2/24/2021 Financial News: Chinese Chip Maker’s Debt Crisis, HK Shares Slumped Upon Trading Tax Hike

Image source: https://asia.nikkei.com/

1.Chinese Chip Maker Tsinghua Unigroup’s Debt Crisis

Chinese chip maker Tsinghua Unigroup announced on February 18 that, due to tight liquidity, it may be unable to repay the principal and interest of the 20 billion yuan bond due on March 25, 2021. In addition, Citibank filed a lawsuit on February 4, demanding Tsinghua Unigroup and its subsidiary Tsinghua Unic Limited to repay the principal and interest of the US$200 million debt. On February 3, Tsinghua Unic announced that it was unable to repay the principal and interest of the US$1.05 billion debt, totaling US$1.072 billion. It was also unable to continue to pay interest on the US$750 million debt due in 2023 and the US$200 million debt due in 2028.

2.Hong Kong Shares Slumped Upon First Trading Tax Hike Since 1993

Hong Kong announced its first stamp-duty increase on stock trades since 1993, triggering a broad selloff and sending shares to their biggest plunge in more than five years. Hong Kong’s benchmark Hang Seng Index sank 2.6% at 1:41 p.m. local time, led by a 7.8% drop in Hong Kong Exchanges & Clearing Ltd.

The planned trading-tax increase from 0.10% to 0.13% was part of a set of new measures announced in Hong Kong’s budget, which included increased spending to help residents during the pandemic. 

3.Boyu Capital Relocated Some Operations to Singapore

Boyu Capital, a leading Private Equity firm set up by Alvin Jiang, a grandson of former Chinese President Jiang Zemin, has relocated part of its operations from the Hong Kong headquarter to Singapore, according to The Wall Street Journal on Monday. Boyu’s Singapore office is the company’s first presence outside China and may serve as a potential refuge from the scrutiny or adverse action by authorities in Beijing.

Such a move started in late 2019 is said to be mainly driven by concerns over the declining influence of the 94-year-old Jiang. It has also coincided with Xi’s efforts to curb the influence of retired CCP elders and tighten his control over Hong Kong.

4.State-Owned Enterprises’ Debt Risks Controllable?

According to Peng Huagang, spokesperson for the Chinese State-Owned Assets Supervision and Administration Commission, a larger number of local state-owned enterprises (SOEs) defaulted on their debts recently mainly because of COVID-19, market fluctuations, blind expansion, and poor management. He also noted that although the default rate of SOE bonds had increased recently, it was still below the market’s average level, and the default risk was generally controllable.

Comment: A search for keywords “Debt Crisis” or “Debt Default” shows numerous companies in various industries such as semiconductor manufacturing, real estate development, manufacturing, construction industries in Communist China have experienced or are experiencing severe debt crisis, which make people hard to believe it is controllable.

5.Skyrocketing Prices of Copper, Aluminum, and Other Metals

Starting from February 4, the spot copper prices has experienced a wave of ten consecutive increases. It surged from around 58,200 yuan per ton on February 1 to 67,490 yuan on February 23. The month-on-month increase was close to 20%. Aluminum prices also showed a similar trend. From February 11 to February 20, each trading day has shown an upward trend. Nickel, tin, zinc, lead and other metals have also seen skyrocketing prices.

6.U.S. to Build “China-Free” Tech Supply Chain with Allies

In an effort to reduce the reliance on Communist China, U.S. President Joe Biden is set to sign an executive order as early as this month to partner with allies such as Taiwan, Japan, and South Korea to build supply chains for chips and other strategically significant products. The order will focus on semiconductors, electric-vehicle batteries, rare-earth metals, and medical products. U.S. is expected to partner with Taiwan, Japan and South Korea in chip production and Asia-Pacific economies including Australia in rare earths mining.

7.HSBC to announce exit from U.S. retail banking

LONDON (Reuters) – As part of HSBC’s strategy update due on Tuesday, HSBC is planning to withdraw from U.S. retail banking in order to cut costs, boost fee income and continue shifting towards Asia. The withdrawal will lead to the sale or closure of around 150 HSBC branches in the United States.

By 【Financial Team – Kate】

News Collection: Wendy 、Kate

Proofreading: 小蚂蚁在行动

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