Bottom line: New Hong Kong IPOs by CICC and China Re are likely to move ahead and receive solid but not extremely strong demand, though a resumption of new listings in China might not occur until early next year.
New listings set to resume in HK
New signs are emerging of an upcoming resumption for China company IPOs, which have come to a standstill these last few months due to huge stock market volatility. The latest signs of new life are coming from 2 major financial services firms, with investment bank CICC and insurance giant China Re reportedly set to meet securities officials in Hong Kong this week. Both companies filed for Hong Kong listings earlier in the summer, but later went quiet as investor appetite for new shares was quashed by huge volatility on Chinese and Hong Kong stock markets.
This latest activity comes just a week after we saw similar signs of life in both Hong Kong and China. One of those saw outdoor advertising specialist Focus Media take steps for a backdoor listing in Shenzhen, while the other saw snack food giant Liwayway also take initial steps for a Hong Kong listing in the next 6 months. The activity led me to call on China’s securities regulator to quickly lift its current temporary ban on new IPOs as soon as the current market volatility subsides. (previous post) Read Full Post…
Bottom line: A threat to privatize Baidu by chairman Robin Li is probably the result of frustration at recent declines in the company’s stock and is unlikely to result in a serious buy-out bid.
Frustrated Robin Li threatens Baidu privatization
The biggest privatization threat to date by a US-listed Chinese company has just come from online search leader Baidu (Nasdaq: BIDU), whose chairman Robin Li is joining a growing chorus of executives who say their shares are underappreciated by Wall Street investors. In this case it’s easy to see why Li is unhappy, since Baidu’s stock has lost a quarter of its value since July, when the company reported a spending binge on new businesses had sapped its profits.
Baidu’s shares were actually down by an even greater 30 percent at the start of this week, but surged 6 percent in the latest session amid a broader rally for Chinese Internet stocks. It should come as no surprise that the US surge was sparked by a rally earlier in the day on China’s domestic stock markets, which is where Baidu and many of its other US-listed Internet peers say they would like to re-list. Read Full Post…
Bottom line: Stiff restrictions on private investment in Chinese financial services will hobble a new insurance tie-up for Ant Financial, and were likely a big factor behind the resignation of the head of Tencent’s young WeBank.
WeBank chief resigns
China’s 2 largest Internet companies are in the headlines for major new moves in financial service, reflecting the rapidly evolving picture for this newer part of their business. Alibaba (NYSE: BABA) was in the headlines for more positive developments, as its affiliated Ant Financial unit announced a new insurance tie-up with Cathay Financial (Taipei: 2882), one of Taiwan’s leading financial services companies. The news was less upbeat for Tencent (HKEx: 700), with word that the head of its young WeBank was leaving just 9 months after the bank’s launch.
Both of these stories reflect the huge potential financial services hold for big private companies like Alibaba and Tencent, as Beijing opens the sector to private investment. But at the same time, the newness of the opening means that many rules are unclear and sometimes even contradictory. Tencent has learned that lesson quickly with WeBank, which has faced major limitations in its early days. Read Full Post…
Bottom line: Contention around Meituan’s new mega-funding and Ele.me’s urgent desire to sell itself reflect overheated competition in the O2O restaurant services market, which could result in a major shake-up over the next 12 months.
Meituan denies rumors of funding collapse
Just a couple of days after reports emerged about the latest fund-raising by leading group buying site Meituan, the newest reports are painting a more chaotic scene in the sector for online-to-offline (O2O) services involving collaboration between web sites and restaurants. Meituan is once again in the news, though this time it’s denying rumors that its latest fund-raising has collapsed. Meantime, take-out dining delivery specialist Ele.me is also reportedly in frantic need of cash due to stiff competition gobbling up the industry.
This pair of stories reflects a cycle that’s all too common for emerging industries in China. That cycle typically sees one or two companies find success in a new business area, sparking a gold-rush that sees many others rush into the space. The result is always a surge in overcapacity, which is almost always followed by a shake-out that sees most companies close or withdraw from the business. Read Full Post…
Bottom line: Alibaba’s shares will remain under pressure through at least the end of the year, but could rebound after that and return to their IPO level or higher in 2016 as the bears lose interest and move on to their next victim.
Bears feast on Alibaba stock
Everyone has their good years and their bad ones, and 2015 is definitely shaping up as a year that e-commerce leader Alibaba (NYSE: BABA) would rather forget. After wowing investors with a record-breaking IPO a year ago, the company’s stock has been mauled in 2015 by a large stable of hungry bears, including the latest that emerged over the weekend in a report saying Alibaba stock could tumble further still.
That report from the well-respected financial magazine Barron’s sparked another sell-off for Alibaba’s shares when the new trading week began, pushing them close to record lows, even as the company issued a detailed rebuttal. I’ve had a look at Alibaba’s statement, and many of its points are legitimate though they do seem to miss the big picture. Read Full Post…
Bottom line: The new iPhone 6S models will post lackluster sales during their first weekend in China, but could gain momentum later as the nation’s 3 mobile carriers launch aggressive promotions for their new 4G services.
High hopes for China with new iPhone launch
China has become a center of attention for Apple (Nasdaq: AAPL) these last few days, on hopes that the world’s largest smartphone market will help to power the latest iPhone to a record launch. Apple is being quite circumspect about the situation, saying only that global pre-orders for its new iPhone 6S and 6S Plus were “very strong”, ahead of their official September 25 launch date when they will become available in stores.
Analysts are saying they expect China to play an important but also muted role in the early stages for the iPhone 6S, accounting for as much as 15 percent of global sales in its first weekend. At the same time, another report is spotlighting discrepancies in iPhone 6S prices in different global markets. As usual the report shows that models in China will cost around 20 percent more than the the US, though Chinese prices will be comparable with Britain, France and Germany. Read Full Post…
Bottom line: Beijing should be commended for taking a national approach to regulating private hired car services, and should continue to update its policies to reflect the rapidly changing sector.
Beijing welcomes Uber, Didi to compete with taxis
A rambunctious young group of Internet companies could soon receive legal status in China, with reports that Beijing is getting set to unveil new rules governing private hired car services as early as this week. Beijing should be praised for taking an even-handed approach and regulating these services that are creating unprecedented competition for taxis, rather than bowing to pressure from state-owned taxi companies that want the aggressive group of newcomers banned.
These newer services do need to be regulated to avoid crime and fraud that has plagued industry pioneer Uber and similar services in other parts of the world. But to outlaw such services, like some countries have done, would have cost China an opportunity to nurture a whole new industry, including the homegrown Didi Kuaidi that was valued at $16.5 billion after a recent funding. Read Full Post…
The following press releases and media reports about Chinese companies were carried on September 15. To view a full article or story, click on the link next to the headline.
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Apple’s (Nasdaq: AAPL) iPhone Gets Boost From China as Sales to Hit Record (English article)
Alibaba’s Ant Affiliate Invests in China Insurance Unit of Cathay Financial (English article)
Bottom line: Intensifying competition in dining-related O2O services is pressuring Meituan to raise more funds, and the company should seriously consider a strategic alliance with Alibaba.
O2O dining wars dog Meituan
Online-to-offline (O2O) services have become the flavor of the day on China’s Internet, and take-out dining has emerged at the epicenter of a stampede by all 3 of China’s leading Internet companies to develop the market. Over the last 2 years, leading search company Baidu (Nasdaq: BIDU), e-commerce leader Alibaba (NYSE: BABA) and social networking giant Tencent (HKEx: 700) have all launched major initiatives in the space, collectively pouring hundreds of millions of dollars into the area.
Against that backdrop, the independent Meituan is emerging as an orphan in the space, since it’s the only player without a major backer despite its status as China’s top group buying site. That could explain the latest reports that say Meituan has returned to financial markets and is in the process of raising up to $2 billion in new funds, less than a year after it raised $700 million in another massive cash-raising exercise. Read Full Post…
Bottom line: Trina’s plan to separately list its solar plant-building assets is likely to meet with lukewarm to frosty demand, while Yingli’s downward spiral will continue as customers abandon the company due to its financial weakness.
Trina eyes IPO for plant-building unit
More signs of stress are on display in the solar panel sector, where shares of the stumbling Yingli (NYSE: YGE) are coming under pressure after its latest earnings report and a new plan by Trina (NYSE: TSL) to separately list some capital-intensive assets has overtones of desperation. These 2 stories reflect the intense pressure solar panel makers continue to feel as their sector still struggles to recover from a downturn that dates back 4 years due to massive oversupply.
Panel prices have rebounded somewhat over the last 2 years and many of the best-run companies have returned to profitability during that time. But intense pressure still remains for less well-run companies like Yingli. Even better performers like Trina are feeling pressure as they pour massive money into construction of new solar power plants, in a bid to create more demand for their products. Read Full Post…
This week’s Street View takes us to Yangpu District and my workplace at Fudan University, as classes resume after our long summer recess and students surprise me with the latest new trends in higher education. My own classes in the Journalism School contain the usual lists of students in their early 20s, but I was amused to see that my colleagues in the math department will be welcoming a youthful 14-year-old prodigy into their ranks this year.
In a different sign of the times, another headline noted that up to 40 percent of incoming freshmen at Fudan are using the Tenpay online payments service to pay their tuition this year. Of course the more popular Alipay might dispute that figure, which does seem quite high for such a new service. But the bottom line is that students are conducting more and more of their lives electronically, especially over popular platforms like Tencent’s WeChat and Alibaba’s Tmall. Read Full Post…
