JD’s stunted growth leaves it in the discount bin 16 Nov 2023 Revenues in the Chinese e-tailer’s core electronics and appliances unit struggled last quarter. As consumers feel the pinch, a focus on big-ticket items puts it at a disadvantage to rivals selling cheaper goods. The valuation is depressed but so is the business outlook.
Measuring the US and China’s conscious decoupling 16 Nov 2023 President Joe Biden and his Chinese counterpart Xi Jinping don’t agree on the terminology, but the Sino-American relationship is fracturing. A close look at trade, finance, investment, people and geopolitical noise shows the world’s two largest economies are pulling apart.
China’s property boost has to sway wary banks 15 Nov 2023 Beijing wants to inject 1 trln yuan into housing projects. It’s a bigger version of a 2022 scheme lenders shunned because developers are saddled with huge debts. Without a broader plan to convince banks the government can stop the real estate rot, the new effort will also fail.
More US-China take-privates could get feisty 14 Nov 2023 A bidding war has erupted for $1.4 bln Nasdaq-listed industrial automation solutions firm Hollysys. One would-be buyer even staged a dawn raid. If a deal succeeds, minority owners of undervalued peers could push for more value, too, as Chinese companies bid farewell to the US.
China’s Singles Day shows buyers’ commitment issue 13 Nov 2023 The country’s biggest shopping event recorded meagre growth of around 2% in total volumes despite steep discounts. E-commerce giant Alibaba didn’t provide figures again, a sign of slow sales. Beijing needs consumers to power growth but shoppers look fatigued.
Meta’s China quest thaws thin layer of dense cube 10 Nov 2023 The $828 bln social media company plans to sell virtual reality headsets in the country, 14 years after its Facebook service was banned there. Hardware is a less thorny way to grab revenue. It also puts pressure on the US government to soften its stance on some Chinese tech.
Weak Biden-Xi handshake would send strong message 10 Nov 2023 The US and Chinese presidents may meet next week in San Francisco as tit-for-tat retaliations pressure trade. Beijing remains combative towards Taiwan while Americans coalesce on anti-China issues. De-escalating tensions can benefit both sides but is not politically expedient.
Ping An highlights China property and policy risks 9 Nov 2023 Beijing wants to broker a bailout of troubled developer Country Garden by the $100 bln insurer, Reuters reported. Ping An denies it has been asked. Yet it’s a warning that, as local governments try to defuse debt bombs, even large private companies may face pressure to help.
China EV champs race to make leaner green machines 8 Nov 2023 Nio is ditching 10% of its staff. Rivals won’t be far behind. While electric-car startups in the People’s Republic have proven their tech can keep pace with Tesla, their losses have been rising, in part due to a persistent price war. That makes cutting costs the next big test.
For global banks, India could soon be worth it 7 Nov 2023 CEOs have descended on Hong Kong for a summit, but investment bankers based in the city are spending time elsewhere in Asia as revenue from China shrinks. In India, IPOs are on the rise and fees are improving. Buyout firms’ behaviour suggests those trends will continue.
Vanke’s safety net models new face of China Inc 7 Nov 2023 The $18 bln property developer’s shares jumped after its owner Shenzhen Metro pledged unreserved support and a $1.4 bln tool kit should it need a rescue. As the state takes a bigger role in business, Vanke illustrates how that could reduce both returns and risks for investors.
Broadcom deal tempts a treacherously tasty trade 6 Nov 2023 The chipmaker’s $82 bln acquisition of VMware hangs by a Chinese thread. This lingering doubt has created a quirky anomaly on whether a small slug of shares winds up being bought for cash or stock, or not at all. There’s 25% upside to grab, but only for the bravest arbitrageurs.
Chinese firms are reluctant national team players 6 Nov 2023 Regulators are rallying domestic investors to help prop up the country’s frail stock market. More than 1,100 companies led by battery giant CATL have responded by spending $9 bln buying back shares. Yet that’s only a tepid increase from 2022. Corporate support looks half-hearted.
China rate scare reminds watchdogs of hidden risks 1 Nov 2023 A liquidity squeeze spooked the country’s money market just as top regulators completed a twice-a-decade summit to outline Beijing’s financial plan. Overnight rates as high as 50% may prompt more monetary loosening. Yet local government debt problems require more drastic surgery.
Big government will drive the next market cycle 31 Oct 2023 Politicians are at their most interventionist in decades. Though a return to the stagnant, centralised economies of the 1970s is unlikely, subsidies and inflation will influence asset values. Fund managers need to pick investments that may benefit from the state’s visible hand.
Biden AI plan is one step in avoiding crypto trap 30 Oct 2023 The president’s new executive order aims to set regulatory guardrails for artificial intelligence. It still leaves a big hole for Congress to fill. Failing to set coherent rules risks the kind of piecemeal enforcement that hobbled crypto, but for a technology with higher stakes.
Smithfield US homecoming looks like pig in a poke 30 Oct 2023 China’s biggest pork firm may relist its US unit in New York. With $7.6 bln in market cap, investors don’t seem to attach much value to its 2013 buy. Moving West is a hedge against geopolitics, but a revaluation is unlikely if the Washington-Beijing relationship remains fraught.
Li Keqiang death dilutes China reform promise 27 Oct 2023 The premier’s 10-year tenure began with hopes for a market-friendly revamp. Efforts to make state firms more efficient through private capital had all but reversed course as he left office. His sudden passing will further weaken the case against Beijing’s sprawling interference.
Stellantis’ China deal maths may amplify US woes 27 Oct 2023 CEO Carlos Tavares is paying up to speed up his green push. At 4.4 times sales, the $1.6 bln deal values Chinese upstart Leapmotor more richly than larger EV peers. Splurging on a rival in the People’s Republic is also a bad look as he negotiates tense pay talks with US workers.
StanChart hopes crash into harsh market realities 26 Oct 2023 Shares in the lender run by Bill Winters tanked by up to 17% after surprise hits to its China bank and real estate holdings. These may be one-offs. But the reaction is a reminder that StanChart’s current mediocre goals, after years of subpar results, offer little room for error.