19 July 2019

The Big Picture: CITIC GROUP

In line with China’s reform of state-owned enterprises, Hong Kong-based CITIC Pacific Ltd. (00267.HK) will acquire all the existing shares of its parent company CITIC Group for the latter to go public in Hong Kong. CITIC Group will also move its headquarters from Beijing to Hong Kong.

CITIC Group’s listing plan, first outlined in 2008, shows Beijing’s determination to push forward the restructuring of state-owned assets, the 21st Century Business Herald reported Wednesday, citing a source familiar with the situation. It also highlights Hong Kong’s key role in the country’s efforts to open up its economy.

The deal, which will allow CITIC Pacific to issue new shares to acquire its parent for US$40 billion, would be the biggest asset injection into a Hong Kong-listed unit by a state-owned Chinese parent, according to the data compiled by Bloomberg.

In 2000, China Mobile Ltd. (00941.HK) acquired seven wireless networks from China Mobile Communications Corp. for US$32 billion, Bloomberg reported. 

Last year, CITIC Group completed its asset restructuring plan with a registered capital of 183.7 billion yuan (US$30 billion).

CITIC Pacific has been a major overseas investment arm of the CITIC Group, which represents the Chinese government, since the country started to open up its economy in the 1980s. The move to let CITIC Group go public in Hong Kong will help the state-owned firm increase the efficiency of its decision-making so that it can adapt to the fast-changing environment of the global investment markets, observers said. 

In the long term, CITIC Group can become an investment firm like Singapore’s Temasek, making investments with more flexibility and generating higher returns on state-owned assets, observers said. 

WTO rules against China on rare earth export curbs

The World Trade Organization’s panel of experts has determined that China’s restrictions on the export of rare earths, including tungsten and molybdenum, were against its rules, the Economic Information Daily reported Thursday. The move came after a similar ruling in 2012 over export quotas China imposed on nine types of raw materials, suggesting the export quota system could end. China has 60 days to appeal against the decision while the WTO will publish its final ruling in three to four months. Chen Zhanheng, deputy secretary general of the Association of China Rare Earth Industry, said it will take action in response to the panel ruling, the report said.

Alibaba launches film-linked online investment fund

Alibaba Group has rolled out a new online insurance management fund called “Yule Bao” (Entertainment Treasure) that lets retail investors put a minimum of 100 yuan (US$16.10) into selected film and TV productions for an expected annualized return of 7 percent, the Securities Times reported Wednesday. Four film productions seeking a combined 73 million yuan will be the investments in the product’s first phase, the report said.

– Contact HKEJ at [email protected]




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