China Business Briefs 24/1/14

ECONOMY

China races to prevent trust loan default – FT.com Chinese authorities are racing to prevent the default of a soured $500m high-yield investment trust, in a closely watched test case for the country’s shadow banking sector.

Local media reported on Thursday that the Shanxi provincial government is considering helping fund a bailout of the trust loan after ICBC, which distributed the product through its branches, said last week it would not provide a backstop. However, Time-Weekly, a state-owned newspaper, reported that the bank – the world’s biggest by assets – and the product issuer China Credit Trust will also be asked to chip in.

China’s First Default Is Coming: Here’s What To Expect | Zero Hedge So with under 10 days to go, for anyone who is still confused about the role of trusts in China’s financial system, a default’s significance, the underlying causes, the implications for the broad economy, and what the possible outcomes of the CCT product default are, here is Goldman’s Q&A on a potential Chinese trust default.

The People’s Money: The Benefits of Default – WSJ.com So far, Chinese investors who bought fixed-income wealth-management products have enjoyed higher returns than bank deposits offer, without suffering any losses. But that looks to be changing now, as a slowing economy starts to expose the weakness in the system, and the Chinese government may not want to absorb all the losses.

China’s Big Four banks raise their lending: report – MarketWatch China’s top four state-owned banks extended 440 billion yuan ($72.7 billion) of new loans in the first 20 days of January, according to a report by the 21st Century Business Herald on Thursday.

In January 2013, Chinese banks extended a total of 1.07 trillion yuan in new loans. The total amount this January is expected to exceed 1 trillion yuan, according to the report.

The top four banks–Industrial & Commercial Bank of China Ltd. (1398.HK), China Construction Bank Corp. (0939.HK), Agricultural Bank of China Ltd. (1288.HK) and Bank of China Ltd. (3988.HK) — typically account for about 30% of total lending in China.

China PBOC Injects Another CNY120 Bln For New Year Holiday | MNI The People’s Bank of China injected another CNY120 billion into the interbank system on Thursday, bringing the total addition of funds via its open market operations this week to CNY375 billion.

Today’s injection, transacted via 21-day reverse repos, follows the CNY255 billion added on Tuesday and the bank’s notice that it is expanding its Standing Lending Facility to make funds available to smaller lenders when market rates rise above preset thresholds.

China households elude taxman – and official GDP bean-counters | Reuters Data released this week showing China’s economy grew 7.7 percent last year suggested the imbalance is worsening, with consumption unchanged at just under 50 percent of GDP, but investment growing to slightly more than half.

A growing number of economists, however, say official statistics have got it wrong. To avoid taxes, consumers routinely get employers to buy things for them, resulting in a gross underestimation of how much consumers spend and exaggerating just how lopsided China’s $9.4 trillion economy is.

Rhodium Group » China’s Interbank Squeeze: Understanding the 2013 Drama and Anticipating 2014 The year 2014 has started off with additional drama over credit markets in China, and concerns that rising costs could lead to defaults for some risky financial products and end up spilling over to a broader financial crisis in China.  In this note we explore the current situation and the recent changes in money market structure. We also consider the common view that the central bank is not in control, and whether its intervention can steer reform for the coming year. As we held throughout 2013, we believe the Bank knows what it’s doing, is being as rational as it can be in the context of China’s unique political crosswinds, and will play a decisive role in shaping 2014 outcomes.

Salty fish, MNCs and the SEC ban | China Accounting Blog | Paul Gillis As much as the firms are feeling sorry for themselves, it is their clients and their investors who will be hurt if they are banned from practice. A ban could lead to the companies being kicked off of U.S. stock exchanges for failing to produce audited financial statements. IPOs would have to be postponed until the bans were over. Financings would be delayed. Fortunately appeals are likely to delay this for a long time.

McKinsey Greater China – Why should Chinese companies list overseas? 2014 is expected to be a busy year for Chinese companies seeking to list overseas. But the delisting of several Chinese firms from foreign exchanges in recent years has some wondering: why should Chinese companies list overseas? In this podcast, Nick Leung tackles this question with Gordon Orr and David Cogman. Gordon is Asia Chairman of McKinsey. David is a Partner in the Corporate Finance Practice. Nick is Managing Partner of McKinsey’s Greater China Practice.

Beijing considers industry fund to transfer excess capacity abroadWantChinaTimes.com China’s Ministry of Industry and Information Technology is considering setting up an industry investment fund to encourage businesses with a production capacity surplus to transfer capacity to other countries, with its size estimated to reach 100 billion yuan (US$16.53 billion), reports the Shanghai-based National Business Daily.

This time, however, China’s State Council is determined to target five sectors that have shown a production capacity surplus, namely steel, cement, aluminum, plate glass and shipping.

China’s fiscal revenue rises 10.1% in 2013 |China Data |chinadaily.com.cn China’s fiscal revenue climbed 10.1 percent year on year in 2013 to reach 12.91 trillion yuan ($2.11 trillion), the Ministry of Finance said Thursday.

The growth pace, however, slowed from the 12.8 percent reported in 2012 and 24.8 percent registered in 2011.

China’s 2013 M&A Value Hits Record High: PwC-Caijing The total value of mergers and acquisitions (M&A) in China reached a  record high of $260 billion last year, a PricewaterhouseCoopers (PwC) report  showed on Wednesday.

It noted that M&As among China’s state-owned enterprises were mostly  concentrated in energy, resources and industrial areas, while investments by  privately owned enterprises were more diversified.

China’s carbon market may remain a solo one as companies get rights to offset pollution with non-CO2 credits China will allow big emitters to use offset credits from nitrous dioxide (N2O) destruction to meet domestic climate targets, giving its nod to a type of project that has been banned in other carbon markets.

The National Development and Reform Commission (NDRC) published on Wednesday a list of more than 120 new types of projects eligible to earn carbon credits that can be sold to power generators and manufacturers facing emission caps under China’s fledgling carbon markets.

Crowdfunded in China: water cup, smartphone button, sex toy With Kickstarter-like Chinese site Demohour’s recent funding, we’ve taken notice of China’s growing crowdfunding scene. In light of this trend, we’re trying something new starting this week: a regular list of our favorite projects assembled from the top crowdfunding sites in the country. Depending on feedback and how many cool projects we can find, this could be a weekly or bi-weekly post. So to get things started off, here are our inaugural top five picks.

China becomes top gold consumer in 2013 – FT.com China has overtaken India as the world’s largest gold consumer thanks to soaring purchases of jewellery, minted Panda coins and small gold bars.

According to the Thomson Reuters GFMS gold survey, the most widely followed report on the industry, Chinese demand reached 1,189.8 tonnes last year, a 32 per cent year-on-year jump and a fivefold increase since 2003.

China’s rebalancing requires more investment of the right kind – FT.com To work out what the Chinese economy needs to invest in more one only has to spend a few days in Beijing or any other major city and listen to the things that ordinary people complain about.

There is enormous demand for better public transport, cleaner energy, environmental protection, industrial upgrading and other investments that can clean up the air and alleviate terrible gridlock on the roads.

Slowing China Economy Raises Questions About Policy – China Real Time Report – WSJ A sharp downturn in manufacturing activity in China is a warning sign to the government not to move too quickly to tighten monetary conditions, says HSBC’s chief China economist, Qu Hongbin.

Mr. Qu said China needs to get a handle on its huge shadow banking sector to avoid messy defaults. But he pointed out that policy makers need to do this without tightening credit for companies in the manufacturing sector, given that inflation remains low across the economy.

China Money Network − China Added A Record 12 Gigawatts Of Solar Panels In 2013 China installed a record 12 gigawatts of solar panels in 2013, the most solar power added in a single year by any country in history, according to Bloomberg New Energy Finance.

The research and data firm says that the number may be as high as 14 gigawatts if including year-end activities.

Investors Offer Hospitals a Market Injection – Which is one reason why local governments and the nation’s health care industry players have been carefully reviewing guidelines issued in October by the State Council, China’s cabinet, designed to encourage fresh investment in the nation’s more than 10,000 public hospitals.

The guidelines complement previous policy directives introduced by Beijing in recent years that encouraged a more market-oriented approach to managing the big, mainly urban hospital networks at the heart of the nation’s health care system.

Hong Kong Jewelry Sales Hit the Rocks, Says MasterCard Report – China Real Time Report – WSJ Hong Kong’s traditionally hot growth in jewelry sales is sagging, according to a new report analyzing MasterCard spending here, which the authors say is a warning signal for the city’s economy.

Nearly one year ago, year-over-year growth in jewelry sales was as high as 19%, said Sarah Quinlan, senior vice president for MasterCard Advisors, a division of the U.S.-based credit-card company. But according to a MasterCard report analyzing Hong Kong spending, that growth rate dipped below 6.4%, the average overall retail growth rate in the city last month.

COMPANIES

ICBC’s Jiang Won’t Compensate for Trust Product, CNBC Reports – Bloomberg Industrial & Commercial Bank of China Ltd. Chairman Jiang Jianqing said the lender won’t compensate investors for losses tied to a troubled trust product distributed by the bank, CNBC reported on its website.

Investors in the 3-billion-yuan ($496 million) Credit Equals Gold No. 1 high-yield product met with ICBC officials at a Shanghai branch yesterday to demand their money amid concern that the trust wouldn’t repay the funds. A default on the trust product, which raised money for a failed coal mining company, would shake investors’ faith in the implicit guarantees offered by trust companies to draw funds from wealthy investors.

Investors Meet ICBC Officials on Concern of Trust Default – Bloomberg Investors in a troubled trust product distributed by Industrial & Commercial Bank of China Ltd. met with the lender’s officials at a private-banking branch in Shanghai, demanding their money amid concern of a default.

Individuals were asked to sink at least 3 million yuan ($496,000) in the 3 billion-yuan Credit Equals Gold No. 1 product amid guarantees that it was “100 percent safe,” said Fang Ping, one of 20 investors who went into the branch. The product, which comes due on Jan. 31, raised funds for a coal mining company that collapsed after its owner was arrested.

Closer Look: New 4G Offerings Have Put China Unicom on Its Heels – Three years ago a long-time China Mobile customer told me he was lured away by China Unicom’s offer of an iPhone and 3G service.  Now, however, he is returning to China Mobile, which is preparing to offer faster 4G service and the popular Apple Inc. gadget.

Since China Mobile’s iPhone sales started on January 17, many people have told me they are abandoning China Unicom. It remains to be seen exactly how successful China Mobile will be with its new offerings, but alarm bells are ringing for China Unicom and China Telecom.

23rd January downstream news PetroChina has delayed the startup of two new refineries and the expansion of a third in order to counter the threat of overcapacity as oil demand growth slows.

The company will now start up its 200 000 bpd Kunming refinery in the Yunman province in 2016, two years behind the original schedule.

Operation of a 400 000 bpd joint venture refinery in Jieyang of Guangdong will be delayed to 2017, rather than 2013.

Alibaba Stake in Citic 21CN Sends Shares to Highest Since 2000 – Bloomberg Citic 21CN Co. (241)’s shares rose the highest in intraday trading in almost 14 years after Alibaba Group Holding Ltd., the owner of China’s biggest e-commerce business, said it would invest in the company to enter the drug-data industry.

Former Foxconn manager detained in kickbacks probe – Business – Chinadaily.com.cn A former senior manager at Taiwan’s technology giant Foxconn has been detained in an ongoing probe into kickbacks from suppliers, prosecutors said on Thursday after reports he pocketed NT$100 million ($3.33 million) in bribes.

Liao Wan-cheng was taken into custody late on Wednesday, while three other ex-employees were questioned and released on bail, an official at the Taipei District Prosecutor’s Office said.

China CNR Plans to Raise Around $1.5 Billion in HK IPO in 2nd Quarter – WSJ.com China CNR Corp. is planning to raise around US$1.5 billion in a Hong Kong initial public offering in the second quarter, people with direct knowledge of the deal said Tuesday.

CNR, which is already listed in Shanghai, is China’s second-biggest train maker by sales after CSR Corp Ltd., which is listed in Hong Kong and Shanghai. It is planning to submit an application to list to the Hong Kong Stock Exchange in coming weeks, the people said. A listing application is the first step toward an IPO in Hong Kong.

China’s Harbin Bank Said to Apply for $1 Billion Hong Kong IPO – Bloomberg Harbin Bank Co., a Chinese lender based near the Russian border, applied to the Hong Kong stock exchange for a $1 billion initial public offering, said two people with knowledge of the matter.

All three sponsors of the IPO are Chinese investment banks, said the people, who asked not to be identified because the information is private. The lender, based in the capital of northeastern China’s Heilongjiang province, aims to start trading in the first half, they said.

Apple Inc. (AAPL): Why Apple’s China Mobile Launch Was A Flop – Seeking Alpha The answer is partly in Apple’s “Premium” strategy and partly in the unique nature of the complex China smartphone market. In North America customers are pretty well divided between Apple and Samsung with a smattering of Motorola, LG, HTC and BlackBerry users and a group of also ran suppliers including Windows OS phones like the Nokia Lumia. Apple is the number one brand in the United States increasing its market share to 42% in the Christmas quarter.

irasia.com – China Telecom Corporation Limited China Telecom Corporation Limited (“China Telecom” or “the Company”; HKEx: 00728; NYSE: CHA) was voted by leading equity analysts “No.1 Best Managed Company in Asia”, across all industries at the “Best Managed and Governed Companies – Asia Poll 2014” (“the Poll”) by Euromoney, a leading international financial magazine.

Backers say twin $1 billion methanol plants planned by China-backed joint venture would be safe and environmentally sound | OregonLive.com A joint venture backed in part by a Chinese government agency has plans to build two $1 billion plants, one in Clatskanie and the other in Kalama, Wash., which would export methanol to China for making plastics and rubber.

allAfrica.com: Kenya: I Did Not Disown Rail Deal – AG (Page 1 of 2) Nandi Hills MP Alfred Keter yesterday appeared before the committee where he said that the China Road and Bridge Corporation is blacklisted from engaging in projects funded by the World Bank. Keter tabled a press release from the bank indicating the CRBC was blacklisted five years ago.

Museveni assures Chinese Railway Company of Government support President Yoweri Museveni has assured the China Harbour Engineering Company Ltd of Uganda Government support while the company will be undertaking the up-grading of the Northern and Eastern railway-line.

President Museveni said that the China Harbour Engineering Company Ltd will be one of the 2 construction companies the Government of Uganda will work with in improving the railway transport system in Uganda, especially the route from Kampala to Tororo in Eastern Uganda.

How I Lost My Offshore Oil Empire | The Global Mail Sun claims in a lawsuit in US District Court in Los Angeles that the Chinese oil giant Sinopec colluded with Chinese police to illegally detain him for five years and, while he was in prison, connived with his employees to wrest away an offshore firm that controlled much of his oil empire.

Sinopec – the fourth-largest company in the world behind Royal Dutch Shell, Wal-Mart and Exxon Mobil— has filed a motion to dismiss the suit, scheduled to be heard in March. It argues that the proper jurisdiction for the case is China rather than the US and that, even if events had happened as Sun alleged, they would not amount to the extortion, kidnapping and torture that he claims.

The “Self-developed” China Operating System by Chinese Academy of Sciences is A Windows Phone 7 Firmware? One week ago, the Institute of Software under Chinese Academy of Sciences unveiled China Operating System (COS) together with Shanghai Liantong Internet Technologies Ltd, as reported by CCTV, China’s state-owned TV station.

Posted from Diigo.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s