FedEx sues US government over shipment restrictions

FedEx sued the US government on Monday. (Reuters)
Updated 25 June 2019
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FedEx sues US government over shipment restrictions

  • The company said it was impossible for employees to determine “the origin and technological make-up of contents of all the shipments it handles and whether they comply with” US laws
  • The announcement of the lawsuit comes as Beijing and Washington face off in a trade war

NEW YORK: American logistics giant FedEx sued the US government on Monday, saying Washington’s restrictions on exports and imports due to growing trade disputes and sanctions created an “impossible burden” for delivery firms.
The announcement of the lawsuit comes as Beijing and Washington face off in a trade war that has seen both sides exchange steep tariffs on hundreds of billions in exports.
The US has also sought to bar Chinese telecom giant Huawei from the American market and limit its ability to purchase US technology.
A statement by the delivery firm said the restrictions placed “an unreasonable burden on FedEx to police the millions of shipments that transit our network every day” or face heavy fines.
The company said it was impossible for employees to determine “the origin and technological make-up of contents of all the shipments it handles and whether they comply with” US laws.
The statement was released hours after China called on FedEx to explain why a parcel from Huawei to the US went undelivered, in the second spat between the two companies in less than a month.
FedEx CEO Fred Smith told US broadcaster Fox News that “Huawei is just emblematic of this problem,” referring to what he described as the “confusing situations” that can emerge when employees sought to comply with the restrictions.
“Under the Department of Commerce’s regulations, we are expected to be the policeman for these export and import controls,” he said.
“Despite the fact that we handle 15 million shipments a day, if we make an error on any one of them… we can be fined $250,000 per piece.”
IT publication PC Mag said on Friday a FedEx package to the US that contained a Huawei phone was returned to the UK.
An accompanying note explained a US government “issue” with China prevented the delivery.
FedEx apologized for the incident.
“The package in question was mistakenly returned to the shipper and we apologize for this operational error,” the company said in a statement.
The US logistics group is already under investigation in China for failing to deliver some of Huawei’s parcels, with the Chinese company saying it would review its ties to FedEx.
Shortly after Smith’s interview, Commerce Secretary Wilbur Ross told Fox News that “the regulation states that common carriers cannot knowingly ship items in contravention of the entity list or other export control authorities.”
“It does not require a common carrier to be a policeman or to know what’s in every package.”


Debut of China’s Nasdaq-style board adds $44bn in market cap

Updated 22 July 2019
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Debut of China’s Nasdaq-style board adds $44bn in market cap

  • Activity draws attention away from main board

BEIJING: Trading on China’s new Nasdaq-style board for homegrown tech firms hit fever pitch on Monday, with shares up as much as 520 percent in a wild debut that more than doubled the exchange’s combined market capitalization and beat veteran investors’ expectations.

Sixteen of the first batch of 25 companies — ranging from chip-makers to health care firms — increased their already frothy initial public offering (IPO) prices by 136 percent on the STAR Market, operated by the Shanghai Stock Exchange.

The raucous first day of trade tripped the exchange’s circuit breakers that are designed to calm frenzied activity. The weakest performer leapt 84.22 percent. In total, the day saw the creation of around 305 billion yuan ($44.3 billion) in new market capitalization on top of an initial market cap of around 225 billion yuan, according to Reuters’ calculations.

“The price gains are crazier than we expected,” said Stephen Huang, vice president of Shanghai See Truth Investment Management. “These are good companies, but valuations are too high. Buying them now makes no sense.”

Modelled after Nasdaq, and complete with a US-style IPO system, STAR may be China’s boldest attempt at capital market reforms yet. It is also seen driven by Beijing’s ambition to become technologically self-reliant as a prolonged trade war with Washington catches Chinese tech firms in the crossfire.

Trading in Anji Microelectronics Technology (Shanghai) Co. Ltd., a semiconductor firm, was briefly halted twice as the company’s shares hit two circuit breakers — first after rising 30 percent, then after climbing 60 percent from the market open.

HIGHLIGHTS

• 16 of 25 STAR Market firms more than double from IPO price.

• Weakest performer gains 84 percent, average gain of 140 percent.

• STAR may be China’s boldest attempt at capital market reforms yet.

The mechanisms did little to keep Anji shares in check as they soared as much as 520 percent from their IPO price in the morning session. Anji shares ended the day up 400.2 percent from their IPO price, the day’s biggest gain, giving the company a valuation of nearly 242 times 2018 earnings.

Suzhou Harmontronics Automation Technology Co. Ltd., in contrast, triggered its circuit breaker in the opposite direction, falling 30 percent from the market open in early trade before rebounding. But by the market close, the company’s shares were still 94.61 percent higher than their IPO price.

Wild share price swings, partly the result of loose trading rules, had been widely expected. IPOs had been oversubscribed by an average of about 1,700 times among retail investors.

The STAR Market sets no limits on share prices during the first five days of a company’s trading. That compares with a cap of 44 percent on debut on other boards in China.

In subsequent trading sessions, stocks on the new tech board will be allowed to rise or fall a maximum 20 percent in a day, double the 10 percent daily limit on other boards.

Regulators last week cautioned individual investors against “blindly” buying STAR Market stocks, but said big fluctuations were normal.

Looser trading rules were aimed at “giving market players adequate freedom in the game, accelerating the formation of equilibrium prices, and boosting price-setting efficiency,” the Shanghai Stock Exchange (SSE) said in a statement on Friday.

The SSE added that it was normal to see big swings in newly listed tech shares, as such companies typically have uncertain prospects, and are difficult to evaluate.