Shareholders in some Chinese companies have cashed out more than US$1 billion from their holdings in the past week, taking advantage of improving market conditions brought on by an adrenaline shot to the country’s economy.
Internet investing firm Prosus NV has sold its entire stake in online travel agency Trip.com (攜程) in a US$743 million block trade, while entities tied to DCM Ventures LLC sold their entire stake in Kuaishou Technology (快手) for US$477 million. A group of pre-initial public offering holders of Sichuan Kelun-Biotech Biopharmaceutical Co (四川科倫博泰生醫) also raised US$49 million.
“The market has proven the ability to take big deals,” said Edward Byun, co-head of equity capital markets for Asia excluding Japan at Goldman Sachs Group Inc.
Photo:AFP
The share sales come as the Chinese government is rolling out more measures to help the economy. The country is considering injecting up to 1 trillion yuan (US$142 billion) of capital into its biggest state banks to increase their capacity to support the struggling economy, while China’s central bank this week cut a key short-term interest rate and announced plans to reduce the amount of money banks must hold in reserve to the lowest level since at least 2018.
The benchmark CSI 300 Index of Chinese stocks gained for a seventh straight session Thursday. Hong Kong’s Hang Seng Index has risen by roughly 17 percent this year.
Secondary share sales in Chinese companies have raised US$6.4 billion this year, according to data compiled by Bloomberg. That eclipses the US$2 billion and US$3.5 billion raised in all of 2022 and last year, respectively.
The recent deals came about a month after Walmart Inc unwound its eight-year partnership with Chinese e-commerce company JD.com Inc (京東), selling its entire holding for US$3.6 billion.
Foreign investors pulled a record amount of money from China in the second quarter of this year, likely reflecting deep pessimism about the world’s second-largest economy. The slowdown in China and rising geopolitical tensions have led some companies to reduce their exposure.
Chinese President Xi Jinping (習近平) and other top leaders admitted yesterday that the country was facing new “problems” and vowed to resolve a long-running crisis in the housing sector.
“Some new situations and problems have emerged in the current running of the economy,” Xinhua news agency reported after the ruling Chinese Communist Party convened a meeting of its top body, the Politburo, which was attended by Xi.
“We must view the current economic situation comprehensively, objectively and calmly, face difficulties squarely, [and] strengthen confidence,” it added.
Politburo members agreed on the need to “further improve the focus and effectiveness of policy measures” aimed at lifting the economy.
They also vowed to “respond to the people’s concerns” about the economic malaise.
Beijing would “adjust housing purchase restriction policies, lower interest rates on existing mortgage loans... and promote the construction of a new model for real estate development,” Xinhua said.
The state media readout suggested that more substantial support for the economy might be on the way, Capital Economics Ltd head of China economics Julian Evans-Pritchard said in a note.
“But concrete details are lacking and so it’s difficult to judge the scale of any additional fiscal support at this stage,” he said.
Additional reporting by AFP
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