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Exclusive: Trump’s former White House ethics lawyer told Cassidy Hutchinson to give misleading testimony to January 6 committee, sources say

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Washington
CNN
 — 

The January 6 committee made a startling allegation on Monday, claiming it had evidence that a Trump-backed attorney urged a key witness to mislead the committee about details they recalled.

Though the committee declined to identify the people, CNN has learned that Stefan Passantino, the top ethics attorney in the Trump White House, is the lawyer who allegedly advised his then-client, former White House aide Cassidy Hutchinson, to tell the committee that she did not recall details that she did, sources familiar with the committee’s work tell CNN.

Trump’s Save America political action committee funded Passantino and his law firm Elections LLC, including paying for his representation of Hutchinson, other sources tell CNN. The committee report notes the lawyer did not tell his client who was paying for the legal services.

Over the summer, Hutchinson emerged as a blockbuster witness for the committee, providing key insight into Trump’s state of mind and his actions leading up to the January 6 attack on the US Capitol. Before her public testimony, Hutchinson dropped Passantino and got a new lawyer.

When asked about pressure on Hutchinson after Monday’s hearing, committee member Rep. Zoe Lofgren, told CNN: “She was advised to say that she didn’t recall something when she did. So that’s pretty serious stuff.”

The episode is just one of several instances in which the committee has accused members of Trump’s orbit of trying to obstruct the panel’s investigation.

Two sources familiar with the situation tell CNN that Hutchinson has discussed the episode with the Justice Department. CNN has previously reported that Hutchinson was cooperating with the Justice Department’s January 6 investigation, after she became a crucial public witness in the House probe.

CNN reached out to the Justice Department for comment.

Passantino has not been accused of a crime. He said House investigators never reached out to him for an interview.

In a statement to CNN, Passantino said he didn’t advise Hutchinson to mislead the committee. “I represented Ms. Hutchinson honorably, ethically, and fully consistent with her sole interests as she communicated them to me. I believed Ms. Hutchinson was being truthful and cooperative with the Committee throughout the several interview sessions in which I represented her.”

Passantino pointed out it’s not uncommon for people to change lawyers “because their interests or strategies change,” according to his statement. He also said political committees sometimes cover client fees “at the client’s request.”

In response to an accusation from the committee that he also shared her testimony with other lawyers and the press even when she told him not to, he said, “External communications made on Ms. Hutchinson’s behalf while I was her counsel were made with her express authorization.”

By Tuesday, Passantino’s professional biography had been removed from the website of a midwestern-based law firm where he was a partner – and he acknowledged in his statement he was on a leave of absence from the firm “given the distraction of this matter.” That firm, Michael Best & Friedrich LLP, said on Tuesday it was not involved in the situation and Hutchinson wasn’t a client.

Passantino said he remains a partner at Elections LLC.

The House January 6 committee, during hearings over the summer, said it was concerned about potential witness tampering. CNN has reported that witness was Hutchinson.

The committee summary stated that the panel “is aware of multiple efforts by President Trump to contact Select Committee witnesses. The Department of Justice is aware of at least one of those circumstances.”

Then on Monday, in the executive summary of the final report, the committee revisited the issue in its handoff of the investigation to the Justice Department.

According to the report, “the lawyer had advised the witness that the witness could, in certain circumstances, tell the Committee that she did not recall facts when she actually did recall them.”

“When the witness raised concerns with her lawyer about that approach,” according to the summary, the lawyer said, “They don’t know what you know, [witness]. They don’t know that you can recall some of these things. So you saying ‘I don’t recall’ is an entirely acceptable response to this.”

“The lawyer instructed the client about a particular issue that would cast a bad light on President Trump: ‘No, no, no, no, no. We don’t want to go there. We don’t want to talk about that,’” the report said.

At the committee’s final public hearing, Lofgren said: “The witness believed this was an effort to affect her testimony, and we are concerned that these efforts may have been a strategy to prevent the Committee from finding the truth.”

Lawyers must follow extensive ethics guidelines as part of their profession, including avoiding conflicts of interest that could compromise their representation of a client. According to legal ethics experts, a lawyer swaying their client’s testimony in a way that wouldn’t be entirely truthful could be looked at as possible obstruction of an investigation.

Elections LLC, a political law practice Passantino and other Trump lawyers founded after he left the Trump White House, has received regular payments from Save America PAC and other Trump-backed groups, according to FEC filings. The Save America PAC distributions to the firm for legal consulting total more than $150,000 in 2021, and about $275,000 in 2022. The firm also has worked for major Republican congressional campaigns.

This year, Trump’s Save America PAC has made payments to several law firms representing witnesses in the January 6 and Mar-a-Lago investigation. An issue only arises if the lawyer doesn’t follow the client’s wishes, legal experts and professional rules say.

The committee, in its summary Monday, gave several other examples of “evidence suggesting specific efforts to obstruct” their work. They noted efforts by Trump to contact some witnesses, as well as multiple Secret Service agents hiring private lawyers rather than agency-provided lawyers who would represent them for free. A Secret Service driver’s lawyer admitted to writing notes to the driver as they testified, about what was being said, according to the committee.

The committee also said it believed some witnesses, such as Trump’s former White House press secretary Kayleigh McEnany and the former president’s daughter Ivanka Trump, weren’t as “frank or direct” as others.

The report also said the committee believed a White House staffer Anthony Ornato “gave testimony consistent with the false account” in a book written by Mark Meadows, downplaying Trump’s wish to go to the Capitol on January 6.

The committee says it plans to release transcripts that will shed further light on the witness testimony they found to be questionable.

In its summary Monday, the committee gave several other examples of “evidence suggesting specific efforts to obstruct” their work. They noted efforts by Trump to contact some witnesses, as well as multiple Secret Service agents hiring private lawyers rather than agency-provided lawyers who would represent them for free. A Secret Service driver’s lawyer admitted to writing notes to the driver as they testified, about what was being said, according to the committee.

The committee also said it believed some witnesses, such as Trump’s former White House press secretary Kayleigh McEnany and the former president’s daughter Ivanka Trump, weren’t as “frank or direct” as others.

The report also said the committee believed a White House staffer Anthony Ornato “gave testimony consistent with the false account” in a book written by Mark Meadows, downplaying Trump’s wish to go to the Capitol on January 6.

The committee says it plans to release transcripts that will shed further light on the witness testimony they found to be questionable.


This story has been updated with other potential examples of obstruction identified by the committee.

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Business

FTC Investigating Amazon Deal to Buy One Medical Network of Health Clinics

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WASHINGTON—The Federal Trade Commission is investigating

Amazon.com Inc.’s

AMZN -0.24%

$3.9 billion deal to buy

1Life Healthcare Inc.,

ONEM 0.35%

which operates One Medical primary care clinics in 25 U.S. markets.

1Life, which went public in 2020, disclosed the investigation in a securities filing. The disclosure says One Medical and

Amazon

AMZN -0.24%

each received a request on Friday for additional information about the deal from the FTC.

Amazon’s

AMZN -0.24%

bid for One Medical added momentum to the push by technology and retail giants to make inroads into the nation’s $4 trillion healthcare economy. The deal was the first major acquisition announced during the tenure of Chief Executive

Andy Jassy,

for whom expansion into healthcare is a priority.

The FTC’s move to investigate the deal could delay its completion as federal competition investigations often take months to finish. Significant U.S. antitrust probes on average take about 11 months, according to data compiled by law firm Dechert LLP.

FTC Chairwoman Lina Khan is a critic of Amazon, having written a 2017 law review article that argued Amazon’s conglomerate-like structure shouldn’t have escaped antitrust scrutiny. Ms. Khan said Amazon’s entry into businesses beyond its e-commerce platform allowed it to gather data it could use to undercut other companies.

The FTC is investigating Amazon’s Prime membership program, according to a legal petition Amazon filed last month. The company argued that FTC staff had made excessive demands on founder

Jeff Bezos

and other company executives and asked officials to quash the subpoenas.

An Amazon spokeswoman declined to comment.

Mr. Jassy is focused on healthcare as an industry in which Amazon could find significant growth opportunities. The company recently revealed that it plans to shut down a healthcare unit it launched in 2019 called Amazon Care after it announced the One Medical deal.

The transaction would give Amazon more than 180 clinics with employed physicians across roughly two dozen U.S. markets. One Medical Chief Executive

Amir Dan Rubin

is expected to remain as CEO once the deal closes.

The line between Amazon and Walmart is becoming increasingly blurred, as the two companies seek to maintain their slice of the estimated $5 trillion retail market while chipping away at the other’s share, often by borrowing the other’s ideas. Photos: Amazon/Walmart

As Amazon seeks to grow in healthcare, the company faces added challenges from competitors such as

UnitedHealth Group Inc.’s

Optum health-services arm and

CVS Health Corp.

, in addition to hospital systems.

In a memo to employees,

Neil Lindsay,

senior vice president of Amazon Health Services, said the healthcare industry continues to be an important arena for innovation.

“As we take our learnings from Amazon Care, we will continue to invent, learn from our customers and industry partners, and hold ourselves to the highest standards as we further help reimagine the future of health care,” Mr. Lindsay wrote.

Write to Dave Michaels at dave.michaels@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Appeared in the September 3, 2022, print edition as ‘FTC Probes Amazon Deal for One Medical.’

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Business

Jack Ma Plans to Cede Control of Ant Group

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HONG KONG—Billionaire Jack Ma plans to relinquish control of Ant Group Co., people familiar with the matter said, part of the fintech giant’s effort to move away from affiliate Alibaba Group Holding Ltd. after more than a year of extraordinary pressure from Chinese regulators.

The authorities halted Ant’s $34 billion-plus IPO in 2020 at the 11th hour and are forcing the technology firm to reorganize as a financial holding company regulated by China’s central bank. As the overhaul progresses, Ant is taking the opportunity to reduce the company’s reliance on Mr. Ma, who founded Alibaba.

Mr. Ma, a 57-year-old former English teacher and one of China’s most prominent entrepreneurs, has been the target of government action that appears designed to reduce his influence and the power of his companies. He has controlled Ant since he carved its precursor assets out of Alibaba more than a decade ago. Over time he built it into a company that owns the Alipay payments network with more than one billion users, an investing platform that houses what was once the world’s largest money-market fund, and a large microlending business. Ant was expected to be valued at more than $300 billion had it gone public.

Diminishing his ownership could put back a potential revival of Ant’s IPO for a year or more. Chinese securities regulations require a timeout on public listings for companies that have gone through a recent change in control.

Mr. Ma doesn’t hold an executive role at Ant or sit on its board, but is a larger-than-life figure at the company and currently controls 50.52% of its shares via an entity in which he holds the dominant position. He could relinquish his control by transferring some of his voting power to other Ant officials including Chief Executive

Eric Jing,

after which they would collectively control the company, some of the people said.

Ant told regulators of Mr. Ma’s intention to cede control as the company prepared to convert into a financial holding company, the people familiar with the matter said. Regulators didn’t demand the change but have given their blessing, the people said. Ant is required to map out its ownership structure when it applies to become a financial holding company.

The People’s Bank of China has yet to officially accept Ant’s application to become a financial holding company. Any change of control isn’t likely to materialize until Ant’s restructuring is complete.

Ant owns the Alipay payments network that has more than one billion users.



Photo:

Qilai Shen/Bloomberg News

Mr. Ma has personally contemplated ceding control of Ant for years, some of the people said. He has been concerned about the corporate-governance risks arising from being too reliant on a single dominant figure atop the company, those people said.

The charismatic founder addressed those risks at Alibaba years ago by setting up a partnership structure to ensure a sustainable succession as its first generation of leaders moved on. He gave up the CEO job at Alibaba in 2013 and stepped down as chairman in 2019 when he retired from the company. He currently holds less than 5% of Alibaba’s shares.

American depositary shares of Alibaba traded in the U.S. fell 2.2% on Thursday. They have lost nearly half their value over the past 12 months.

The need to end Mr. Ma’s control at Ant gained new urgency as the souring regulatory environment spurred Ant and Alibaba to cut their ties. On Tuesday, Alibaba revealed seven top Ant executives had stepped down from the Alibaba partnership, the top echelon of management at Alibaba and its subsidiaries. The two companies also terminated long-running commercial and data-sharing agreements that had given Alibaba an edge.

Mr. Ma previously held back from giving up control of Ant because he didn’t want to delay the company’s plans for an initial public offering, some of the people familiar with the matter said. The scuttling of those plans—after Mr. Ma laid into financial regulators in a speech—removed that obstacle and created a fresh opportunity for Mr. Ma to resolve the matter, those people said.

A change in control could mean that Ant will have to wait a while longer before it tries going public again. Chinese securities regulations state that companies can’t list domestically on the country’s A-share market if they have had a change of controlling shareholder in the past three years—or in the past two years if listing on Shanghai’s Nasdaq-like STAR Market.

In less than six months, China’s tech giant Ant went from planning a blockbuster IPO to restructuring in response to pressure from the central bank. As the U.S. also takes aim at big tech, here’s how China is moving faster. Photo illustration: Sharon Shi

Hong Kong also imposes a waiting period but only for one year. Ant’s scuttled IPO plan included simultaneous listings in the former British colony as well as Shanghai.

Ant is in no rush to attempt an IPO again and intends to keep its options open, some of the people said. The company could consider other moves including spinning off units that could in turn be listed themselves, those people said.

Mr. Ma controls Ant through an entity called Hangzhou Yunbo Investment Consultancy Co., which in turn controls two vehicles that together own a little more than half of Ant’s shares.

Mr. Ma has a 34% stake in Hangzhou Yunbo. The other 66% is split evenly among Ant’s CEO, Mr. Jing, former CEO

Simon Hu

and veteran Alibaba executive and former Ant nonexecutive director Fang Jiang.

The billionaire originally owned all of the entity. He transferred two-thirds of the shares to the three executives in August 2020 before Ant filed its IPO prospectus. At the same time, Mr. Ma was given veto power over Hangzhou Yunbo’s decisions, according to the prospectus. The arrangement was designed to give the other executives more say in Ant’s affairs without triggering an effective change in control that could delay the IPO, a person familiar with the matter said.

Jack Ma doesn’t hold an executive role at Ant or sit on its board but controls 50.52% of its shares via an entity in which he holds the dominant position.



Photo:

bobby yip/Reuters

Mr. Ma could cede control of Ant by diluting his voting power in Hangzhou Yunbo via giving up his veto and transferring some of his stake to other executives, the person said.

Mr. Hu, who resigned as Ant’s CEO last year and recently retired, and Ms. Jiang, who left Ant’s board last year, will likely exit Hangzhou Yunbo and be replaced by other Ant executives. In addition to Mr. Jing, Ant’s most senior executives are now Executive Vice President Xiaofeng Shao and Chief Technology Officer Xingjun Ni. Mr. Shao is also the general secretary of Ant’s Communist Party committee, according to people familiar with the matter. Mr. Ni was instrumental in founding Alipay in 2004.

Mr. Ma’s control over Ant goes back more than a decade to the period when he was CEO of Alibaba. In 2011, it emerged that he had carved the payments business Alipay out of Alibaba without the knowledge of key shareholders including Yahoo Inc. and

SoftBank Group Corp.

9984 0.37%

Alibaba argued the transfer was needed for Alipay to secure a Chinese license that might not have been granted if the company had foreign shareholders. Following the move, China’s central bank in May 2011 gave Alipay a license to operate as a payment-services company. Yahoo and SoftBank were later compensated by an agreement that allowed them to share economic interests in Ant through their ownership in Alibaba.

In 2014, Ant Financial Services Group was created to hold Alipay and other financial businesses including consumer lending. The company in 2020 changed its name to Ant Group.

Write to Jing Yang at Jing.Yang@wsj.com and Raffaele Huang at raffaele.huang@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Business

‘So bad, it’s good.’ This beleaguered stock market has one big asset on its side, say strategists.

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A rough month for stocks is drawing to a close, and many investors likely won’t be sad to see the back of it. And the last day of April trade is looking weak as Apple and Amazon failed to raise the bar on a mixed season for tech earnings.

Our call of the day comes from Keith Lerner, chief market strategist at Truist Advisory Services, who said “depressed” investor sentiment is the reason he hasn’t shifted to a full negative stance on stocks right now.

“Indeed with markets, it’s not about good or bad — it’s all about better or worse relative to expectations. When expectations are low, a little bit of good news can go a long way. That’s why markets tend to bottom when fear and uncertainty are at an extreme,” said Lerner in a recent note to clients.

He downgraded his equity stance to neutral in April after two years of a positive stance, noting that while the range of potential outcomes is wide, risk/reward is less positive.

He pointed to the latest survey from the American Association of Individual Investors (AAII), which showed the percentage of investors with a negative/bearish outlook surging to 59.4%. That was the highest since early March 2009, just a few weeks short of a major stock bottom following the 2008-09 financial crisis decline.

“To be fair, investors were correctly negative in January 2008 in the early stages of that market downturn,” he said.

The percentage of bullish investors is currently 16%, also close to a record low, leaving the bull/bear spread at -43%, a level that has been surpassed twice in the past 35 years — in the fall of 1990 and that March 2009 period, said Lerner.


Truist Advisory Services

A similar theme was heard from Thomas Lee, founder of Fundstrat Global Advisors, who told clients that the AAII sentiment survey was a “major bottom signal,” based on history. “So bad, it’s good,” he said.

Lee provided this chart showing when such a weak reading marked a stock bottom:

One footnote from Lee is that the AAII survey tends to sample older investors, and not the Reddit crowd.

Read: Boomers are leaving the stock market. Here’s what happens next.

Lerner adds other proof of investor negativity, such as the $45 billion flowing out of equity funds over the past two weeks. “This is an extreme that we have also seen during times of heightened uncertainty and volatility,” Lerner said.

For example: the post-Lehman Brothers bankruptcy, the U.S. debt downgrade, COVID-19 pandemic lows and two months before the 2020 U.S. presidential election. While the Lehman Brothers signal was “premature,” strong price returns followed the other periods, he said.

In short, Lerner said Truist follows the “weight-of-the-evidence approach,” which is telling it that depressed investor views and a “low hurdle for positive surprises” are the stock market’s biggest assets going.

The buzz

The Federal Reserve’s favored inflation gauge — the core personal consumer expenditure price index — rose a sharp 0.9%i, and employment costs also rose. The followed by the University of Michigan consumer sentiment index is still to come, and next week we’ll get a Fed meeting.

Amazon
AMZN,
-11.95%
is down 8% after its first loss in seven years. Apple
AAPL,
+1.34%
is down over 2% after the tech giant topped earnings and set a revenue record, but warned of billions in added costs from supply-chain woes.

Tesla
TSLA,
+6.32%
stock is higher after CEO Elon Musk tweeted that there were no more sales planned for now, after he sold nearly $4 billion worth.

Earnings from Chevron
CVX,
-0.94%,
Exxon
XOM,
+0.23%
have left those shares softer, while Honeywell
HON,
+4.98%
is up on results, while AbbVie
ABBV,
-10.36%,
Bristol-Myers Squibb
BMY,
-2.30%
and Colgate-Palmolive
CL,
-5.43%
are also all down on results.

Opinion: Big Tech is no longer winning as big, but these two stocks still seem safe

Elsewhere, Intel
INTC,
-5.25%
is down after results, while investors are cheering Roku
ROKU,
+9.57%
earnings. Also sinking are shares of Robinhood
HOOD,
+4.66%,
which missed forecasts and said fewer people were trading on its app.

And Digital World Acquisition Corp.
DWAC,
+8.07%,
the special-purpose acquisition company buying the company behind former President Donald Trump’s Truth Social, is surging after Trump resurfaced with a message on the platform.

Ukraine’s leader has accused Russia of trying to humiliate the UN by firing missles on Kyiv during a visit by Secretary-General António Guterres. And efforts to get trapped civilians out of embattled Mariupol continue.

China’s government has vowed more support for its economy, as the country battles COVID-19 outbreaks.

The Labor Department is worried Fidelity’s plan to allow Bitcoin into 401(k) plans is risky for retirees.

The markets

Stocks
DJIA,
-0.05%

SPX,
-0.47%

COMP,
-0.12%
are lower, with bond yields
TMUBMUSD10Y,
2.865%

TMUBMUSD02Y,
2.702%
higher and crude-oil prices
CL00,
+0.94%
up. Gold is climbing , while the dollar
DXY,
-0.37%
has cooled after Thursday’s massive rally, notably against the yen
USDJPY,
-0.57%,
which continues to drop. The Russian central bank cut interest rates to 14% and the ruble
USDRUB,
-2.12%
is rebounding.

Bitcoin
BTCUSD,
-1.67%
and other cryptos are modestly off.

The chart

Naomi Poole and a team of strategists at Morgan Stanley have rolled out a new Market Sentiment Indicator (MSI) to offer “tactical guidance on ‘risky assets.’” It aggregates survey, positioning, volatility and momentum data to gauge market stress and sentiment.

The MSCI All-Country World Index (you can track that via the exchange-traded fund iShares MSCI ACWI
ACWI,
+0.25%
) is used as a proxy for risk asset performance.

“Our analysis suggests that improving/deteriorating sentiment is a more powerful signal for forward returns than just extreme levels,” said Poole and the team. Using the level and direction of stress, the MSI is currently neutral and not giving off buy signals yet, they said.

The tickers

These were the top-traded tickers on MarketWatch as of 6 a.m. Eastern Time:

TSLA,
+6.32% 		Tesla
AAPL,
+1.34% 		Apple
AMZN,
-11.95% 		Amazon
GME,
+0.76% 		GameStop
AMC,
+2.49% 		AMC Entertainment
NIO,
+7.12% 		NIO
FB,
+2.85% 		Meta Platforms
BABA,
+11.86% 		Alibaba
NVDA,
+1.61% 		Nvidia
TWTR,
+0.72% 		Twitter
Random reads

A southern Italian town may hold the secrets to longevity. And it’s all down to food.

Pet duck helps solve a murder mystery.

Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.

Want more for the day ahead? Sign up for The Barron’s Daily, a morning briefing for investors, including exclusive commentary from Barron’s and MarketWatch writers.

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Business

Alibaba to Buy Back Up to $25 Billion of Stock

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Alibaba Group Holding Ltd.

BABA -4.35%

boosted its share buyback program to $25 billion from $15 billion, in a bid to reassure investors about the company’s prospects after a year in which its stock has fallen by more than half.

The potential buybacks are substantial compared with the Chinese e-commerce giant’s market value: As of Monday, it had a market capitalization of about $270 billion, according to FactSet.

The modified repurchase program will be effective for two years through March 2024,

Alibaba

BABA -4.35%

said on Tuesday morning Hong Kong time. It said the 67% increase in the firepower allocated for buybacks was “a sign of confidence about the company’s continued growth in the future.”

Chinese technology stocks in Hong Kong, China and in the U.S.—where they are listed as American depositary receipts—have been highly volatile recently amid worries that U.S. regulators may move to delist Chinese companies as soon as 2024 and signs that Beijing’s long-running regulatory crackdown will continue.

Alibaba’s New York Stock Exchange-listed ADRs are down nearly 13% so far this year—and have fallen about 57% over the past 12 months—according to FactSet. Its stock also trades in Hong Kong, where shares jumped 11% Tuesday.

Alibaba said it repurchased about $9.2 billion worth of ADRs as of March 18 under its previous program. That sum will count toward the new $25 billion total.

Citigroup analysts said the enlarged buyback plan was “likely the largest share repurchase program ever in China’s internet sector,” and suggested Alibaba’s management viewed its stock as undervalued and attractive.

Separately, the company said Weijian Shan, executive chairman of investment group PAG, would join the board as an independent director starting March 31.

Ericsson

Chief Executive

Börje Ekholm,

who has served on the board since 2015, will step down the same day, Alibaba said.

Many companies use buybacks to return cash to shareholders. The plans can help support stock prices by signaling confidence in the company’s outlook and its financial health, while boosting earnings per share. In recent years, they have also caused controversy, with critics arguing it would be better to reinvest the money back into the business, in areas like equipment, research and higher wages.

Companies on the S&P 500 have poured more than $5.3 trillion into repurchasing their own shares since 2010. WSJ explains how stock buybacks work, and why there’s debate over whether or not they’re good for the economy.

S&P 500 firms outlined $238 billion of buyback plans in the first two months of 2022, according to Goldman Sachs, and the bank has forecast the full-year total could rise 12% to $1 trillion.

Some of the biggest U.S. technology companies have embraced even bigger repurchase programs than Alibaba. Last year, for example, Google’s parent company

Alphabet Inc.

and

Microsoft Corp.

earmarked up to $50 billion and $60 billion, respectively, for buybacks.

Write to P.R. Venkat at venkat.pr@wsj.com and Quentin Webb at quentin.webb@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

Appeared in the March 22, 2022, print edition as ‘Alibaba Increases Share Buybacks to $25 Billion.’

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Business

Alibaba and JD.com soar as China pledges to support markets

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Chinese- and Hong Kong-listed stocks soared on Wednesday after China’s government pledged to support beleaguered markets.

The Hang Seng
HSI,
+9.08%
surged 9% as state-run Xinhua News Agency said the government would take a number of market-friendly steps.

The Shanghai Composite
SHCOMP,
+3.48%
rose 3.5%.

China’s financial stability and development committee called for monetary policy to support the economy, and that authorities should prudently introduce policies that have a contractionary impact.

The Chinese government also is working with U.S. authorities to support listings overseas, as the Securities and Exchange Commission last week identified Chinese companies that could be delisted over the issue of auditor access.

JD.com
9618,
+35.64%

JD,
+7.08%
jumped 36%, Alibaba
9988,
+27.30%

BABA,
-1.29%
rallied 27% and NetEase
9999,
+23.40%

NTES,
+3.79%
surged 23% in Hong Kong trade.

Other Hong Kong tech stars also jumped, including Meituan
3690,
+32.08%
and Tencent Holdings
700,
+23.15%.

The committee also said it would keep Hong Kong’s financial markets stable while enhancing regulatory communications and coordination with Hong Kong regulators.

“Having disappointed markets earlier in the week by not cutting interest rates, China’s state economic policy apparatus is taking significant coordinated steps to support risk sentiment. These include State Council support for overseas listings, engaging with the U.S. on ADRs, and perhaps most importantly, suggesting that regulation of its big tech firms will end soon. There are also promises to step-up support for the real estate sector,” said Stephen Innes, managing partner at SPI Asset Management.

Even with Wednesday’s surge, the Hong Kong index is down 14% this year, compared to the 11% drop for the S&P 500
SPX,
+2.14%.

The remarks didn’t address another factor that’s been weighing on Chinese stocks, the possibility of sanctions from the U.S. if the country provides arms to Russia.

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Business

SoftBank Pitches IPO for Arm After Deal With Nvidia Falls Through

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TOKYO—After a deal that could have been worth $80 billion to his company fell apart,

SoftBank Group Corp.

9984 5.85%

Chief Executive

Masayoshi Son

is playing salesman for Plan B—an initial public offering of chip designer Arm.

Mr. Son sounded as if he were on a roadshow for investors at a news conference in Tokyo on Tuesday. He said Arm is entering a “golden period” of high demand for the chips it helps create in smartphones, electric vehicles and computer-server farms operated by the likes of

Amazon.com Inc.

The pitch came hours after the Japanese investment and technology conglomerate said it was abandoning plans to sell Arm to Nvidia Corp.—in what would have been the largest semiconductor deal on record—because antitrust concerns stood in the way.

Mr. Son said he was surprised to see the backlash not only from U.S. regulators who sued to block the deal in December but also big tech companies that rely on Arm’s chip designs.

“We saw strong opposition because Arm is one of the most important and essential companies that most companies in the IT industry or in Silicon Valley rely on, either directly or indirectly,” he said.

SoftBank paid $32 billion when it acquired the U.K.-based chip business in 2016. Mr. Son said the sale to Nvidia, under which SoftBank would have received both cash and Nvidia shares, could have been worth $80 billion because of a rise in Nvidia’s share price.

SoftBank now plans to pursue a public listing of Arm by March 2023. Arm shares will most likely be listed on the tech-heavy

Nasdaq Stock Market

in the U.S. because many of Arm’s clients are based in Silicon Valley, Mr. Son said.

He said SoftBank didn’t intend to keep Arm for itself because he wanted outside investors in the SoftBank-led Vision Fund, which owns a quarter of Arm, to be able to cash in through an IPO and because he wanted to give stock options as incentives to Arm employees.

Uncertainties linger around an Arm IPO, including whether the volatile semiconductor business will stay hot through this year.

Chinese tech stocks popular among U.S. investors have tumbled amid the country’s regulatory crackdown on technology firms. WSJ explains some of the new risks investors face when buying shares of companies like Didi or Tencent. Photo Composite: Michelle Inez Simon

Tech shares have fallen recently because of tightening by the Federal Reserve. Fumio Matsumoto, chief strategist at

Okasan Securities,

said that made the timing for a big IPO less than ideal, and he also observed that a strategic buyer in the chip industry might pay more for Arm because of the potential synergy effects.

Still, Mr. Matsumoto said the downturn in Silicon Valley also offered opportunities for Mr. Son, and it made sense to raise cash for his war chest from an Arm IPO. “Because technology share prices have gone through a sharp correction over the past year, we are seeing a good cycle to consider preparing” for new investments, Mr. Matsumoto said.

After a rough patch a few years ago, Arm is on track for $2.5 billion in revenue this fiscal year, which ends in March, up from $1.98 billion the previous year, SoftBank said. Arm’s operating profit, according to one type of calculation used by SoftBank, more than doubled over the past two years to a projected $900 million this fiscal year.

An array of consumer electronics companies as well as semiconductor companies, including

Apple Inc.,

Samsung Electronics Co.

and

Qualcomm Inc.,

use Arm’s designs in at least some of their chips. The designs are known for their low power consumption, making them nearly ubiquitous in mobile devices.

The collapse of the Arm deal is just one of the challenges Mr. Son is tackling in his globe-spanning investment portfolio. He said “we are in pain” over China’s crackdown on its big tech companies, which hit SoftBank investments including its most valuable one, e-commerce giant Alibaba Group Holding Ltd.

The past two years have seen some of the wildest swings in the four decades since Mr. Son started SoftBank. The pandemic, initially seen as a blow, soon emerged as a boon for many technology businesses including those in which SoftBank has invested. SoftBank shares surged, only to fall by half from their recent peak when the China troubles hit and the Arm deal ran aground.

SoftBank’s net asset value, Mr. Son’s preferred measure of the company’s finances, fell by ¥1.6 trillion, equivalent to about $14 billion, in the October-December quarter to ¥19.3 trillion. That is a fall of 30% from the peak in September 2020 and the lowest level since 2017.

Mr. Son blamed the sharp fall in Alibaba shares. The Chinese company, which once made up the majority of SoftBank’s net assets, now accounts for less than a quarter of the total.

SoftBank said it unloaded a small number of Alibaba shares to settle contracts with its lenders, but Mr. Son said SoftBank’s stake in the Chinese company remained close to a quarter.

Mr. Son, who turns 65 this year, has lost a number of top lieutenants in recent years, including Chief Operating Officer

Marcelo Claure,

who stepped down in January after a pay dispute. Mr. Son said that while he was grooming successors, he didn’t intend to step down soon.

“If I stop, I’d become an old grandpa very quickly,” he said. He boasted that when he went bowling recently, he topped 200 points in two different rounds—a fine score for an amateur. “I thought, ‘Hey, I’m still pretty young,’ ” he said.

—Sam Schechner in Paris contributed to this article.

Write to Megumi Fujikawa at megumi.fujikawa@wsj.com and Peter Landers at peter.landers@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Business

Brace for a volatile 2022, but cling to this tech stalwart when the storm comes, says investment adviser

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The pain is piling up for equity investors after the long U.S. holiday weekend, with bond yields at levels not seen since early 2020, and oil prices tapping 2014 highs.

The pace of Federal Reserve monetary policy tightening amid the highest inflation in about 40 years, a bumpy start to the corporate earnings reporting season and pandemic uncertainties are just a few things on the worry list. Technology stocks
COMP,
-1.12%
are set to take the biggest hit on Tuesday, as a rapid rise in short term interest rates tends to make their future cash flows less valuable.

While a Deutsche Bank chart (below) reveals more tech-bubble worries, our call of the day makes a case for one of the biggest tech stalwarts, Apple
AAPL,
-0.43%,
saying the iPhone maker has an ace in the hole that few are paying attention to.

That call comes from investment adviser Wedgewood Partners, who kick off their fourth-quarter 2021 client letter with a warning about market volatility for 2022, triggered by central bankers who are about to usher in some market chaos by pulling the plug on years of cheap money. Even Chinese President Xi Jinping was heard warning the Fed not to hike interest rates at a virtual Davos on Tuesday.

However, the adviser also sees opportunities ahead as selling picks up speed, and they plan to stick to Apple, which they’ve owned for 16 years.

While Wedgewood said it couldn’t foresee the many products the company unveiled, “we did know that Apple’s vertically integrated [software and hardware] product development strategy was unique and extremely capable of creating products and experiences that customers thought worthwhile enough to spend growing amounts of time and money on,” said the adviser.

Today, that strategy remains intact, but more important Apple is commanding a key new realm, having developed over a dozen custom processors and integrated circuits, since launching its “A-series” processors. For example, one it produced in 2017 provided the iPhone X with enough power to operate FaceID 3-D algorithms, used to unlock phones and make digital payments.

“Apple has effectively created a semiconductor business that rivals and even surpasses some of the most established semiconductor-focused businesses in the industry,” said Wedgewood. “Apple continues to differentiate through vertical integration, which has been a hallmark of Apple’s long-term strategy to grow and capture superior profitability. It is difficult to predict what new products will be unveiled; however, we think this strategy should continue to serve
shareholders quite well.”

Other top positions recommended by Wedgewood include telecom group Motorola
MSI,
-1.73%,
another tech stalwart Microsoft
MSFT,
-0.23%
and retailer Tractor Supply
TSCO,
-1.14%.

Here’s a final comment from Wedgewood about the stock storm it sees brewing. “The graphic below reminds us that when speculation reigns, markets can go far higher than what seems sober,” but when they fall “markets will repeat their long history of falling faster and further than what seems sober.”


Wedgewood Partners

“Long term investors should root for such downside. Such times are opportunities to improve portfolios. Our pencils are sharpened for opportunities as Mr. Market serves them up.”

The markets

Microsoft shares are slipping after the tech group confirmed it will buy Activision Blizzard
ATVI,
+27.39%
in a $68.7 billion cash deal. The gaming group’s shares are flying, along with those of rival Electronics Arts
EA,
+6.72%.

Goldman Sachs
GS,
-7.72%
added to a disappointing batch of bank results from last week, with shares down as earnings came up short, with Charles Schwab
SCHW,
-4.29%
also falling on gloomy results. Kinder Morgan
KMI,
-0.14%
and Alcoa
AA,
-1.43%
are still to come.

Airbnb shares
ABNB,
-2.49%
are slumping after ratings and target cut from an analyst who sees multiple headwinds and too-few catalysts.

The New York Empire state manufacturing index for January fell well short of expectations. A National Association of Home Builders index for the same month is still ahead.

An unpublished study by an Israeli hospital showed second Pfizer
PFE,
-1.78%
-BioNTech
BNTX,
-7.77%
or Moderna
MRNA,
-4.70%
boosters aren’t halting omicron infections. Separately, Moderna’s CEO Stephane Bancel said his company is working on a combined flu/COVID booster, while White House chief medical advise Dr. Anthony Fauci, said it’s too soon to tell if omicron will bring us out of the pandemic.

Another study says COVID infections are turning children into fussy eaters due to parosmia disorders that distort their sense of smell. And China state media says packages from the U.S. and Canada had helped spread omicron, as Hong Kong gets ready to cull thousands of hamsters.

An airline lobby group is warning of “chaos” for U.S. air travelers due to 5G services rolling out this month, in a letter signed by big carriers, UPS
UPS,
-1.55%
and FedEx
FDX,
-1.39%.

Larry Fink, chairman and chief executive of BlackRock
BLK,
-1.72%
said investors need to know where company leaders stand on societal issues.

Retailer Walmart 
WMT,
-1.28%
is looking at creating its own cryptocurrency and nonfungible tokens, according to U.S. patent filings.

The markets

Uncredited

The Nasdaq Composite
COMP,
-1.12%
is sprinting ahead with losses, with the Dow
DJIA,
-1.43%
and S&P 500
SPX,
-1.24%
also lower Tuesday led by those for the Nasdaq-100
NQ00,
-1.28%
as bond yields
TMUBMUSD10Y,
1.848%

TMUBMUSD02Y,
1.034%
surge across the curve. Oil prices
BRN00,
+1.06%

CL00,
+1.56%
are surging after Iran-backed Houthi rebels launched a deadly drone attack on a key oil facility in Abu Dhabi. Goldman Sachs also predicted Brent could top $100 a barrel in 2023, while the OPEC left its 2022 global oil-demand forecast unchanged.

Losses spread to Asian
NIK,
-0.27%
and Europe stocks
SXXP,
-0.77%,
with a key German bund yields
TMBMKDE-10Y,
-0.012%
about to turn positive for the first time in three years.

The chart

A January survey of more than 500 investors polled by Deutsche Bank shows a slightly gloomier mood. For example, they are more bearish:


Uncredited

Many, especially those over 34, think tech shares are in a bubble:


Uncredited

And they continue to see inflation as the biggest risk to markets, but are also fretting a more aggressive Fed:


Uncredited

Here are the top stock tickers on MarketWatch as of 6 a.m. Eastern Time.

Ticker Security name
TSLA,
+1.47% 		Tesla
GME,
-5.61% 		GameStop
AMC,
-6.32% 		AMC Entertainment
BBIG,
+29.75% 		Vinco Ventures
NIO,
-0.71% 		NIO
AAPL,
-0.43% 		Apple
CENN,
-4.72% 		Cenntro Electric Group
NVDA,
-1.57% 		Nvidia
BABA,
-0.85% 		Alibaba
NVAX,
-4.04% 		Novavax
Random reads

Tulsa pastor apologizes for wiping his saliva on a man’s face during a sermon.

The high environmental cost of your beloved fish-oil pills.

Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.

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Business

What Happens When Stocks Delist? What to Know If You Own Didi.

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Text size

The regulatory environment is tough for Chinese stocks, but delisting doesn’t happen overnight.


Angela Weiss/AFP via Getty Images


Didi Global

‘s plans to delist from the New York Stock Exchange months after going public triggered concerns over the future of other U.S.-listed Chinese companies.

Chinese tech stocks have borne the brunt of this blow to market sentiment, with the


Hang Seng Tech Index
—which tracks the Hong Kong-listed shares of China’s largest technology companies—hitting an all-time low earlier this week.


Alibaba

(ticker: BABA) and


JD.com

(JD), which are listed in both Hong Kong and the U.S., have been some of the biggest losers. 

Didi’s delisting decision comes amid brewing regulatory pressures in both Washington and Beijing. The Securities and Exchange Commission finalized rules last week that would force foreign companies to open their books to U.S. auditors or be delisted from U.S. markets if they don’t comply for three years. Reports from China, beginning last week and continuing this week, indicate that the country’s market regulator is scrutinizing the corporate structure used by companies that list overseas.

Analysts are split on what will happen next for Alibaba, JD.com, and other U.S.-listed Chinese stocks. “The risk of eventual delisting is real,” Robin Zhu, a Bernstein analyst, told Barron’s. Needham analyst Vincent Yu doesn’t agree: “On the Chinese regulator’s side, there’s no intention to delist them.”

Mass delistings would be a chaotic and dramatic move. And as Barron’s has previously reported, experts think regulators could reach a compromise within the three-year window provided by the SEC’s rule that would prevent delisting. But concerns and regulatory pressure are unlikely to disappear soon.

Here’s what investors should consider if they own these stocks. 

What Are ADRs and How Do They Work?

Investors in U.S.-listed foreign companies own shares of an American depositary receipt, or ADR. Here’s how they work.

U.S. banks bundle shares of foreign-listed companies into ADRs, which are issued as stock that can be traded on U.S. exchanges in dollars. Foreign companies, in turn, gain access to U.S. capital.

But in the case of a U.S.-listed Chinese stock, investors own shares in an offshore holding company. These shell companies are called variable interest entities, or VIEs, and are a corporate structure used by Chinese companies to circumvent Beijing’s rules about foreign investment while still tapping U.S. capital. The offshore company has a contractual relationship with the operating company, which means investors don’t have a direct stake.

VIEs are under scrutiny in both the U.S. and China. SEC Chair Gary Gensler said earlier this year he worried investors didn’t realize how these companies work and pushed for more oversight and transparency. Based on recent reports from China, regulators in Beijing are also looking to crack down on VIEs, especially technology or data-heavy companies.

What Happens to Your Shares When a Company Delists?

If a U.S.-listed Chinese company like Didi delists, there are essentially three possible outcomes for investors: a share buyback, share transfer, or share limbo.

In a buyback scenario, the Chinese company could purchase its shares back from investors at a price agreed upon by shareholders—effectively going private. If the company wishes to go public again, it would do so in a separate listing in the likes of Hong Kong.

In a share transfer scenario, investors would swap their ADR for the Chinese company’s foreign stock. In the case of Didi, which doesn’t have a secondary listing, would need to first launch a listing—in Hong Kong or Shanghai, for instance— to establish both a home for its foreign stock and mechanism for the transfer of ADRs.

If Didi doesn’t buy back shares, but rather delists and doesn’t launch another listing, the ability to trade its shares would be in limbo. Investors would still own equity in the company, but they’d be unable to trade their stock on regulated exchanges. They could sell their shares in over-the-counter markets—with limited liquidity—or hold on to them until a suitable listing was launched.


China Mobile
,
which was blacklisted by the Trump administration because of its ties to China’s military, remains a cautionary tale. The widely held stock was forced to delist from the New York Stock Exchange, leaving many individual investors unable to execute trades or transfers at their U.S. broker.

What Choices Do Investors Have?

Concerned investors have a few options if they believe that they own stock that could be delisted and want to get ahead of the risk.

The first is to sell their stake in U.S.-listed Chinese companies. If investors still want to own shares of Chinese companies, they can try to buy a stake on a foreign exchange through a brokerage. That option isn’t available on every brokerage, though.

There are other options too, including converting an ADR into a stake. Explore those options at the links below:

• How to Buy Chinese Stocks Now That U.S.-Listed Shares Have Become Risky

• How Funds Can Help Investors Navigate China

Write to Jack Denton at jack.denton@dowjones.com

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Business

Stock Market Today: Dow Rose as Moderna Slumped Again

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The


Dow Jones Industrial Average
had one of its best days this year on Monday, as value and defensive stocks led a rebound from last week’s market declines.

The news Monday was relatively positive, with signs that the Omicron variant of Covid-19 might be less severe than earlier strains and reports that China is considering easing monetary policy. On the Federal Reserve policy front, the latest reporting suggested that the central bank could announce plans at its next meeting to more quickly pull back from its bond-buying program.

The Dow surged 647 points, or 1.9%, for its best one-day point gain since November 2020 and the largest percentage increase since last March. The


S&P 500
closed up 1.2% and the Nasdaq Composite rose 0.9%, while the small-cap


Russell 2000
gained 2.1%, for its fourth-straight daily move of 2% or more.

Post-pandemic reopening stocks were among the biggest gainers on Monday. The


U.S. Global Jets
exchange-traded fund (ticker: JETS) added 5.3%, as


American Airlines Group

(AAL) added 7.9% and


United Airlines Holdings

(UAL) jumped 8.3%. Cruise lines


Carnival

(CCL) and


Royal Caribbean Cruises

(RCL) surged 8.0% and 8.3%, respectively.


Marriott International

(MAR) added 4.5%,


Live Nation Entertainment

(LYV) rose 6.1%, and


Cinemark Holdings

(CNK) gained 7.7%.

S&P 500 value stocks as a group gained 1.4% on Monday, versus a 0.9% rise for growth stocks in the index.

Investor attention remains focused on the newly discovered Omicron variant of coronavirus, news of which recently brought about the Dow’s worst day of the year and saw volatility rock markets last week. The latest headline driving sentiment comes from South Africa, where data—though from a small sample size—suggest that symptoms caused by Omicron were milder than with other variants.

Investors aren’t out of the woods yet, however. The broad market will remain sensitive to daily headlines about Omicron—both good and bad.

“It still feels like we’re in the guesswork stage of working out what the impact of Omicron will be,” said Russ Mould, an analyst at broker AJ Bell. “It would be naive to rule out further volatility as markets attempt to work out exactly what’s going on.”

On Monday, the news was positive and investors bought the market. All 11 S&P 500 sectors closed in the green.

Fed policy has been pushing investor sentiment the other way. Chair Jerome Powell indicated last week that the central bank would consider speeding up its slowing, or tapering, of monthly asset purchases, which add liquidity to markets, amid higher inflation.

“We’re really at a fascinating crossroads in markets at the moment,” said Jim Reid, a strategist at Deutsche Bank. “The market sentiment on the virus and the policy makers at the Fed are moving in opposite directions.”

Those trends mean different things for different kinds of stocks and indexes.

If Omicron is less severe than feared, then the economy might hold up better than expected. That would be good for economically-sensitive cyclical stocks, like many of those in the Dow. Higher bond yields and interest rates, however, can put downward pressure on stock valuations, particularly those with nosebleed price-to-earnings ratios, many of which are found in the Nasdaq.

“Like Friday, how the Nasdaq trades will likely determine the day, as markets want to see the tech sector stabilize after intense weakness late last week,” wrote the Sevens Report’s Tom Essaye. “If the Nasdaq can stabilize, the broad market can bounce.”

The tech-heavy index bounced from a loss of about 1% shortly after Monday’s opening bell.

In the commodity space, oil prices rose Monday after Saudi Arabia raised its January prices for Asian and U.S. customers over the weekend by $0.60, in a sign of firmer demand expectations.

Futures contracts for the international oil benchmark Brent rose 4.6%, to above $73 a barrel, with U.S. futures for West Texas Intermediate crude up 4.9% to about $69.50 a barrel.

“Given that OPEC+ is proceeding with its planned 400,000 barrels per day increase this month, it appears that Saudi Arabia is taking a punt that Omicron is a virus in a teacup,” said Jeffrey Halley, an analyst at broker Oanda. “Saudi Arabia’s confidence, along with the South African Omicron article over the weekend, is a boost to markets looking for good news in any corner they can find it.”

Cryptocurrency markets remained depressed after digital assets took a tumble over the weekend.


Bitcoin
and


Ether,
the two leading cryptos, remained off their lows following the stark fall Saturday, but were slipping after steadying Sunday. Bitcoin was trading hands around $49,000—down from more than $57,000 as recently as Friday—with Ether holding above $4,000.

Here are several stocks on the move Monday:


Nvidia

(ticker: NVDA) was among the most actively traded stocks in the U.S. Monday, closing down about 2.1%. Shares of fellow semiconductor firm Advanced Micro Devices (AMD) lost 3.4%.


Lucid Group

(LCID) stock dropped 5.1% after the electric-vehicle startup revealed that it had received a subpoena from the Securities and Exchange Commission, without offering many details.


Kohl’s

(KSS) gained 5.4% after an activist investor said it should explore selling itself.


Moderna

(MRNA) fell 13.5% after its president said that the risk that vaccines don’t work as well against Omicron is high. Pfizer (PFE) stock slid more than 5%.

Alibaba Group Holding (BABA) stock closed up 10.4% after a management shakeup at the e-commerce giant.


Deutsche Bank

(DB) rose 3.6% after JPMorgan upgraded the bank to Overweight from Neutral, adding that the group shows positive revenue developments in key divisions.

Pharma giant


Roche

(ROG.Switzerland) rose 1.5% in Zurich after announcing that it would release rapid antigen tests for Covid-19 and flu viruses next month.

Food delivery group


Just Eat Takeaway.com

(JET.U.K.) fell 4.9% in London following a price target cut and downgrade to Market Perform from Outperform by Bernstein, which sees few positive catalysts in the pipeline for the company.

Write to Jack Denton at jack.denton@dowjones.com

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