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Bao Fan, China Renaissance Holdings Ltd.’s founder and one of the most prominent investment bankers in China, is assisting Chinese authorities in an investigation, the company said. The news came more than a week after the investment bank lost contact with the billionaire, rattling the country’s tech investing scene, especially those with business ties to the company.
Meanwhile, after an almost four-year pilot program, China finally expanded the registration-based IPO system to its two biggest boards in Shanghai and Shenzhen. The landmark reform is expected to trigger a new wave of IPOs in the country’s stock market, which is worth more than $10 trillion.
On the macro level, China’s economic recovery appears to be faster than expected, but isn’t as smooth as many have hoped. Despite strong consumer spending over the Lunar New Year holiday, China needs to address fundamental problems, such as unstable expectations and a lack of confidence, to boost growth.
# IPO Overhaul #
Seven Things to Know About China’s Latest IPO System Overhaul
China is about to take a major step forward in the overhaul of the country’s $12.7 trillion stock market with plans to roll out its registration-based IPO system to the country’s two biggest boards in Shanghai and Shenzhen, completing a shift that began in 2019 when the new mechanism was first used.
The long-awaited change will give markets and investors a bigger say in deciding on the value of companies seeking to raise funds on the main bourses, make the IPO system more transparent, and put more responsibility for ensuring applications comply with regulations onto the shoulders of sponsors and the stock exchanges. The top securities regulator will no longer decide on pricing or approve listings, with its role becoming more supervisory.
Editorial: China’s IPO Reform: Many a Little Makes a Mickle
After a four-year pilot program, China has accelerated reform of the registration-based IPO system. Authorities including the China Securities Regulatory Commission (CSRC), the Shanghai Stock Exchange (SSE) and the Shenzhen Stock Exchange (SZSE) sought public comments on 39 regulations concerning the system’s implementation. Rich reform programs have been proposed, including a plan to introduce the system to the main boards of the SSE and SZSE, which has drawn the most attention.
The reform undoubtedly marks an important milestone for the development of China’s capital market. It will not end here, as the system needs continuous improvement. However, the existing results can provide experience for deepening overall reform. On the right track, reform could advance in due order. And every little bit helps. At the critical point, the country should cleave through the waves to achieve breakthroughs.
# Exclusive #
Billionaire Founder of China Renaissance Goes Missing
Bao Fan, the billionaire founder and chairman of private investment bank China Renaissance Holdings Ltd., has been out of contact with the company for days, Caixin learned from several sources.
Bao hasn’t shown up at the office and hasn’t appeared in public in recent days, and a Hong Kong market participant said he couldn’t get in touch with Bao for two days, several people close to Bao told Caixin. Bao didn’t respond to calls from Caixin or WeChat messages.
In Depth: Hiring of ICBC Veteran Looms Over Disappearance of China Renaissance Founder
The disappearance of Bao Fan, one of the most prominent investment bankers in China, has rattled the country’s corporate scene, especially those with business ties to his conglomerate.
The billionaire founder of China Renaissance Holdings Ltd. hasn’t been in touch with the company for days, Caixin reported earlier this month, before the investment bank confirmed the story.
Investment Banker Bao Fan Is Aiding an Investigation, China Renaissance Says
China Renaissance Holdings Ltd. said its founder and chairman Bao Fan is assisting Chinese authorities in an investigation, more than a week after the investment bank lost contact with the billionaire dealmaker.
“The company has been trying to reach Bao and ascertain his status,” China Renaissance said Sunday in a filing with the Hong Kong stock exchange. “The board has become aware that Bao is currently cooperating in an investigation being carried out by certain authorities in China.” The Beijing-based enterprise didn’t give further details.
# NEV Dilemma #
China’s EV Market Downshifts on Scaled-Back Incentives
Electric vehicle (EV) sales in China have lost much of last year’s momentum now that the government has scaled back incentives for the industry, industry data show.
From Jan. 1 to Jan. 27, retail sales of EV and hybrid passenger cars plunged 43% from the same period last month to 304,000 vehicles, down 1% from a year earlier, according to data from the China Passenger Car Association (CPCA), an industry group.
China Doesn’t Have an EV Production Glut, Ex-Minister Says
China is not facing an overall glut of electric vehicle (EV) production as growth in demand remains solid, though there may be overcapacity in some regions, China’s former minister of industry said.
“New-energy vehicle (NEV) sales growth in 2023 is likely to exceed 30%, with total sales reaching 9 million units,” said Miao Wei, the former minister of industry and information technology.
WM Motor Dealers Are Turning Out the Lights
Some dealerships in WM Motor Holdings Ltd.’s network have halted operations due to supply chain disruptions, casting a shadow over the money-losing electric vehicle (EV) startup as it vies with a crowded field of rivals in the world’s largest auto market.
The closures could deal a fresh blow to the Shanghai-based firm, which is exploring a back-door listing in Hong Kong using a smart mobility solutions company backed by billionaire Li Ka-shing.
Related China’s January Auto Sales Plunge 45%
China Car Sales Drop Amid Weaker Buying Over Lunar New Year
# 2023 Outlook #
Cover Story: China’s Economy Appears Headed for Uneven Rebound
China’s economy appears to be on track for a faster-than-expected recovery, but it may not be felt evenly across the country.
When the government in December abruptly abandoned its “zero-Covid” policy after three years of draconian controls, many feared that an onslaught of outbreaks would lead to prolonged waves of infections in the world’s most populous country and further cripple its economy. But signs from the Lunar New Year holiday in the January showed that the worst may have passed.
Analysis: China Had Some Strong Holiday Spending Numbers, but Don’t Break Out the Champagne
Despite the strong consumer spending numbers for tourism, restaurants and cinemas from over the Lunar New Year holiday this year, some analysts are cautioning against reading too much into the data.
It remains to be seen whether a handful of strong data points from the holiday herald a sustained rebound in household spending that can buoy the overall economy, they said, as many people remain unwilling to open their wallets too wide given lingering concerns over the job market and economic growth.
Editorial: Boosting China’s Growth Requires Addressing Fundamental Problems
China plans to boost economic growth this year are moving ahead at full force. Several provinces organized economic mobilization meetings and many local authorities have issued policy packages concerning projects, consumption, foreign capital and the business environment. The situation is pressing. In a downward stage of cyclical development, China’s economy is facing its worst period of growth of the past three decades, partially due to the severe impact of Covid on market entities. While Covid policies are optimized, it is essential to boost economic growth.
To Capitalize on Reopening, China Needs to Rebuild Foreign Investor Confidence
As foreign businesses operating in China conclude their damage assessment of the annus horribilis that was 2022 and reset expectations following the sudden scrapping of “zero Covid,” the mood is shifting toward cautious optimism.
There is widespread relief at the prospect of a more predictable operating environment and the resumption of connectivity with the rest of the world. Recovering the more robust levels of confidence common among foreign investors pre-2019 will now need to be the goal if China seeks to capitalize on its reopening, stabilize and grow levels of inbound investment, and return to the “new normal” of annual GDP expansion of 5% or above.
Related China’s Economic Activity Rebounds After Reopening
# Weekend Long Read #
Kai-fu Lee: The Safest and Most Endangered Jobs in a ChatGPT World
Developed by OpenAI, ChatGPT has became the hottest topic in and outside the tech world. The sophistication of its answers is quite amazing. Some have used it to answer questions on university tests on law and medicine, or on a Google engineer recruitment test that could lead to a $180,000 a year job. The program passed all with flying colors.
But anxiety has followed. Smart as ChatGPT is, its existence naturally leads to the question of whether artificial intelligence (AI) will take away human jobs? And if so, which ones?
