Chinese Stock Selloff

October 26, 2022

Good Morning,

The first cruise ship has docked in Wellington after a two and half year hiatus, the New Zealand employment court has ruled that four Uber drivers are employees, Australian household energy bills are expected to rise 50% over the next two years, the Australian federal budget has been released, Rishi Sunak is the new PM of the UK, the Kremlin has doubled down on its 'dirty bomb' claims, the eurozone is heading for recession, US business activity contracted for the fourth consecutive month & Chinese stocks were in freefall.

Let's jump in.

Before The Bell

Markets

  • The New Zealand market lifted on the back of two positive days on Wall Street.

  • The Australian market was held to a small creep-up after a couple of downgrades. (AFR)

  • US stocks rose on the back of signs of a cooling US economy, raising hope of slower Fed rate hikes.

  • Chinese stocks wobbled, with the Nasdaq Golden Dragon China Index down 14.4%. (AFR)

  • The Yuan was down 7.3% per USD. (AFR)

Earnings

  • Ampol is forecasting record full-year profits. However, it posted a $21.3m (AUD) loss in its fuel and infrastructure business activities, excluding refineries and was well short of estimates for Q3 net profit. Its stock price was down 12.6%. (AFR)

  • Philips beat Q3 EPS estimates. However, it missed revenue estimates amid operational and supply challenges and a ~$1.3B (USD) writedown on its respiratory business due to legal issues. Their stock fell ~1.4% yesterday. (FT)

  • Reliance slipped 13.4% as EBIT was down 15%, and the EBIT margin also decreased. (AFR)

News Summary

  • The first cruise ship has docked in Wellington after a two and half year hiatus. (Stuff)

  • A 23-million-year-old whale fossil has been 'stolen' from a West Coast river in New Zealand. (Stuff)

  • The New Zealand employment court has ruled that four Uber drivers are employees. (Stuff)

  • Just 2% of decile one students passed the new writing standard pilot in New Zealand. (Herald)

  • A private consortium developing Waikeria prison claimed an extra $430m (NZD) in covid costs. (NBR)

  • Australian household energy bills are expected to rise 50% over the next two years. (9 News)

  • The Australian federal budget has been released, and Treasurer Jim Chalmers has said harder days are to come. (AFR)

  • Australia received a sovereign rating of AAA from S&P after the budget reveal. (RT)

  • Rishi Sunak is meeting the King to officially become the prime minister of the UK. (BBC)

  • UK's competition watchdog is considering the remedies for the $5.1B (USD) Sika-MBBC merger after the companies proposed to sell MBCC's chemical admixture business in the UK, Europe and serval other countries. (RT)

  • Russia has been accused of sabotaging water pipes in Ukraine. (BBC)

  • The Kremlin has doubled down on its 'dirty bomb' claims. (RT)

  • The Eurozone's business activity contracted at the fastest pace in almost two years this month. (RT)

  • EU antitrust regulators will rule on French media company Vivendi's proposed acquisition of French peer Lagardere by November 30th. (RT)

  • Philip Morris is likely to receive a nod from the EU for its Swedish Match takeover after they offered to sell the targets logistics business. (RT)

  • US business activity contracted for the fourth consecutive month as the PMI fell from 49.5 to 47.3 in October. (RT)

  • The US Treasury will take steps to enhance the resilience of the Treasury debt market, private money market and bond funds. (RT)

  • China's budget deficit has neared a record $1 Trillion. (BBG)

  • WhatsApp is back online after suffering a worldwide outage. (BBC)

  • HSCB has named Georges Elhedery as its new CFO. He will replace Ewen Stevenson in December. (BBG)

  • Global junk-bond sales have plummeted the most ever and show no signs of recovery. (BBG)

  • Rothschild & Co has opened an office in Saudi Arabia. (BBG)

Deal Flow

Investments/ M&A

  • Toshiba has been valued at $16.1B (USD) in a takeover bid for a consortium led by Japan Industrial Partners. (BBG)

  • Chinese conglomerate Fosun International is planning $11B (USD) in asset sales next year. (BBG)

  • Saudi wealth fund PIF has offered to buy a 51% stake in Telecommunications Towers Co. Saudi Telecom Co is assessing the offer and said the entire business had been valued at $5.8B (USD). (BBG)

  • A unit of Japanese drugmaker Sumitomo has acquired drugmaker Myovant Sciences after increasing its bid to $1.7B (USD). (BBG)

  • Brookfield Business Partners, a US investment firm, is renewing a sale of UK biofuel supplier Greenergy after it received interest from potential buyers. A deal could be worth $1.4B (USD). (BBG)

  • Mason Stevens, an Australian wealth manager, sold a 38% stake in the company to pre-IPO investors and clients for $55m (AUD). (AFR)

  • US PE firm Paine Schwartz Partners sought to buy a 15% stake in Australian citrus and berries company Costa Group. They were willing to pay up to a 16.67% premium. (AFR)

  • A 5% stake in listed asset manager Pacific Current was cleared at a 3% premium via Barrenjoey's desk. (AFR)

  • Germany is unlikely to block China's Cosco's bid for a stake in a Hamburg port terminal but instead is likely to offer a smaller stake. (RT)

  • KFC owner Yum has exited Russia and is selling its business there to local franchises Smart Services. (BBG)

  • Atos, a French technology company, says it has received interest from multiple bidders for its legacy IT outsourcing unit. (BBG)

  • A consortium of Abu Dhabi state-backed entities is considering making an offer for a stake in Dubai-based GEMS Education which is one of the world's largest private school operators. (BBG)

VC & Fundraising

  • Bain Capital, a PE firm, has raised $2B (USD) for its latest tech fund and plans to use part of it to expand its deal-making in Europe. (BBG)

  • Bilt Rewards, a New York-based start-up which operates a loyalty program and credit card that converts rent payments to points, has raised $150m (USD) at a $1.5B (USD) valuation. Left Lane Capital led the round. (BBG)

  • The Coterie, a financial technology platform, has raised $40M (USD) in its latest funding round, which Andreessen Horowitz led. (BBG)

  • Dog food start-up Lyka has raised a $30m (AUD) Series B. Led by renowned Israeli entrepreneur and investor Itai Tsiddon. (AFR)

  • Crypto-based web3 fund UpsideDAO has locked up $5m (AUD) in funding. It is backed by Apollo Capital Management, a Melbourne-based digital asset manager, crypto payments operator Banxa, crypto broker Caleb & Brown and digital horse racing game Zed Run. (AFR)

  • GenesisCare, a KKR-backed cancer care company, is seeking to raise additional capital from either new or existing investors. (AFR)

Equity Raises 

  • UK northern sea oil and gas producer Ithaca Energy said it plans to go ahead with its London listing. It could be valued at between $2B & $3B (USD) and raise between $300m & $500m (USD). (RT)

  • Global Lithium Resources, a lithium explorer, is launching a $121.5m (AUD) equity raise. It will be done via a $111.4m (AUD) underwritten share placement and a $10.1m (AUD) share purchase plan. (AFR)

  • Gold Hydrogen, a South Australian green hydrogen play, is seeking $25m (AUD) in an IPO. (AFR)

  • Australian water treatment and metals treatment company Clean TeQ Water is attempting to raise $5m (AUD) via a two-tranche placement. (AFR)

  • Dubai plans to sell a 10% stake in district cooling firm Emirates Central Cooling Systems, known as Empower, via an IPO this year. (BBG)

  • Investment company Welkin China Private Equity has decided to halt its IPO due to macroeconomic uncertainty and market volatility. (BBG)

SPAC

  • A unit of Australian miner European Lithium has agreed to merge with the Sizzle SPAC to go public on the Nasdaq. It will give the combined entity a market value of $972m (USD). (BBG)

  • Flair Airlines, a low-cost Canadian airline, is in talks to go public via a merger with New Vista Acquisition Corp, a blank cheque company. (BBG)

Debt

  • Singapore Airlines have said they will spend $2.7B (USD) to redeem the convertible bonds they issued in 2020. The redemption will occur at a price that is 110.4% of the principal amount. (RT)

  • South Korea's Mirae Asset Financial Group is planning to commit $208m (USD) to help finance Elon Musk's $44B (USD) buyout of Twitter. (RT)

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