Last Week in Numbers: Xiaomi Goes Public in Hong Kong

Chinese smartphone maker, Xiaomi, made its debut in Hong Kong on Monday (9 July) at HK$17 per share, raising US$4.72 billion (S$6.4 billion). This puts the value of the firm at US$54 billion, almost half of its original US$100 billion intention. The retail tranche was oversubscribed by 9.5 times. On its first trading day, shares slid 2.9% but have since gone above it listing price to HK$21.00 at the time of writing.

Two high profile British cabinet minister quit during the week. British foreign secretary Boris Johnson and Brexit secretary David Davis both resigned amid disagreements with the Brexit negotiations. This was a big blow to Prime Minister Theresa May, as it leaves her at the top of a government unable to agree over its Brexit strategy. Mr Davis criticised her plan, saying it was “dangerous” and would give “too much away, too easily”.

The turmoil surrounding its exit from the EU has led the British pound to fluctuate for the week. On Monday (9 July), it recorded its largest drop against the US dollar in 3.5 weeks. The pound fell 1.3% against the dollar to a low of US$1.319.

Contrary to investors sentiment, Moody’s has suggested that the additional property cooling measures in Singapore can benefit banks. It said that it would reduce speculative investing of residential properties and increase bank buffers if property prices fall significantly. This will improve the housing loan asset quality.

As of 31 March 2018, the three largest Singapore-listed banks had between 42% to 50% of their loan portfolio exposed to the property sector. Moody’s also expects household loan delinquencies to remain low, with total financial assets being more than 3.5 times household liabilities as of 31 December 2017. Singapore’s system-wide non-performing loan ratio for mortgages was just 0.4% at the end of 2017, with loan-to-value ratio averaging just 53%.

Temasek Holdings’ portfolio grew by 12.19% in one year to a record S$308 billion, up from S$275 billion. The results were largely due to key listed holdings DBS Group Holdings Limited(SGX: D05), Ping An Insurance Group and Alibaba Group Holding Ltd posting strong gains of 44%, 91% and 73% respectively.

Annualised returns over 20 years was 7%, up from 6% a year ago. Dividend income was S$9 billion for the year, and net profit was $21 billion. Temasek’s portfolio is split in the ratio of 60:40 (mature economies to growth economies).

Finally, China has said that it would retaliate against the United States after the latter said that it would impose an additional 10% tariffs on an extra US$200 billion worth of Chinese imports. They had both levied 25% tariffs on US$34 billion worth of goods against each other two weeks ago, with another US$16 billion expected later. The US Chamber of Commerce has been critical of Trump’s tariffs. A chamber spokeswoman said that the duty would raise the cost of everyday goods for Americans and retaliatory tariffs will further hurt American workers.

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