shot up from 4% in 2017 to almost 30% last year (equivalent to 22bn cubic metres), as prices soared on the continent. America “has almost 100% of its liquefaction capacity already in use”, reckons Rystad, a research firm, meaning that “there is no additional LNG to be exported” in the short term. Jack Fusco, boss of Cheniere, a big American energy company, confirms that his firm is “maxed out”. It would take four or five years and tens of billions of dollars in investment, not to mention the fast-tracking of regulatory approvals, to change that.There are also questions about whether the EU has the infrastructure to cope with the imports. Receiving cargoes of LNG and converting them into usable natural gas requires big facilities for regasification. Europe has spare capacity, but much of it is on the coasts of western countries like Spain and France. Poor interconnections mean that these are not very useful in getting imports to eastern parts of the EU, where an embargo would hit hardest. Germany, which has no LNG terminals, has vowed to build two, but that will take several years. Some European countries talk of acquiring floating LNG terminals, which can be set up more quickly—but there is a severe global shortage of them.Look to the longer term, though, and the new approach to natural gas shows more promise. That is because the EU appears ready to jettison its misguided hostility to long-term gas contracts, which it had discouraged as part of its effort to boost spot markets for gas. The intent had been to promote competition, but, as last winter’s rocketing gas prices revealed, it also left Europe badly exposed to a supply shock. As a top American LNG exporter explains, Europe focused on expanding the spot market when it should have secured “fantastic” long-term pricing instead.Now the commission says it will encourage long-term contracts “to support final investment decisions on both LNG export and import infrastructure”. That should give investors in American export facilities the confidence to spend the billions required, boosting transatlantic trade. Giles Farrer of Wood Mackenzie, a consultancy, reckons that the infrastructure needed to achieve the aim of 50bn cubic metres of liquefaction capacity in America would cost roughly $25bn, not including upstream investments and supply-chain inflation. Rystad thinks the spending needed to meet Europe’s extra demand could be in the region of $35bn.Diversification away from Russia in the long term, then, may be possible. But that does little to help with the short-term problem of an aggressive Mr Putin. A rational calculus suggests that he should be unwilling to turn off the taps, considering he profits handsomely from high prices. Energy Intelligence, an industry publisher, reckons Gazprom earned $20.5bn from European gas sales in the first two months of the year, nearly as much as it made from Europe in all of 2020. But few observers would dare to predict the actions of an increasingly erratic dictator. ■For more expert analysis of the biggest stories in economics, business and markets, sign up to Money Talks, our weekly newsletter.This article appeared in the Finance & economics section of the print edition under the headline “A little help from a friend” More