8/2/2021 Financial News: Evergrande Sold 11% Stake In Hengteng; Stamp Duty On Hong Kong Stocks Increased By 30%

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1. Evergrande Sold 11% Stake in Hengteng Network for HK$3.25 billion

Evergrande sold 11% of its shares in Hengteng Network to recoup HK$3.25 billion. In the evening of August 1, Hengteng Network announced that the controlling shareholder, China Evergrande, signed an equity transfer agreement with the buyer, in which buyer 1, Tencent Holdings, acquired 7% shares of the company at a price of HK$3.2 for a total consideration of HK$2.068 billion. Purchaser 2 acquired 4% shares of the Company at a price of HK$3.2 for a transaction consideration of HK$1,182 million. The total consideration for the two transactions is HK$3.25 billion.

According to the announcement, upon completion of the transaction, Tencent Holdings and Purchaser 2 will hold approximately 23.9% and 4% of the issued share capital of Hengteng Network, respectively, while China Evergrande will hold approximately 26.55% of the issued share capital of Hengteng Network. Before the suspension of trading, Hengteng Network was quoted at HK$3.42 per share, with a total market capitalization of HK$31.582 billion.

2. Stamp Duty on Hong Kong Stocks Increased by 30%

The stamp duty on the Hong Kong stock market was officially increased from 0.1% to 0.13% on August 1, 2021. The information about the increase in stamp duty on Hong Kong stock transactions was first circulated in February this year. As a result of this news, Hong Kong stocks plunged. On the day the news came out, the Hang Seng Index plunged 2.99%, and the HKEx fell more than 9% during the day. Beginning in July this year, with the decline of several Internet stocks, the Hang Seng Index began a round of sharp downward trend, the index recently set a new low for the year. At present, the main channel for mainland investors to invest in Hong Kong stocks for the “Hong Kong Stock Connect”, the increase in stamp duty means that the transaction costs of mainland investors to invest in Hong Kong stocks will also be raised.

3. Education Stock Leader Temporarily Cancels Earnings Release

Leading Chinese education stocks New Oriental Education & Technology and TAL Education Group have both announced that they will cancel their new quarterly earnings reports and conference calls scheduled for early August due to recent new regulations. As of the last trading day, New Oriental Education closed at US$2.17 per share, down 1.81%. In the Hong Kong stock market, New Oriental Online shares were trading at HK$4.830 per share, down 3.40%, while New Oriental-S shares were trading at HK$16.80 per share, down 7.69%.

Comments: Temporary cancellations of earnings reports are relatively rare, and the fact that the two leaders have cancelled one after another is a clear indication of how hard the new CCP’s regulations are hitting the after-school tutoring industry. The ultimate consequence of this is that investors will lose all their money.

4. Communist China’s Manufacturing PMI Drops to 50.4 in July

The official manufacturing purchasing managers’ index (PMI) fell to 50.4 in July, 0.5 percentage points lower than the previous month and less than market expectations, with the pace of manufacturing expansion slowing, according to data jointly released by the National Bureau of Statistics of Communist China and the Federation of Logistics and Purchasing on Saturday. Communist China’s National Bureau of Statistics said that some enterprises concentrated on equipment maintenance in July, and extreme weather such as high temperature and flooding in local areas affected manufacturing expansion. Some medium and small enterprises said those recent problems such as rising raw material costs, decreasing orders and increasing pressure for repayment are prominent, and enterprises are under pressure in production and operation. Previously, the value dropped to 50.9 in June from 51 in May, the second lowest of the year; the low point of the year was 50.6 in February.

5. More than 20 Commercial Banks Suspend New Account Opening Business for Precious Metals

China Merchants Bank recently issued a notice announcing that it will adjust its personal paper precious metals two-way trading business and live paper gold and paper silver buying and selling business on August 11, 2021. Specifically, China Merchants Bank has revised the customer agreement, product specification, risk disclosure letter and other documents of the relevant business, and the scope of the revision includes business emergency liquidation, business suspension and discontinuation and other matters and terms. According to the reporter’s statistics, more than 20 commercial banks have suspended the new precious metals account business, including Bank of Communist China, Industrial and Commercial Bank of Communist China and other large state-owned banks, as well as Everbright Bank, Ping An Bank and other joint-stock banks. As for the reasons for the tightening of business, several banks mentioned in their circulars that “the price of precious metals continues to fluctuate significantly” and “the market risk has increased significantly” and “the risk of investment transactions in personal precious metals trading business has increased”.

6.The First Trillion-yuan Non-money Fund Sales Company Was Born

The public fund industry continues to grow rapidly. In the second quarter, the first trillion-yuan non-money fund company was born. At the same time, the first trillion-yuan non-money fund sales organization also emerged in the fund sales market. The latest data from the Fund Industry Association shows that by the end of the second quarter, Ant Fund’s non-money market public fund holdings reached 1059.4 billion yuan, making it the first fund sales organization to break trillion; its scale grew by more than 100 billion in a single quarter. China Merchants Bank and ICBC ranked second and third with 796.1 billion yuan and 587.5 billion yuan respectively. In addition, “Tiantian Fund Platform“(1234567.com) sales in the second quarter increased by 75.1 billion yuan compared to the first quarter, reaching 507.5 billion yuan, entering the top three in the industry.

7. Tesla Cuts Model 3 Price to Accelerate Market Share

On July 30, Tesla lowered the price of Model 3 standard range plus on its official website, this time the price was lowered by RMB 15,000 yuan, and the price was adjusted to RMB 235,900 yuan after the subsidy, and the price of Performance AWD remained unchanged. Tesla China said in an interview with the Securities Daily that all undelivered orders can be eligible for the latest selling price. At the same time, the Model3 standard range plus has no change in either comfort configuration or performance parameters after the price reduction.

In fact, this is the second significant price cut in 10 months for the Tesla Model 3 standard range plus. Such an aggressive product strategy is unprecedented in the automotive industry. In 2021, Communist China’s new energy vehicle market is developing very rapidly. Data show that the sales of cars priced under 300,000 yuan accounted for nearly 90% of the total sales of the auto market. The industry generally believes that the price adjustment of Tesla Model 3 will compete directly with domestic independent brands and new power models, including the Weltmeister M7, BYD Han and Xpeng P7.

8. Sino Biological Sets a New A-share Historical Record

According to the notice of Sino Biological’s initial public offering of shares and listing on second-board market, the issue price of the company was 292.92 yuan per share.  Sino Biological also set a record for the highest issue price of A-share in history. Sino Biological is a biotechnology company engaged in the research and development, production, sales and technical services of biological reagents. Its main business includes products such as recombinant proteins, antibodies, genes and culture media, as well as the development of recombinant proteins and antibodies and bioanalytical testing services.

Sino Biological said that in 2020, the CCP Virus outbreak in the world, the company’s CCP Virus-related biological reagents products demand increased significantly, the company’s performance for the year grew significantly, net profit increased by 2996.90%.

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

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