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US investors in Chinese companies are stuck in zombieland: US investors are increasingly unable to repatriate returns in what the New York Times refers to as the Chinese version of “zombie” companies. Like TikTok parent company ByteDance — where some USD 8 bn of capital is stuck — these are Chinese firms, often booming, that are caught in geopolitical crosshairs, preventing investors from receiving returns.
ICYMI- The US House of Representatives last week voted to give ByteDance six months to sell TikTok or face a ban in the US over concerns about the Chinese government’s access to US user data.
It’s much more complicated than it may seem: Export control rules on tech imposed by China in 2022 mean that even if TikTok gets sold, its recommendation algorithm — the app’s most valuable feature — is unlikely to be included in the sale. Buying TikTok without the algorithm would be akin to acquiring Hulu without the rights to its content, said Columbia Business School professor Jonathon Knee. “It’s not completely clear what you’re buying,” he explained.
Chinese companies aren’t as attractive as they once were: China’s regulatory crackdowns, coupled with falling company valuations triggered by the country’s economic slowdown, have made acquisitions less tempting for US buyers. Some 3.2k Chinese companies were acquired last year, half of what was bought in 2019.
And less Chinese companies are IPOing in the US: Chinese companies have grown wary of listing in the US since ride hailing app Didi delisted from the New York Stock Exchange in 2022 due to regulatory pressure by China. Only three Chinese startups listed in the US in 2022, down from 18 per year between 2018 and 2021.
THE MARKET THIS MORNING-
Asian markets are mixed and stock futures little changed in trading early this morning as traders take a breather ahead of fresh economic guidance from the US Federal Reserve and other central banks this week, as we note in this morning’s What We’re Tracking Today, above.
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TASI |
12,762 |
+0.3% (YTD: +6.6%) |
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MSCI Tadawul 30 |
1,605 |
-0.1% (YTD: +3.5%) |
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27,280 |
+1.1% (YTD: +11.2%) |
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USD : SAR (SAMA) |
3.75 Sell |
3.75 Buy |
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Interest rates |
6.5% repo |
5.5% reverse repo |
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EGX30 |
31,062 |
-0.8% (YTD: +24.8%) |
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ADX |
9,221 |
-0.4% (YTD: -3.7%) |
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DFM |
4,263 |
-0.7% (YTD: +5%) |
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S&P 500 |
5,117 |
-0.7% (YTD: +7.3%) |
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FTSE 100 |
7,727 |
-0.2% (YTD: -0.1%) |
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Euro Stoxx 50 |
4,986 |
-0.1% (YTD: +10.3%) |
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Brent crude |
USD 85.34 |
-0.09% |
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Natural gas (Nymex) |
USD 1.66 |
-4.94% |
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Gold |
USD 2,155 |
-0.3% |
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BTC |
USD 68,507 |
+2.4% (YTD: +150%) |
THE CLOSING BELL: TADAWUL-
The TASI rose 0.3% yesterday on turnover of SAR 9 bn. The index is up 6.6% YTD.
In the green: Saudi Steel Pipe (+10%), Saudi Advanced Industries (+10%) and Wafrah for Industry and Development (+10%).
In the red: East Pipes (-4.6%), Arabian Shield (-4.2%) and MBC Group (-3.9%).
THE CLOSING BELL: NOMU-
The NomuC rose 1.1% yesterday on turnover of SAR 41 mn. The index is up 11.2% YTD.
In the green: Banan (+19.2%), Apico (+7.5%) and Raoom (+5%).
In the red: Ngdc (-8%), Leen Alkhair (-6.5%) and Aldawliah (-5.3%).
CORPORATE ACTIONS-
#1- Nomu-listed Saudi Advanced Industries (SAIC) is mulling the distribution of part of its stake — 300k shares — in Obeikan Glassto its shareholders in a bid to meet the liquidity requirement for transitioning to main market Tadawul, it said in a regulatory filing. SAIC owns a 34.56% stake in the company.
ALSO- SAIC plans to pay out SAR 44.3 mn in dividends at SAR 0.75 per share for 2023, it said in a disclosure to Tadawul.
#2- Leejam Sports is set to buy back up to 200k of its shares to allocate them to its employee stock ownership program, it said in a disclosure to Tadawul.
