NetEase raises at least $2.7 billion in Hong Kong, more listings likely

HONG KONG (Reuters) – Chinese online gaming firm NetEase (NTES.O) raised at least $2.7 billion in a Hong Kong secondary offering, two sources said on Friday, amid doubts that mainland firms can list in New York as Sino-U.S. tensions deepen.

NetEase’s deal, the second after Alibaba (BABA.N) in 2019, is expected to be one of several large secondary deals in Hong Kong this year.

Its shares were priced at HK$123 ($15.87) each, the sources with direct knowledge of the matter told Reuters.

The company had planned to sell 171.48 million shares, according to an earlier term sheet, and has the option of selling another 25.72 million shares, under a so-called ‘greenshoe’ option.

The Hong Kong price is equivalent to $396.70 for NetEase’s U.S.-listed shares which is a 2% discount to the stock’s last closing price of $405.01 on Thursday.

Under the terms of the deal, one American depository receipt (ADR) is worth 25 of the company’s Hong Kong shares.

In its earlier regulatory filings, NetEase said it planned to use the money raised in its Hong Kong listing to fund its international expansion plans.

Charles Li, CEO of Hong Kong Exchanges and Clearing Ltd (0388.HK), said on Thursday he expected 2020 to be “a big year” for what he called “returnees” from U.S. markets.

The U.S. administration has questioned whether Chinese companies should be able to list in New York as tensions with Beijing rise.

“Today the atmosphere in the U.S. is becoming less friendly and we obviously have fundamentally changed many aspects of our listing regime so that we are becoming more accommodating,” he said via webcast at an industry conference held by Piper Sandler.

Chinese e-commerce company JD.com is due to launch its Hong Kong listing as early as Friday, according to sources with knowledge of the matter, to sell up to 5% of its stock to raise at least $3 billion.

Shares of Netease debut on June 11.

NetEase did not immediately respond to a request for comment.

($1 = 7.7501 Hong Kong dollars)

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Warner Music looks to raise $1.82 billion in Nasdaq listing

(Reuters) – Warner Music Group said on Tuesday it expects to raise up to $1.82 billion in its initial public offering on the Nasdaq stock exchange, as some companies gingerly test investor appetite after the COVID-19 pandemic put many debuts on hold.

The recording label, home to artistes including Cardi B, Ed Sheeran and Bruno Mars, expects its offering of 70 million shares to be priced between $23 and $26 per share, valuing it at about $13.26 billion.

The world’s third-largest music recording label had in March delayed it plans to kick off the debut, set to be one of the year’s bigger IPOs.

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China urges local companies to list in London in renewed global push: sources

LONDON/HONG KONG/WASHINGTON (Reuters) – China is urging domestic companies to look at listing in London, several sources told Reuters, as the country aims to revive deals under a Stock Connect scheme and strengthen overseas ties in the wake of the coronavirus crisis.

The Shanghai-London Stock Connect scheme, which began operating last year, aims to build links between Britain and China, help Chinese companies expand their investor base and give mainland investors access to UK-listed companies.

The original plan was for several companies to take part in the scheme in the first couple of years, but so far only one company — Huatai Securities (HTSCq.L) — made the trip from Shanghai to London last June.

But now Chinese authorities have given the go-ahead for China Pacific Insurance (601601.SS) and SDIC Power (600886.SS) to move ahead with their London-listing plans, the sources said, after both deals were halted last year.

They also gave the nod to China Yangtze Power (600900.SS) to begin preparations for a secondary listing on the London Stock Exchange, the sources said, speaking on condition of anonymity as the matter is confidential.

The China Securities Regulatory Commission, the Shanghai Stock Exchange and China Pacific Insurance did not immediately respond to Reuters’ requests for comment. SDIC Power and China Yangtze Power declined to comment. The London Stock Exchange declined to comment.

Under the London-Shanghai Connect Scheme, first announced in 2018, Chinese companies are allowed to add a secondary listing of Global Depositary Receipts in Britain that would be linked to shares in Shanghai.

The sources, including officials from banks, government and exchanges, said that the aim was to push for a resumption of listings under the Stock Connect scheme as China seeks to improve ties with the outside world and help to fund its post-lockdown recovery.

“In the second half of this year, we could see one or maybe two Chinese companies list in London,” said one of the sources, who is closely involved in the process.

“China is among the first countries to come out of lockdown, and is keen to get back on track with plans to improve trade relations with the UK,” he added.

Anti-China sentiment in the United States on several fronts and the troubles surrounding U.S.-listed Chinese coffee chain Luckin Coffee (LK.O) may have made the route to New York harder to navigate.

PIPELINE BUILDS

In London-Shanghai listings pipeline, China Pacific Insurance is likely to be the first Chinese company to make its London debut this year, seeking to raise between $2 billion and $3 billion, and it could price the sale in September or October this year, a second source said.

China Yangtse Power is another sizable listing, which could raise about $2.5 billion from a deal that will equal about 5% of its share capital, the second source said.

The share listings will not necessarily be an easy sell in the current environment, a third source said, who is a London-based banker involved in some of the transactions.

“The IPO market is like to remain shaky for a good while yet, and these are not ‘need to own’ assets. Investors will already be busy supporting the companies in their portfolio and are likely to be selective,” he said.

The market for initial public offerings (IPOs) has been all but shut since the outbreak of COVID-19 across the world, which has hit global economic growth, wreaked havoc on stocks and pushed market volatility to its highest in years.

Many companies have been raising funds in the secondary markets to keep businesses going through the lockdowns imposed in much of the world. But there were only eight new listings in the first quarter of 2020, the lowest number since 2009, Refinitiv data showed.

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Duterte's risky bet on online casinos as an essential service

The Covid-19 outbreak has raised many questions about Philippine President Rodrigo Duterte’s handling of the crisis. His government’s decision to designate online Chinese casinos as an essential service and allow them to reopen, while most other local businesses are under a two-month-long lockdown, has ignited an outcry in the Philippines.

The move has also refocused attention on the controversies swirling around the so-called Pogos (Philippine offshore gaming operators). Despite expressing hatred for gambling, Mr Duterte has overseen the entry of hundreds of thousands of Chinese workers, many illegal and mostly employed in the sprawling yet opaque online casino industry. Much to the chagrin of the public, the government recently allowed Pogos to reopen from May 1 at 30 per cent capacity and subject to certain conditions.

Opposition has sprung from priests to politicians. Church officials asked why online gaming was allowed to resume operations while Sunday masses remain banned. Ozamis Archbishop Martin Jumoad lamented on Radio Veritas: “Why allow the reopening of Pogos? From the Philippines being the only Christian nation in the Far East, to being the gambling capital in the Far East.”

Trade union group Kilusang Mayo Uno (KMU) questioned the government’s rationale of designating the industry as an essential one. “Pogos are not essential both in terms of people’s needs and its contribution to the economy,” said KMU chairman Elmer Labog. “It insists on allowing Pogo operations because it favours dealing with Chinese business over the nation’s economy and people’s welfare. Where is the Filipino people’s interest in this?”

Crucially, even Duterte-leaning legislators have joined in. Up to 31 lawmakers, led by House Minority Leader Bienvenido Abante Jr, have crossed party lines to push for a Bill to effectively ban these online casinos. Dubbed the “Anti-Pogo Act of 2020”, House Bill No. 6701 characterises the Chinese-dominated Pogos as a “source of unimaginable corruption” and “social menace”, which has made a “mockery of our anti-money laundering, immigration and tax laws. It has been a source of untold criminal offences and heinous crimes related to the conduct of such operations”. Top senators, including Senate president Vicente Sotto and Senate Minority Leader Franklin Drillon, also do not find the government’s justifications persuasive.

Presidential spokesman Harry Roque had argued earlier that Pogos are akin to the multibillion-dollar business process outsourcing sector – an essential industry – and an important revenue source. There are about 60 such licensed firms in the country. The Philippines’ gambling industry has experienced a fourfold expansion under Mr Duterte, with total revenues reaching US$4 billion (S$5.7 billion) last year. Licensing fees topped US$150 million that year.

Philippine Amusement and Gaming Corporation chairman Andrea Domingo has defended the influx of Chinese workers, saying Mandarin-speaking employees are essential as most offshore gaming clients are Chinese.

But critics say the revenue is outweighed by the social costs of illegal immigration, prostitution, human trafficking, kidnapping and other crimes. If the Pogos cannot be trusted with abiding by immigration laws, how can they be trusted to follow Covid-19 regulations such as testing of workers? And if health officials have a real clue of the number of illegals working for the Pogos, how are they to contain the spread of the disease?

The latest concern over Pogos comes on top of the Duterte administration’s slow pandemic response. It did not impose curbs on travellers from China until weeks into the outbreak in Wuhan, likely for fear of upsetting Beijing and disrupting the online casinos. And when the administration finally imposed a month-long lockdown of the Philippines administrative and industrial heartland, the Pogos were still allowed to operate across Metro-Manila days after the announcement. Many simply shifted to residential areas after regulations were tightened.

A second major concern with Pogos is their highly opaque nature and alleged underworld links. In recent years, there has been a surge in criminal activities, including kidnappings and homicides, involving elements directly or indirectly involved in the online casino industry.

Between 2017 and last year, the Philippine National Police recorded at least 67 gambling-related kidnappings. Government agencies have also warned of suspicious transactions, with a portion reportedly funding drug trafficking, as well as large-scale tax evasion by the casino operators.

The law and order concern is so dire that Manila is considering a special Mandarin-speaking law enforcement unit. More broadly, critics warn of the corrosive effects of corruption on government agencies. A recent legislative investigation revealed a thick web of corruption, conspiracy and large-scale illegal entry of Chinese citizens into the Philippines.

The third source of concern is national security. Earlier this year, Philippine Senator Panfilo Lacson, a former police chief and current head of the Senate Committee on National Defence and Security, publicly warned that there could be as many as 3,000 members of the Chinese People’s Liberation Army (PLA) embedded among the foreigners working for the Pogos.

The senator said the information came from sources in the Philippines’ security establishment when the Chinese Embassy in Manila questioned the claim. Mr Lacson’s explosive statements came shortly after two Chinese citizens suspected of involvement in a casino-related murder were reportedly in possession of military IDs. Another senator, Mr Richard Gordon, said in a recent interview that the Pogos may have been infiltrated by the PLA.

Both the Armed Forces of the Philippines and the Department of the Interior and Local Government have yet to verify the senators’ claims, but top security officials voiced similar concerns last year, citing the tendency of most Pogos to cluster around strategic facilities such as the national police headquarters at Camp Crame, the air force and navy headquarters, and Camp Aguinaldo, the headquarters of the Philippine Army. Defence Secretary Delfin Lorenzana has noted that given their location, “it’s very easy for all these people to perhaps shift their activities to spying”.

Mr Duterte has insisted the Pogos are “clean” even in the face of concerns from China about their involvement in scams. But the continued operation of the Pogos will only sow the seeds of resentment, risking a major blowback against not only the casinos but also Chinese nationals and relations with Beijing. In the minds of many Filipinos, the Pogos, which hire few locals, epitomise the growing shadow of China and the deep menace of the gambling industry. For critics, the gaming firms underscore the emptiness of Beijing’s (and Mr Duterte’s) promise of high-quality Chinese investments, which would supposedly create many well-paying jobs for Filipinos. Their legacy of scepticism about Chinese goodwill will outlast the Duterte presidency.

• Richard Javad Heydarian is a Manila-based academic and columnist at the Philippine Daily Inquirer.

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Subcontinent's silly season could get serious

As if the world doesn’t have enough on its hands with a pandemic that’s proving difficult to control, we now have a fresh worry: tensions boiling in the subcontinent between Chinese and Indian troops in the far north and north-east of the area, and between Indians and Pakistanis in Kashmir.

Last weekend, a serious skirmish took place between Chinese and Indian troops in the north Sikkim sector in which a young Indian lieutenant apparently struck a Chinese major in the face after the latter appeared to menace an Indian captain, shouting “This is not your land… just go back!”

Although the headstrong young lieutenant, a third-generation soldier, was immediately transferred out by higher authority, sections of the Indian media, including a publication close to the ruling Bharatiya Janata Party, have hailed him as a hero.

Separately, clashes between Indian and Chinese soldiers erupted at a spot called “Finger 5” on the northern bank of the Pangong Tso Lake in eastern Ladakh, an area bordering Xinjiang and Tibet that saw pitched battles in the 1962 Sino-Indian conflict.

Two-thirds of the water body is controlled by China and the Finger 5 incident apparently involved 250 troops using rocks and iron rods, leaving injuries on both sides.

Over in Kashmir in the past fortnight, India lost an officer of colonel rank, a major and three soldiers. They died storming a hideout in troubled Kupwara district to rescue hostages taken by intruders, described by India as Pakistanis belonging to the Lashkar-e-Taiba terrorist group. Fearing a repeat of the Indian retaliation seen in February last year following a suicide bombing in Kashmir, the Pakistan Air Force has flown fighters close to the Line of Control, including night sorties.

The summer months when the Himalayan glaciers melt with the arrival of warmer weather are generally the silly season for the low-intensity skirmishes that routinely take place along the frontiers.

While mortar and machine gun fire is frequently exchanged on the India-Pakistan line, the Chinese and Indians are careful to only confront each other with guns pointed to the ground. Such encounters take place when border patrols run into each other along their undemarcated line and one side thinks the other has pushed too far.

Instead, there is jostling and warnings – and in the rare instance as happened over the weekend – a flying fist.

Three years ago, Indian troops entered Bhutanese territory to push out Chinese troops from a key tri-junction in the Doklam area, whose control would have given China enormous advantage in checking India’s access to its seven north-eastern states in a conflict situation. The area is considered so vital strategically that China reportedly had offered Bhutan 540 sq km of territory in exchange for the 89 sq km of territory it sought from the kingdom.

NEW STRATEGIC ENVIRONMENT

This time, however, frictions are rising amid a marked change in the strategic environment. That lends additional danger to the scenario and the risks of a significant escalation on the various fronts.

India’s steadily advancing strategic embrace of the United States, at a time when US-China ties are worsening by the day, has caused worry in Beijing. The weapons India has begun to acquire from the US, and a series of bilateral agreements, have increased inter-operability of the forces. Beijing also suspects a noose is sought to be drawn around it by the Quadrilateral Dialogue or Quad, which pulls in the US, Japan, Australia and India.


ST ILLUSTRATION: MIEL

After initial hesitation about upsetting China, Quad nations held their first foreign minister-level meeting in New York last September. Earlier this month, the four decided to consult weekly at officials level. Although the subject for now is health, there are suspicions about where the consultations could lead to, given the developments around East Asia.

A Quad-Plus meeting was held in the second half of March that included New Zealand, South Korea and Vietnam. Since that meeting, Chinese coast guard actions against Vietnamese fishing vessels in disputed waters saw the Philippines voicing rare public criticism of China, as it backed Hanoi’s position. A second Quad-Plus meeting this week was raised to the level of foreign ministers, and this time brought in South Korea, Brazil and Israel.

New Delhi also is in danger of appearing to play too closely to Washington’s decoupling playbook when it comes to access to its 1.4 billion-size market, reducing Beijing’s incentives to be accommodative of Indian concerns.

After pulling out of Regional Comprehensive Economic Partnership talks last November on fears of being swamped by Chinese goods, India recently announced it would no longer give blanket permission for countries with which it shares “land borders” – widely interpreted as a euphemism for China – to invest in its market.

While this does not amount to a ban, only increased scrutiny, it comes at a particularly sensitive time for China, which fears US pressure is shutting it out of key foreign markets. New Delhi’s decision followed a small, opportunistic Chinese investment in India’s biggest mortgage lender as stock prices collapsed in the wake of the pandemic.

India has its own list of grievances about Chinese insensitivities, starting with Beijing’s steadfast support for Pakistan. Beijing announced the China-Pakistan Economic Corridor, which runs partly through territory that is the subject of a Pakistan-India bilateral dispute, without consulting New Delhi. That one act caused capital-short India to turn its back on the Belt and Road Initiative.

Subsequently, China’s repeated “technical holds” on naming Pakistan-based Masood Azhar, head of the Jaish-e-Mohammed militant group, to a list of global terrorists identified by the United Nations irked India severely.

Azhar, whose group claimed responsibility for the February 2019 Kashmir suicide bombing that nearly brought India and Pakistan to war, was finally named to the group in May last year after intense pressure applied by Washington and Paris.

THE KASHMIRI CANKER

Meanwhile, Kashmir remains the perennial canker between India and Pakistan.

The deaths of the Indian soldiers there in the past fortnight follow on the heels of the loss last month of five commandos killed along the Control Line in Kashmir’s Keran sector during a close-quarter firefight with insurgents attempting to infiltrate the line.

The incident prompted a visit to the area by Indian army chief Manoj Naravane, who accused Pakistan of “exporting terror” at a time when the world was preoccupied with the coronavirus.

Senior commanders generally step in to calm situations such as these. However, India has proclaimed a “new normal” since February last year when it went for significant escalation, using fighter aircraft to hit a purported terrorist camp inside Pakistani territory.

This took place amid the heat of the election campaign after an Indian Kashmiri suicide bomber sent by Jaish detonated himself on Feb 14, taking with him the lives of 40 Indian paramilitary troops. Following the air strike, Prime Minister Narendra Modi had spoken of a “new convention and policy” towards Pakistan, taken to mean he would not be deterred by its nuclear weapons. On the stump, he has said his own nukes were not “crackers meant to be burst during Deepavali”.

For its part, Islamabad has shown it does not lack resolve; in a dogfight that followed its own warning strike close to an Indian military facility, an Indian pilot was shot down and later returned.

The danger is that all of this comes when all countries involved are at a weak moment; the pandemic has ravaged what anyway were wheezing economies whose swagger had been significantly curtailed. In India, for instance, pensions aside, this year’s defence budget is just 1.5 per cent of gross domestic product – there simply is no money for more, given the multiple other challenges the country faces.

Rather than help reduce tensions, weakness can sometimes cause situations to escalate. A spark here and there could lead to wider conflagrations if, for instance, a nation unwilling to commit ground troops is tempted to reach for stand-off weapons, such as missiles.

MODI’S DISENCHANTMENT

So far, all concerned seem to be inclined to tamp down the situation. India’s General Naravane told journalists on Wednesday that the incidents on the China border had “no connection with any domestic or international situation prevailing today” and the current ones, too, would be handled “as per protocol between the two countries”. A Chinese spokesman has echoed similar views, saying his nation was committed to maintaining peace and tranquillity.

While India-Pakistan ties were always fraught given their tortured history, the pity about the Sino-Indian relationship is that no Indian leader had stepped into the prime minister’s office with such a positive attitude towards China as Mr Modi.

Today, admiration and the instinct to emulate China, which led him to promote Gujarat as “Guangdong of the East”, have soured into deep scepticism. This is driving him to take his nation, long admired for its independent foreign policy, towards what looks like a “non-treaty ally” relationship with Washington. In turn, this feeds into apprehensions about New Delhi turning into a lackey of the US.

Ironically, Mr Modi had been banned from entering the US for more than a decade following his mishandling of communal violence early in his tenure as Gujarat state minister.

The weather forecast for the Indian subcontinent is for a normal monsoon. Hopefully, that will cool what could be a hot summer on the borders.

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Coty hives off majority stake in Wella portfolio to KKR

(Reuters) – Coty Inc (COTY.N) said on Monday it would sell a majority stake in its hair and nail care brands, including Wella and OPI, to U.S. buyout firm KKR & Co Inc (KKR.N) for $3 billion in cash in a push to simplify its product portfolio and cut down debt.

Shares of the company rose 15% after it also laid out plans to cut costs by $700 million and announced an additional $1 billion investment by KKR.

Coty, which has been struggling with slowing sales and mounting debt, had put the brands on the block last October and has since seen interest from some well known consumer names such as Unilever (ULVR.L) and Henkel (HNKG_p.DE).

The portfolio was valued at about $7 billion earlier this year, Reuters reported, before the novel coronavirus ravaged the market, redirecting consumers’ focus towards online beauty products including home dye kits.

The company’s brand portfolio became complicated after it failed to integrate the more than 40 brands it acquired from Procter & Gamble (PG.N) in 2016, forcing it to rethink its strategy.

In an effort to revitalize its sales, the company bought a majority stake in Kylie Jenner’s make-up and skincare businesses late last year, banking on Jenner’s more than 270 million social media followers to attract a younger audience.

Still, Coty on Monday reported a wider-than-expected loss and revenue fell 23% for the three months ended March 31.

As part of the deal with KKR, the private equity firm will also get two board members, the company said, also announcing its will suspend its dividend for the next one year.

Coty said that under the deal, which also includes the Clairol and ghd brands, the businesses will operate as a standalone company, with KKR acquiring a 60% stake and Coty retaining the rest.

New York-based Coty will continue to fully own its mass beauty business in Brazil, for which the company was exploring options.

Excluding items, it posted a loss of 8 cents, compared with Wall Street estimates of a 1-cent loss, according to IBES data from Refinitiv.

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GSK selling $3.45 billion stake in Hindustan Unilever – term sheet

(Reuters) – GlaxoSmithKline (GSK.L) is selling $3.45 billion worth of shares in Unilever’s (ULVR.L) Indian business (HLL.NS) on the open market, according to a deal marketing term sheet seen by Reuters, cashing in late from the sale of the Horlicks brand.

The 5.7% stake in Hindustan Unilever that is now on the market, was accepted by GSK as payment for the sale of the malted drink brand and other nutrition brands to Unilever (ULVR.L), agreed in late 2018.

The shares are being sold for 1,850 to 1,950 rupees, a 3%-8% discount to Wednesday’s close of 2,010.20 rupees, according to the term sheet.

GSK, which declined to comment, struck a deal to fold its Indian business – whose main product is Horlicks – into Unilever’s Indian unit Hindustan Unilever in exchange for shares in the combined group.

Hindustan Unilever also declined to comment.

According to GSK’s first-quarter report, it completed the Horlicks deal on April 1, receiving the 5.7% equity stake in Hindustan Unilever plus about 400 million pounds ($495 million)in cash.

The cash injection will help GSK in its goal of reinvigorating its drug development pipeline, having made costly bets on experimental cancer treatments and future cell and gene therapies amid sluggish revenue growth.

Earlier this year, GSK launched a two-year programme to split into two entities, separating the core prescription drugs and vaccines business from an enlarged over-the-counter products business that was merged with a Pfizer unit.

It is eyeing more divestments to fund the costs of the separation.

Having sold travel vaccines to Bavarian Nordic (BAVA.CO) for up to 955 million euros in October last year, the British group is looking into shedding more assets, starting with a review of its prescription dermatology business with about 200-300 million pounds in annual sales.

IFR earlier reported the Hindustan Unilever transaction.

The transaction was organised by HSBC (HSBA.L), Morgan Stanley (MS.N) and JP Morgan (JPM.N). They declined to comment.

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COMMENTARY: China’s response to coronavirus criticism is diplomatic ‘charmless’ offensive

China is facing a lot of criticism as political leaders from around the world have demanded transparency from Beijing about the origins of the virus and why it chose not to share information about it in a timely fashion.

And there are a lot of questions.

A groundbreaking investigation by Sam Cooper of Global News found that before China informed the world of the potential lethality of the novel coronavirus in late January, it told embassies and consulates around the world to secretly buy up all the personal protective equipment they could.

In the face of reports like this, you might expect China to be responding with a diplomatic charm offensive. Instead, China’s response has been more of a “charmless” offensive.

When Australia’s foreign minister called for a global inquiry into what China knew about the brewing pandemic, China’s response, from its ambassador to Australia, Cheng Jingye, was to question trade relations between the two countries: “Why should we drink Australian wine? Why eat Australian beef?”

Hu Xijin, editor of the Communist Party newspaper Global Times, caused a sensation in Australia when he reportedly said the country had become “a bit like chewing gum stuck on the sole of China’s shoes.” 

Beijing’s diplomacy comes with distinctive characteristics. Among the actions it has taken in recent weeks has been to send more warships into the South China Sea and to demand that Vietnam, the Philippines and Indonesia adhere to a ban it is imposing this summer on fishing around atolls far out to sea there, which it brazenly claims for itself.

However, an international court has ruled its military annexation of these waters was an illegal territorial grab.

In one of the most outlandish recent claims, Zhao Lijian, chief spokesman for China’s foreign minister, alleged last month that the virus had its origins in the U.S., not China, though he did not provide a jot of information to support such a highly charged claim.

The Global News report found that China secretly stockpiled PPE and other medical supplies, leaving many countries, including Canada, with limited supplies of PPE.

The conduits for the purchases were diplomats, state-owned companies, and “overseas Chinese” working on behalf of the shadowy, state-controlled United Front. They were to buy up more than two billion face masks and other medical safety gear.

In all, about 100 tons of such kit were quietly spirited out of Canada.

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China’s action explains why, when I went to a dozen pharmacies in Toronto and Ottawa in early February to buy face masks for a trip to Japan, I could not find one for sale, though there was barely any discussion among Canadians at the time about the need to buy such gear.

Still, a constant theme of Prime Minister Justin Trudeau’s government has been that Canadians should be gentle in their criticisms of China so as not to provoke racism.

China has been angry with Canada for a while. Back in December 2018, a Canadian judge ordered that Meng Wanzhou, the daughter of the founder of the Huawei telecoms giant, remain in Vancouver while a court decides whether she should be extradited to the U.S. to face serious fraud charges.

The size of such compensation claims is ludicrous. But such tempests speak to the current international mood.

Ottawa has become an outlier in that it has had barely a harsh word to say about China throughout this tragic drama. It also seems incapable of making up its mind about whether to ban Huawei’s 5G cell phone technology, despite advice from its military and security establishments to do so.

Australia has banished the new Huawei system because it could be used to conduct espionage. Germany and Britain are reconsidering their decisions to allow some pieces of Huawei’s technology into their country. Japan has created a $2.2-billion fund to try to get Japanese corporations to bring their factories back home or move them to other countries.

It has suddenly dawned on the West that there has been an over-reliance on trade with China. There is talk in many capitals now about the need to greatly diminish dependence on Chinese products, particularly in areas related to national security and public health.

At some point, Canada will have to stop admiring “China’s basic dictatorship,” as Justin Trudeau infamously once put it, and join its European, Asian and American allies in forging a common position on China that reflects the emerging post-COVID realities.

Matthew Fisher is an international affairs columnist and foreign correspondent who has worked abroad for 35 years. You can follow him on Twitter at @mfisheroverseas

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Kingsoft sets terms for U.S. listing, first major IPO since coronavirus crisis

NEW YORK (Reuters) – China’s Kingsoft Cloud Holdings Limited KC.O said on Monday it aims to sell up to $450 million in stock in a U.S. initial public offering (IPO), which could value the cloud service provider at as much as $3.6 billion.

Kingsoft will be the first major U.S. IPO by a company that is neither a biotechnology firm nor special purpose acquisition company (SPAC) since the coronavirus outbreak roiled global stocks in March. Biotech and SPAC IPOs are typically immune to broader market swings.

Kingsoft offers cloud infrastructure as well as enterprise cloud and artificial intelligence of things services. Cloud computing has so far been one of the sectors boosted by the novel coronavirus outbreak as it drives more businesses to operate digitally and rely on cloud computing.

Kingsoft is looking to sell 25 million American depositary shares (ADS) between $16 and $18 per ADS, the company said. It expects to price its IPO on Thursday and start trading on the Nasdaq stock exchange on Friday under the symbol “KC.”

Existing shareholders Kingsoft Group and Xiaomi as well as Carmignac Gestion have shown an interest in anchoring the IPO, buying up to $25 million, $50 million and $50 million of the stock offered, respectively.

The IPO is also the first gauge of U.S. investor demand for Chinese companies going public in New York after a fraud scandal sent shares in Chinese coffee chain Luckin Coffee (LK.O) into freefall last month.

Luckin, whose stock is down almost 90% in 2020, had one of the most successful U.S. IPOs by a Chinese company last year, attracting interest from the likes of BlackRock Inc and hedge fund Citron Capital.

“There is no doubt that the Luckin debacle has put a cloud over the Chinese IPOs in the pipeline, but the interest for Chinese companies to list here in the U.S. remains strong,” said Jason Ye, Asia practice chair of law firm Ortoli Rosenstadt LLP, which advises Chinese companies on their IPOs.

Kingsoft estimated revenue for the first three months of 2020 were between 1.35 billion yuan ($191.2 million) to 1.4 billion yuan ($198.3 million), an increase in the range of 59.6% to 65.5% year on year. The company incurred a net loss in 2019 of 1.1 billion yuan, compared to a net loss of 1 billion in 2018.

JPMorgan, UBS, Credit Suisse and CICC are the banks underwriting the IPO.

(This story refiles to fix spelling error in headline)

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COMMENTARY: ‘Assault weapon’ ban might be popular, but that’s no guarantee it will accomplish much

I, like the vast majority of Canadians, do not own an AR-15, an AR-10, or a Ruger Mini-14 rifle — nor do I have any desire to. I, like the vast majority of Canadians then, will not be in any way affected if the legal status of these firearms changes.

But that doesn’t and shouldn’t give the government a pass on its plan to ban so-called “assault weapons.” This is probably a political winner for the Liberals, but good politics doesn’t automatically equate to good policy.

The question of how to regulate firearms is inherently subjective and reasonable people can disagree on what is a sufficient balance between protecting the right to own firearms and protecting public safety. Slightly more or slightly less gun control does not mean a slippery slope to complete prohibition or a complete free-for-all. Proposals on either side can be judged on their own merits.

So while the government can try to argue — perhaps convincingly to many Canadians — that it is taking steps to significantly improve public safety, it’s fair to hold that claim up to scrutiny.

The government announced Friday that a number of so-called “military-grade,” “assault-style” firearms were to be banned immediately, via an order-in-council. The full list contains about 1,500 firearms, but most are variations of about a dozen or so semi-automatic rifles.

It should be noted that this is not a ban of all semi-automatic rifles, and it’s still unclear as to what sets these particular rifles apart from those that are not on the list of newly prohibited firearms. There is no clear definition as to what constitutes “military-grade,” nor is there even a clear definition of what constitutes an “assault weapon” in the first place.

People certainly have an idea in their head of what an “assault weapon” is or might be. A poll released Friday shows about 80 per cent of Canadians support a ban on “assault weapons.” The Liberals are well aware of this, and are no doubt happy to let the Conservatives try to articulate a “leave assault weapons alone” position.

More broadly, though, it does not appear that legally owned semi-automatic rifles are a significant component of the gun violence problem in Canada. For all the notoriety the AR-15 has acquired over the years, there seems to be no evidence of its use in any homicides in Canada.

In 2018, there were 249 gun-related murders in Canada and 143 of them involved handguns — just 56 involved some type of rifle or shotgun. That’s not to argue for a national handgun ban, necessarily, but it’s worth noting that the Liberal government has specifically rejected the idea.

The Liberals, though, did campaign on this promise to ban “assault weapons,” and it’s unlikely to hurt their poll numbers. But popular policies are not always effective. There’s good reason to doubt that this will be.

Rob Breakenridge is host of “Afternoons with Rob Breakenridge” on Global News Radio 770 Calgary and a commentator for Global News.

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