The January Caixin services Purchasing Managers’ Index (PMI) dropped to 52 amid a resurgence in local Covid-19 cases in China, from 56.3 in December. China’s official non-manufacturing PMI, released last week, saw a similar a slip to 52.4 from the previous reading of 55.7.
The official and Caixin manufacturing PMIs were down at 51.3 and 51.5, respectively, last month.
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Foreign investors increased their holding of bonds in China’s interbank market by Rmb299.4bn in January, including Rmb203.8bn through the CIBM Direct scheme and Rmb95.6bn via Bond Connect, data from the China Foreign Exchange Trade System (Cfets) showed.
Trading volume by foreign investors in January rose 44% compared to December to Rmb1.13tr, equal to about 4% of the total bonds traded in the interbank market, shows Cfets.
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Ant Group and the Chinese regulators have agreed on a restructuring plan, Bloomberg reported on Wednesday. The deal will see the Alibaba Group Holding-affiliate put all its businesses, including technology offerings in areas such as blockchain and food delivery, into a financial holding company, according to the wire. A Financial Times report said the plan could be officially announced before the Chinese New Year holiday next week.
A Thursday story by Reuters suggests that Ant is also planning to spin off its consumer credit data operations. The spin-off, together with Ant’s restructuring into a financial holding company, will mean the company could proceed with its delayed A+H listing within two years, the report added.
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Alibaba said on Tuesday that Ant’s business prospects and the IPO plan are subject to “substantial uncertainties” as it explores a restructuring. Alibaba is “unable to make a complete and fair assessment of the impact that these changes and uncertainties will have” on its business, it added in its financial results announcement for the quarter ended December 2020.
The Chinese technology giant reported close to $33.9bn in revenue for the quarter, 37% higher than a year ago.
Alibaba raised $5bn from four dollar bonds on Thursday, with both the $1.5bn 10 year and the $1bn 20 year notes priced at 100bp over US Treasuries, the $1.5bn 30 year bond at a spread of 120bp over, and the $1bn 40 year portion at 130bp over.
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The China Banking and Insurance Regulatory Commission on Wednesday published the corporate governance ranking of Chinese insurance companies for 2020. Six out of the 10 insurers evaluated received a ‘B’ grading — the second highest — with the other four firms assigned a ‘C’ rank. The grading system descends from A to E.
The higher ranked insurers are China Pacific Insurance Co, China Reinsurance Corp, China Taiping Insurance Group, People’s Insurance Co of China, Ping An Insurance (Group) Co of China, and Taikang Life Insurance Co.
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Ping An Insurance’s total exposure to recently defaulted China Fortune Land Development Co is about Rmb54bn, its president Xie Yonglin reportedly said when announcing the company’s 2020 financial results on Thursday.
These included Rmb18bn in equity investments and Rmb36bn in debt, Xie said, adding that the financial conglomerate, which jointly chairs China Fortune Land’s creditors committee, will put aside money for potential loss absorption “in a timely manner”.
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The Shanghai Stock Exchange plans to step up supervision and inspection of Star board IPOs, and released guidelines for onsite supervision at pre-listed firms if issues are found when reviewing their listing applications. The bourse said it will tighten supervision over new listings, and has asked IPO sponsors and other service providers such as law firms and accounting firms to better perform their duties as the capital market’s “gatekeepers”.
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Lenovo Group’s planned listing of Chinese depository receipts (CDRs) in Shanghai’s Star market will happen “in the next few months”, its chief financial officer Wong Wai Ming said during the company’s earnings call this week.
Lenovo announced the CDR sale of up to 10% of its enlarged share capital last month, and is working with China International Capital Corp to prepare for the listing. Wong said Lenovo is working on the prospectus, which will be submitted to the Shanghai bourse and the China Securities Regulatory Commission after its internal approval.
The company’s revenue for the fourth quarter of 2020 rose 22% year-on-year to Rmb114.2bn, while its net profits jumped 53% to Rmb2.6bn.
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MSCI has launched two China technologies indices, the MSCI China Tech 100 Index and the MSCI China A Onshore Tech 100 Index. Alibaba, Baidu, BYD, Meituan, NetEase, Nio, JD.com, Pinduoduo, Tencent and Xiaomi are the top 10 constituents of the former.
MSCI describes the indices as capturing the new economy companies and providing investors access to “the full China tech growth story”. It said on Wednesday that they are designed to include stocks from the consumer, communication services, healthcare and information technology sectors, to “meet the needs of international and domestic investors looking to invest in companies that are at the forefront of the technology and innovation-led economy in China”.
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Brilliance China Automotive Holdings denied a Reuters report of its acquisition by state-owned FAW Group, the second largest automaker in China. The deal is valued at $7.2bn and would eventually see the company being taken private, said the story, which led to a 11.4% boost in Brilliance China’s H-share price on Wednesday.
The company, the main Chinese partner for Germany’s BMW, said in a stock exchange filing that it “does not have any knowledge of the source of information” based on its “knowledge, information and belief”. Its top shareholder, Liaoning government-owned Huachen Automotive Group, defaulted on Rmb6.5bn of debt by November 2020.
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China’s outbound direct investment in 17 central and eastern European countries totalled $3.14bn by the end of 2020, according to the Ministry of Commerce. The same 17 nations have invested $1.72bn in the Mainland.
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The State Administration of Foreign Exchange penalised 13 Chinese banks for forex-related violations. Three of the lenders, China Development Bank, China Construction Bank and China Guangfa Bank, were fined more than Rmb10m each.