China Business Digest: Luckin Receives 2nd Delisting Notice from Nasdaq; China, India Agreed to Cool Border Tensions
Scandal-ridden Luckin gets more bad news as U.S. bourse cites another reason to kick it out. Tencent surpasses Alibaba as the most valuable company traded in Hong Kong after a Tuesday stock surge. China and India military officials agree to cool tensions at the border, and China launches the final satellite for its Beidou navigation system.
— By Guo Yingzhe (firstname.lastname@example.org) and Han Wei (email@example.com)
** TOP STORIES OF THE DAY
Luckin stock plunges after 2nd delisting notice from Nasdaq
China’s scandal-ridden upstart Luckin Coffee Inc. received a second delisting notice from the Nasdaq stock exchange citing its failure to submit the annual financial report, the company said Tuesday. Luckin was warned in May of a potential delisting after the revelation of a $310 million financial reporting fraud. Luckin’s shares plunged as much as 19% Tuesday morning following the news.
China, India agree to cool border tensions after deadly clash
China and India agreed to deescalate tensions along their disputed Himalayan border after an 11-hour meeting of high-level military officials. The two sides agreed to “take necessary measures to cool down” the situation and resolve the issue through diplomatic and military channels, Zhao Lijian, spokesman for China’s Foreign Ministry, said Tuesday at a regular news briefing. Troops of the two countries had their first fatal conflict at the border in more than four decades last week, causing at least 20 deaths.
Tencent surpasses Alibaba as the most valuable company in Asia
Chinese internet giant Tencent Holdings Ltd. surpassed archrival Alibaba Group Holding Ltd to become Asia’s most valuable company after its Hong Kong-traded shares surged to a record HK$497.4 Tuesday. Tencent’s market cap reached HK$4.75 trillion ($613 billion), compared with Alibaba’s HK$4.72 trillion. Tencent’s stock has almost doubled in value since a low in 2018, when the company was hit by stricter online game rules in China.
China launches last Beidou navigation system satellite
China has launched the final, 55th satellite in its Beidou navigation system (BDS), according to an official statement. The BDS will provide positioning, navigation and timing services to global users after tests are completed, the statement said. The project, which began in 1994, is seen as the country’s competitor to the U.S.’ GPS.
ChiNext board embraces first IPO filings under registration-based mechanism
The Shenzhen Stock Exchange has accepted the first 33 filings using a new registration-based mechanism for its Nasdaq-style ChiNext board, according to a Monday statement from the bourse (link in Chinese). The move marks a major step in the securities regulator’s efforts to make China’s stock markets more market-oriented by cutting red tape.
The 33 applications (link in Chinese) include 32 IPO filings and one refinancing application. Currently, registration-based IPOs are only allowed on the Chinese mainland on Shanghai’s STAR Market, another Nasdaq-style high-tech board. (Read our in-depth story.)
Apple to remove thousands of unlicensed games from Chinese app store
Apple Inc. will reportedly start kicking unlicensed mobile games off its Chinese app store next month, a move that will end the practice of allowing developers to sell games on the platform while they were awaiting government approval, Bloomberg reported Monday, citing people familiar with the matter.
Two Chinese data-center operators get investments
Two Chinese data-center operators announced major investments on Monday.
GDS Holdings Ltd. announced that investment firm Hillhouse Capital Management Ltd. and Singapore-based data center provider ST Telemedia Global Data Centres have agreed to purchase $505 million of the company’s newly issued Class A ordinary shares through a private placement. The company’s Nasdaq-listed shares closed 3.79% higher that day.
Nasdaq-listed 21Vianet Group Inc. announced that funds managed by Blackstone Group Inc. have agreed to make a $150 million investment in the company.
Debt-ridden state-owned enterprise in Qinghai under bankruptcy reorganization
A local court in Northwest China’s Qinghai province has accepted a bankruptcy restructuring application made by the creditors of troubled state-owned metal producer Qinghai Provincial Investment Group Co. Ltd., as it has been deemed unable to repay overdue debt, according to a Monday filing. (Read the full story.)
** OTHER STORIES MAKING THE HEADLINES
Economy & Finance
• State-owned financial conglomerate Citic Group Corp. has made Xi Guohua its new president on Tuesday, filling the vacancy left by retired Wang Jiong, marking the latest development in a fresh round of senior executive shifts in the company, sources with knowledge of the matter told Caixin.
• China is interested in joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the 11-country Asia-Pacific trading bloc, but should test the waters with the two key stakeholders, Japan and the U.S., before engaging in formal talks, said Chen Deming. The former Chinese commerce minister made his remarks at a Caixin Summer Summit event Monday. (Read the full story.)
• A series of corruption cases involving high-level officials and executives of rural financial institutions in East China’s Anhui province has sent jitters through the region’s rural credit system. Wang Xia, a member of the Communist Party committee at the Anhui Rural Credit Union, was placed under investigation for “serious violations of party discipline and law,” the state graft buster’s local branch said Friday. (Read the full story.)
• Bank of China Ltd. is discussing ending a credit facility to Germany’s Wirecard AG, which was engulfed by a multi-billion-dollar accounting scandal. (Bloomberg)
Business & Tech
• A magnetic levitation train being developed by China’s top railway equipment builder CRRC Corp. has conducted a low-speed trial in Shanghai that could pave the way for a rail network capable of speeds up to 600 kph.
• The Chinese government said (link in Chinese) on Monday that it would create a new category under fossil-fuel-powered cars, which is expected to include hybrid vehicles, in a widely anticipated move to relax controls on automakers and to encourage production. (Nikkei Asian Review)
• Chinese telecom equipment maker ZTE Corp.’s parent Zhongxingxin Telecom Co. Ltd. has been cutting its stake (link in Chinese) to cash since early 2019 in the wake of trade sanctions imposed by Washington.
• U.S. President Donald Trump on Monday issued a proclamation suspending certain types of work visas, including H-1B visas for highly skilled workers, until the end of the year, a move that he said would help the American labor market weather the Covid-19 pandemic.
** ON THE CORONAVIRUS
Restrictions on leaving Beijing tightened
As the capital’s latest outbreak continues, restrictions have been tightened on people leaving Beijing. The authorities have banned people from leaving the city if their digital health codes are less than perfect or if they cannot prove they’ve tested negative for the coronavirus in the last seven days, according to a briefing (link in Chinese) from the transport ministry on Tuesday.
Also on Tuesday, the Beijing government said a food delivery driver with Alibaba Group Holding Ltd.-owned platform Ele.me tested positive Sunday. The driver had delivered about 50 takeout orders per day on average from June 1 to June 17.
Beijing reports 13 new coronavirus cases Monday
Beijing reported 13 new symptomatic Covid-19 cases on Monday, four more than the day before, official data (link in Chinese) showed. The country’s capital also added one asymptomatic case the same day. Feng Zijian, a deputy director of the Chinese Center for Disease Control and Prevention, said (link in Chinese) that the new outbreak is controllable.
Other virus news
• The Chinese mainland reported (link in Chinese) 22 new coronavirus cases with symptoms on Monday, 13 of which were local cases in Beijing. The mainland added seven new asymptomatic cases on the same day.
• As of Tuesday afternoon Beijing time, the number of coronavirus infections globally had surpassed 9.1 million, with the death toll above 472,000, according to data compiled by Johns Hopkins University.
** AND FINALLY
High school senior students across China are preparing for the country’s infamously competitive college entrance exams, or “gaokao.” Tests will kick off on July 7, one month later than usual.
Seniors at a high school in the eastern city of Xiamen, Fujian province, play with water pistols to relax while prepping for the stressful college entrance exams.
** LOOKING AHEAD
June 25-26: China’s financial markets closed for the Dragon Boat Festival
Contact reporter Guo Yingzhe (firstname.lastname@example.org) and editors Yang Ge (email@example.com) and Joshua Dummer (firstname.lastname@example.org)
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