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Robyn Mak

Didi faces long and perilous journey to Hong Kong

Dec 03 2021

HONG KONG (Reuters Breakingviews) - Didi's road to Hong Kong may be paved with good intentions, but that will not make the journey any easier. China's $38 billion ride-hailing group is eschewing its New York listing for one in the Asian hub amid pressure from Beijing. A take-private would be costly; migrating American depositary receipts could be tricky. Didi will have to navigate Hong Kong's tougher IPO requirements too. | Video

TSMC's global expansion will chip away at its edge

Nov 11 2021

HONG KONG (Reuters Breakingviews) - The world’s biggest chipmaker is broadening its horizons. Taiwan Semiconductor Manufacturing agreed https://pr.tsmc.com/english/news/2880 to build a $7 billion plant in Japan with Sony, and it has similar plans to do more elsewhere. Diversifying production provides a helpful geopolitical hedge, but also makes its financial edge more vulnerable.

Alibaba is better off without Singles’ Day

Nov 04 2021

HONG KONG (Reuters Breakingviews) - It's time to end the world's biggest shopping event. Alibaba has kicked off China's annual Singles' Day event and wants it to be greener this time. But the extravaganza looks increasingly at odds with Beijing's environmental goals. If Alibaba is serious about sustainability, calling off the consumption overkill would send a stronger message than tweaking it around the edges. Started over a decade ago to coax Chinese shoppers onto Alibaba's online sites, Singles' Day has morphed into a national obsession featuring glitzy galas and performances and plenty of addictive discounts with a tap on a smartphone screen. Last year, the company processed a whopping $74 billion in transactions over an 11-day period. This year’s numbers will dazzle again: A record 290,000 brands will offer some 14 million deals to over 900 million bargain-hunters. Rival sites like JD.com have joined in too. It's an impressive feat involving millions of workers handling billions of packages. Alibaba's logistics arm mobilised 3,000 planes during last year's event to ship foreign products into the country; this year, it has already pre-stocked some 300 million goods from abroad. Such excess will have an environmental cost. Figures are scarce, but Greenpeace estimated that deliveries of 2016 Singles’ Day orders generated 52,400 tonnes of carbon dioxide. A more recent report in 2019 forecast the volume of packaging material used by e-commerce and delivery sectors would more than quadruple to 41.3 million tonnes by 2025 from 2018. For its part, Alibaba plans to cut order-related carbon emissions by 30% this year, though it has yet to disclose actual numbers. It's touting recycling services, data centres that run on renewable energy and even algorithms that match products with the right-sized parcel to cut waste. The company is also offering 100 million yuan worth ($15.6 million) of vouchers for eco-friendly brands.

E-brokers are big reach for Beijing’s long arm

Nov 03 2021

HONG KONG (Reuters Breakingviews) - Even Beijing's long arm has its limits. There are indications that authorities are reaching for trading apps that cater to rich investors with money abroad. Barring some extreme steps, however, these hot online brokers probably can thrive. Hints of a crackdown have been dropping for months. State media published an article in October warning that $9 billion Futu and rival UP Fintech, also known as Tiger Brokers may violate new data privacy laws. Soon after, a central bank official chided the industry. Despite a share rally this week thanks to a buyback plan, Futu, China’s answer to Robinhood, has lost over 60%, or nearly $18 billion, of its market value since July. Beijing's biggest gripe may be how e-brokers help Chinese citizens skirt capital controls. Local traders can only invest overseas via so-called stock connect links and the Qualified Domestic Institutional Investors scheme. They’re tightly managed, but grey areas and loopholes have flourished. Research outfit Rhodium Group reckons Chinese investors held an estimated $700 billion of U.S. stocks last year, three times the official figure. Futu's meteoric rise also may overstate its impact. Even after the recent rout, its stock is up more than 250% since it listed in New York in 2019 and its number of paying users tripled to 1 million. And yet client assets tallied just $65 billion, less than a quarter of the $280 billion of deposits at Bank of China's Hong Kong unit alone in 2020. Mainland Chinese customers trade on Futu with money already offshore, and the company says it doesn't move yuan out. Authorities could slow its growth by requiring new approvals or imposing tough data rules. An awkward move would be to tighten capital controls altogether and restrict financial institutions from opening offshore accounts for Chinese customers. That seems unlikely, but with the economy sputtering and President Xi Jinping targeting income inequality no measure can be entirely discounted. If Futu were to lose all its domestic paying Chinese users, net profit would fall by 71%, to roughly HK$1 billion ($129 million) in 2022, JPMorgan analysts estimate. The company has secured licences elsewhere, however, and aggressively courted users in Hong Kong, Singapore and beyond. Like the legendary outlaw Robin Hood, Futu is likely to elude the sheriff’s full grasp.

Chinese IPOs return to New York with a whimper

Nov 02 2021

HONG KONG (Reuters Breakingviews) - What makes a Chinese initial public offering Chinese? Shares of LianBio fell 14% on their first day trading in New York on Monday after raising $325 million. It touts a foreign domicile and U.S. backers but most of its business is in the People's Republic. Investors who once loved such hybrids have good reason to distrust them now.

Foxconn cars powered by both hype and substance

Oct 19 2021

HONG KONG (Reuters Breakingviews) - Foxconn's cars are revving up a lot of hype. The $53 billion iPhone-maker on Monday unveiled https://www.honhai.com/en-us/press-center/press-releases/latest-news/694 its first electric-vehicle prototypes as part of an ambitious pivot into autos. Founder Terry Gou's track record of overpromising https://www.breakingviews.com/considered-view/foxconns-u-s-debacle-offers-an-economics-lesson is enough to warrant doubt. Look past the glitz and glamour, though, and Foxconn is making some serious progress.

China's power woes herald green transition strains

Sep 29 2021

HONG KONG (Reuters Breakingviews) - China's power woes may deliver a helpful green jolt. Surging coal prices are largely to blame for electricity shortages. Boosting fossil fuel imports would help, but also jeopardise carbon-neutrality goals. It’s better to bear the pain now and accelerate structural changes.

Ant may find it easy to move on after breakup

Sep 13 2021

HONG KONG (Reuters Breakingviews) - Breaking up is hard to do, but China's Ant may be able to move on quickly. Beijing wants Jack Ma's financial technology giant to separate its payments, credit scoring and lending businesses, and is diluting it with assorted government investors. But these stakeholders might be friendly, and the loan operation looks to get a wider business remit.

Xi's common prosperity becomes financial black box

Sep 03 2021

HONG KONG (Reuters Breakingviews) - President Xi Jinping's "common prosperity" is turning into a financial black box. Alibaba and Tencent have each pledged $15.5 billion to the Chinese president's cause to ease inequality. Investors, though, are in the dark on how these huge sums will be deployed.

South Korea’s app-store sandbox is worth watching

Sep 01 2021

HONG KONG (Reuters Breakingviews) - South Korea's new assault on big app stores is the antitrust version of a sandbox – a place where developers test new code without risk of trashing the wider system. A new bill will let local app developers skirt the typical 30% sales commissions charged by Apple and Google. South Korea has some unique features, but other countries should be watching to see if this leaves end users better off.

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