Fintech
China’s Fintech Ecosystem Upgrade: A New Era?
China’s fintech ecosystem has been out of sight and mind for many investors and analysts since Ant Financial’s potentially blockbuster IPO was delayed to late 2020. We believe it may be time to revisit the dynamic sector. After struggling with regulatory changes and macroeconomic headwinds, many consumer finance and micro-lending platforms have adapted their business models to meet the moment and capitalize on new opportunities, which we believe could usher in a new era of sustainable growth.
In this edition’s main topic, we will look at two innovative online lenders: KWEB holdings Lufax and Qifu Technology.
Recent Internet Highlights in China:
- OpenAI has abandoned the vast Chinese market, which is a major catalyst for domestic artificial intelligence (AI) players such as KWEB holding company Baidu, which has already offered free services to AI startups using its Ernie Bot extended language model, and Alibaba.1
- E-commerce giants Alibaba and JD.com have both issued convertible bonds denominated in US dollars. We believe these issuances will help both companies finance buybacks with US dollars, borrow at a lower interest rate on expectations of rising stocks, and signal to the market confidence in their growth and financial situation.
- Alibaba’s Hong Kong shares could be added to Southbound Stock Connect, the mutual market access program that allows mainland investors to trade Hong Kong stocks, as early as August, according to management. To put the significance of this inclusion into perspective, Tencent and Meituan currently have 10% and 13% of their shares owned by mainland investors. Assuming a similar level of mainland ownership for Alibaba, this could lead to inflows of more than $100 million.2
Contents of China Internet Industry Earnings Report:
- Recent Highlights of China’s Internet Industry
- Subsector Analysis
- Featured Topic: China Fintech Ecosystem Update: A New Era?
- KWEB Top 10 Holdings Earnings Update
- Bloomberg News. “How OpenAI’s Decision Not to Operate in China Will Reshape China’s AI Scene,” Time. June 26, 2024.
- Hong Kong Exchange & Clearing data as of 30/06/2024.
For KWEB’s standard performance, top 10 holdings, risks and other fund information, click here. Here.