China Business Digest: Chinese Mainland Enters Bull Market; Luckin Coffee Chairman Ousted
Chinese mainland stocks entered a technical bull market after rising more than 25% from the lowest point in March. Meanwhile, the country’s top chipmaker SMIC will raise up to $7.5 billion in the mainland’s biggest IPO in a decade. Luckin Coffee Chairman Lu Zhengyao lost in a board fight.
— By Lu Yutong (firstname.lastname@example.org)
** TOP STORIES OF THE DAY
Mainland chipmaker SMIC to raise up to 53.2 billion yuan in Shanghai listing
The Chinese mainland’s top chipmaker Semiconductor Manufacturing International Corp. (SMIC) will raise up to 53.2 billion yuan ($7.5 billion) in its upcoming Shanghai listing by offering 1.93 billion shares priced at 27.46 yuan each, according to a company statement released on Sunday. The fundraising figure is more than double the estimated 20 billion yuan in its prospectus, and gives SMIC a price-to-earnings ratio of 83.44 — around four times higher than industry counterparts like Taiwan Semiconductor Manufacturing Co. Ltd.
China’s A-share market enters bull market territory
The Shanghai Composite Index, a benchmark of the Chinese mainland stock markets, closed up 5.71% on Monday to 3,332.88 after rising for four trading days in a row, reaching its highest point since February 2018. The spike took the index into technical bull territory as it rose 25.39% compared with its recent low in March.
Analysts attributed the bullish performance to abundant liquidity from loose monetary policy as policymakers pledged to channel more funds to businesses in response to the Covid-19 pandemic.
Luckin Coffee shareholders vote to remove chairman, report says
Luckin Coffee Inc. Chairman Lu Zhengyao, also known as Charles Lu, was ousted at a special shareholder meeting Sunday, Bloomberg reported Monday citing local media. Three other directors supporting an independent probe into the coffee chain’s financial reporting fraud were also removed.
Sina considers CEO’s buyout bid valuing company at $2.7 billion
Sina Corp.’s CEO and controlling shareholder, Charles Chao, proposed to take the company private in a deal valuing the Chinese online media company at $2.7 billion, Sina said Monday. New Wave MMXV Ltd., a company controlled by Chao, proposed to buy the shares it doesn’t already own for $41 each, or 11.8% above Thursday’s closing price of $36.67.
BlackRock favors Asia markets closely tied to China’s recovery
BlackRock Inc., the world’s biggest asset manager overseeing $6.47 trillion in global assets, expects stocks and bonds in China and trading partners such as South Korea, Japan and Taiwan to do better than global emerging markets over the next six to 12 months.
Anxin’s $7 billion financial scandal prompts policy targeting trust industry
A 50 billion yuan financial black hole has been found in the books of Anxin Trust Co. Ltd., once lauded as China’s most profitable trust company. Anxin’s collapse has prompted regulators to tighten their grip on China’s 20 trillion yuan trust industry where billions of dollars of investments have been misappropriated to benefit the biggest shareholders and their affiliates.
Inner Mongolia city on alert after reporting case of bubonic plague
A city in North China’s Inner Mongolia autonomous region issued a health warning Sunday after a livestock herder contracted bubonic plague.
The health commission of Bayan Nur announced a level three emergency, the second-lowest in a four-tier system. It ordered residents in the city of half a million people to stop hunting, skinning or transporting rodents and other animals known to carry plague, to report fevers of unknown causes, and to report sightings of dead marmots.
Plague infections are rare in China but occasionally occur in northern and western regions. The country recorded five plague cases last year, one of which was fatal, according to the National Health Commission.
** OTHER STORIES MAKING THE HEADLINES
Finance & Economy
• HSBC Holdings has hired 100 wealth advisers and is setting up a fintech venture in China as part of a plan to increase operations on the Chinese mainland despite plans to slash as much as 35,000 staff globally.
• China suspended imports from two more Brazil meat plants amid coronavirus concerns, taking the total number of Brazilian meat factories blocked from exporting to China to six, Reuters reported. The two plants are owned by meatpackers JBS SA and BRF SA.
• A former director of provincial television station Zhejiang TV has been sentenced to five years in jail and fined 500,000 yuan by a local court for accepting bribes of 4.88 million yuan when making a TV show in 2016, according to a court statement (link in Chinese) released Thursday.
Business & Tech
• Appliance-maker Gree Electric admitted Saturday that it mistakenly submitted the wrong information in its bid to supply equipment to China’s largest mobile carrier, an error that ended up costing it its share of the 408 million yuan ($52.6 million) contract.
• China State Railway Group Co. Ltd. announced (link in Chinese) Sunday that it invested 325.8 billion yuan in railway fixed assets in the first half of 2020, up 1.2% over the same period last year.
• Tech giant Tencent has opened a new studio in California, led by former Rockstar Games veteran Steve Martin, to develop and publish AAA titles as it seeks to move beyond its home China market.
• Chinese flexible-display maker Royole Corp. is mulling an IPO in China while putting a planned U.S. listing on hold, Bloomberg reported. The company reportedly had previously filed for a U.S.IPO that could raise about $1 billion.
** ON THE CORONAVIRUS
• The Chinese mainland added four coronavirus cases on Sunday (link in Chinese), including three imported ones and one domestic case in Beijing, according to the National Health Commission.
Beijing has reported single-digit numbers of new cases for eight consecutive days, according to the local health commission.
• The number of the global infections is approaching 11.5 million as of Monday afternoon Beijing time, according to Johns Hopkins University. The number of fatalities had surpassed 534,000, with the U.S. number approaching 130,000.
Caixin’s coverage of the new coronavirus
** LOOKING AHEAD
July 9: Release of China’s CPI and PPI data
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