|Bid||0.00 x 0|
|Ask||0.00 x 0|
|Day's Range||8.20 - 8.28|
|52 Week Range||8.20 - 10.89|
|Beta (5Y Monthly)||0.84|
|PE Ratio (TTM)||3.65|
|Forward Dividend & Yield||0.68 (8.09%)|
|Ex-Dividend Date||Jul 06, 2020|
|1y Target Est||N/A|
China should prepare for potential U.S. sanctions by increasing use of its own financial messaging network for cross-border transactions in the mainland, Hong Kong and Macau, according to a report from the investment banking unit of Bank of China. Chinese state lenders have been revamping contingency plans in anticipation of U.S. legislation that could penalise banks for serving officials who implement the new national security for Hong Kong, Reuters reported earlier this month. Greater use of the Cross-Border Interbank Payment System (CIPS) instead of the Belgium based SWIFT system would also reduce exposure of China's global payments data to the United States, BOC International (BOCI) said in the report, which was co-authored by a former foreign exchange regulator.
(Bloomberg Opinion) -- The world’s largest fintech unicorns are preparing for their debutante balls. Billionaire Jack Ma’s Ant Group is seeking a valuation north of $200 billion in a landmark dual public listing in Hong Kong and Shanghai. Lufax, backed by Ping An Insurance Group Co., is going one step further, braving the U.S. Senate’s new Holding Foreign Companies Accountable Act and targeting to raise at least $3 billion in New York.Billion-dollar initial public offerings are encouraging news for market sentiment. But we can’t help but wonder: Is this really a good time to celebrate their success, when tension between the U.S. and China is escalating into a war for capital?At first glance, the timing couldn’t be better. China’s regulatory environment has become friendlier as Beijing, pinched by the coronavirus, loosens its purse strings. Meanwhile, stock markets are rewarding tech companies that consumers use every day. California-based PayPal Holdings Inc., for instance, has soared about 60% this year. In China, Ant Group’s ubiquitous mobile payment product, AliPay, fits the bill. Paper money is dirty in the Covid-19 era and no one wants to handle cash.But by listing this year, Ant and Lufax run the risk of exposing how volatile and unsteady China’s financial regulations can be, potentially adding fuel to speculation that the nation’s Lehman moment is drawing nearer. Beijing first vowed to clamp down on private-sector debt in late 2017, with the People’s Bank of China pointing fingers at rising risks in asset management and internet finance. It followed with far-reaching rules for the financial industry in April 2018.Since then, regulators have blown hot and cold on practices in the online lending industry, leading to significant uncertainty for loaning out money and the availability of consumer credit. Going public in 2020 means that Ant and Lufax will have to explain what happened to their business models in 2018 and 2019.Both behemoths took a hit. For most of 2017, consumer micro lending was a lucrative business for Ant, accounting for almost 20% of the group’s income, Bernstein Research estimated. But that cash cow’s milk turned sour that December, when Beijing suspended all unsecured online cash loans. Ant could no longer offer asset-backed securities exceeding 2.3 times its total capital. Issuing such bonds had been a capital-efficient way for Ant to pass its loan books on to funds.The change was painful. In the fourth quarter of 2017, Alibaba Group Holding Ltd., which has a one-third equity stake, received a payment of 193 million yuan ($27.6 million) from Ant, down from 2 billion yuan in the three months ending in September. Lufax, China’s largest peer-to-peer lender, also saw seismic changes. Until late 2017, the country’s online financing business was driven by P2P, with total outstanding loans peaking at 1.1 trillion yuan. Regulatory tightening practically killed this model. Nowadays, facilitation — essentially matchmaking — is the norm, with banks accounting for about 45% of online consumption loans, according to CLSA Ltd. estimates. Last July, Lufax substantially scaled back its core P2P business.These IPOs will expose the true state of millions of consumer balance sheets. Thanks in part to the rise of companies like Ant and Lufax, Chinese are no longer debt-free. At the end of last year, household debt totaled more than 60 trillion yuan, or 62% of gross domestic product. Their ability to repay is worsening. Data from the central bank show that while consumption loans drawn from financial institutions rose over 13% in June from a year earlier, disposable incomes are shrinking, unemployment is rising, and the cash flows of borrowers are looking smaller.Investors may find that the picture wasn’t all rosy, even before Covid-19. For instance, Qudian Inc., a smaller lender, noted that its D1 delinquency rate, a real-time representation of its portfolio asset quality, rose to 13% at the end of last year from 10% in the previous three months. Sure, financial distress at Qudian’s customers might appear minor in the bigger picture, but it could seem much less idiosyncratic when public offerings reveal such details from Ant and Lufax. They respectively account for 32% and 13% of online lending, according to CLSA. It’s not clear why Beijing would want to let these two cats out of the bag. The coronavirus will muddy the waters further, especially for those seeking to borrow online. Asset-backed securities sponsored by banks did better than those by finance companies, potentially reflecting the less-prime nature of the latter’s customers. A significant increase in delinquencies may leave online lenders short of capital. There will be lasting pain.Six-year-old Ant was once known as the firm that threatened the stranglehold of China’s giant banks. One of its main offerings has been the systemically important money-market fund, Yu’e Bao, which has more than 600 million Chinese investors. Lufax had 44 million customers on its platform at the end of 2019, with 347 billion yuan of their assets under management. Its loan book stood at 462 billion yuan, up 23.3% from a year earlier. If the two firms had waited a few more years, they wouldn’t have to explain the awkward period of 2018 and 2019. By allowing early investors and company insiders to cash out now, Ant and Lufax will lay bare the ugly side of China’s financial industry. Foreigners will be sifting through the prospectus of each offering, wondering what China’s subprime consumers look like in the Covid-19 era – and for years to come.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Shuli Ren is a Bloomberg Opinion columnist covering Asian markets. She previously wrote on markets for Barron's, following a career as an investment banker, and is a CFA charterholder.Anjani Trivedi is a Bloomberg Opinion columnist covering industrial companies in Asia. She previously worked for the Wall Street Journal. For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Tencent Holdings Ltd.-backed MissFresh closed $495 million of financing from backers led by China International Capital Corp., underscoring strong investor interest in online commerce and groceries during the pandemic.The Beijing-based company also attracted Goldman Sachs Group Inc.’s asset management arm, Tiger Global Management, Industrial & Commercial Bank of China Ltd. and Abu Dhabi Capital, as one of several online services that thrived during nationwide lockdowns. The financing round was on track to value the startup at about $3 billion before investment, people familiar with the deal have said.Beijing MissFresh Ecommerce Co. -- one of dozens of startups Tencent backed during China’s internet boom -- is competing in a cash-burning sector with deeper-pocketed corporations including Alibaba Group Holding Ltd. and JD.com Inc. Consumers sheltering at home during the pandemic have reinvigorated a once-difficult groceries arena, and Missfresh now needs ammunition to attack a Chinese online fresh foods sector that could reach $178 billion by 2025.The company, founded in 2014, has more than 1,500 mini-warehouses that promise deliveries as fast as within an hour, it said in a statement last year. Missfresh had nearly 25 million monthly active users as of May last year. It handled 10 billion yuan ($1.5 billion) of transactions in 2018 and had generated positive cash flow by the end of that year, the company said at the time.China Renaissance served as the exclusive financial adviser on its latest deal. The funding will help tide Missfresh over in an uncertain venture capital environment. VC funding plummeted at the start of 2020 with investors stranded at home and increasingly risk-averse.But online commerce is one sector that continues to draw investor attention. Investors including Tencent and private equity giant Primavera Capital are pitching in on a separate funding round that values rival Xingsheng Youxuan at $3 billion, people familiar with the matter have said.Excluding the latest effort, MissFresh has raised nearly $900 million since its inception via eight funding rounds from investors including Jeneration Group and Genesis Capital, the company has said.Read more: Tencent, Primavera Said to Fund Grocery App at $3 Billion ValueFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.