TheChek News Flow

CATL is one of several Chinese companies expected to list in Hong Kong this year as activity revives

CATL, the world’s largest electric vehicle battery maker, has filed an application for a secondary listing in Hong Kong, in what could be the city’s largest stock offering in years. 

The listing of Contemporary Amperex Technology Co, which is a major supplier of Tesla, Volkswagen and other EV makers, has been long awaited in Hong Kong and is expected to be one of the city’s largest share offerings since 2021. 

CATL is one of several Chinese companies expected to list in Hong Kong this year, with analysts expecting a $20bn revival in activity — principally from mainland-based companies seeking to expand abroad.

The Shenzhen-listed company has appointed JPMorgan, Bank of America, and China’s CICC and China Securities International as lead banks. It also appointed Goldman Sachs, Morgan Stanley and UBS to work on the deal.

The US banks are involved despite CATL having last month been added to a US blacklist of companies deemed to be working with China’s military. 

CATL said it was aiming to raise funds in part in order to boost its international expansion plans, which include building a production site in Hungary. It also plans a joint venture in Spain with Stellantis and a project in Indonesia.

The company redacted several key details from its publicly-released prospectus, including the amount of shares it would offer and the precise timetable.

The battery maker said in December it planned to list up to about 5 per cent of its total share capital in Hong Kong, but that underwriters would have the option to increase this slightly based on the market situation.

One person familiar with the matter said that CATL hoped to raise up to $7bn if market conditions were optimal. Morgan Stanley has previously estimated the CATL listing could raise up to $7.7bn.

The surge in Hong Kong listings could boost the city’s reputation as a leading destination for capital raising, after years of thin deal flows. In many cases Chinese companies are looking to list in Hong Kong to raise offshore funds, because tight capital controls can hinder them moving money abroad.

But the recovery in listings may not translate to a boon for Hong Kong’s investment bankers. The FT reported last month that competition from Chinese banks had threatened to depress fees for the CATL listing.

“It is too early to say Hong Kong is back,” Gary Ng, a senior economist at Natixis, told the FT.

The CATL listing “signals that Hong Kong still has advantages for Chinese firms seeking overseas funding”, Ng said, but added that “equity investors remain sceptical of valuations due to decelerating growth in China and geopolitics”. 

The offering comes as Hong Kong’s Hang Seng index has rallied by some 13 per cent in the past month amid greater optimism about Chinese tech and electronics stocks after start-up DeepSeek last month overturned assumptions about US supremacy in AI.

CATL said in its heavily-redacted stock exchange filings that Washington’s inclusion of the company on the “Chinese Military Companies” list was “a mistake” and that it was “proactively engaging with [the US defence department] to address the false designation”. It said the designation only stopped it doing business with “a small number of US governmental authorities”.

The company also flagged its exposure to geopolitics, such as the risks of violent fluctuations in China’s currency — including when it would have to convert renminbi to pay dividends in Hong Kong dollars.

CATL has been in the top spot in the global EV battery market for eight consecutive years and had a share of 38 per cent in 2024, according to data from South Korean consultancy SNE Research. 

Despite its dominant market position, the battery maker warned of a revenue drop of as much as 11 per cent for 2024, citing lower product prices. CATL said in a Shenzhen stock exchange filing in January that it expected to report net income growth of up to 20 per cent for last year, its slowest pace since 2019. 

The company reported revenues of over $50bn in 2023 and has a market capitalisation of some $150bn based on its Shenzhen listing.

Luxembourg-based steelmaker says that it discussed the proposal at a meeting with its European works council

ArcelorMittal MT -1.97%decrease; red down pointing triangle said it is looking at the possibility of moving some business-support activities to India from Europe to cut costs in the face of a challenging backdrop for the European steel industry.

The Luxembourg-based steelmaker said Tuesday that it discussed the proposal at a meeting with its European works council, a body representing employees, as part of its efforts to address major issues that the company said threaten the future of steelmaking on the continent.

The move comes after the company said as recently as Monday that urgent support was needed to bolster the competitiveness and sustainability of European steelmaking and to protect the industry from what ArcelorMittal called unfair trade practices. The company said the industry is contending with significant excess global capacity, subdued demand in Europe and record-high imports.

ArcelorMittal said it is exploring options to optimize business processes and to cut costs not directly related to steel production. Under the plan, it would centralize certain business-support activities by extending a hub in India, it said.

“No steel manufacturing will be moved to India from Europe as part of this initiative,” the company said.

The proposal is one element of the company’s response to the crisis, it said.

‘Karmic realignment therapy’ is to the fore as Mike White’s luxury holiday satire relocates to Thailand

Gunfire is echoing around the meditation huts; bodies are floating in the reflecting ponds. Welcome back to The White Lotus, where every booking will soon have to come with a complementary body bag.

The third season of Mike White’s savagely funny, lavishly executed anthology — set across the various outposts of a luxury hotel brand — exchanges the old-world Sicilian decadence of the previous series for a new age Thai resort, but it begins, just as before, with a flash-forward glimpse of paradise being lost. The murder mystery element is still secondary to the emotional violence, however: back-stabbing, barbed comments and ruptured relationships that no amount of “karmic realignment therapy” can heal. 

All this awaits the guests who arrive for a week of digital detoxing — or poolside boozing. Doing their share of the latter is a trio of forty-something women, who are determinedly not on a “midlife crisis trip”. What initially seems like a chance for old friends to catch up — paid for by TV star Jaclyn (Michelle Monaghan) — quickly turns into an opportunity to put each other down in subtle ways. “Everything you do is so hard,” divorcee Laurie (Carrie Coon) is told. She, in turn, later mocks Jaclyn’s “waxy” appearance with Kate (Leslie Bibb), whose new life as Trump-voting Texas housewife also becomes fodder for late-night gossiping.

While the three friends compete for the attention of a yoga instructor, bright-eyed Mancunian Chelsea (Aimee Lou Wood) struggles to get her own much older boyfriend Rick (Walton Goggins) to take notice of her. Perhaps the least relaxed man ever to wear a Hawaiian shirt, he is irritable and evasive, except during grudgingly attended therapy sessions with an on-site guru. 

Across the breakfast terrace, Victoria Ratliff (Parker Posey filling the Jennifer Coolidge-shaped void) takes a more pharmaceutical approach. She has been dragged to this strange land by her Buddhism-practising daughter Piper (Sarah Catherine Hook), who’s eager to see the world beyond the country club. But that life may not be waiting for them when they get back. Unbeknown to the rest of the family — which includes obnoxious gym bro Saxon (Patrick Schwarzenegger) and his impressionable little brother Loch (Sam Nivola) — upstanding patriarch Tim (Jason Isaacs) is wanted by the FBI for financial misdeeds and may be heading straight from The White Lotus to white-collar prison. 

If writer-director White revels in puncturing the pride and illusions of the privileged, then he also makes sure his skewer cuts through fully fleshed-out characters. Each arrives at the hotel with personal baggage that is unpacked over a series that interlaces several storylines, but also runs a thread back to season one, with the return of Natasha Rothwell’s masseuse Belinda (in Thailand on an exchange from the Hawaii branch). Each also plays their part in this season’s broader story. Where class and sex previously dominated, the show now grapples with spirituality and self-discovery — while also satirising how fetishised concepts such as “enlightenment” are commercialised for westerners visiting Asia.

The White Lotus now has a certain reputation to uphold and, like a seasoned hotelier, White ensures that every expectation is met. Those accustomed to its style, subtlety and commitment to delivering moments of intense discomfort will not be disappointed.

As the industry embraces artificial intelligence, the need for chips ready for AI tasks has increased considerably in recent years. While Nvidia is currently the main supplier of AI chips, OpenAI (the company behind ChatGPT) wants to have its first custom chip ready by the end of the year.

OpenAI working on its own AI chip

As reported by Reuters on Monday, OpenAI has been “pushing ahead” with its plans to design and build its own AI-ready silicon by the end of this year. Sources familiar with the matter say the company is finalizing the design and plans to send it to manufacturing in the next few months. TSMC, which already supplies chips to Apple, is rumored to produce OpenAI’s first chip.

The report notes that “tape-out,” which is the final stage in the process of designing a new chip, costs “tens of millions of dollars” and can take up to six months before production begins. This is a critical stage as the first chips produced on a large scale could fail – and this would require redoing the whole process.

At first, the OpenAI chip would be used to run AI models with a “limited role,” but the chip also capable of training AI models and may be used for this purpose in the future. If all goes well, OpenAI engineers already have plans to develop even more powerful chips.

If OpenAI succeeds in building its own chip, the company will not only have more control over how it processes data for AI training, but will also reduce its reliance on Nvidia. Apple, for instance, currently uses Amazon chips to pre-train Apple Intelligence models. However, the company is also rumored to be working on its first custom server chip for AI tasks in partnership with Broadcom.

Other companies such as Meta and Microsoft have also been spending billions of dollars on AI infrastructure. At the same time, the latest AI model introduced by Chinese startup DeepSeek has shown the world that it’s possible to develop powerful AI models with fewer hardware resources.

A new twist on value has investors waking up to the beauty of companies returning gobs of cash to shareholders

The investing secret that helped make Warren Buffett a multibillionaire isn’t working anymore, though probably not for the reason you would think.

Every decade or so someone will declare that the Berkshire Hathaway boss has lost his touch—usually a cue for the reasonably priced stocks he prefers to come roaring back. Even so, value investing the way that Buffett’s mentor Benjamin Graham practiced it and Nobel Prize-winning economists defined it decades later has had too few rebounds recently.

The reason isn’t that the “Magnificent Seven” stocks such as Nvidia, Apple and Tesla have rewritten the law of gravity. Value investing just needed a tuneup. A slew of exchange-traded funds, many without “value” in their names, have given it one.

The classic value factor was described in a landmark paper by economists Eugene Fama and Kenneth French in 1992, and it was compelling: A portfolio of stocks that were cheap relative to their book value trounced flashier stocks to the tune of thousands of percentage points over the decades.

But the professors’ results covered a period when companies’ value was mostly in property and machinery rather than brands and intellectual property. Fifty years ago, less than a fifth of the S&P 500’s assets were intangible. Today it is well over four-fifths, and many top-performing companies like Microsoft are “asset-light.”

The results tell the story: Analysts at fund manager Lord Abbett point out that a low price-to-book-based portfolio returned 519% between 2002 and the middle of last year. One based on free-cash-flow yield did more than twice as well.

Free cash flow is generally defined as money left over after expenses and capital expenditures that a company can return to shareholders. The yield is usually calculated by dividing 12-month free cash flow by enterprise value—market capitalization plus net borrowings.

“We sort of caught on to this about 10 years ago,” says Sean O’Hara, president at Pacer ETFs Distributors. Pacer’s U.S. Cash Cows Index underpins an eponymous ETF, ticker symbol COWZ, which has about $25 billion in assets. The index has returned 15.7% annually over five years, a whopping 7 percentage points better than the Russell 1000 Value Index. It even beat the plain-vanilla Russell 1000 index, dominated by the very much non-value Mag 7 stocks, by 1.4 points a year.

If imitation is the sincerest form of flattery, then the recent popularity of funds that try to capture similar effects is high praise for free-cash-flow yield. ETFs launched in 2023 alone include the tickers FLOW from Global X, QOWZ from Invesco, COWS from Amplify ETFs and VFLO from VictoryShares.

Value investing was never dead—it just had a measurement problem. Plenty of investors, including Joel Greenblatt of “Magic Formula” fame, and even Buffett himself, ignore the academic straitjacket plaguing some value indexes. Other fund managers have accounted for the rise of intangible assets by tweaking the classic book-value calculation, which also improves results. That is harder to explain, though.

COWZ is simple: Its proprietary index picks the 100 highest free-cash-flow yielders out of the Russell 1000 stock index and then weights those 100 by their free cash flow in dollars, capped at 2% of the index. The fund’s yield at the end of 2024 was 7.32% or 4.7 percentage points more than the overall Russell 1000 index. A small company version, CALF (get it?), yielded 9.94%.

Will the strategy work during tough times? S&P Dow Jones Indices has constructed its own free-cash-flow-based index based on the S&P 500. It calculates that the index beat the broad market by the greatest margin during times of falling economic growth and rising inflation.

With nervousness growing over the Mag 7 stocks, COWZ’s top seven returners of cash recently—Qualcomm, Gilead Sciences, Cencora, Tenet Healthcare, Valero Energy, Archer-Daniels-Midland and Bristol-Myers Squibb—might be a sturdier alternative.

Just call them the “Munificent Seven.”