TIME Markets

Asian Stocks Rise After U.S. Data Calms Investors

<> on August 27, 2015 in New York City.
Andrew Burton—Getty Images Traders work on the floor of the New York Stock Exchange on August 27, 2015

Regional markets took their lead from Wall Street

(HONG KONG) — Asian stocks rose Friday as upbeat U.S. economic data lifted investors’ spirits following days of stomach-churning turbulence sparked by a heavy sell-off in China.

Japan led regional gains, but Shanghai shares were not far behind as markets took their lead from Wall Street, where benchmarks had a strong finish after a government report showed that U.S. second-quarter economic growth was much stronger than initially estimated. The growth data, which also helped oil prices stage an impressive rebound, gave added encouragement to investors seeking bargains in beaten-down shares.

Japan’s benchmark Nikkei 225 index climbed 3 percent to 19,124.85 after lackluster monthly data on inflation and household spending raised hopes of further stimulus.

The Shanghai Composite Index in mainland China rose 2.1 percent to 3,149.35, adding to its 5.3 percent gain Thursday, which was its first increase in six days, during which it shed nearly 23 percent.

World stock markets are returning to calm after the tumult of the past two weeks, which saw Chinese stocks plunge, wiping out gains for the year, on jitters over the economy and a surprise devaluation of the yuan. Analysts warn there may be further volatility ahead.

“Uncertainties regarding China and the emerging world are likely to linger and uncertainty still remains around the Fed,” said Shane Oliver, head of investment strategy at AMP Capital.

However, he added that he believes markets have bottomed out and a “cyclical bull market” is likely to resume. “Despite the recent set-back, share markets are likely to remain in a broad rising trend,” he said.

Recent market turmoil has thrown into doubt expectations for a Federal Reserve interest rate hike in September, with most economists now saying it’s off the table for now. Fed officials hold their annual meeting at Jackson Hole, Wyoming, this weekend, which will be heavily scrutinized for clues on the rate hike timing.

South Korea’s Kospi climbed 1.5 percent to 1,937.16 while Hong Kong’s Hang Seng added 0.7 percent to 21,984.11. Australia’s S&P/ASX 200 gained 0.5 percent to 5,259.00.

On Wall Street, the Dow Jones industrial average climbed 2.3 percent to close at 16,654.77, recouping nearly half of its losses over the past two days following a sharp six-day slump. The S&P 500 index gained 2.4 percent to 1,987.66 and the Nasdaq composite rose 2.5 percent to 4,812.71.

The dollar slipped to 121.09 yen from 121.12 in late trading Thursday. The euro climbed to $1.1254 from $1.1242.

Benchmark U.S. crude oil extended gains, rising 68 cents to $43.24 in electronic trading on the New York Mercantile Exchange. On Thursday the contract posted its biggest one-day gain in six years, leaping $3.96, or 10.3 percent, to $42.56 a barrel. Brent crude, a benchmark for international oils imported by U.S. refineries, rose 74 cents to $48.34 in London.

TIME Markets

Asian Stocks Rise After Wall Street Rebound

Asia stock market
Kevin Frayer—Getty Images A Chinese day trader reacts as he watches a stock ticker at a local brokerage house in Beijing, on Aug. 27, 2015.

Analysts said there are probably more roller-coaster days ahead

(BEIJING) — China’s key stock market index surged 5.3 percent Thursday, its biggest gain in eight weeks, as markets across Asia rose following Wall Street’s rebound, giving investors some relief after gut-wrenching global losses.

The Shanghai Composite Index, whose steep drop in recent days triggered worldwide selling, gained 5.3 percent to close at 3,083.59 points, bouncing back from losses that wiped some 20 percent off its value over the past week. It was the biggest one-day gain since a 5.5 percent rise on June 30.

Elsewhere in Asia, Hong Kong’s Hang Seng rose 2.9 percent to 21,697.31 and Tokyo’s Nikkei 225 added 1.1 percent to 18,574.44. Sydney’s S&P ASX 200 advanced 1.2 percent to 5,233.30 and Seoul’s Kospi gained 0.7 percent to 1,908.00. Markets in Singapore, Bangkok, New Zealand and Jakarta also rose.

European markets also advanced in early trading. France’s CAC-40 added 2.1 percent to 4,597.36 and Germany’s DAX gained 2.4 percent to 10,240.92.

The gains came after Wall Street rocketed up overnight. The Dow Jones industrial average soaring more than 600 points, or 4 percent. That was its third-biggest point gain of all time and its largest since Oct. 28, 2008.

Traders were encouraged by comments from William Dudley, president of the New York Federal Reserve Bank, that the case for a U.S. interest rate hike in September is “less compelling to me than it was a few weeks ago,” given China’s troubles, falling oil prices and weakness in emerging markets.

“Traders took the cue to buy,” said Nicholas Teo of CMC Markets in a report.

Following a six-year run-up in U.S. stocks that has pushed major indexes to all-time highs, investors worry the economy could falter if the Fed raises rates too soon.

U.S. markets looked set for more gains, with futures for the Dow Jones and S&P both up 0.4 percent.

In currency markets, the dollar rose to 120.2220 yen from Wednesday’s 120.1440 yen. The euro edged down to $1.1327 from the previous session’s $1.1337.

Benchmark U.S. crude gained 92 cents to $39.53 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 71 cents on Wednesday to close at $38.60. Brent crude, used to price international oils, rose $1 to $44.14 in London after losing 7 cents the previous day to close at $44.14.

TIME Markets

Asian Stocks Post Mixed Results

Tokyo stock rebounds
Kimimasa Mayama—EPA A businessman watches an electronic board displaying Tokyo's benchmark Nikkei Stock Average at a securities office in Tokyo on Aug. 26 2015

Markets have been zigzagging for weeks

(TOKYO) — Asian stocks were mixed Wednesday and Shanghai’s index fell despite Beijing’s decision to cut a key interest rate to help stabilize gyrating financial markets and counter short liquidity.

The benchmark Shanghai Composite Index fell late in the day after spending most of the afternoon in positive territory. It closed down 1.3 percent at 2,927.29 on heavy selling of steelmakers and other heavy industrials.

Most other Asian markets initially wavered but had appeared to regain buying momentum by early afternoon. Japan’s main Nikkei 225 stock index advanced 3.2 percent to 18,376.83, and South Korea’s Kospi gained 2.6 percent to 1,894.09.

But Hong Kong’s Hang Seng index fell 0.5 percent to 21,305.17, and mainland China’s smaller Shenzhen Composite Index lost 3.1 percent.

Elsewhere in Asia, Australian shares gained 0.7 percent to 5,172.80, helped by buying of resource-related shares. Shares also rose in Taiwan but fell in New Zealand and most Southeast Asian markets.

Many in Asia went to bed Tuesday smiling over China’s decision to slash its key interest rate, only to awaken to yet another decline overnight on Wall Street, Nicholas Teo, an analyst at CMC Markets, said in a commentary.

“All of a sudden, China and the performance of the Chinese markets have now taken the lead in determining daily direction for trading in stocks worldwide,” he said. Meanwhile, investors unable to meet margin calls are being forced to sell, regardless of the Chinese central bank’s decision.

“With confidence in the markets completely shattered, the likelihood of buyers meeting these intermittent bouts of forced selling may just be few and far in-between,” he said.

Markets have been zigzagging for weeks on deepening unease over the ramifications of slowing growth in China, the world’s second-largest economy and the driver of much of the global growth of the past decade.

The apparent inability of Chinese regulators to stabilize the markets, has spooked investors already fretting over when the U.S. Federal Reserve will raise interest rates.

Asia got a slow start following a last-minute sell-off that dragged the Dow Jones industrial average down 204.91 points, or 1.3 percent, on Tuesday to 15,666.44. That extended Wall Street’s losing streak to six days, the longest such stretch in more than three years.

The Dow had surged more than 400 points after China cut its interest rates for the fifth time in nine months in a renewed effort to shore up growth. The central bank also increased the amount of money available for lending by reducing the reserves banks are required to hold.

The People’s Bank of China acted after the Shanghai stock index slumped 7.6 percent on Tuesday, on top of an 8.5 percent loss on Monday.

China’s slowdown is crimping demand for oil and other commodities, a ripple effect that already is slowing exports and other business activity across Asia.

Beyond China, traders are waiting for clarity from the Federal Reserve, which has signaled it could begin raising its key interest rate from near zero for the first time in nearly a decade as early as this year. The Fed isn’t expected to deliver a policy update until it wraps up a meeting of policymakers in mid-September.

In other trading, U.S. crude oil rose 1 cent to $39.32 a barrel in electronic trading on the New York Mercantile Exchange. It rose $1.07, or 2.8 percent, to $39.31 on Tuesday. Brent crude oil, which is used to price international trading, gained 6 cents a barrel, to $43.15.

The dollar rose to 119.35 yen versus 118.66 yen late Wednesday. The euro slipped to $1.1509 from $1.1524.

 

TIME Markets

World Markets Recover as China Cuts Interest Rates

An investor looks at an electronic board showing stock information at a brokerage house in Shanghai
Aly Song—Reuters An investor looks at an electronic board showing stock information at a brokerage house in Shanghai, on Aug. 25, 2015.

China's main stock-market index fell for a fourth day before government action

BEIJING — Global markets rebounded Tuesday after China’s central bank cut its key interest rate to support growth in the world’s second-largest economy. Earlier, China’s main stock index closed sharply lower for a fourth day.

European markets recovered almost all their losses from Monday, with most rising at least 4 percent, while U.S. stocks were expected to open higher and oil prices rebounded.

Hours after China’s Shanghai stock index slumped to close 7.6 percent lower — adding to Monday’s 8.5 percent loss and taking the benchmark to its lowest level since Dec. 15 — the central bank swung into action.

It cut its interest rates for fifth time in nine months in a renewed effort to shore up economic growth in the world’s second-largest economy. The central bank said the benchmark rate for a one-year loan will be cut by 0.25 percentage point to 4.6 percent and the one-year rate for deposits will fall by a similar margin to 1.75 percent.

The bank also increased the amount of money available for lending by reducing the minimum reserves banks are required to hold by 0.5 percentage points.

The move came as Beijing appeared to be abandoning a strategy of having a state-owned company buy shares to stem the market slide. There have been no signs of large-scale purchases by the China Securities Finance Corp. during the past week.

“The fear is that the Chinese economy is slowing at an alarming pace and that the domestic policy makers have fallen well behind the curve,” said analyst at Credit Agricole CIB in a report.

Tokyo’s Nikkei 225 earlier closed down 4 percent after sliding 4.6 percent Monday.

But other markets in Asia posted modest recoveries. Hong Kong’s Hang Seng index rose or 0.7 percent, while Sydney’s S&P ASX 200 gained 2.7 percent and Seoul’s Kospi index and Singapore’s Straits Times index also rose.

In morning trading in Europe, France’s CAC-40 jumped 4.6 percent after tumbling 5.4 percent Monday while Germany’s DAX was up 4.4 percent after dropping 4.7 percent the day before. Britain’s FTSE 100 was 3.4 percent higher.

Dow Jones and S&P 500 index futures were both up 3.7 percent, an indication the U.S. market was set to open higher.

Wall Street had a stomach-churning day Monday, when the Dow plunged more than 1,000 points at one point before finishing down 588.40 points, or 3.6 percent, at 15,871.35. The Standard & Poor’s 500 index slid 77.68 points, or 3.9 percent, to 1,893.21, and is now in “correction” territory, Wall Street jargon for a drop of at least 10 percent from a recent peak. The last market correction was nearly four years ago.

In currency markets, the dollar rose to 120.26 yen from Monday’s 118.69 yen. The euro fell to $1.1461 from the previous session’s $1.1591

Oil rebounded from Monday’s steep declines.

Benchmark U.S. crude gained $1.31 to $39.55 per barrel in electronic trading on the New York Mercantile Exchange. The contract plunged $2.21 on Monday to close at $38.42.

 

 

TIME China

China Struggles to Stay Rosy as Confidence and Markets Plummet

The Aug. 24 stock-market disarray was dubbed Black Monday

Monday was a really bad day for global stocks, and the Chinese state-run media duly covered the volatility. But the official Chinese press was more reticent in its coverage of China’s own stock-market rout, which triggered the worldwide sell-off.

On Monday, the Shanghai Composite Index dropped 8.5%, the worst decline since 2007. Tuesday saw a 7.6% fall. The latest drop in a summer of sell-offs means that the once buoyant Chinese bourse has shed more than $4 trillion since peaking in June — either a much-needed correction of an overheated market that had more than doubled in a year or a symbol of China’s more troubling economic slowdown, or quite likely both.

Even as punters counted their losses and one group even briefly kidnapped the head of a metals exchange in Shanghai, Monday evening’s prime-time newscast on CCTV, the state broadcaster, totally ignored the nation’s market woes. On Tuesday, as the Shanghai exchange opened 6.4% lower, the People’s Daily, the mouthpiece of the Chinese Communist Party, published a dispatch from Shanghai that reported not on the market fallout but instead on the installation of 12,000 sensors on manholes in one city district. The manholes, whose safety is apparently looked after by 19 separate agencies, will be monitored by satellite.

Control — even on manholes — is something with which China’s ruling Communist Party is clearly enamored. Chinese President Xi Jinping has consolidated power surprisingly quickly since taking over in late 2012 and will use the occasion of the 70th anniversary of Japan’s defeat in China to project his authority. A Sept. 3 military parade is planned, with world leaders (and some former ones, like Tony Blair) gathered to check out China’s latest in martial hardware.

But the past few weeks haven’t exactly gone according to the party’s plan. Earlier this month, a chemical explosion in Tianjin, which killed at least 129 people, coupled with official media obfuscation, dented confidence in the party’s leadership and commitment to transparency. Earlier in the summer, the government’s unprecedented stock-market intervention only served to spook investors, leading to further declines. This past weekend, the government announced that Chinese pension funds would be allowed to invest one-third of their capital in the stock market — yet another move to try to prop up the nation’s bourses. The move was followed by Black Monday, as the Aug. 24 stock-market disarray has been dubbed. “The government still thinks it can control everything,” says Mose Ma, who works for a venture-capital firm in Beijing. “But this is the stock market, and markets fluctuate. It abides by its own logic and rules.”

Most Chinese don’t trade in stocks and foreigners only own a tiny percentage of China-listed shares. Still, the market rout, along with the Chinese government’s bungled attempts to bring stability to the market, has raised larger questions about the health of the world’s second largest economy — and the competence of its stewards. After decades of double-digit growth, China’s economy is slowing. With the nation cutting back on commodities and imports, countries that depend on Chinese consumption are bracing for impact. And for a generation of Chinese accustomed to torrid growth, the new normal is frightening to behold.

Griffin Gao, a project manager for a financial-leasing company in Shenzhen, says he escaped Black Monday only because the stocks he holds are still frozen because of an earlier suspension in trading due to steep losses. “I’m not very confident,” he says, noting that most of his customers are from the manufacturing industry and that many have closed shop in China and are now building factories in Southeast Asia. “China’s infrastructure-construction boom is over.”

In the meantime, China’s official press is focusing on preparations for the upcoming military parade. Many local papers reserved prime front-page space to articles on shock and awe, including live-fire naval drills scheduled to take place off the eastern coast of China over the next three months. Diversionary tactics are just as useful for propaganda artists as they are for military strategists.

— With reporting by Gu Yongqiang / Beijing

TIME Markets

Chinese Stock Market Plunge Causes Global Rout

The Shanghai Composite Index tumbled 8.8%

(TOKYO)—World stock markets plunged on Monday after China’s main index sank 8.5 percent—its biggest drop since the early days of the global financial crisis—amid deepening fears over the health of the world’s second-largest economy.

Oil prices, commodities and the currencies of many developing countries also tumbled on concerns that a sharp slowdown in China might hurt economic growth around the globe. Wall Street was expected to suffer heavy losses on the open.

The Shanghai index suffered its biggest percentage decline since February 2007, with many China-listed companies hitting their 10 percent downside limits, in what local media called “Black Monday.” The benchmark closed at 3,209.91 points, meaning it has lost all of its gains for 2015, though it is still more than 40 percent above its level a year ago.

China’s dimming outlook is drawing calls for more economic stimulus from Beijing, though earlier government efforts to staunch the hemorrhage appear to have done little to stabilize markets.

Asia’s gloom spread to European markets, where Britain’s FTSE 100 fell 2.7 percent, Germany’s DAX 2.6 percent and the CAC 40 of France 2.5 percent. Dow futures were down over 2 percent while the S&P futures were 1.8 percent lower.

Japan’s Nikkei fell 4.6 percent to 18,540.68, its worst one-day drop since in over two and a half years.

“It is a key moment for China. The equity market in free fall, the banking system increasingly starved of liquidity, rising capital outflows, and a rapidly slowing economy,” Angus Nicholson, a market analyst for IG, said in a market note.

“Global markets look set to continue their rout into the European and U.S. sessions,” he said, noting that the scale of the losses may have been exaggerated by the thin trading volumes typical of late August.

Some analysts say they see opportunities for bargains in the latest plunge in prices. But underlying the gloom is the growing conviction that policymakers and regulators may lack the means to staunch the losses.

The bloodletting spread across Asia, as Hong Kong’s Hang Seng index fell 5.2 percent to 21,251.57. Australia’s S&P ASX/200 slid 4.1 percent to 5,001.30, while South Korea’s Kospi lost 2.5 percent to 1,829.81.

Those declines followed tumbles over the weekend in emerging markets such as Egypt, Dubai and Saudi Arabia.

Fresh evidence of the slowdown in China’s economy sparked a wave of selling Friday in Europe and the U.S. that culminated with the S&P 500 losing nearly 6 percent for the week in its worst weekly slump since 2011.

The panic has underscored the scale of the challenge for Chinese leaders in seeking to curb excess investment and guide the economy toward a more sustainable pace of growth.

“My biggest concern is that global growth momentum is very fragile. The most important step is to seeChina take further action to try to bring their economy to a 7 percent growth path,” said Rajiv Biswas, Asia-Pacific chief economist for IHS.

In currency trading, the dollar was at 120.65 yen on Monday, down from 122.05 yen on Friday. The euro rose to $1.1462 from $1.1388. Currencies fell hard in developing economies — particularly those that rely heavily on the export of commodities and oil, both of which China is a big consumer. The Russian ruble dropped 2.3 percent to a seven-year low.

In commodity markets, benchmark U.S. crude dropped $1.67 to $38.78 a barrel in electronic trading on the New York Mercantile Exchange. It fell 87 cents a barrel on Friday. Brent crude, a benchmark for international oils used by many U.S. refineries, fell $2.07 to $43.39 a barrel.

The slide in the value of the dollar against the yen hurt shares in Japanese exporters that have benefited in the past two years from a weaker yen. Sony Corp.’s shares fell 8.0 percent Monday, while Toyota Motor Corp.’s shares dropped 6.8 percent.

TIME Marijuana

These Could Be the Next States to Legalize Marijuana

Pot Prices Double as Colorado Retailers Roll Out Green Carpet
Bloomberg—Bloomberg via Getty Images Marijuana inside the Evergreen Apothecary in Denver, Colo.

The prediction is based on two criteria

If you’ve been watching with jealousy as citizens of Alaska, Colorado, Oregon, Washington, and Washington, D.C., smoke legal marijuana, you might soon be in luck. The finance blog 24/7 Wall St. has a plausible theory as to which states are most likely to legalize the plant next.

The likely candidates are those states where medical marijuana is legal and possession of a small amount of marijuana does not carry a prison sentence. There are 11 states that currently meet that criteria: California, Connecticut, Delaware, Maine, Maryland, Massachusetts, Minnesota, Nevada, New York, Rhode Island, and Vermont.

In most of those, 24/7 Wall St. reports, polls have shown that more than half of the residents support a form of legalization. They also already use it: nine of these states over-index for marijuana users, with a rate that is higher than the national average, which is 12.3% of Americans aged 12 and older.

If those 11 states were to legalize, it would bring the total count to 15, plus our nation’s capital. For many Americans, that high total would sow the seeds of real momentum indeed.

TIME wall street

This JP Morgan Exec Makes More Than the Bank’s CEO Jamie Dimon

Day Two Of The Institute Of International Finance Spring Meeting
Bloomberg—Bloomberg via Getty Images Daniel Pinto

When it comes to base pay, at least

Maybe banking regulations are Un-American, after all, Jamie Dimon.

In this country it’s pretty standard to have a lower salary than your boss. But then again, nothing about compensation in the financial services industry looks all that normal to the rest of us.

Take, for instance, the example of Daniel Pinto, CEO of JPMorgan’s corporate and investment bank, based in London. Though he technically works for Jamie Dimon, his base salary of $7.4 million, well above Dimon’s base pay of $1.5 million, according to a report in Bloomberg News.

The difference is the result of differing regulations on executive pay between the U.S. and Europe. According to Bloomberg:

With chief executives at Standard & Poor’s 500 Index firms making 331 times more than their workers, an increase from 46-to-1 in 1983, according to the AFL-CIO, the U.S. and EU policies are looking to narrow the widening gulf in incomes.

That’s what the policies have in common. EU rule makers say they’re trying to avoid reckless behavior that could trigger a 2008-like meltdown, while the U.S., which approved the legislation in the 1990s, requires salaries greater than $1 million to be performance-based to qualify for corporate tax deductions.

Of course, the above examples show just how miserably lawmakers are failing when it comes to reining in Wall Street’s excesses. Jamie Dimon’s total pay in 2014 came to a cool $20 million, a sum that should soothe the banker’s anger over regulation — and pretty much anything else, for that matter.

TIME wall street

Wall Street’s Latest Perk For New Moms: Flying Nannies

482763153
skynesher—Getty Images

A Wall Street firm just upped the ante when it comes to parental leave policies

In a month that’s seen companies like Netflix, Adobe, and Microsoft expand their parental leave policies, private equity firm KKR is going a step further. The company is extending paid leave for new parents and allowing them to bring their babies and caregivers on business trips at the firm’s expense.

The new perk, reported by Bloomberg, is part of the private equity firm’s efforts to add women and minorities to its ranks. This year, twelve women are included in the firm’s 93 senior professionals, according to Bloomberg.

Employees who are a baby’s primary caregiver will be allowed to travel with their new child and a nanny up until the child’s first birthday, with KKR footing the bill for the additional transportation, lodging, and meal expenses. New parents, including those who adopt or use a surrogate, are also getting four more weeks of paid leave—16, up from 12— as part of KKR’s sweetened parental leave policy. The firm is also doubling the amount of time off available to parents who aren’t a baby’s primary caregiver, from five days to 10.

KKR’s move comes a week after Netflix made the unprecedented step of giving new parents unlimited paid leave in the year after welcoming a new child. Microsoft also extended its parental leave last week and Adobe did so on Monday.

Companies’ efforts to offer new parents more paid leave stands in stark contrast to the United States’ federal policy, which does not guarantee any paid leave following the birth of a child.

While KKR’s new policy is commendable—as are the other companies’— it’s further evidence that paid leave is a privilege for workers who already have it good. According to the Bureau of Labor Statistics, of the top 10% of wage earners, 22% receive paid family leave. In the highest quarter of wage earners, it’s 21%. Meanwhile, just 5% of workers in the lowest 25% of wage earners have access to paid time off for family matters.

Read next: How to Keep Your Baby From Ruining Your Credit

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TIME Hillary Clinton

Hillary Clinton Courts Both Liberals and Wall Street with Tax Plan

Democratic Presidential Candidate Hillary Clinton Campaigns in Iowa
Bloomberg—Bloomberg via Getty Images Hillary Clinton, former U.S. secretary of state and 2016 Democratic presidential candidate, pauses while speaking during a campaign event in Cedar Rapids, Iowa, U.S., on Friday, July 17, 2015.

A rollout of economic policies continues

Hillary Clinton on Friday proposed a significant hike on capital gains taxes for some investors, a plan favored both by progressive economists and some Wall Street investors.

The proposal is intended to combat short-term investing, which Clinton argued diverts capital away from important business expenditures.

“American companies need to break free from the tyranny of quarterly earning reports so they can do what they do best,” Clinton said speaking at New York University in Lower Manhattan on Friday. “Real value comes from long term growth, not short term profits.”

Clinton’s capital gains plan calls for a sliding scale of taxes on investments, with some short-term investments taxed at higher rates than they are now.

Currently, top earners pay a tax rate of 39.6% on investments held for less than a year, a rate that matches those earners’ income taxes. After holding those investments for a year, the rate for top earners drops to 24%.

But under Clinton’s plan, the tax rate for top earners on capital gains would remain at 39.6% in the second year, and then drop at a staggered rate over six years to their current levels. It would amount to nearly doubling capital gains tax rates in the second year.

“The current definition of a long-term holding period—just one year—is woefully inadequate,” Clinton said, calling on companies to abandon what she has called “quarterly capitalism” in favor of more farsighted investments in research and development, talent and physical capital.

A six-year sliding scale, Clinton said, would “provide real incentives for long-term investments.”

Clinton’s plan for a tax hike is aligned with some voices on Wall Street and financial institutions. Larry Fink, the CEO of BlackRock, the largest asset manager in the world, called earlier this year for a plan similar to Clinton’s. In a March letter to the executives of the 500 largest companies in the United States, Fink recommended holding the capital gains tax rate at income tax rates for three years—39.6% for the highest earners—and eventually dropping over a period of 10 years.

“We believe that U.S. tax policy, as it stands, incentivizes short-term behavior,” Fink said, using language similar to Clinton’s speech on Friday. “We believe that government leaders around the world—with a concerted push from both investors and companies—must act to address public policy that fosters long-term behavior.”

A number of other major business figures have openly lamented so-called economic short-termism, including Dominic Barton, managing director of McKinsey & Co., Paul Polman, CEO of Unilever and others.

Economists, particularly those on the left, have also criticized the relatively low rate of capital gains tax, arguing it acts an income subsidy for the wealthiest Americans.

The Joint Committee on Taxation, a nonpartisan Congressional committee, found that low rates on capital gains taxes will deliver in 2015 an effective subsidy of $120.3 billion to investors, most of them wealthy: a separate report by the Congressional Budget Office found that 68% of the benefit of low rates on capital gains and dividends go to the top 1% of earners.

Clinton’s plan, some economists say, would reduce inequality in the tax code and create incentives for shareholders to hold longer-term investments.

Clinton’s proposal “is a way to target an inefficient tax subsidy—a tax subsidy that subsidizes growing inequality—in a way that encourages more long-term planning by investors,” said Harry Stein, director of fiscal policy at the Center for American Progress. “I view this as a piece of a larger agenda to encourage more of a long term outlook.”

Clinton’s plan is meant in part to slow activist investors, who tend to buy large amounts of company stock and call for higher dividends, share buybacks and other strategies to boost share prices. Some executives complain that makes it more difficult for companies to invest in long-term employees or facilities, stunting long-term growth.

Republicans have been quick to criticize the plan, pointing out that Clinton said during the 2008 campaign that she would not raise capital gains taxes above 20%, “if I raised it at all.” They argue that capital gains taxes harm economic growth by preventing investment.

“Sadly, Hillary is not wise enough to have learned the simple lesson from those decades: reducing the capital gains tax is part of any pro-growth agenda,” said Grover Norquist, president of the conservative Americans for Tax Reform.

Leonard Burman, the director of the nonpartisan Urban-Brookings Tax Policy Center and the top tax economist during the last two years of President Bill Clinton’s administration, said he doubted the plan would significantly change investor behavior.

“I’m sympathetic with her objective, but I don’t think her proposal is going to solve it,” Burman said. He added that the plan might actually encourage some shareholders to pull investments out of a company earlier than they would otherwise: under the new plan, investors who could sell shares after six months gain no tax benefits by waiting until after a year, and little benefit for waiting more than two.

Read more: What to Know About Hillary Clinton’s Economic Proposals

Clinton has laid out a number of specific proposals so far in her campaign intended to spur growth, including providing tax credits to businesses that hire apprentices, tax incentives to encourage corporate profit-sharing, as well as broader proposals like raising the minimum wage and supporting unions. The tax plan is part of Clinton’s slow-drip of proposals designed to boost economic growth and incomes.

It’s unclear if the proposal was enough to satisfy progressives, who are calling for significant overhauls of the tax code. Charles Chamberlain, executive director of the grassroots progressive network Democracy for America, suggested that the speech did not go far enough in targeting income inequality.

“If Secretary Clinton wants to earn the enthusiastic support of grassroots progressives that means standing up, staking out genuinely bold positions on income inequality, and aggressively taking on the powerful, greed-driven institutions that have dominated the Democratic Party and held back the prosperity of the American people for far too long,” said Chamberlain.

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