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Business Times
22-07-2025
- Business
- Business Times
Chinese investors snap up Hong Kong stocks as flows near record
[HONG KONG] Mainland Chinese investors' purchase of Hong Kong-listed stocks is approaching an annual record, driving a rally that has made a key benchmark in the city one of the world's best performers. Southbound net inflows expanded by another HK$2.7 billion (S$440.8 million) on Tuesday (Jul 22), taking this year's total to HK$800 billion, a whisker away from 2024's previous record of HK$808 billion. The accelerated buying came as the Hang Seng China Enterprises Index gained 24 per cent this year, in a rally fuelled by DeepSeek-led technology breakthroughs, mainland investors' hunt for quality assets and global funds' diversification needs. Also driving the southbound flows is a less robust onshore market, where the CSI 300 benchmark has risen 4.7 per cent in the same period. Southbound flows may exceed HK$1 trillion this year, according to estimates by China International Capital Corp (CICC) analysts including Kevin Liu. They expect the purchases to taper in the current half year as mainland mutual and insurance funds run low on dry powder. Mutual funds may add only HK$100 billion for the rest of the year before they approach the 50 per cent cap for Hong Kong equity positions that applies to most funds, while insurance firms may buy another HK$200 billion, CICC's analysts estimate. The level of mainland investor participation has climbed with the inflows, with southbound turnover accounting for 47 per cent of the Hong Kong market's year-to-date average and up about 10 percentage points from 2024's level. Still, there may be room for retail demand to increase, as exchange-traded funds' turnover was less than 1 per cent of the total last month under the stock link between Hong Kong and the mainland. BLOOMBERG
American Military News
22-06-2025
- Business
- American Military News
Widespread pay cuts in China drive down consumer spending, fuel deflationary fears
This article was originally published by Radio Free Asia and is reprinted with permission. Chinese workers across industries are facing salary cuts and layoffs as mounting economic woes engulf China's public and private sectors, sources tell Radio Free Asia. That's forcing families to slash spending. It is also triggering deflationary concerns as businesses enter into desperate price wars. From Beijing's central government offices to provincial agencies across China, as well as major state-owned enterprises like investment bank China International Capital Corp (CICC), employees have faced substantial pay reductions that have reduced household budgets and fundamentally altered consumer spending patterns. 'I used to earn 6,000 yuan (or US$835) a month but now I only get 5,000 yuan (US$696), and some allowances have been removed too,' Li, an employee at a Beijing-based state-owned enterprise, told RFA. Like many others interviewed for this story, Li wanted to be identified by a single name for safety reasons. 'Some people in my wife's company have also had their salaries cut and some have received layoff notices, saying they will only work until July-end,' said Li. In Zhejiang, regarded one of China's most prosperous provinces, ordinary civil servants have had their annual salaries slashed by 50,000 to 60,000 yuan (or US$6,964-US$8,356) this year, Zheng, a resident of the province's Zhuji city, told RFA. Civil servants in more senior positions have seen deeper reductions to their annual pay of around 80,000 to 100,000 yuan (or US$11100-US$13900) and others in still higher levels by about 150,000 yuan (or US$20,890), Zheng said. 'There was already a reduction two years ago. This year's salary is reduced again,' he added. The cuts indicate the financial strain on local governments, as domestic economic challenges lead to tepid consumer demand and price pressures. That's impacting businesses' ability to pay taxes. Additionally, local governments are grappling with a decline in land transfer sales revenue amid weak property market demand. For 2025, China's provincial regions have set cautious fiscal revenue estimates, with an average growth target of 2.8% for their general public budget revenue, which is the sum of tax and non-tax revenue. That's down 1.6 percentage points from 2024's target average, as revenue generation challenges continue to weigh on local governments, economists say. For example, in Shandong, many real estate projects have been suspended for the past two years with no land sales recorded, impacting the local government's already large fiscal debt levels, said one blogger based in the northeastern coastal province, according to texts and pictures posted on X account @whyyoutouzhele, also known as 'Mr. Li is not your teacher,' who posts content on that platform to circumvent Chinese government censorship. Another Shandong resident, named Geng, told RFA, that county and township level officials in the province have had their salaries slashed by 30%, with payments frequently delayed. 'Now the county-level finances have been depleted, and the benefits for police officers have also been reduced,' Geng, a resident of Qingdao city, said. Police officers in many other regions have also seen significant cuts to their annual salaries, down to 200,000 yuan (US$27,856) this year from 300,000 yuan (US$41,784) a year ago, said a legal professional based in southeast China's Guangdong province. Employees of major Chinese state-owned commercial enterprises, such as investment bank CICC and China Development Bank, have not been spared either, with companies executing cost-cutting 'optimization measures,' including wage reductions and layoffs, amid a government campaign to cap pay ceilings at financial institutions and bring it more on par with other civil servants But an employee at CICC said the salary cuts have affected virtually all staff levels. 'Almost everyone in our building has had their salaries cut. The lowest-level employees have also had their salaries cut by 5%. I heard that the reductions for mid- and high-paid employees are even greater,' he said. According to a report from Beijing-based Caixin media group, 27 government-owned financial enterprises have begun to implement salary cuts, mainly aimed at reaching the goal of capping annual income of staff at these firms at 1 million yuan (US$139,180), as Beijing moves forward with a campaign, known as 'common prosperity' drive, to narrow income and wealth inequality. Ma, who works at a Beijing-based state-owned enterprise, said his company has already conducted two rounds of salary cuts and layoffs since 2023. 'The basic salary has shrunk, and the company has also cancelled meal and transportation subsidies,' Ma said. 'The work that used to be done by two or three people now has to be done by one person.' Another employee of a state-owned bank based in Guangdong's Dongguan city said his salary had been reduced by 30% in the past two years, with performance bonuses 'almost completely cut.' The salary reductions have sparked a sharp decline in consumer spending, creating deflationary pressures across the economy, as businesses engage in aggressive price cutting in a desperate bid to attract cash-strapped consumers. 'The price war has become the latest struggle for many small businesses,' Meng, a Shandong resident, told RFA. 'For example, the good ribs here only sell for 12 yuan (or US$1.67) a pound, and the purchase price of live pigs is only a few yuan … restaurants are desperately offering discounts to survive. This is not competition, but dragging each other down.' In Beijing, small supermarkets are 'slashing prices like crazy,' said Su, a resident of the city's Haidian District. 'I'm afraid they will all go bankrupt in a few months at this rate.' In her own home too, Su has observed major changes in spending patterns, with fewer family gatherings and less frequent restaurant meals, as household budgets tighten. Economist Wu Qinxue warned that the current situation highlights continued decline in local governments' fiscal levels and is not just a temporary belt-tightening. 'The (local) government has no money to manage people, and no one is willing to spend money,' he said. 'From salary cuts within the system to the collapse of consumption among ordinary people, the entire society is quietly forming a top-down (consumer belt-) 'tightening chain.''
Bloomberg
11-06-2025
- Business
- Bloomberg
Biotech Firm MediLink Is Said to Hire Banks for Hong Kong IPO
MediLink Therapeutics Ltd. has hired China International Capital Corp., JPMorgan Chase & Co. and Morgan Stanley for a planned initial public offering in Hong Kong, according to people familiar with the matter. The Suzhou, China-based biotechnology company is seeking to raise more than $100 million in the IPO, the people said, asking not to be identified because the information isn't public.
Bloomberg
15-04-2025
- Business
- Bloomberg
Alibaba-Backed AI Startup Zhipu Targets IPO as Soon as 2025
Zhipu has enlisted China International Capital Corp. to spearhead an initial public offering as soon as this year, angling to become the first of several prominent ChatGPT-competitors to tap public markets. The six-year-old firm and CICC have begun to prepare for the debut and could formally apply to list by October, according to IPO documents filed with the country's stock markets watchdog.
Reuters
03-03-2025
- Business
- Reuters
A Chinese Morgan Stanley is worth an M&A shot
HONG KONG, March 3 (Reuters Breakingviews) - If imitation is truly the sincerest form of flattery, one of Wall Street's biggest firms may soon be blushing. Beijing is planning to merge China International Capital Corp ( opens new tab with broker China Galaxy Securities ( opens new tab, Reuters reported last week, citing sources. The two denied it, but the tie-up - the latest attempt to consolidate the overcrowded industry - would have more logic than previous state-led deals. It would also mean CICC following the path of its co-founder, Morgan Stanley (MS.N), opens new tab. The U.S. bank, now run by Ted Pick, created CICC in 1995 as a joint venture with China Construction Bank ( opens new tab. That was two years before the U.S. financial institution agreed to join forces with brokerage Dean Witter, Discover. The earnings diversification and access to a broader pool of investing clients - enhanced over the years by acquiring Citi's (C.N), opens new tab brokerage business and E*Trade - is one reason why Morgan Stanley trades at a premium to arch-rival Goldman Sachs (GS.N), opens new tab. A CICC-China Galaxy combo would create China's third-largest brokerage with $190 billion in assets and could expect to emulate some of those business benefits. That makes it a different proposition to last year's merger of Guotai Junan Securities ( opens new tab and Haitong Securities ( opens new tab, which was commonly understood, opens new tab to effectively be a state-mandated bailout. Not that CICC is sitting pretty. In recent years, regulators throttled the flow of listings in China's onshore markets as well as in Hong Kong, kneecapping the firm's bread-and-butter business. Its earnings are likely to have fallen 13% last year, analysts polled by LSEG reckon; China Galaxy's are forecast to rise 28%. The diverging fortunes have flipped the script on how a deal might work. Citi analysts were already touting the tie-up a year ago, favouring CICC to be in charge courtesy of its bigger market capitalisation. That has since fallen to 129 billion yuan ($17.7 billion), putting 147 billion yuan China Galaxy into the driver's seat, they point out - just as Dean Witter was 28 years ago. A deal would ostensibly be part of China's stated goal to produce two to three globally competitive investment banks and 10 leading institutions in the securities sector by 2035. CICC's pedigree suggests its successor entity would be expected to perform on the world stage against the likes of Goldman and Morgan Stanley. Of course, a single deal will not immediately produce such a champion, especially when Beijing's ambitions lack detail. Independent of that, the standalone benefits of creating a Chinese version of Morgan Stanley makes it worth a shot. Follow @KangHexin on X CONTEXT NEWS State-run investment bank CICC - or China International Capital Corp - is set to merge with broker China Galaxy Securities to create the country's third-largest brokerage with combined assets of $193 billion, Reuters reported on February 26, citing sources. Both stocks posted double-digit gains in Hong Kong on the report before partly reversing course the following day, after the companies denied any consolidation plans from their top government shareholder Central Huijin Investment. China's securities regulator announced plans a year ago to develop 10 leading firms and two to three internationally competitive investment banks via mergers, acquisitions and restructuring by 2035. For more insights like these, click here, opens new tab to try Breakingviews for free.
