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Iran set for presidential run-off between a reformist and a hardliner

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Iran’s presidential poll was heading for a second round on Saturday with no candidate expected to garner half the votes in an election marred by a low turnout.

The run-off will offer voters a stark choice between a reformist promising to improve relations with the west and ease social restrictions, and a hardliner intent on consolidating conservatives’ grip on power.

With more than 19mn votes counted, Masoud Pezeshkian, a reformist former health minister, was ahead of Saeed Jalili, a regime stalwart who was the most ideologically hardline of three conservative candidates running, according to the interior ministry.

But the low turnout will dominate political discourse ahead of Friday’s second round, with the absence of voters sending a stinging rebuke to the Islamic republic — both reformers and hardliners within the system. Provisional estimates by state-affiliated media put turnout at about 40 per cent of the 61mn eligible voters, which would be a record low.

Ayatollah Ali Khamenei, the supreme leader, said on Friday that a high turnout was an “absolute necessity” and that Iran’s “durability, stability, honour and dignity in the world” depended on people’s votes.

The election comes at a crucial time for the regime amid heightened tensions with the west triggered by the Israel-Hamas war and Tehran’s expansion of its nuclear programme. The republic is also preparing for the eventual succession to supreme leader when Khamenei, 85, dies.

The emergency vote was held after hardline president Ebrahim Raisi, a cleric and potential successor to Khamenei, died in a helicopter crash last month.

Reformist politicians had been energised by the authorities’ surprise decision to allow Pezeshkian’s candidacy after the presidential election in 2021 and this year’s parliamentary poll saw leading reformist and centrist contenders barred from competing.

But many voters who would typically back a reformist candidate have grown increasingly disillusioned with their leaders, angered by the country’s economic malaise, social restrictions and isolation from the west. They have given up on the notion that change can come from within the regime and are loath to be seen to be legitimising the theocratic system through the ballot box.

The mood darkened after the 2021 presidential vote that brought Raisi to power, with many believing the result was preordained as leading reformists were prevented from competing. Turnout at that election was 48 per cent, the lowest for a presidential poll since the 1979 Islamic revolution.

The following year, mass anti-regime protests erupted after Mahsa Amini, 22, died in police custody after being arrested for allegedly not wearing her hijab properly. This year, social media campaigns have urged people not to vote, saying it would be a betrayal of those killed during the crackdown on demonstrations.

As a result, not voting has become a form of silent protest against the regime in a nation with a youthful population.

“Iranian society has completely transformed since 2022 [since the Amini protests],” said Mohammad-Reza Javadi-Yeganeh, a sociologist, in a post on X. “Neither the theoretical frameworks nor previous methods of opinion polls are capable of understanding the new society.”

Reformist politicians will cling to the hope that in a run-off between Pezeshkian and Jalili, more Iranians will be mobilised to go to the polls.

Pezeshkian, 69, has promised to revive negotiations with the US to resolve Tehran’s nuclear stand-off with the west and secure sanctions relief, while also suggesting he would ease social restrictions, including a more relaxed stance towards compulsory hijabs for women.

But Jalili, 58, will be betting that his chances are bolstered now that he is the sole hardliner running and hoping that the conservative base will unite around him.

Typically, hardline candidates withdraw from the race to rally behind the leading candidate shortly before voters go to the poll. This time, however, neither Jalili, nor Mohammad Bagher Ghalibaf, the other leading hardliner who was trailing in third, were willing to step aside despite pressure from within their camp, splitting the conservative vote.

If Jalili is victorious, analysts warned that he would enforce social restrictions more rigorously and be more hostile to any engagement with the US or other western powers.

While Pezeshkian, and even Ghalibaf, suggested they would be open to negotiations with the west, Jalili told supporters that he would “use the existing economic potential to make the enemy regret imposing sanctions [on Iran]”.

Although important foreign policy and domestic decisions are determined by the supreme leader, the president can influence the tone of government both in the republic and in its foreign engagements.

But the challenge for Pezeshkian will be convincing wary Iranians that he can make a difference as president in a system where the supreme leader has ultimate authority and elected and unelected hardline centres of power, including the elite Revolutionary Guards, have significant sway over foreign and domestic policy.

“We don’t see any reason for voting,” said Saba, a 22-year-old student. “No one can change things, they [the president] are just a small part of a big circle and no one can change it.”



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Hong Kong’s IPO market is set to improve over the next five years

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Hong Kong Exchanges and Clearing celebrates the 24th anniversary of its listing on June 21, 2024.

China News Service | China News Service | Getty Images

BEIJING — The market for initial public offerings in Hong Kong is set to improve significantly over the next five years, starting in the second half of this year, George Chan, global IPO leader at EY, told CNBC in an interview Wednesday.

“I think it will take a couple years to go back to the peak [in 2021] but the trend is there,” Chan said. “I can see the light at the end of the tunnel.”

High U.S. interest rates, regulatory scrutiny, slower economic growth and U.S.-China tensions have constrained Greater China IPOs in the last three years.

EY said in a report that while the volume of IPOs and proceeds in the U.S. increased significantly in the first half of 2024 compared to the same period a year ago, mainland China and Hong Kong saw a sharp decline in listings.

Many of the macro trends are now starting to turn around, which can support more IPOs in Hong Kong, said Chan, who is based in Shanghai.

“We are seeing a reversing trend,” he told CNBC. “We are seeing more of these [U.S. dollar] funds, they are moving back to Hong Kong. The main reason is that Hong Kong has already factored in these uncertainties.”

The Hang Seng Index is up more than 5% year-to-date after four straight years of decline — which was the worst such losing streak in the history of the index, according to Wind Information.

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“Our HK cap markets team is very busy and has a strong pipeline for H2.  We expect to see many HKSE listings,” Marcia Ellis, global co-chair of private equity practice at Morrison Foerster in Hong Kong, said in an email Wednesday.

Many companies that were waiting for a listing in mainland China’s A share market have decided to switch to one in Hong Kong, she said. “Previously [China Securities Regulatory Commission] approval was slowing things down but recently our team has gotten CSRC approvals pretty quickly.” 

In June, China issued new measures to promote venture capital, and authorities spoke publicly about supporting IPOs, especially in Hong Kong. Investors and analysts said they are now looking at the speed of IPO approvals for signs of a significant change.

Chan said another supportive factor for Hong Kong IPOs is that many of the companies listed in the market are based in mainland China, where economic growth is “quite satisfactory.”

He expects consumer companies could be among the near-term IPO beneficiaries.

“As the economy slowly recovers, a lot of people in China are willing to spend,” he said, noting that was especially the case in less developed parts of the country.

Official national-level data have showed that retail sales are growing more slowly in China — up by just 3.7% in May from a year ago versus growth of nearly 10% or more in prior years.

Also significant for global asset allocation, the U.S. Federal Reserve and other major central banks are pulling back from aggressive interest rate hikes. High rates have made Treasury bonds a more attractive investment for many institutions instead of IPOs.

“I would say if the interest rate can be further cut down, 1% maybe, that would have a significant effect on the IPO market,” Chan said.

Hong Kong IPOs raised $1.5 billion during the first half of the year, a 34% drop from a year ago, EY said in a report released late last month. Back in 2021 and 2020, the Hong Kong Stock Exchange saw nearly 100 or more IPOs a year raising tens of billions of dollars, according to the report.

In comparison, mainland China IPOs raised $4.6 billion in the first six months of 2024 — a drop of 85% from the year-ago period, according to EY.

HKEX CEO aims for more large-scale IPOs this year

Bonnie Chan, CEO of Hong Kong Exchanges and Clearing Limited, said during a conference last week that so far this year, the Hong Kong exchange has received 73 new listing applications — a 50% increase compared to the second half of last year. She is not related to EY’s George Chan.

“The pipeline is building up nicely,” she said, noting about 110 IPOs in total are in line for a Hong Kong listing. “All we need is a set of good market conditions so these things get to launch and price nicely,” she added.

Improving post-IPO performance

“What we need is a strong pipeline,” EY’s Chan said. “We need an interested investor with the money to invest, and we need a good aftermarket performance.”

Hong Kong IPO returns are improving. The average first-day return of new listings on the Hong Kong stock exchange in the first half of 2024 was 24%, far more than the average of 1% in the same period last year, according to EY.

“The aftermarket performance of Hong Kong IPOs has been doing quite good compared to the past five years,” Chan said. “These things added together are projecting an upward trend for the Hong Kong market [in the] next 5 years.”

Chan said he expects the number of deals to pick up in the second half of 2024.

Goldman Sachs says it remains positive on Hong Kong capital markets activity

He said those will likely be medium-sized — between 2 billion Hong Kong dollars to 5 billion Hong Kong dollars ($260 million to $640 million) — but added he expects better market momentum in 2025.

Slowing economic growth and geopolitical uncertainty have also weighed on early-stage investment into Chinese startups.

Total venture funding from foreign investors into Greater China deals plunged to $19 billion in 2023, down from $67 billion in 2021, according to Preqin, an alternative assets research firm.

U.S. investors have not participated in the largest deals in recent years, while investors from Greater China have remained involved, the firm said in a report last month.

U.S. IPO outlook

As for IPOs of China-based companies in the U.S., EY’s Chan said he expects current scrutiny on the listings to be “temporary,” although data security rules would remain a hurdle.

In early 2023, the China Securities Regulatory Commission formalized new rules that require domestic companies to comply with national security measures and the personal data protection law before going public overseas. A China-based company with more than 1 million users must pass Beijing’s cybersecurity review to list overseas.

“As time goes on, when people are more familiar with the Chinese [securities regulator] approval process and they are more become comfortable with geopolitical tensions, more of the large companies … would consider [the] U.S. market as their final destination,” Chan said.

“When the time comes I think the institutional investors would be interested in these sizeable Chinese companies, as they pretty much want to make money.”

He declined to comment on specific IPOs, and said certain high-profile listing plans are “isolated incidents.”

Chinese ride-hailing company Didi, which delisted from New York in 2021, has denied reports it plans to list in Hong Kong next year. Fast-fashion company Shein, which does most of its manufacturing in China, is trying to list in London following criticism in the U.S., according to a CNBC report.



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Microsoft hack affected Veterans Affairs and State Departments, government says

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The US Department of Veterans Affairs and an arm of the US State Department are among a growing list of Microsoft Corp. customers that have acknowledged they were impacted by a breach of the technology giant that was blamed on Russian state-sponsored hackers.

The US Agency for Global Media, part of the State Department that provides news and information in countries where the press is restricted, was notified “a couple months ago” by Microsoft that some of its data may have been stolen, a spokesperson said in an emailed statement. No security or personally identifiable sensitive data was compromised, the spokesperson said.

The agency is working closely with the Department of Homeland Security on the incident, the spokesperson said, declining to answer additional questions. A State Department spokesperson said, “We are aware that Microsoft is reaching out to agencies, both affected and unaffected, in the spirit of transparency.”

Microsoft disclosed in January that a Russian hacking group it calls Midnight Blizzard had accessed corporate email accounts and later warned that they were attempting to use secrets shared between the technology giant and its customers. The company has declined to identify the customers who were impacted.

“As our investigation continues, we have been reaching out to customers to notify them if they had corresponded with a Microsoft corporate email account that was accessed,” a Microsoft spokesperson said on Wednesday. “We will continue to coordinate, support and assist our customers in taking mitigating measures.”

In addition, the Department of Veterans Affairs was notified in March that it was impacted the Microsoft breach, officials for the agency said.

A one-second intrusion

The hackers used a single set of stolen credentials — found in the emails they accessed — to break into a test environment in the VA’s Microsoft Cloud account around January, the officials said, adding that the intrusion lasted for one second. Midnight Blizzard likely intended to check if the credentials were valid, presumably with the larger intention of breaching the VA’s network, the officials said. 

The agency changed the exposed credentials, along with log-in details across their Microsoft environments, once they were notified of the intrusion, they said. After reviewing the emails that the hackers accessed, the VA determined that no additional credentials or sensitive email was taken, the officials said.

Terrence Hayes, the VA’s press secretary, said an investigation is continuing to determine any additional impact.

The Peace Corps was also contacted by Microsoft and notified about the Midnight Blizzard breach, according to a statement from its press office. “Based on this notification, Peace Corps technical staff were able to mitigate the vulnerability,” according to the agency. The Peace Corps declined further comment.

Bloomberg News asked other federal agencies for comment, and none of the others disclosed that they were impacted by Midnight Blizzard’s attack on Microsoft. Bloomberg previously reported that more than a dozen Texas state agencies and public universities were exposed by the Russian hack.

Midnight Blizzard, also known in cybersecurity circles as “Cozy Bear” and “APT29,” is part of Russia’s foreign intelligence service, according to US and UK authorities. 

In April, US federal agencies were ordered to analyze emails, reset compromise passwords and work to secure Microsoft cloud accounts amid fears that Midnight Blizzard may have accessed correspondence. Microsoft has been notifying some customers in the months since then that their emails with the tech giant were accessed by the Russian hackers.

The Midnight Blizzard breach was one in a series of high-profile and damaging security failures at the Redmond, Washington-based technology company, which has drawn strong condemnation by the US government. Microsoft President Brad Smith appeared before Congress last month where he acknowledged security failures and vowed to improve the company’s operations. 



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Lebanese farmers dig for answers on Israel’s white phosphorus use By Reuters

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By Maya Gebeily

Qlayaa, LEBANON (Reuters) – The last time Lebanese farmer Zakaria Farah stepped onto his fields outside the southern town of Qlayaa was in January – but it was not to plant. With shelling in the distance, he swiftly dug his hands into the soil to gather samples that could determine his family’s farming future.

After bagging up the earth, Farah, 30, sent half-a-dozen samples to a laboratory at the American University of Beirut (AUB) to be tested for residues of white phosphorus from Israeli shelling, hoping he’d learn whether he can plant his fields once hostilities end.

“I want to know what I’m feeding my son, what I’m feeding my wife, what I’m eating,” he told Reuters in June. “We’re afraid for the future of our land. What can we eat? What can we drink?”

Farah told Reuters he fears his fields have been poisoned by the Israeli military’s use of white phosphorus since October, when exchanges of fire erupted between Israel and Lebanese armed group Hezbollah in parallel with the Gaza war. He said there are dozens of farmers in south Lebanon as worried as he is.

According to the Lebanese National Council for Scientific Research, there have been 175 Israeli attacks on south Lebanon using white phosphorus since then, many of them sparking fires that have affected over 600 hectares (1,480 acres) of farmland. 

White phosphorus munitions are not banned as a chemical weapon and can be used in war to make smoke screens, mark targets or burn buildings – but since they can cause serious burns and start fires, international conventions prohibit their use against military targets located among civilians. 

Lebanon is a party to those international protocols, while Israel is not.  

In June, Human Rights Watch said it had verified the use of white phosphorus in at least 17 municipalities in southern Lebanon since October, including five “where airburst munitions were unlawfully used over populated residential areas.”

In response to questions from Reuters, the Israeli military said the “primary smoke shells” it used do not contain white phosphorus. It said smoke shells that do include white phosphorus can be used to create smokescreens, and that it “uses only lawful means of warfare.” 

According to a December report on Lebanon by the U.N. Development Programme, white phosphorus is extremely poisonous and poses “ongoing and unpredictable hazards due to its prolonged and difficult-to-control burning, creating serious risks to human health, safety, and the environment.” 

The agency said that soil quality in the conflict area of southern Lebanon had been affected by the spread of heavy metals and toxic compounds, with “white phosphorus usage further reducing fertility and increasing soil acidity.”

SOIL SCIENCE

Farah and other farmers estimate they have already lost up to $7,000 each in potential income, as continuing bombardment has made it too risky for them to plant or harvest the usual seasons of wheat, tobacco, lentils and other greens. 

Oday Abou Sari, a farmer from the southern town of Dhayra, said white phosphorus had also burned hay he had gathered for livestock and even plastic irrigation pipes across his fields. 

“I have to start all over – but first, I need to know if it’s safe for planting,” said Abou Sari. 

To find out if the white phosphorus has left a lasting impact on their soil, farmers are digging in – literally – and sending samples to Dr. Rami Zurayk, a soil chemist at AUB.

Zurayk developed a research protocol to collect and examine the samples. First, soil is gathered at various distances from the impact site, including a control sample from 500 meters away – which would not have been directly affected by the strike. 

Once in his lab, the soil is sifted, mixed with acid and exposed to high heat and pressure. A solution is added to show the concentration of phosphorus, with the intensity of colour in the result matching the concentration of the phosphorus. The sample is then compared to the control, which sets the benchmark of naturally-occurring phosphorus in the soil. 

“What we’re looking for is what happens to the soils and to the plants in locations that have received white phosphorus bombing. Does the phosphorus remain? In what concentrations? Does it disappear?” Zurayk told Reuters. 

His assistant, doctoral student Leen Dirani, told Reuters she had thus far tested samples from four towns this way – but they need more samples to “obtain a conclusive outcome.”  

But the steady pace of Israeli shelling on southern Lebanon – particularly agricultural fields that Hezbollah fighters are accused of using as cover – has made farmers unwilling to venture out to gather more samples. Some, like Abou Sari, have left Lebanon altogether. He is waiting out the war abroad and so for now is unable to obtain soil samples.

Others are documenting through video footage. Green Southerners, a collective of ecologists and nature lovers in Lebanon’s south, have filmed several incidents of shelling showing the tell-tale signs of white phosphorous attacks: dozens of streams of white bursting out of a munition over farmlands.

The group’s chairman Hisham Younes told Reuters the attacks’ “frightening density” amounts to ecocide – mass destruction of a natural environment by humans, deliberately or by negligence.

Given the possible impacts on soil, water reserves and even ancient trees, “we are talking about a profound injury to the natural system. The repercussions are multiplied,” Younes said.

Lebanon’s ministries of environment and agriculture are working with UNDP to determine the extent of those repercussions, and hope to use any documentation or lab results to stand up complaints to the United Nations.

© Reuters. Lebanese farmer Zakaria Farah, sits on his land during an interview with Reuters in Qlayaa, southern Lebanon June 12, 2024. REUTERS/Aziz Taher

“This is an act of ecocide, and we’ll take it to the U.N. Security Council,” Lebanese environment minister Nasser Yassin told Reuters. 

In response to questions from Reuters, the Israeli military said the accusation of ecocide was “completely baseless.” 





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