China Business Digest: China Southern Launches $2.25 Billion Bond Plan; Fitch Ratings Enters China
Today, China Southern Airlines announced plans to issue up to 16 billion yuan ($2.25 billion) worth of convertible bonds, and credit ratings agency Fitch Ratings received the green light to enter China’s market as new figures showed globalization of the yuan expanded for the third consecutive month. Carmaker BYD failed to receive certification for its face masks to be sold in California, but will reapply in an effort to avoid having to repay the second half of a nearly $500 million down payment from the state of California as part of a mask supply deal.
— Lu Yutong (email@example.com)
** ON THE CORONAVIRUS
China reports four new symptomatic cases, 11 asymptomatic
The Chinese mainland added four local symptomatic cases on Thursday, all in the troubled northeastern province of Jilin. Eleven asymptomatic and one suspected case were also reported in other regions by the National Health Commission.
Shulan, a city of 600,000 in Jilin province, remains under lockdown after a cluster of Covid-19 cases emerged there.
As of noon Friday in Beijing, there were more than 4.4 million coronavirus cases reported around the world, and the death toll had passed 300,000.
Wuhan has tested 3 million residents for coronavirus
China’s central city of Wuhan, where the Covid-19 first emerged late last year, has tested three million of its 11 million citizens, the state-run Xinhua News Agency reported Thursday.
The city has vowed to arrange nucleic acid tests for all residents starting Wednesday, with districts to complete their testing within 10 days of starting, in a bid to fully screen out asymptomatic cases after a new cluster of infections emerged in the city.
** TOP STORIES OF THE DAY
China releases economic indicators for first four months
Unemployment edged up a whisker to 6% and retail sales were down 7.5% year-on-year in April, while fixed-asset investment fell 10.3% for the first four months, according to the Chinese National Bureau of Statistics’ mid-May release on Friday. (Read Caixin’s full breakdown here.)
China Southern Airlines’ $2.25 billion convertible bond plan
Guangzhou-based China Southern Airlines plans to issue up to 16 billion yuan ($2.25 billion) worth of convertible bonds, it said in a filing (link in Chinese) to the Shanghai Stock Exchange on Friday. A total of 30% of the takings will be earmarked to replenish the company’s working capital, while the rest will be used for airplane maintenance and procurement of parts. Airlines have been among the industries hardest hit by Covid-19.
Carmaker BYD must reapply for U.S. mask certification
BYD Co. Ltd., a carmaker that began making face masks in response to overwhelming demand due to Covid-19, said it will reapply for U.S. regulatory approval for its new N95 masks after U.S. federal authorities rejected the electric car giant’s previous application.
It has returned $247 million to the government of California for failing to meet the U.S. respiratory mask standard on time, rendering it unable to supply the state with masks. The company needs to obtain certification from the U.S. National Institute for Occupational Safety and Health (NIOSH) by May 31, or it will also be forced to pay back the second half of a nearly $500 million down payment from the state made as part of a mask supply deal. BYD said it hopes to obtain certification by late May or early June.
Yuan globalization index rose on capital flow
The March Renminbi Globalization Index has risen for a third consecutive month to reach 2,224, according to its compiler Standard Chartered Bank. The bank attributed the increase to global market’s turbulence in March and abundant capital flowing into Hong Kong under the stock connection between the Hong Kong, Shenzhen and Shanghai Stock Exchanges.
The number of cross-border yuan transactions also rose in March, said the report, accounting for 16.1% of overseas deals made by Chinese companies in the first quarter of 2020.
Fitch Ratings enters China’ credit market
American ratings giant Fitch Ratings Inc. will be able to do business in China as one of its wholly owned subsidiaries has received approval (link in Chinese) to rate certain kinds of bonds on the country’s interbank market, according to China’s central bank.
Fitch (China) Bohua Credit Ratings Ltd. will be allowed to rate financial institutions participating in China’s interbank market, as well as their securities and structured finance bonds, according to a Thursday statement released by Fitch Ratings.
WTO chief quits a year early
World Trade Organization chief Roberto Azevêdo has quit the job a year early, during a turbulent time for the organization.
The 62-year old Brazilian diplomat announced at a press conference Thursday that he would step down in August, a full year before his term as director-general was to end. He has helmed the group since September 2013.
The WTO has predicted global trade may drop up to 32% this year, the deepest contraction since the Great Depression. Azevêdo said his decision to quit was personal.
** OTHER STORIES MAKING THE HEADLINES
Finance & Economy
• China’s financial regulators unveiled a sweeping plan to facilitate cross-border transactions and investments between Hong Kong, Macao and several other cities in southern China as part of the government’s ambition to transform the coastal “Greater Bay Area” region into a high-tech megalopolis to rival California’s Silicon Valley.
Business & Tech
• Chinese medical device provider Peijia Medical Ltd. made the best trading debut in Hong Kong so far this year, with its share price rising 74%, Bloomberg reported.
Its initial public offering netted the biotech firm $320 million and attracted strong investor demand in the face of the coronavirus pandemic.
• The Humen bridge in Guangzhou, capital of southern Guangdong province, reopened on Friday following a 10-day closure after swaying dramatically when it was hit by a whirlwind.
State media operated by the country’s Ministry of Transport said Tuesday that the swaying did not affect the structural integrity of the bridge.
• Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC), one of the world’s top contract chipmakers, plans to build a $12 billion plant in Arizona.
The facility will employ more than 1,600 and produce state-of-the-art five nanometer chips that can be used in advanced defense and communications devices, Reuters reported Friday.
• Tesla will reportedly launch a low-cost, long-life battery for its Shanghai-built Model 3 sedan in a move that could help the U.S. automaker further reduce the car’s price in the country.
The new battery, which is expected to be introduced later this year or early next year, will have a lifespan of 1 million miles and enable Tesla cars to compete on price with gasoline-powered vehicles, Reuters reported Thursday
** AND FINALLY
Canadian zoo returns pandas to China citing bamboo supply fears
The Calgary Zoo in Alberta has sent giant pandas Er Shun and her mate Da Mao back home to China after the Covid-19 pandemic disrupted transport links and threatened the supply of bamboo, the zoo said in a statement.
The pandas have been in Canada for five years as part of a 10-year agreement.
“We believe the best and safest place for Er Shun and Da Mao to be during these challenging and unprecedented times is where bamboo is abundant and easy to access,” said Calgary Zoo President & CEO Dr. Clément Lanthier on Tuesday.
Giant pandas eat around 40 kilograms of bamboo a day.
** UPCOMING RESULTS
May 18: Baidu, iQiyi and Bilibili
May 19: Weibo, Sina
May 20: Xiaomi, Lenovo
May 22: Alibaba
This story has been updated to clarify the timeline for Wuhan's coronavirus testing blitz.
Contact reporter Lu Yutong (firstname.lastname@example.org) and editor Flynn Murphy (email@example.com)
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