China to close loophole used by tech firms for IPOs

Companies would not be able to list on foreign stock markets through VIEs
Newsfeed03 Dec 2021
    Photo credit: AFP Photo


    Weibo Corporation (9898 HK) and its shareholder Sina Corporation (SINA US) priced shares in the Twitter (TWTR US) -like website’s Hong Kong second listing at HKD272.80 each, raising about HKD3b (USD385m) despite Beijing’s latest market-dampening regulatory moves.

    The price represents a discount of about 2.8% to Wednesday’s USD36 close in New York.

    The Chinese social media company sold 5.5m new shares in the Hong Kong offering, while Sina sold 5.5m existing shares. The sellers set a maximum price of HKD388 for the portion of the deal being marketed to Hong Kong’s retail investors.

    Weibo’s Hong Kong listing comes as Chinese regulators continue their relentless tightening of oversight on local firms traded overseas. China will issue new draft rules as soon as this month restricting the use of so-called variable interest entities (VIEs), Bloomberg News reported Wednesday. The rules would ban VIEs’ use in new listings aside from in Hong Kong and would require more transparency from firms that already use the structure.

    Weibo’s American depositary receipts plunged 9.6% during Wednesday (2 December) trading in New York, their biggest fall since late August. They have lost more than 30% of their market value since early July, when a cybersecurity probe of Didi Global Inc (DIDI US) kicked off a round of moves that wiped about a trillion dollars off Chinese companies globally. – Bloomberg News.

    The Shanghai Composite Index dipped 0.01% to 3,573.84 while the Hang Seng Index climbed 0.55% to 23,788.93.



    Grab Holdings Ltd (GRAB US), Southeast Asia’s biggest ride hailing and delivery company, fell sharply in its first day of trading after completing its merger with Altimeter Growth Corporation (AC US), the largest deal yet for a special purpose acquisition company (SPAC).

    The shares slid 21% to USD8.67 at 1:30 pm in New York.

    Grab has yet to prove it can reach profitability, especially with the resurgence of Covid. In September, the company cut its revenue projections for 2021 as Southeast Asia battled with the delta variant. In November, the company said its net loss widened to USD988m for the third quarter, while revenue declined 9% to USD157m.

    Grab is facing growing competition in the region, including from Sea (SE US). Still, Grab has a leading position in the market and it raised more than USD4b in additional capital as part of the SPAC deal. – Bloomberg News.

    Australia’s S&P/ASX 200 Index climbed 0.15% to 7,236.00 early-Friday morning, reversing to its previous loss of 0.15% to 7,225.20.

    South Korea’s Kospi Index slipped 0.45% to 2,932.08 in early Friday trading. It climbed 1.57% to 2,945.27 the previous session.

    The Taiwan Stock Exchange Weighted Index rose 0.79% to 17,724.88.

    The information published by DBS Bank Ltd. (company registration no.: 196800306E) (“DBS”) is for information only. It is based on information or opinions obtained from sources believed to be reliable (but which have not been independently verified by DBS, its related companies and affiliates (“DBS Group”)) and to the maximum extent permitted by law, DBS Group does not make any representation or warranty (express or implied) as to its accuracy, completeness, timeliness or correctness for any particular purpose. Opinions and estimates are subject to change without notice. The publication and distribution of the information does not constitute nor does it imply any form of endorsement by DBS Group of any person, entity, services or products described or appearing in the information. Any past performance, projection, forecast or simulation of results is not necessarily indicative of the future or likely performance of any investment or securities. Foreign exchange transactions involve risks. You should note that fluctuations in foreign exchange rates may result in losses. You may wish to seek your own independent financial, tax, or legal advice or make such independent investigations as you consider necessary or appropriate.

    The information published is not and does not constitute or form part of any offer, recommendation, invitation or solicitation to subscribe to or to enter into any transaction; nor is it calculated to invite, nor does it permit the making of offers to the public to subscribe to or enter into any transaction in any jurisdiction or country in which such offer, recommendation, invitation or solicitation is not authorised or to any person to whom it is unlawful to make such offer, recommendation, invitation or solicitation or where such offer, recommendation, invitation or solicitation would be contrary to law or regulation or which would subject DBS Group to any registration requirement within such jurisdiction or country, and should not be viewed as such. Without prejudice to the generality of the foregoing, the information, services or products described or appearing in the information are not specifically intended for or specifically targeted at the public in any specific jurisdiction.

    The information is the property of DBS and is protected by applicable intellectual property laws. No reproduction, transmission, sale, distribution, publication, broadcast, circulation, modification, dissemination, or commercial exploitation such information in any manner (including electronic, print or other media now known or hereafter developed) is permitted.

    DBS Group and its respective directors, officers and/or employees may have positions or other interests in, and may effect transactions in securities mentioned and may also perform or seek to perform broking, investment banking and other banking or financial services to any persons or entities mentioned.

    To the maximum extent permitted by law, DBS Group accepts no liability for any losses or damages (including direct, special, indirect, consequential, incidental or loss of profits) of any kind arising from or in connection with any reliance and/or use of the information (including any error, omission or misstatement, negligent or otherwise) or further communication, even if DBS Group has been advised of the possibility thereof.

    The information is not intended for distribution to, or use by, any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation. The information is distributed (a) in Singapore, by DBS Bank Ltd.; (b) in China, by DBS Bank (China) Ltd; (c) in Hong Kong, by DBS Bank (Hong Kong) Limited; (d) in Taiwan, by DBS Bank (Taiwan) Ltd; (e) in Indonesia, by PT DBS Indonesia; and (f) in India, by DBS Bank Ltd, Mumbai Branch.