This week Chinese Regulators raised hopes that Ant Financial’s IPO may now go ahead, despite the PBOC causing the Hong Kong Exchange to plunge after it drained billions from open markets amid warnings of an asset bubble. Fundraising increased as a whole in China over the course of last year, while PE firms have begun this year with a flurry of investments across the region. China and New Zealand have signed an enhanced free trade deal, and Vietnam’s National Congress is meeting to finalise policy for the next five years.
MAJOR HEADLINES IN ASIA
This section tracks major political, economic and business news from the key economies in Asia.
China and New Zealand signed a deal upgrading a free trade pact as Beijing seeks to establish itself as a strong advocate of multilateralism. The pack will either remove or cut tariffs on many of New Zealand’s mostly commodities-based exports, while compliance costs will also be reduced.
The International Monetary Fund urged South Korea to lift restrictions on short-selling, which were put in place early last year to help tame the markets as the pandemic spread. The IMF’s comments come as Korean lawmakers discuss an extension of the ban, which was set to expire on March 15. The IMF believes the restriction lift would improve the functioning of markets and help ensure that investors are sensitive to risks.
In a WTO meeting this Monday, the US rejected Hong Kong’s request for a dispute settlement panel over the Trump administration’s decision to label goods that are made in Hong Kong as “Made in China”. Hong Kong is likely to raise the issue again in the next scheduled meeting in February.
The Philippines has just announced its worst economic performance since the country began releasing growth data just after World War II in 1947. The country’s GDP in 2020 contracted almost 10%, but the government is eyeing a big rebound in 2021.
EQUITY AND DEBT CAPITAL MARKETS
This section highlights the biggest ECM and DCM developments in China and Hong Kong which are moving markets and grabbing headlines.
After regulators abruptly shut down Ant Group’s US$34.5 billion dual listings in Shanghai and Hong Kong last November over concerns that the firm posed a systemic risk and was violating consumers’ privacy, China’s central bank raised the possibility this week that Ant Group could be allowed to pursue an IPO once it fully complies with the country’s law and has addressed customer complaints.
Hong Kong’s mainland-dependent stock market plunged this week as the People’s Bank of China drained billions of funds from the financial system via open-market operations. The fall was led by a 7.2% drop in Hong Kong Exchanges & Clearing Ltd. and a 6.3% plunge in Tencent.
Airport Authority Hong Kong is considering raising as much as US$1.5 billion in its second dollar bond offering in two months. The sale would consist of 10-year and 30-year tranches.
PE/VC DEAL ACTIVITY
This section tracks the fundraising, deals and other activities conducted by the PE/VC funds in Asia.
CHINA AND HONG KONG
Despite a dip in fundraising in the first quarter of 2020, China’s deal-making market showed overall resilience. Chinese start-ups raised at least US$56.2 billion across 1,193 transactions in the entire year, average deal size also climbed quarter-on-quarter from Q2 to Q4 as investors grew more ambitious.
Edge Medical, a China-based manufacturer of surgical robots, has raised a US$93 million Series B round led by Lyfe Capital and Hong Kong-listed Kangji Medical.
Chinese AI technology developer 4Paradigm has raised a US$700 million Series D round led by Boyu Capital, Primavera Capital Group, and Hopu Investments.
Aspex Management has led a US$200 million Series E round for Hong Kong-based travel app Klook, as it pivots to domestic holiday services during a freeze in international tourism.
JAPAN AND KOREA
Carlyle Group has increased its offer for energy and environment service firm Japan Asia Group to US$462.5 million, doubling the original terms of a management buyout launched last November, along with a cash payment.
SoftBank’s robotics unit announced a joint venture with Japanese electronics maker Iris Ohyama. The Japanese brand, which will hold a 51% stake in the venture, is becoming an increasingly potent force in Japan’s electronic sector as it moves steadily up the value chain.
Galaxy Digital Trading HK Ltd co-led a US$25 million funding round in Singapore-based Terraform Labs, whose cryptocurrency-related technology is gaining in popularity with merchants and users in South Korea.
General Atlantic has invested US$55 million in Kalbe Genexine Biologics, an Indonesia-based drug developer focusing on Southeast Asia. The company, also known as KGBio, is a joint venture between Kalbe Farma, a pharmaceuticals company in Indonesia, and Genexine, a biotech developer in Korea.
This section highlights the major regulations, policy changes and political developments in China and Hong Kong that have implications for the business environment.
China’s central bank said it will look into and punish illegal unlicensed personal credit scoring businesses as the government tightens regulation on fintech firms who collect and use personal data in financial services.
China is allowing the country’s small and midsize banks to use a new type of perpetual bond with an equity-conversion feature to raise money, as part of regulators’ efforts to help smaller banks replenish capital and keep risks under control.
HSBC CEO Noel Quinn said the bank had no option but to close an exiled Hong Kong lawmaker’s account. Facing questions from the UK, Quinn said HSBC’s decision was driven purely by the need to comply with local laws. The Hong Kong police has reportedly requested pro-democracy activists’ financial records from the city’s major retail banks, including Citibank and Standard Chartered.
Fund managers and bankers leaving Hong Kong for alternative financial centres have reportedly been asked to explain such decision to a range of government agencies, including the Securities and Futures Commissions of Hong Kong, and the Hong Kong Financial Services and the Treasury Bureau.
ONE FOR THE WEEKEND
Each week we will select one or two articles which have caught our attention – long reads, institutional outlooks, analysis or interesting viewpoints
ESG is becoming increasingly important in M&A, according to Avinash Mehrotra, global head of the Activism and Shareholder Advisory and Takeover Defense practices. Avinash describes how ESG considerations can drive M&A transactions while influencing corporate strategy, and how standardisation in ESG measurement is a factor in DD processes.
THE WEEK AHEAD
After being under the spotlight for weeks, Kuaishou’s shares will begin trading next week on Feb 5 in Hong Kong. Hong Kong and Singapore are going to publish December retail sales data which is expected to make sobering reading, while Vietnam is expected to re-elect its Communist Party chief Nguyen Phu Trong to serve a rare third term at the close of the country’s five-yearly National Congress.
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