Jul 3

China Business News: International Capital Returns to China

Editorial Staff
Jun 10, 2022
China business
Image: Phuong Uyen Vo Hoang via Unsplash

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:

China may have re-started talks on a potential IPO of Ant Group, according to Bloomberg. However, The China Securities Regulatory Commission (CSRC) denied the report, saying in a statement that it was not conducting a review into revival of the IPO. In late 2020, plans for a $35 billion IPO for the fintech giant were crushed by the Chinese authorities, causing the company’s valuation to drop by an estimated $110 billion. News of the potential revival sent the American-listed shares of Alibaba (which owns around a third of Ant) up around 7% on Thursday morning, before dropping 8% after the CSRC’s statement denied that a review of the IPO was underway. (Bloomberg)

International capital began a cautious return to the Chinese stock market last week as COVID cases appeared to fall. Investors poured nearly $270 million into the iShares Asustek MSCI China ETF on Tuesday, the largest single-day inflow since the fund’s inception in 2011. The MSCI China Index, tracked by the ETF, has gained nearly 7% for the week.

Related Chinese stocks also topped the list as market expectations for the tech regulatory cycle are set to enter a steady phase rise. KWEB, the Chinese Internet ETF, closed with an 5.8% increase overnight, while the Nasdaq Golden Dragon China Index (HXC) rose 5.7%. Since late May, the index’s decline over the past year has narrowed to around 50%. Although many foreign investors are returning one after another, a lot of allocated capital is still waiting for further risk release. The results of the resumption of Shanghai work and production are yet to be seen, but as the decline in corporate earnings continues, and Fed’s monetary policy tightens, the overseas investors’ operations will be subject to a great deal of fluctuation. (First Financial)

Tencent released two digital products for the energy industry on June 9, including Tencent EnerLink for companies to use internally and Tencent EnerTwin for external use. Tencent’s entry into the energy industry is closely related to the carbon neutrality policy. It was one of the first Chinese Internet companies to launch a carbon neutrality strategy. Last year, Tencent Cloud already released a variety of application-based products, including Carbon Engine, Simulation Cloud, Integrated Energy Workshop and Inspection AI. This time, Tencent has integrated all its previous products into two systems. Enerlink is mainly focused on internal business operations and connects equipment, data, business, customers and ecology. EnerTwin, on the other hand, has internal AI templates and introduces 3D visual models into the energy industry.  Previously, Tencent Cloud cooperated with Baosteel to carry out the intelligent transformation of some of the company’s new production lines. Now, through digital twin, users can monitor the operation status of the whole production line in real time and improve its efficiency, which is expected to reduce carbon emissions by 30-50% once the transformation is complete.  (The Economic Observer)

Vision Deal HK Acquisition, a special purpose acquisition company (SPAC) co-sponsored by former Alibaba CEO Wei Zhe, listed on the Hong Kong Stock Exchange on Friday. The listing made Vision Deal HK Acquisition the second shell acquisition company to be listed on the Hong Kong stock market.

VD’s offering price was set at HK$10 per share, with 110,000 shares per board lot. The listing raised a total of around 1 billion HK$. According to the announcement, a total of 94 investors participated in the subscription of VD’s new shares, of which 24 were institutional professional investors holding a total of 75.71% of the listed shares and warrants offered by VD.

VD plans to look for M&A targets in two areas, including companies focusing on smart car technologies or companies with supply chain and cross-border e-commerce capabilities. VD intends to announce M&A targets within 18 months and complete the M&A within 30 months. (Caixin)

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