July 6 FT Thoughts, Chinese wealth going overseas?


This and previous notes can be found at Substack ( Asian Market Sense )
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Apologies for the erratic timing of the notes; getting into a new routine.
If you have any specific questions please reply to this note and I will answer.


Front Page
Tigray rebels remain defiant

China broadens tech crackdown to rein in more US-listed groups
• Offensive follows action on Didi • Full Truck Alliance and Boss Zhipin targeted • Shares slide
The really worrying aspect is the lack of understanding about what the exact violations are. The Cyberspace Administration of China is saying ‘national security and cyber security laws’ but not giving specific details. It is claimed that Didi was warned in advance that this was going happen, although the company denies any knowledge of a warning. It is interesting to see a number of Tencent backed companies coming under pressure considering that Pony Ma has been very compliant with most government requests.

Russian LGBT+ community dealt blow after supermarket pulls lesbian advert
Russian supermarket chain VkusVill has pulled an online advertisement featuring a lesbian couple after conservatives vowed to boycott the retailer, in a big blow to the country’s LGBT+community.


INSIDE
Opec+ group calls off talks on possible boost to oil production
The failure to reach agreement pushes oil prices higher.  Currently a solution is not apparent, and there is no intention at this stage to review the production targets until the next meeting; which is likely to push prices higher in the meantime.

Japan weighs fan curbs at Olympics
Rise in Tokyo cases adds to pressure on organisers to keep out spectators.
Increasingly it looks more likely that most of the games will be very quiet and it was announced this morning that the opening ceremony will be without spectators. It will be interesting to how this changes the finances of the Olympics going forward.

Companies & Markets
Apple wins privacy battle in China
Block on updates meant to bypass rules forces app makers to give ground.
Looks at how several Chinese groups were trying to circumvent Apples new privacy rules via CAID ‘that would let them identify users even if they refused to let apps use Apple’s official ID, called IDFA’.
Seems that Apple called their bluff and the scheme lost support but I would imagine that there are a lot of apps looking to continue tracking people.

Coupang accused of meddling with algorithms
An example of how tech companies are coming under increased scrutiny in part no doubt because the regulators and others are gaining more knowledge about how the algos work.
Also notes how Coupang has come under scrutiny for other issues too and how that is impacting its brand image.

Bullish investors in move for Sydney Airport
Looks at the opportunistic bid being made for the airport but does show that there is money out there prepared to try and secure good assets at attractive prices whilst the immediate future remains uncertain.
US flop for Chinese listings despite fundraising frenzy
IPOs provide payday for Wall Street but poor investor returns with many below offer price.
The poor performance of some Chinese listings does not seem to have impacted the desire for Chinese companies to try and make hay whilst the sunshines. It will be interesting to see whether the recent regulatory crack down stems the flow. The key is that Chinese companies want US listings as does China seeking to draw in as much cash from overseas to fund its recovery.
The real worry is that that Chinese companies are listing in the US and taking advantage of the lower reporting standards that are still in force.

FT BIG READ. ASIA-PACIFIC BUSINESS
Unleashing China’s household wealth
Chinese households will have $46.3tn of investable assets by 2025. But fears over a strong renminbi and risks of a bubble in domestic markets mean Beijing is taking a cautious approach to letting assets flow.
An interesting read. I think the key thing to remember is that whilst the combined potential amount is significant most of the ordinary Chinese people have very little experience of overseas investment. Some do, some who have traveled but most don’t. The wealthy do and are keen to diversify their portfolio to be outside China; but they are the few. Most Chinese investor locally but understand diversification and use their US$50,000 allowance to buy US dollars which they keep onshore. Most do not have access to good information on foreign shares or alternative investments and so being conservative just keep it in US dollars as a hedge.
Worth a read; if China allows more access to information on alternative stocks or if the new breed of wealth managers can ‘sell the idea’ it may change but I doubt it will be quick.