China to further open up economy, slams rising protectionism

‘China has opened its door to the world; we will never close it but open it even wider,’ Chinese Premier Li Keqiang said in a published article. (Reuters)
Updated 12 November 2018
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China to further open up economy, slams rising protectionism

  • ‘China has opened its door to the world; we will never close it but open it even wider’

SINGAPOR: Chinese Premier Li Keqiang said on Monday Beijing will further open up its economy in the face of rising protectionism, as he headed for meetings with Asia-Pacific leaders in Singapore that are expected to focus on trade tensions.
Li’s remarks in an article in Singapore’s Straits Times newspaper, ahead of his arrival in the city-state later in the day, came as Singapore’s Prime Minister Lee Hsien Loong called for more regional integration, saying multilateralism was under threat from political pressures.
“China has opened its door to the world; we will never close it but open it even wider,” Li said in the article, in which he called for an “open world economy” in the face of “rising protectionism and unilateralism.” He did not directly refer to China’s bruising trade war with the United States.
Notably absent from this week’s meetings is US President Donald Trump, who has said several existing multilateral trade deals are unfair, and has railed against China over intellectual property theft, entry barriers to US businesses and a gaping trade deficit.
Vice President Mike Pence will attend instead of Trump, and Russian President Vladimir Putin, Indian Prime Minister Narendra Modi and Japanese Prime Minister Shinzo Abe are among those also expected to join Li and the ten-member member Association of Southeast Asian Nations (ASEAN).
It was not clear if Li and Pence will hold separate talks on the sidelines of the meetings, which would be a prelude to a summit scheduled between Trump and Chinese President Xi Jinping at the end of the month in Buenos Aires.
The encounter, if it happens, would come on the heels of high-level talks in Washington where the two sides aired their main differences but appeared to attempt controlling the damage to relations that has worsened with tit-for-tat tariffs in recent months.
Meanwhile, in remarks at a business summit on Monday ahead of this week’s meetings, Singapore PM Lee said:
“ASEAN has great potential, but fully realizing it depends on whether we choose to become more integrated, and work resolutely toward this goal in a world where multilateralism is fraying under political pressures.”
Lee has previously warned that the US-China trade war could have a “big, negative impact” on Singapore, and the city-state’s central bank has warned it could soon drag on the economy.
Both Singapore and China are expected to rally support for the Regional Comprehensive Economic Partnership (RCEP) pact now being negotiated, showcased to be the free trade deal that will encompass more than a third of the world’s GDP.
The pact includes 16 countries, including China, India, Japan and South Korea, but not the United States. Li said China would work to “expedite” RCEP negotiations this week.
Also on Monday, the ten-member ASEAN group reached their first ever deal on e-commerce aimed at helping boost cross-border transactions in the region.


Debut of China’s Nasdaq-style board adds $44bn in market cap

Updated 22 July 2019
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Debut of China’s Nasdaq-style board adds $44bn in market cap

  • Activity draws attention away from main board

BEIJING: Trading on China’s new Nasdaq-style board for homegrown tech firms hit fever pitch on Monday, with shares up as much as 520 percent in a wild debut that more than doubled the exchange’s combined market capitalization and beat veteran investors’ expectations.

Sixteen of the first batch of 25 companies — ranging from chip-makers to health care firms — increased their already frothy initial public offering (IPO) prices by 136 percent on the STAR Market, operated by the Shanghai Stock Exchange.

The raucous first day of trade tripped the exchange’s circuit breakers that are designed to calm frenzied activity. The weakest performer leapt 84.22 percent. In total, the day saw the creation of around 305 billion yuan ($44.3 billion) in new market capitalization on top of an initial market cap of around 225 billion yuan, according to Reuters’ calculations.

“The price gains are crazier than we expected,” said Stephen Huang, vice president of Shanghai See Truth Investment Management. “These are good companies, but valuations are too high. Buying them now makes no sense.”

Modelled after Nasdaq, and complete with a US-style IPO system, STAR may be China’s boldest attempt at capital market reforms yet. It is also seen driven by Beijing’s ambition to become technologically self-reliant as a prolonged trade war with Washington catches Chinese tech firms in the crossfire.

Trading in Anji Microelectronics Technology (Shanghai) Co. Ltd., a semiconductor firm, was briefly halted twice as the company’s shares hit two circuit breakers — first after rising 30 percent, then after climbing 60 percent from the market open.

HIGHLIGHTS

• 16 of 25 STAR Market firms more than double from IPO price.

• Weakest performer gains 84 percent, average gain of 140 percent.

• STAR may be China’s boldest attempt at capital market reforms yet.

The mechanisms did little to keep Anji shares in check as they soared as much as 520 percent from their IPO price in the morning session. Anji shares ended the day up 400.2 percent from their IPO price, the day’s biggest gain, giving the company a valuation of nearly 242 times 2018 earnings.

Suzhou Harmontronics Automation Technology Co. Ltd., in contrast, triggered its circuit breaker in the opposite direction, falling 30 percent from the market open in early trade before rebounding. But by the market close, the company’s shares were still 94.61 percent higher than their IPO price.

Wild share price swings, partly the result of loose trading rules, had been widely expected. IPOs had been oversubscribed by an average of about 1,700 times among retail investors.

The STAR Market sets no limits on share prices during the first five days of a company’s trading. That compares with a cap of 44 percent on debut on other boards in China.

In subsequent trading sessions, stocks on the new tech board will be allowed to rise or fall a maximum 20 percent in a day, double the 10 percent daily limit on other boards.

Regulators last week cautioned individual investors against “blindly” buying STAR Market stocks, but said big fluctuations were normal.

Looser trading rules were aimed at “giving market players adequate freedom in the game, accelerating the formation of equilibrium prices, and boosting price-setting efficiency,” the Shanghai Stock Exchange (SSE) said in a statement on Friday.

The SSE added that it was normal to see big swings in newly listed tech shares, as such companies typically have uncertain prospects, and are difficult to evaluate.