Daily Brief: SenseTime Is Listing On The Stock Market, Tech Crackdowns Or No Tech Crackdowns

Daily Brief: SenseTime Is Listing On The Stock Market, Tech Crackdowns Or No Tech Crackdowns

about 2 years ago3 mins

Mentioned in story

SenseTime announced plans to list on China’s stock market on Monday, and China’s biggest AI firm thinks anyone who buys in will be very – processing... – happy.

What does this mean?

SenseTime – which specializes in facial recognition software – saw massive demand for its services last year, primarily from a Chinese government that wanted to keep lockdowns locked tight. And unlike many of its rivals, the company hasn’t been the subject of any cybersecurity reviews from the country’s regulators either.

Put those two favorable circumstances together, and SenseTime’s decided that now’s the time to go public. The company has previously said it was looking to raise up to $2 billion, but the company knows full well that investors – burned by government crackdowns – are wary of Chinese stocks these days. Now, then, it’s looking for nearly $800 million, which would value the company at “just” $17 billion.

Why should I care?

For markets: SoftBank needs a win.

SoftBank will certainly be hoping SenseTime does well: the Japanese conglomerate – which owns 15% of the company – saw its shares fall for the seventh consecutive day on Monday, bringing the decline to nearly 20% in the last week. Some of its biggest holdings have been struggling, after all: crackdown-battered Alibaba has seen its stock plummet, ride-hailing company Didi is being forced to leave the US stock market, and British chip designer Arm is proving more than a little difficult to sell.

Softbank stock
Source: Google Finance

Zooming out: China needs to spend.

China’s been (relatively) quiet on the crackdown front lately, which might be because the country has bigger fish to fry – namely managing a slowdown in its economic growth. That might be why it said on Monday that it’ll cut the amount of cash its banks have to set aside for a rainy day. The move will give them more to lend out to people and businesses, which should encourage them to spend, spend, spend.

Cuts coming

Keep reading for our next story...

The IMF Warned That Omicron Could Slow Down The Global Recovery

IMF image

The International Monetary Fund (IMF) said at the weekend that it thinks Omicron could wreck the global economic recovery, so forgive us if we never invite the organization over for mojitos.

What does this mean?

Even before the arrival of the new variant, the IMF – a sort of bank for countries – was worried that the recovery was losing steam: it figured that the ongoing supply chain shortages and the uneven distribution of vaccines between rich and poor countries was bound to slow things down. It wasn’t quiet about its opinion, either, cutting its outlook for global economic growth as recently as October.

But now that the new variant has arrived, the IMF is even more leery of the recovery: it warned over the weekend that the economy could grow more slowly than even its reduced forecasts. It has a point: if vaccines don’t prove as effective against Omicron, there could be a new wave of restrictions that create a lot more supply bottlenecks, keep consumers at home, and, ultimately, drag on economic growth.

Why should I care?

The bigger picture: Any good news?

Nope: Goldman Sachs cut its own forecast for US economic growth over the weekend, for much the same reasons as the IMF. It reckons the country’s economy will grow 3.8% in 2022 versus the 4.2% it was forecasting previously.

Goldman GDP

Zooming out: Ugh.

You can see why Garfield hates Mondays: a major British business organization lowered its expectations for UK economic growth on Monday to 6.9% in 2021 and 5.1% in 2022, down from 8.2% and 6.1% respectively. That means it’s expecting the country’s economy to be 3% smaller by the end of 2023 than it would’ve been had the pandemic never happened, and that’s based on data from before the new variant showed up…



All the daily investing news and insights you need in one subscription.

Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.

/3 Your free quarterly content is about to expire. Uncover the biggest trends and opportunities. Subscribe now for 50%. Cancel anytime.

© Finimize Ltd. 2023. 10328011. 280 Bishopsgate, London, EC2M 4AG