Welcome to this week’s edition of top stock market highlights.
China’s stimulus measures
As China’s slowdown deepens, the country’s central bank announced another short-term policy rate cut to spur consumer demand.
The People’s Bank of China (PBOC), China’s central bank, reduced the 14-day reverse repurchase rate from 1.95% to 1.85%.
Along the way, the central bank also injected RMB 74.5 billion of liquidity into the banking system.
This move came ahead of China’s National Day Holiday which typically lasts for seven days whereby the PBOC will offer 14-day loans ahead of the break.
Meanwhile, the Ministry of Finance and Ministry of Civil Affairs will dish out one-off cash handouts to people in extreme poverty on 1 October.
This rate move came a day after the government announced a sweeping program to stimulate the country’s economy.
Living subsidies will be handed out to disadvantaged groups including orphans and the very poor before the National Day Holiday.
This is an unusual move as China is known for rejecting a welfarism policy.
China’s ministries budgeted around RMB 154.7 billion for financial assistance to people in extreme poverty, which numbered around 4.74 million people at the end of June 2024.
Aside from the monetary policy measures announced, all eyes will be on the Ministry of Finance which will meet ahead of the week-long holiday.
Investors may be expecting more fiscal measures to come as China goes all out to boost its economy and stimulate spending.
Elsewhere, Shanghai’s government plans to give out RMB 500 million in consumption vouchers for dining, accommodation, and sporting events.
Beijing is reportedly getting ready to recapitalise the six big state banks using around RMB 1 trillion.
It remains to be seen if these bold moves will have any positive effect on the economy, but it appears the Chinese government cannot be faulted for lack of trying.
DFI Retail Group (SGX: D01)
DFI Retail Group announced the divestment of 1,913,135,376 shares of Yonghui Superstores Co., Ltd (SHA: 601933) through its wholly-owned subsidiary.
The shares represent a 21.1% stake in the Chinese supermarket operator which is accounted for as an associate company in DFI Retail Group’s books.
The buyer is Guangdong Juncai International Trading Co., Ltd, a subsidiary of MINISO Group (NYSE: MNSO).
This transaction will bring in gross cash proceeds of approximately RMB 4,496 million (around US$640.4 million) for the pan-Asian retailer.
The sale works out to be around RMB 2.35 per Yonghui share.
For 2023, the share of underlying losses from Yonghui amounted to US$36 million for DFI Retail Group.
The retailer also reported that the carrying value of Yonghui on its balance sheet as of 30 June 2024 was US$765 million.
With the sale at around US$640.4 million, DFI Retail Group may have to recognise a one-time loss on disposal of around US$124.6 million.
The good news is that moving forward, Yonghui will not contribute to further share of losses in DFI Retail Group’s books.
The completion of this sale, however, is contingent upon the satisfaction of regulatory conditions and needs clearance from Chinese antitrust authorities and the Shanghai Stock Exchange.
MINISO also needs to obtain shareholder approval for the transaction to proceed.
Temasek Holdings
Temasek Holdings recently held its 50th anniversary dinner at Shangri-La Singapore on 23 September where Prime Minister (PM) Lawrence Wong spoke about how the investment firm has evolved over time.
More than 600 Temasek partners and friends were in attendance, including representatives from the board and senior executives from its local and global portfolio companies.
PM Wong noted that initially, Temasek’s role was mainly custodial and administrative.
The investment firm started out with a portfolio of 35 companies that it had taken over from the government, including stakes in DBS Group (SGX: D05) and Singapore Airlines (SGX: C6L).
Over time, Temasek morphed into a more active manager while stepping up its direct investments in new areas.
From a Singapore-centric portfolio, Temasek’s portfolio evolved to owning investments across Asia, the Americans, Europe, the Middle East, and Africa.
The Temasek today is a different animal compared to when the investment firm first started out in 1974, but PM Wong also noted that the global environment has become more challenging with increased protectionism and the US-China trade tensions.
Meanwhile, Temasek also launched a commemorative book titled “By Generations, For Generations: Fifty Years of Temasek As Told By The People Who Shaped It”.
This book was written by former journalist Ong Soh Chin after doing research and interviews with around 90 staff, alumni, and business partners.
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Disclosure: Royston Yang owns shares of DBS Group.
