China Business Briefs 19/4/14

Economy Finance Auto Infrastructure Energy Mining Property Travel Tech Healthcare Retail

Economy

Yuan Depreciation Is Deeper Than You Think – China Real Time Report – WSJ But guess what? The yuan depreciation this year is probably steeper than you think.

Since the beginning of the year, the yuan has depreciated 2.8% against the dollar– a number that’s been widely used. But that’s in “nominal” terms, meaning the number doesn’t account for the different levels of inflation in the U.S. and China. When factoring in inflation, calculates Brookings Institution researcher Karim Foda, the yuan has actually fallen 3.2% over the same time period.

Yu’e Bao Finds ‘Leftover Treasure’ in Deposits – China Real Time Report – WSJ Much of Yu’e Bao’s popularity has come from its ability to give customers the convenience of a demand deposit—meaning they can withdraw their funds whenever they like—but with returns well above what a bank could offer. It recently advertised an annualized yield of 5.25%, but that level has on occasion spiked above 7% since the fund was set up June. By contrast, banks offer 3.3% for a one-year fixed deposit and close to nothing on savings deposits.

But those favorable numbers might not last long: On Tuesday Caijing magazine cited a vice president at Yu’e Bao as saying in future he expects the fund’s return to continue to decline, to a point where it’s largely in line with the fixed deposit rate.

China Officials Fibbed To Depositors To Stop Bank Runs In China, “protected by law” has a much different meaning, however.  Ordinary citizens take the phrase to mean that the Chinese government guarantees bank deposits.  That is the sense that Wei Guoqiang, mayor of Yancheng, tried to convey to depositors when speaking at the height of the turmoil last week: “Do you know whom the bank is backed by?  It’s the government.”

That statement is not true.  It is not true not just with respect to tiny rural institutions like Sheyang Rural Commercial Bank, which holds 0.01% of the total assets of the Chinese banking system, but it is also not true with respect to the so-called Big Four banks, the pillars of the national banking system.

China Resources chairman in probe as anti-corruption net widens – FT.com On Wednesday, Mr Song issued a strong rebuttal on China Resources’ website, describing the allegations as “completely false and an ill-intentioned attack that is meant to smear me”.

But on Friday, China Resources said Qiao Shibo, its general manager, had taken over Mr Song’s responsibilities at the company while Mr Song was being investigated for corruption.

China’s plan for iron ore giants hits snag | South China Morning Post Beijing wants Anshan Iron & Steel, a steelmaker with its own iron ore mines, and the Metallurgical Mines’ Association of China to lead the plan. A draft is expected by the end of the year to be submitted to the State Council for approval.

However, combined production would at best amount to only a third of total demand, making a target to cut imports to below half of the country’s requirement within 10 years look impossible and suggesting big global miners may have to ship even more.

Sitting on a lot of copper | China Economic Review Did China really use its political clout to delay a mining megamerger that could fix global commodity prices? Yes, but for its own interests. Beijing’s condition for allowing the merger that formed Glencore Xstrata (GLEN.LON, 0805.HKG) was the sale of Peru’s La Bambas mine to a Chinese consortium made up of state investment and mining companies.

Finance

Land sale revenue rise ‘unsustainable'[1]- Chinadaily.com.cn Land sale revenue rose 40.3 percent year-on-year to 1.08 trillion yuan ($174 billion) during the first quarter, said Finance Minister Luo Jiwei.

By comparison, fiscal revenue only grew 9.3 percent nationwide to 3.5 trillion yuan – and that figure excludes land sales, which are now equivalent to 55.4 percent of the public fiscal revenue of local governments. Land sale revenue for all of 2013 grew 44.6 percent.

China Rate Swap Posts Biggest Weekly Drop Since June on Easing – Bloomberg The one-year rate swap, the fixed payment needed to receive the floating seven-day repurchase rate, dropped 43 basis points this week to 3.77 percent as of 4:52 p.m. in Shanghai, according to data compiled by Bloomberg. It fell six basis points today following a 22 basis point slide yesterday that was the biggest decline since June 21, when the central bank used targeted injections of funds to alleviate a record cash crunch.

P2P Lenders Heading into Dangerous Waters, Critics Say – Most P2P companies also promise to repay lenders their investment when a borrower defaults on a loan, either with money out of their own pocket or through cooperation with a guarantee firm.

Critics have argued that this is why a P2P website should be regulated as strictly as a financial institution rather than as the information providers they started out as. Without proper supervision, they say, P2P companies could use investor money to repay old loans, basically building Ponzi schemes.

Private banking opportunities draw increased foreign interest – Headlines, features, photo and videos from ecns.cn For private banks, China is a market with a vast number of potential clients. As of 2013, there were more than 1 million individuals in the nation with assets available for investment exceeding 10 million yuan ($1.6 million) each, the China Merchants-Bain survey showed. But those individuals have had few private-banking options so far.

For foreign banks, private banking mostly refers to managing personal wealth. But according to Dai Xiaohong, managing director of Standard Chartered Plc’s private banking operations in China, nearly 60 percent of their clients are entrepreneurs, most of whom don’t separate their business and personal wealth.

Third-party payment sector rules issued – Headlines, features, photo and videos from ecns.cn The new regulation features detailed rules on user information protection, user identity verification and the transaction amount during third-party payments, in a bid to reduce security risks.

The regulation made clear that commercial banks should set up transfer amount caps in accordance with the clients’ risk tolerance ability. Some analysts consider the rule as an endorsement of the commercial banks’ earlier decision to set stricter caps on quick transfers via Alipay.

Fed up Chinese retail investors exit losing markets | South China Morning Post **No wonder – see the annual performance of the top 20 stocks** More than 7 million mainland retail investors have exited the stock market since 2010, with many complaining about inefficient regulations and poor earnings by listed firms. Analysts said big funds would take advantage of the crisis of confidence to “buy low” as some shares were undervalued.

A total of 70.9 million retail investors now hold shares in their brokerage accounts, compared to 78.3 million in 2010, Guangzhou Daily reported yesterday, citing figures by data provider iFind. Mainland individual investors have been seen chasing market rallies rather than finding good bargains when the market is languishing.

China’s commodity demand tied to risky credit deals | South China Morning Post While it has been known for some time that copper imports were often used as collateral in order to get financing outside of the traditional banking channels, this year has seen iron ore, soya beans and now gold added to the list.

So far the apparently increasing use of commodities to access lines of credit hasn’t had as much impact on markets as might be expected.

But surely the risks must be mounting as it becomes clearer that significant parts of China’s commodity demand is tied to increasingly risky credit deals, many of them in property, a market that analysts believe is at risk of a sharp correction.

Taiwan Regulator Penalizes Bank Over Derivatives Sales – WSJ.com The Financial Supervisory Commission declined to name the lender, but its chairman, Tseng Ming-Chung, said during a legislative hearing Thursday that the bank was “mercenary” by misleading clients into overinvesting in these products and raking in high commissions.

Over the past two years, sales of such products have surged and brought in additional income for buyers as the yuan rose. Taiwanese companies were big buyers because of their close links with China, but the unexpected slide this year in the Chinese currency has turned many of the contracts into heavy paper losses for holders.

Auto

China Automotive Starter Market 2014-2017 Research Report — DALLAS, April 18, 2014 /PRNewswire/ —  In 2013, China’s auto market achieved more-than-expected growth, of which, the production rose 14.82% YoY to 22.13 million and sales volume climbed 13.94% YoY to 21.99 million. Automotive starter as an integral part of the car witnessed accompanying growth in OEM market size, reaching 22.13 million. On the other hand, after-sales repair & replacement constitutes another big market for automotive starter requirements. With the swelling base of Chinese car ownership, starter replacement market still shows a growing trend. By 2013, aftermarket size has amounted to 1.2604 million sets, presenting a year-on-year increase of 12.0%.

Volkswagen mulls expansion of China plant – The Wall Street Journal – MarketWatch The expansion of the Foshan plant would help Audi add the production capacity it needs to boost sales in China of its upmarket sedans and SUVs over the next few years.

Audi, the leading luxury car brand in China, sold 491,989 cars in China last year, including sales in Hong Kong, up 21% from 2012. In the first three months of this year, Audi sold 124,520 cars in China, up 21%.

Infrastructure

allAfrica.com: Zimbabwe: ZPC Deal Hangs in Balance ZIMBABWE Power Company may re-tender bids for Hwange Thermal Power Station expansion, nearly a year after naming China Machinery Engineering Company as the winning bidder of the multi-million dollar project, sources said.

Alternatively, Sino Hydro, which won the tender to expand Kariba Hydro Power Station, may be considered as it could take time to re-start the whole process.

Energy

Chinese state energy firm ups shale gas spend to £950m | World news | The Guardian Chinese state energy group PetroChina plans to spend more than 10bn yuan (£950m) on shale gas fracking this year as domestic competition heats up after rival Sinopec announced a commercial find.

Faced with high drilling costs and the complexity of tapping shale gas, China has struggled to revolutionise its energy supplies. But now the country wants to unlock what could be the world’s largest shale gas reserves by emulating the success of the US shale boom.

Athabasca triggers oilsands sale to PetroChina Athabasca Oil Corp. says it is selling its 40 per cent stake in the proposed 250,000-barrel-per-day Dover oilsands project to partner PetroChina for $1.32 billion.

The much-anticipated sale, conditional on final regulatory approval of the project, will give the Chinese national oil company its second 100 per cent owned thermal oilsands project in northeastern Alberta.

Candu Energy changes tack in China, seeks construction partnerships – The Globe and Mail When SNC-Lavalin Group Inc. bought Candu Energy Inc. for $15-million, it took private an asset that had, over 60 years, sucked $21-billion from Ottawa.

Just three years later, SNC is pinning hopes for future billions on another government, this time in Beijing. With a long-standing effort to sell new reactors to China yet to produce any fruit, Candu is now seeking to link hands with state-owned Chinese firms to build new reactors abroad, an ambition that has eluded the Canadian nuclear industry for many years.

Mining

China’s Zhongjin Gold profits plunge – BUSINESS – Globaltimes.cn Net profits at Zhongjin Gold Corporation Ltd., China’s leading gold producer, plummeted more than 72.32 percent in 2013 from the previous year, the company announced on Friday.

The company’s net profits tumbled to 431.1 million yuan (70 million US dollars) last year.

Beijing appeals to WTO against rare earth ruling|Policy|Business|WantChinaTimes.com The appeal will be lodged Thursday, Ministry of Commerce spokesman Shen Danyang said.

No matter the result, China will stick to its policy objective to protect resources and the environment, and will continue to boost management of resource industries following the WTO rules, said Shen.

Property

China new-home prices slow gains in March – MarketWatch Average new home prices in 70 cities rose 7.32% year over year in March, according to calculations by The Wall Street Journal based on data released Friday by the National Bureau of Statistics. Prices rose 0.22% month over month compared with 0.27% in February.

The year-over-year rise in February was 8.19% and 8.98% in January. Until then price rises accelerated every month for the past year. In December the average price rise was 9.17% and 9.10% in November.

Chinese Real Estate Service Leju Debuts on NYSE Thursday | TechNode Leju (NYSE:LEJU), once a wholly-owned subsidiary of real estate service E-House (NYSE:EJ) and former property channel of Sina, got listed on the New York Stock Exchange for overall $100 million of funding this Thursday, the same day of Sina Weio’s debut on Nasdaq Capital Market. The company has filed for an US IPO this March.

Leju sought to raise as much as $194 million by selling 17.70 million shares for $10-$12 each, but only saw demand through underwriters for 11.50 million shares at the low end of the offer at $10 apiece.

Travel

Cruise lines push throttle on China expansion plans – Business – Chinadaily.com.cn The 4,180-passenger Quantum of the Seas, Royal Caribbean’s newest ship, will move its home port to Shanghai in May 2015, the Miami, United States-based company said at a news conference in Shanghai. The ship will sail three- to eight-night voyages year-round from Shanghai to Japan and South Korea, following its maiden season, which will launch in November from the US to the Bahamas and the Caribbean.

“People in China have grown to expect the best the world has to offer, and Quantum of the Seas meets that standard like no other ship,” said Adam Goldstein, president and COO of Royal Caribbean Cruises Ltd.

In-Depth Research and Forecast of China Shield Tunnel Boring Machine Market — DUBLIN, April 16, 2014 /PR Newswire UK/ — Research and Markets (http://www.researchandmarkets.com/research/7mbvg9/indepth_research) has announced the addition of the “In-Depth Research and Forecast of China Shield Tunnel Boring Machine Market” report to their offering.

Shield tunnel boring machine is a kind of specialized engineering machinery for tunneling. Currently it is widely used in the construction of subway, railway, road and hydropower projects. With the trend of three-dimensional cities and pipelines buried underground, output of China’s shield tunnel boring machines reached to 141 units in 2012, with sales revenue harvesting CNY 7.045 billion.

Tech

Linked to prostitution, China’s favorite flirty chat app slammed by state media Momo is China’s top chat-and-flirt app, sort of like Skout, for connecting with people in your area. It’s hugely popular, too. Earlier this year Momo reached 100 million registered users.

But China’s state news agency, Xinhua, is not too pleased with some of the shenanigans on Momo. In an editorial yesterday (in Chinese), Xinhua described the “hormone-filled” app as being a hotbed of prostitution. Xinhua’s reporters fired up the app and were shocked – shocked – to find that a number of the nearby women in the app were actually sex workers.

Alibaba’s Alipay payment service inks deal with Rakuten According to an official statement from Rakuten, 250 shops on Rakuten Global Market will open up transactions with Alipay, though the company intends to increase that number gradually. Currently, 10,000 of Rakuten’s 42,000 domestic vendors sell goods internationally on Rakuten Global Market.

Healthcare

China Money Network − Carlyle, Primavera Capital Offer Higher Bid For Chindex Go-Private Deal Washington, D.C.-based global private equity firm The Carlyle Group is the bidder who has offered a higher price to privatize NASDAQ-listed Chinese hospital operator Chindex International, Inc., according to Chinese media reports.

Primavera Capital, a Chinese private equity firm founded by former chairman of Greater China at Goldman Sachs Fred Hu, is also considering making a competing bid, says the report.

Retail

McDonald’s to give China restaurants a makeover – MarketWatch The Oak Brook, Ill., company is overhauling a number of its China-based stores in places like Beijing, Shanghai and Guangzhou using a local designer, according to a company statement. It is also launching a new advertising campaign that focuses on Chinese aspirations and recruiting more locals to run its franchises in China. McDonald’s will also feature basketball star LeBron James in China-focused commercials later this year, the statement said.

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