Welcome to China Business News, NEO’s weekly roundup of top business developments as reported by news outlets in China and the region.
This week’s highlights:
- ESG has received growing attention from Chinese venture capital (VC) and private equity (PE) institutions in recent years. Zhang Lei, founder of the Hillhouse Capital Group, a global private equity firm that took part in the 2nd Sina Finance – ESG Global Leaders Summit, said that “ESG is both a new path for sustainable human development and a unique perspective for understanding the opportunities and risks faced by companies. Technological innovations are the ultimate solution to ESG issues. Through the combination of technological innovations and ESG, companies can find new growth points and create new opportunities for development.” A total of 101 domestic institutions have signed the Principles for Responsible Investment, focusing on the domestic equity investment market and China’s “Carbon Peak and Carbon Neutrality” goal. Many well-known Chinese VC/PE institutions have launched large “double carbon” funds. Starting from 2022, state-owned capital and social capital have been laid out in this sphere. (21st Century Business Herald)
- The China Securities Regulatory Commission (CSRC) issued an official document outlining provisions for the amendment of the interconnection mechanism of the Shanghai-Shenzhen-Hong Kong Stock securities. Both the Shanghai Stock Exchange and Shenzhen Stock Exchange have updated the specific implementation measures for the Shanghai-Shenzhen-Hong Kong Stock Connect. The CSRC will prohibit mainland investors located outside of China from the following: participating in the securities interconnection mechanism, opening Shanghai-Shenzhen-Hong Kong Stock Connect accounts, and trading A-class shares through such accounts. Under the new rules, trhe investors and accounts involved in the above-mentioned operations will eventually leave the market entirely. The new law will be implemented from July 25 of this year, with a one-year transition period providing different exit arrangements for different mainland investor groups. (Caixin)
- What are the main concerns of Chinese companies investing in the UK after its new national security regime came into force on January 4? Sarah Jensen, a consultant at Freshfields Bruckhaus Deringer’ antitrust department, said at an online media conference on June 23 that the new Act covers a wide range of transaction types and does not impose any specific minimum requirements on the revenue or market share of the acquired company. This means that even if the target company is very small, it may still be subject to scrutiny. If the relative percentage of equity interest in the subject company exceeds 25% and involves any of the 17 strategic sectors listed by the UK government, such as the defence industry, advanced technology, or key suppliers to the UK government, they must all be voluntarily declared. However, the regulatory focus is not on foreign investment, but on the industry sensitivity in which the target of the acquisition is located. Chinese analytics highlight the importance of considering all the risks in order to anticipate the feasibility of the transaction, to assess if the investment involves high-tech industries or the defence sector, to evaluate whether the acquisition may result in key technologies falling under the control of other countries or companies, and to judge whether the subject company’s existing customers are in a sensitive industry. (Caixin)