(Bloomberg) — When the coronavirus pandemic sent shares plunging, you didn’t have to be a professional investor to spot a buying opportunity. In fact, it might be better if you weren’t.The can’t-miss rise of equity markets around Asia is fueling the explosion of interest among retail investors in the region, mirroring their exuberance worldwide. Millions of investors who had never so much as opened a trading account before have been piling into the market.Just as the pandemic led bored Americans to make the Robinhood investing app a household name, it’s the amateurs who have helped to lift equities from India to Thailand despite some of the worst macroeconomic fundamentals in memory. But it’s also giving professionals pause – what happens when these investors are no longer around?“If everyone is going into the same name and something happens, those names are likely to be sold off quite aggressively,” said Catherine Yeung, Fidelity International’s investment director. “I think we just need to be wary that market seems a bit complacent at the moment.”In Japan, the Tokyo Stock Exchange Mothers Index, which hosts many tech start-up listings, has soared throughout the pandemic: buying the dip on almost any small-cap stock would make money. All but seven of the 320 companies on the board have gained since April’s start, from vaccine hopeful AnGes Inc., up 228%, to Precision System Science Co., which is developing a virus test and has added more than 509%.“If there’s a report on TV about a coronavirus-related stock that’s going up, they can just buy it the next day and make profit,” said Naoki Murakami, a long-time Japanese day-trader. He points to “simple” bets by amateur investors on stocks such as AnGes or Avigan maker Fujifilm Holdings Corp.In the U.S., Robinhood and the Reddit forum called r/wallstreetbets have become a dominant force in the market, boosting everything from the stocks of bankrupt companies such as Hertz Global Holdings Inc. to revenue-less start-ups like truck maker Nikola Corp. That pattern has been repeated in Europe with brokerages in Germany, the U.K. and France all reporting a jump in participation by individual investors, fueled by a fear of missing out.And while the names may be less familiar, the same picture appears across countries in Asia that imposed lockdowns.Digital HabitsRetail investors supported Singapore’s exit from bear market territory. Dividends in the city-state are a draw, “and they are sitting at home, they have nothing to do,” said Aik Hong Ng, deputy head of Phillip Investor Centre, a unit of Phillip Securities Pte. Some are loading up on debt and leverage to buy more shares.“Almost-global shelter-in-place measures are entrenching digital habits across all aspects of daily life. This includes digitising our investment behavior,” said Clarie Kwa, chief market officer for wealth management advisory firm 360F in Singapore. “Without the normal distractions of life, people actually stop procrastinating and open their first retail accounts, motivated further by their fear of missing a chance to buy low.”In the Philippines, AAA Southeast Equities Inc. saw two to three times more new online brokerage accounts opened each month from March when the lockdown was imposed, said President William Matthew Cabangon. Meanwhile, India has seen 1.8 million new accounts opened since March, while South Koreans are borrowing to fuel their purchases.The AmateurAs the first major economy to adopt the zero-interest rate policies and central bank asset purchases that are boosting equity valuations across the world, Japan’s experience may be the most informative.Burned when the bubble collapsed, for years Japan’s retail investors have avoided stocks. Two decades of underperformance instilled habits that propelled investors to try to sell at the top. Yet that attitude could at last be shifting.Japanese individuals opened more than 820,000 online brokerage accounts between February and April, more than double the number in the same period in 2019. That’s been prompted by a growing awareness of Japanese firms’ favorable dividends, a push to promote tax-exempt investing accounts and the backing of the Bank of Japan’s ETF purchases, said Makoto Sengoku, a market analyst at Tokai Tokyo Research Institute Co.A 35-year-old Japanese housewife, who had long watched her husband and parents buy stocks and get gifts typical for shareholders, never before found the right time to start buying herself.“I’m THE amateur,” she said, declining to give her name citing privacy concerns. “But I saw a chance when shares plunged and I started buying.” She’s been documenting her experience on Twitter under the handle @kabukonosekai, buying the dips on large companies and planning to hold them long term.In a regular survey this month of retail investors by Monex Group Inc., just 17% said the plunge led them to sell risk assets and move into cash, with 37% saying they took the opportunity to increase their share holdings.A separate Nikkei Money survey of more than 30,000 individual investors found that of those who had started this year, just 0.1% had thought about quitting due to losses, with close to 60% either happy with their performance or wanting to invest more actively.Long-Term ReturnWell, who wouldn’t be happy with their performance in the market that goes up regardless of bad news? The question turns to whether these investors will cut and run during the next dip, or learn new ways to succeed.In China, interest has waned somewhat. A surge of account openings in March and April coincided with lockdowns throughout the country, but May figures were more muted. China has already had a considerable retail investor presence, with the lockdown stock boom paling in comparison to some recent share rallies.In Japan, where retail investors are less of a force, individuals’ share of trading volume jumped during the state of emergency, and more surprisingly has stayed consistent even as workers have returned to the office.“Amateurs can make money just by buying stocks now, but the difference will be if they can grow when they start losing,” said Murakami, the Japanese day trader.“Oddly enough, many if not most of the retail investors take a long view,” said veteran investor Mark Mobius, co-founder of Mobius Capital Partners, “and they will probably keep their money in the market and think of a long term return.”(Adds quote from Murakami in second-last paragraph. Story corrected spelling of name of AAA Southeast Equities’ president, and vaccine maker AnGes.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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(Bloomberg) — The shale bust has reached a grim milestone by claiming the pioneer of America’s drilling renaissance. But Chesapeake Energy Corp., which filed for bankruptcy protection on Sunday, is just the latest in a long list of casualties.More than 200 North American oil and gas producers, owing over $130 billion in debt, have filed for bankruptcy since the beginning of 2015, according to a May report from law firm Haynes & Boone. This year alone, at least 20 have gone under after oil prices plunged amid the Covid-19 pandemic.The shale boom spearheaded by the likes of Chesapeake a decade ago was fueled by debt. Profitability and shareholder returns have been consistently disappointing, and investors had already grown wary of throwing more money into shale before this year’s oil crash. The rate of default on high-yield energy debt stood at 11%, Fitch Ratings said in a June 11 report, the highest level since April 2017.Here are four other notable shale bankruptcies so far this year:Whiting PetroleumAn oil explorer focused on the Bakken Shale in North Dakota, Whiting Petroleum Corp. was already facing headwinds prior to 2020. Last year, the Denver-based company announced it would fire a third of its workforce and scale back production targets after posting a surprise quarterly loss.Crude prices had their worst quarter ever in the first three months of 2020, with oil heavyweights Saudi Arabia and Russia failing to agree on supply cuts just as worldwide lockdowns wiped out demand for fuel. That was enough to push Whiting, saddled with $3.6 billion in debt, into bankruptcy on April 1.But not before the board approved $14.6 million in cash bonuses for top executives in order to “ensure the stability and continuity of the company’s workforce and eliminate any potential misalignment of interests that would likely arise if existing performance metrics were retained,” the company said in a filing the same day it filed for Chapter 11 protection.Extraction Oil & GasAnother Colorado driller, Extraction Oil & Gas Inc. focused exclusively on the Denver-Julesburg Basin in the Rockies. It filed for Chapter 11 on June 15, offering to ease its debt burden of roughly $1.5 billion by giving note holders 97% of new common stock to be issued.Extraction had withdrawn its 2020 guidance in May and warned it may have to file for bankruptcy. Then, in early June, the company announced plans to pay 16 executives and senior managers a total of $6.7 million in return for staying with Extraction ahead of a possible default on its bond payments.Ultra PetroleumOnce wasn’t enough.Ultra Petroleum Corp. filed for its second bankruptcy in May, four years after its first. Listing $2.56 billion in debt and $1.45 billion in assets in its Chapter 11 filing, the Englewood, Colorado, driller reached a deal with most of its senior creditors that would slash $2 billion in debt, while looking to restructure within three months.In its struggles to stay afloat, Ultra went so far as to suspend its drilling program in January to bolster free cash flow and focus on paying down debt. The explorer first filed for bankruptcy in 2016 and emerged the following year, just as the shale patch was beginning to crawl out of what had been the worst oil industry crash in a generation — until this year.Sable Permian ResourcesSoon after his ouster from Chesapeake in 2013, co-founder Aubrey McClendon went to work building a new empire, American Energy Partners. But after McClendon died in a car crash three years later, the company shut down.Part of that business, American Energy – Permian Basin, merged with Sable Permian Resources LLC last year. That particular business was widely seen as having among the best assets of a half dozen oil-and-gas acquisition vehicles that McClendon set up during his brief tenure at American Energy Partners.Sable filed for bankruptcy last week in Houston alongside affiliates, listing at least $1 billion of assets and liabilities each.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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(Bloomberg) — The U.S. and China are moving beyond bellicose trade threats to exchanging regulatory punches that threaten a wide range of industries including technology, energy and air travel.The two countries have blacklisted each other’s companies, barred flights and expelled journalists. The unfolding skirmish is starting to make companies nervous the trading landscape could shift out from under them.“There are many industries where U.S. companies have made long-term bets on China’s future because the market is so promising and so big,” said Myron Brilliant, the U.S. Chamber of Commerce’s head of international affairs. Now, they’re “recognizing the risk.”China will look to avoid measures that could backfire, said Shi Yinhong, an adviser to the nation’s cabinet and a professor of international relations at Renmin University in Beijing. Any sanctions on U.S. companies would be a “last resort” because China “is in desperate need of foreign investment from rich countries for both economic and political reasons.”Pressure is only expected to intensify ahead of the U.S. elections in November, as President Donald Trump and presumptive Democratic nominee Joe Biden joust over who will take a tougher line on China.Trump has blamed China for covering up the coronavirus pandemic he has mocked as “Kung Flu,” accused Beijing of “illicit espionage to steal our industrial secrets” and threatened the U.S. could pursue a “complete decoupling” from the country.Biden, likewise, has described President Xi Jinping as a thug, labeled mass detention of Uighur Muslims as unconscionable and accused China of predatory trade practices.And on Capitol Hill, Republicans and Democrats have found rare unity in their opposition to China, with lawmakers eager to take action against Beijing for its handling of Covid-19, forced technology transfers, human rights abuses and its tightening grip on Hong Kong.“China is going to be a punching bag in the campaign,” said Capital Alpha Partners’ Byron Callan. “But China is a punching bag that can punch back.”China has repeatedly rejected U.S. accusations over its handling of the pandemic, Uighurs, Hong Kong and trade, and it has fired back at the Trump administration for undermining global cooperation and seeking to start a “new cold war.” Foreign Minister Wang Yi last month said China has no interest in replacing the U.S. as a hegemonic power, while adding that the U.S. should give up its “wishful thinking” of changing China.Both countries have already taken a series of regulatory moves aimed at protecting market share.The U.S. is citing security concerns in blocking China Mobile Ltd., the world’s largest mobile operator, from entering the U.S. market. It’s culling Chinese-made drones from government fleets and discouraging the deployment of Chinese transformers on the power grid. The Trump administration has also tried to constrain the global reach of China’s Huawei Technologies Co., the world’s largest telecommunications equipment manufacturer.Meanwhile, China prevented U.S. airline flights into the country for more than two months and, after the U.S. imposed visa restrictions on Chinese journalists, it expelled American journalists. It has stepped up its scrutiny of U.S. companies, with China’s state news agency casting one probe as a warning to the White House. China also has long made it difficult for U.S. telecommunications companies to enter its market, requiring overseas operators to co-invest with local firms and requiring authorization by the central government.One of the most combustible flashpoints has been the Trump administration’s campaign to contain Huawei by seeking to limit the company’s business in the U.S. and push allies to shun its gear in their networks.The U.S. Federal Communications Commission moved to block devices made by Huawei and ZTE Corp. from being used in U.S. networks. And the Commerce Department has placed Huawei on blacklists aimed at preventing the Chinese company from using U.S. technology for the chips that power its network gear, including tech from suppliers Qualcomm Inc. and Broadcom Inc.After suppliers found work-arounds, Commerce in May tightened rules to bar any chipmaker using American equipment from selling to Huawei without U.S. approval. The step could constrain virtually the entire contract chipmaking industry, which uses equipment from U.S. vendors such as Applied Materials Inc., Lam Research Corp. and KLA Corp. in wafer fabrication plants. The curbs also threaten to cripple Huawei. Although the company can buy off-the-shelf or commodity mobile chips from a third party such as Samsung Electronics Co. or MediaTek Inc., going that route would force it to make costly compromises on performance in basic products.Huawei was on a list the Pentagon unveiled last week of companies it says are owned or controlled by China’s military, opening them to increased scrutiny.China has raised the specter of reprisal.After the new restrictions were announced, the editor of the Communist Party’s Global Times newspaper tweeted that China would retaliate using an “unreliable entities list” that it first threatened at the height of the trade war last year. Although China didn’t identify companies on the list, the Global Times has cited a source close to the Chinese government as saying U.S. bellwethers such as Apple Inc. and Qualcomm could be targeted.The fallout could extend to companies heavily reliant on Chinese supply chains, as well consumer-facing brands eager to expand sales in Asia. Boeing Co., which recorded $5.7 billion of revenue from China in 2019, and Tesla Inc., the biggest U.S. carmaker operating independently in China, are among companies most exposed if relations sour further.“We’re playing in a much wider field now,” said Jim Lucier, managing director of research firm Capital Alpha Partners. “We’re not simply talking about ‘you tariff me’ and ‘I tariff you.’ The playing field is virtually unlimited.”Planes and AutomobilesU.S. automakers have also been singed. In June, China fined Ford Motor Co.’s main joint venture in the country for antitrust violations, saying Changan Ford Automobile Co. had restricted retailers’ sale prices since 2013.Aviation has been another source of tension, as both countries squabble over access to their skies. China’s decision to limit U.S. airlines operations to those services scheduled as of March 12 hurt carriers such as United Airlines Holdings Inc., Delta Air Lines Inc, and American Airlines Group Inc. that had suspended passenger flights to and from China because of the coronavirus pandemic.The U.S. responded earlier this month by initially threatening to ban all flights from China, then relenting to allow two flights weekly once Chinese officials eased their restrictions. Now, in what appears to be a staged de-escalation, China gave U.S. passenger carriers permission to operate four weekly flights to the country and earlier this month, the Trump administration matched the move by also authorizing four flights from Chinese airlines.It’s happening outside of aviation too. Consider the U.S. government’s decision to seize a half-ton, Chinese-made electrical transformer when it arrived at an American port last year and divert the gear to a national lab instead of the Colorado substation where it was supposed to be deployed. That move — and a May executive order from Trump authorizing the blockade of electric grid gear supplied by “foreign adversaries” of the U.S. in the name of national security — have already sent shock waves through the power sector.The effect has been to dissuade American utilities from buying Chinese equipment to replace aging components in the nation’s electrical grid, said Jim Cai, the U.S. representative for Jiangsu Huapeng Transformer Co., the company whose delivery was seized. Although Cai said the firm has supplied parts to private utilities and government-run grid operators in the U.S. for nearly 15 years without security complaints, at least one American utility has since canceled a transformer award to the company, Cai said.Trump’s directive is tied to a broader effort to bring more manufacturing to the U.S. from China. “This is a part of the administration’s efforts to impair China’s supply chains into the United States,” said former White House adviser Mike McKenna.Escalating tensions could jeopardize the U.S. economic recovery as well as China’s trade commitment to purchase $200 billion in American goods and services. Trump declared on Twitter last week that the pact “is fully intact,” adding: “Hopefully they will continue to live up to the terms of the Agreement!”Last week, Trump tweeted “The China Trade Deal is fully intact. Hopefully they will continue to live up to the terms of the Agreement!”It may also affect the November presidential election. Former U.S. national security adviser John Bolton alleges in a new book that Trump asked his Chinese counterpart Xi Jingping to help him win re-election by buying more farm products — a claim the White House has dismissed as untrue.“I don’t expect one single blow to send this relationship in a tailspin,” the chamber’s Brilliant said. “Each side will calibrate their reactions in a way that will not tip the scales too far.”Take the recent spat over media access. After the U.S. designated five Chinese media companies as “foreign missions,” China revoked press credentials for three Wall Street Journal staff members over an article with a headline describing China as the “real sick man of Asia.”Then the Trump administration ordered Chinese state-owned news outlets to slash staff working in the U.S. Beijing responded in March by effectively expelling more than a dozen U.S. journalists working in China.Both the U.S. and China have ample opportunities to ratchet up regulatory pressure. A bill passed by the Senate last month could prompt the delisting of Chinese companies from U.S. stock exchanges if American officials aren’t allowed to review their financial audits.And last week, as the U.S. State Department imposed visa bans on Chinese Communist Party officials accused of infringing the freedom of Hong Kong citizens, a senior official made clear the move was just an opening salvo in a campaign to force Beijing to back off new restrictions on the city.China, similarly, can slow licensing decisions and regulatory approvals, launch investigations under its anti-monopoly law and squeeze financial firms that want to do business in the country. For instance, the country could rescind pledges to let U.S. financial firms take controlling stakes in Chinese investment banking joint ventures, according to a Cowen analyst.“China will not make any significant compromise and will retaliate whenever and wherever possible,” Shi, the Renmin University professor, said.Companies are still lured to China and its massive local market — and tensions with the U.S. don’t overcome the Asian superpower’s appeal. Just one-fifth of companies surveyed by the American Chamber of Commerce in China late last year said they had moved or were considering moving some operations outside of the country, part of a three-year downward trend.But the coronavirus pandemic has subsequently pushed more companies to reckon with the risks of relying too heavily on any single country for their supply chains, amid existing concerns about forced technology transfers, cost and rising tensions that could damp investment in China.China is no longer the lowest-cost manufacturer, and companies are more reluctant to invest there, said James Lewis, director of the Technology Policy Program at the Center for Strategic and International Studies in Washington.“Everyone would like to be in the China market — everyone wants it to be like 2010 — but things are changing.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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