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China

Naspers “put” tackles one of its Tencent problems

27 Jun 2022

The South African firm and its Dutch offshoot will buy back stock by slowly trimming their $133 bln stake in the Chinese tech giant. Tax liabilities and clunky governance remain valuation drags. But investors can worry less about Naspers blowing its riches on other startups.

Lithium landgrab sparks new electric-car risk

24 Jun 2022

Tesla, Stellantis and others want to lock in long-term supplies of the battery component. Elon Musk might even try mining it. Such steps are enticing after the metal’s price rose tenfold in two years. But deals struck under duress can be a shock to the system down the road.

Drug sellers brave clinic on China’s tech habits

23 Jun 2022

Alibaba and JD.com's drug units fell nearly 15% on fears of a ban on marketplace operators from acting as vendors. In theory, companies could oust third party sellers without much self-harm but consumers may pay more. It’s a timely test of Beijing’s support for the platform economy.

China stocks decouple from West – and reality

22 Jun 2022

The CSI300 is up some 14% over the past couple of months against a 10% swoon in the S&P 500. There’s growing optimism Beijing crackdowns are ebbing, lockdowns are easing and stimulus will be flowing. It may look like a cheap hedge against the Fed, but hope is not a fundamental.

Hong Kong’s last governor on dealing with China

21 Jun 2022

Chris Patten was Britain’s top representative in the colony before its handover 25 years ago. In this edition of The Exchange podcast he talks about his newly published diaries, businesses sucking up to the People’s Republic, and whether the West will defend international rules.

China slowdown prompts healthy luxury rethink

21 Jun 2022

Brands like Gucci and Louis Vuitton have made a killing in China's $63 bln market. Yet Beijing's Covid-19 policies and rising nationalism among young shoppers show the perils of being overdependent on one consumer group. A pivot into the United States and the Gulf offers a hedge.

This Chinese jobs crisis could be its worst

20 Jun 2022

Youth unemployment hit a record 18% as the national rate heads toward levels not seen since 2008. Private employers are traumatised and a strained public sector will struggle to make up the difference. Fiscal and monetary responses used previously are unlikely to work this time.

Baidu video sale hints at a China tech plot twist

16 Jun 2022

The search-engine operator may divest its Netflix-like streaming arm in a $7 bln deal. Ordinarily rivals like Tencent would welcome the opportunity, but the recent anti-trust crackdown will deter them. That clears the way for otherwise unlikely bidders, including state companies.

Foreign banks’ China honeymoon ends early

13 Jun 2022

Regulators want international banks to reduce pay and stretch bonus periods, Bloomberg reports, making it harder for them to compete for onshore talent as offshore listings slump. Those who predicted Beijing would keep leveling the finance playing field may have to reconsider.

Didi’s vertical integration strategy distracts

9 Jun 2022

The ride-hailing giant may buy a stake in Sinomach’s electric vehicle unit. Didi’s $5 bln cash pile, plus its data and technology, could revive the struggling state firm, which until recently focused on importing cars, not making them. It can’t help rebuild Didi’s core business.

Starbucks has talked itself into a China corner

8 Jun 2022

The $91 bln coffee maker’s “second home market” routinely disappoints, and lockdowns aren’t helping. At this point, it’s not obvious a spinoff would create value. The better path would be to slow expansion and focus on profit, but it’d be a tough move after overselling growth.

Chinese movie industry screens business tragedy

8 Jun 2022

Box office takings touched a 10-year low during the recent holiday weekend. While China overtook the U.S. market during the pandemic, in absolute terms it’s contracting, a trend reflected in share prices for companies like IMAX China. The damage could be permanent.

Chinese property crisis drives derivative rethink

7 Jun 2022

Beijing has helped some private developers with bond issues by letting them offer protection via tools like credit risk mitigation warrants. So far it’s symbolic and over-reliant on reluctant state banks. If private money can be wooed, however, the market could finally take off.

Glencore rebuff sets up less noxious coal deal

2 Jun 2022

The trader calls a Chinese offer for the 38% of Aussie miner Yancoal it doesn’t own “unacceptable”. That’s an understatement. It’s a deeply discounted deal offering payment via a convertible bond. Political risk looms large too, but Yankuang has to make the financials less toxic.

Ukraine war helps China’s coal addiction stack up

2 Jun 2022

President Xi Jinping’s administration is boosting coal production to stave off power cuts. The top emitter is embracing the fossil fuel tightly as wealthy nations bid aggressively to replace Moscow’s natural gas supplies. The rational financial choice is a firm blow to net zero.

WM Motor fundraise will test its anti-Tesla appeal

1 Jun 2022

Founder Freeman Shen missed a chance grabbed by rivals Xpeng and Li Auto to float when valuations were high, stalling his dream of mass-producing affordable electric cars. An IPO filing reveals deep losses; hoped-for economies of scale may be harder to achieve in tough times too.

Fourth time to be the charm for Richard Li’s IPO

1 Jun 2022

Poor markets have derailed insurer FWD’s $1 bln float. That’s the third delay after a costly Hong Kong to New York round trip, and a flirt with super voting stock. The pause gives the tycoon time to improve the Asian-focused company’s profit record and to freshen its pitch.

Geely-backed auto SPAC deal revs up too fast

31 May 2022

Unprofitable maker of tech for car cockpits, Ecarx, is going public via a $3.5 bln sale to a blank-cheque firm, but a plan to boost its sales beyond Li Shufu’s marques looks ambitious. The record Chinese deal requires a leap of faith so soon after Didi’s wild listing ride.

Stability and security trump threat of sanctions

30 May 2022

India is buying more Russian oil and coal, and a state-led group of companies is now eyeing Shell’s stake in an LNG project. Price volatility and climate woes are dictating national priorities. It’ll be thorny for the West to punish poorer countries for putting themselves first.