Bottom line: A new crackdown on microlenders could put a slight damper on their growth, but is unlikely to affect them significantly next year unless China experiences a bad debt crisis.
Beijing clamps down on microlenders
Word that China will clamp down on the nation’s thriving field of online microlenders is sending a chill through the sector, as many predict new moves could severely slow down their breakneck growth. The newly-announced crackdown is only aimed at new microlenders, at least for now, with word that the central government has ordered all provinces to immediately stop issuing new licenses for such companies. (English article)
But like everything else in China, where there’s smoke there’s often fire not far behind. In this case, market watchers and participants are expecting this sudden freeze in new licenses is a prelude to a bigger clampdown, which is probably sorely needed. The explosion in microlenders over the last two or three years really does seem a bit out of control, and Beijing is clearly worried about the possibility of mass defaults due to poor risk management in this fledgling industry. Read Full Post…
Bottom line: Alibaba’s new investment in grocery operator Sun Art looks like a shrewd move into an area where logical synergies between online and offline shopping can be achieved.
Alibaba buys into Sun Art
After a period of relative quiet, e-commerce giant Alibaba(NYSE: BABA) is splashing back into the major M&A headlines with its purchase of a major stake in grocery retailer Sun Art (HK: 6808) for HK$22.4 billion ($2.9 billion). This particular deal looks strikingly similar to an earlier tie-up between Alibaba’s archrival JD.com (Nasdaq: JD), which is joining online and offline grocery carts through its own older tie-up with Walmart (NYSE: WMT).
Each of these plays looks relatively savvy, acknowledging that off-line shopping will continue to play a major role in the retail experience for certain products. Alibaba has embraced this online-offline approach with a vengeance over the past year, snapping up a series of existing retail chains and also rolling out its own concept convenience store that is completely automated. Read Full Post…
Bottom line: Sogou is unlikely to shed its position as a second-tier search engine anytime soon, despite its ties to Tencent ties, and its stock is also unlikely to be a strong performer over the next 2-3 years.
Sogou pops on debut, but will it hold?
After writing about up-and-coming hot new names like Qudian (NYSE: QD) and ZhongAn Insurance (HKEx: 6060) making blockbuster IPOs over these last few weeks, it feels a bit like going back to the future by writing today about a new listing for search engine Sogou (NYSE: SOGO). The fact of the matter is that Qudian, ZhongAn and just about all of the companies listing in this current wave of IPOs didn’t even exist when Sogou was born, and many of their founders were probably still in college or perhaps younger.
Anyone out there sensing just a tiny bit of skepticism from what I’ve just written isn’t just imagining things. As a longtime China tech reporter, I remember meeting with Charles Zhang, founder of Sogou’s parent Sohu (Nasdaq: SOHU), more than a decade ago, at which time he told me about all the great things in store for his then-fledgling search engine. Fast forward to the present, when it doesn’t seem like much has changed, including Sogou’s ongoing status as a niche player in China’s massive search market. Read Full Post…
Bottom line: The intensifying spat between Sina and a dissident shareholder is likely to ultimately cool down without any legal action, and could see the addition of 1-2 new independent directors to its board.
Sina-Aristeia tussle headed for court?
The battle for reform at Internet stalwart Sina(Nasdaq: SINA) has taken a somewhat nasty twist, with a dissident shareholder threatening legal or other action following a power play by longtime CEO Charles Chao to deprive minority shareholders of influencing the company through use of the ballot box. This particular move doesn’t come as a huge surprise, as it’s quite typical of Chinese CEOs like Chao to believe they know what’s best and do their utmost to ignore anyone who disagrees with their view.
That said, Chao did sound a slightly conciliatory note in this battle for reform, which is being led by a dissident minority shareholder called Aristeia Capital. I’ll go into that shortly, though first we should review this colorful battle and also what it might mean for Sina. The company’s share price has taken a bit of a beating these last few weeks and is now down around 8 percent amid all the brouhaha. Read Full Post…
Bottom line: The wave of strong sentiment for new offshore IPOs by Chinese companies is running out of steam, but listings before year-end could still get a slight left, especially fintechs.
Hexindai jumps on trading debut
Fintech is hot, and just about everything else is not. That appears to be the message with the latest offshore IPO by a Chinese firm, this time from Hexindai (Nasdaq: HX), a peer-to-peer (P2P) lender that takes in money from small investors and then lends it out to borrowers. Hexindai’s shares initially soared as much as 70 percent in their trading debut before finishing a much more modest but still comfortable 20 percent higher.
We’ll review the latest offshore IPO by a Chinese company in more detail briefly, but I thought this would also be a good opportunity to do a scorecard for a broader flurry of deals that has hit the market in the last month or two to see how they’re doing. The bottom line seems to be quite clear: IPOs from this new generation of financial technology companies, or fintech, are generally doing ok, while just about everyone else is now below their IPO prices. Read Full Post…
Bottom line: Apple should be able to extend its return to growth in China into at least one more quarter, while Xiaomi should also be able to continue posting strong double-digit growth for the next year.
Apple returns to China growth
Apple(Nasdaq: AAPL) has just released its latest quarterly results that show China is back on a growth track, quieting skeptics who had said its latest iPhone was debuting to mostly snoozes in the world’s largest smartphone market. On a broader basis, IDC has also just announced its global figures for third-quarter smartphone sales, showing Huaweicontinues to creep up on Apple and could well take the global No. 2 spot from its U.S. rival over the next year if current trends continue.
Last but not least is China’s own Xiaomi, which is catching people’s attention again with the strongest growth of any global players in the third quarter, consolidating its position as the world’s fifth largest player. It’s probably too early to say that Xiaomi’s comeback story has legs. But the company is the only one posting triple-digit growth among the top 5 in the latest quarterly results, a distinction previously reserved for Huawei and Chinese rival Oppo. Read Full Post…
Bottom line: Tesla’s announcement that its China plant is three years away puts a clear and realistic timeline on its intentions, which include strong growth in the market banking on supportive policies by Beijing.
Tesla gets realistic about China car production
Anyone who was hoping that electric car superstar Tesla (Nasdaq: TSLA) would start cranking out its products in China anytime soon will have to think again. Founder and celebrity CEO Elon Musk has poured cold water on all the speculation about his company imminently building a China manufacturing base by saying local production is at least 3 years off. That’s just a single data point, but it’s quite a significant one considering all the talk that’s been swirling around these days.
That talk dates back a couple of years, when reports first emerged that Tesla was interested in such a move. One of the stumbling blocks all along has been the ownership issue, since China now limits foreign ownership of any car-making joint venture to 50 percent. But that looks set to change, which had fueled speculation that Tesla would step on the gas pedal once it got the green light, pardon all the car metaphors. Read Full Post…
Bottom line: Whatsapp has likely been permanently blocked in China, while Satya Nadella’s visit to Xiaomi underscores Microsoft’s growing ties with the company, and Google’s China AI push is mostly PR.
Whatsapp booted from China?
A couple of the big high-tech multinationals are in the headlines as we head into the next-to-last month of the year, which seems like a good opportunity to review where these companies stand heading into the second term of President Xi Jinping and also as Donald Trump gets set to make his first China visit. One of those headlines involves Google(Nasdaq: GOOG), and comes in a soft-ish report pointing out the company is actively pushing its artificial intelligence (AI) development software in China.
Next there is Microsoft (Nasdaq: MSFT) CEO Satya Nadella, who is in China this week where he paid a visit on recovering smartphone maker Xiaomi. I’m not a huge fan of Microsoft’s strategy in general. But its growing ties with Xiaomi do look like an interesting new approach that could ultimately pay off nice dividends under Nadella’s 3-year-old leadership at the software giant. Read Full Post…
Bottom line: Big drops for three China concept stocks recently listed in New York, combined with a pullback for social networking giant Weibo, indicate a recent round of China stock euphoria may have crested.
Secoo continues to drop
Wednesday could go down as a watershed for newly listed China stocks in New York, which posted one of their worst days since a new wave of IPO euphoria began about a month ago. Three of the largest new offerings in New York, online microlender Qudian (NYSE: QD), e-commerce firm Secoo (Nasdaq: SECO) and education firm Rise (Nasdaq: REDU) all fell by 7 percent or more in the latest session.
At the same time, the more stately but still new-ish Weibo (Nasdaq: WB) also dropped by nearly 6 percent after the company announced plans for a $700 million convertible bond and gave some preliminary third-quarter results that clearly didn’t get people too excited. It’s hard to say if there was a single catalyst for this sell-off, which didn’t really go too far beyond these new listing candidates joined by Weibo. Read Full Post…
Bottom line: A merged company combining Youon and Haluo could emerge as a strong regional shared bike company, while Shouqi could likewise emerge as a strong regional player in the private car services space.
Shouqi raises new money
China’s shared ride space has been on a turbulent ride of its own this past year, as billions of investor dollars flooded into a sector with big but also limited potential. The result has been the typical bloody battle for market share, which is starting to result in a trickle of mergers, closures and even one new fund-raising in the latest headlines.
In the merger column, a couple of second-tier shared bike operators, one named Youon and the other named Haluo, are formally getting together, perhaps presaging more mergers ahead. The second development has seen Shouqi, a private car services company operated by one of Beijing’s top taxi companies, raise a fresh 600 million yuan ($91 million) in cash. And the third is seeing a shared car company called EZZY formally throw in the towel, leaving its users little hope of recovering their 2,000 yuan deposits. Read Full Post…
Bottom line: The strong debut for Rise Education reflects good investor appetite for new China concept stocks in New York, which should bode well for a new listing by Jianpu and could also buoy iClick.
Jianpu, iClick file for NY listings
The IPO floodgates are opening wider following the hugely successful listings of microlender Qudian (NYSE: QD) in New York last week and the Hong Kong listing of online insurance provider ZhongAn (HKEx: 6060) shortly before that. Those two nice debuts may be partly behind an equally impressive launch for Rise (Nasdaq: REDU), an education services firm that looks far less high-tech than that other pair.
At the same time, two other higher-tech names have just made their first public filings, with iClick and JianpuTechnology aiming to raise $100 million and $200 million in New York, respectively. Read Full Post…
