Caixin
Jul 16, 2020 08:29 PM
CHINA BUSINESS DIGEST

China Business Digest: Central Banker Calls on IMF to Pour Assets Into Pandemic Relief; Hong Kong Reports Record Daily Infections in Resurgence

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The International Monetary Fund should tap its special drawing rights to help countries combat virus damage to economies, according to the PBOC’s Yi Gang. China’s economy is showing more signs of recovery from the Covid-19 pandemic as GDP returned to growth, but a market sell-off hit the stock market after a record surge. Most movie theaters in China could start to reopen as soon as next week, while Hong Kong is reporting new flare-ups. Meanwhile, a new coronavirus case was confirmed in the Xinjiang Uygur autonomous region.

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

** TOP STORIES OF THE DAY

Central bank governor calls on IMF to use SDRs in pandemic response

China's central bank Governor Yi Gang said the International Monetary Fund should tap its special drawing rights (SDR) to help countries combat the economic fallout of the Covid-19 pandemic. A general allocation of SDRs, the organization’s supplementary foreign exchange reserves, would bolster member countries’ foreign reserves and purchasing power. It would be a quick, practical, fair and cost-effective response to this once-in-a-century crisis, Yi said in an article published Thursday in the Financial Times.

Hong Kong reports 63 local cases in new virus flare-up

Hong Kong reported a record 63 local coronavirus infection cases Thursday, sparking fears of a strong wave of resurgence. Of the confirmed locally transmitted cases, 35 were of unknown origins, the city’s health department said. In less than two weeks, Hong Kong has reported more than 300 infections in the renewed round of outbreak.

Market selloff wipes out $25 billion of Moutai’s value

Kweichow Moutai Co. fell the most in nearly two years Thursday amid the worst sell-off in months on China’s mainland market. Moutai tumbled 7.9% in its worst decline since October 2018, wiping out a record $25 billion of value. The stock was hit particularly after the influential People’s Daily blasted the alcohol for its link with corruption cases.

China’s second-quarter GDP returns to growth with 3.2% gain

China’s economy grew 3.2% year-on-year in the second quarter, returning to growth after a record 6.8% contraction in the first quarter. The growth rate was higher than the median estimate of 2.9% growth in a Caixin survey of economists. (Read the full story.)

China’s surveyed urban unemployment rate edged down to 5.7% in June from 5.9% the previous month. Chinese Premier Li Keqiang on Wednesday stressed the importance of helping college graduates and migrant workers find jobs.

Show to go on in China’s cinemas

China’s movie theaters could start to reopen on July 20 in regions with a low coronavirus risk under strict new guidelines from the film regulator, as cinemas become one of the last major sectors to resume business following massive closures to contain the Covid-19 epidemic. (Read the full story.)

China’s leading chipmaker SMIC triples in Shanghai debut

Shares of China’s leading contract chipmaker Semiconductor Manufacturing International Corp. (SMIC) tripled from their IPO price in their Shanghai trading debut Thursday, as investors raced to buy into the mainland’s largest new listing in a decade. Investors are betting the company will become one of the biggest beneficiaries of Beijing’s recent drive to make China more self-sufficient in high-tech chips. (Read the full story.)

Worst China stocks since February caps brutal reversal

The rally in Chinese shares is unraveling almost as quickly as it began as the benchmark Shanghai Composite Index closed down 4.5% on Thursday, its biggest loss since Feb. 3 when the market reopened following the Lunar New Year holiday. Overseas investors’ selling of Chinese mainland stocks through Hong Kong has surpassed buying for the third day in a row. (Bloomberg & Caixin)

China’s home prices rise the most in 10 months

China’s home prices rose at the fastest pace in 10 months in June, prompting some local authorities to roll out fresh housing curbs. New home prices in 70 major cities, excluding state-subsidized housing, increased 0.58% last month. (Bloomberg)

Supreme People’s Court unveils rules to handle disputes in corporate bonds

China’s top court has released a document on how to handle bond disputes in a bid to tackle the mounting defaults in the country in recent years, teasing out various legal paths creditors can take. (Read the full story.)

China scraps equity investment restrictions for insurance funds

The Chinese government has lifted limits on industries in which the country’s insurers can make equity investments as financial investors, and laid plans to allow insurance funds to tap private equity and venture capital investments in pilot programs. The rule change is expected to provide additional long-term funding to the private sector. (Read the full story.)

Digest Stock Chart 0716

** OTHER STORIES MAKING HEADLINES

Economy & Finance

• The collective net profits of China’s centrally-owned state enterprises dropped 37.7% year-on-year in the first half of 2020. In June, net profits rose by 5%, according to a government briefing (link in Chinese).

• The share price of China Bohai Bank Co. Ltd. closed unchanged on the first day of trading on the Hong Kong stock market, after falling below its IPO price during the day.

• China’s Belt and Road Initiative has found new life in Pakistan with $11 billion worth of projects signed last month. (Bloomberg)

Business & Tech

• Local governments will be required to issue policies to support the sales of new-energy vehicles (NEVs) in rural areas. China is turning to the countryside to stimulate the market as NEV sales retreat after a steep cut in subsidies. (Read the full story.)

• Shenzhen-listed electronics giant TCL Technology Group Corp. has won the bid to acquire a 100% stake in Tianjin Zhonghuan Electronics and Information Group Co. Ltd., a large state-owned electronics manufacturer, according to a TCL filing (link in Chinese) on Thursday.

• China is firmly opposed to the U.K. government’s decision to ban Huawei Technologies Co. Ltd. from the country’s 5G networks and will take “necessary measures” to protect the legitimate interests of Chinese companies, a commerce ministry spokesman said (link in Chinese) on Thursday.

• China’s ubiquitous WeChat is testing a mini program that would facilitate online product sales by businesses, a clear sign of the wider e-commerce ambitions of its parent, Tencent Holdings Ltd. (Read the full story.)

** ON THE CORONAVIRUS

• A symptomatic coronavirus case was confirmed on Wednesday in Urumqi, the capital city of the Xinjiang Uygur autonomous region, according to the local health authority (link in Chinese) on Thursday. Three new asymptomatic cases were also confirmed there on the same day.

• As of Thursday afternoon Beijing time, the number of global coronavirus infections surpassed 13.5 million, with the death toll passing 584,000, according to data compiled by Johns Hopkins University.

• China’s Ministry of Culture and Tourism on Tuesday allowed travel agencies and online tour companies, which have been dormant since January due to the epidemic, to resume interprovincial group package tours in regions with a low coronavirus risk. (Read the full story.)

** AND FINALLY

People around the world are trying different ways to stay cool during the summer heat wave, even as the coronavirus pandemic continues to grow and floods wrack central and southern China. From inflatable pools to river dining, many creative ideas have come out from people eager to beat the heat.

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Residents sit at a park Saturday near the Yangtze River in Wuhan, Central China’s Hubei province.

Contact reporter Guo Yingzhe (yingzheguo@caixin.com) and editor Yang Ge (geyang@caixin.com)

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