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Market Morning: Alibaba Goes Hong Kong, Uber Dump, Alzheimer’s Hope, Cannabis Collapse

ME Staff

Alibaba, Now May Not Be the Best Time to IPO in Hong Kong

Alibaba (NYSE:BABA) is going public in Hong Kong with a $13.4 billion listing, and it’s putting extra stress on the Hong Kong banking system specifically at a time when the island is on the verge of exploding in cacophonous riots leading to a possible general breakdown of law and order. According to Reuters, Hong Kong bankers who prefer to remain anonymous are not too keen on the idea of $13.4 billion more in liquidity being sucked out of the system at a time when capital flight is accelerating in the face of anti-Beijing protests. Overnight borrowing costs are pushing up higher to decade-highs last seen in July nearing 2.5%. The one-month Hong Kong Interbank Offered Rate, the Hong Kong equivalent of LIBOR, has shot up a full percentage point in one week as protests get more violent.

SEE: Cannabis News Roundup November 15

Meanwhile, in an effort to maintain the Hong Kong Dollar peg with the US dollar, the Hong Kong Monetary Authority has kept the money supply pretty much stable since the protests began, which could lead to a selloff in the Hang Seng at any time. To make matters a little more edgy, the US Congress is planning to pass a declaration of support for Hong Kong protesters, which could get Beijing to act more strongly against the island and possibly even call off trade talks. Alibaba is getting stuck in the middle of all this.

The latest out of the protests: They are spilling out internationally. The Chinese government and the Hong Kong government that is controlled by China, have condemned a “violent mob” that attacked Hong Kong’s justice secretary in London. Apparently the official suffered serious bodily harm.

Uber Co-Founder Dumps $700 Million in Stock in One Week

Travis Kalanick, who was previously ousted from heading Uber (NYSE:UBER) for being politically incorrect, is now furiously dumping shares. According to SEC filings, he has sold more than $700 million worth of stock, though he still owns about $1.8 billion worth, so this is not complete capitulation yet. Last week began his first opportunity to start selling shares that were previously locked up when the IPO hit the wire. $547 million were sold last week, and another $164 million this week for a total of $711 million. Uber’s valuation has been nearly cut in half from highs of $47.08. It now sits just below $26.

More Fresh Hope In Alzheimer’s With New Blood Test In Trials

It’s been a busy last few weeks in the Alzheimer’s space. After the surprising turnaround of Biogen (NASDAQ:BIIB) beta-amyloid-busting drug aducanumab that was recently shown to have met its primary endpoint after its pivotal trial was suspended following a futility analysis, we may now have some more success in diagnosing the disease much earlier. This could make aducanumab even more effective at slowing Alzheimer’s progression.

Breakthrough Diagnostics, a joint venture between Todos Medical (OTCQB:TOMDF) and Amarantus BioScience Holdings (OTCQB:AMBS), announced today that it has completed enrollment for a second study of its Lymphocyte Proliferation Test (LymPro), an Alzheimer’s blood test that works by stimulating lymphocytes in the blood to undergo cell division prematurely, a process that should normally be resisted by healthy cells. Breakthrough believes that abnormal cell division is responsible for beta amyloid buildup in the brain, targeted by aducanumab, that in turn is involved in Alzheimer’s disease. If a patient’s lymphocytes are unable to resist premature cell division, then chances are neurons aren’t either, this being the sign of possible Alzheimer’s. In a previous study completed last year, Breakthrough was able to show that high LymPro scores and positive amyloid PET imaging strongly correlated. Data from the second trial is due next quarter.

In other Alzheimer’s news that is less positive, Amgen (NASDAQ:AMGN) is shutting down its neuroscience R&D department following its decision to stop pivotal trials of its drug CNP250, a BACE inhibitor that also breaks amyloid plaques, but that has unfortunately been shown to worsen cognitive functioning.

Aurora Cannabis Scales Back as Demand Slides, Revenues Fall

Aurora Cannabis (NYSE:ACB) continues the slide it has been on since March as the cannabis sector leader is seeing demand slouch for cannabis. Aurora reported a 24% decline in revenue yesterday for last quarter over the quarter before, and as a result has decided to slow expansion plans in Canada and Denmark. The savings from the halt in these growing operations will yield about C$190 million according to the CFO. Earnings are still positive at one cent a share, but down from 12 cents a share in the same quarter last year. Recreational pot sales declined sequentially 33%. The issue according to CEO Terry Booth is that retails stocked up on supply to the limit when it first became available, and the amount that distributors still have has been affecting sales for the most recent quarter. Overall, 41.4 tons of cannabis were produced by the company, and 12.5 tons sold. So there is quite a surplus here. Other cannabis sector leaders including Canopy Growth (NYSE:CGC) have reported even worse earnings and tanked even more.

Under Armour Under The Hood Under Investigation

Under Armour (NYSE:UA), the company that figured out that if you change the word “wear” to “armour” people will like it and buy more, has been outed by former executives at the company for goosing sales. In 2016 as demand for its armour began to wane, Under Armour would routinely pressure retailers to take product early before the end of a quarter and then send product to off-price chains in order to record more sales. According to investigators, emails from Under Armour founder Keven Plank show that he knew about efforts to move revenue between quarters. The company is now the subject of a criminal probe led by Baltimore and the SEC. The trick hasn’t seemed to help the stock much, shares having been in the doldrums since falling off a cliff in March of 2016.

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