News
False start for London Connect
Equities ‘Technical issues’ delay Huatai GDR, while Shanghai tech board moves aheadBY FIONA LAU, KAREN TIANThe launch of the long-
awaited Shanghai-London
Stock Connect scheme has
been delayed by unspecified
technical issues, dealing a
setback to China’s ambitions to
connect to the world’s financial
markets.
HUATAI SECURITIES, which had
been due to mark the launch of
the trading link with a US$1bn
offering of global depositary
receipts in London, postponed
bookbuilding from early last
week even after receiving
the green light from Chinese
regulators on November 30.
Huatai’s GDRs were set to
start trading on December 14,
according to people close to the
deal.
“Everything was ready but
we were told the deal had to be
delayed due to technical issues
related to the Stock Connect,”
said a banker on the deal. “We
don’t know what the issues are
and when they will be sorted
but with such a delay, the
deal may have missed the best
window to launch by year-end.”The unexpected hold-up
recalls the failed introduction
of Chinese depositary receipts
in June, when smartphone
maker Xiaomi cancelled a CDR
issue that was due to coincide
with its Hong Kong IPO.
Chinese media reported last
Wednesday that the Shanghai-
London Stock Connect maynot start until after Christmas,
citing issues related to the UK
parliament’s planned December
11 vote on the Brexit deal. One
person with knowledge of the
matter confirmed to Reuters
that the scheme will be delayed
by at least one month.
But market participants say
the short delay will not have abig impact.
“It’s not surprising to see the
delay. Given the choppy market
conditions, China will want to
make sure the Connect link
will be launched at the right
time,” said a banker away from
the Huatai deal. “A short delay
won’t have a big impact as
many Chinese issuers are stillTencent Music momentum 06 Nimble Indonesia 06 Arrest sours Huawei loan 08
Huawei arrest spooks markets
Bonds US probe of Chinese tech giant reignites trade war fearsBY CAROL CHANHUAWEI TECHNOLOGIES’ US dollar
bonds slumped to record lows
last week on news that the
company’s chief financial
officer was arrested in Canada
and is facing extradition to the
United States on suspicion of
violating US sanctions.
Huawei’s 4.125% 2025s,
4.125% 2026s and 4.00% 2027s
fell about two points in cash
price and widened about 30bp
in Treasury spread terms on
Thursday. The bonds furtherwidened about 5bp–10bp on
Friday, according to a bond
trader.
“Quotes widened a lot
after the news broke out on
Thursday morning, but trading
was not very active,” the trader
said.
The arrest of Meng Wanzhou
rattled markets last week as
investors worried that it might
derail a fragile truce in the
trade dispute between China
and the US, with some Chinese
state media accusing the US of
trying to pressure its allies notto use Huawei’s products.
After a strong start to the
week following an agreement
between US President Donald
Trump and China’s Xi Jinping
at the weekend’s G20 summit
in Argentina, stock markets
in Europe slumped more than
3% on Thursday on the Huawei
news and government bonds
rose as investors looked for safe
havens.
White House officials sought
to calm the situation late on
Thursday, claiming that Trump
did not know about plans toarrest Meng when he met Xi
in Buenos Aires on December- US stock indices, which had
been down around 3% early on,
cut most of those losses by the
close.
The slump also highlights
the risks facing investors in
politically sensitive Chinese
companies at a tense time in
relations between China and
the US. Huawei, which has
never sought a global credit
rating and is not listed, is a
major international borrower
with over US$11bn outstanding
in bonds and loans, according
to Refinitiv and LPC data.
It is currently in the
market with a Japanese yen-
denominated three-year loan,