Bottom line: The MSCI’s inclusion of US-listed Chinese stocks like Baidu and Alibaba in some of its emerging market indexes will support the shares by attracting more long-term investors.
Alibaba, Baidu get support from MSCI inclusion
Investors who previously looked enviously at Chinese Internet stocks but were too afraid to buy due to their volatility have new reason for confidence, with word that one of the world’s top index compilers will include the country’s top names in some of its indexes. The move by MSCI has been long overdue, and comes just months after the global index compiler disappointed China boosters by declining to allow Shanghai- and Shenzhen-listed A-shares into its emerging markets indexes.
This particular move will also come as a welcome development to people who argue that China’s best companies are better served by listing their shares in overseas markets like the US and Hong Kong rather than at home. Many Chinese Internet companies that previously listed in New York have been abandoning the market recently by launching privatization bids, with an aim of eventually re-listing in China to try for better valuations. Read Full Post…
The following press releases and media reports about Chinese companies were carried on November 18. To view a full article or story, click on the link next to the headline.
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Former Google (Nasdaq: GOOG) China Chief Plans to Take Startup Incubator Public (English article)
Fox International Inks Production Deal With China’s Huace (Shenzhen: 300133) (English article)
Movie Ticket Booking Platform Weiying Shidai Wins 1.5 Bln Yuan Series C Funding (English article)
Bottom line: Focus Media and Giant Interactive will become the first 2 companies to re-list in China after privatizing from New York, but will still struggle for attention and could end up with valuations roughly equal to what they had previously.
Giant completes backdoor listing, Focus close
China’s first 2 companies to attempt re-listings at home after privatizing from New York are both in the headlines today, led by word that Giant Interactive has completed its backdoor listing using a company called New Century Cruises (Shenzhen: 002558). At the same time, separate reports are saying that outdoor advertising specialist Focus Media is on the cusp of completing its own backdoor listing after receiving official approval from the securities regulator to execute its plan using another Shenzhen-listed company called Hedy Holding (Shenzhen: 002027).
The completion of both deals right around the same time seems like more than coincidence, and probably coincides with the regulator’s announcement last week that it will resume new IPOs after a 5 month hiatus due to volatility on China’s stock markets. It’s also quite revealing that both Giant and Focus are big Shanghai-based companies, meaning they probably have more financial sophistication and other resources than most other companies seeking to make a similar homeward migration. Read Full Post…
Bottom line: Tsinghua Unigroup is likely to soon announce big new tie-ups with SanDisk and a major second-tier Asian chip maker, in its bid to become a major memory chip maker that can challenge Samsung and Toshiba.
Unigroup eyes 2 new chip tie-ups
After becoming a regular fixture in the headlines over the last year, Tsinghua Unigroup is finally giving the world a more detailed picture of its plans to become a leading global chip maker in one of the first in-depth interviews with its talkative chairman. In that interview Zhao Weiguo is disclosing for the first time that he has a massive war chest of 300 billion yuan ($47 billion) to spend on building his empire.
What he doesn’t say is where exactly all that money is coming from, since it’s quite a large sum for a company that was an unknown name in most semiconductor circles until it embarked on its buying spree over the last 2 years. The answer is almost certainly that Beijing and big state-run institutions are supplying all the funds, as China looks to succeed in an areas where many smaller earlier initiatives have failed in the high-tech chip sector. Read Full Post…
Bottom line: Alibaba and Baidu’s inclusion in MSCI indexes and SouFun’s new dual listing in China highlight reasons why overseas markets are still an attractive place for leading private Chinese companies to list.
SouFun eyes dual listings in China, NY
Two new developments last week highlighted why overseas listings are still beneficial and even desirable for some Chinese companies, even as a flood of New York-listed firms move ahead with plans to leave New York and re-list in China.
The first development saw MSCI, one of the world’s top index compilers, say it would include Chinese companies in its products for the first time by choosing several US-listed firms, including Internet titans Alibaba(NYSE: BABA) and Baidu (Nasdaq: BIDU). The second saw investors applaud a plan by leading online real estate services firm SouFun (NYSE: SFUN) to take control of a Shanghai-listed company, a move designed to gain access to Chinese capital markets while maintaining its New York listing. Read Full Post…
The following press releases and media reports about Chinese companies were carried on November 17. To view a full article or story, click on the link next to the headline.
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Tsinghua Unigroup to Invest $47 Bln to Build Chip Empire (English article)
Bottom line: Weak pricing for Dali Foods’ Hong Kong IPO reflects investor uncertainty about China’s economy and stock markets, though the shares could briefly rise on their debut due to support from state-backed investors.
IPO for snack maker Dali draws tepid demand
A lukewarm reception for an upcoming IPO from snack maker Dali Foods is providing the latest evidence that global appetite for Chinese offerings is still quite wobbly. Dali has cut the size of its fund-raising plan by about 20 percent, following in the footsteps of China’s oldest investment bank CICC (HKEx: 3908), which made a similar reduction for its IPO whose shares made their trading debut last week.
The weak sentiment reflects uncertainty about China’s domestic stock markets, which reflects uncertainty about the nation’s broader economy that is showing signs of slowing. Hong Kong’s stock markets have become increasingly synced with far more volatile mainland stock markets, which soared in the first half of this year, only to come crashing back to earth during a massive summer sell-off. Read Full Post…
Bottom line: Vipshop’s third-quarter revenue shortfall is the latest signal that China’s e-commmerce sales are set to slow after a period of rapid growth, and could pressure the company’s stock over the next few months.
Warm autumn chills Vipshop sales
Discount e-commerce superstar Vipshop (NYSE: VIPS) has suddenly lost some of its luster, after announcing a revenue shortfall that sparked a 27 percent plunge in its stock. The unusual revenue miss looks even more unusual in China’s broader booming e-commerce sector, where leaders Alibaba(NYSE: BABA) and JD.com (Nasdaq: JD) are still basking in the glow of a record-breaking Singles Day online shopping blitz last week. (previous post)
The bigger question that many will be asking this week is whether there’s any broader significance to Vipshop’s new announcement that it missed its previous third-quarter revenue forecast by 6 percent. (company announcement; Chinese article) Some others have warned of a similar slowdown, and I previously said the big Singles Day sales totals were at least partly manipulated by online merchants trying to meet tough targets set by online mall operators. (previous post) Read Full Post…
This week’s Street View takes us to the courtroom, where a recent series of cases in and around Shanghai is spotlighting a uniquely Chinese approach to legislating the complex relationship between parents and their children. Each case in some way raises a topic that vexes many of us foreigners, who can’t understand why Chinese courts are increasingly mediating cases between parents and children who don’t get along but still feel a need to be together.
In the west this kind of case would never even occur, since family members who don’t get along simply avoid each other and that’s the end of the story. What’s more, western courts would rarely step in to try and mediate such purely personal disputes, and most legislators would never dare to touch the topic for fear of being accused of meddling in people’s private affairs. Read Full Post…
The following press releases and media reports about Chinese companies were carried on November 14-16. To view a full article or story, click on the link next to the headline.
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Bottom line: China Postal Bank’s signing of several major global institutions as cornerstone investors reflects the attractiveness of conservative financial service firms as China’s economy slows.
Conservative Postal Bank draws big global investors
What’s likely to be this year’s biggest IPO has just moved one step closer to market, with word that Postal Savings Bank of China is near a deal to sell about 15 percent of itself to a group of mostly foreign investors ahead of a planned $20 billion new offering. This particular IPO will provide one of the most conservative choices yet to investors looking to buy into China’s financial services market.
That’s because Postal Bank historically served as a place for consumers to park their savings, and did little actual lending like traditional banks. That difference appears to be a major factor making Postal Bank so attractive now compared with more traditional lenders like ICBC(HKEx: 1398; Shanghai: 601398), which are standing on the cusp of a bad loan crisis as China’s economy rapidly slows. Read Full Post…
