South Korea and Singapore topped the world in the Bloomberg Innovation Index. As Hong Kong faces uncertainties over the continued application and interpretation of the National Security Law, international firms are considering writing the city out of some legal contracts. China has drained US$12.38 billion out of its financial system to cool market expectations ahead of Lunar New Year.
MAJOR HEADLINES IN ASIA
This section tracks major political, economic and business news from the key economies in Asia.
Large international corporations in Asia are considering writing Hong Kong out of governing law and arbitration clauses when conducting business in the financial hub or entering into joint ventures with Chinese and other Asian counterparties over concerns that China’s tightening grip may impact rule of law in the territory.
Singapore has launched an agreement between the Economic Development Board, Enterprise Singapore and private sector partners to promote the network of industrial parks to manufacturers interested in investing in Singapore and Southeast Asia, helping them to expand their business in the region and diversify their supply chain.
The Myanmar government has ordered internet service providers to temporarily block access to Facebook until Feb 7 amid growing protests days after seizing power from its civilian leadership. The Yangon Stock Exchange resumed trading for the first time since the coup while businesses largely remain open. Still, there are concerns that the coup may prompt foreign investors to halt operations or pull out from the country entirely.
South Korea returned to first place in the latest Bloomberg Innovation Index, topping the index for seven of the nine years that it has been published. Singapore has moved up one spot, ranking second.
EQUITY AND DEBT CAPITAL MARKETS
This section highlights the biggest ECM and DCM developments in China and Hong Kong which are moving markets and grabbing headlines.
Zhejiang Huakang Pharmaceutical, which specialises in the manufacture of polyols and starch sugar used in the food ingredient industry, has kicked off the subscription exercise for its IPO in Shanghai looking to raise US$233 million.
Alibaba is starting a sale of dollar debt to raise as much as US$5 billion, in what could be the biggest dollar bond sale in Asia in eight months. The e-commerce giant is marketing a multi-tranche bond offering which is expected to price as early as Thursday.
China Fortune Land Development and its subsidiaries have defaulted on billions of yuan in debt as the property developer struggled to scrape together cash amid a tightening regulatory environment.
JD Logistics, the distribution arm of JD.Com, is planning to file for IPO in Hong Kong as soon as this month, aiming to raise US$4 billion. The company plans to start trading in the second quarter.
Despite being accused of massive copyright infringements ahead of its Hong Kong debut, short-video app Kuaishou, backed by Tencent, advanced by as much as 181% on Thursday on an over-the-counter retail platform operated by Phillip Securities Group. Kuaishou’s shares were more than 1,200 times covered in the retail segment, making it the most popular IPO over US$1 billion in the city in history.
PE/VC DEAL ACTIVITY
This section tracks the fundraising, deals and other activities conducted by the PE/VC funds in Asia.
CHINA AND HONG KONG
Babycare, a Chinese baby products brand, has raised US$108 million in Series B funding led by CDH Investments. Sequoia Capital China and Huaxing Growth Capital also participated.
Guangzhou-based precision diagnosis and gene sequencing company Vision Medicals has raised US$31 million in Series C funding led by Tencent Holdings.
Newlink Group, the operator of a platform that helps drivers in China locate the best value gas stations, has raised US$100 million in funding led by CMB International. Other investors include Hongtai Capital, Joy Capital and Nio Capital.
Dmai, a Chinese cognitive AI platform also known as AnwuZhineng, has raised US$77 million in a Series A round led by Sailing Capital and GF Venture Capital.
China’s leading communication infrastructure services provider Guodong Group said that it has raised US$170 million in a pre-IPO round to advance national new infrastructure.
JAPAN AND KOREA
CVC Capital Partners is set to make its largest investment in Japan since before the global financial crisis. The firm has agreed to purchase a majority stake in Shiseido’s personal care business at a valuation of US$1.52 billion.
Vietnam-based English language education app operator Elsa has raised a US$15 million Series B round co-led by local private equity firm VI Group and SIG.
Asia-focused impact investment PE fund ABC World Asia has led a US$24 million Series B round in Vietnam’s dental system operator Kim Dental. Existing backer Aura Private Equity also participated in this round.
This section highlights the major regulations, policy changes and political developments in China and Hong Kong that have implications for the business environment.
China’s central bank made a withdrawal of US$12.38 billion in net liquidity via its open market operations in the midst of market concerns that its simulative monetary policy has reached a turning point in the face of a weakening economic data due to fresh coronavirus outbreaks.
Chinese internet regulators are planning to crack down on social media accounts run by independent content producers, which analysts interpret as targeting political content. The Cyberspace Administration of China is exploring measures to control the distribution of information across all internet platforms to end “disruption to the order of internet broadcasts”.
Hong Kong’s financial regulators and market supervisors are closely monitoring the stock exchange for unusual price and volume movements to prevent market manipulation via social media, stepping up their vigilance in a market that mostly operates with few brakes on.
ONE FOR THE WEEKEND
Each week we will select one or two articles which have caught our attention – long reads, institutional outlooks, analysis or interesting viewpoints
Myanmar’s military seized power early Monday morning in a coup that came in shock to the world. Although the country appears to be rapidly returning to normal as businesses resume, big questions remain over what happens next. In this article, Dezan Shira & Associates looks at what it could mean for foreign trade and investment.
THE WEEK AHEAD
It will be a short week ahead as most Asian countries celebrate the arrival of the Lunar Year of Ox. China is expected to release its January inflation and foreign exchange reserves figures, while Malaysia will deliver its 4Q20 GDP report, in which a contraction is anticipated.
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