CX Daily: The Herculean Task Of Bailing Out Huarong
Cover Story: The Herculean task of bailing out Huarong
As China Huarong Asset Management Co. Ltd. belatedly confirmed the vast amount of red ink it spilled last year, the Herculean scope of the government-led rescue is becoming clear — with billions of dollars in offshore bonds and domestic debt at stake.
News Aug. 18 of a long-expected rescue plan involving new state-backed investors eased some of the concerns about the company’s future and buoyed its battered dollar bonds. And yet, the prospective bailout may require capital injections totaling nearly 100 billion yuan ($15.5 billion) from strategic investors and asset sales, Caixin learned.
The restructuring is likely to lead to an ownership change. As of June 2020, Huarong was controlled by the Ministry of Finance with 61.41%, followed by the National Council for Social Security Fund with 6.34%. Citic Group Corp., the state-owned giant leading the rescue, said it plans to invest 20 billion yuan to 50 billion yuan in Huarong, becoming the largest shareholder, ahead of the Finance Ministry.
China’s Education Ministry bans vaccination mandate for students
China’s Ministry of Education banned local requirements that students be vaccinated against Covid-19 before returning to school, stressing that inoculations should be voluntary.
Earlier this month, the ministry urged local authorities across the country to promote vaccination of all eligible students below the age of 18 amid the recent domestic outbreaks but said the shots must be given only with the consent of students or their guardians.
New China vaccine shows 82% effectiveness against serious Covid
FINANCE & ECONOMY
China has 260 million people age 60 or older, accounting for 18.7% of the population.
PBOC puts financial fraud label on promoting guaranteed principal and high returns
China’s central bank put a financial fraud label on promotion of financial products with guaranteed principal and high returns and vowed to strengthen financial literacy among the elderly.
Older people have a hard time adapting to financial digitization and are more dependent on traditional channels to meet their financial needs, Liu Guiping, deputy governor of the People’s Bank of China (PBOC), said Friday at a media briefing to kick off financial literacy month in September.
The bank regulator has a list of prohibited practices, said Guo Wuping, director of the Consumer Protection Bureau of the China Banking and Insurance Regulatory Commission. Banks and insurers can’t force the elderly to use only bank cards because many older people still prefer deposit books, and they shouldn’t try to force the elderly to conduct banking through self-service smart devices, Guo said.
Chinese foreign minister talks Afghanistan with U.S. counterpart
China’s Foreign Minister Wang Yi discussed Afghan affairs, including potential actions to be taken by the United Nations Security Council, with U.S. Secretary of State Antony Blinken in a phone conversation Sunday, the second in two weeks, according to a statement released by the Ministry of Foreign Affairs.
Wang said “it is necessary for all parties to make contact with the Taliban and guide it actively.” He also called on the U.S. “to work with the international community to provide Afghanistan with urgently needed economic, livelihood and humanitarian assistance and help the new Afghan political structure maintain normal operation of government institutions.”
China’s sovereign wealth fund reports weaker overseas gains in 2020
Sovereign wealth fund China Investment Corp. (CIC) reported weaker gains on its overseas investment portfolio last year as the Covid-19 pandemic shook markets.
CIC reported an annual net return on its overseas investments of 14.1% in dollar terms in 2020, according to the company’s annual report released Friday. That’s down from a 17.4% gain in the previous year, the second highest since the company was founded 14 years ago.
Jin Renqing /
Former Chinese finance minister dies after house fire, sources say
A former Chinese finance minister died Saturday from injuries he suffered after his house in Beijing caught fire, multiple sources told Caixin.
Jin Renqing, 77, was confirmed dead at a local hospital after efforts to save his life failed, sources said.
The cause of the fire Saturday remains unclear.
Blog: China has lost a ‘pragmatic’ voice with the death of former finance minister Jin Renqing
Quick hits /
Jerome Powell’s future as U.S. Fed chair is under review
BUSINESS & TECH
ByteDance’s headquarters in Beijing on July 4. Photo: VCG
ByteDance acquires China’s largest virtual reality headset maker
Embarking on a merger strategy pursued by international rival Facebook, ByteDance Inc., the owner of short-video apps TikTok and Douyin, acquired China’s largest virtual reality headset maker Pico Interactive Inc. for undisclosed terms, seeking to capitalize on the growing popularity of gaming and fitness apps among mainland users.
A ByteDance representative confirmed the move to Caixin Monday. The acquisition, which comes as the company seeks new revenue streams in the face of a crackdown on big tech businesses by Beijing, has coincided with reported wide-scale layoffs in ByteDance’s fledging Dali Education unit.
Tianqi Lithium back in the black on surging prices
Tianqi Lithium Corp., one of the world’s biggest producers of the commodity, recorded its first half-year profit in two years of 85.8 million yuan ($13.3 million), thanks to a jump in sales and prices of the company’s lithium products amid booming demand for electric vehicle batteries.
The Sichuan-based company recovered from a loss of 697 million yuan in the same period last year, according to an earnings report (link in Chinese) released on the Shenzhen Stock Exchange Monday. In the six months through June, revenue came in at 2.4 billion yuan, a 25% jump from a year earlier.
China’s biggest AI firm SenseTime files for Hong Kong IPO
SenseTime Group Inc. filed plans for an IPO that would list China’s largest artificial intelligence (AI) company in Hong Kong.
China International Capital Corp., Haitong Securities Co. Ltd. and HSBC Holdings Plc are joint sponsors on the proposed offering, the company said in documents filed with the exchange Friday. The IPO could raise at least $2 billion, depending on the valuation the company is seeking, people familiar with the matter said.
Sexual assault /
Shares linked to China’s second-largest broadcaster plummet amid star’s sexual assault scandal
Shares of Shenzhen-listed media production company Mango Excellent Media Co. Ltd. continued their downward spiral Monday after the network ousted a high-profile talk show host who is being investigated by police for sexual assault.
The stock of Mango Excellent Media, one of the listed companies controlled by China’s second-largest television network Hunan Broadcasting System, has shed 13.74% since Friday morning to hit the lowest level of the year, after the Alibaba-backed enterprise terminated its cooperation with Qian Feng.
Quick hits /
Geely’s electric car brand raises $500 million
Sinopec swings back to profit on rebound in oil prices
Chinese gaming shares slump as minors limited to three hours’ play per week
Energy Insider /
China and Saudi Arabia to build mega petrochemical complex
Chengdu Motor Show draws 120 auto brands
Thanks for reading. If you haven’t already, click here to subscribe.
- MOST POPULAR