Caixin
Aug 26, 2020 09:20 AM
CX DAILY

CX Daily: Alibaba's Ant Group Files for Dual Listing in Hong Kong and Shanghai

Simandou in southwest Guinea is considered to be the world’s largest, highest-quality iron ore deposit.
Simandou in southwest Guinea is considered to be the world’s largest, highest-quality iron ore deposit.

Iron ore /

Cover Story: Stalled Guinea project highlights China’s struggle to reforge iron ore supply chain

Simandou, a 110-kilometer range of hills deep in the hinterland of Guinea in Western Africa, boasts the world’s largest untapped iron ore reserves. They could reshape the global supply chain of the critical ingredient of steel, the world’s second-most traded commodity behind crude oil.

The rich assets have lured global investors, especially from ore-thirsty China, but pulling the mineral out of the ground has turned out to be a thorny challenge with entangled interests and risks stemming from technical, capital and political uncertainties.

It is considered the world’s largest, highest-quality iron ore deposit. Some industry experts project it could produce as much as 150 million tons of iron ore a year, equivalent to 7% of global production in 2019. Developing the deposits could save China, the world’s largest steelmaking country, billions of dollars a year.

FINANCE & ECONOMICS

1

Trade /

Positive signs after China-U.S. phone call on phase one trade deal

Chinese Vice Premier Liu He spoke with the U.S. Trade Representative (USTR) Robert Lighthizer and Treasury Secretary Steven Mnuchin by phone Monday in a six-month review of the two countries' phase one trade deal signed in January that effectively put on pause the protracted trade war between the world’s two largest economies.

In the phone call, previously scheduled for Aug. 15, the two countries’ top trade negotiators made positive signs that both sides “see progress and are committed to taking the steps necessary to ensure the success of the agreement,” according to a statement released by the office of the USTR.

“The two sides conducted a constructive dialogue on such issues as strengthening bilateral coordination of macroeconomic policies and the implementation of the China-U.S. phase-one economic and trade agreement,” China’s Commerce Ministry said in a statement.

IPO /

Ant files for blockbuster listings in Shanghai and Hong Kong

Ant Group Co., the Chinese financial-technology giant controlled by billionaire Jack Ma, Tuesday filed for its long-expected initial public offerings in Hong Kong and Shanghai that could raise more than $20 billion.

Hangzhou-based Ant said it will issue new shares accounting for at least 10% of total shares following the concurrent IPOs. The company didn’t provide a share price range or the amount it intends to raise in the IPO. But based on analysts’ estimates of a market valuation of more than $200 billion, the deals could raise more than $20 billion, making it one of the largest listings in recent years.

The operator of popular payment service platform Alipay filed for the listings separately with the Shanghai and Hong Kong bourses. The documents for the first time disclosed financial details of Ant's gigantic business size and robust growth. Ant had revenues of 72.5 billion yuan ($10.5 billion) for the six months through June 2020, with net profit rising more than ten-fold to 21.2 billion yuan, according to the filings.

Exclusive: Ant Group loses two key executives as IPO looms, sources say

New consumer lending arm gives Ant Group license to lend a lot more

Banking /

Exclusive: Regulators step up efforts to recapitalize cash-strapped small, midsize banks

China’s financial regulators are considering expanding the types of instruments struggling small and midsized banks can sell to local governments to raise capital, making it easier and quicker for them to strengthen their balance sheets and expand lending to businesses, sources familiar with the issue told Caixin.

In July, the State Council, China’s cabinet, said it would allow 18 provincial-level governments to use as much as 200 billion yuan ($28.9 billion) from this year’s 3.75 trillion yuan quota of special-purpose bonds (SPBs) to inject funds into banks in their jurisdictions that need support. At the time, the government specified only one channel for investment — convertible bonds, which banks can use to replenish their core tier-one capital.

But financial authorities have now come up with more ways for banks to get the money. These include selling bonds, usually subordinated debt, to replenish what’s known as Tier-2 capital, the second layer of a bank’s capital requirements that’s less secure than the top Tier-1 capital.

Hiring /

China’s banks hire tens of thousands in latest rescue mission

China’s mega banks are ramping up their recruitment of fresh graduates as a record number enter the labor market, joining other state-owned enterprises in boosting employment even as lenders deal with plunging earnings and ballooning bad debt.

The four biggest state banks, led by Industrial & Commercial Bank of China Ltd., kicked off their autumn campus hiring this month instead of in November as in previous years. China Construction Bank Corp. plans to add 16,000 graduates this year, up from 13,000 last year. Bank of China Co. will increase its hiring by 15% to more than 10,000, according to their advertisements. Agricultural Bank of China Ltd. hired 4,500 people during the spring round. China’s largest banks are under pressure from Beijing to help prop up the economy.

Quick hits /

Another state-owned firm joins Bank of Gansu bailout

BUSINESS & TECH

CHIP

HSMC’s founders had big hopes for the company when they set it up late 2017, aiming to take advantage of billions of dollars being made available by central and local governments to build up the country’s chip industry.

Semiconductors /

China’s $18.5 billion chip champ hopeful fights for survival

An $18.5 billion company that aimed to become one of China’s leading high-tech electronic chip makers faces the risk of never getting off the ground because of a major cash shortfall, a local government authority close to the project has determined.

A collapse of the startup known as Wuhan Hongxin Semiconductor Manufacturing Co. Ltd. (HSMC) would be a major setback for China’s aspirations to become more self-sufficient in producing the high-tech chips that power most modern gadgets and devices. It would also spotlight the difficulties of building such complex companies from scratch.

HSMC’s large funding shortage was raised in a July 30 government report on the progress of investments in the Dongxihu district of the central Chinese city of Wuhan where the project is located. The report said the cash shortfall raised the risk that the project could come to a halt at any time.

M&A /

Dairy giant Mengniu quits Australia acquisition after government says it wasn’t in national interest

Mengniu Dairy Co. Ltd. pulled out of a deal to buy an Australia-based dairy producer from Japan's Kirin Holdings Co., after Australia’s Federal Treasurer told the Inner Mongolian dairy giant the purchase was not in the national interest.

All three companies made statements Tuesday saying the acquisition deal had been terminated, nine months after it was first agreed. Kirin said it decided to terminate the agreement because approval from Australia’s Foreign Investment Review Board (FIRB), a condition of the purchase agreement, had not been secured and was “unlikely to be forthcoming at this time.” The business in question, Lion Dairy, said it was “disappointed,” while Mengniu said only that the conditions of the agreement had not been met.

Food security /

Four things to know about China’s food security amid Covid-19

Food security has made headlines in China since President Xi Jinping called for an end to “shameful” waste earlier this month, after widespread flooding in southern China and disruption to global supply chains from Covid-19 raised the specter of food shortages.

While the likelihood of a food crisis remains remote, Xi was quoted by state media as saying that the country should “maintain a sense of crisis regarding food security, especially amid the fallout of the Covid-19 epidemic, despite the fact that China has scored consecutive bumper harvests.” Here are four things to know about China’s food security amid the ongoing disruption to global supply.

Beverage /

China bottled water giant seeks $1.1 billion in one of year’s biggest food and beverage IPOs

China bottled water giant Nongfu Spring Co. is seeking to raise as much as HK$8.35 billion ($1.1 billion) in what could be the world’s second-biggest initial public offering by a food and beverage company this year.

The Hangzhou-based company is offering 388.2 million shares at HK$19.5 to HK$21.5 each in its Hong Kong share sale, according to a prospectus on the Hong Kong stock exchange website Tuesday. The offering attracted five cornerstone investors that will purchase a combined $320 million of the offering, based on top end of the range. The company plans to price the offering Aug. 28 and to list on the Hong Kong stock exchange Sept. 8. China International Capital Corp. and Morgan Stanley are the joint sponsors.

Quick hits /

Taco Bell starts tolling in Beijing

China’s self-driving vehicle ambitions hit roadblocks

Tesla starts taking orders for Shanghai-built Model Y SUVs

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