SPAC IPO Rapid Slowdown

July 11, 2021 (Sun) cloudy

- Chinese companies are gathering land in Asia and Africa.

When tallying the areas acquired or leased overseas over the past 10 years, they far surpass the United States and other major countries.

Concerns about emerging and developing countries being economically controlled, and security-related warnings are rising.

- The G20 Finance Ministers and Central Bank Governors Meeting on the 10th is expected to approve the outlines of a new corporate tax framework akin to a national debt tax.

The setting of a universal minimum tax rate and the introduction of digital taxation targeting large IT (information technology) companies are the main pillars, aiming for a final agreement in October.

- According to Nikkei, the summer 2021 bonus extraction survey (as of 6/29) shows the overall average payment across all industries at 768,774 yen, down 2.89% year on year.

After three consecutive declines, 13 of the 31 industries increased from the previous year, including electronics, suggesting a bottoming out.

Electronics (up 2.09%), Food (up 6.04%), Machinery (up 3.13%), Land transport (up 12.27%), Department stores & supermarkets (up 3.11%),

Railways & buses (down 29.09%), Dining out & other services (down 10.25%), continuing to stagnate.

- The governments of Japan and South Korea are coordinating to hold a summit between Prime Minister Yoshihide Suga and President Moon Jae-in within the month.

They plan to meet when Moon visits Japan for the Tokyo 2020 Olympics opening ceremony for the first time in two years.

- Movements to resume studying abroad, halted by the coronavirus, are appearing in domestic universities.

Internationalization of universities, which paused during the pandemic, is finally starting to move again.

- IPOs of SPACs in the United States have slowed sharply.

The fundraising amount for April–June 2021 was $12.7 billion (about 1.4 trillion yen), a sharp 86% drop from January–March.

U.S. authorities intensified monitoring for investor protection and other considerations, and overheated SPAC IPOs rapidly cooled.

- Among global leading asset managers, there is a broad move to acquire investment firms strong in ESG (environment, social, governance) sectors.

JPMorgan Asset Management in the U.S. acquired a forest investment company.

Gresham House in the U.K. also brought an Irish asset management company under its umbrella.

Expanding ESG investment know-how to attract pension funds and individual investors.

- The government will apply the fourth state of emergency for COVID-19 to Tokyo on the 12th.

The “reliance on declarations” that repeated economic restrictions each time infections surged, failing to leverage lessons from the more than a year of the pandemic, has become a barrier to economic recovery.

- China’s internet regulation authorities announced on the 10th that for Chinese companies planning to list overseas,

if the number of personal data registration users exceeds 1 million, the authorities will review them.

This is the first step of the overseas listing restrictions announced by the Chinese government on the 6th.

Many Chinese companies have more than 1 million net registrations, so a very broad regulatory net will be cast.

Data is becoming a determinant of corporate and national competitiveness, and China is highly vigilant about data leaks to the U.S. and other adversaries.

- The Biden administration in the United States is taking steps to curb the market dominance of large corporations.

It views strong corporate power as a cause of price increases and wage declines, and will tighten M&A scrutiny and promote competition through industrial policy.

However, the effectiveness remains uncertain.

- Summer bonuses declined for the third consecutive year. 13 sectors posted gains; total 2020 summer compared to 2020: -2.86%; Manufacturing -1.35%; Non-manufacturing -7.47%

Manufacturing: Foods +6.04%, Textiles +3.48%, Paper & Pulp +2.15%, Oil +7.56%, Nonferrous metals +1.40%, Electronics +2.09%, Precision machinery +3.13%, Printing 0.0%

Nonmanufacturing: Fisheries +3.32%, Trading houses +3.60%, Department stores & supermarkets +3.11%, Other retail +3.66%, Land transport +12.27%, Communications +2.6%

- Summer bonus payout rankings

1st Disc, <6146> [Closing price 32,650 yen] Tax-inclusive payout 2,816,126 yen; +33.75% vs summer 2020; average age 37.8

2nd Tokyo Electron <8035> [Closing price 45,840 yen] 2,335,901 yen; +8.70%; 42.7 years

3rd SoftBank (SB) <9434> [Closing price 1,449.0 yen] 1,701,304 yen; +2.96%; 40 years

4th Sony Group <6758> [Closing price 11,055 yen] 1,696,700 yen; 0.00%; not disclosed

5th Sekisui House <1928> [Closing price 2,218.5 yen] 1,441,100 yen; ▼10.86%; not disclosed

- Global COVID-19 infection numbers (deaths by day) as of 4 PM on 7/10, compiled by Johns Hopkins University: worldwide 186.0 million cases (8,398 deaths)

U.S. 33,838,746 (518), India 30,795,715 (1,206), Brazil 19,020,499 (1,509), France 5,865,767 (19), Russia 5,664,200 (715), Turkey 5,465,094 (0)

U.K. 5,075,945 (30), Argentina 4,627,537 (244), Colombia 4,471,622 (576), Italy 4,268,491 (25), Spain 3,937,192 (6), 3,742,355 (35)

- Domestic COVID-19 infections: confirmed cases 818,490 (new infections +2,457 as of 8 PM on the 10th); deaths 14,964 (+11)

Hokkaido 41,772 (+64); Tokyo 181,024 (+950); Osaka 104,682 (+200); Kyoto 16,785 (+24); Hyogo 41,245 (+45)

Aichi 51,619 (+64); Fukuoka 35,874 (+54); Okinawa 21,317 (+64)

(Nikkei Newspaper)

- The symbol of reconstruction: following Tokyo metropolitan area and Hokkaido, Fukushima will also host the Olympics without spectators.

Spectator-attended events will be held in Miyagi, Ibaraki, and Shizuoka Prefectures at five venues.

Those involved are also wary of a “no-spectator domino.”

(Sankei Shimbun)

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