171.16 0.00 (0.00%)
After hours: 7:59PM EDT
|Bid||171.06 x 800|
|Ask||171.50 x 1200|
|Day's range||170.79 - 173.34|
|52-week range||129.77 - 195.72|
|Beta (3Y monthly)||1.89|
|PE ratio (TTM)||48.94|
|Earnings date||31 Oct 2019 - 4 Nov 2019|
|Forward dividend & yield||N/A (N/A)|
|1y target est||224.04|
(Bloomberg) -- Paytm is close to scoring $2 billion of new financing from investors including Jack Ma’s Ant Financial and SoftBank Group Corp., a person familiar with the matter said, describing a mega-deal that will raise the temperature in India’s increasingly heated financial payments arena.Rob Citrone’s Discovery Capital Management is also in discussions to join a funding round that values the country’s top online financial services firm at $16 billion, the person said, asking not to be identified talking about a private deal. The funding will be split evenly between equity and debt and is aimed at helping Paytm fend off an influx of rivals, the person said. Talks are in their final stages but the terms could still change, the person added.If a deal is finalized, Paytm could outstrip fellow high-profile Asian startups such as Grab and Gojek in valuation. Billionaire Paytm founder Vijay Shekhar Sharma is raising capital to protect the startup’s share of a potentially $1 trillion Indian payments market from newer entrants Facebook Inc., Alphabet Inc.’s Google and Walmart Inc.-owned Flipkart’s PhonePe. Over the past year, a string of new apps have made payments increasingly easy, bringing discounts and cash bonuses to young, smartphone-savvy users.Paytm remains the leader for now. The firm has in a decade become India’s biggest digital payments brand, attracting big names in investing from Alibaba co-founder Ma and SoftBank founder Masayoshi Son to Warren Buffett. Sharma got a huge boost in 2016 after India’s government moved to eliminate most of the nation’s paper money in circulation in a bid to curb corruption. His startup, a pioneer in the country’s nascent field, saw tens of millions of consumers and hundreds of thousands of businesses sign up for digital services in a matter of months.“India is a large market,” said Kunal Pande, head of financial services risk consulting at KPMG. “Digital payments adoption is growing quickly, yet there is room for massive growth as users get comfortable transacting digitally. The large business opportunity makes it attractive for both domestic startups and large global players.”Read more: Facebook and Google Chase a New $1 Trillion Payments MarketPaytm, which is also backed by Alibaba Group Holding Ltd., declined to comment in response to emailed questions. Ant had no immediate comment when contacted, while Discovery Capital and SoftBank declined to comment.Sharma is now extending his online empire into e-commerce and banking, even as others encroach on his turf. The Indian payments market remains a chaotic field where the rules are hazy on what players can offer, yet its promise has lured a string of competitors including Indian banks, its postal service and its richest man, Mukesh Ambani.Credit Suisse Group AG now estimates that the Indian digital payments market will touch $1 trillion by 2023 from about $200 billion currently. It’s a market with huge potential: Cash still accounts for 70% of all Indian transactions by value, according to Credit Suisse, and neighboring China is far more advanced with a mobile payments market worth more than $5 trillion.Ant Financial, China’s largest provider of internet financial services and one of Paytm’s earliest backers, has said it will continue investing in mobile-payment providers around the world to boost offshore revenue and buttress itself against rising competition and tighter regulation at home.It’s not clear how much SoftBank would contribute, but the Japanese company is going through a rocky stretch. SoftBank’s shares are down about 30% from their peak this year as investors, unnerved by the WeWork turmoil and Uber Technologies Inc.’s disappointing debut, grow skittish about startup valuations.\--With assistance from Lulu Yilun Chen, Hema Parmar and Vincent Bielski.To contact the reporter on this story: Saritha Rai in Bangalore at email@example.comTo contact the editors responsible for this story: Arijit Ghosh at firstname.lastname@example.org, ;Sarah Wells at email@example.com, Edwin Chan, Vlad SavovFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Associate Stock Strategist Ben Rains dives into some of the latest U.S.-China trade war updates, including President Trump's optimism. We then look at three large-cap technology stocks to consider buying during Q3 earnings season. - Full-Court Finance
(Bloomberg) -- WeWork is considering a bailout that will hand control of the co-working giant to SoftBank Group Corp., according to a person familiar with the matter, one of two main options to rescue the once high-flying startup.The Japanese investment powerhouse controlled by billionaire Masayoshi Son is convinced it can turn around the cash-strapped American company with the right financial controls in place, the person said, asking not to be identified talking about internal deliberations. WeWork’s board and backers however are also weighing another option: JPMorgan Chase & Co. is leading discussions about a $5 billion debt package, Bloomberg has reported.Either rescue package, or some combination of them, would ease a cash crunch that could leave the office-sharing company short of funds as soon as next month. We Co., the parent of WeWork, had been headed toward one of the year’s most hotly anticipated IPOs before prospective investors balked at certain financial metrics and flawed governance, turning the American giant into a cautionary tale of private market exuberance and costing the company’s top executive his job.The fast-growing, money-losing startup had been counting on a stock listing -- and a $6 billion loan contingent on a successful IPO -- to meet its cash needs.Son, SoftBank Risk Too Much With WeWork Takeover: Tim CulpanRead more: WeWork Is in Talks for $5 Billion Debt Package With LendersThe Wall Street Journal first reported that SoftBank may be discussing a deal to gain control of WeWork. Representatives for the Japanese company weren’t immediately available for comment Monday, a national holiday.SoftBank is already WeWork’s biggest shareholder but the proposed deal would shore up its control of the startup, the person said, declining to elaborate on when a decision on the competing offers might be reached. The Japanese company is in advanced talks to acquire more shares at a significantly lower valuation than the $47 billion WeWork sported in January, two people familiar with those discussions said last week. The New York Times has reported that members of the board would meet Monday to decide on which bailout to select.If the board opts for the SoftBank deal, the Japanese company will be taking on a troubled enterprise at a time it’s struggling to convince the market about its longer-term investment vision. It’s also busy wooing potential investors for a successor to its record-breaking Vision Fund.Read more: SoftBank’s Son Is ‘Embarrassed’ By Record, Impatient to ImproveSon is going through a rocky stretch after repositioning his company from a telecommunications operator into an investment conglomerate, with stakes in scores of startups around the world. He built a personal fortune of about $14 billion with spectacularly successful bets on companies such as Alibaba Group Holding Ltd. But SoftBank’s shares are down about 30% from their peak this year as investors, unnerved by WeWork and Uber Technologies Inc.‘s disappointing debut, grow skittish about startup valuations. In an interview with the Nikkei Business magazine, Son said he is unhappy with how far short his accomplishments to date have fallen of his goals.WeWork and Uber may be losing money now, but they will be substantially profitable in 10 years’ time, Son said in that interview. But at a private retreat for portfolio companies late last month, he had a different message: get profitable soon. At the gathering, held at the five-star Langham resort in Pasadena, California, Son also stressed the importance of good governance. Just days later, SoftBank led the ouster of WeWork’s controversial co-founder Adam Neumann.“WeWork has retained a major Wall Street financial institution to arrange a financing,” a representative for the U.S. company said in a statement on Sunday. “Approximately 60 financing sources have signed confidentiality agreements and are meeting with the company’s management and its bankers over the course of this past week and this coming week.”(Updates with details of SoftBank investments from the sixth paragraph)To contact the reporters on this story: Gillian Tan in New York at firstname.lastname@example.org;Michelle F. Davis in New York at email@example.com;Davide Scigliuzzo in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Liana Baker at email@example.com, ;Tom Giles at firstname.lastname@example.org, Edwin Chan, Virginia Van NattaFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Shares of tech companies Alibaba, JD.com, the Trade Desk, and Roku are up today. The broader indexes have also opened higher on trade talk optimism.
salesforce's (CRM) cloud solutions will help Esprit to bring its ecommerce and marketing on a single platform. Moreover, its Success Cloud advisory services will accelerate Esprit's transformation.
(Bloomberg) -- Tencent Holdings Ltd. can’t get a break.The National Basketball Association, Activision Blizzard Inc. and now one of its most important portfolio companies, Fortnite proprietor Epic Games Inc., have all sparked political controversy at a time of increasingly assertive Chinese nationalism online.A tweet by an NBA executive expressing support for Hong Kong protesters drew the ire of Beijing, throwing into question the billions Tencent has invested in the U.S. sports league. Then Blizzard, partly owned by Tencent, banned a gamer for endorsing Hong Kong’s pro-democracy movement, triggering a boycott of the company’s games for its apparent kowtowing to China. Most recently, Epic Chief Executive Officer Tim Sweeney tweeted his disagreement with the Blizzard action, eliciting calls for a boycott of its Fortnite game among Chinese players incensed by the perceived slight.At stake for Tencent are billions of dollars in ad and subscription revenue, along with its entire strategy of becoming a go-to destination for NBA broadcasts. Tencent had almost half a billion basketball aficionados tune in last season. That audience is now in jeopardy after Tencent halted game broadcasts in the wake of the Hong Kong controversy.“It’s a big wakeup call for Chinese tech companies,” said Mark Tanner, founder of Shanghai-based research and marketing company China Skinny.Tencent had just inked a $1.5 billion, five-year deal to stream NBA games online in China. Its suspension of broadcasts followed a similar move by state-backed CCTV.Tencent uses the online streams to sell ads, and the gargantuan scale of the audience drives its marketing business, which is expected to be a key driver of Tencent growth going forward. To spruce up its investment, Tencent has been developing memorabilia, entertainment shows and video games based on the NBA.“Advertising of Tencent sports will likely take a hit. NBA is the star of Tencent sports, so it could cause a contract of Tencent’s advertising growth further,” said Michael Norris, a Shanghai-based research and strategy analyst at consultancy AgencyChina.NBA China Woes Threaten Billions of Dollars, Decades’ WorkA single tweet from the Houston Rockets’ general manager supporting Hong Kong’s protesters was enough to spark a chain reaction, including an abridged history lesson by Alibaba Group Holding Ltd. Vice-Chairman Joe Tsai, majority owner of the Brooklyn Nets. Alibaba has also yanked Rockets merchandise from its online stores, causing harm to both the NBA and Alibaba’s bottom line.After initially apologizing, the league went on to express its support for staff’s freedom of political expression via a statement by Commissioner Adam Silver. That sparked another round of fury in China, threatening to prolong the clash and the blackout.The Chinese company’s shares have held up well so far, despite warnings from analysts including Citigroup’s Alicia Yap that the streaming freeze will hurt Tencent’s media ad revenue -- particularly if it extends into the regular season.But there’s more trouble ahead: Tencent’s gaming portfolio is spurring controversy too. For years, the WeChat operator took a hands-off approach with the startups and studios across its empire, reaping the benefits of importing Western content and technology for a vast Chinese market. Now the two are increasingly at odds, and Tencent is beginning to realize the downside to its passive approach.Blizzard’s stern reprimand of the pro-Hong Kong player was popular in China, but drew outrage from the U.S. to South Korea. Online, gamers called for a boycott of the company and proudly posted their cancellations.Then Epic CEO Sweeney jumped into the crossfire, explicitly giving Fortnite players the green light to discuss politics. The game maker is 40% owned by Tencent, but Sweeney is the controlling shareholder.His statement earned accolades in the U.S., but was shunned in China. “Tencent why are you not holding your dog on a leash? They are biting you in your face,” one person wrote on Weibo. Tencent spokeswoman Jane Yip didn’t respond to a request for comment.With its investments in Epic and Blizzard, Tencent has its brand on the line -- but little control.“Never have we seen this policing of China companies being extended to subsidiaries,” said Norris. “And that’s what Tencent is having to grapple with.”Over the years, Tencent and Alibaba have worked hard to remain on the good side of Beijing, with Tencent recently launching a patriotic game called Homeland Dream in time for the People’s Republic of China’s 70th anniversary celebrations. Both have also been called out by name in Senator Marco Rubio’s letter to President Trump as examples of how Chinese companies are used as tools to help “coerce American companies and American citizens to bend to Beijing’s will.”With its growing exposure to international markets and regulation, Tencent finds itself in the middle of a maelstrom of political, economic and cultural grievances. Eight Chinese companies -- two of which are backed by Alibaba -- were this week placed on a U.S. blacklist for allegedly being involved in human rights abuses of a Muslim minority in China’s Xinjiang region. That follows the Washington government’s discussion about whether to restrict pension fund investments into China.Tencent and the rest of China’s technology companies now have to consider risks they’ve never faced before.“They’re realizing they may not have as many friends as they thought they had across the Pacific,” said Tanner of China Skinny.(Updates with shares from the 11th paragraph)To contact the reporter on this story: Lulu Yilun Chen in Hong Kong at email@example.comTo contact the editors responsible for this story: Edwin Chan at firstname.lastname@example.org, Vlad Savov, Peter ElstromFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
U.S.-China trade war updates, including President Trump's tweet that helped U.S. stocks climb Thursday. A look at the ongoing fight between the NBA and China, some Q3 earnings results next week, and why marijuana stock Cronos looks like a buy - Free Lunch
(Bloomberg Opinion) -- A common refrain you hear in India is, “There’s no credit in the market.” The despondence cuts across industries as diverse as real estate, autos and road construction. An 88% slump in the flow of funds to the commercial sector between April and September shows that the producers’ unease is justified. However, one credit tap is starting to gurgle, giving some cause for optimism. Pocket-sized loans are feeding online consumption, with demand coming from smaller cities and towns. The amounts are still tiny, but as digital spending grows, financing it has the power to turn the page on Indian lenders’ underwriting of soured corporate loans: the source of a $200 billion sigh of collective agony.Amazon.com Inc. and Walmart Inc.’s Flipkart Online Services Pvt claimed record sales during the recently concluded six-day online shopping bonanza that marks the start of the Indian festival season. Although nowhere close to Alibaba Group Holding Ltd.’s $31 billion Singles’ Day promotion in China, the Indian version of Black Friday has grown fivefold to $3 billion in four years, according to a review of this year’s sales by RedSeer, a consulting firm. Add the spending between now and Diwali, the Hindu festival of lights, and Forrester Research reckons the total for a month of online purchases may fall just shy of $5 billion. Although the 30% growth this year was slower than in the previous three, it’s a strong outcome in a weak economy. Both of India’s leading e-commerce marketplaces cited small towns – and credit – for their success. Flipkart says Tier 3 cities ordered 100% more goods this year. The share of transactions using credit options grew by 70%, with a majority of these people living outside of big cities. Amazon revealed that three out of four customers who availed themselves of financing came from Tier 2 and 3 cities; significantly, every second buyer who used credit did so for the first time.All this is hardly unique to India. China’s e-commerce boom saw an explosion of microloans, with millennials buying hamburgers on credit and the buy-now-pay-later habit picking up in Indonesia. What makes India interesting is the possibility that soon even physical retail will embrace digital in-store credit – minus plastic.A mobile-payment app with pay-later options at physical stores will be an important innovation. For all its expansion, e-commerce will account for only 7% of India’s $1.2 trillion retail sales by 2021, according to Deloitte. Credit cards won’t go beyond big cities and organized retail. It’s not worth any bank’s while to make card acceptance universal because the revenue to a bank from signing up a mom-and-pop shop – the merchant who handles purchases at the bottom of the income pyramid – is a meager $4 a month.That’s why Flipkart’s “cardless” credit deserves attention. Customers are validated for a $1,400 limit via a simple video upload; the actual financing comes not from Flipkart but from banks and financiers like Bajaj Finserv Ltd. This is the model that Mukesh Ambani, India’s richest man, might use to connect India’s 30 million small retailers with consumers. Amazon’s claim that its Great Indian Festival saw orders from 99.4% of the country’s postal codes owes that reach to Ambani’s aggressive entry into telecoms three years ago. The 4G network of Reliance Jio Infocomm Ltd. has caused data prices to crash and usage to explode.But Ambani won’t let the American duo of Amazon and Walmart be the biggest beneficiaries of his disruption. If Jio succeeds in taking its knowledge of 340 million Indians who use its mobile service to neighborhood stores, where most people still shop, banks and shadow banks will rush in with credit. From Citigroup Inc. to State Bank of India, HDFC Bank Ltd. to Singapore’s DBS Group Holdings Ltd., everyone will want this sizable new line of revenue at the intersection of consumer and corporate banking. Writing in the Financial Times, Viral Acharya, a former deputy governor at the Indian central bank, argues that finance in India must learn from shampoo makers such as Unilever and Procter & Gamble Co., who boosted sales by offering families affordable quantities in small sachets rather than in more expensive full-size bottles.To similarly make bite-sized finance sustainable, account aggregators are coming. They’ll digitally record a consumer’s transactions with various institutions and, with consent, share data with a lender. Given that 52% of Indian workers are self-employed, and only 23% earn a regular wage, to be able to accurately assess a borrower’s irregular cash flows will give lenders confidence to extend credit.So large is the overhang of bad corporate debt that to suggest a better model of banking will emerge invites skepticism. Yet below the surface of corporate bankruptcies and failing financial institutions, technology is enabling important change. Maybe not tomorrow, but credit will go where it is due. To contact the author of this story: Andy Mukherjee at email@example.comTo contact the editor responsible for this story: Patrick McDowell at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andy Mukherjee is a Bloomberg Opinion columnist covering industrial companies and financial services. He previously was a columnist for Reuters Breakingviews. He has also worked for the Straits Times, ET NOW and Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Benchmarks closed in the negative territory on Tuesday as U.S. blacklisted 28 Chinese companies and imposed visa restrictions on Chinese officials, dampening hopes on trade negotiations.
(Bloomberg) -- Binance Holdings Ltd. was quick to leave China after regulators started to crack down on digital currencies. Now, the exchange behemoth has returned to its lucrative home market to host over-the-counter yuan trade.The startup launched a peer-to-peer trading platform that lets users trade Bitcoin, Ether and Tether against the Chinese currency. Founder and Chief Executive Officer Zhao Changpeng said in a tweet the P2P service will start with China, then expand into other regions. The platform marks a homecoming for a startup that quit the country two years ago, when regulators ordered local crypto-exchanges to stop targeting domestic clients for fear of stoking financial speculation. Binance blocked Chinese Internet Protocol addresses, moved its offices to places like Japan and Taiwan, and incorporated on the Mediterranean island of Malta.Yet crypto-trading has flourished in China through OTC platforms, which host direct broker-dealer transactions versus trades on a centralized exchange. OTC platforms run by Chinese operators Huobi and OKCoin are now among the most popular vehicles for local traders to exchange yuan for digital coins. Wallet apps operated by Alibaba Group Holding Ltd. and Tencent Holdings Ltd. are used in OTC trading though the central bank has warned against it.Binance’s OTC service also represents its latest foray into the world of fiat money. Founded two years ago, the startup gained momentum by handling crypto only, which allowed it to grow rapidly without dealing with banks and regulators. But more recently, Binance has set up regulatory-compliant exchanges in jurisdictions like Singapore to appeal to a larger user base. In August, it announced a so-called stable coin to rival Facebook Inc.’s controversial Libra currency. Both are intended to be used for everyday transactions across the globe.In September, Binance made its first strategic investment in China, joining a financing round that valued crypto-data site Mars Finance at about $200 million.To contact the reporter on this story: Zheping Huang in Hong Kong at email@example.comTo contact the editors responsible for this story: Edwin Chan at firstname.lastname@example.org, Joanna OssingerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
The move follows announcements by Kroger Co and Walgreens Boots Alliance Inc this week that they would stop selling e-cigarettes at their stores, in line with a similar decision by Walmart. Alibaba said it already had a long-standing policy in place to not sell complete e-cigarette products in the United States.
The feud between China and the NBA has started to heat up after the NBA commissioner announced on Tuesday that he would not be regulating what his general managers or players say.
(Bloomberg) -- Thailand is considering forcing online giants such as Amazon.com Inc. and Facebook Inc. to collect value-added tax on e-commerce sales, echoing an Indonesian clampdown on transactions that skirt the levy.Cross-border purchases by Thais routed through global online marketplaces, as well as booming domestic sales in the so-called social-commerce sector, should incur the tax. But overseas vendors aren’t always aware of such obligations, and many Thais selling informally via social media avoid them.“Our laws just can’t catch up with market trends,” Pinsai Suraswadi, principal adviser in Thailand’s Revenue Department, said in an interview Tuesday in Bangkok. “Current rules put the responsibility on the customer to come to us to pay the value-added tax. But in reality, it’s difficult to collect.”Governments from Indonesia to Mexico say huge amounts of online sales and profits aren’t taxed properly, and they’re intensifying efforts to enforce their claims. Legislation to plug the gap may reach the Thai parliament by the end of the year, Pinsai said, adding that officials are also looking at taxing the Thailand-derived earnings of internet platforms.Read more: Amazon, Google Face Tax Test as Indonesia Reins In E-CommerceThailand could put the onus on internet platforms to ensure the 7% consumption tax is collected and sent to the government, Pinsai said. A separate digital services levy could be imposed on the Thailand-derived earnings of such firms, he said. The rate hasn’t been decided yet.Facebook declined to comment on Thailand’s efforts to tighten its rules. Amazon didn’t respond to a request for comment.Levies on goods and services, such as the value-added charge, account for more than half of Thai tax revenue, an Organization for Economic Cooperation and Development report shows.The country collected 806 billion baht ($27 billion) of value-added tax in 2018, according to official data. Pinsai said applying the charge to e-commerce will generate additional revenues exceeding “many billions of baht,” but declined to give an exact figure.The Thai e-commerce sector may be worth $18 billion by 2025 and its wider Internet economy could more than triple to $50 billion from the current $16 billion, research by Google, Temasek Holdings Pte and Bain & Co. shows.However, these figures don’t cover social commerce because of a lack of reliable data. Social commerce refers to burgeoning purchases of goods and services through Line, Facebook and Instagram, where buyers may haggle over price and often skirt value-added tax, as the sector is relatively new and part of the gray economy.Officials should think carefully about whether taxes will stunt the e-commerce sector, said Somprawin Manprasert, chief economist at the research division at Bank of Ayudhya in Bangkok.‘Foregone Opportunities’“If the government is only looking to add more revenue by imposing this tax without contemplating foregone opportunities, it won’t be good in the long-term,” he said. “If they used that revenue to build a better digital ecosystem, operators, tech companies and investors would be able to accept that.”With an economic slowdown is squeezing tax collection, Pinsai said Thailand’s revenue department may have to cut its 2.1-trillion-baht target for this fiscal year.Pinsai said the administration is also weighing whether to impose customs duties on low-value cross-border purchases by Thais, which are growing fast. These sub-1,500 baht ($49) imports -- for example, orders placed with Chinese sellers on Alibaba Group Holding Ltd.’s AliExpress platform -- are below the current threshold for customs levies.Adam Najberg, a spokesman for Alibaba, didn’t immediately respond to requests for comment.“There’s exponential growth in the revenue of e-commerce in comparison to the flat growth of tax revenue collection,” Pinsai said. “It’s a very big gap.”\--With assistance from Lulu Yilun Chen.To contact the reporters on this story: Natnicha Chuwiruch in Bangkok at email@example.com;Suttinee Yuvejwattana in Bangkok at firstname.lastname@example.orgTo contact the editors responsible for this story: Sunil Jagtiani at email@example.com, Michael S. ArnoldFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
The big shareholder groups in Alibaba Group Holding Limited (NYSE:BABA) have power over the company. Institutions...
(Bloomberg) -- Donald Trump’s latest salvo against China threatens to derail a $1 billion coming-out party for a prominent startup backed by Alibaba Group Holding Ltd., while curtailing the country’s broader ambitions of leading artificial intelligence in the coming decade.The U.S. placed eight Chinese technology giants on a U.S. blacklist on Monday, accusing them of being implicated in human rights violations against Muslim minorities in the country’s far-western region of Xinjiang. Among those singled out for sweeping American export restrictions were SenseTime Group Ltd., the world’s largest AI startup, and Megvii Technology Ltd. -- two giant enterprises Beijing is counting on to spearhead advances into a revolutionary technology, aided by billions of dollars in foreign backing.The White House’s actions -- announced days before sensitive trade negotiations resume in Washington -- cast a pall over not just Megvii’s capital-raising effort but the burgeoning Chinese sector. Leading players like SenseTime and Megvii, already having trouble securing financing during an economic downturn, had considered international forays to sustain a sizzling pace of growth. The Commerce Department’s action threatens to derail that effort while spooking the business, supply and research partners needed over the longer term. Nvidia Corp., for one, is a key supplier to both AI firms.“This will make people think twice about working with these companies even if there are no legal reasons preventing them from doing so,” said Isaac Stone Fish, a senior fellow with the Asia Society’s Center on U.S.-China Relations. “Reputational costs will be greater than financial costs.”Read more: U.S. Blacklists China’s Hikvision, 7 More Over Human RightsMonday’s move marks another escalation in a U.S. effort to contain China’s technological ascendancy, a campaign that began by slapping curbs on Huawei Technologies Co. and now encompasses some of the country’s most promising startups. Apart from SenseTime and Megvii, the Trump administration placed six other Chinese technology giants on its so-called Entity List. That bars them from doing business with American companies without a U.S. government license.SenseTime and Megvii are trying to reduce their reliance on American software and circuitry by developing their own chips. Monday’s blacklisting could further decouple the two Chinese companies from the U.S. in terms of tech and funding. Megvii said in a statement that it “strongly objects” to the U.S. blacklisting and that the company complies with all regulations in the markets in which it operates.“We believe our inclusion on the list reflects a misunderstanding of our company and our technology, and we will be engaging with the U.S. government on this basis,” the company said.“We are deeply disappointed with this decision,” SenseTime said in a statement, emphasizing it complies with all relevant laws. “We have been actively developing our AI code of ethics to ensure our technologies are used in a responsible way.”U.S. Just Started Targeting China’s Tech Future: Tim CulpanA spokesman for China’s foreign ministry said on Tuesday the U.S. is interfering in its internal affairs and harming the country’s interests. Asked if China would retaliate over the blacklist, the spokesman told reporters to “stay tuned.”Chinese AI has raised hackles in Washington like no other segment of the country’s vast corporate machine, in part because of the welter of headlines daily proclaiming how it may surpass the U.S. Broadly defined as anything from autonomous driving and robot waiters to facial recognition systems, names like Megvii and SenseTime are joined by established players including Huawei, Tencent Holdings Ltd. and Didi Chuxing in an effort that’s intended to seal China’s place at the nexus of the modern global economy.Read more: China’s Hottest Startups Struggle for Cash Amid Trade WarMegvii’s IPO was supposed to have been the Chinese industry’s unofficial debut on the global stage. Already mothballed because of rising violence in Hong Kong, that offering now looks in question. While the startup warned in its prospectus about the unforeseen circumstances of conflict between Washington and Beijing, it never publicly addressed the prospect of getting cut off from American technology or markets.It’s unclear how foreign investors may respond to Monday’s decision. Megvii counts Qiming Venture Partners and Chinese AI guru Lee Kai-Fu’s Sinovation Ventures as backers. SenseTime won funding from global powerhouses from Fidelity International and Silver Lake to Tiger Global and SoftBank Group Corp., en route to a valuation of $7.5 billion.Both have enjoyed rip-roaring growth in recent years. SenseTime has expanded from facial recognition technology to financial security, robot deliveries and driverless cars. The five-year-old startup now has 3,000 people and is hiring about 100 staff every month. Revenue is still growing at triple-digit percentages, though it remains cash-flow-negative because of the need to invest in new areas such as AI chipmaking. While it still relies on Nvidia chips, it’s also developing in-house alternatives and investing in startups, SenseTime Chief Executive Officer Xu Li said in September.Also on Commerce’s list were lesser-known Xiamen Meiya Pico Information Co. and Yixin Science and Technology, major resources for China’s police force. Meiya, whose products are used for data gathering and analysis, is controlled by China’s state capital management body. Yixin also provides big-data analysis for the Chinese authorities, according to its website.Read more: CEO of Biggest AI Startup Says Valuation Passed $7.5 BillionHefei, Anhui-based iFlytek Co., another company on the list, specializes in natural language processing but also provides AI-based video and security services. Its shares slid Tuesday but the company dismissed any major impact from the blacklisting because its core technologies are homegrown.“We have been preparing for this kind of situation and have contingency plans to keep providing high-quality products and services to our customers,” it said in a statement.(Updates with company statements from sixth paragraph)\--With assistance from Candy Cheng.To contact the reporters on this story: Lulu Yilun Chen in Hong Kong at firstname.lastname@example.org;Gao Yuan in Beijing at email@example.comTo contact the editors responsible for this story: Peter Elstrom at firstname.lastname@example.org, Edwin Chan, Vlad SavovFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.