9/4/2021 Financial News In China: The Beijing Stock Exchange Established; CCP Strengthens 11 Anti-monopoly Reviews

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1.The Beijing Stock Exchange Does Not Impose Any Price Limit On The First Day Of IPO

According to Reuters News Agency, the Communist China established the Beijing Stock Exchange on Friday.  Zhou Guihua, director of the Public Company Department, said that the source of newly listed companies on the Beijing Stock Exchange was innovative companies that had been listed on the NEEQ for 12 months.  The Beijing Stock Exchange does not impose a price limit on the first day of listing, and the price limit will be 30% from the next day.

Comment: The CCP established the Beijing Stock Exchange, and the reform of the New Third Board has set a new starting point. This should be the product of negotiation and compromise within the party. Xi Jinping established his own financial trading platform and used the new three-board reform method to grasp the lifeblood of small and medium-sized enterprises in his own hands.

2.The CCP Is Strengthening 11 Anti-monopoly Reviews

The State Administration for Market Regulation said on Friday that it is strengthening anti-monopoly review of 11 cases of operator concentration including the merger of Tencent’s Huya and Douyu, Baidu’s acquisition of Huanju Group, and JD’s acquisition of Liexin Technology. The “Annual Report on China’s Anti-Monopoly Law Enforcement (2020)” was published on the website of the State Administration of Municipal Supervision and stated that it will strengthen and optimize the anti-monopoly review of the concentration of undertakings, and solve the problem of weak legal deterrence by increasing the penalties for illegal enforcement of concentration cases, etc.  The regulatory compliance system for the concentration of business operators has become more complete and comprehensive. The merger of Huya and Douyu in early July has been suspended.

Comment:The CCP does not have a real rule of law, and giant enterprises are the CCP’s white gloves for making money.

3.The CCP Hopes To Bring Didi Into State Control

According to Bloomberg News, Beijing is considering bringing Didi Chuxing DIDI.N into the scope of state control and proposes that state-owned enterprises invest in this online car-hailing company.  Bloomberg reported on Friday that the core of the Beijing government’s proposal is to regain control of Didi, especially the data held by Didi.  Didi is one of the largest enterprises in Beijing.  Bloomberg quoted an unnamed person familiar with the matter as saying that according to preliminary recommendations, state-owned companies such as Beijing Capital Travel Group’s Shouqi Group will acquire shares in Didi. According to the report, other options under consideration include the acquisition of nominal shares by the aforementioned consortium, as well as so-called “golden shares” with veto power and a seat on the board of directors.  Didi Chuxing, the Beijing Municipal Government, Beijing Tourism Group and Shouqi Group did not immediately respond to requests for comment.  Didi shares closed up 2.4% in New York at $9.02.  Some investors welcomed the news, believing that it may eliminate the impact of regulatory uncertainty on Didi’s share price. The SEC declined to comment.  NYSE did not respond to a request for comment.

4.China Evergrande’s U.S. Dollar Debt Continues To Fall And Hit New Lows

China Evergrande Group’s related US dollar debt, which is under heavy debt pressure, continued to fall on Friday, and all continued to hit new lows. With the exception of individual bonds, most of them have fallen below 30% of their face value.  After Evergrande’s credit rating was downgraded by China Chengxin International, domestic bonds once plummeted, and worries about Evergrande’s debt repayment became even greater.  The latest purchase price of China Evergrande’s US dollar bonds (with a coupon rate of 9.5%) due on April 11, 2022 was 31.92 cents per US dollar, which was around 34.8 cents yesterday afternoon.  The latest purchase price of Evergrande Real Estate’s US dollar bonds (with a coupon rate of 13.75%) due on November 6, 2023 is 24.4 cents per US dollar, and around 29.2 cents on Thursday afternoon.  China’s largest local credit rating agency-China Chengxin International announced on Thursday that it will lower the credit rating of the entity and related debts of China Evergrande Group from AAA to AA, and include it on the watch list for possible downgrade; reasons;  It is that the uncertainty of Evergrande Real Estate and Evergrande Group’s debt continuation and repayment has increased significantly.

5.JD.com Bans 87 Games And Games That Have Not Been Approved Are Not Allowed

Communist China’s local official media-Beijing Youth Daily reported on Friday that Jingdong Group 9618.HKJD.O issued “Announcement on Banning Games” on Thursday, requiring merchants to ban the sale of 87 games.  The JD.com announcement also emphasized that games that have not been approved and filed shall not be sold on JD.com, which will form a normalized and high-pressure treatment for such products.  These games include “Call of Duty” developed by Blizzard’s ATVI.O, and “Assemble! Animal Forest” developed by Nintendo 7974.T.  The Propaganda Department of the Central Committee of the Communist Party of China recently issued the “Notice on Carrying out Comprehensive Management Work in the Cultural and Entertainment Fields”, requesting to strengthen the review and control of game content, compact the main responsibility of the game platform, promote the access to the anti-addiction system, and improve the real-name verification technology.

6.The Prices Of Two Steelmaking Raw Materials Are Differentiated

The prices of several steel-making raw materials that generate huge profits for the world’s large miners have greatly diverged. On the one hand, it highlights Communist China’s influence on the global commodity market, and on the other hand, it suggests that iron ore prices will rebound.  An assessment by S&P Global Platts shows that although iron ore prices have fallen by 40% from the historical high of more than US$230 per ton in May, the reason is that Communist China has imposed stricter restrictions on steel production.  However, the price of metallurgical coal exported to Communist China has soared, from US$230 per ton in May to US$440 per ton this week. The price of iron ore has fallen sharply, while the price of metallurgical coal has soared. Considering that the end uses of these two commodities are the same, the price difference between them is surprising.

7.Food Companies Set Up Biotechnology Companies With A Registered Capital Of 5 Million

According to the Tianyancha APP, on September 2, Hunan Xiangming Biotechnology Co., Ltd. (hereinafter referred to as Hunan Xiangming) was established. The legal representative is Sun Cuiying with a registered capital of RMB 5 million. The business scope includes the manufacture of tea beverages and other beverages;  Agricultural product acquisition; agricultural product research and development; food research and development; food testing services, etc. On August 30th, Jiangsu Hefu Food Technology Co., Ltd. was established with a registered capital of 50 million and the legal representative is Guo Yanxia. The business scope includes food production; food sales; food processing food production; catering services; vegetable, fruit and nut processing, etc.  Shareholder information shows that the company is wholly-owned by Jiangsu Hefu Catering Management Co., Ltd., an affiliated company of Hefu Noodles.

8.CCP Launched 10 Billion Yuan Reverse Repurchase

The People’s Bank of China Securities News reported on September 3 that the People’s Bank of China announced on September 3 that, in order to maintain a reasonable and sufficient liquidity in the banking system, a 7-day reverse repurchase operation of 10 billion yuan was carried out by way of interest rate bidding, and the winning interest rate was 2.20%.  Given that 50 billion yuan of reverse repurchase expires today, a net return of 40 billion yuan has been achieved.  At the beginning of the month, the funds became loose, and short-end interest rates went down across the board for two consecutive days.  The Shanghai Interbank Offered Rate (Shibor) fell 4 basis points overnight to 2.082%.  The 7-day Shibor fell 2.9 basis points to 2.075%.  In terms of the performance of the repo interest rate, the weighted average interest rate of DR007 dropped to 2.05%, which was lower than the policy interest rate.  The reverse repurchase rate (GC001) of the 1-day treasury bond on the Shanghai Stock Exchange fell to 2.301%.

By【G translators – Financial Team】
Author: 雪梨