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China markets round-up: July PMI expands, TikTok under US scrutiny, Covid-19 vaccine producer goes to Star

Shanghai_skyline_575px_Adobe_24Apr2020
By Addison Gong, Rebecca Feng
31 Jul 2020

In this round-up, China’s July Purchasing Managers’ Index (PMI) numbers indicate recovery, Chinese video-sharing company TikTok is under a US national security review and Hong Kong-listed CanSino Biologics is set for a secondary listing on Shanghai’s Star board.


China’s July PMI expanded at a faster pace than in June, according to data published by the National Bureau of Statistics on Friday morning.

Manufacturing PMI reached 51.1 in July, edging up from 50.9. Non-manufacturing PMI moderated to 54.2 from 54.4 in June.

Among the sub-indices of manufacturing PMI, new export orders index jumped from 42.6 in June to 48.4 this month. The employment sub-index also improved slightly to 49.3 from 49.1, after falling for three consecutive months since April.

“These PMI readings point to steady recovery momentum in July despite the floods along the Yangtze River and some local second waves of Covid-19,” Ting Lu, chief economist at Nomura, wrote in a Friday note. However, Lu expects weaker sequential recovery momentum in the second half this year.

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TikTok, the Chinese video sharing service owned by ByteDance, is under a national security review by the Committee on Foreign Investment in the United States, according to the US treasury secretary Steven Mnuchin. The treasury department leads the committee.

When China’s foreign ministry spokesperson, Wang Wenbin, was asked about the issue at a Thursday press conference, he said the US applies the principle of “presumption of guilt” on Chinese companies without any evidence, and threatens the companies. This has “exposed the hypocrisy of the US” when it comes to maintaining fairness and freedom, he added, urging the country to stop politicising trade issues.

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Tianjin-based and Hong Kong-listed CanSino Biologics, the producer of one of China’s first potential Covid-19 vaccines, is doing a secondary public offering on the Shanghai Star board, according to filings with the bourse.

The company is planning to sell 24.8m shares at Rmb209.71 ($30) per share. It will raise about Rmb5.2bn from the IPO, more than five times what it sought to raise in the beginning.

The issuer said Rmb1bn of the proceeds will be used to expand its production facilities base, conduct research and development work for new vaccines, and improve its IT infrastructure.

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China has completed the issuance of Rmb1tr of Covid-19 special treasury bonds, after the fourth tap of the 10 year tranche on Thursday.

Issued by the Ministry of Finance through auctions, the Rmb1tr was split between five, seven and 10 year tenors. Through various taps, China raised Rmb200bn from the 2025 bonds, Rmb100bn from the 2027s, and Rmb700bn from the 2030 deal.

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The World Bank expects China’s economic growth to moderate to 1.6% this year, but has forecast a recovery to 7.9% in 2021, it said in a Tuesday report.

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The Asia Infrastructure Investment Bank has elected Jin Liqun, its current and founding president, for a second term as president. Jin’s next five-year term will begin on January 16, 2021.

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Chinese online travel firm Ctrip, also known as Trip.com, is planning to delist from the Nasdaq, Reuters reported, citing anonymous sources.

The company has reportedly reached out to a number of financial and strategic investors to join a take-private deal, due to rising tensions between the US and China as well as Covid-19’s impact on its business.

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China Vanke Co could become the second largest shareholder in defaulted Chinese property issuer Tahoe Group with a 19.9% stake, Tahoe said on Friday morning.

According to the share transfer plan, Tahoe’s parent, Tahoe Investment Group Co, will sell 19.9% of its shares in the company — worth Rmb2.43bn at Rmb4.9 apiece — to a unit of Vanke. Tahoe Investment’s holding will drop to 29.07%.

The deal’s close is contingent upon Tahoe’s successful debt restructuring as well as Vanke completing its due diligence of Tahoe.

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MSCI plans to launch a series of thematic indices based on China’s A-share market within a year, its head of index product for Asia Pacific reportedly said at a conference.

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The National Association of Financial Market Institutional Investors (Nafmii), one of the regulators for China’s interbank bond market, together with China Central Depository and Clearing (CDCC), a clearing institution for the market, published new guidelines on Wednesday to simplify the issuance of so-called “enterprise bonds”.

Enterprise bonds are sold by corporations and fall under the supervision of the National Development Regulatory Commission (NDRC).

Under the new rules, the issuance of enterprise bonds will shift from an approval-based system to a registration-based system. NDRC has appointed Nafmii and the CDCC to take up the responsibility of analysing the issuance material.

The NDRC is known for taking its time when giving approvals to enterprise bond issuers. The new rules, however, explicitly said the registration process should not last longer than 30 working days.

As a comparison, bankers have told GlobalCapital China previously that some enterprise bond issuers could wait up to two years for approval from the NDRC.

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The Beijing Local Financial Supervision and Administration said on Monday it would provide support for US-listed Chinese companies that seek to return to the A-share or H-share markets, local media reported.

The regulator also said it will work with the China Securities Regulatory Commission to launch relevant policies to attract these firms back.

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The People’s Bank of China has asked commercial banks to submit their online consumer loans data for the half-year periods ending December 2018, June 2019, December 2019 and June 2020, local media Caixin reported. The submissions should be made by the end of July.

Additionally, the central bank also told banks to submit separate data on loans provided through lending platforms developed by Ant Financial, the operator of online payment service Alipay.

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The Shanghai Stock Exchange published guidelines for the corporate bond exchange, encouraging issuers to actively manage their debt as well as improve their maturity profile and funding cost.


By Addison Gong, Rebecca Feng
31 Jul 2020