China Business Digest: Tencent Profits Jump; China Reports More Imported Cases from Middle East, Central Asia

China is facing a rise of imported Covid-19 cases from the Middle East and Central Asia as overseas Chinese return home. Cathay Pacific painted a bleak picture of its outlook. Online retailer JD.com taps into convenience store chain. Meanwhile, Tencent reported increasing revenue and net profit in the second quarter. And the CEO of smartphone-maker Xiaomi said the company’s international expansion is getting complicated given some countries’ attitudes toward Chinese tech giants.

— By Timmy Shen (hongmingshen@caixin.com) and Han Wei (weihan@caixin.com)

** TOP STORIES OF THE DAY

China faces rising imported cases from Mideast, Central Asia

China’s public health authorities warned of a rising number of imported Covid-19 cases from countries in the Middle East and Central Asia as more overseas Chinese workers and students returned home. China recorded 82 new imported cases between Aug. 9 and 11, including 30 from the UAE and 15 from Kazakhstan.

Cathay Pacific reports $1.3 billion loss in first half

Cathay Pacific Airways Ltd. reported a first-half net loss of HK$9.9 billion ($1.3 billion) as the pandemic brought travel to a near standstill. The airline and its Cathay Dragon unit flew only 4.4 million passengers in the first six months, down from 18.3 million a year earlier. Passenger revenue tumbled 72% to HK$10.4 billion during the period. Cathay warned that the second half of 2020 isn’t likely to be better than the first.

JD.com invests in convenience store chain

China’s leading e-commerce platform JD.com made its first investment in a convenience store chain to reach more offline shoppers. A unit of JD.com bought 20% of Xiamen Jianfu Chain Management Co. for 31.3 million yuan, ($4.5 million) to become the second-largest shareholder. Jianfu operates nearly 2,000 convenience stores mainly in China’s southeastern Fujian province.

Disgraced financial bigshot accused of taking more bribes than anyone else in China

A former chairman of one of China’s “Big Four” state-owned bad-asset managers, Lai Xiaomin, was accused of taking a record 1.79 billion yuan ($258 million) of bribes over 10 years as he stood trial in North China’s Tianjin municipality Tuesday.

U.S. lifts sanction against Macao’s Banco Delta Asia

The U.S. Department of Treasury has decided to lift sanctions on Macao-based Banco Delta Asia SARL. The sanctions were imposed in 2007 for the bank’s alleged involvement in the North Korean government’s money laundering.

Xiaomi CEO calls international expansion “complicated”

Lei Jun, founder and CEO of smartphone-maker Xiaomi Corp., said that the company’s international expansion is becoming “complicated” as other countries increasingly turn against Chinese tech giants such as Huawei Technologies Co. Ltd. and ByteDance Ltd.

Tencent reports rising profit and revenue

Tencent Holdings Ltd. reported 29% year-on-year growth in revenue in the second quarter of this year, while its net profit jumped 28% year-on-year to 30.2 billion yuan, its latest unaudited quarterly results showed.

France-China fund jointly set up by CIC makes first investments

The France-China Cooperation Fund — a joint fund set up by China’s sovereign wealth fund China Investment Corp., French bank BNP Paribas SA and private equity firm Eurazeo SE — has made its first investments, putting money into the Dutch Ophthalmic Research Center and auto testing services provider UTAC Ceram, according to a Wednesday statement (link in Chinese) by Eurazeo.

China’s securities regulator is proposing removal of a mandatory credit ratings requirement on sales of exchange-traded bonds to reduce borrowers’ reliance on ratings. It is soliciting opinions on such a proposal.

The proposal represents a response to a rash of corporate bond defaults in the last two years by some highly rated companies and scandals involving ratings providers with conflicts of interest.

TikTok faces French data probe, adding to EU-wide scrutiny

France’s privacy watchdog has opened a probe into TikTok, marking the latest Western scrutiny of ByteDance Ltd.’s social media app. The watchdog is looking into a number of issues, including how the company communicates with users and its protection of children. (Bloomberg)

Nio reports improving revenue, narrowing net loss in second quarter

Electric-vehicle maker Nio Inc. reported a 146.5% year-on-year increase in total revenue in the second quarter, while its net loss narrowed by 64.2%, its latest unaudited quarterly results showed.

Hong Kong legislators to stay in posts for at least one extra year

China’s top legislative body said Tuesday it will extend the terms of Hong Kong legislators by at least a year, according to the state-run Xinhua News Agency.

The decision follows last month’s postponement of legislative elections in the semiautonomous city. Local leaders cited the coronavirus pandemic for the delay of elections initially slated for September.

** OTHER STORIES MAKING THE HEADLINES

• Zhang Gong has been named the head of the State Administration for Market Regulation, according to a Wednesday government announcement (link in Chinese).

• Two Chinese government-backed chip projects have hired over 100 engineers and managers in total from industry leader Taiwan Semiconductor Manufacturing Co. Ltd. since last year. (Nikkei Asian Review)

• Livi Bank, backed by BOC Hong Kong (Holdings) Ltd. and e-commerce giant JD.com Inc., launched services in Hong Kong Wednesday, becoming the fourth virtual bank to open for business in the financial hub.

• Tencent Holdings Ltd.-backed online literature provider China Literature Ltd. posted a net loss of 3.3 billion yuan ($474 million) for the first six months of the year, reversing a 393 million yuan profit a year earlier.

• Tencent Music Entertainment Group reported a 17.5% year-on-year increase in revenue in the second quarter of this year, while its net profit increased slightly to 939 million yuan from 927 million yuan a year earlier.

** ON THE CORONAVIRUS

• CanSino Biologics Inc.’s experimental coronavirus vaccine has entered the third stage of clinical trials, which needs to be carried out on a large group of volunteers. The company is actively in contact with countries outside China to conduct trials, its chairman said at a recent summit (link in Chinese).

• On Tuesday, the Chinese mainland reported 25 new Covid-19 cases with symptoms (link in Chinese), including 16 imported cases and nine that were locally transmitted, according to China’s top health body. All nine of the local cases were reported in the Xinjiang Uygur autonomous region.

• As of Wednesday afternoon Beijing time, the number of coronavirus infections globally had exceeded 20.3 million, with the death toll surpassing 742,000, according to data compiled by Johns Hopkins University.

** AND FINALLY

China Oceanwide Holdings Group Co. Ltd., backed by property tycoon Lu Zhiqiang, is still trying to close an overseas acquisition after 1,400 days, Bloomberg reported.

In October 2016, Oceanwide agreed to take over Genworth Financial Inc. for $2.7 billion. However, the deadline for the proposed purchase has been extended 15 times and the deal continues to drag, according to Bloomberg.

A banner of China's Oceanwide Real Estate Group is displayed at the construction site of a property, purchased in 2014, located across the steet from the Staples Center in Los Angeles, California on May 17, 2016. Photo: Bloomberg

** LOOKING AHEAD

Aug. 13: Lenovo, NetEase, Baidu and iQiyi to announce second-quarter financial results

Aug. 14: Release of China’s investment, industrial output and retail sales data

Aug. 17: JD.com to report second-quarter financial results

Aug. 20: Alibaba to report second-quarter financial results

Aug. 21: Meituan Dianping to report second-quarter financial results

Matthew Walsh contributed to this report.

Contact reporter Timmy Shen (hongmingshen@caixin.com) and editor Yang Ge (geyang@caixin.com)

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