7/26/2021 Financial News: Communist China’s Education Stocks Plunge; Henan Autumn Grain Damaged Area of 9%

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1.Communist China’s Education Stocks Plunge, Market Value Evaporates by $16.87 Billion in One Day

The new restrictions for the education tutoring industry affected Hong Kong education stocks on July 23, with New Oriental plunging 40.61%, the largest single-day drop since its listing. In the U.S. stock market, Chinese education stocks also suffered heavy losses, with TAL (TAL Education Group) triggering a meltdown due to excessive volatility. TAL eventually closed down 70.76%, GOTU (Gaotu Techedu) closed down 63.26%, EDU (New Oriental Education & Technology) closed down 54.22%. On the same day, TAL market capitalization evaporated $9.362 billion. GOTU’s market capitalization evaporated $1.554 billion. EDU’s market capitalization evaporated $5.949 billion.  The market capitalization of the three companies evaporated a total of $16.87 billion on Friday.

2.Henan Autumn Grain Damaged Area of 9%

Henan, known as the second large agricultural province, was hit by heavy rains, raising concerns about the safety of wheat, corn and other food crops. On July 24, Henan Provincial Department of Agriculture and Rural Affairs party members, deputy director Wang Junzhong said in a press conference, for Henan Province crop disaster, as of July 23, the province’s farmland waterlogged area of 11.32 million mu, crop damaged area of 10.68 million mu, accounting for 9% of the autumn crop area (including corn 7.46 million mu, peanuts 1.5 million mu, soybeans 410,000 mu, other 1.31 million mu). The damaged area refers to the sown area of crops whose yield is reduced by more than 10% due to the disaster, and the disaster area is the area in the damaged area whose yield is reduced by more than 30% due to the disaster. As of July 23, Henan Province crop disaster area of 1.08 million mu, accounting for 0.9% of the autumn crop area; 350,000 mu of crop failure, accounting for 0.3% of the autumn crop area.

3.Communist China’s Crackdown Makes Hong Kong Index the World’s Biggest Tech Loser

The Hang Seng Technology Index (HSTECH), launched a year ago to increase investors’ exposure to Communist China’s Internet giants, including such giants as Tencent Holdings Ltd, Alibaba Group Holding Ltd and Meituan.com, has become the world’s worst-performing major technology indicator as a result of Beijing’s crackdown. According to Bloomberg, the HSTECH has been on a roller coaster ride over the past 12 months. After rising 59 percent in February, the index has suffered a setback due to Beijing’s crackdown on technology companies, causing its market value to evaporate by more than $551 billion. The HSTECH has now shrunk to a gain of nearly 6%, compared to the MSCI World Information Technology Index and the U.S. Nasdaq 100, which have risen more than 40% in the past 12 months. The performance of the HSTECH highlights the regulatory risks in China.

4.Multiple Provinces Deploy Crude Steel Production Limits and Production Cuts

In order to ensure the goal of 2021 crude steel production fell year-on-year, recently, a number of steel-producing provinces began to deploy to reduce crude steel production in the second half of the year. A number of industry sources said that in the first half of this year, except for Hebei Province, other major steel-producing provinces have achieved year-on-year growth in crude steel production, Jiangsu and Shandong crude steel production in the first half of the year, an increase of 12.77%, 17.02% respectively.  The national industry and information technology work conference held at the end of last year had set the goal: resolutely reduce crude steel production, to ensure that crude steel production in 2021 fell year-on-year. Analysts said that in the first half of this year, the national crude steel production 563 million tons, an increase of 11.8%. The national crude steel production in 2020 is 1.065 billion tons, which means that the crude steel production in the second half of this year needs to be controlled at 502 million tons, 61 million tons less than in the first half of the year, in order to achieve the goal.

5.SAMR Orders Tencent to Release Exclusive Online Music Rights within 30 Days

(Reuters) On July 24, Communist China’s State Administration for Market Regulation (SAMR) announced that it ordered Tencent and affiliates to take several measures, including releasing exclusive music rights within 30 days, stopping high prepayments and other methods of paying copyright fees, and not requiring upstream copyright holders to give it better conditions than competitors without justifiable reasons. This case is the first case since the implementation of Communist China’s Anti-Monopoly Law in which necessary measures were taken to restore the so-called competitive state of the market in response to the illegal implementation of operator concentration.

6.Several Banks Waive Fees on Inter-bank ATM Transaction

From July 25, several banks temporarily waived the fee on ATM inter-bank cash withdrawals. Among them, the six major banks, namely Industrial and Commercial Bank of Communist China (ICBC), Bank of Communist China, Agricultural Bank of Communist China, Communist China Construction Bank, Bank of Communications and Postal Savings Bank of Communist China, will temporarily waive the inter-bank cash withdrawal fees for domestic ATMs. The fee for interbank cash withdrawals from domestic ATMs such as Pudong Development Bank and Industrial Bank has been reduced to 3.5 yuan per transaction and is free for certain services.

The reporter checked the official websites of major banks and found that Agricultural Bank issued an announcement saying that since July 25, 2021, the interbank ATM cash withdrawal transaction fees for debit card and Quasi-credit card will be temporarily waived. The Construction Bank also issued an announcement saying that from July 25, 2021, the nationwide interbank cash withdrawal fees for debit and quasi-credit cards will be waived, including ATM interbank cash withdrawals, as well as certain other cash withdrawal services.

7.Li Auto Passed Listing Hearing of HKEX: Seeking Dual Listing

On July 26, according to HKEX documents, Li Auto passed the listing hearing. Goldman Sachs and China International Capital Corporation (CICC) acted as joint sponsors. Like Xpeng Motors, Li Auto will use a dual listing to return to the HKEX. A dual listing means that the company is listed on two stock exchanges at the same time and meets all regulatory requirements for listed companies in both places, which are jointly regulated by the U.S. Securities and Exchange Commission (SEC) and the Hong Kong Securities and Futures Commission (SFC).

Li Auto officially landed on the U.S. stock market on July 30 last year, and is the second Chinese new carmaker to land on the U.S. stock market after Nio. Among the three new Chinese car-making stocks, Li ranks third in terms of market capitalization. As of the close of trading on July 23, Li closed at $30.28 per share, with a market value of $27.39 billion.

8.CITIC Securities Disclosed Its Shareholding in the Pension Joint Venture

On July 25, CITIC Securities announced that on July 23, 2021, the Board of Directors announced that CITIC Securities Investment, a wholly-owned subsidiary of CITIC Securities, entered into a promoter agreement with CITIC Wealth and other promoters for the establishment of a joint venture company in pension. As disclosed in the announcement, according to the promoter agreement, it is for the purpose of further improving the pension system. The registered capital of the joint venture company is 11.15 billion yuan ($1.72 billion), of which CITIC Securities Investment will contribute 300 million yuan ($46.27 million) and CITIC Wealth will contribute 500 million yuan ($77.11 million), holding approximately 2.69% and 4.48% of the shares of the joint venture company, respectively. The other promoters will contribute a total of 10.35 billion yuan ($1.6 billion) and will hold a combined shares of approximately 92.83% in the joint venture.

By【G Translators- Financial Team】
Author: Rosy Cloud

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