Alibaba, Proxies Pull Back As Correction Begins

Alibaba shares shed 4 pct on 2nd trading day

Alibaba (NYSE: BABA) fever has finally peaked, as shares of the e-commerce leader and its 2 major proxies took a needed breather after a turbo-charged IPO that made it China’s most valuable Internet firm. As a final footnote, the company also made the widely expected announcement that its underwriters exercised their rights to buy additional shares in the offering, officially making it the biggest IPO of all time. But the looming question for now is whether the sell-off on the second day of trading is short-term or the start of a much-needed correction. Regular readers will know my forecast is that the stock is set for turbulent trading over its first month or two, before it moves steadily downward over the next year to levels closer to its IPO price. Continue reading

Luxury Car Crackdown Shifts To Transparency Drive

NDRC on car pricing transparency drive

The largest in a string of Chinese antitrust investigations this year has begun nearing closure, with word that Beijing regulators are crafting new rules that will require greater transparency from luxury car makers regarding their pricing policies. The new rules would follow a series of massive fines against both luxury automakers and their parts suppliers, who were penalized for charging excessively high prices for after-sales replacement parts and maintenance services. Continue reading

News Digest: September 23, 2014

The following press releases and media reports about Chinese companies were carried on September 24. To view a full article or story, click on the link next to the headline.
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  • Alibaba (NYSE: BABA) Underwriters Exercise Option To Buy Additional ADSs (Businesswire)
  • Shanghai Husi Lays Off 340, Says Factory Unable To Reopen In Near-Term (Chinese article)
  • Youku Tudou (NYSE: YOKU) Piles Up 1.77 Bln Yuan In Losses In 4 Years Since IPO (Chinese article)
  • Focus Media, Kingsoft’s (HKEx: 3888) Westhouse Partner On Mobile Gaming (English article)
  • Lenovo (HKEx: 992) Workers Move Into Motorola HQ As Merger Nears End (Chinese article)

China Closes Book On GSK Case With Record Fine

GSK criminal probe ends with record fine

One of the highest profile cases in a recent series of probes against multinationals in China has reached an emphatic but reasonably just conclusion, with word that Beijing has fined British drugmaker GlaxoSmithKline (London: GSK) nearly half a billion dollars and handed several of its top local executives suspended jail sentences. I was never a big fan of this investigation, which saw GSK pursued for bribing doctors and other medical professionals to buy its drugs. That’s not because I think GSK was innocent in this case, but rather because I think the company was unfairly singled out for punishment for corrupt practices that are widespread in China’s business culture. Continue reading

Alibaba, CAR Soar In NY, HK Trading Debuts

China Auto IPO draws on Alibaba fever with strong debut

I’m a bit reluctant to write more today about the historic New York IPO for e-commerce giant Alibaba (NYSE: BABA), whose extremely strong trading debut surprised even me. But I would be somewhat remiss if I didn’t at least mention the final phase of this massive offering, which has made Alibaba the world’s second largest Internet company behind only Google (Nasdaq: GOOG). At the same time, another far more low profile trading debut in Hong Kong for auto rental specialist CAR Inc (HKEx: 699) has also done quite well, extending a nearly yearlong window for overseas listings by Chinese firms. Continue reading

Smartphone Stress In Coolpad Cuts, China Mobile ‘Naked’ Policy

Coolpad cuts 10 pct of workforce

Several news bits are casting a spotlight on growing stress in the low-end smartphone market, where a crowded field of Chinese companies have been engaged in a cut-throat series of price wars for the past year. Leading the headlines is word that Coolpad, a leading homegrown brand, is cutting 10 percent of its workforce as it explores a new joint venture with some of its distributors. At the same time, other reports say that China Mobile (HKEx: 941; NYSE: CHL) won’t be coming to the rescue of these struggling companies by selling their smartphones to its subscribers at subsidized prices, as the leading Chinese carrier embarks on its own cost-cutting campaign to bolster its sagging profits. Continue reading

News Digest: September 20-22, 2014

The following press releases and media reports about Chinese companies were carried on September 20-22. To view a full article or story, click on the link next to the headline.
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  • Alibaba (NYSE: BABA) Jumps 38 Pct In Debut, Becomes 2nd Largest Internet Firm (Chinese article)
  • China Fines Drugmaker GSK (London: GSK) Record $489 Mln For Bribery (English article)
  • Car Makers Ordered To Openly Disclose Maintenance Fees Starting Next Year (Chinese article)
  • Chinese Auto Rental Company CAR Inc (HKEx: 699) Soars 28 Pct In HK Debut (English article)
  • Microsoft (Nasdaq: MSFT) Delays Xbox One China Launch To Before Year-End (Chinese article)

iPhone Chases China Window, Oct Launch Likely

October China launch likely for iPhone 6

With Alibaba’s blockbuster IPO nearly in the past, attention will turn over the next few weeks to tech giant Apple (Nasdaq: AAPL) and the mystery surrounding the lack of a launch schedule for its new iPhone 6 in China. While Alibaba is a story of hype, the iPhone 6 saga is quickly becoming a tale of intrigue, as everyone tries to guess what’s happening behind the scenes to delay this other highly anticipated event. China’s own media are helping to fuel the suspense, with a new report from the Xinhua central news agency providing clues about what looks like a tangle with China’s censors. Continue reading

Alibaba Prices High, Set For Turbulent Trading

Alibaba set for solid debut

With Alibaba’s (NYSE: BABA) blockbuster IPO nearly in the history books, I wanted to take this opportunity to explore what’s ahead for the company as it gets set to break numerous records with its New York listing. One good indicator of what lies ahead would be the performance for shares of other Chinese tech firms that have listed over the last 12 months. But such comparisons have limited value, since Alibaba is clearly in a far different class from all these other companies, following a pricing of its shares that makes it more valuable than such global corporate giants as Amazon (Nasdaq: AMZN) and Disney (NYSE: DIS). Continue reading

Canadian Solar Joins China Solar Financing Club

Canadian Solar joins solar power building club

Canadian Solar (Nasdaq: CSIQ) has joined a growing field of Chinese solar panel makers entering the risky business of speculative development in China, with its launch of a new locally-based fund for solar power construction. The move follows the establishment of self-financed vehicles for similar speculative construction by rivals Trina (NYSE: TSL), Yingli (NYSE: YGE) and wind power equipment maker Ming Yang (NYSE: MY), as they try to create more demand for their products. Continue reading

News Digest: September 19, 2014

The following press releases and media reports about Chinese companies were carried on September 19. To view a full article or story, click on the link next to the headline.
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  • Alibaba (NYSE: BABA) IPO Prices At Top Of Range, Raising $21.8 Bln (English article)
  • NDRC Announces Fines For 12 Japanese Auto Parts Makers In Antitrust Probe (Chinese article)
  • LeTV (Shenzhen: 300104) Film Unit Raises 340 Mln Yuan In B-Series Funding (Chinese article)
  • SMG to Merge BesTV (Shanghai: 600637) and Shanghai Oriental Pearl (English article)
  • Regulator Orders Online Video Sites To Stop Distributing TV Apps – Source (Chinese article)