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from Breakingviews:

U.S.-backed China tech shows investment curb folly

By Robyn Mak

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

China’s tech companies may be Beijing’s darlings, but they have U.S. dollar funding to thank. The next generation of upstarts look likely to continue the pattern. Foreign currency funds poured $5 billion into venture capital the first half of this year – three times more than local funds raised. The economic benefits these foreign investors bring make the rules keeping them out harder to justify.

New venture capital funds raised almost $7 billion in the first half of this year, up 157 percent from the same period last year, data gatherer Zero2IPO Research estimates. It’s mostly U.S. investors leading this resurgence, accounting for three quarters of the total amount raised. Lucrative exits abroad, such as online retailer JD.com’s recent New York listing, make U.S. dollars the preferred choice for internet upstarts.

Local venture capitalists lack a deep funding pool to match Silicon Valley’s. Individuals and families, who dominate early-stage tech investment in China, make up half of the country’s private equity investors by number but just 1.4 percent by investable capital, according to Zero2IPO. An emerging crop of tech moguls-turned-venture capitalists, like smartphone-maker Xiaomi’s founder Lei Jun, may attract institutional investors, but this will take time.

from Breakingviews:

Line’s $13 bln valuation shows chat app exuberance

By Robyn Mak and Una Galani

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

Line’s apparent $13 billion valuation sends a strong signal about chat app exuberance. The Japanese mobile messaging app’s quarterly revenue jumped 26 percent from the previous three months, its parent company reported on July 31. That pushes up valuation expectations ahead of its planned initial public offering. Yet Line’s valuation hangs on the assumption that new overseas users will spend like those back home. That seems like wishful thinking.

from Breakingviews:

Apple winds up earnings hope for new gadgets

By Rob Cyran

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

Apple is winding up investors’ earnings hopes for new gadgets. The $570 billion iPhone maker racked up another period of so-so growth in the quarter to June 28, but still with astonishing cash flow. The lower share count may fuel a stock run-up if Apple soon unveils another must-have device.

from Data Dive:

A Cynking ship

This is a chart of the share price and trading volume of Cynk, a technology company that was listed at $0.05 per share in May. Its $13.90 share price today makes it worth about $4 billion on paper (it was, at one point, up to $6 billion, but has since dropped). It has never had any revenues and no one is quite sure what it does.

This morning, the SEC and FINRA suspended trading on the stock because of concerns over market manipulation.

from Breakingviews:

Chinese internet stocks deserve their discount

By Robyn Mak 

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

China’s internet stocks are red hot but investors would rather pay more for their U.S. counterparts. Shares of Chinese companies including gaming and social media giant Tencent and search engine Baidu trade at lower multiples than those of Facebook, Google and other American dotcoms when expected earnings growth is taken into account. The discount is deserved.

from The Great Debate UK:

Old Street is old news: Don’t shackle Europe’s tech start-ups

--Irfon Watkins is CEO of Coull. The opinions expressed are his own.--

London Tech Week created some interesting conversations and predictions. The stand out being a claim from Oxford Economics that in the next decade London’s tech scene will increase by over 11,000 businesses, creating 46,000 new jobs and generating £12 billion. There are signs that London is on the verge of becoming Europe’s tech hub and that it may even overtake Silicon Valley. The calls for Europe’s tech talent to migrate have gone out. However, while the figures suggest this will bolster the city’s economy, it could end up doing more harm than good when it comes to Europe’s technology sector overall.

For me, bringing all of the Europe’s talent together in one city and placing them around one roundabout goes entirely against the new working world that technology has created. Isn’t it meant to be about “anywhere working”? Technology has allowed us to do meetings from home and secure billion dollar contracts while lying on a beach. Yet to be a successful start-up we’re now making out that you have to be in London. Worse still, you have to be at Silicon Roundabout. It just doesn’t make sense.

from Breakingviews:

Oracle deal provides partly cloudy forecast

By Kevin Allison

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

Oracle’s $5.3 billion deal for Micros Systems provides a cloudy forecast for shareholders in the database giant. Even if it’s the start of a new deal binge by Chief Executive Larry Ellison – which is possible – it’s not at a crazy valuation. But longtime partner Micros is more of an add-on than a way to supercharge Oracle’s effort in the cloud.

from Breakingviews:

Alibaba is case study in U.S.-China legal gulf

By Richard Beales

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

Alibaba’s coming U.S. initial public offering will probably value the Chinese e-commerce firm at more than $100 billion. But will shareholders actually own the business? That’s the timely concern raised by a U.S. congressional commission. Lack of clarity in PRC law is mainly to blame.

from Breakingviews:

Alibaba’s slow unveiling shows good and bad sides

By Peter Thal Larsen

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

Alibaba is lifting its veil to reveal both good and bad sides. The e-commerce giant has released more information ahead of its highly anticipated initial public offering. Though some of the disclosures will persuade prospective investors its business is relatively robust, the rapid shift by users to mobile phones is squeezing margins.

from Breakingviews:

China-U.S. cyber spat risks corporate casualties

By Ethan Bilby

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

China’s security spat with the United States risks corporate casualties on both sides. The People’s Republic has responded to U.S. allegations of cyber spying by targeting American tech companies. A continuing dispute could lead to blocked deals in the United States and lost sales in China. Though companies can try to ease concerns, it’s hard for them to escape a political escalation.

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