6/3/2021 Financial News: Hong Kong Trading Tax Hike Passed By Legislature, Huawei P50 Phone’s Launch Time Unknown

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1.Hong Kong Trading Tax Hike Passed by Legislature

Xinhua News Agency – On June 2, the Legislative Council of the Hong Kong Special Administrative Region passed the “Revenue (Stamp Duty) Bill 2021”. According to this bill, the stamp duty rate for stock transactions will be increased from 0.1% to 0.13% currently paid by both buyers and sellers. The adjustment will take effect on August 1 this year.

The Hong Kong Special Administrative Region Government’s Director of Financial Affairs and the Treasury Bureau Xu Zhengyu said that the government’s decision to adjust the stamp duty on stock transactions is mainly to increase government revenue and maintain a sound public finances. The fiscal deficit from 2021 to 2022 is expected to reach HK$101.6 billion. Based on the average daily trade volumes of approximately HK$177 billion from the end of February to the end of May this year, the adjustment of the stamp duty rate will generate about HK$18.7 billion in additional revenue to the government each year. Hong Kong’s government initially announced its plan to increase the stamp duty on stock transactions in February this year. 

2. Huawei Launched HarmonyOS 2 but P50 Phone’s Launch Time Unknown

On the evening of June 2, Huawei officially launched the latest HarmonyOS 2 system. This new operating system will be used in mobile phones, computers, tablets, TVs, driverless cars, car equipment, smart wearables, etc. In addition, it was announced that over 300 application and service partners, more than 1,000 hardware partners, and over 500,000 developers have participated in the Hongmeng ecosystem.

Huawei P50 mobile phone was also unveiled at the press conference. However, Yu Chengdong, CEO of the Consumer BG at Huawei Technologies, said that the launch time of the P50 series is yet to be determined, but Huawei will solve the issues as soon as possible and bring the P50 to the market.

3.Communist China Issued Fresh QDII Quotas of US$10.3 Billion

A reporter from China Securities News learned from the State Administration of Foreign Exchange (SAFE) on June 2 that a total of US$10.3 billion in Qualified Domestic Institutional Investor (QDII) quotas was issued to 17 institutions. After this round of issuance, the SAFE has approved a total of US$147.319 billion in investment quotas for 173 QDII institutions. Among these 17 institutions are banking institutions such as HSBC Bank (China), securities institutions such as China Southern Fund Management, and insurance companies such as the People’s Insurance Group of China. QDII is an arrangement in the capital market that allows domestic institutions to invest in offshore markets such as securities and bonds.

From last September to this May, the SAFE issued six rounds of QDII quotas with a total of US$33.036 billion to 89 institutions.

4.Rising Prices and Shortages of Yellow Phosphorus

Huachuang Securities reported that due to the recent power shortage in Yunnan, the operations of yellow phosphorus manufacturers have been greatly affected, leading to a sharp increase in product prices. Data indicate the phosphoric acid index rose to 7,080 yuan/ton on June 1, an increase of 34% compared to 5,288 in early May.

Yellow phosphorus production is concentrated in Yunnan, Sichuan, Guizhou and Hubei provinces, of which Yunnan accounts for about 65% of the output. Recently the domestic inventory of yellow phosphorus has dropped significantly, and the supply is tight. Phosphoric acid factories have difficulty in acquiring raw materials. Some factories have to suspend their productions.

5.Freshwater Fish Price Continues to Rise in Communist China

According to statistics from the National Bureau of Statistics, in April, the price of freshwater fish increased by 26.4% year-on-year and 9.8% month-on-month. Since the beginning of this year, the price of freshwater fish has gone up significantly.

It is believed that factors such as decreased farming area, regulations on catching and restocking, and the rising cost of fish feed have caused the increasing price of freshwater fish. In addition, the number of newly registered fish-farming businesses has been declining for four consecutive years. In 2016, 19,700 such businesses registered. There were only 13,800 newly registered businesses in 2020, a year-on-year decrease of 16.3%. In the first five months of this year, only 2,470 new fish-farming businesses registered. It is expected that the price of freshwater fish will remain high in the short term, but may go down after this summer and fall.

6.AMC Buying Frenzy and Soaring Stock Price

AMC’s stock soared 126% in intraday trading on Wednesday. It closed at an all-time high with a 95% increase in stock price. The overall increase this year has exceeded 2,850%. Before the market opened on June 1, AMC announced its agreement to raise $230.5 million of cash from the sale of 8.5 million shares of Class A Common stock to Mudrick Capital Management, L.P. Each share was priced at approximately $27.12. However, Mudrick Capital liquidated and sold its shares on Tuesday as it believed AMC’s stock was significantly overvalued and should not be used as long-term investments.

Dalian Wanda Group, the Chinese company that acquired AMC Entertainment for $2.6 billion in 2012, reduced its AMC stake to 0.002% in May. Before that, Wanda held about 9.8% of AMC’s shares. When market closed on Wednesday, the market value of AMC soared to $31.3 billion, and 9.8% of its shares were worth $3.067 billion. Based on this estimate, Wanda made at least $2.5 billion less.

7.Many Chinese Companies Among Apple’s Major Suppliers

Apple recently released its 2021 Supplier Responsibility Progress report with a list of major suppliers for fiscal year 2020. According to a report by Yicai, there are 96 manufacturers in Communist China, which primarily provide precision components and materials. However, according to a Nikkei Asia analysis of the list, out of the top 200 suppliers in 2020, 51 were based in Communist China including Hong Kong, up from 42 in 2018. Although the list does not provide the monetary value of suppliers’ parts and services, suppliers based in Communist China generally offer lower value-added manufacturing and materials.

Comment: It would be interesting to see how many suppliers based on Communist China will remain on the list for fiscal year 2021, during which talks on economic decoupling and scrutiny on Chinese companies regarding forced labor have been on the rise.

By【G Translators – Financial Team】
Author: Kate