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  • Writer's pictureThe San Juan Daily Star

Wall Street steered billions to blacklisted Chinese companies: Probe, WSJ reports

A congressional investigation found that Wall Street used billions of dollars of American retirement savings and other investments to buy shares in index funds that included several blacklisted Chinese companies, the Wall Street Journal reported on Thursday.

The probe, conducted by a bipartisan House committee empowered to devise strategies for the U.S. to counter China, focused on world’s largest asset manager BlackRock and index provider MSCI, the report said.

BlackRock and MSCI did not immediately respond to Reuters requests for comment.

Ties between the U.S. and China, the world’s two largest economies, have been strained in recent years due to issues including Taiwan, the origins of the COVID-19 pandemic, allegations of spying, human rights issues and trade tariffs.

The House Select Committee on the Chinese Communist Party concluded that through investments in index funds, American financial institutions funneled $6.5 billion last year to some 63 Chinese companies flagged by the U.S., the report said.

The committee could not be immediately reached for a comment.

Shares of digital marketing firm Ibotta soared 33% on their debut on the New York Stock Exchange on Thursday, giving the Walmart-backed company a market valuation of $3.55 billion.

The PCE index rose to 52.6, from 52.5 the previous month, reflecting the pick up in the cost of things like gasoline and food that pushed the broader producer price index up by more than expected in March.

Ibotta sold 6.6 million shares at $88 apiece in its initial public offering (IPO), raising $577.3 million. Its earlier price range was $76-$84 apiece.

Tech offerings are leading the charge as the U.S. IPO market rebounds in 2024, after a sluggish two years, fueled by hopes of a soft landing in the economy.

Ibotta’s stellar listing follows successful debuts by social media platform Reddit and chip firm Astera Labs.

“We’re going to use the proceeds of the IPO to build out the AI-enabled technology, so that it’s ... the most sophisticated way to promote a product digitally in the world. So that it is, richer set of capabilities for our advertisers, who want to be able to reach large audiences,” Ibotta CEO Bryan Leach told Reuters in an interview.

Leach will hold about 69.7% of the total voting power in the company post-IPO.

Ibotta provides a platform for consumer brands to deliver promotions to customers and offer cash-back rewards on their everyday purchases.

The U.S. dollar’s dominant reserve currency status is likely to endure partly because even the most talked about alternative the Chinese yuan falls short as a credible challenger, Morgan Stanley said in a report on Thursday.

Rivalry with China, Russia’s war in Ukraine, wrangling in Washington over the U.S. debt ceiling and rising debt levels have put the dollar’s status as the world’s dominant currency under scrutiny in recent years.

In a new report exploring the dollar’s reserve status, Morgan Stanley said it did not expect the currency’s dominance to change soon, noting dollar influence in the global economy across a range of economic and financial metrics remains strong.

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