The top news has been Didi Chuxing’s huge IPO in New York, followed by the sudden, and for sure carefully-timed announcement from Beijing that Didi was subject to a security review based on use of its user data. Didi’s share price tanked up to 25% before recovering slightly. But the timing of it all, in our view, is just a classic example of how China works. It reminds us of an incident in 2018, again revealing a telling synchronicity. MSCI announced that it would for the first time include China A shares in its emerging markets index, and the very next day, Sohu’s market valuation in NYC plunged when the Beijing authorities announced that its video streaming business would be restricted. As Master Wugui in Kungfu Panda so wisely says, there are no coincidences. So what’s the point? Didi has of course been accused of not informing investors of what it must have known was coming, but that is not the key issue. We’d say it is to remind Chinese companies to whom they are beholden, and also to encourage such firms to list in Shanghai or HK rather than in NYC. Which side, then, is the prime driver of the decoupling trend, particularly clear in tech and capital markets? Hard to say.
A couple of developments on the Euro side of things. The UK is going to reconsider the takeover of the country’s largest silicon wafer manufacturer, Newport Wafer Fab, by a Chinese-backed company on national security grounds, the Financial Times reported. And also China’s leader Mr Xi reached out to the leaders of France and Germany to try to get the China-European investment agreement back on track. But it appears it is going to be difficult without some concessions.
What else? The troubled retailer Suning got bailed out by the system, indicating as usual that big firms, both state and private, are not allowed to fail. Chinese astronauts completed a first space walk from the new Chinese space station orbiting the Earth, and 10 million users have been signed up for the start of a digital yuan.
That’s it for the week. Have a cool weekend.