China likely to restart listings from unprofitable tech firms...Naura climbs chipmaking equipment supplier ranks...China commerce ministry meets with Walmart
China likely to restart listings from unprofitable tech firms
China is likely to restart allowing unprofitable tech companies to list on Shanghai’s STAR Market, sources with knowledge of the matter said, showing intensified financing support for technology innovations, reports Caixin. The Shanghai Stock Exchange has recently told several intermediary institutions that it particularly supports the listing of high-tech firms, multiple sources from investment banks and private equity firms told Caixin. It’s clear that regulators are paving the way for reopening the IPO channel to money-losing tech companies, they said.
A readout of a Tuesday meeting hosted by China Securities Regulatory Commission (CSRC) Chairman Wu Qing pledged support for IPOs by “quality” unprofitable tech companies.
The CSRC will “prudently reinstate” a regime designed to get money-losing tech companies listed on the STAR Market, in a bid to promote the integrated development of technological innovation and industrial innovation, according to the readout.
Naura climbs chipmaking equipment supplier ranks
Naura Technology Group climbed up in the rankings of the world’s biggest semiconductor equipment suppliers in 2024, as China’s leading chip tool maker braced for tighter US tech restrictions, reports the South China Morning Post. Beijing-based Naura was ranked sixth among global chipmaking equipment suppliers by revenue last year, up from eighth place in 2023 when it cracked the industry’s top-10 leaderboard for the first time, according to a report last week by Chinese semiconductor research firm CINNO.
The state-backed company, which is expected to post about a 40% increase in 2024 sales, was the only Chinese firm among the world’s top-10 chipmaking equipment vendors, according to CINNO data. Dutch giant ASML Holding topped the table, followed by US companies Applied Materials and Lam Research.
The combined 2024 revenue of the top 10 global chipmaking equipment suppliers rose 10% to about $110 billion from a year earlier, the CINNO report showed.
China commerce ministry meets with Walmart
Beijing officials met with Walmart this week to discuss media reports that the US retailer has asked Chinese suppliers to slash prices on their goods to offset the impact of the Trump administration's tariffs, according to social media posts affiliated with state-run broadcaster CCTV, reports Reuters. The posts, published on Wednesday on the Weibo account of Yuyuantantian, said the meeting between China's commerce ministry and Walmart representatives was held on March 11. The posts cited sources familiar with the meeting.
A Walmart spokesperson confirmed the meeting took place but offered no further details.
"We will continue to work closely with them (suppliers) to find the best way forward during these uncertain times. We have a strong business in China and are proud of our associates around the world who are delivering for customers and members," Walmart said in an emailed statement.
The meeting was prompted by reports that Walmart had requested some Chinese suppliers to cut their prices by as much as 10% per round of tariffs, essentially shifting the full cost of US tariffs onto these suppliers.
US regulator to create council to counter China tech threats
The Federal Communications Commission is creating a national security council to bolster US defences against Chinese cyber attacks and help it stay ahead of China in critical technologies, such as artificial intelligence, reports the Financial Times. Brendan Carr, the new FCC chair, said he was establishing the council to step up the agency’s focus on the “persistent and constant threat from foreign adversaries, particularly the Chinese Communist party.”
“These bad actors are always exploring ways to breach our networks, devices and technology ecosystem. It is more important than ever that the FCC remain vigilant and protect Americans and American companies from these threats,” he said.
He added that because the threats cut across sectors that the commission regulated, “it is important that the FCC’s national security efforts pull resources from a variety of FCC organisations.”
Foreign investors net sellers in China commercial real estate
Foreign investors were net sellers in China’s commercial real estate market for a fourth year in 2024, hastening their retreat as the nation struggled with deflation and higher global borrowing costs diminished the potential for capital gains, reports the South China Morning Post. They bought $5.9 billion worth of office, hotel, industrial and retail properties last year, the lowest since 2014, as risk appetite waned, according to MSCI, which tracks property transactions worth at least $10 million. Investors also sold $6.9 billion of assets at the same time.
The $969 million net selling last year brought the cumulative 2021-to-2024 outflows to $11.2 billion, exceeding the net inflows for the preceding two years combined. Since the Covid-19 outbreak in early 2020, global funds were net sellers in every segment bar industrial assets, MSCI data showed.
“The office market has welcomed a lot of new supply, meaning that existing stock has faced downward pressure on occupancy and rents,” said Benjamin Chow, head of Asia real estate research at MSCI. “Investors have been less acquisitive” since rates increased from late 2022, and were likely to wait and see until values stabilised, he added.
Listing changes
A readout from a recent meeting hosted by China Securities Regulatory Commission (CSRC) Chairman Wu Qing pledged support for IPOs by “quality” unprofitable tech companies. This suggests a return to allowing unprofitable tech companies to list on Shanghai’s STAR Market, which was previously halted in August 2023. The move will make it easier for up-and-coming hi-tech firms to access funding, something sorely needed by China’s private sector in the wake of diminishing investment.
Investing in not-yet-profitable companies has become a fairly common thing in recent years all over the world, but Chinese firms face an additional barrier in terms of funding. Foreign investment into China has fallen dramatically over the last couple of years, and government investment funds have become a major source of investment for such companies.