Articles from Caixin Global, Caixin Global

Caixin Global

Articles from Caixin Global

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<ul><li>Chinese suppliers of both auto hardware and software are following their carmaking clients overseas, particularly focusing on Europe and North America, a new report showed.</li><li>The suppliers have several motivations, such as being more responsive to their Chinese clients with assembly plants abroad, reducing shipping costs, avoiding tariffs and localizing their operations, according to industry data compiled by Cyzone research center and a subsidiary of China Automotive Technology and Research Center Co. Ltd.</li><li>The report looked at 70 “outstanding” Chinese auto parts and software suppliers that were expanding overseas as of June.</li></ul>

Chinese suppliers of both auto hardware and software are following their carmaking clients overseas, particularly focusing on Europe and North America, a new report showed.The suppliers have several motivations, such as being more responsive to their Chinese clients with assembly plants abroad, reducing shipping costs, avoiding tariffs and localizing their operations, according to industry data compiled by Cyzone research center and a subsidiary of China Automotive Technology and Research Center Co. Ltd.The report looked at 70 “outstanding” Chinese auto parts and software suppliers that were expanding overseas as of June.

Most of China’s Top Auto Suppliers Are Expanding Into Europe, Report Shows 

<ul><li>China has slammed the European Commission for requiring Chinese electric-vehicle (EV) and battery makers to provide additional information for its anti-subsidy probe as beyond what is required, saying that its requirements “undermine fair competition” and “disregard” World Trade Organization (WTO) rules.</li><li>“The types, scope and amount of information that the European Commission has asked from Chinese companies are unprecedented, far exceeding the needs of the anti-subsidy investigation,” said He Yadong, a spokesperson for the Ministry of Commerce (MOC), at a Thursday media briefing.</li><li>The information requested included detailed battery components and formulation, as well as the production costs of EVs, purchase information for all EV parts and raw materials, sales channels and pricing methods, and information on customers in Europe, He said.</li></ul>

China has slammed the European Commission for requiring Chinese electric-vehicle (EV) and battery makers to provide additional information for its anti-subsidy probe as beyond what is required, saying that its requirements “undermine fair competition” and “disregard” World Trade Organization (WTO) rules.“The types, scope and amount of information that the European Commission has asked from Chinese companies are unprecedented, far exceeding the needs of the anti-subsidy investigation,” said He Yadong, a spokesperson for the Ministry of Commerce (MOC), at a Thursday media briefing.The information requested included detailed battery components and formulation, as well as the production costs of EVs, purchase information for all EV parts and raw materials, sales channels and pricing methods, and information on customers in Europe, He said.

China Slams EU’s EV Anti-Subsidy Probe as ‘Disregarding’ WTO Rules 

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>Nearly 90% through the review period, we see 6 potential adds and 5 potential deletes in June. However, there can be a maximum of 5 changes at a rebalance.</li>
<li>We estimate a one-way turnover of 5.07% at the June rebalance leading to a one-way trade of CNY 3.97bn. Index arb activity could add to the impact on the stocks.</li>
<li>The potential adds have outperformed the potential deletes by 17% over the last month and by 21% over the last two months.</li>
</ul>


Nearly 90% through the review period, we see 6 potential adds and 5 potential deletes in June. However, there can be a maximum of 5 changes at a rebalance.
We estimate a one-way turnover of 5.07% at the June rebalance leading to a one-way trade of CNY 3.97bn. Index arb activity could add to the impact on the stocks.
The potential adds have outperformed the potential deletes by 17% over the last month and by 21% over the last two months.


SSE50 Index Rebalance Preview: BIG Outperformance Over the Last Month

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<ul>
<li>The EV market offers bright long term prospects supported by technological progress and government incentives, particularly in China.</li>
<li>In the short term, surging raw material costs and supply bottlenecks are significant risks and could take longer to resolve than many suspect.</li>
<li>We believe the high-end performance segment and low-end mini/city vehicle segments are most suitable for rapid EV penetration.</li>
</ul>


The EV market offers bright long term prospects supported by technological progress and government incentives, particularly in China.
In the short term, surging raw material costs and supply bottlenecks are significant risks and could take longer to resolve than many suspect.
We believe the high-end performance segment and low-end mini/city vehicle segments are most suitable for rapid EV penetration.


Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Dongzheng Automotive Finance / Event-Driven

<ul>
<li>On the 19 May, <a href="https://www.smartkarma.com/entities/saic-motor-corp-ltd-a" target="_blank" data-smartkarma-citation="entities:20833:1" rel="noopener">SAIC Motor (600104 CH)</a> acquired <a href="https://www.smartkarma.com/entities/china-zhengtong-auto-services" target="_blank" data-smartkarma-citation="entities:17001:1" rel="noopener">China Zhengtong Auto Services Hldg (1728 HK)</a>'s 71.04% stake in <a href="https://www.smartkarma.com/entities/shanghai-dongzheng-automotive-finance-co-ltd" target="_blank" data-smartkarma-citation="entities:27984:1" rel="noopener">Dongzheng Automotive Finance (2718 HK)</a> at a judicial auction. </li>
<li>Reportedly SAIC was the only bidder. The price paid appears to be at the minimum bid price of HK$1.294/share. </li>
<li>The acquisition will trigger an unconditional Offer for the H shares.  SAIC and ZhengTong have announced the outcome of the auction. But still no word from Dongzheng.</li>
</ul>


On the 19 May, SAIC Motor (600104 CH) acquired China Zhengtong Auto Services Hldg (1728 HK)'s 71.04% stake in Dongzheng Automotive Finance (2718 HK) at a judicial auction. 
Reportedly SAIC was the only bidder. The price paid appears to be at the minimum bid price of HK$1.294/share. 
The acquisition will trigger an unconditional Offer for the H shares.  SAIC and ZhengTong have announced the outcome of the auction. But still no word from Dongzheng.


Shh! SAIC's Unconditional Offer For Dongzheng (2718 HK)

China

SAIC Motor Corporation Ltd., through joint ventures, manufactures and markets automobiles and related parts and accessories.

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SAIC Motor (600104 CH)

Most of China’s Top Auto Suppliers Are Expanding Into Europe, Report Shows

Chinese suppliers of both auto hardware and software are following their carmaking clients overseas, particularly focusing on Europe and North...

Caixin Global

China Slams EU’s EV Anti-Subsidy Probe as ‘Disregarding’ WTO Rules

China has slammed the European Commission for requiring Chinese electric-vehicle (EV) and battery makers to provide additional information for its...

Caixin Global

SSE50 Index Rebalance Preview: BIG Outperformance Over the Last Month

There could be 5 changes for the SSE50 in June. Estimate one-way turnover is 5.07% and the one-way trade is CNY 3.97bn. The potential adds have...

Brian Freitas

China’s Evolving EV Industry

With attractive long term prospects but a short term clouded by raw material prices investors should focus on a barbell approach to EVs examining...

Mio Kato

Shh! SAIC's Unconditional Offer For Dongzheng (2718 HK)

Dongzheng remains suspended so there is nothing to do yet. This should trade very tight to terms, possible through terms, given a larger credible...

David Blennerhassett

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