Bank Of America: This 6.00% Preferred Stock Has Begun Trading On The NYSE

In this article, we want to shed light on a new Preferred Stock issued by Bank Of America Corporation (BAC).

Our goal is purely to inform you about the product while refraining ourselves from an investment recommendation. Even though the product might not be of interest to us and our financial objectives, it definitely is worth taking a look at.

The New Issue

Before we get into our brief analysis, here is a link to the prospectus.

For a total of 48M shares issued, the total gross proceeds to the company are $1.2B. You can find some relevant information about the new preferred stock in the table below:

Source: Author’s spreadsheet

Bank of America Corporation 6.000% Non-Cumulative Preferred Stock Series GG (BAC-B) pays a qualified fixed dividend at a rate of 6.00%. The new preferred stock has a BBB- Standard & Poor’s rating and is callable as of May 16, 2023. Currently, the new issue trades close to its par value at a price of $25.09 and has a current yield of 5.98% and yield-to-call of 5.92%.

Here is what the stock’s YTC curve looks like right now:

Source: Author’s spreadsheet

The Company

As per Reuters:

Bank of America Corporation, incorporated on July 31, 1998, is a bank holding company and a financial holding company. The Company is a financial institution, serving individual consumers, small- and middle-market businesses, institutional investors, corporations and governments with a range of banking, investing, asset management and other financial and risk management products and services. The Company, through its banking and various non-bank subsidiaries, throughout the United States and in international markets, provides a range of banking and non-bank financial services and products through its business segments: Consumer Banking, Global Wealth & Investment Management, Global Banking, Global Markets and All Other.

As it is the one of the most famous and the second biggest U.S. banks, there is no need for a very in-depth presentation. So, it’s better to move on to the dividend and profitability information about the common stock, BAC.

Source: FastGraphs.com

And here’s the market opinion:

Source: Tradingview.com

The dividend paid by BAC is constantly increasing, from $0.04 in 2013 to $0.39 in 2017. There’s a bullish expectation for the next couple of years as well. As an absolute value, for the last year, the company paid an almost $4B yearly dividend. In addition, the market capitalization of the company is around $306B, which makes Bank of America the second largest money center bank.

Capital Structure

Below you can see a snapshot of Bank of America’s capital structure as of its last quarterly report in March 2018. You can also see how the capital structure evolved historically:

Source: Morningstar.com

As of Q1 2018, BAC had a total debt of $270.3B ranking senior to the newly issued preferred stock. The new Series GG preferred shares rank junior to all outstanding debt and equal to the other outstanding preferred stocks, which total $24.6B.

The Bank of America Corporation Family

The company has 16 more outstanding preferred stocks and a third-party security, listed on a National Exchange under the umbrella of BAC:

Source: Author’s database

Recently, the company announced the redemption of Merrill Lynch Capital Trust III (MER-P*) and Countrywide Capital V (CFC-B*) on June 6, 2018, and the redemption of its 6.625% Non-Cumulative Preferred Stock, Series I (BAC-I*) on July 2, 2018; as such, they will not be a part of the following bubble chart. Furthermore, Bank of America has submitted a redemption notice of approximately three-fourths of its 6.204% Non-Cumulative Preferred Stock, Series D (BAC-D).

Source: Author’s database

If we compare the newly issued Series GG preferred stock with the rest of BAC’s preferred stocks, we can see that it seems to be fairly priced vs. its closest “brothers,” BAC-A and BAC-C. Furthermore, there are a plethora of corporate bonds issued by the company; the picture below presents only a small part of it:

Source: FINRA

For my comparison, I choose a fixed-rate bond that matures almost the same as the call date of BAC-B, May 15, 2023.

Source: FINRA

BAC4126820, as it is the FINRA ticker, is rated an A- and has a yield-to-maturity of 3.676%. This should be compared to the 5.92% yield-to-call of BAC-B, but when making that comparison, remember that BAC-B’s YTC is the maximum you could realize if you hold the preferred stock until 2023. This result is a yield spread of 2.3% between the two securities. This yield margin seems to be a little high, despite the higher rank in the capital structure and the higher credit rating of the bond, especially given how well capitalized BAC seems to be. At these price levels, BAC-B looks like the better security of the two.

Sector Comparison

The chart below contains all preferred stocks in the money center banks sector (according to Finviz.com) that pay a fixed dividend rate and have a par value of $25. It is important to take note that none of these preferred stocks are eligible for the 15% federal tax rate.

Source: Author’s database

Take a look at the investment grades only:

Source: Author’s database

And look at these, with a positive yield-to-call:

Source: Author’s database

The Banking Preferreds

The chart below contains all preferred stocks issued by a bank with a par value of $25 that have qualified fixed dividend rate.

Source: Author’s database

Again, the investment grades only:

Source: Author’s database

And these have a positive yield-to-call:

Source: Author’s database

All BBB- Preferred Stocks

The last chart contains all preferred stocks that pay a fixed dividend rate, have a par value of $25, a BBB- Standard & Poor’s rating and a positive yield-to-call.

Source: Author’s database

The main group:

Source: Author’s database

Redemption Following a Regulatory Capital Event

As per BAC’s 424B5 filing:

At any time within 90 days after a capital treatment event, and at the option of our board of directors or any duly authorized committee of our board of directors, we may provide notice to holders of the Preferred Stock that we will redeem the Preferred Stock in accordance with the procedures described below, and subsequently redeem, out of funds legally available therefor, the Preferred Stock in whole, but not in part, at a redemption price equal to $25,000 per share (…) For purposes of the above, “capital treatment event” means the good faith determination by us that, as a result of any:

  • proposed changes in those laws or regulations that is announced or becomes effective after the initial issuance of any shares of the Preferred Stock; or
  • official administrative decision or judicial decision or administrative action or other official pronouncement interpreting or applying those laws or regulations that is announced or becomes effective after the initial issuance of any shares of Preferred Stock,

there is more than an insubstantial risk that we will not be entitled to treat an amount equal to the full liquidation preference of all shares of Preferred Stock then outstanding as additional Tier 1 capital (or its equivalent) for purposes of the capital adequacy guidelines or regulations of the Federal Reserve or other appropriate federal banking agency, as then in effect and applicable, for as long as any share of Preferred Stock is outstanding.

Redemption of the Preferred Stock is subject to our receipt of any required prior approvals from the Federal Reserve or other appropriate federal banking agency.

Use of Proceeds

We intend to use the net proceeds from the sale of the depositary shares representing interests in the Preferred Stock for general corporate purposes, including, but not limited to, the repurchase or redemption of outstanding preferred securities.

Addition to the S&P preferred stock index

With the current market capitalization of the new issue of $1.2B, it is a potential addition to the S&P U.S. Preferred Stock iShares Index (NASDAQ:PFF). If the average monthly volume of BAC-B after its first six months trading on the NYSE is more than 250,000, it would be eligible to be included in the S&P U.S. Preferred Stock Index. With fewer than six months of trading history, issues are evaluated over the available period and may be included if available trading history infers the issue will satisfy this requirement.

Conclusion

This is an informational article about the new preferred stock, BAC-B. With this kind of article, we want to keep you informed of all new preferred stock and baby bonds IPOs. I believe that BAC-B offers good returns when compared to other securities in BAC’s capital structure and to other preferred stocks in its peer group. The issuer company is well capitalized and is poised to increase its profitability in the coming year. Overall, I think that BAC-B offers nice returns for the risks that you are taking.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Enbridge Simplification: A Slap In The Face To Shareholders

The simplification transaction announced by Enbridge (ENB) on Thursday, May 17, is a massive one, a nearly $10 billion deal in what will be all-stock consideration. It is also turning out to be a harsh lesson for shareholders of the company’s sponsored vehicles: Enbridge Energy Partners (EEP), Enbridge Energy Management (EEQ), Enbridge Income Fund (OTC:EBGUF), and Spectra Energy Partners (SEP). Such simplification transactions are getting more commonplace within the master limited partnership (MLP) space recently, and some parts of this deal were widely expected to occur over the next several years.

What was not expected was just how harsh the deal terms are for shareholders and the highly aggressive language taken toward its daughter firms. The reasons for the deal rationale represent a complete turn from statements made just a few months prior. While this deal certainly benefits Enbridge, it cripples any good will with shareholders of daughter firms. I suspect there are going to be some very irate shareholders sitting on large tax bills and shareholder lawsuits are probably inevitable. For those of us that avoided the firm, the proposal unfortunately might drive investor capital away from the subsector when it needs it most.

Management’s Take on Simplification

For Enbridge, management touted the transaction’s ability to simplify the corporate and capital structure, allowing Enbridge to have full ownership of core strategic assets. That’s a true statement. However, the tone toward its daughter firms was incredibly negative and is a complete turnaround from statements made recently. For perspective, within its presentation of deal economics, Enbridge stated it should see its own credit profile enhanced by “eliminating sponsored vehicle public distributions” (I’m sure Seeking Alpha income investors love that part) and that “sponsored vehicles are ineffective and unreliable standalone financing vehicles.”

The blame for this has been pinned on a weak market for public valuations of midstream firms, the change in FERC policy on cost recovery, and lasting impact from U.S. tax reform. This broad blanket statement on the MLP structure is an ignorant one in my opinion. There are more than a few MLPs out there – correctly run – that have very low costs of capital, even in this environment: MPLX (MPLX), Shell Midstream (SHLX), and Phillips 66 Partners (PSXP) are all examples. Instead of taking responsibility for its own poor decisions in building out the capital structure and getting itself into this mess in the first place, management has decided to shirk responsibility and cast blame elsewhere.

Source: Enbridge Partners Simplification Transaction, Slide 6

Some Seeking Alpha readers often chide me (or other contributors for that matter) for not listening to management guidance or taking statements made on conference calls as gospel. In other words, “management knows best.” For every company I research, I form my own opinion before reading or listening to a single sentence on a conference call. This Enbridge saga is yet another opportunity to show why shareholders need to do their own due diligence and come to their conclusions. Let us wind back the clock and see what Chief Financial Officer of Enbridge John Whelen had to say just two months ago on the Q4 conference call (paywall):

With respect to our sponsored vehicles, the good news is that the legislation maintained the competitive tax advantages of our MLPs relative to corporate structures through at least 2025.

This was followed by a statement, picked up by other Seeking Alpha contributors, that the losses faced at Enbridge Energy Partners would be balanced out by gains for Enbridge Income Fund. In other words, neutral to earnings across the firms.

Looking forward, on balance, the Fund Group will actually benefit modestly from tax reform. As I noted earlier, EEP’s FSM tolls will be reduced as a result of the reduction in U.S. tax rates. To the extent the EEP tolls go down, ENF will see a corresponding uptick in its Canadian Mainline toll revenue under the existing International Joint Tolling framework.

Just two months ago, the competitive tax advantage of MLPs had been maintained and the FERC policy change would have no real change on dollars flowing to the Enbridge family due to the Joint Tolling Framework. Compare those statements with the ones made as part of this deal announcement. It is startling. Make no mistake, nothing has materially changed in the past two months. Was the tone on the Q1 conference call a little more negative? Sure, but management was just one week out from dropping this bombshell on investors. In short, management was happy to assuage investor concerns before pulling the rug out from under them.

Premium? What Premium?

If a company is going to roll up assets that are not being valued correctly in the public market, the least most of these firms do is throw a bone to shareholders. Slap a 10, 15, or 20% premium on the deal and the acquirer is still getting a steal on the assets versus replacement cost. Further, this placates shareholders a bit who have undergone quite a bit of pain and helps aid the transaction in getting past the conflicts committee. As a result, hopefully the general partner avoids getting sued in the process. What did Enbridge offer shareholders?

  • SEP unitholders will receive 1.0123 common shares of Enbridge per SEP unit, representing a value of US$33.10 per SEP unit based on the closing price of Enbridge common shares on the NYSE on May 16, 2018 – equivalent to the closing price of SEP’s common units on the NYSE on such date.
  • EEP unitholders will receive 0.3083 common shares of Enbridge per EEP unit, representing a value of US$10.08 per EEP unit based on the closing price of Enbridge common shares on the NYSE on May 16, 2018 – equivalent to the closing price of EEP’s common units on the NYSE on such date.
  • EEQ shareholders will receive 0.2887 common shares of Enbridge per EEQ share, representing a value of US$9.44 per EEQ share based on the closing price of Enbridge common shares on the NYSE on May 16, 2018 – equivalent to the closing price of EEQ’s common shares on the NYSE on such date.

Investors won’t find that here. Not even a dollar. And that whole “EEQ shares are equivalent to EEP shares” thesis? The 10-K might say that they are equivalent, but management has certainly taken the stance that 1:1 does not mean 1:1. For all their trouble of forming an investor base for Enbridge to fund dropdowns, these investors will be locking in a massive loss, eating a major tax bill made worse by return of capital lowering their basis, and are being rewarded with Enbridge common stock and not cash.

While I’m sure some will try to spin this positively, even as a non-shareholder and someone who recommended against buying any of these companies in the past, it just leaves a sour taste in my mouth. Enbridge is a massive entity and the actions it takes have broad implications across the entire MLP space. Management teams that would never dream of trying to pull off a transaction like this due some sense of fiduciary duty will unfortunately have to deal with the consequences of an impaired investor base that might never invest a dollar in these types of assets again.

Disclosure: I am/we are long MPLS, SHLX.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Facebook Creates Youth Portal to Give Teens Tips About Using Its Service

Facebook has created an online resource center for teenagers to learn tips and tricks for using the social networking service.

On Monday, the technology giant debuted the Youth Portal, intended for teens to better understand how to control their Facebook settings, like determining who is allowed to see certain posts, as well as learning how other teenagers use Facebook to raise awareness about humanitarian issues.

Facebook said that it consulted with an unspecified number of teenagers in the U.S., Italy, the United Kingdom, and Brazil in designing the new site.

Some of the information that the Youth Portal provides includes safety tips for teenagers to adhere to when posting on Facebook. In one tip, Facebook recommends that teens ask themselves whether they would feel comfortable reading out loud to their parents or grandparents the contents of a Facebook post before posting it.

Another recommendation is that teenagers not give out personal information to people they just met online and to only accept Facebook friend requests from people they know.

Facebook also created a section in the Youth Portal about data privacy that shows teenagers how to change their user settings so that their posts or status updates only show to specific groups of people like their close friends or acquaintances. In that section, there’s also a description of Facebook’s data policy and another short account about how Facebook uses data to help companies better target their online ads. But both of those descriptions link to the company’s longer and more complicated explanations intended for the general public.

Facebook said it is still figuring out how to notify teenagers about its new tips. Earlier this month, as a test, it started showing some of the tips to an unspecified number of teens in their News Feeds.

Get Data Sheet, Fortune’s technology newsletter.

The social networking company’s release of a youth information center comes amid a general backlash against tech companies for failing to account for how their services will be used by children.

A few of Apple’s big shareholders, for example, urged the company to address the rise of smartphone addiction and other negative consequences that the overuse of smartphones present to children. Apple then debuted its “Families” site in March as a way for parents to learn how to better monitor how their children use smartphones and apps.

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Two Chinese bitcoin mining equipment makers plan $1 billion Hong Kong listings: IFR

HONG KONG (Reuters) – Two Chinese bitcoin mining equipment makers plan to raise up to $1 billion each from Hong Kong listings this year, riding on strong global interest in cryptocurrencies, IFR reported on Tuesday, citing people familiar with the plans.

FILE PHOTO: A token of the virtual currency Bitcoin is seen placed on a monitor that displays binary digits in this illustration picture, December 8, 2017. REUTERS/Dado Ruvic//File Photo

Canaan Creative filed a listing application to the Stock Exchange of Hong Kong on Monday, IFR, a Thomson Reuters publication, reported.

Zhejiang Ebang Communication has also started working with advisers on a proposed Hong Kong float of up to $1 billon, reported IFR.

Ebang listed on China’s National Equities Exchange and Quotations, also known as the New Third Board, in 2015 and was

delisted from the over-the-counter market in March after announcing in January that it would seek a Hong Kong listing.

Chinese bitcoin mining equipment makers are hungry for capital to fund their growth as the heightened interest in cryptocurrencies has led to a surge in demand for their machines.

Canaan, which sells “Avalon” mining machines with customised super-fast ASIC chips, made revenue of more than 1 billion yuan in 2017. Although cryptocurrencies can be mined using regular computer equipment, specialised processing devices dedicated to mining are more effective and can generate more income.

The company’s co-chairman Jianping Kong told Reuters in April that he expected China’s push to promote the domestic chip industry to help drive growth for the company.

Credit Suisse, CMB International, Deutsche Bank and Morgan Stanley are joint sponsors for Canaan’s float, according to IFR.

Canaan Creative declined to comment. Ebang could not be immediately reached for comment. All the banks didn’t immediately respond to a request for comment.

Canaan’s IPO valuation has yet to be set as there is no listed comparable and the prices of cryptocurrencies have

fluctuated a lot, reported IFR. It was valued at $500 million in mid-2017, IFR said, attributing it to one of the people.

Reporting by Fiona Lau at IFR; Additional reporting by Sijia Jiang; Writing by Julie Zhu; Editing by Muralikumar Anantharaman

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Your Business Deserves the Same Quality Ingredients, Patience, and Character as Your Favorite Wine

Recently, my wife and I returned from a trip to Europe. While we were there, I enjoyed some tremendous wines. It got me thinking how fine wine and good business share many characteristics. They both require quality inputs, time to develop, and character, and they need to find the right customers at the right time.

Here are other reasons why your business is like a fine wine:

1. You Don’t Have to Spend a Lot

There’s a lot of wine out there, but price does not always correlate with quality. The biggest name does not always produce the finest work. Similarly, businesses need to be careful how they spend their money. Businesses leaders must consider carefully where and how their raw materials are generated. And you don’t necessarily need to hire the candidate who requires the highest salary. There’s a great deal of quality to be found if you dig a little deeper, and the fit for your company might be even better.

2. Be Smooth

Drinking wine should be a great experience. The flavors should blend with the food and highlight the appropriate notes. The whole experience should come together seemingly effortlessly. A business should also function like a well-oiled machine. The team should coordinate efforts efficiently, and the experience for the customer should be smooth and effortless.

3. Quality Over Quantity

I love wine. And while a lot of wine can be fun, if I’m being serious, I’d much rather have a few sips of excellent, highest quality wine than a bottle of rotgut. Encouraging huge quantity can be fun for a while, and cause a flash in the pan for businesses. But for both businesses and consumers, the short-term gain almost always fizzles out, and carries long-term consequences that make everyone uncomfortable. As wine improves with age and businesses develop slowly, patience will be required. But the payoff will be well worth the effort.

4. Know Your Sourcing

Any good chef knows his vintners and vintages. The chef must know the grapes and the land that produce the wine he uses so he can understand how the flavors will meld and will be able to predict any problems. Likewise, business leaders need to know the people they work with and the resources they use. A big mistake in the beginning of the process filters down throughout the product and almost inevitably reaches the customer, putting your reputation and livelihood at risk.

5. Use an Advisor

Restaurants hire sommeliers because they want their guests to have the best experience possible. They want to ensure that the pairing between wine and food is the best possible match, and that the wine tastes exactly as it should. Business leaders, too, should use advisors. Mentoring is an important part of any leader’s development, ensuring that leaders use their time well, guide their team efficiently, and learn from their mistakes.

6. It’s About Relationships

Just like chefs must ensure that their wines match the foods, businesses must ensure that their products fit their market. You can have excellent quality product, but if it doesn’t work in the context of your target market, your businesses will not succeed. That doesn’t mean you can’t do something a little different; chefs and sommeliers sometimes get creative, and businesses should to. But make sure the proposition is compelling – don’t be different just for the sake of being different.

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Chinese gaming firm Huya prices IPO in New York at $12 per share: source

(Reuters) – The initial public offering of Chinese game-streaming platform Huya Inc on the New York Stock Exchange was priced at $12 per share, a source familiar with the matter said on Thursday, at the upper-end of the indicated price range.

Huya offered 15 million American Depository Shares (ADS), raising $180 million. The company had indicated a price range of $10-$12 each.

Following the offering, Huya’s parent company YY Inc will hold 54.9 percent voting power in the company, while a Tencent Holdings investment unit will hold 39.5 percent, Huya said in a statement.

Huya is one of China’s biggest live-streaming platforms for online gaming, covering over 2,600 different mobile, PC and console games.

China had the world’s largest video games market in terms of revenues and number of gamers in 2017, Huya said. The company had nearly 40 million average mobile monthly active users in the fourth quarter of 2017.

Huya’s revenue almost tripled to 2.18 billion yuan ($344 million) in 2017 from the year previous. It made a loss of 80.9 million yuan.

Credit Suisse, Goldman Sachs and UBS are lead underwriters to the offering.

Reporting by Diptendu Lahiri and Nikhil Subba in Bengaluru, Editing by Rosalba O’Brien

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Tencent's WeDoctor raises $500 million, values firm at $5.5 billion pre-IPO

SHANGHAI (Reuters) – Chinese online healthcare solutions platform WeDoctor, which is backed by tech giant Tencent Holdings Ltd (0700.HK), said on Wednesday it had raised $500 million from several investors, valuing the firm at $5.5 billion ahead of a listing this year.

The investment round was led by AIA Company Ltd, part of Hong Kong-listed insurer AIA Group Ltd (1299.HK), and infrastructure and services group NWS Holdings Ltd (0659.HK).

WeDoctor is among a spate of technology-driven firms looking to shake up China’s overburdened public healthcare market, with increasingly affluent consumers willing to pay for ways to get more convenient access to doctors and health services.

Founded in 2010, WeDoctor provides diagnosis and online appointment booking, an issue in China where patients often queue outside hospitals from early morning to get an appointment. Users can also consult doctors via the platform.

The pre-IPO fund raising comes after rival Ping An Good Doctor, formally known as Ping An Healthcare and Technology Co Ltd (1833.HK), raised $1.1 billion in an IPO this month but saw its shares tumble soon after as investors worried about its high valuation.

The firm said it would use the funds to accelerate its expansion plans, helping it better tap into the country’s “flourishing and enormous market”.

AIA said it had made a “minority equity investment” in WeDoctor and had an agreement to be its “preferred provider” of life and health insurance, a boost as insurers race to tap into China’s life insurance market, the world’s third largest.

Chinese healthcare spending is set to hit $1 trillion by 2020, up from $357 billion in 2011, according to consultancy McKinsey & Co, with private healthcare providers and insurers looking to take a larger slice of the market.

WeDoctor, which has four main units focused on healthcare, cloud, insurance and pharmaceuticals, said it has on its platform over 2,700 hospitals, 220,000 doctors, 15,000 pharmacies and 27 million monthly active users.

Deutsche Bank advised AIA and WeDoctor on the transaction.

Reporting by Adam Jourdan; Additional reporting by Sumeet Chatterjee; Editing by Edwina Gibbs and Kim Coghill

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South Korean prosecutors raid LG's head office in tax probe

SEOUL (Reuters) – South Korean prosecutors have raided LG Group’s head office as part of a probe into alleged tax evasion by family members controlling the conglomerate, the prosecutors’ office said on Wednesday.

A man walks past an LG logo at the Mobile World Congress in Barcelona, Spain, February 27, 2018. REUTERS/Sergio Perez

Prosecutors are looking into possible evasion of capital gains tax worth about 10 billion won ($9.25 million) in relation to the transfer of shares of an LG affiliate, the Seoul Central District Prosecutors’ Office said in a text message to reporters.

A spokeswoman at LG Corp, the group’s holding company, said the relevant parties will cooperate with the prosecutors’ probe.

The probe appeared to have been caused by differing views on the amount of tax payable after some shareholders sold shares in the market and paid the corresponding taxes, she said.

The probe into the country’s fourth-biggest conglomerate by assets would be the latest of a string of troubles faced by families controlling the country’s conglomerates, known as chaebols.

A tantrum by the heiress of Korean Air Lines Co Ltd earlier this year reignited public anger at the behavior of the rich and powerful, and sparked investigations into her family and its businesses.

The liberal government of Moon Jae-in has pledged to pursue chaebol reform, urging them to improve governance structures to improve transparency and fair competition.

Reporting by Joyce Lee, Ju-min Park; additional reporting by Hyunjoo Jin, Editing by Christopher Cushing and Richard Pullin

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Chinese-American Elites Lament a Brewing Trade War

It’s not easy to promote closer US-China ties these days. The countries are moving toward a trade war; a US delegation left Beijing Friday reporting little progress on resolving disputes. US executives accuse China of stealing their intellectual property. The US government is imposing ever tighter restrictions on Chinese telecommunications firms.

That made an uncomfortable backdrop for the annual conference of the Committee of 100, a group of influential Chinese-Americans, in Silicon Valley over the weekend. The group billed the event as a “Bridge Between the US and China.” But speakers and attendees lamented deteriorating relations, heaped scorn on the Trump administration, and expressed concern that nativism could lead to discrimination against Chinese-Americans.

“It does not take a very stable genius to understand that the US relationship with China is now under severe stress,” Chas Freeman, a senior fellow at Brown University’s Watson Institute, told several hundred guests. In 1972, Freeman was an interpreter for President Nixon during his first visit to China. More than four decades later, Freeman noted the growing hostility between the leaders of the world’s two largest economies, even as their nations remain interdependent. “The US and China are each too globalized, too successful, and entangled to divorce,” he said.

Freeman and others said Trump administration policies risk weakening the US or exacerbating tensions between the countries. The tax cut approved by Congress last year will lead the government to issue more debt, much of which will be bought by the Chinese, he said. Blocking Chinese telecom company ZTE from buying US-made components could backfire by encouraging China to buttress its domestic suppliers; those firms could eventually displace US components in other products.

Not all the blame went toward Washington. Susan Shirk, chair of the 21st Century China Center at the University of California, San Diego, said China is engaged in a “massive government-organized and lavishly funded drive to acquire foreign technology to make itself into a high-tech superpower.” After decades of movement toward a market-based economy, Shirk said the Chinese government is increasing its involvement in the economy, and re-emphasizing its socialist ideology. “What’s happening in China is not your normal industrial policy,” Shirk said. “These are efforts to reduce integration with the rest of the global economy.”

Shirk said executives and political leaders in other developed economies share concerns about China’s path. “This is a much broader and deeper concern than just Trump,” she said. Gary Locke, a former US ambassador to China, echoed that sentiment, saying China limits foreign ownership of Chinese businesses, prodding many US firms into uncomfortable joint ventures with Chinese companies that are, or could be, rivals.

Technology executives find the growing tensions unsettling. “As a tech person, I love to think that technology has no boundaries,” said Paul Yeh, who runs a Palo Alto, California venture capital fund that invests in both the US and China. But Yeh said he’s not naive, and thinks the tech industry ultimately will suffer from the hostility. One potential warning sign: Three-fourths of respondents to a recent survey by the American Chamber of Commerce in China said foreign businesses are less welcome in China than previously.

Beneath the rhetoric, China has emerged as a legitimate tech power. Locke, the former ambassador, noted that Chinese inventors filed more patents than those from any other nation last year, and the country is home to the world’s fastest supercomputer. China has been particularly aggressive in artificial intelligence, with a national goal to catch the US by 2020. China’s SenseTime, which makes image-analysis software, is now the world’s most valuable AI startup.

Fei-Fei Li, Google’s chief scientist for artificial intelligence and machine learning, offered a more personal perspective on the rivalry between the two countries. Li was born in China and came to the US during high school. She earned a bachelor’s degree in physics before moving into computer science and ultimately, AI. She noted that the discoveries that revolutionized physics in the early 20th century came from scientists in several countries. “No company or country owned modern physics,” she said, drawing a parallel to artificial intelligence. “We all benefit.”

In some areas, the two countries are so interconnected that it’s hard to distinguish what is American and what is Chinese. Several startups pursuing self-driving technology include people from both countries and technology from both countries, said Jonathan Woetzel, the Asia-based director of the McKinsey Global Institute. “Business is what happens while politicians are talking,” he said.

Rising Tension

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1 Out of Every 6 Retirees in America Is a Millionaire–Here Are 8 Things You Can Do Today to Become One of Them

This is according to a report by online investing company United Income, which analyzed data from multiple sources, including the Federal Reserve Board and the US Bureau of Labor Statistics, to find out how retirees are faring now compared to previous generations.

Average wealth for American retirees is $752,000 — which has more than doubled since 1989, the report found. Likewise, the rate of retired millionaires has more than doubled in the last 30 years. Fewer people are retiring in poverty and relying on minimum wage than ever before. The report says “the percentage of retirees living on the minimum wage or less dropped in half over the past 30 years.”

Still, the median wealth for retirees is just over $200,000 — and people are living longer and costs are increasing. Many retirees end up relying on their monthly Social Security retirement benefits, about $1,400 on average. The Social Security Administration says the benefits account for one-third of retirees’ income.

Retiring as a millionaire may seem like a difficult goal to accomplish. However, there are tricks that can help you get over the line so you can enjoy seven digit wealth when you stop working.

Matt Fellowes, the CEO of United Income shared his tips on how to retire a millionaire with Business Insider. Below are the eight best pieces of advice from Fellowes on how to be wealthy when you stop working.

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