Bottom line: Upbeat reports from leading pork producer Smithfield and aircraft giant Boeing show that consumer-focused companies should continue to thrive despite China’s slowing economy, while policy-driven state-run firms could suffer more.
Boeing ups China aircraft outlook
A couple of upbeat new reports from aircraft giant Boeing (NYSE: BA) and leading global pork producer Smithfield are providing an interesting contrast to broader forecasts of gloom and doom for China’s slowing economy. In the first instance, Boeing has upgraded its 20 year forecast for aircraft demand in China, while the second has Smithfield has saying its exports to China rose 45 percent in the first half of this year.
Each of these stories is slightly different, but both point to a growing divide in the Chinese economy that has big implications for the nation’s major industries. On one side of the aisle are companies like Boeing and Smithfield, which make products and services directly tied to consumer demand. Such products and services are part of the so-called “real economy” and are things that the market really wants. These should be able to continue thriving even if China’s economy slows. Read Full Post…
Bottom line: Apple will continue to post strong iPhone growth in China but could lose some momentum if the stock market sell-off continues, while Xiaomi’s new push into Africa won’t offset its own rapidly slowing momentum.
iPhone China sales continue strong
Apple (Nasdaq: AAPL) and Chinese imitator Xiaomi are both in the headlines, as the former continues to consolidate its China position at the expense of the fading latter. In this case, Apple’s continuing China surge is reflected in new remarks from CEO Tim Cook, who says his company’s business has remained strong in China during the summer months despite concerns of a slowdown linked to the nation’s tanking stock markets.
While Apple has been feasting on China, Xiaomi is feeling growing pressure at home and is looking to other global markets for growth as it struggles to meet the lofty expectations it set for itself. According to the latest headlines, the latest stop on Xiaomi’s global roadmap is Africa, where the company is eyeing another BRICS country in South Africa. Such a move would put Xiaomi in 4 of the 5 BRICS, following its earlier moves into India and Brazil. Read Full Post…
The following press releases and media reports about Chinese companies were carried on August 27. To view a full article or story, click on the link next to the headline.
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Global PC Shipments to Fall 8.7 Pct This Year – IDC (Chinese article)
Bottom line: The recent sell-off for US-listed Chinese Internet stocks represents some panic selling but also a more realistic view of these companies by western investors, and could presage a modest rebound for their shares.
New investor realism towards China Internet stocks
After all the turmoil on China’s stock markets over the last 2 weeks, I thought it was finally time to take a closer look at what’s happened to shares of US-listed Chinese Internet companies and give my view on what’s happened and what might happen next. I was quite surprised when the selling frenzy in China over the last 2 weeks spread to US-listed Chinese shares, since names like Baidu (Nasdaq: BIDU) and Alibaba (NYSE: BABA) seemed like they were being punished even though they never benefited from the massive price gains seen by many of their Chinese peers over the last year.
But after moving in tandem with China’s stocks over the last 2 weeks, US-listed Chinese shares finally broke the cycle and posted strong gains on Tuesday, even as the main Shanghai index slid another 7.6 percent. Some will say that US investors were acting in response to a surprise interest rate cut by China’s central bank after Chinese markets closed on Tuesday, and that may be partly true. But I also believe that their selling over the last 2 weeks reflects a new realism by US investors about China’s growth prospects, and that investors have also woken up to the biggest truth that governs China’s stock markets. Read Full Post…
With the 70th anniversary of the end of World War 2 in Asia fast approaching, I’ve been looking for interesting but overlooked war stories involving my adopted home of Shanghai, which was one of China’s first cities to get dragged into the conflict. Most such stories involve a mix of perseverance, resilience and defiance, as both Chinese and foreigners in Shanghai tried to maintain their daily routines as much as possible, while also resisting the enemy and awaiting the return of peace.
That’s when I realized that one of the most fascinating stories, which includes a healthy dose of all these elements, was right under my nose at Fudan University where I’ve been teaching in the Journalism School for the last 4 years. I’d heard in the past that Fudan fled Shanghai during the war and set up temporary shop in Jiangxi province or the interior city of Chongqing, but never pursued the real story to find out what actually happened and why. Read Full Post…
The following press releases and media reports about Chinese companies were carried on August 26. To view a full article or story, click on the link next to the headline.
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IDC Forecasts China Smartphone Market to Grow 1.2 Pct This Year (Chinese article)
Asia’s Richest Man Wang Jianlin Heads List of Big Losers in China Crash (English article)
Boeing (NYSE: BA) Raises China 20-Year Aircraft Demand, Says Outlook Rosy (English article)
E-House (NYSE: EJ) Reports Second Quarter 2015 Results (PRNewswire)
Smithfield CFO Says China Pork Exports Rise 45 Pct in First Half (English article)
Bottom line: New fund-raising signals indicate car services giant Uber could spin off its China unit within a year, and that Ping An-backed P2P lending platform Lufax could make a major IPO in the same time frame.
Uber, Lufax send new fund-raising signals
Two big new fund-raising stories are in the headlines, led by a modest new funding commitment that hints at a spin-off soon for the China unit of hired car services leader Uber. Meantime, the rush to see which of China’s fast-growing peer-to-peer (P2P) lending sites will be first to market has officially begun, with separate reports saying an IPO is in the planning stages for Lufax, a Shanghai based company that is backed by one of China’s top traditional financial services firms.
Both of these deals are in the mid-range in terms of size, probably worth the $100-$500 million, contrasting with a spate of deals earlier this year that were worth much more when China’s stock market was booming. It’s still possible we could see one or two more mega-fundings worth $1 billion or more by the end of the year, though such large deals could quickly disappear if China’s stock markets and economy remain in the doldrums. Read Full Post…
Bottom line: Premier Chinese Internet names should eschew China’s stock markets and continue to make IPOs in New York, where they can gain more accurate valuations and greater access to global capital markets.
NY offers best value for China Internet listings
Shares of e-commerce giant Alibaba (NYSE: BABA) achieved a dubious milestone late last week, when they officially closed at their lowest price since the company’s record-breaking IPO nearly a year ago. The big rise and subsequent fall of Alibaba’s stock was part of a broader sell-off of US-listed Chinese shares, sparked by an equally large drop on China’s domestic stock markets.
The US sell-off once again cast a spotlight on the question of whether some of China’s most promising private companies should pursue such offshore listings or make IPOs at home where their names are more familiar. Despite occasional volatility like last week’s sell-off, such offshore listings remain the best choice because they provide companies with relative stability and far more accurate valuations than what their peers are getting in China’s immature markets. Read Full Post…
The following press releases and media reports about Chinese companies were carried on August 25. To view a full article or story, click on the link next to the headline.
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China’s State-Owned Telecoms Firms Shuffle Top Executives (English article)
Apple’s (Nasdaq: AAPL) China Business Strong in July and Aug: CEO (English article)
Update: Since writing this post, China Telecom and Unicom have both announced that they will swap chairmen. Wang Xiaochu will resign from China Telecom and become head of Unicom, and Chang Xiaobing will resign from Unicom and become head of China Telecom. (Unicom announcement, China Telecom announcement)
Bottom line: A rumored shake-up in the top ranks of China’s big 3 telcos is long overdue, but will only be effective if Beijing installs experienced, marketing savvy managers rather than the usual government bureaucrats.
Leadership shuffle coming at big 3 telcos?
I was largely dismissive of the first reports to emerge last week of a brewing shake-up for the leadership at China’s big 3 telcos, saying the basis for the speculation didn’t seem too solid. But the chatter continued to gain momentum at the end of last week, leading me to change my view and predict that perhaps much-needed change is on the way and could be announced soon.
The buzz began when media first reported that the telecoms regulator had called a meeting last Friday of top leaders of China’s big 3 state-run telcos, China Mobile (HKEx: 941; NYSE: CHL), China Unicom (HKEx: 763; NYSE: CHU) and China Telecom (HKEx: 728; NYSE: CHA). (previous post) Now media are reporting that the Ministry of Industry and Information Technology (MIIT) has called another meeting for Monday, and some are citing unnamed sources saying that the main topic is a big leadership shuffle. Read Full Post…
Bottom line: A steady series of leaked photos of a smartphone co-produced by Google and Huawei is designed to give face to Beijing, and could pave the way for a China entry for Google’s Nexus phones and app store by year end.
China wins face in Google-Huawei tie-up
Barely a day has gone by recently without a leaked photo appearing on the Internet of a new smartphone being developed in a landmark tie-up between Chinese up-and-comer Huaweiand Google’s (Nasdaq: GOOG) Nexus brand. A cynic like me would speculate that the growing volume of noise looks rather deliberate, and that both sides are intentionally trying to drum up buzz for a new Nexus model that will become the brand’s first to be made by a Chinese manufacturer.
Huawei
Huawei’s motivations for leaking the information are obvious: this particular tie-up will bring it the validation it craves for its young smartphone business, giving its products the stamp of approval from one of the world’s leading technology names. But Google’s motivations are a bit more subtle. Certainly it’s natural to hype up this kind of new product before the launch. But in this case Google is almost certainly aware of the “face” that China will receive from such a move. That could help to soothe its tense relations with Beijing as it eyes a return to a market it can’t afford to ignore. Read Full Post…
