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Apr 03, 2019 08:08 AM
CX DAILY

CX Daily: Investment Bank Chief Says World Standards Should Replace Rule on Sponsors Holding IPO Stakes

CICC is the largest underwriter and sponsor of Chinese IPOs. Photo: VCG
CICC is the largest underwriter and sponsor of Chinese IPOs. Photo: VCG

CICC: Rule on sponsors holding IPO stakes should be ‘temporary’

A rule that requires sponsors of IPOs on China’s new Nasdaq-style high-tech board to invest their own money in the IPOs should be only a "temporary” arrangement and can’t be a long-term mechanism, the country’s largest investment bank said.

The requirement is understandable because most of China’s investment banks and institutional investors have not established checks and balances, and the interests of investment banks in the primary market can’t be restrained in the secondary market, said Bi Mingjian, chief executive officer of China International Capital Corporation (CICC). The rule can be beneficial only if handled in the proper manner, Bi said.

Sponsors of an IPO on the new board are required to buy 2%-5% of the new shares they help to sell and hold the stocks for two years, according to the rules governing the new board released in early March. The aim is to ensure that sponsors conduct proper due diligence and select the best companies for the high-tech board to be launched on the Shanghai Stock Exchange.

FINANCE & ECONOMICS

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Peng Chun is former chairman of the Bank of Communications. Photo: IC

Leadership /

Former Communications Bank head appointed chair of China’s sovereign fund

Peng Chun, veteran banker and former chairman of the Bank of Communications Co. Ltd. — one of the country’s “Big Five” state-owned commercial lenders — has been appointed chair of China Investment Corp. (CIC), which manages the nearly $1 trillion sovereign wealth fund, we've learned. The post had been unoccupied for more than two years.

CIC Executive Vice President Ju Weimin has been promoted to president, replacing Tu Guangshao, sources told us on condition of anonymity.

Earnings /

Bad debt dealer Huarong’s profit collapses after corruption scandal

China Huarong Asset Management Co. Ltd.’s net profit in 2018 plummeted 94.3% to 1.5 billion yuan ($223.3 million), according to the company’s annual report released Thursday. The profit plunge came as Huarong’s revenue fell 16.3% to 107.3 billion yuan, and its total assets shrank 8.6% to 1.7 trillion yuan by the end of the year.

Despite being the largest of China’s four large asset managers, Huarong reported a dismal performance which it attributed to the corruption scandal of Lai Xiaomin, the company’s former chairman and Communist Party chief, who is awaiting trial.

Value-add /

New Economy Index rebounds slightly after capital influx

The contribution of high-value-added industries to China’s overall economic inputs rebounded in March from a three-year low the month before, due to an increase of capital inputs in new economy industries, according to a private index released Tuesday.

The Mastercard Caixin BBD New Economy Index (NEI) rose to 28.3, indicating that new economy industries accounted for 28.3% of overall economic input. The reading was just off February’s 27.4, the lowest of available data dating back to March 2016, when the index launched. The NEI measures labor, capital and technology inputs in 10 emerging industries relative to those used by all industries.

Quick hits /

Barry Eichengreen: Is China’s current account surplus really vanishing?

Editorial: Lessons the new high-tech board can learn from the past

China's newest economic zone Xiongan turns two


BUSINESS & TECH

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Photo: VCG

Apps /

Chinese owner of gay dating app confirms talks with U.S. regulators

Chinese company Kunlun Tech has confirmed it's talking with the U.S. agency that reviews cross-border M&A for national security concerns over its ownership of Grindr, a popular U.S.-based gay dating app.

That confirmation comes about a week after foreign media first reported that the Committee for Foreign Investment in the United States (CFIUS) was pressuring Kunlun to sell Grindr over national security concerns. In its filing to the Shenzhen stock exchange, Kunlun confirmed its discussions with CFIUS but didn't elaborate.

5G /

Foxconn unit gears up for 5G mass production

Foxconn Industrial Internet, a unit of the world's largest contract electronics manufacturer, said Monday that it received orders for 5G gear from at least two “world-class customers.” The equipment is for delivery this year.

Zheng Hongmeng, general manager of Foxconn Industrial, said the rollout of 5G technology will bring new demand for advanced servers and data processing facilities.

Stake sale /

Gree Electric faces ownership shakeup as controlling shareholder seeks sale

Gree Electric Appliances Inc. of Zhuhai, run by the outspoken Chinese businesswoman Dong Mingzhu, is facing an ownership shakeup as a state-owned shareholder is looking to sell its controlling stake in the home appliance giant.

Controlling shareholder state-owned Zhuhai Gree Group Co. Ltd., which holds 18.22% of the Shenzhen-listed company, is looking to divest part of its stake in a deal that could "lead to a change of Gree Electric’s ownership structure,” the appliance maker said in a stock exchange filing.

Telecom /

China’s state-owned carriers edge consumer broadband giant out of the market

Shanghai-listed Dr. Peng Group is considering pulling away from competition with the country's state-owned carriers in consumer broadband markets, an internal source has confirmed.

Dr. Peng, one of China’s largest consumer broadband providers, currently competes with China's three biggest carriers — China Mobile, China Unicom and China Telecom — which are all state-owned. Dr. Peng will switch to providing broadband services to these carriers as a partner.

Dirty energy /

China’s renewed embrace of coal power bucks global trend

The amount of coal power capacity under construction globally increased 12% in 2018 from the year before, a trend researchers said was due primarily to China, based on satellite photos that revealed the nation had “quietly resumed” construction of a number of sites previously reported to have been suspended by central government rules.

This is despite a 20% global drop in newly completed coal-fired plants last year and a 53% drop over three years, as well as a 39% decrease in construction starts on such projects, according to the report by environmental nongovernmental organizations Global Energy Monitor, the Sierra Club and Greenpeace.

Quick hits /

Pricey purchase plan for popular WeChat account draws regulatory scrutiny

Cloud services firm offers lesson in dual-class shares to new tech board

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