Caixin
Sep 22, 2020 08:25 PM
CHINA BUSINESS DIGEST

China Business Digest: Regulator Piles Penalties on Luckin Coffee; Biotech Firm Raided for Alleged Import and Export Violations

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Luckin Coffee and 43 other companies involved in its fraud were together fined $9 million by China’s market regulator. Genscript Biotech says its offices were raided by anti-smuggling officials. Hotelier Huazhu accused by short seller of inflating profit. Meanwhile, a Swedish space company says it is no longer renewing contracts that give Beijing access to its antennas in Sweden, Chile and Australia.

— By Lu Yutong (yutonglu@caixin.com) and Han Wei (weihan@caixin.com)

** TOP STORIES OF THE DAY

Courier ZTO Express prices Hong Kong listing at HK$218 a share

Chinese delivery company ZTO Express priced its shares at HK$218 ($28.13) each as it aims to raise as much as $1.27 billion in a secondary listing in Hong Kong. The price represents 1.92% discount to ZTO’s closing price Monday in New York of $28.68. ZTO said earlier that it would sell 45 million shares at a maximum price of HK$268 each. Trading is set to start Sept. 29.

Genscript Biotech probed for alleged import and export violations

Hong Kong-listed biotech company Genscript Biotech said its offices in Nanjing and Shenjiang were raided by anti-smuggling officials last week on allegations of violating China’s import and export rules. Zhang Fangliang, chairman and controlling shareholder of Genscript, was placed under house arrest, while four other employees were also detained, the company said.

Hotelier Huazhu targeted by short sellers before Hong Kong offering

Chinese hotel chain Huazhu Group Ltd. was accused by short seller Bonitas Research of concealing operating expenses and inflating profits, right before the company debuted in Hong Kong Tuesday following a HK$5.9 billion ($761 million) secondary listing. Despite the news, Huazhu’s shares in Hong Kong rose by 4.71% Tuesday, pushing up its market value to HK$100 billion.

Swedish space company severs China satellite operation tie-up

A state-owned Swedish space company providing ground stations that help fly Chinese spacecraft and transmit data, said on Monday it would no longer renew contracts with China or accept new Chinese business, because of changes in geopolitics. (Reuters)

The Sweden Space Corp. has had contracts allowing Beijing access to its antennas in Sweden, Chile and Australia since at least 2011.

U.S. weighs in on spiking cargo rates, following China’s move

The Federal Maritime Commission recently sent out a warning over spiking cargo rates, saying “it may seek an injunction for a ‘collusion’ breach of the Shipping Act.” It took the action after China’s Ministry of Transport tightened rules on shipping routes with the U.S. to control spiking costs.

Rio Tinto to develop bonded area operations to blend iron ore at Dalian port

Anglo-Australian miner Rio Tinto has signed a pact to jointly develop its first bonded area operations to blend iron ore in China’s port city of Dalian, the company said on Tuesday, as it moves to widen offerings for customers across Asia. (Reuters)

The agreement with Dalian Port Co. Ltd. allows Rio Tinto to also use the Chinese port as a transshipment hub and could help it better serve steel mills in North China.

HSBC’s share price slumps to 25-year low on report

London-based HSBC Holdings PLC’s shares slumped (link in Chinese) to their lowest level since 1995 on Monday after a report from the Financial Crimes Enforcement Network suggested that it “kept profiting from powerful and dangerous players” in the past two decades even after the U.S. imposed penalties on it and other institutions. The bank’s shares may have also suffered as it faced the threat of being added to China’s “unreliable entity list.”

Former Huayuan Property chairman gets 18 years for bribery

Ren Zhiqiang, 69, former chairman of state-owned developer Huayuan Property Co., has been sentenced by the Beijing No. 2 Intermediate People’s Court to 18 years in prison and fined 4.2 million yuan ($619,000) for embezzling public funds, taking bribes and abuse of power as a member of state-owned enterprise, according to a court statement (link in Chinese) released on Tuesday. Ren said he accepted the sentence and will not appeal.

Digest Stock Chart 0922

** OTHER STORIES MAKING THE HEADLINES

Finance & Economy

• China is tackling unbridled borrowing in the real estate development sector anew with caps for debt ratios. But sources at developers say a rush to get around the rules by moving more debt off balance sheets is on. (Reuters)

• Beijing has sped up development of a blacklist that could be used to punish American technology firms, but officials say leaders are hesitating to pull the trigger, with some arguing a decision on the list should wait until after the U.S. election. (Wall Street Journal)

Business & Tech

• China’s market regulator has fined (link in Chinese) scandal-plagued Luckin Coffee Inc., along with 43 other third parties involved in the fraud, a total of 61 million yuan for fabricating financial records and misleading the public.

• Hong Kong-headquartered plant-based food company Green Monday Holdings has raised $70 million in a new funding round led by U.S. investment firm TPG’s The Rise Fund and Hong Kong-based conglomerate Swire Pacific, in a sign that investors are betting on a future in which plant-based protein alternatives will grow in popularity.

• Hong Kong-listed Genscript Biotech Corp. said in a statement on Monday its offices in East China’s Jiangsu province were raided by customs for suspected violation of imports and exports regulations. The news sent its share price down by 17.29% on Tuesday.

• Shanghai-based new-energy vehicle startup Weltmeister said on Monday it has closed the pre-IPO funding round led by state-backed SAIC Motor, taking its total fundraising to 33 billion yuan.

• A China Eastern Airlines Co. Ltd. route from the Philippines became the latest to fall afoul of strict rules from China’s civil aviation regulator that penalize airlines found to have flown in people with Covid-19.

** ON THE CORONAVIRUS

• An $18 billion initiative to deploy a vaccine around the world is moving into the next phase, with 156 countries and regions joining the program. China and the U.S. remain on the sidelines. (Bloomberg)

• The Chinese mainland reported (link in Chinese) six new coronavirus cases for Monday, down from 12 infections a day earlier. All the cases were imported, with three arriving in southern Guangdong province.

 Read more 
Caixin’s coverage of the new coronavirus

• As of Tuesday afternoon Beijing time, the number of global Covid-19 infections reached 31.3 million, with more than 965,000 deaths, according to data from Johns Hopkins University.

** LOOKING AHEAD

Sept. 30: Release of Caixin China manufacturing PMI

Oct. 9: Release of Caixin China services PMI

** AND FINALLY

The eastern city of Hangzhou’s Qiantang River, famous for its tidal bore that rose as high as 26 meters and clashed with bridges in August, is attracting tourists from across the country to share the experience.

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Tourists photograph the surging tidal bore along the famous Qiantang River in the eastern city of Hangzhou on Monday.



Contact reporter Lu Yutong (yutonglu@caixin.com) and editor Yang Ge (geyang@caixin.com)

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China Business Digest: Oracle-TikTok Deal Still in Doubt; STAR Market Warns Against IPO Pricing Collusion

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