Caixin
Dec 17, 2020 09:43 AM
CX DAILY

CX Daily: Private Chemical Producer Fails to Repay Bonds on Time but Avoids Default Label

Shares of Shenzhen-listed Hongda Xingye Co. Ltd. plunged by the 10% daily limit Tuesday soon after the market opened.
Shares of Shenzhen-listed Hongda Xingye Co. Ltd. plunged by the 10% daily limit Tuesday soon after the market opened.

Defaults /

Private chemical producer fails to repay bonds on time but avoids default label

Chinese chemical producer Hongda Xingye Group Co. Ltd. failed to repay 950 million yuan ($145 million) of bonds that were due Monday but found a way to controversially avoid labeling it a default.

A day before the debt matured, Guangzhou-based Hongda Xingye held an urgent meeting with 12 institutional holders of the 270-day ultrashort-term bonds. More than 90% of the holders voted to cancel registration of the bonds and accept repayment sometime later under separate agreements, according to a Hongda Xingye executive.

Consequently, the company technically avoided a default, the executive said. The official said the company will apply to the Shanghai Clearing House to cancel the bonds as soon as possible but didn’t divulge when bondholders will be paid.

Standard Chartered Bank seeks to liquidate unit of China apparel giant after defaults

FINANCE & ECONOMY

MSCI

U.S. mutual funds were expected to invest $38.9 billion in A-shares by the end of 2020 as a result of their addition into the indexes of the three major providers.

Index /

MSCI’s global indexes drop seven mainland companies blacklisted by U.S.

MSCI Inc. became the latest global index provider to remove Chinese stocks from its benchmark indexes after U.S. President Donald Trump’s administration blacklisted the companies over alleged links to the Chinese military and banned American investors from holding their shares.

The stocks of seven Chinese companies named in Trump’s November executive order will be taken out of several MSCI indexes at the close of trading Jan. 5, the New York-based company said Tuesday. It warned that there could be further deletions if the U.S. updates its blacklist, which now comprises 35 companies. At the same time, MSCI said it would launch parallel indexes that retain the deleted shares.

MSCI, which said it took the action following consultation with more than 100 market participants, follows two other global index providers that have taken similar action in response to the U.S. ban.

Nasdaq to remove four Chinese companies from indexes

IPO /

China to dominate world IPO league in 2020, report says

China will probably be home to three of the world’s top five stock exchanges that generate the most money from new listings this year, a new report showed.

The Hong Kong and Shanghai stock exchanges are expected to rank second and third among global exchanges for the amount of “IPO proceeds” — which consist of funds raised from IPOs and secondary listings — they generate in 2020, behind only the Nasdaq, according to estimates by KPMG International Ltd.

The New York Stock Exchange, which ranked fifth last year, is expected to come in fourth this year, while the Shenzhen Stock Exchange, which didn’t make the top five in 2019, is set to come in fifth, according to a KPMG report.

China Inc.’s IPO haul from the U.S. and at home tops records

Carbon /

In Depth: What’s holding back carbon capture in China?

China’s bold pledge to achieve net zero carbon emissions by 2060 has set the stage for the world’s largest greenhouse gas emitter to boost technologies that absorb planet-warming carbon dioxide from pollution sources, put it to industrial use and stop it from entering the atmosphere.

But the Asian giant faces serious challenges to ramping up carbon capture, utilization and storage (CCUS), with high costs, weak economic incentives and rickety legal support hindering the industry’s growth — problems compounded by the shock of the Covid-19 pandemic.

Although CCUS cannot single-handedly cut carbon emissions at the scale needed to reverse climate change, experts said the suite of techniques is crucial for reaching carbon neutrality and winning the global battle against climate change as it can bolster other measures like renewable energy and hydrogen production.

Climate experts urge China to hit its emissions target five years early

Corruption /

Ex-banking official accused at trial of taking record amount of bribes

Song Jianji, a former deputy head of the now-defunct China Banking Regulatory Commission’s (CBRC) Inner Mongolian branch, stood trial Tuesday in the autonomous region’s capital Hohhot, according to a statement (link in Chinese) issued by a local court.

Song is accused of taking bribes in exchange for help worth more than 229 million yuan ($35 million) between 1995 and 2017 when he worked at the regional branches of the central bank and the CBRC. A record sum for a corruption case in the banking regulatory system, as far as is publicly known, bribes were offered for assistance including loan extensions, loan interest reductions and administrative approvals, said the statement. Song had “no disagreement” with the prosecutor’s charges, the court said.

Quick hits /

Opinion: Paris Agreement five years on – a renewed call for leadership

Opinion: How countries can remake their post-pandemic economies

BUSINESS & TECH

1

Chipmakers /

China’s top chipmaker hires sought-after former TSMC executive

China’s top chipmaker Semiconductor Manufacturing International Corp. hired a former senior executive from its biggest rival to be its vice chairman in a move to bolster the Chinese chip industry against U.S. blacklisting and tightening export controls.

The move immediately sparked turmoil at SMIC, however, as Co-CEO Liang Mong-song reportedly quit unexpectedly the following day. The chipmaker suspended trading of its shares in Hong Kong Wednesday morning, saying it would make a “major announcement” later in the day. Its Shanghai shares were trading as normal but fell as much as 10% at one point in early morning trading.

Chiang Shang-yi, 74, Taiwan Semiconductor Manufacturing Corp.’s former co-chief operating officer and the longtime research and development chief, became SMIC’s executive director and vice chairman Tuesday, the company said in a stock exchange filing.

China’s first DRAM chipmaker ChangXin Memory raises $2.39 billion

Videos /

Online video giant iQiyi hits up market for another $2 billion

Cash-challenged online video giant iQiyi Inc. announced a plan to raise around $2 billion through the issue of notes and new shares a month after talks to sell a controlling stake to China’s two largest internet companies reportedly collapsed due to disagreement over valuation.

The new move marks the second major capital-raising among China’s top online video companies this month, following a plan to raise nearly $1 billion that rival Mango Excellent Media Co. Ltd. announced less than two weeks ago. Most or all of the online video firms are hemorrhaging money as they fight a bloody battle for a bigger share of the huge but highly competitive market.

Shares of iQiyi dropped 8.2% Tuesday in after-hours trading following the announcement, indicating investor skepticism, in a sell-off that could wipe $1.3 billion off the company’s market value if the loss holds in the regular Wednesday trading session.

Retail /

Detergent giant Blue Moon cleans up in Hong Kong IPO

China’s biggest detergent maker, Blue Moon, cleaned up in its debut on the Hong Kong Stock Exchange Wednesday with its shares closing 13% higher, spurred by significantly increased profits from Covid-19 demand for disinfectants.

Backed by private equity firm Hillhouse Capital Group, Blue Moon Group Holdings Ltd. raised HK$9.58 billion ($1.24 billion) in the IPO, selling 747 million shares at HK$13.16 apiece. That gives it a valuation of HK$85.5 billion.

The funds raised could increase to HK$11 billion if international underwriters, including BNP Paribas and Citigroup, exercise over-allocation options to issue up to 15% more of the total shares.

TikTok /

TikTok appellate judges signal skepticism of Trump’s ban on app

A panel of judges on the U.S. appeals court in Washington signaled skepticism of the Trump administration’s continuing efforts to ban new downloads of the Chinese-owned video-sharing app TikTok.

At a hearing Monday, two of the three judges suggested they disagreed with the government’s legal rationale for a ban on TikTok, which is owned by ByteDance Ltd. The administration is arguing for reinstatement of an order removing TikTok from app stores run by Apple Inc. and Alphabet Inc.’s Google, which a lower court blocked in September as an “indirect regulation” of communications prohibited by federal law.

The government is relying on “a fairly narrow definition of indirect regulation,” U.S. Circuit Judge Patricia Millett said at Monday’s hearing.

Quick hits /

China to get 100 million doses of Pfizer-BioNTech vaccine

China pushes ‘sponge city’ plan with first rainwater rights sale

Tesla supplier CATL to build $5 billion Indonesia battery plant

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