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from Breakingviews:

Hong Kong needs to defend shareholder democracy

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By Una Galani and Peter Thal Larsen

The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

Hong Kong needs to make a stand for shareholder democracy. Alibaba’s decision to shift its giant stock market listing to the United States has sparked a debate about control of public companies in the former British colony. Hong Kong’s stock exchange, whose rules wouldn’t have permitted a plan to let Alibaba insiders nominate a majority of board directors, is preparing a public consultation on shareholder rights. But dumping the principle of “one share, one vote” would be a mistake.

For a city that likes to bill itself as China’s gateway to global capital markets, missing out on the initial public offering of the largest e-commerce company in the People’s Republic is a symbolic blow. The snub raises fears that other fast-growing Chinese companies will choose to raise capital elsewhere, leaving the Hong Kong exchange as a stagnant backwater dominated by local tycoons and stodgy Chinese state-owned companies. Weibo, another hot Chinese tech company, is also planning a New York IPO.

In the United States, insiders can control public companies even when they no longer own the majority of the shares. Google and Facebook – to name just two of the companies Alibaba views as its peers – have blazed a trail by creating multiple classes of shares with different voting rights.

from Breakingviews:

WH Group’s quick pork flip serves up meaty return

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By Una Galani 

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

WH Group’s quick pork flip will serve up a meaty return. The Chinese pig producer hasn’t had much time to justify the 31 percent premium it paid for rival Smithfield less than seven months ago. Yet the planned relisting of the enlarged group in Hong Kong implies the value of the U.S. business has risen at least 21 percent.

from Breakingviews:

Alibaba triangular dealmaking adds to IPO quirks

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By John Foley
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Powerful insiders are the norm in internet companies. Alibaba’s tie-up with a digital TV company adds an extra twist. The Chinese e-commerce group, which is planning a U.S. listing, has signed a three-step deal with China’s Wasu Media that looks a little too clever for comfort.

from Breakingviews:

China tech rout sifts IPO haves from don’t-needs

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By John Foley 

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Falling prices of internet stocks are a headache for companies yet to join the market. The sell off that began in the first week of March and broke on April 8 hit Chinese companies particularly hard. It may leave investors pickier about coming initial public offerings of tech companies from the People’s Republic. The haves will be sorted from the don’t-needs.

from Breakingviews:

Rob Cox: Crazy valuations not only sign of bubble

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By Rob Cox
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Crazy valuations – even after a recent dip – are not the only signal that parts of the U.S. stock market, particularly internet companies, are in bubble territory. The willingness of investors in hot initial public offerings to accept second-class stock and governance that favors insiders suggests an imbalance between providers of capital and its consumers. Add head-scratching market caps based on contorted metrics, and this risks storing up trouble when the inevitable headwinds arrive.

from Breakingviews:

Virtu IPO blocked by high-frequency trading cloud

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By Richard Beales
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

It’s a good thing Virtu Financial doesn’t really need to go public. The “technology-enabled market maker” is delaying its initial public offering, according to news reports. While Virtu may be different, too much of what it does sounds similar to the high-frequency trading that’s suddenly in the spotlight.

from Counterparties:

MORNING BID – Crushing It

Is King Digital Entertainment the next Zynga or not? The markets may not find out with today's first day of trading in the London-based company, but it will provide a bit more context for those eager to build some kind of "time wasting" index or something like that. The King IPO has other gamemaker companies waiting in the wings at a time when there's been a high volume of IPOs this year coming from unprofitable companies - according to Renaissance Capital, the IPO research firm, 66 percent of this year's 53 IPOs were unprofitable names, though Kathleen Smith, principal at the firm, points out that if you clear out the biotech names, just 37 percent are those that do not yet have earnings. (Whether this is a good argument or not is another matter -- witness the trading lately in the biotechnology shares overall, which have been pummeled in the last few weeks.)

The obvious reference point for King is Zynga, which has lost about half of its value since the company's IPO in 2011 that valued it at about $8.9 billion. And things did well for them as long as people were interested in Farmville, until they weren't. Right now, Candy Crush is the current darling, drawing in more revenues on Apple's App store than any other in 2013, and, well, it just happens to garner three-quarters of its revenue from this game (well, 78 percent, actually). These kinds of fads tend to fade, though, putting pressure on the company to keep filling the void with some kind of new version or new product, not an easy task.

from Breakingviews:

Weibo IPO sets bar low for Alibaba

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By John Foley 

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Imagine the riskiest possible share offering. It would be a new, unprofitable company with rapid and uncertain growth in an emerging market. One whose customers are fickle, which lives under the constant threat of being snuffed out by regulators, and where external shareholders are dominated by insiders. The listing of Sina Weibo fits the bill. The Twitter-like microblog has also set a low bar for the upcoming market debut of e-commerce giant Alibaba.

from Breakingviews:

Candy Crush maker picks $7.6 bln IPO from thin air

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By Robert Cyran
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The maker of the popular game “Candy Crush Saga” has picked $7.6 billion out of the thin air for its initial public offering. King Digital Entertainment uses creative metrics to justify its whopping valuation. But there’s no way to calculate what an enterprise is worth when its profit can skyrocket 70-fold one year and could collapse the next. Rival Zynga’s IPO flub serves as an apposite warning.

from Breakingviews:

Unicorns stampede through tech fantasyland

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By Jeffrey Goldfarb
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

There’s a new stampede in technology’s fantasyland: Unicorns. The single-horned stallion has made the leap from legend to run free through modern-day Silicon Valley, New York, London and the plains of central Israel as a term to describe the most successful startups. In a different and unintended sense, the trope couldn’t be more apt.

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