China Business Digest: Global Infections Top 9 Million; Securities Regulator Pushes for A-Share Derivatives in Hong Kong

More than 9 million people have been sickened by Covid-19 as Brazil and India lead the surge of new cases. China calls for more caution in reopening entertainment venues following a resurgence in Beijing. A senior official of China’s top securities regulator says the time is ripe for Hong Kong to roll out derivatives linked to the mainland stock market. Meanwhile, Kweichow Moutai is now the biggest stock on the Chinese mainland market.

— By Guo Yingzhe (yingzheguo@caixin.com) and Han Wei (weihan@caixin.com)

** TOP STORIES OF THE DAY

Global Covid-19 cases exceed 9 million

The total caseload of the novel coronavirus infection topped 9 million worldwide, more than doubling in just five weeks, data compiled by Johns Hopkins University showed. Developing countries including Brazil and India led the recent surge of new cases. Countries reporting the most cases are the U.S., Brazil and Russia. The global death toll surpassed 460,000.

China slows entertainment reopening amid new outbreak in Beijing

China’s Ministry of Culture and Tourism put the brakes on the reopening of the entertainment industry after the recent resurgence of Covid-19 cases in Beijing. The ministry issued a guideline Monday requiring entertainment venues such as theaters, karaoke bars and internet cafes to remain closed if the areas where they are located are designated with middle or high-level risks.

Liquor maker Moutai becomes the biggest China-listed stock

Chinese liquor giant Kweichow Moutai Co. became the most valuable stock listed on the mainland market after its market value surpassed that of Industrial & Commercial Bank of China Ltd. Monday. The maker of potent alcohol is now worth 1.81 trillion yuan ($256 billion), compared with ICBC’s 1.78 trillion yuan.

Securities regulator signals A-share derivatives in Hong Kong

The time is ripe for Hong Kong to roll out derivatives linked to the Chinese mainland’s stock markets, Fang Xinghai, a vice chairman of China’s top securities regulator, said Monday at the 2020 Caixin Summer Summit (link in Chinese).

It makes sense for Hong Kong to have derivatives based on A-shares because overseas institutional investors need the instruments to manage risk from their investment in the mainland markets, Fang said.

Luckin proposes board overhaul

Shareholders of scandal-plagued Starbucks challenger Luckin Coffee Inc. will vote on a major overhaul of the company’s board on July 5, including removal of its embattled founder Lu Zhengyao, Caixin has exclusively learned (link in Chinese). The company is taking the drastic step as it seeks to avoid getting the boot from the Nasdaq in the wake of a major accounting scandal. (Read a related in-depth story.)

Another fund embezzlement case disclosed

Chinese financial giant Chong Sing Holdings FinTech Group Ltd. has said that a company that runs a peer-to-peer lending platform had embezzled 1.5 billion yuan ($212 million) from its subsidiary UCF Pay Ltd., according to a stock exchange filing.

Chong Sing and the company, Beijing Jingxun Time Technology Co. Ltd., are both considered under the umbrella of UCF Holdings Group Ltd., whose previous actual controller, Zhang Zhenxin, died last year in London. (Read a related in-depth story.)

Cross-border cooperation is key to fighting securities fraud, regulator says

The chairman of China’s top securities regulator, Yi Huiman, has proposed Chinese and U.S. companies jointly investigate cases of financial fraud by U.S.-listed Chinese companies. “China has never prohibited or prevented accounting firms from providing audit working papers to overseas regulators,” he said in an exclusive interview with Caixin. (Read the full cover story.)

** OTHER STORIES MAKING THE HEADLINES

Economy & Finance

• Insurance giant AIA Co. Ltd. has received approval from China’s top insurance regulator to set up the first wholly offshore-owned life insurance company on the mainland, according to a government statement (link in Chinese) released Friday.

• Overseas investors’ net purchases of onshore Chinese bonds jumped by 106% month-on-month to $19.4 billion in May, data (link in Chinese) from the State Administration of Foreign Exchange showed Friday. Overseas net purchases of onshore Chinese bonds and listed stocks rose by a milder 25% to $23.6 billion last month compared with April, as yuan assets were relatively attractive, an official statement said.

• China’s one-year national loan prime rate (LPR) remained at 3.85% in June, the same as May’s, and the five-year-plus LPR was also unchanged at 4.65%, according to official data released on Monday. The official benchmark lending rates have remained unchanged for two months.

Business & Tech

• State-owned steel giant China Baowu Steel Group Corp. Ltd. (link in Chinese) is helping to assemble $6 billion of funds to revive a long-stalled iron ore project in the West African country of Guinea, taking over the project from China’s top aluminum maker.

• Hong-Kong listed China Maple Leaf Educational Systems Ltd. has agreed to acquire one of the largest international schools in Singapore in a deal valued at $487 million. (Bloomberg)

• China’s TCL Technology Group Corp. will invest $281 million in JOLED Inc., a Japanese display-maker specializing in organic light-emitting diodes diode displays, forming a partnership to jointly develop large television panels.

• Ding Lei, founder and CEO of Chinese gaming firm NetEase Inc., has bought one of Elon Musk’s properties in Los Angeles for $29 million.

** ON THE CORONAVIRUS

Mysterious Tianjin Covid-19 case believed to be linked to neighboring Beijing

Five days after North China’s Tianjin municipality reported its first Covid-19 case in more than three months, the local government said Monday that the patient is believed to have been infected by one of his colleagues who had traveled to neighboring Beijing multiple times within the month and tested positive on antibody tests.

New research discovers reduction in post-coronavirus infection antibodies

A new study published in Nature Medicine found that Covid-19 antibody levels fell in a majority of 74 subjects two or three months after they were infected, casting doubt on hopes that people gain immunity from the virus once they have been infected.

Beijing reports nine new infections Sunday

Beijing reported nine new symptomatic Covid-19 cases on Sunday, 13 fewer than the day before, official data (link in Chinese) showed. The daily new infections in the country’s capital fell into single digits for the first time in nine days as the capital races to control a new outbreak.

On the same day, a food factory belonging to PepsiCo Foods China Co. Ltd. in Beijing reported a cluster of eight coronavirus infections (link in Chinese) were found last week. The factory has been temporarily closed since June 15.

Other virus news

• The Chinese mainland reported (link in Chinese) 18 new coronavirus cases with symptoms on Sunday, 11 of which were locally transmitted, including the nine in Beijing. The mainland added seven new asymptomatic cases on the same day.

• As of Monday afternoon Beijing time, the number of global infections had surpassed 8.96 million, with the death toll exceeding 468,000, according to data compiled by Johns Hopkins University.

** AND FINALLY

People in China and many other parts of the eastern hemisphere were able to view a partial or annular solar eclipse on Sunday, which was also the summer solstice.

Annular eclipse in Hengyang, Central China’s Hunan province, June 21.

** LOOKING AHEAD

June 25-26: China’s financial markets closed for the Dragon Boat Festival

Contact reporter Guo Yingzhe (yingzheguo@caixin.com) and editors Yang Ge (geyang@caixin.com) and Michael Bellart (michaelbellart@caixin.com)

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