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September Recap: Wall Street Unsettled, Sides Exchange Deals & Threats Ahead of

Anna Vodopyanova 2019-10-01 10:10 AM

September’s end has been shaken up by reports that the Trump administration is considering delisting Chinese companies from Wall Street at the same time that Nasdaq has been tightening its listing rules. And while the delisting, originally reported by Bloomberg last week, was renounced by White House trade advisor Peter Navarro as “fake news” in a statement to CNBC on Monday, the tightening of the approval process for listing on the Nasdaq was reported by Reuters as supported by “regulatory filings, corporate executives and investment bankers.”

Just this month, a number of Chinese companies have filed their preliminary proposals with the U.S. Securities and Exchange Commission. They were enterprise consultancy Global Internet of People, insurance facilitator Huize Holding Ltd., Hong Kong retailer of health supplements Dragon Jade International Ltd., online pharmacy Ecmoho Ltd. and logistics provider MingZhu Logistics Holdings Ltd. 

In addition, just on Monday, four Chinese companies filed for IPO in New York: NetEase's education arm Youdao Inc., content and business services provider 36Kr Holdings Inc., road maintenance servicer REED Ltd. and aesthetic surgery company Aesthetic Medical International Holdings Group Ltd.

Meanwhile, no Chinese company had a flotation in September on U.S. markets, following one IPO in August and three in July.

Following the threat on U.S. listings and the Sino-U.S. trade tensions, Chinese companies may increasingly turn to Hong Kong, despite the ongoing protests in the city, as well as the recently launched STAR market in Shanghai. Reuters reported that Bestbond, a Nanjing apartment rental provider, was rethinking its Nasdaq IPO plans, while investment banks have been getting calls from worried Chinese clients.

Nasdaq did not respond to requests for comment on Monday.

Alibaba’s Jack Ma Resigns

A significant, though long-planned, shift occurred at Alibaba Group Holding Ltd. (NYSE: BABA) earlier this month. The company’s founder and chairman Jack Ma stepped down after growing the e-commerce giant for 20 years, promoting trustworthiness and user-first values. A former teacher and now an inspirational leader, Ma planned to concentrate on education and philanthropy after retirement.

Chief executive Daniel Zhang succeeded Ma as chairman and implemented a set of new values at the company’s 20th anniversary.

Last week, Alibaba Cloud held the Apsara Computing Conference in Hangzhou. It revealed its AI inference chip, Hanguang 800, that makes machine learning faster and more time-efficient. On the company’s official news website Alizila, Alibaba said the chip cuts down the time to complete a task that takes traditional GPUs an hour to five minutes.

Alibaba Cloud also announced a number of partnerships at the conference, including one with Intel, formed to accelerate the digitization of the Olympic Games. The two will collaborate on bringing tech solutions to the games in Tokyo in 2020 and in Beijing in 2022, according to official statements by the companies.

Alibaba is anticipated to raise $15 billion in a Hong Kong IPO in October.

Awaiting an Agreement on Trade

China is kicking off its Golden Week to celebrate the 70th anniversary of Communist rule, with trade talks – and more tariffs – scheduled to follow. In light of the celebration, U.S. President Donald Trump postponed the additional tariffs on $250 billion in previously taxed Chinese imports this month in what he called a “gesture of goodwill.”

Whether following requests for exemption by American businesses or in another gesture of goodwill, Trump has excluded 437 Chinese products from tariffs. These include certain bikes, coolers, water filter cartridges and other consumer products. China's Ministry of Finance, meanwhile, has exempted $16 billion in U.S products from additional tariffs. Trump, who may be facing an impeachment inquiry, also said he would consider an interim trade deal with China.

A delegation with Vice Premier Liu He is set to meet in Washington with U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin on Oct. 10. The tariffs on Chinese imports are set to rise from 25% to 30% on Oct. 15, unless a deal is reached.

Deals of the Month, PKX Launch, Hong Kong Protests

Also this month, Beijing Daxing International Airport, designed by Zaha Hadid Architects, held its grand opening. CW columnist Mark Melnicoe wrote about the opening of this “biggest and most modern” airport, also bound to be the busiest, at the time of plunging venture capital in the country. He also believes that U.S. companies manufacturing in China may not be heading for the exits anytime soon, despite Trump’s urge for them to come home.

Separately, Baidu Inc. (Nasdaq: BIDU) is taking steps to focus on expanding its own ecosystem. Last week, it announced the sale of 31.3 million shares worth $1 billion in travel booking giant Ctrip.com International Ltd. (Nasdaq: CTRP) as part of the move. E-vehicle maker Kandi Technologies Group Inc. (Nasdaq: KNDI) scored a $70.5 million deal with Walmart supplier DGL Group Ltd. Sohu.com Ltd. (Nasdaq: SOHU) reaffirmed its buyout proposal of Changyou.Com Ltd. (Nasdaq: CYOU). Alibaba acquired luxury retailer Kaola from NetEase inc. (Nasdaq: NTES) for $2 billion. The Stock Exchange of Hong Kong tried to buy out the London Stock Exchange, unsuccessfully.

Meanwhile, Hong Kong protests are continuing, with Beijing bracing for mass demonstrations during the anniversary of the rule. Hundreds of thousands of people have taken to the streets of the city since mid-June, calling for the resignation of CEO Carrie Lam and the cancellation of the extradition bill. The violations have turned violent, with more than 1,000 arrests. Early in September, Lam said the bill will be formally withdrawn, as reported by various media.