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FirstFT: SoftBank raises $22bn as it moves to sell down Alibaba stake


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Good morning, and we start with an exclusive from our reporters Ryan McMorrow in Beijing and Kana Inagaki in Tokyo.

SoftBank, the Japanese technology investor led by billionaire Masayoshi Son, has raised $22bn in cash from deals that would sharply reduce its stake in Chinese ecommerce giant Alibaba.

The Japanese group has sold about one-third of its Alibaba stake or 213mn shares through prepaid forward contracts — a type of derivative to which SoftBank has increasingly turned to raise cash immediately while retaining the possibility of holding on to the shares.

It has now sold more than half its Alibaba holdings through these financial contracts. That could shrink its stake in the Chinese group to below the threshold for retaining its board seat and prevent SoftBank from recognising its share of Alibaba’s income in its financial statements.

Alibaba, which reports quarterly earnings later today, was founded more than two decades ago by Chinese entrepreneur Jack Ma.

Son built his fortune on the back of leading a $20mn funding round for Alibaba’s fledgling ecommerce start-up, generating a huge return on his investment.

But SoftBank has scrambled to raise cash this year as dozens of its investments have slumped amid a broader market sell-off in tech stocks.

Thanks for reading FirstFT Americas. Here is the rest of the day’s news — Gordon.

1. China unleashes wave of military drills around Taiwan China’s armed forces have begun live fire military exercises in six exclusion zones surrounding Taiwan. The unprecedented scale of the operations forced the Taiwanese government to warn commercial ships and planes to avoid the area. The exercises began after the visit of US House Speaker Nancy Pelosi who pledged support for the government of President Tsai Ing-wen. In South Korea today President Yoon Suk-yeol refused to meet Pelosi.

2. Tiger Global blames inflation after 50% drop in flagship hedge fund Chase Coleman’s hedge fund Tiger Global ended the second quarter nursing heavy losses amid a tech stock rout that has caused performance across one of the world’s largest hedge funds to plummet. A long-only fund the firm manages ended the second quarter down 63.6 per cent after fees, according to a letter sent to investors and seen by the Financial Times.

3. Argentina’s new economy minister pledges to restore fiscal order Sergio Massa, the third person to take charge of Argentina’s economy in barely a month, yesterday pledged to bring fiscal order to the country as the Peronist administration attempts to restore its crumbling credibility and regain market confidence. In his first speech since being appointed last week, Massa said he would establish a “super ministry” to tackle double-digit inflation.

4. Virginia pension fund invests in crypto lending in bid to boost returns The $6.8bn Fairfax County Retirement Systems pension fund is looking to boost its returns by investing in crypto lending markets despite a crisis in the sector that has pushed several companies into bankruptcy and left retail investors with heavy losses.

5. Elon Musk subpoenas Goldman Sachs and JPMorgan in Twitter takeover fight The Tesla chief executive is seeking any documents and communications exchanged between the social media group and the banks that advised it on the $44bn takeover that Musk is now seeking to abandon.

The day ahead

Market outlook US stock markets are predicted to have a subdued start to trading when they open later after closing at a three-month high yesterday. The rally was driven by better than expected quarterly earnings from PayPal, as well as strong results from the US services sector.

Company earnings Private equity groups Apollo Global and Blue Owl Capital both report before the opening bell and could offer investors greater detail on the state of dealmaking and financing markets. A batch of consumer goods and entertainment companies also report this morning, including Kellogg and theme park group SeaWorld. Lyft, the ride-hailing company, reports after the market closes.

Economic data The US labour department releases data on new applications for unemployment aid. Economists estimate jobless claims will tick up to 259,000 from 256,000 a week earlier.

Monetary policy A 50-basis-point rise will be “on the table” today as the Bank of England considers its next move on interest rates, according to governor Andrew Bailey. At a husting last night, the frontrunner to be the next British prime minister, Liz Truss, said she would look to change the Bank of England’s mandate if she won.

Nuclear talks resume Iran is expected to resume nuclear talks with world powers in Vienna today. Iran’s negotiator Ali Bagheri Kani and US envoy Rob Malley flew into the Austrian capital yesterday in an attempt to revise the 2015 agreement and rein in the Islamic republic’s atomic activities.

What else we’re reading

The women calling out Apple In interviews with the Financial Times, more than a dozen past and present employees accused Apple’s human resources team of putting the Silicon Valley giant’s reputation ahead of workers’ welfare. Inspired by the #MeToo movement, more women are sharing allegations of apathy and retaliation in the face of misconduct claims.

Scientists revive cells and tissues in dead pigs Yale University scientists have used a new procedure to restore many biological functions in pigs that had been dead for more than an hour, raising profound questions about the boundary between life and death.

Donald Trump-backed candidates prevail in US primaries Several candidates endorsed by Donald Trump prevailed in their Republican primaries across five US states on Tuesday.

Himars fuels Ukraine hopes of ‘limited’ counter-offensive In less than a month the precise, long-range rockets from the US, which have a range of 80km, have delivered Ukraine some striking battlefield wins. Four additional American units arrived this week, bringing the total number of Himars in Ukrainian hands to 20. But Kyiv says it needs more if it is to defeat Vladimir Putin’s army.

The Taliban’s black gold Thanks to a global surge in commodity prices after the Ukraine war and Covid-related disruption, business is booming in Afghanistan’s coal mines. The fossil fuel offers a crucial revenue stream to the militant group after it seized power a year ago, which led to international sanctions that crippled the country’s economy.

A child working at Chinarak mines
The number of children working the mines has reportedly increased as the economic crisis forces them out of school © Oriane Zerah/FT

Colombia’s military eyes new president with ‘deep unease’ This weekend, a ceremony will take place in Bogotá that would have been unimaginable just a few years ago: outside the presidential palace, the top brass of Colombia’s armed forces will stand before former leftwing guerrilla Gustavo Petro and acknowledge him as their new commander-in-chief. The significance of the moment is unlikely to be lost on Colombians.

Property

The popularity of the Hudson Valley, the farm-filled, culture and creativity-rich region two hours north of New York City, rose sharply throughout the pandemic. But the boom seems to be waning.

The town of Kingston had the fastest-rising home prices in the US twice in the past two and a half years © Chris Boswell/Getty Images/iStockphoto

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