CX Daily: August Was Even Worse Than Expected

Economy /

China’s economic activity slowed further in August

China’s major economic indicators posted a worse-than-expected performance for August as growth of fixed-asset investment and value-added industrial output further slowed to multi-month, even multi-year, lows.

Fixed-asset investment, a key driver of domestic demand that includes infrastructure investment, increased 5.5% YOY in the first eight months of this year, offiicial data said, down from 5.7% growth during the first seven months of the year. It marks the lowest growth rate since investment grew 5.4% in the first nine months of 2018 and missed a Bloomberg economist poll with a median forecast of 5.7% growth.

Government-driven infrastructure investment rose 4.2% YOY in the first eight months of 2019, up from 3.8% growth in the first seven months, while investment in real estate development rose 10.5% from a year earlier in the first eight months of 2019, down from 10.6% growth in the first seven months and marking the lowest rate since the whole of 2018, official data showed.

FINANCE & ECONOMICS

Photo: VCG

Loans /

China to impose nationwide ratings system on online ‘microlenders’

China will establish a ratings-based supervision system for licensed online microlenders as part of draft national rules to oversee them, the country’s banking watchdog said. Microlending involves small, unsecured, short-term loans targeting people with limited access to traditional credit, such as students and rural migrants.

The China Banking and Insurance Regulatory Commission is drafting national online microlending regulations and planning a nationwide ratings-based management mechanism, according to a recent report published by the official newspaper of the Chinese People’s Political Consultative Conference, the country’s top political advisory body.

M&A /

LSE rejects Hong Kong Exchange’s surprise $36.6 billion bid

London Stock Exchange Group Plc rejected a takeover proposal from Hong Kong Exchanges & Clearing Ltd. in a letter raising concerns including:

Potential regulatory issues in the U.K., the United States and Italy.

The company’s existing partnership with the Shanghai Stock Exchange, “which is our preferred and direct channel to access the many opportunities with China.”

Joining the business with that of HKEx, with its heavy exposure to market transaction volumes, “would represent a significant backward step.”

The “inherently uncertain” value of the stock portion of the takeover, particularly given the political climate in Hong Kong.

HKEx intends to continue its pursuit of the deal, according to Financial News. The company previously said its takeover would happen only if the LSE dropped its combination with Refinitiv — and that it could go hostile if the business resisted its plans to build an Anglo-Asian markets giant.

Trade war /

Investors take heart from Trump comment on possible trade deal

Stock markets reacted positively after President Donald Trump said Thursday he’d consider an interim trade deal with China despite preferring a permanent one, as officials in the world’s two largest economies continue to seek a solution to the ongoing trade war.

Asian investors seemed to warm to the news on Friday. Hong Kong’s Hang Seng Index opened up 135.9 points, or 0.5%, in the morning and closed 0.98% higher, while Japan’s Nikkei 255 closed 1.17% higher. Chinese stock markets were closed Friday for the Mid-Autumn Festival public holiday.

Swine /

China mulls more U.S. pork imports as prices continue to rise

China wants to increase purchases of pork from overseas, including the U.S. and the EU, as the government grows increasingly concerned about soaring prices, according to people with knowledge of the plans.

The need for more pork coincides with a potential move by Beijing to ease trade tensions with Washington by resuming imports of U.S. farm goods ahead of talks in coming weeks. Some of the pork would be added to state reserves, according to the people, who asked not to be identified because they’re not authorized to speak publicly. There’s no official target, though total imports of 2 million tons for the year would be considered ideal, one of them said.

Quick hits /

Chinese blockchain firm GXChain raided by police

Opinion: No, China is not waiting out Trump on trade

Opinion: Democracy is the art of political compromise

Opinion: China’s commitment to global institutions

BUSINESS & TECH

Ne Zha became the biggest success in China's animation film industry. Photo: mtime.com

Film /

In depth: Is China’s animation industry ready to take off?

In six weeks on the big screen through Sept. 10, animated film “Ne Zha,” based on an ancient folk legend, generated 4.8 billion yuan ($6.8 billion) of box-office sales, second only to last year’s action blockbuster “Wolf Warrior II.” While this marks a milestone for home-grown animated films, Chinese audiences’ enthusiasm for domestic animated productions also extends to small screens.

This is fueling expectations that the long-awaited takeoff of the domestic animation industry is approaching. Investors and market players have been betting on a boom since 2015 as private equity investment funds poured into the animation sector, and in the years since have signed hundreds of deals, leading to the emergence of some big players in animation. But amid all the fanfare, some industry insiders are urging caution.

Check out our deep dive.

Dairy /

China Mengniu offers 59% premium for Australian baby-formula maker

China Mengniu Dairy Co. agreed to buy organic infant formula maker Bellamy’s Australia Ltd. for A$1.5 billion ($1 billion), securing a premium brand in one of the fastest-growing segments of the dairy market.

The Hong Kong-based company offered A$13.25 per share Monday for Bellamy’s, a sizable 59% premium to the stock’s last closing price. The Launceston, Tasmania-based company’s board unanimously recommended the offer. The deal, which is subject to approval from Australia’s Foreign Investment Review Board, would hand China’s second-largest dairy producer a trusted formula brand as it seeks to wrest back market share from global rivals.

Environment /

Steel giant in polluted Hebei to relocate older operations

The main steelmaker in the industrial city of Handan will move its older production operations from the city center to an area about 90 kilometers (56 miles) away, part of an ongoing national drive to improve air quality in one of China’s most polluted provinces.

Announcement of the plan on a government website comes two years after discussion began on relocating the older operations for Handan Iron and Steel Group, also known as Hansteel Group. Similar relocations happened decades ago in the West as urban space became more expensive and heavy industries moved to less developed areas.

Electric cars /

Tencent announces buyout plan for New York-listed car site

Chinese car comparison site Bitauto would be delisted from the New York Stock Exchange under a buyout plan proposed by Tencent Holdings Ltd. and its private equity partner Hammer Capital.

The two companies said they would pay $16 per share to buy out the company’s other shareholders, Bitauto Holdings Ltd. said in a statement late last week. That’s a 7% premium on Bitauto's Friday close. The delisting offer was backed by three of Bitauto’s shareholders, who together own more than 48.5% of the company, including e-commerce company JD.com Inc.

Quick hits /

Swiss robot maker sees promise in China, despite recent sluggish demand

Shanghai Disneyland bows to law student complaint in waiving food ban

JD.com fintech arm launches digital wallet app in Thailand

Iron ore glory days seen numbered as China demand eases

Provincial party chief calls on Xiongan to become tech powerhouse

What tepid reception? JD.com notches turbocharged iPhone 11 preorders

China’s internet safety week begins with alarming report on data privacy

China Evergrande plans to build electric cars, batteries in Qingdao

The violence behind ‘shantytown’ redevelopment

Uber-like truck-rental startup mulls IPO after breaking even

Shanghai paves the road for autonomous vehicles

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