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China Business Briefs 23/4/14

Economy Finance Auto Infrastructure Energy Telecoms Property Travel Tech Agriculture Healthcare

Economy

Reform of China’s state-owned sector gains momentum | South China Morning Post **Cross river by feeling the stones, etc** Far from the spotlight, in secretive high-level meetings and company boardrooms, Beijing is drawing up one of the country’s thorniest reforms: an overhaul of China’s hugely inefficient state-owned enterprises (SOEs).

It shapes up as an eclectic mix of pilot projects and initiatives rather than a single blueprint, which makes it hard to judge their progress.

Yet, taken together, they probably mark the beginning of the biggest revamp of China’s state sector since the late 1990s, when Beijing set out to shore up industry before joining the World Trade Organisation.

South China’s Balancing Act Between Raising Wages & Keeping Investors | China Briefing News In South China for example, minimum wages were last increased in Dongguan, Foshan, Zhuhai and Zhongshan on a mandatory basis on May 1st of last year. This year, no announcement has been made, although rumors are the increase is being deferred a few months to August.

There are signals that local governments are now having to strike a balancing act between making companies happy (with no further labor cost raises) and workers demanding higher salaries – which will attract more workers and increase local consumption. In terms of social insurance, although this is compulsory, some local companies have been late in paying their obligations in full.

Chinese Bad-Loan Ratio Rises ‘Significantly,’ Huarong Says (1) – Businessweek China’s bad-loan ratio rose “significantly” in the first quarter, increasing risks for the nation’s banking industry, according to the nation’s largest manager of soured debt.

The business environment this year has been “grim and complicated” as lenders face pressures on asset quality, liquidity and lending margins, China Huarong Asset Management Co. Chairman Lai Xiaomin said during an internal meeting on April 15, according to a statement today on the website of the Beijing-based company.

Chinese Shoemakers Are on Strike for Benefits — But Who Will Foot the Bill? – China Real Time Report – WSJ The workers said the Hong Kong-listed company has been making social insurance contributions based on basic wages rather than total actual pay as required by law.

According  to an estimate by a not-for-profit labor support organization, Yue Yuen’s back payments could total more than 100 million-200 million yuan ($16 million-$32 million) depending on how many of the workers are owed for long years of service.

Slower growth poses challenges: AmCham[1]- Chinadaily.com.cn “With slower growth, we see more challenges,” AmCham China Chairman Gregory Gilligan told reporters in Beijing. “That is the reason some American companies are scaling back their investment plans.”

Finance

China Warns of Rising Risks From ‘P2P’ Lending – WSJ.com **Again** “Currently, P2P lending has been growing rapidly. The number of new P2P lending websites and the total of loans they have issued have been rising rapidly,” said Liu Zhangjun, director general of the Office of the Interagency Anti-illegal Fundraising Taskforce, a group that includes bank regulators, police and court officials.

Closer Look: Regulator Takes Hard Look at Jack Ma-Hundsun Deal – **Is Ma starting to overreach?** The securities regulator has been consulting large securities firms and fund companies regarding the proposed acquisition of a leading financial software provider by Jack Ma, the founder and chairman of e-commerce giant Alibaba Group, sources with knowledge of the matter said.

Banks to issue preferred shares this year – Headlines, features, photo and videos from ecns.cn The first batch of Chinese commercial banks may issue preferred shares this year, and investors will ask for a higher dividend rate while putting up with more uncertainties, experts said.

Preferred shares pay fixed dividends and enjoy priority over common stock in the event of bankruptcy. They typically do not trade on the open market, carry no voting rights and do not dilute net profits attributable to shareholders.

“The pace of Agricultural Bank of China and Bank of China is faster, and they probably will issue preferred shares this year,” said an insider at one of the four major State-owned commercial banks.

China may let banks default when deposit insurance begins – SFGate Authorities may tolerate failures of smaller banks once depositor safeguards are in place, Kwong Li, Chief Executive Officer of China Lianhe Credit Rating Co. said. Among lender bonds rated at or below AA, the extra yield investors demand to hold the 2022 securities of China Bohai Bank Co. in the northern city of Tianjin surged to an 11-month high of 245 basis points on Thursday. The premium on the notes due 2019 of Harbin Bank Co., a lender near China’s border with Russia, has jumped 51 basis points in the past year to 225.

DZHNews.com- Breaking China Biz News, Financial Updates, Corporate News Wang Yongli, vice president of Bank of China Ltd. (BOC, 601988.SH) quitted his job last week, following reports that he was under investigation by the Communist Party of China’s (CPC) discipline department.

Wang’s resignation came after he had reportedly been investigated by the CPC’s Central Commission for Discipline Inspection (CCDI).

Forex controls and VIEs | China Accounting Blog | Paul Gillis Chukong Holdings Limited filed on last Friday with the SEC for a U.S. IPO. Chukong is an online game company so it uses the variable interest entity (VIE) structure despite a specific MIIT prohibition against using VIEs for game companies. The company also faces a lawsuit alleging they ripped off their game Fishing Joy from an arcade game, report that they have not been paying required employee benefits, never bothered to register their stock option plan, and have an auditor facing suspension by the SEC, but based on past history investors ignore such matters.

Beijing mulls bond sales by local gov’ts|Finance|Business|WantChinaTimes.com Money raised by the bond sales could be used to partly finance construction projects that have been included in the provincial-level governments’ general public budget plans, it said.

No other forms of debt raising by local governments and their subordinate organs would be allowed under the draft revision. Furthermore, local governments and their subordinate departments should not provide debt guarantees for any institutions or individuals, under the proposals.

WH Group Said to Mull Cutting $5.3 Billion IPO in Half on Demand – Bloomberg The company may sell new shares equivalent to 10 percent of its enlarged market capital, about half of what it previously planned, the people said yesterday, asking not to be identified as the information is private. Existing investors including Goldman Sachs Group Inc. (GS) may also refrain from selling stock as part of the IPO, the people said.

At $5.3 billion, the WH Group IPO would have been Hong Kong’s biggest since October 2010, when AIA Group (1299) Ltd. raised $20 billion, according to data compiled by Bloomberg. The company struggled to attract investors even after hiring 28 underwriters, the most ever for an IPO in the city.

Wanda Cinema Line Plans CNY2 Billion IPO in Shenzhen — Update – WSJ.com China’s biggest cinema operator in terms of box office revenue plans to sell up to 60 million yuan-denominated A shares to fund the opening of new cinemas and to supplement working capital, according to a preliminary prospectus posted late Monday by the China Securities Regulatory Commission.

The planned listing comes as China pushes to generate economic growth more through domestic spending and less through state-backed investment. The film industry, part of the so-called “cultural industry” that Beijing wants to build up, has in recent years grown rapidly with box office revenue rising by about 30% a year.

Huarong Q1 profits up by 75% – Business – Chinadaily.com.cn Huarong, one of four asset management companies the government set up in 1999 to absorb toxic assets held by China’s four biggest banks, said total assets and net assets were 432.9 billion yuan and 56.7 billion yuan, respectively, at the end of March.

Profits nose dive for Chinese rare earth miner|Markets|Business|WantChinaTimes.com The company made 1.6 million yuan (US$261,300) in net profits from the start of January to the end of March, diving by 94.1% year on year, according to a financial report released on Monday.

The miner’s business revenue also declined by 98.5% to reach 3.3 million yuan (US$529,100) in the first three months. The financial results came after a 20.5% decline in net profits and a 57.6% drop in business revenue in 2013.

Auto

GM to battle VW in China with $12 billion investment and new plants | Reuters GM expects its China sales to expand 8-10 percent this year, in line with the overall growth of the Chinese market, where foreign firms, such as Volkswagen AG, and domestic players like SAIC Motor Corp vie for more market share.

“We are investing wisely and accelerating our vehicle development and manufacturing to keep pace with market demand. In total we are investing $12 billion between 2014 and 2017,” Matt Tsien, president of GM China, said at the Auto China show in Beijing.

Chinese Nissan Leaf goes on sale in September as Venucia e30 The upcoming Chinese version of the Nissan Leaf, the Venucia e30, was not the highlight of the Dongfeng Nissan stand at this year’s Beijing Motor Show. That honor goes to the R30, a compact car with “segment-competitive fuel economy” and a starting price of under RMB 50,000 ($8,033 US). But that doesn’t mean Dongfeng didn’t make some news about the debut of the world’s most popular electric vehicle in the world’s most populous country.

Infrastructure

China Province to Spend $3.35 Billion on Water Projects – Bloomberg A northeastern Chinese province is planning to invest 20.9 billion yuan ($3.35 billion) this year on water-conservation projects as the world’s most-populous nation tries to ensure residential and industrial supplies.

The works in Heilongjiang province, which borders Russia, will highlight agricultural irrigation and drainage, improved flood protection and preserving water resources, the official Xinhua News Agency reported today, citing a provincial government work meeting.

Sany digs deep to lay foundation in Africa[1]- Chinadaily.com.cn However, Xiao Jiang, general manager of subsidiary Sany Southern Africa (Pty) Ltd, said that while Africa has tantalizing potential as a market, any Chinese company contemplating taking advantage of that potential needs to take a long-term view.

“If all you do is scramble for market share by offering the lowest price and don’t care about related services, it’s only a matter of time before your operations fold,” Xiao said.

Energy

CNOOC Limited Announces Key Operational Statistics of Q1 | The Jakarta Post – PR Newswire In the first quarter, the Company achieved a total net production of 108.1 million barrels of oil equivalent (“BOE”), representing 15.5% increase year over year (YoY).

In the first quarter, the unaudited oil and gas sales revenue of the Company reached approximately RMB59.15 billion, representing an increase of 6.9% YoY, mainly due to the increase of oil and gas production. During the period, the Company’s average realized gas price was US$6.33 per thousand cubic feet, representing an increase of 9.3% YoY while the Company’s average realized oil price was US$104.63 per barrel.

PetroChina hikes 2015 shale gas output target to 2.6 bil cu m: report – Natural Gas | Platts News Article & Story State-owned PetroChina has hiked its shale gas production target significantly and now expects to produce 2.6 billion cubic meters/year next year, a senior executive was reported as saying Monday.

This is an increase from an earlier target of 1.5 billion cu m/year made in August last year.

China Petroleum and Chemical’s Underperform Rating Reaffirmed at Zacks (SNP) – Mideast Time Zacks’ analyst wrote, “We are maintaining our recommendation on Sinopec at Underperform, ahead of first quarter results. During 2013, the company witnessed a sharp drop in crude oil prices, which dragged down the Exploration and Production (E&P) segment’s operating profit by 21.8% year over year. However, increases in the price of international crude oil amid government caps on fuel prices prevented the company from fully passing on the spiraling costs to consumers. We believe that Sinopec’s matured domestic oil fields and associated rising costs will continue to be an overhang on its operations as natural declines become pricier to counterbalance. In view of these factors, we see no positive catalyst in the near term.”

Exclusive – Nigeria favours local firms in $40 billion oil contract awards – Yahoo Singapore Finance A number of other former winners were also absent from the 2014/2015 list, which will take effect from June. China’s Unipec, the trading arm of top Asian refiner Sinopec Corp , as well as Azeri state oil company Socar, were former contract holders and did not feature on the new list.

China Hydroelectric Corporation Announces Results for the Fourth Quarter and Full Year 2013: PR Newswire Business News – MSN Money China Hydroelectric Corporation (NYSE: CHC, CHCWS) (“China Hydroelectric” or “the Company”), an owner, developer, and operator of small hydroelectric power projects in the People’s Republic of China, today announced its unaudited financial results for the fourth quarter and twelve months ended December 31, 2013.

For the fourth quarter of 2013, revenues from continuing operations (net of value-added tax) declined by 18.5% year over year to $10.1 million, due to a 16.6% decline in electricity sold. We recorded a net loss attributable to China Hydroelectric shareholders from continuing operations of $5.1 million for the fourth quarter of 2013, compared to a $9.2 million loss for the same period of 2012. This improvement is partially attributable to a $2.9 million decrease in general and administrative expenses.

Telecoms

China Mobile Profit Declines as Costs Rise With IPhone Release – Bloomberg China Mobile Ltd. (941), the world’s largest phone company by users, posted its third straight drop in quarterly profit as expenses for subsidizing Apple Inc. (AAPL)’s iPhone and building networks increased.

Net income fell 9.4 percent to about 25.24 billion yuan ($4 billion) in the first quarter, the Beijing-based company reported yesterday. Profit was expected to be 27 billion yuan, based on the median of five analysts’ estimates compiled by Bloomberg News.

China Unicom Q1 Earnings Soar on 3G Adoption – April 22, 2014 – Zacks.com China Unicom Hong Kong Limited, China’s second largest mobile operator, announced results for first-quarter 2014 with adjusted net income of RMB 3.302 billion ($539.5 million) that surged 73.8% year over year on strong revenue growth and higher adoption of the 3G plan. Earnings per share soared 75% year over year to RMB 0.14 (2 cents).

Total revenue (excluding deferred fixed-line upfront connection fee) climbed 8.3% year over year to RMB 76.5 billion ($12.5 billion) in the first quarter. Telecommunication service revenues, comprising roughly 81% of total revenue, were RMB 63.80 billion ($10.4 billion), up 11.8% year over year.

Property

Xi’s Squeeze Leaves China’s Heartland Missing Boom – Bloomberg “Cities in China are facing some serious real estate bubbles, and the bubbles in third-, fourth-tier cities have the risks of total collapse,” said Tao Ran, director of the China Center for Public Economics and Governance at Renmin University in Beijing, in a phone interview on March 31. “The central government and banks tightened credit in the property market because they realized the risks.”

Liu said three years ago he could get loans from China Construction Bank Corp. (939) and Agricultural Bank of China Ltd. for half the value of the land at about 6 percent to 7 percent interest. Now he’s forced to rely on “friends with connections” and pay rates of about 20 percent.

Closer Look: Why Gov’t Is Eager to Renovate Shantytowns – Premier Li Keqiang said in a recent work report that the government plans to start building 7 million low-income housing units this year, 340,000 more than the number built last year. But the number to be completed is 4.8 million, 640,000 units less than in 2013.

A rough estimate based on the data from Li’s report shows investment in affordable housing for this year will be around 1.2 trillion yuan, similar to last year’s level. In 2013, 1.12 trillion yuan was spent to build affordable housing, equivalent to 13 percent of the year’s total real estate investment, and 2 percent of GDP.

Travel

Shandong Airlines orders 50 Boeing aircraft for US$4.6 billion | South China Morning Post The company signed a deal to purchase 16 Boeing 737-800s and 34 Boeing 737 MAX planes, a statement said, in a drive to grow its fleet for business expansion in the future.

China’s commercial airline industry is dominated by the “Big Three” – flag carrier Air China, China Eastern Airlines and China Southern Airlines – but a move towards greater competition has seen the growth of smaller players in the market.

Tech

China Money Network − Baidu Likely To Report Better-Than-Expected Earnings Baidu, Inc. will report first quarter results on April 24th after the market close. We believe its results are highly likely to come in better than consensus expectations, mainly driven by its mobile business and other non-traditional search businesses such as online video.

In the mobile area, the number of downloads for both Baidu app stores and Baidu’s apps showed significant growth based on our proprietary data.

Ban on Video Game Consoles Tentatively Lifted in the Shanghai FTZ | China Briefing News **Nuts, when you think about it** On Monday this week, details were announced regarding the lifting of China’s 14-year ban on video game consoles, set to begin as a pilot program in the Shanghai Free Trade Zone (FTZ). The lifting of the ban is poised to fundamentally alter China’s lucrative video gaming market, which is currently dominated by PC and mobile games, as the giants of console gaming compete over the world’s 3rd largest video game market in terms of revenue (valued at 123 billion yuan).

Qingguo Jizhang, WeChat-based Daily Expenses Tracking App | TechNode Qingguo Jizhang is one of those expense tracking apps that hopes to make your life easier through their outstanding value proposition – using audio recording function to track your expenses.

By tapping on the WeChat platform and its audio message capability, Qingguo Jizhang wants to make expense tracking easily accessible, hassle-free and most importantly, cultivate a habit of managing your finances on a daily basis.

Alibaba’s chat app has turned its focus away from messaging **”Me too! Me too!”** How is the new Laiwang different from the old app? For starters, let’s take a look at the design. A screenshot of the original Laiwang ought to show up as a picture under the Chinese-English dictionary entry for the word “uninspired.” Its app icon featured a speech bubble enclosed in a kelly green backdrop. Look familiar? Laiwang’s user interface, meanwhile, closely mimicked that of the original WeChat interface, before Tencent placed public accounts on separate pages from ordinary contacts pages.

Now, the updated Laiwang is drenched in sour-candy yellow as it sports a new lemon theme. It even has a new mascot of sorts – anthropomorphic lemons.

Days after promising to go legit, police in China raid offices of notorious video piracy app Police in the southern Chinese city of Shenzhen performed a raid this morning on the offices of one of China’s most notorious video piracy apps. The raid on Kuaibo, makers of the QVOD app for streaming films and TV shows, comes less than a week after the company promised to remove pirated content – which can be streamed or downloaded – from QVOD.

Late last year, QVOD (pictured below) and a mobile app made by search engine Baidu were the targets of a $50 million legal challenge by legitimate video streaming sites in China.

China Money Network − China Everbright Supports Management Buyout Of iSoftStone Beijing-based Chinese IT services provider iSoftStone Holdings Limited says it has entered into a definitive agreement, in which its chairman and CEO Liu Tianwen, together with China Everbright Investment Management Limited, will take the company private, according to a company announcement.

Agriculture

Millions of China’s Farmers Now Buy Climate-Change Insurance – Scientific American Li is one of hundreds of millions of Chinese farmers who are now using insurance as a tool to hedge against the risks of climate change. China is the world’s second-largest agricultural insurance market after the United States by premium income, and it is scrambling to spread the use of climate-related insurance into other sectors.

Chinese policymakers in recent years have already persuaded hundreds of millions of farmers there to buy agricultural insurance, forming a capability of covering losses worth 1.4 trillion yuan ($225 billion) in 2013. Climate risks are known as the biggest danger for losses in agriculture.

Healthcare

Fosun-TPG Group Agrees to Buy Chindex With Sweetened Bid – Bloomberg **Wonder how this will affect expat media – United Family Hospitals are one of their biggest advertisers** Shanghai Fosun Pharmaceutical Group Co. (2196) and its partners agreed to acquire hospital operator Chindex International Inc. (CHDX) for about $433 million, after raising their offer to counter another bidder.

The group comprising Fosun Pharma, TPG Capital and Roberta Lipson, Chindex’s chief executive officer, boosted its offer for the hospital operator to $24 a share from $19.50, the Chinese drugmaker said yesterday. Chindex, based in Bethesda, Maryland, signed an amended agreement with the group after another bidder, who earlier offered $23 a share, declined to bid further, Chindex said in a separate statement

Posted from Diigo.

China Business Briefs 18/4/14

Good to be back in Beijing.

Economy Finance Auto Energy Telecoms Property Tech Agriculture Retail

Economy

Closer Look: Signs China’s Economy Transforming Linger behind Latest GDP Figure – What is worth more attention than the growth rate is a change in the economy that other NBS data reflect. In 2013, the tertiary sector’s contribution to total economic output exceeded that of secondary sector for the first time in modern Chinese history.

The latest results showed that services pulled ahead of production and construction even more, with the former accounting for 49 percent of total economic output in the first quarter. Last year tertiary sector’s share of GDP was 46.1 percent.

Many Chinese firms looking overseas: Poll[1]- Chinadaily.com.cn Approximately 60 percent of leading Chinese companies plan to move research and development centers and/or production overseas in the next five years, a study by Strategy& (formerly Booz &Co) and the World Economic Forum said on Wednesday.

That figure roughly doubles the number of Chinese companies that are currently sending these functions abroad, according to the study.

Anti-Dumping The U.S. Trade Representative (“USTR”) announced last week that China, in a follow-up to its December 3, 2013 request for World Trade Organization (“WTO”) consultations, has asked for a dispute settlement panel concerning certain U.S antidumping methodologies. The USTR requests public comments on the issues identified by China in its panel request.

Beijing must stay the course despite the slowdown | China Economic Review If expectations are low, beating them doesn’t mean much. China’s GDP grew by 7.4% year-on-year in the first quarter of 2014, a notch above the market consensus of 7.3%.

But after three months of mainly gloomy economic data, analysts weren’t betting on a powerful punch in overall growth figures. The stats from March alone give reason to believe that China has yet to rebound from a tough start to the year. As for giving the economy a gentle fiscal nudge, Beijing has likely said all it intends to on that matter with some targeted measures in recent weeks. China Economic Review thinks that’s just fine as long as economic reform keeps abreast.

Internationalizing Your China WFOE | China Briefing News In the rush to get into China over the past decade, many foreign investors established WFOEs – either as trading and services companies, or as manufacturing entities in their own right. For many, this is a policy that has worked very well – the legal and regulatory structures are well defined and understood. Today though, as foreign investors start to eye other markets in Asia, the China WFOE is starting to prove awkward as a base from which to launch into Asia. There are a number of reasons for this:

China Resources Chairman Song Lin Faces Probe After Media Charge – Bloomberg Song Lin, whose company is the parent of five Hong Kong-listed units, is being probed for “suspected disciplinary violations,” the Chinese Communist Party’s Central Commission for Discipline Inspection said in a statement yesterday on its website using language that signals a corruption probe.

His company controls China Resources Power Holdings Co., which was accused last year of paying too much for three coal mines in Shanxi province in 2010. The probe is a signal that the Communist Party is intensifying a campaign to root out the corruption that President Xi Jinping has said threatens its six-decade hold on power. Party leaders have promised to target both “tigers and flies,” or cadres up and down the power ladder, over graft.

Bet the Farm, Or Settle for Table Scraps? In this intriguing essay, Shanghai-based consultant Kaiser suggests that for foreign companies, the glory days are over, and the only two strategies left are to either fight for one of the top two positions in your industry (against what might be brutal competition) or accept that your market in China will be modest, picking up what others cannot.

I really enjoyed the essay, because I like contrarian thinking on business in China. But I have a couple of problems right out of the gate.

McKinsey Greater China – Even Chinese SOEs Are Getting Media Savvy **Their websites still suck though** I recall state-owned insurance company announcements as being completely dire in the past. A large semi-lit room, partly filled. Executives sitting at a desk reading a script they didn’t care about to an audience who didn’t really want to be there other than for the drinks available at the end. And always running late.

The new version involved floor to ceiling LCD screens, which projected what was on the screen of the sales agent’s iPad on the stage as she demonstrated an actual sale in real time during the event. The speeches were concise, on time, and delivered with enthusiasm. The back of the room had further iPads so that the journalists could try (and film themselves doing so) the apps.

Disillusioned office workers: China’s losers | The Economist But Mr Zhu considers himself a loser, not a winner. He earns 4,000 yuan ($650) a month after tax and says he feels like a faceless drone at work. He eats at the office canteen and goes home at night to a rented, 20-square-metre (215-square-foot) room in a shared flat, where he plays online games. He does not have a girlfriend or any prospect of finding one. “Lack of confidence”, he explains when asked why not. Like millions of others, he mockingly calls himself, in evocative modern street slang, a diaosi, the term for a loser that literally translates as “male pubic hair”. Figuratively it is a declaration of powerlessness in an economy where it is getting harder for the regular guy to succeed. Calling himself by this derisive nickname is a way of crying out, “like Gandhi”, says Mr Zhu, only partly in jest. “It is a quiet form of protest.”

Finance

How liquidity evaporates from China | South China Morning Post The difficulty of accurately calculating the mainland’s liquidity results from the unknown size of the shadow banking system in which non-banks borrow, lend and invest like a real bank but at market rates and outside the official regulated system. This market is calculated variously as 70 per cent of the mainland’s GDP, or 20 per cent of all credit.

But in reality, no one knows – except that it is significant. This black market has developed to allow market-based funding of smaller enterprises and individuals. It appears strange to have such a tightly regulated banking environment on the mainland when you can game the system so readily.

HEARD ON THE STREET: China’s Citic and the State Share Shuffle – WSJ.com Citic Group, a sprawling state conglomerate, laid out a more ambitious plan last month, with more details unveiled this week. The company will inject its entire $36 billion of assets—including businesses in finance, steel, publishing and more—into Citic Pacific, a Hong Kong-listed unit.

The listed company will pay mainly by issuing shares to the parent, but at a 6.5% premium to where they were trading before the announcement. The new assets will boost return on equity to 13% from 9%, partly because the old listed unit was weighed down by a struggling Australian iron-ore mine.

China eases M&A rules for insurers | Reuters China’s decision to partially relax mergers and acquisition rules in the insurance industry could see global insurance firms expand their footprint in the $288 billion market.

Beijing would allow insurers, including Chinese-based units of foreign insurance firms, to buy stakes in more than one peer that competes in the same market segment, according to a statement on the China Insurance Regulatory Commission’s (CIRC) website and dated last Friday.

RPT-Fitch Affirms Noble Group’s Guaranteed Bonds at ‘AAA(tha)’ | Reuters Fitch Ratings (Thailand) Limited has  affirmed Noble Group Limited’s (Noble; BBB-/Stable) THB2.85bn guaranteed bonds  due 2016 at National Long-Term ‘AAA(tha)’. The bonds, which are guaranteed by  Credit Guarantee and Investment Facility (CGIF), have a Stable Outlook.

Chinese banks are passing the buck | Business Spectator Outstanding non-performing loans soared 19.5 per cent in 2013 from 390 billion yuan ($67 billion) to 467 billion yuan, according to data disclosed by 12 major listed Chinese banks. During the same period, these 12 Chinese banks either transferred or wrote off 102 billion yuan worth of loans, an increase of 206 per cent compared to the same period last year, according to Caixin.

The outstanding non-performing loans of the big five major Chinese banks — the Industrial and Commercial bank of China, Agricultural Bank of China, Bank of China and the Construction Bank of China and Communication Bank of China — increased 16.1 per cent in 2013.

RPT-Fitch Affirms China Life at IFS ‘A+’; Outlook Stable | Reuters Fitch Ratings has affirmed China Life Insurance Company Limited’s (China Life) Insurer Financial Strength (IFS) Rating at ‘A+’.  The Outlook is Stable.

China to Cut Reserve Ratio for Some Rural Banks -Caijing Chinese Premier Li Keqiang Wednesday said reserve requirements would be relaxed for qualifying rural banks in a sign that more loosening policies are likely on the way.

The People’s Bank of China (PBoC) sets different reserve requirements for banks, depending in part on the size of their loan business. The ratio stands at 20 percent for China’s biggest banks, around 16 percent for smaller, rural banks.

Auto

Jaguar Land Rover to recall vehicles in China – Business – Chinadaily.com.cn Jaguar Land Rover Automotive Trading (Shanghai) will recall 1,923 vehicles mainly due to problems with their warning lights, China’s quality watchdog announced on Thursday.

The recall, from April 17, covers 1,909 imported 2014-edition Range Rover vehicles in the Chinese mainland, which were produced from May 7 to Oct. 10, 2013, said the General Administration of Quality Supervision, Inspection and Quarantine.

5.12 Million China Commercial Vehicle Industry Growth in 2017 Forecasts a Research Report | SYS-CON MEDIA According to China Commercial Vehicle Industry Report, 2014-2017 sales volume of China’s commercial vehicles is estimated to register a CAGR of 6% in 2014-2017, and will reach 5.12 million in 2017. The development of the commercial vehicle industry is closely related to the macro economy. In 2013, the growth rate of China’s GDP fell to 7.7%, while commercial vehicle market experienced slow growth at the same time, with output and sales volume increasing by 7.6% and 6.4%, respectively.

Chinese auto brands limp into Beijing show – SFGate **This is not in the Five-Year Plan!** Facing intense competition from General Motors, Volkswagen and other global rivals, local brands such as Chery, Geely and SUV maker Great Wall have suffered shrinking sales and market share this year while China’s overall auto market has grown. That is a blow to Chinese leaders who have made it a national priority to catch up with neighboring Japan and South Korea by creating globally competitive automakers.

Ford to Start Selling Luxury Lincoln Cars in China Lincoln is a late comer to China’s luxury car market, but Robert Parker, president of Lincoln China, said the brand is being introduced here after thorough research.

At Lincoln dealerships, Chinese customers will be greeted with a waterfall, considered auspicious, and their new Lincoln car will have a custom fragrance pleasing to Chinese noses, Parker said.

Energy

China Shenhua Energy Company Limited (HKG:1088) More Than a Coal Company Morningstar analyst Zhao Hu says investors would be wise not to look at China Shenhua Energy Company Limited (HKG:1088) as only a coal story. Even if coal continues to underperform, Hu says China Shenhua’s other businesses will offset the negative impact.

China Shenhua is a little bit different than the other pure-play coal companies we cover primarily because of its vertical integration strategy,” Hu says. “The company recognized the coal sector’s volatility and was able to expand upward and downward into different sectors that include railway transportation, power generation as well as some shipping and port operations.”

CNOOC Limited Filed 2013 Annual Report on Form 20-F – Yahoo Finance CNOOC Limited (the “Company”, NYSE: CEO, SEHK: 00883, TSX: CNU) announced today it has filed with the United States Securities and Exchange Commission (“SEC”) its 2013 annual report on Form 20-F (“annual report”) that included audited financial statements for the year ended December 31, 2013.

The annual report is available on the Company’s website at www.cnoocltd.com as well as SEC′s website at www.sec.gov.

Sinopec Wins Dismissal Of $5B False Imprisonment Suit – Law360 A California federal judge on Tuesday tossed a Chinese foreign national’s $5.17 billion suit alleging China Petroleum & Chemical Corp., known as Sinopec Corp., colluded with the Chinese government to falsely imprison him, ruling the court did not have jurisdiction over the claims.
U.S. District Judge Beverley Reid O’Connell granted Sinopec’s motion to dismiss the July suit, which accused Sinopec officials of interrogating, threatening and ultimately having Tiangang Sun imprisoned for five years after he sued the company in China for breaching a pipeline contract

Your Industry News – Three International wind power exhibitions to take place in Shanghai in July 2014 **Would hope there is a major Scottish presence at these events. Wind power getting important there as oil declines** The Offshore Wind China Conference & Exhibition, the Wind Farm O&M China Conference & Exhibition and Distributed Generation China will take place concurrently at Shanghai Mart in Shanghai on 2-4 July 2014.

China Money Network − Yingli, Shanghai Sailing To Jointly Launch $160M Renewable Energy Fund New York Stock Exchange-listed Chinese solar panel producer Yingli Green Energy Holding Company Ltd. says that it has signed an agreement with Shanghai Sailing Capital Management to jointly form a renewable energy fund in Shanghai to invest in downstream solar energy projects in China, according to a company announcement.

The joint fund will have an initial size of approximately RMB1 billion ($160 million). Yingli China will commit around 51% of the total capital in several installments through its wholly owned affiliate in China.

PetroChina to Expand Installation of Honeywell Technologies to 30 Plants | Control Engineering Asia PetroChina Company Limited will expand its use of Honeywell advanced information management and process modeling software tools to 17 additional refining and petrochemical sites across China, to help meet the country’s growing demand for chemicals and transportation fuels. PetroChina currently uses Honeywell’s information solutions at 13 locations.

Telecoms

Alibaba unit to offer mobile phone service in China from June – Livemint The service will include voice and third-generation data packages on network capacity leased from all three state-owned carriers, according to Alizila, a website run by Alibaba. The packages will be sold through Alibaba’s Taobao and Tmall sites and can be paid for with Alipay, the company’s e-payment affiliate.

Alibaba, Tencent take rivalry to mobile network services | South China Morning Post Alibaba, the mainland’s biggest e-commerce service provider, said yesterday that it would launch 3G data and voice services in June through subsidiary HiChina, one of 19 companies licensed to operate as a mobile virtual network operator in the country.

The announcement, made through the Alizila website of Hangzhou-based Alibaba, followed reports earlier this month that online retail platform operator JD.com in which Tencent is a major shareholder, would launch its own mobile virtual network operator service next month.

ZTE Q1 profit grows – BUSINESS – Globaltimes.cn ZTE Corp, China’s second-biggest telecommunications equipment maker, said first-quarter profit matched its estimate after benefiting from the country’s introduction of 4G networks.

Net profit rose 204 percent to 622.2 million yuan ($100.01 million) from January to March, compared with an estimated range of 425 million yuan to 637 million yuan, the Shenzhen-based company said on Thursday.

China Unicom profits rise – BUSINESS – Globaltimes.cn China Unicom (Hong Kong) Ltd, the country’s second-biggest mobile carrier by subscribers, posted a 74 percent rise in first quarter net profits, beating estimates, as an increase in data usage offset a slowdown in subscriber growth.
China Unicom said on Thursday net profit from January to March was 3.3 billion yuan, higher than the 1.9 billion yuan in the same period one year ago.

Yahoo Still Set to Get Value From Alibaba After IPO – Bloomberg That’s because Yahoo, which owns about 24 percent of Alibaba, will still have a sizable chunk of the Chinese e-commerce company after it goes public as soon as this year. The Web portal is set to sell about 40 percent of its Alibaba stake in the initial public offering, leaving it with the majority of its holding. Yahoo can hang onto that piece indefinitely if it chooses.

Investors who had bought into Yahoo as a proxy for privately held Alibaba thus may not be tempted to dump the Web company’s shares — at least not right away. For Chief Executive Officer Marissa Mayer, who has relied on Yahoo’s Alibaba stake to boost the company’s share price, that may buy just enough time to accelerate a nascent sales rebound.

Xiaomi looks to steal thunder from OnePlus with launch of mysterious new gadget on same day, April 23 The mysterious device is set to launch on the same day as the OnePlus One, the new brand’s first ever phone. We doubt Xiaomi’s timing is unintentional as the OnePlus One phone is designed to compete with Xiaomi’s flagship phone, the Mi3.

Coolpad obtains fresh funds for 4G smartphone expansion | South China Morning Post Coolpad Group, the third-biggest smartphone supplier on the mainland, is poised to boost its 4G mobile phone development plans and global expansion with new financing worth as much as US$175 million.

Shenzhen-based Coolpad, formerly known as China Wireless Technologies, obtained yesterday a US$107 million, three-year loan facility through a syndicate of mostly Taiwanese banks, according to the firm’s filing with the Hong Kong stock exchange.

Property

Towers where no lights burn at heart of China’s puzzle – FT.com The main reason for the slowdown is a slump in fixed asset investment, the biggest driver of the Chinese economy.

The slide was largely owing to declining real estate investment, which also experienced its weakest growth in more than a decade. The situation is certain to get worse in the coming months as new housing floor space under construction contracted 27.2 per cent in the first quarter.

Why China Needs to Let More Companies Go Bankrupt – China Real Time Report – WSJ China needs to let more companies go bust.

That was the message from several executives at a real-estate conference in Shanghai on Thursday, as the latest string of loan defaults among real-estate developers and a small construction firm have some people talking about bankruptcy more freely.

Tech

China Money Network − Sina’s Weibo Downsized IPO By 21% To $286M Chinese social networking platform Weibo Corporation has raised $286 million by offering 16.8 million American Depository Shares (ADR) at $17 per share. The size of its IPO is 21% smaller than its initial target of of $380 million, according to an announcement.

Weibo gains 5% in Nasdaq trading debut – MarketWatch **I wouldn’t put money on Weibo** Shares in Weibo Corp were last up 5% on Thursday in their trading debut on the Nasdaq after initially dropping. Late Wednesday, the Chinese social-media company raised $286 million by offering 16.8 million U.S.-listed shares at $17, according to Renaissance Capital. That $17 price was at the low end of an expected range of $17 to $19.

As Weibo launches IPO, here are all the facts and stats you need to know In less than an hour, China’s top Twitter-esque social network, Sina Weibo (NASDAQ:WB), will launch its long-awaited IPO. As that happens, let’s look at all the facts and stats you need to know about Weibo.

Chinese graduates deepen hi-tech inroads | South China Morning Post The Chinese for more than a decade have been potent rivals to American and European manufacturers. Now, China is giving Westerners something new to worry about: a generation of workers able to compete in higher-technology endeavours. The aim is to develop service industries and shift from producing simple exports – often assembled from parts made elsewhere – to making a larger share of more sophisticated products.

Agriculture

China Says Nearly One-Fifth of Its Arable Land Is Polluted – WSJ.com **But doesn’t say what constitutes “polluted” or “highly polluted”** Nearly one-fifth of China’s arable land is polluted, China’s environmental ministry said. The new report confirms the worst fears of environmentalists and researchers about the effects of decades of rapid industrialization on the country’s soil.

The release of the report Wednesday shed unexpected light on the scale of China’s environmental problem. Environmental authorities had previously declined to disclose national soil pollution data, calling it a “state secret.”

Retail

China backs away from price controls on basic drugs | Reuters **Healthcare in China is FUBAR** China has backtracked on its policy of capping retail prices on medicines and will allow pharmaceutical companies to set prices for some drugs, after criticism that controls had caused a drug drought that derailed treatment for millions of patients.

Beijing has been struggling with rising healthcare costs, violent conflicts between patients and doctors and medicine safety issues, and President Xi Jinping has said providing affordable, accessible healthcare is a government priority.

Gap sees China sales tripling to $1b in three years – Business – Chinadaily.com.cn The push comes as Gap Inc tries to become less reliant on North America, where it generates 84 percent of its sales. North American sales have cooled of late at Gap Inc’s three major brands, which also include Banana Republic.

 

Posted from Diigo.

China Business Briefs 6/2/14

Economy   Finance   Auto   Infrastructure   Energy   Telecoms   Property   Tech   Media

Economy

Four reasons the yuan will struggle to gain acceptance | South China Morning Post Yet a look at the economic history books advises caution. Over the past 50 years, other currencies – including the deutschemark, its successor the euro, and the Japanese yen – had been tipped to steal the dollar’s crown.

All failed. And the obstacles the yuan will have to overcome to unseat the dollar are just as formidable as those that defeated the three earlier pretenders.

Intel Economist Sees Pollution Contributing to Slower China Growth – China Real Time Report – WSJ Mr. Thomas predicted slower growth in China, the world’s second-largest economy, in part because of rising concern about air-pollution problems. He said Intel, like many non-Chinese companies, has installed additional air filters in its facilities in China and that many employees use air filters in their homes.

Shenzhen has China’s highest minimum wage|Markets|Business|WantChinaTimes.com The Shenzhen city government announced that the city’s minimum wage has been raised from US$213 to US$241 a month, which has made it the city with the most expensive labor in China. The minimum wage in the city in 1992 was US$39.

In 2013, Shanghai had the largest minimum wage, followed by Shenzhen and Guangdong. In addition to Shenzhen, the growth for the minimum wage in Xinjiang was 31%, 29.8% in Jiangsu, 19.2% in Guangdong, 11.7% in Shanghai and 11.1% in Beijing.

What’s Driving China’s New Economy? Three months after the conclusion of China’s Third Plenum, the state seems to be fulfilling every prophecy set out by economists. These meetings, used by Chinese political leadership to set policy goals and the general direction of the country, seem to show that the state may be giving up its usual stance on intervening in the market for something a little more hands-off. This move is still in its infancy, but in an economy expected to be the world’s strongest by 2020, the move seems to be one a long time in coming.

Although China’s slowing economy has been compared to a near-apocalyptic sign of failing markets, indications show the slow to be a forced suppression of an economy that had been bubbling in the early 2000s. This bubble is now being deflated, says Professor Yiping Huang, by Premier Li Keqiang’s government who seeks less market volatility. In an economic view that has been dubbed “Likonomics,” the Chinese premier calls for the establishment of a market built on no stimulus, deleveraging of current assets, and structural reform.

GlaxoSmithKline hails drug pipeline after 2013’s China scandal The pharmaceutical giant unveiled its drugs pipeline as it revealed that turnover rose 1% to £26.5bn in 2013, while pre-tax profits inched up by 0.7% to £6.6bn. Sales continued to slide in its scandal-hit China division, but the pace of decline slowed down: drug and vaccine sales were down 18% in the final quarter of 2013, compared with a 61% drop in the previous quarter.

Chinese authorities have accused GSK of being a “criminal godfather”, running a £320m slush fund to bribe doctors and hospital officials with cash payments and visits to prostitutes, in order to sell its products.

Finance

Big Four’s Chinese Affiliates May Mull Workarounds – China Real Time Report – WSJ The Big Four’s Hong Kong affiliates aren’t affected by the ruling, and if they were to temporarily take over some of the Chinese affiliates’ work, it might minimize the disruptions the suspension would cause for the Chinese firms’ clients, some observers believe.

But others say a switch would be unfeasible as the Chinese firms’ reason for refusing to give the SEC the documents it wanted – they said Chinese laws on state secrecy prevented them from turning over the documents – could also apply in certain cases to the Hong Kong firms if they took over the work. That could leave the Hong Kong firms similarly unable to comply, and potentially subject to U.S. sanctions.

Singapore Bank Expands China Presence; OCBC Buys Ningbo Bank Shares – WSJ.com A week after announcing that it was in exclusive negotiations to buy Hong Kong’s Wing Hang Bank Ltd., OCBC said Tuesday that it has agreed to buy up to 207.5 million new ordinary shares in Bank of Ningbo, which is undertaking a private placement of shares to current substantial shareholders. The 383 million-Singapore-dollar (US$303 million) investment will raise the Singaporean bank’s stake in the Chinese lender to 20% from 15.35%.

Westpac to launch derivatives business in China – MarketWatch Westpac Banking Corp. (WBC.AU) plans to launch a new derivatives business in China, tapping into increased capital flows after Australia and China agreed to allow each other’s currencies to be directly converted last year.

The Sydney-based bank said Thursday it has been granted a general derivatives license by the China Banking Regulatory Commission. It will offer derivatives trading from its branches in Shanghai and Beijing, where it has already built up its dealing rooms in the past year to support yuan trade.

Bank of China International hires Ex-Goldman metals chief – Yahoo Singapore Finance Bank of China International (BOCI) has recruited former Goldman Sachs (GS.N) metals trading chief as an adviser to help it expand its commodities business.

BOCI’s appointment of Stephen Branton-Speak as an adviser is one of the highest profile metals industry hires by a Chinese bank since Hong Kong Exchanges & Clearing Ltd bought the London Metal Exchange (LME) for $2.2 billion in 2012.

Auto

Aston Martin recalls 75% of the cars it has built since 2008 – FT.com The British supercar manufacturer is recalling almost 18,000 cars – 75 per cent of the cars it built since 2008 – after discovering a Chinese supplier used fake materials in its cars’ accelerator pedals.

Infrastructure

Rail will cost more than Sh1.3trn – PIC | The Star The committee also found out the railway line awarded to China Roads and Bridges Corporation will be constructed in line with the Chinese specifications.

While appearing before the committee on Monday, former Transport Minister Chirau Mwakwere told the committee that CRBC is a credible firm having constructed the 1,390km Shanghai- Beijing railway.

But the committee has information that CRBC was just a sub-contractor in the project and that various audits carried out in China had raised serious audit queries against the firm.

Sierra Leone News: Amb. Zhao visits Hydro & Regent Grafton Rd Construction sites « Awoko Newspaper Chinese Ambassador Zhao Yanbo less than a month after taking office as the new Chinese Ambassador to Sierra Leone has made a visit to the Hydro construction at Charlotte and the Regent  Grafton Road sites.

Energy

Moving Average Crossover: Great News for CNOOC Limited (CEO)? – Tale of the Tape – NASDAQ.com CNOOC Limited (CEO) could be a stock to avoid from a technical perspective, as the  firm is seeing unfavorable trends on the moving average crossover  front. Recently, the 50 Day Moving Average for CEO broke out  below the 200 Day Simple Moving Average, suggesting short-term bearishness.

This has already started to take place, as the stock has moved  lower by 15.8% in the past four weeks. Plus, the company  currently has a Zacks Rank #4 (Sell) meaning that now could  definitely be the time to get out of this potentially in-trouble  stock.

Ethiopia: How Foreign Oil Companies Annihilated the Lives of Ordinary African Population in Ogaden Region February 13, 2013, China’s oil and gas producer of Petro-trans negotiated with Somaliland’s officials for the possibility to extend Berbera  port’s container and mineral export services to help China’s grasping  ways to profit Ogaden gas and oil financially but has scrapped plans to  build a liquefied natural gas facility. Now China’s GCL Poly Petroleum signed  a Memorandum of Understanding (MoU) on Wednesday January 8, 2014, with  the government of Djibouti that will allow the company to construct two  pipe lines stretching from Ethiopia to Djibouti.

Regional commentators believe that China is good for Africa leaders  but it’s bad for Africans as long as human rights concerned. And it uses  the key president’s issue to penetrating, like the European colonial  times, more or less. Sad and angry Somali people in Ogaden say, every  coming year it is Dhina’s day-dreaming to produce oil and gas from Ogaden region and Ethiopia’s nightmare of being an oil-industry nation, dreams likely to be a needle in a haystack.

China’s Oil Pipeline Through Myanmar Brings Energy—and Resentment – Businessweek Until recently, 80 percent of China’s oil and gas imports were transported by ship through a narrow waterway separating Indonesia and Malaysia, known as the Strait of Malacca. The possibility that hostile forces could one day block that crucial passageway and starve the country of energy has long made China’s leaders nervous.

Petrochina’s Neutral Rating Reaffirmed at Zacks (PTR) | Ticker Report Zacks reiterated their neutral rating on shares of Petrochina (NYSE:PTR) in a research report sent to investors on Tuesday morning, AnalystRatings.Net reports. The firm currently has a $102.00 price target on the stock.

Maintenance at UK’s Buzzard oilfield set for Q2 and Q3 -Suncor – Yahoo Finance UK Britain’s biggest oilfield Buzzard will undergo routine, planned maintenance in the second and third quarters of 2014, Suncor, which owns a 29.9 percent stake in the field, said.

Nexen (KSE: 005720.KSnews), Buzzard’s operator and a unit of Chinese state company CNOOC (HKSE: 0883.HKnews) , has said that it aims to improve Buzzard’s reliability in 2014.

Telecoms

WeChat’s money gifting scheme lures 5 million Chinese users Last week WeChat, the popular Chinese messaging app, launched a feature letting users based in China gift money to friends and family.

The feature went viral in China, and yesterday parent company Tencent disclosed to Chinese media that during the first two days of Spring festival, over five million users participated in the scheme, exchanging over 20 million envelopes. At its apex, over 585,000 people sent over 121,000 red envelopes within a five-minute stretch.

Probe against Huawei over hacking of BSNL network – The Hindu The Centre told Parliament on Wednesday that an inter-ministerial team had been formed to investigate the hacking of the Bharat Sanchar Nigam Ltd. network in Andhra Pradesh allegedly by the Chinese telecom equipment-maker Huawei.

In probably the first case of its kind, the Centre is investigating corporate rivalry between Huawei and another Chinese company, ZTE, which has bagged the BSNL’s network-expansion project, including in Rajahmundry, that led to the alleged hacking.

Property

China’s housing market is looking ugly, which is scary for its financial system – Quartz Sales have “showed a sharp decline” (paywall) in January, compared to Dec. 2013, according to China Confidential, a Financial Times research outfit, even when controlling for softness due to the Chinese New Year holiday. Official data show prices still high in December (the last month for which data were available), but those will likely be dragged down in the coming months.

Housing investment is a big engine of China’s economy. And though slower growth could help end China’s dangerous reliance on credit-backed investment, an abrupt slowdown will freak out global markets and throttle commodity prices.

Chinese government foundation teams up with investors in Hong Kong and Dubai to build resorts catering to elderly | South China Morning Post China Ageing Development Foundation, a fund under the Ministry of Civil Affairs, has formed an alliance with investors in Hong Kong and in Dubai for an aggressive plan to build 12 upmarket retirement and health resorts on the mainland and overseas to tap the country’s rapidly greying population.

“Population ageing in China is expected to lead to a burgeoning demand for aged-care services over the next 40 years. It is now recognised that the ageing of China’s population will have far reaching implications for society, for the economy and for the ability of the government to meet the expectations of the community,” the consortium said in a written reply to questions from the South China Morning Post.

Tech

China’s Top Revenue-generating Mobile Apps of 2013 App ranking and analytics service App Annie released top trends of 2013 on iOS and Google Play. For Google Play isn’t widely accessible in mainland China and the majority of Chinese users download Android apps through dozens of other stores, the revenues in China market recorded by App Annie are mainly from iOS platform. What’s interesting is the most revenue-generating non-game categories include dating, messaging, navigation, among others.

Glu Mobile: Better Play Than Zynga [Apple Inc., Zynga Inc] – Seeking Alpha Following the announcement of Apple’s (AAPL) deal with China Mobile (CHL), the mobile gaming stock most likely to benefit, in my opinion, from a double-whammy of an additional 24 million iPhones held in the hands of gamers in China, of which, whose spending on gaming apps soared 247% (y-o-y) in 2013 is: Glu Mobile (GLUU).

I also expect Glu Mobile could reach $9 in 2015, but, first, the lead-up to my analysis.

Media

This Movie Beat Iron Man 3 in Chinese IMAX Corporation Theaters (DIS, IMAX) But that young record fell this week. That’s right — not even Iron Man’s robotic power could hold back the magical armies of the Middle Kingdom this time. Chinese kung fu production The Monkey King just laughed at Iron Man‘s $1.5 million first-day sales, on its way to a $1.8 million opening day in IMAX theaters.

So IMAX is finding new ways to grow in the crucial Chinese market. Furthermore, the company should be able to apply the lessons learned here in other important markets, accelerating revenue growth in places like Latin America and major European markets.

Posted from Diigo.

China Business Briefs 25/1/14

ECONOMY

Big Four firms, China in talks over corporate audit impasse: KPMG | Reuters In the midst of a U.S.-China quarrel over corporate auditing, the global chairman of audit giant KPMG said on Friday that a “constructive dialogue” was under way to defuse the dispute, which led days ago to U.S. sanctions against the Chinese arms of the world’s largest accounting firms

“We are in dialogue with the Ministry of Finance in China on the matter,” KPMG KPMG.UL Chairman Michael Andrew told the Reuters Global Markets Forum, an online community, in Davos, Switzerland, during the World Economic Forum meetings.

What’s Next for Big Four Audit Firms in China? – China Real Time Report – WSJ Still, despite the expected delay, accounting experts said the ruling was another step down the road toward a final reckoning with a broader, fundamental dispute: The U.S. wants to regulate and investigate China-based companies that trade on U.S. markets, but China has put up roadblocks to those efforts, especially with regard to the China-based audit firms that those companies use, including affiliates of the Big Four – PricewaterhouseCoopers, Deloitte Touche Tohmatsu, KPMG and Ernst & Young.

Local govts start releasing audit results[1]- Chinadaily.com.cn China has increased the transparency of its massive local government debt by allowing local governments to release independent reports on their liabilities, a move that analysts said showed Beijing‘s increasing seriousness in dealing with the issue.

As of late Thursday, several provincial-level governments had released audit reports, including Guangdong, Guangxi, Ningxia Hui autonumous region, Beijing, Jilin and Zhejiang.

The mystery of China’s fading inflation, explained – Quartz Where economists disagree is on what a slowing inflation rate does say about China’s money supply. Slate’s Matthew Yglesias argued that something “people are missing about the China slowdown is that monetary policy keeps getting tighter.” Patrick Chovanec, an economist at Silvercrest Asset Management, takes the opposite position. ”Every time the CPI rate looks moderate, people say [China has] more room for monetary easing to boost the economy,” he tells Quartz. “[But] monetary policy is already horrendously loose in China.” Michael Pettis, a finance professor at Peking University, concurs: CPI “is not the appropriate measure by which to gauge domestic monetary conditions.”

China Bank Regulator Said to Issue Alert on Coal Loans – Bloomberg China’s banking regulator ordered its regional offices to increase scrutiny of credit risks in the coal-mining industry, said two people with knowledge of the matter, signaling government concern about possible defaults.

The China Banking Regulatory Commission also told its local branches to closely monitor risks from trust and wealth-management products, said the people, who asked not to be identified as the matter isn’t public. The commission issues such alerts for matters that it judges may pose significant risks to banks, the people said.

China Trust Products Gone Awry Evoke Soros Crisis Echoes – Bloomberg The story of how a 3 billion-yuan ($496 million) Chinese trust investment wound up on the brink of default shows what billionaire investor George Soros has called the “eerie resemblances” between the 2008 global financial crisis and the nation’s debt market.

Banks in Asia need to go digital to keep customers says McKinseyWantChinaTimes.com The number of digital banking consumers in Asia will reach 1.7 billion by 2020, with China, India, and ASEAN seeing the biggest gains, said a new report by global management consultants McKinsey & Company.

The report showed that in China, the number of digital banking consumers will leap from 380 million in 2012 to 900 million in 2020.

China ‘can weather QE challenge’ – Chinadaily.com.cn Although the United States’ tapering of quantitative easing this year will pose a “significant challenge”, China is capable of withstanding the change, according to a Chinese financial official.

Guan Tao, the State Administration of Foreign Exchange official in charge of balance of payments, said the ending of quantitative easing would even be seen as a good thing.

Infographic: China Tech 2013 Year in Review Infographic: China Tech 2013 Year in Review

China to tackle film fraud following hidden box office returns | Film | theguardian.com China‘s media regulator is to bring in a series of measures to tackle fraud in cinemas, as film revenues there could have been hugely underestimated.

Illegal software is used to report cinema takings that are lower than the actual figure, to avoid paying film tax and fees to distributors, Variety reports. Meanwhile tickets are sold for one film and then a ticket for another written out by hand, so that cinemas meet quotas set for certain films – and deprive others of revenue.

China joins Davos drive to cut green trade barriers – FT.com China has joined the US, EU and Japan in a new push to lower tariffs and other trade barriers on the $1tn global annual market in green goods.

The move is intended to end a deadlock within the World Trade Organisation, where efforts to secure a deal on green goods have been caught up in the stalemate around the 12-year-old Doha round of negotiations.

Scottish cloth exports to China set for record high – FT.com Estimates from HM Revenue & Customs indicate that exports of textiles from Scotland to China are about to hit a record high, after sales in the first nine months in 2013 reached nearly £9.7m – outstripping the total for the previous year. Scotland sells more than two and a half times more textiles to China than it did a decade ago.

Another Look at China’s GDP Numbers – China Real Time Report – WSJ Did Thursday’s surprise fall in one of China’s purchasing manager indexes give you pause about the pace of Chinese economic growth? Some indices had already said that China’s economy was doing worse than advertised.

China Money Network − Private Equity Investors Pile Onto China’s Environmental Sector In 2013, private equity firms poured over $1.2 billion in companies related to the environment industry in China, accounting for 8.3% of the year’s total transaction volume, the highest percentage recorded for this sector, according to Asia Private Equity Review.

Building a Chinese floor under the market | China Economic Review Russian firm Uralkali OAO (URALL.LON, URKA.MCX) this week concluded a deal to sell 700,000 tons of potash, a compound most commonly used as a fertilizer, to Chinese National Agricultural Means of Production Group at US$305 a ton, 25% lower that the price it could have got under an existing deal with Belarus. Despite the lower price, the deal is a good one for analysts as it allows Uralkali to strengthen its position in the world’s largest potash market. The China price sets a floor for the global market,” said Elena Sakhnova, an equity analyst for VTB Capital.

China OKs nitrous dioxide carbon offsets | Business Spectator 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.

As Internet TV Grows Popular, Regulator Mulls Show of Force – Internet companies have shown they are ambitious about exploring the growing market, one that also involves appliance manufacturers, telecom operators and broadcasting companies. However, behind the excitement are some uncertainties because regulators are mulling gradually tightening controls.

In mid-December, the State Administration of Press, Publication, Radio, Film and Television, the country’s media watchdog, held a symposium on IPTV oversight with representatives from various industry players.

Record crude oil imports to China from Kazakhstan in 2013WantChinaTimes.com Oil imports hit a record high of 11.9 million tonnes in 2013 through the China-Kazakhstan Pipeline, up 14.1% year-on-year, according to the regional government.

COMPANIES

E-Investing Spurs Banks to Raise Interest Rates for Deposits Many big banks in the country have moved to offer the highest possible interest rates for deposits despite the central bank’s advice they not do this.

The lenders had to act because they were losing customers fast to the emerging league of high-yield money market funds offered by Internet companies such as Alibaba Group and Tencent Holdings, an executive at a large bank said.

China’s Wang Plans Up to $5 Billion Investment in U.K. Projects – Bloomberg Dalian Wanda Group, the property company owned by Chinese billionaire Wang Jianlin, plans to invest as much as 3 billion pounds ($5 billion) in U.K. developments after a meeting with British Prime Minister David Cameron aimed at bolstering trade.

Wang and Cameron announced the investment in Davos, Switzerland, according to a statement today. The main part of the 2 billion-pound to 3 billion-pound venture will be a cultural and travel development. The Chinese company didn’t provide details of the project.

Lenovo Agrees to Buy IBM’s Low-End Server Unit for US$ 2.3 Bln – Lenovo Group Ltd. is counting on a US$2.3 billion deal for International Business Machine Corp.’s (IBM) low-end server unit to generate US$ 5 billion in revenue every year, says Yang Yuanqing, CEO and chairman of the world’s second largest maker of personal computers.

Deutsche bank starts talks to sell gold fixing seat – sources – Yahoo Singapore Finance Deutsche Bank is talking with prospective buyers about selling its place in the global gold and silver price setting process, known as the “fix”, sources familiar with the situation said on Friday.

Bank of China (BoC) and Industrial and Commercial Bank of China (ICBC) have both already become members of the LBMA. ICBC is also about to complete the acquisition of the London commodity arm of Standard Bank (SBKJ.J), another member of the London Bullion Market Association.

KKR, BlackRock, funds in talks to buy stake in China Huarong: sources | Reuters KKR & Co and BlackRock Inc are among leading global investors in talks to buy a stake in China Huarong Asset Management Co Ltd as the bad debt manager seeks to raise more than $2 billion, people familiar with the matter told Reuters.

As China’s economy slows, a wave of loans is expected to turn sour. That will boost prospects for Huarong and the three other asset managers set up by the Chinese government in 1999 to remove an estimated 1.4 trillion yuan ($230 billion) worth of bad loans from the country’s top four state lenders.

Carmaker plans $2b Hong Kong IPO – BUSINESS – Globaltimes.cn Chinese carmaker BAIC Motor, part-owned by Daimler AG, plans to raise up to $2 billion in a Hong Kong initial public offering, hoisting its target as China’s auto industry purrs to solid growth.

Fueling BAIC Motor’s ambitions, the world’s biggest auto market is moving toward a second year of double-digit sales increases.

First Nations, Oil Industry Trade Business Cards Instead of Barbs – Canada Real Time – WSJ One of the issues looming largest is PetroChina Co. affiliate Brion Energy Corp.’s plans to expand production near an area the Fort McKay First Nation considers sacred. The development remains in limbo after a court ruling last fall paved the way for an appeal of the Alberta Energy Regulator’s approval of the controversial project.

Uganda set to sign pact with Tullow to allow for oil production – Yahoo Finance UK In a speech at a private function for Tullow late on Thursday and seen by Reuters on Friday, energy minister Irene Muloni said the government would shortly sign the memorandum of understanding (MoU) with Tullow and its partners, France’s Total and China’s CNOOC.

Posted from Diigo.

 

China Business Briefs 19/1/14

Apologies for the brief hiatus. In the same way that you get your shots before travelling to some countries, you really ought to sort out your internet connections before you travel to China.

ECONOMY

ICBC Won’t Repay Troubled China Trust Product, Official Says – Bloomberg Industrial & Commercial Bank of China Ltd. is rejecting calls to bail out a troubled 3 billion-yuan ($495 million) trust product, a bank official with knowledge of the matter said, stoking concern that the nation’s first default on such high-yield investments may be looming.

ICBC, which distributed the product sold by a trust company to raise funds for Shanxi Zhenfu Energy Group, won’t assume primary responsibility after the coal miner collapsed, according to the executive, who asked not be identified while negotiations continue. China’s largest bank may be forced to repay investors, most of whom were Beijing-based ICBC’s own private banking clients, Guangzhou Daily reported yesterday.

China Shadow Lender Makes Plans to Recoup Loan – WSJ.com A standoff is brewing in China, as an asset management firm that had used the country’s largest bank as its agent seeks avoid setting a loss-making precedent among shadow lenders in connection with a loan-gone-bad made to a coal miner.

China Credit Trust Co., the shadow lender—a term used to describe nonbank lenders in China—raised 3 billion yuan ($495 million) from customers of state-controlled Industrial & Commercial Bank of China Ltd. and lent it to a little-known coal-mine operator in northern China’s Shanxi province, Wang Pingyan. The farmer-turned-entrepreneur, whose financial problems first came to light in 2012, has been detained by authorities and couldn’t be reached for comment.

Troubled shadow bank product tests no-default policy in China | South China Morning Post A high-yielding investment product based on a loan to an indebted coal company is offering the latest test of Beijing’s willingness to permit defaults in the mainland’s shadow banking system.

If the product, which is scheduled to mature on January 31, fails to pay out as promised, it could shatter the widespread assumption that even risky investments carry implicit guarantees from the government and state-owned banks.

UK’s drive to be offshore hub for Chinese currency gains pace – Yahoo Singapore Finance China decided late last year to give UK investors the right to buy up to 80 billion yuan (7.90 billion pounds) of mainland stocks, bonds, funds and money market instruments directly using its currency, making Britain the first country outside Asia with such status.

Last week, the state-controlled Bank of China also sold a 2.5 billion yuan ($413 million) bond in London, the biggest issued in the currency – which is also known as the renminbi (RMB) – so far in the British capital.

Inland provinces in China see boost in foreign trade|Markets|Business|WantChinaTimes.com A total of six inland provinces — Henan, Anhui, Yunan, Shaanxi, Gansu and Guizhou — along with the municipality of Chongqing posted an over 15% growth in foreign trade during 2013. In comparison, the contribution of foreign trade in seven coastal provinces or municipalities dropped 0.9% to 79%, according to China’s General Administration of Customs.

Bank profit growth could miss 10-pct target: analysts – Xinhua | English.news.cn China’s listed banks may see profit growth under 10 percent this year as financial reform and Internet businesses take their toll on the sector.

Chief economist at the Bank of Communications Lian Ping forecast net profit growth for listed banks at around 8.3 percent this year, a notable retreat from the double-digit era, according to China Securities Journal. China Merchants Securities analyst Luo Yi put the figure at 9.4 percent.

China decries U.S. spending bill | Reuters China’s Commerce Ministry has condemned a $1.1-trillion spending bill passed by the U.S. Congress last week over clauses that limit technological purchases from the Asian giant, saying they clash with the principles of fair trade.

In a weekend statement, China’s Commerce Ministry said the move “went against the principles of fair trade” as it sought to curb purchases of Chinese technology and export of satellites and parts to China.

Investment pact ‘means better market access’ – Chinadaily.com.cn China and the European Union will open negotiations next week on a bilateral investment agreement, EU Ambassador Markus Ederer told a news conference on Friday in Beijing.

Even amid weak global economic conditions in recent years, EU-China trade has grown steadily. Bilateral trade expanded 2.1 percent last year to $559.06 billion, according to China’s Ministry of Commerce.

PBOC sets sights on ‘zombie’ financing vehicles[1]- Chinadaily.com.cn The People’s Bank of China has reiterated its resolve to root out “zombie” local government financing vehicles this year and ensure that urbanization funding moves through standard market channels.

The central bank said in an online statement on Thursday that it will “exhaustively clean up” local government financing vehicles that “have poor credit, ambiguous functions and unsustainable financial conditions”.

China Home Prices Advance as Guangzhou, Shenzhen Jump 20% – Bloomberg New-home prices in China’s cities defined by the government as first tier rose more than 15 percent last month, led by Guangzhou and Shenzhen in the south, as local property curbs failed to deter buyers.

Prices climbed 20 percent in Guangzhou and Shenzhen from a year earlier, and jumped 18 percent in Shanghai and 16 percent in Beijing. They increased in 69 of the 70 cities tracked by the government, the National Bureau of Statistics said in a statement today.

Chinese Property Prices Rose in December – WSJ.com New-home prices in major Chinese cities in December were up 9.2% from a year earlier, but month-to-month figures suggest Beijing’s efforts to cool the market are continuing to have an impact.

Prices in December were up from a year earlier in 65 of the 70 cities surveyed by the government, according to data released on Saturday. At 9.2%, the average price increase marked an acceleration from November’s 9.1%, according to Wall Street Journal calculations.

Austerity drive crimps gift-giving by China’s rich – FT.com The Hurun Report, chronicle of all things wealthy in China, said in its 2014 Luxury Consumers Survey that 25 per cent fewer people plan to give a gift over Rmb5,000 ($826) at Chinese New Year – in two weeks’ time – than last year. Overall, their average luxury spending fell by 15 per cent, from Rmb1.77m last year to Rmb1.5m this year, “possibly due to the impact of anti-corruption initiatives and a slowdown in the economy”, Hurun said.

The Rise of China’s Innovation Machine – WSJ.com Chinese companies still face a perception problem among consumers in many parts of the world that their products aren’t as high-quality or reliable as others. Some foreign competitors have alleged that Beijing gives unfair advantages through subsidies, cheap financing and control over the currency market.

But, many executives at Chinese and Western companies contend, China’s technology sector is reaching a critical mass of expertise, talent and financial firepower that could realign the power structure of the global technology industry in the years ahead.

Private Chinese Companies Struggle to Invest in America, Expert Says – In 2012, direct investment made by private Chinese firms for the first time outpaced that by their state-owned counterparts in terms of value. In 2013, total investment by private firms into the U.S. again increased by US$ 5 billion to about US$ 9 billion.

Despite the surge, a large number of private Chinese firms are seeing their attempts to tap the U.S. market fail. Data from the SoZo Group, a Hong Kong company that provided investment expertise to businesses in China, shows that 90 percent of Chinese private enterprises’ attempts at setting up manufacturing in the United States or Europe fail.

Guangdong Tells Certain SOEs to Turn over More of Their Profits – The figure is significantly more than the previous level of 10 percent, but is still lower than the 30 percent target a recent meeting of the Communist Party’s 18th Central Committee called for reaching by 2030.

Wholly state-owned companies in the southern province of Guangdong will turn over 15 percent of their profits to the government this year, a report the provincial finance department submitted to the local people’s congress says.

China Private Equity, M&A & Capital Markets, from China First Capital The long dark eclipse is over. The sun is shining again on China’s capital markets and private equity industry. That’s good news in itself, but is also especially important to the overall Chinese economy. For the last two years, investment flows into private sector companies have dropped precipitously, as IPOs disappeared and private equity firms went into hibernation. Rebalancing China’s economy away from exports and government investment will take cash. Lots of it. Expect significant progress this year as China’s private sector raises record capital and China’s state-owned enterprises (SOEs) gradually transform into more competitive, profit-maximizing businesses.

The Future of the Accounting and Legal Professions in China | China Briefing News The accounting profession in China and, more generally, Asia, will undergo dramatic changes over the next decade as competition intensifies and business complexity increases, according to the Intuit 2013 Future of Accounting Report. More accounting or tax-related products and services will enter the market as banks, financial services companies, software and Internet firms, and even governmental bodies, innovate and develop new offerings.

CSRC Launches Inspections Linked to Pricing of New Shares – The China Securities Regulatory Commission (CSRC) said on January 15 it has sent out teams to inspect underwriters and financial institutions involved in pricing new shares that were about to hit the A-share market.

The inspections target 13 IPO underwriters for 13 issuing companies and 44 financial institutions that took part in the price inquiries. They will be examined for compliance with regulations, the CSRC said, suggesting as usual that it will check whether they inflated the new shares’ offering price.

FDI in China Springs Back by 5.25 Percent in 2013 | China Briefing News Total foreign direct investment (FDI) in China rose by 5.25 percent in 2013 after the decline which was witnessed in 2012. China’s Ministry of Commerce (MOFCOM) recently disclosed this information during a routine press conference on January 16.

COMPANIES

49 million Alipay Users Have Contributed to Mutual Fund Yuebao. WeChat Adds A Me-too One. When WeChat stealthily launched a Yuebao clone, named Licaibao (means a powerful tool for financial management) a couple of days ago, Alipay announced that 49 million Alipay users had contributed 250 billion yuan (roughly $41 bn) to the mutual fund Yuebao as of January 15.

Chinese microblog use fell 9% in 2013, government says – WSJ.com The report doesn’t specify how the data about user numbers were collected or which microblogs the data references. Internet giants Sina Corp. and Tencent Holdings Ltd. operate China’s two largest microblog services. Sina said in November in its most recent earnings report that daily active users grew 11.2% to 60.2 million in the third quarter from the second. Tencent didn’t release third-quarter figures for its weibo users.

Making money from WeChat: Nice little earner | The Economist IT IS hard to make money peddling social media anywhere. During their first few years in business, Facebook and Twitter lost pots of money. Yet somehow Tencent, an innovative Chinese firm that released the WeChat app in 2011, seems to have cracked the code. Alicia Yap of Barclays, an investment bank, forecasts that WeChat will earn some 6.8 billion yuan ($1.1 billion) this year and 9.6 billion yuan next year. The reasons for optimism include clever integration of the app with other money-making services and spectacular growth in users at home and, unusually for a Chinese app, abroad.

Baidu Releases Wireless Music Box Priced at $16 After releasing several smart devices last year, Baidu continues its forays into hardware industry by releasing a wireless music box to enrich its smart gadget lineup. The first batch of 20,000 sets is on sale at online retailer JD with a price tag of 99 yuan ($16.35) .

Tencent’s 10TB of free cloud storage is hands down the best Welcome to Tencent’s Weiyun. In July 2012, the Chinese web giant released its cloud service with a whopping 10TB of free storage, and it now reports 300 million registered users. This week, Tencent released an update that dramatically improved the interface and features. Only a Chinese version is available for now, but Tencent (HKG:0700) plans to launch an English-language version sometime this year.

China’s Tencent latest online platform to launch fund product | Reuters China’s Tencent Holdings Ltd  quietly rolled out its first financial services product for its mobile messaging app WeChat on Thursday to compete against similar offerings from rivals Alibaba Group Holding Ltd and Baidu Inc.

Tencent teamed up with China’s Huaxia Bank Co to offer the product via its three year-old WeChat messaging app, which boasts 272 million global monthly active users. The service was released on a limited basis and is not available to all users.

Peugeot Board to Discuss Possible Investment – WSJ.com The board of loss-making car maker PSA Peugeot Citroën is set to meet Sunday to discuss a possible investment from the French government and China’s Dongfeng Motor Co., as well as from the Peugeot family, people with direct knowledge of the matter said Friday.

Worker error, corrosion caused Nov. pipeline blast, Sinopec says – UPI.com Chinese energy company Sinopec published a statement on a fatal November oil pipeline explosion, blaming worker error and corrosion for the accident.

“After the leakage, rescue workers used hydraulic hammer[s] to break the concrete trench cover slab, and sparks ignited the vapor in the trench and caused an explosion,” Sinopec said in a statement Monday.

Sinopec said it did not take full responsibility for safety at the site while provincial officials didn’t identify the risks properly.

Sina Weibo Loses More Users to Tencent’s WeChat -Caijing Sina Weibo, the once most popular social networking site in China, is losing large number of users last year to WeChat, an instant messaging app where Chinese people are spending more time every day.

The total number of Weibo users dropped 27.83 million from a year ago to 281 million by the end of 2013, a report released by the China Internet Network Information Center (CNNIC) on Thursday showed.

Challenges ahead for Zhou Jiping at the helm of CNPCWantChinaTimes.com Zhou Jiping has assumed the chairmanship of China National Petroleum Corporation (CNPC), taking on the formidable mission of revitalizing the state enterprise’s operations, in the wake of the 180 billion yuan (US$29.8 billion) market value plunge in 2013.

The company’s share price closed at 7.71 yuan (US$1.27) on Dec. 31, 2013, down 11.68% from 9.04 yuan (US$1.49) a year earlier and a far cry from its peak level of 48.62 yuan (US$8.04) in 2007. In addition to the share-price drop, the company was inflicted by a litany of woes in 2013, including the ousting of many executives, heavy fines for violation of environmental regulations, and an outbreak of security incidents.

Apple’s China Data Seems Suspicious (AAPL, GOOG) Apple (NASDAQ: AAPL) CEO Tim Cook, in a recent interview with The Wall Street Journal, claimed that Apple’s iOS devices account for 57% of all mobile Internet browsing in China.

Cook didn’t give a source for his data — it’s likely that he’s relying on internal Apple metrics of some sort. At any rate, I find that figure is a bit hard to believe. Google‘s (NASDAQ: GOOG) Android has taken China by storm in recent quarters, as Samsung, Xiaomi, and other Android handset makers dominate the Chinese market.

Itemized online transactions reveal China spent massively in 2013|Markets|Business|WantChinaTimes.com Alipay released the 2013 National Shopping Records on Monday, saying the annual average per capita expenditure of its users exceeded 10,000 yuan (US$1,653) for the first time, including consumption in online shopping, money transfers, debt repayments and fee payments.

Ping An Launches Trial of App to Provide Wealth Management Services – The service is called Yi Qianbao, meaning One Wallet. It is open to only Ping An employees and a small group of select customers for now, the insurer said on January 16.

Users can now transfer money between bank accounts and chat with each other. The app has other functions, such as one that allows people to split bills conveniently, the company said.

Gov’t-Backed Consolidation of Hebei Steel Industry Melts Away – In 2010, the government of the central province of Hebei, which produces about one-quarter of the country’s steel, arranged a consolidation of Hebei Iron & Steel, the country’s largest steelmaker, and 12 private firms in the hopes of boosting competitiveness and better regulating the industry.

There are two main reasons for the break-up, said an executive at Hebei Iron & Steel who did not want to be named. Hebei Iron & Steel wants to focus on managing its assets and the private companies no longer want to remain part of the group.

A China Hand Loses Touch – In 2006, familiarity with Chinese business culture apparently helped Palmer cut an iron ore mine deal with CITIC Pacific, a Hong Kong-listed subsidiary of one of the country’s biggest state-run investment conglomerates.

Since then, however, Palmer and CITIC Pacific executives have battled bitterly over the contract they signed for the magnetite ore operation in Western Australia’s Pilbara region. Their legal disputes have grown increasingly complicated, to the point where other Chinese executives have apparently discussed pulling their companies out of Australia.

China-focused Boyu Capital raises $1.5 bln for 2nd buyout fund-sources – Yahoo Finance China-focused private equity firm Boyu Capital, whose partners include former TPG Capital executive Mary Ma and the grandson of former Chinese president Jiang Zemin, has raised $1.5 billion for its second buyout fund, according to people with knowledge of the matter.

Boyu, which was established in 2010, is an investor in e-commerce giant Alibaba Group Holding Ltd and debt manager China Cinda Asset Management Co Ltd. Cinda has risen 48.5 percent since listing in December, while China’s biggest e-commerce company Alibaba is widely expected to launch an IPO this year.

Construction of the Yaoundé-Nsimalen highway takes shape – Business in Cameroon The Cameroon government has just hired the Studi International, Cenor and ECTA BTP technical study firms to oversee the construction of the Yaoundé-Nsimalen highway’s “rural” section that runs some 10.6 km for 2 billion FCfa.

The roadwork initially scheduled for early 2013 will now be completed in thirty-six months by the Chinese company, China Communications construction Company Ltd for 36.7 billion FCfa.

Business Newswires : euronews : the latest international news as video on demand Chinese carmaker BAIC Motor, part-owned by Daimler AG , plans to raise up to $2 billion in a Hong Kong initial public offering, hoisting its target as China’s auto industry purrs to solid growth.

Fueling BAIC Motor’s ambitions, the world’s biggest auto market is moving toward a second year of double-digit sales increases. A year ago, in the early planning stages, BAIC Motor’s target was closer to $1 billion.

China’s Jingdong Said to Plan $2 Billion IPO for Second Half (1) – Businessweek Beijing Jingdong Trading Co., the Chinese online retailer backed by Saudi Prince Alwaleed bin Talal, plans to raise about $2 billion in an initial public offering in the second half, three people with knowledge of the matter said.

The Beijing-based company is working with Bank of America Corp. and UBS AG, said the people, who asked not to be identified because the details are private. Jingdong is leaning toward a U.S. listing, although Hong Kong is another potential IPO destination, they said.

30,000 houses from China, and a big earthquake – In Focus – Jamaica Gleaner – Sunday | January 19, 2014 The Chinese company, Gao Zhen Real Estate and Development Company Ltd, is either stupid or knows something which Chairman Douglas and the NHT do not. They are proposing delivering around 6,000 units per year of low-income, high-quality housing solutions while creating sustainable employment for some 1,500 skilled and unskilled Jamaicans.

Your Oil and Gas News – CNOOC Limited – Liuhua 19-5 gas field starts production Liuhua 19-5 is located in the Pearl River Mouth Basin of the South China Sea with an average water depth of about 185 meters. This project was designed to share the existing producing facility of Panyu 30-1 gas field, and two new producing wells were drilled. Liuhua 19-5 is expected to hit its peak production of 29 million cubic feet per day in year 2014.

See how Noble Group earnings could rebound in 2014 | Singapore Business Review The earnings outlook for Noble Group is looking brighter as prices and crush margins may soon see a resurgence, according to Barclays Research.

Noble Group may see its agricultural business margins recover as well as revive its volume growth, which will help the company post better earnings this year.

ICBC to Sell CNY100bn Certificates of Deposit in 2014 | 4-Traders Industrial and Commercial Bank of China announces that it plans to issue CNY 100 billion certificates of deposit in 2014 after ten Chinese banks completed the first round of such issuances at last year end.

China’s CNPC foreign equity oil, gas output up 12.9% in 2013 – MSN Malaysia News China National Petroleum Corporation (CNPC) recorded a 12.9% increase in its overseas equity oil and gas production last year, state media and the company said today, a growth pace rapidly accelerating from the previous year.

CNPC, parent of PetroChina Co Ltd, said its equity share of oil and gas output outside China in 2013 amounted to 59.2 million tonnes of oil equivalent or about 1.18 million barrels per day (bpd).

Sinopec Engineering Entered Into RMB18.67 Billion Contract Providing One-stop EPC Servi… | 4-Traders SINOPEC Engineering (Group) Co., Ltd. (“SEG” or “the Company”, together with its subsidiaries known as the “Group”) (stock code: 2386.HK) announced that the Company and Zhong Tian He Chuang Energy Corporation Limited today entered into an EPC contract for the development of a new coal chemical project (the “Project”) in Uxin Banner, Ordos, Inner Mongolia.

Posted from Diigo.

China Stock Watch 15/1/14

There may not be any posts tomorrow, I am flying London to Beijing tonight so chances to write will be minimal.

Today was tepid, with the majority moving by less than one percent, either way; a plurality showed a mild loss, while a moderate proportion showed gains. The biggest movers were Sinopec (gaining 1.31% to RMB4.65) and ICBC (down 1.99% to RMB3.45). ICBC is now close to its 52-week low of RMB3.4. With the Big 4 state-owned banks all trading around a P/E of 4.7, the market evidently has no great expectations of future growth (and large fears of thus-far hidden bad debts). They are, it is interesting to note, expanding into overseas markets, opening branches in cities from London to Calgary. One wonders what UK-born Chinese think of Bank of China‘s lumbering rules and regulations, for example. Probably not a lot.

Elsewhere only China Construction Bank moved by 1% (down to RMB3.96, losing 1% exactly).

Mild gains were seen in the auto manufacturing sector, with SAIC Motor (up 0.10% to RMB13.21) and Dongfeng Motor (up 0.34% to HK$11.64) shading up. Domestic sales are certainly zooming (or whatever onomatopoeic term you want to use) ahead but sales to the US remain minimal. This remains the holy grail for Chinese auto manufacturers, but with recalls too frequent and safety standards lagging, this is far out of their reach at the moment.

The Shanghai Composite closed down a smidgeon, to use the technical phrase, at 2,023.35 (down 3.49 points or -0.17%).

Name Price Change Mkt cap 52wk high 52wk low EPS P/E
Sinopec 4.65 +0.06 (1.31%) 542,028.72M 7.03 4.05 CN¥0.62 7.56
PetroChina 7.58 -0.04 (-0.52%) 1.39B 9.5 7.08 CN¥0.68 11.22
ICBC 3.45 -0.07 (-1.99%) 1.21B 4.53 3.4 CN¥0.74 4.69
China Construction Bank 3.96 -0.04 (-1.00%) 990,043.48M 5.19 3.8 CN¥0.85 4.68
Agricultural Bank 2.4 -0.01 (-0.41%) 779,505.91M 3.28 2.38 CN¥0.50 4.78
Bank of China 2.52 +0.01 (0.40%) 703,998.67M 3.26 2.48 CN¥0.53 4.75
China Mobile 77.10* -0.45 (-0.58%) 1.55B 90.45 74.9 HK$8.20 9.4
Noble Group 1.03 0.00 (0.49%) 6,859.03M 1.27 0.785 SGD0.04 28.64
China State Construction 2.98 +0.02 (0.68%) 89,400.00M 4.18 2.9 CN¥0.62 4.84
CNOOC 13.78* -0.06 (-0.43%) 615,241.93M 16.52 12.04 HK$1.89 7.28
China Railway Construction 4.16 -0.01 (-0.24%) 51,324.17M 6.46 3.95 CN¥0.84 4.94
China Railway Group 2.4 0.00 (0.00%) 51,119.76M 3.41 2.3 CN¥0.44 5.47
SAIC Motor 13.21 +0.10 (0.76%) 145,647.74M 19 11.83 CN¥2.05 6.44
China Life Insurance 14.25 +0.01 (0.07%) 402,772.05M 22 12.88 CN¥0.97 14.74
Dongfeng Motor 11.64* +0.04 (0.34%) 100,291.64M 13.28 9.48 HK$1.38 8.45
China Shenhua 14.53 -0.10 (-0.68%) 288,996.18M 25.28 14.4 CN¥2.25 6.45
Ping An Insurance 39.7 -0.29 (-0.73%) 314,270.85M 53.27 31.69 CN¥3.45 11.51
China Telecom 3.71* -0.01 (-0.27%) 300,259.09M 4.42 3.48 HK$0.26 14.36
China Communications Construction 3.84 -0.03 (-0.78%) 62,110.98M 5.79 3.8 CN¥0.81 4.74
Bank of Communications 3.76 -0.03 (-0.79%) 279,227.85M 5.68 3.65 CN¥0.84 4.46

China Business Briefs 15/1/14

ECONOMY

China’s shadow banking loans leap – FT.com Funds from trust companies and other entities in the shadow sector rose to their highest level on record and accounted for more than 30 per cent of aggregate financing, the People’s Bank of China said, up from 23 per cent the previous year.

China’s shadow banking sector has helped fuel an alarming run-up in the debt owed by local governments, which have established off balance sheet vehicles to borrow money for development projects. A recent report by China’s National Audit Office estimated that local government debts had reached almost $3tn by June last year, rising 70 per cent from the previous audit conducted at the end of 2010.

Is China’s Focus on Reform Clouding the Picture on Shadow Banking? – China Real Time Report – WSJ Fealty to the idea of reform made China slow to recognize that shadow lending was turning into what Cornell University economist calls an “untamed beast in China.” With the encouragement of Messrs. Li and Xi, the central bank has been focusing on its top priority: freeing interest rates so they move according to market sentiment, say banking officials, not on curbing shadow banking

So far lending rates have been deregulated. Next up are deposit rates – a much dicier proposition because banks could compete for customers by offering such high interest rates that they can’t cover their costs.

China urges IMF to give more power to emerging markets | Reuters China called on the IMF on Wednesday to stick to a commitment to give emerging markets more power at the world body after U.S. lawmakers set back historic reforms that would give developing countries a greater say.

The remarks by Chinese Foreign Ministry spokesman Hong Lei were an indirect criticism of the United States, the biggest and most powerful IMF member, where lawmakers failed on Monday to agree on key funding measures, though Hong did not mention the United States by name.

China’s overcapacity easing: Deutsche Bank – Business – Chinadaily.com.cn China’s industries beset by overcapacity have entered a more favorable demand-supply balance, Deutsche Bank said on Tuesday.

The bank estimated the cement industry would reduce its added capacity by 35 percent in 2014 while the steel sector could raise its use ratio to 78 percent.

China Credit Growth Slowed in Second Half of 2013 – WSJ.com The People’s Bank of China on Wednesday said new credit issued in the Chinese economy fell by 10.7% to 7.135 trillion yuan (about $1.18 trillion) in the second half of 2013 compared with the year-earlier period. But for all of 2013, overall credit rose 9.7% to 17.29 trillion yuan compared with 2012. The central bank’s data concerns total social financing, a broad measure of credit in the Chinese economy.

BBC Asks The Hard Question: Will Americans Drive Chinese Cars One Day? | China Car Times – China Auto News With the Detroit Auto Show kicking off this week, the UK’s Britain’s BBC has noted that there is no Chinese prsence at the show for the first time since 2006. The BBC delves into the history of Chinese cars, their current status in China, and also the development of Korean auto brands in the US market with their generosity in warranty guarantees and eventual stylish demands, but the question remains: Will American’s one day look to Chinese cars the way they look to Korean cars today?

Microsoft Ventures Accelerator Debuts 4th Batch of 19 Startups in Beijing Microsoft Ventures Accelerator, a program which has accelerated 154 startups in the past two years, just debuted its fourth batch of 19 startups coming from Chinese mainland, Singapore, and Taiwan. These new companies which were handpicked from 420 applicants range from Internet finance, education, smart wearables, etc. This session of the program will last six months from Jan to July this year.

Hong Kong faces threat from Guangzhou port – FT.com Tens of thousands of litres of Admiral Vodka, a Lithuanian brand, lie in large blue vats in a warehouse in the southern Chinese port of Nansha waiting to be bottled for shipment to consumers in southeast Asia.

The 900,000 litres that Nansha – the main port in Guangzhou – handles annually, alongside European wine, Scottish whisky and polyethylene plastic from the United Arab Emirates, are just a few examples of how the lesser known hub has helped Guangzhou gain ground on Hong Kong and become the world’s seventh largest

China’s fuel exports to rise 30% in 2014: CNPC – MarketWatch It is is expected to produce 313 million metric tons of refined-oil products this year which may lead to a surplus of 13.39 million tons, according to CNPC Research Institute of Economics and Technology in an annual report. Exports of refined-oil products grew 17.5% in 2013, according to customs data.

Saudi to keep 2014 China crude contract volumes steady -trade | Reuters China’s top crude supplier Saudi Arabia is set to ship about the same volumes to Chinese buyers in 2014 as it did last year, as the world’s second-largest oil consumer takes more from Iraq and Central Asia, traders said.  Iraq has been offering cheaper prices and better payment terms to Asian buyers this year as it increases its output, while two new refineries in China are designed to run on crude from suppliers in Kazakhstan, Russia and the Middle East.  Since those two refineries will provide the bulk of China’s oil demand growth in 2014, Saudi Arabia has been left with little room to increase its Chinese contract volumes. That means its 20 percent share of the China market will fall.

Shangha Gold Exchange to Launch Yuan-Denominated Gold Contract in New Free-Trade Zone – China Real Time Report – WSJ Gold buyers in the world’s biggest consumer of the precious metal want more of a say in its price, and the government wants to increase the international use of its currency: The Shanghai Gold Exchange is combining these two wants with the upcoming launch of an “international board” for gold trading in Shanghai’s pilot free-trade zone. Now, the question is whether investors demonstrate a need for gold contracts denominated in China’s currency.

China Auto Industry News | Used Car Warranties in China – The Next Big Thing | China Car Times – China Auto News The used car industry has slipped into China – hidden by the desire for new cars being so huge that the glut of near new vehicles must find new homes – and is now presenting itself as a premium choice for many to build upon or integrate their business into.

China Shoe Factory Owners Detained After Deadly Fire – WSJ.com Authorities detained the owners of a shoe factory in the eastern Chinese city of Wenling where a fire on Tuesday killed 16 workers, according to local officials.

COMPANIES

Can Qihoo 360 Close the Revenue Gap With Baidu? Although the company has gained significant traffic share from Baidu, Qihoo still hasn’t ramped up monetization. Analysts at Stifel expect 2014 to be the year Qihoo flips the switch and closes the gap between market share and revenue share, and they upgraded the stock earlier this week.

Apple’s China Mobile deal to extend beyond handsets – The Wall Street Journal – MarketWatch Apple Inc.’s deal with China Mobile Ltd. to sell iPhones won’t be limited to handsets, but will also entail broad cooperation between the two companies, the chairman of the world’s largest carrier said Wednesday.

China Mobile Chairman Xi Guohua said that already multi-millions of Apple’s iPhones have been ordered by its customers, signaling strong demand for the device. Apple’s iPhones will begin selling at China Mobile, the world’s largest carrier by subscribers, starting Friday.

China’s biggest dating site now has 100 million lovelorn users How many of Jiayuan’s 100 million users are active? According to the newest numbers in Jiayuan’s Q3 financial report (the company went public in 2011) that we looked at in November, it has 5.43 million monthly active users. That’s up an almost glacial 3.5 percent from Q3 2012.

Tesla to build a network of car charging stations in China The network will be similar to the one Tesla is building in the US and plans to build in Europe. It will serve car owners traveling between major cities, such as Beijing and Shanghai. Tesla owners will be allowed to use the charging stations free of charge.

Sanyuan set to suffer first annual loss since 2009 – Business – Chinadaily.com.cn Dairy producer Sanyuan Group estimated losses of between 185 million yuan ($30.63 million) to 215 million yuan for 2013, according to a pre-announcement released on Tuesday.

The Beijing-based dairy group attributed the predicted loss to rising material costs, and a fall in investment.

Haier expanding brand presence in US market|Companies|Business|WantChinaTimes.com China’s leading electrical appliance maker Haier Group has been trying to deepen its penetration into the US market because its brand name is not as well-known as its global counterparts in the country, Tencent’s financial news portal finance.qq.com reports.

In its latest move, Haier was one of six global television suppliers to unveil their line of “flexible” televisions at this year’s Consumer Electronics Show (CES) in Las Vegas.

Breaking New Ground – Liu Chuanzhi, co-founded what is now Legend Holdings – owner of Lenovo, the world’s largest PC maker and seller – has dedicated his life to exploring new ground and pushing boundaries.

Caixin editor-in-chief Hu Shuli recently interviewed Liu. Excerpts from their conversation follow.

Insurance Group Bets Big on Banking and Real Estate – and Pushing Regulatory Limits – Eighteen months after it was established, at the end of 2012, AIG already boasted assets of 510 billion yuan. The figure surpassed 600 billion yuan in 2013, a source familiar with the company said.

Much of the growth apparently owes to the company’s 35 percent holding in Chengdu Rural and Commercial Bank (CDRCB), which it acquired for 5.6 billion yuan in mid-2011. In less than three years, the bank’s assets have grown from slightly more than 100 billion yuan to more than 300 billion yuan.

Apple-China Mobile deal a ‘watershed’ moment: Tim Cook A deal to sell iPhones on China Mobile‘s vast network is a “watershed” moment, Apple CEO Tim Cook told CNBC on Wednesday.

“This is a watershed day,” said Cook, who is in Beijing ahead of Friday’s launch. He referred to China Mobile as a great cellphone firm with a “very fast network.”

Dispute over foreign bank assets sent to New York’s highest court – Yahoo Finance In the second case, privately held Tire Engineering and Distribution of Sarasota, Florida, has been trying to get the Bank of China to turn over money the tire maker is owed after winning judgments against China-based competitors.

The bank has refused, saying Chinese banking laws prohibit it from complying with U.S. court orders to freeze customer bank accounts.

Richard Li’s PCCW Said To Sell Beijing Property For $900M – Forbes A real estate firm controlled by Richard Li, the billionaire son of Asia’s richest man, announced this week that it is in advanced talks to sell a Beijing office building for a price that is said to be in the range of $900 million.

BoCom Financial Leasing to Issue CNY200mn Financial Bonds – Financial and Business News – MENAFN Bank of Communications Financial Leasing intended to issue CNY 200 million three-year financial bonds on January 16, the first term in 2014.

The bonds have fixed rate, the interests will be paid based on an annual basis and the coupon rate is determined by the bid-inviting results. Bank of Communications will act as the lead underwriter of this issuance and Agricultural Bank of China, CITIC Securities and UBS Securities will serve as joint lead underwriters.

ZPMC mulling German shipyard deal – Headlines, features, photo and videos from ecns.cn|china|news|chinanews|ecns|cns Shanghai Zhenhua Heavy Industries Co Ltd, the world’s largest maker of cranes and large steel structures and known as ZPMC, is negotiating the acquisition of a German shipyard – part of its drive to diversify and expand its maritime engineering business.

ZPMC aims to buy JJ Sietas Schiffswerft, a Hamburg-based shipyard with a history of more than 300 years, Huang Qingfeng, vice-president of ZPMC, told China Daily. He visited the shipyard and talked with local politicians and business executives in October.

China’s Huawei profit jumps on smartphones, U.S. asks Hua-who? | Reuters China’s Huawei Technologies Co Ltd, known more for its telecom networking prowess than its razor-thin smartphones, is starting to see success in its consumer electronics business, though the key U.S. market remains elusive.

Huawei became the world’s third-biggest smartphone manufacturer last year, mainly due to a fast-growing Chinese market. That is helping to cushion the impact of a global slowdown in network equipment spending, which caused the company to miss its revenue growth target last year.

Investor’s ALert – Baidu Inc (ADR) (NASDAQ:BIDU), China Telecom Corporation (NYSE:CHA), China Mobile (NYSE:CHL), Qihoo 360 Technology (NYSE:QIHU) | Gaining Green Companies looking to do businesses in China often stumble because they don’t understand the local market, said Baidu Inc (ADR) (NASDAQ:BIDU) CEO Robin Li, operator of China’s largest search engine. Baidu Inc (ADR) (NASDAQ:BIDU) stock opened at $178.90 in last session, and closed at $179.66, while the day range of stock is $176.61 – $180.22. The stock showed a positive weekly performance of 2.50%.

Ping An 2013 gross premium totals $44.36 billion | Business Insurance Ping An Insurance (Group) Co. of China Ltd. posted a total gross premium of 268.7 billion Chinese yuan ($44.36 billion) during 2013, an increase of 15.03% year on year, Chinese news website Hexun.com reports.

Premiums posted by the insurer’s property/casualty arm Ping An Property & Casualty Co. Ltd. totaled CNY 115 billion ($19 billion).

Yanzhou Coal Buy at Chinavestor We recommend a BUY for Yanzhou Coal Mining Co. Ltd. (NYSE:YZC). With an average revenue and net income growth rate of 33% and 56%, the company has growth potential very far into the future. It is clear that the company is very generous in using its resources to invest in new and promising coal projects.

A.M. Best Assigns Ratings to China Overseas Insurance Limited – MarketWatch Best Asia-Pacific Limited  has assigned a financial strength   rating of B++ (Good) and an issuer credit rating of “bbb” to China   Overseas Insurance  Limited  (COIL) (Hong Kong). The outlook assigned to both ratings is stable.

The ratings reflect COIL’s improvement in loss experience, low underwriting expenses and the strong support it receives from its parent company, China State Construction International Holdings Limited (CSCI), one of the largest construction companies in Hong Kong and ultimately owned by China State Construction Engineering Corporation  (CSCEC), a Chinese state-owned construction company.

Petrochina Buy at Chinavestor Based on gas pricing reforms and higher oil prices, we expect Petrochina’s business prospects to improve over the forthcoming quarters. Given Petrochina’s share of the natural gas market, they are likely to overturn downstream losses incurred in 2012 and improve their share price significantly in 2013.

NewsWires : euronews : the latest international news as video on demand A former senior executive at China Mobile Ltd’s state-owned parent has been expelled from the Communist Party amid a company-wide probe into suspected corruption.

Xu Long, who was general manager of China Mobile Communications Corp’s Guangdong office, was expelled from the party due to “severe discipline violations,” according to a statement posted on Wednesday on the website of Guangdong province’s disciplinary committee.

China CNR Said to Pick Banks for $1.5 Billion Hong Kong Offering – Bloomberg China CNR Corp. (601299), the nation’s second-biggest trainmaker, picked China International Capital Corp., Macquarie Group Ltd. and UBS AG (UBSN) to work on a first-time share sale in Hong Kong, said three people with knowledge of the matter.

Shanghai-listed China CNR plans to raise as much as $1.5 billion in the offering this year, said the people, who asked not to be identified because the information is private. The company has yet to file an application to the Hong Kong stock exchange, they said.

Singapore Bank Expands China Presence; OCBC Buys Ningbo Bank Shares – WSJ.com A week after announcing that it was in exclusive negotiations to buy Hong Kong’s Wing Hang Bank Ltd., OCBC said Tuesday that it has agreed to buy up to 207.5 million new ordinary shares in Bank of Ningbo, which is undertaking a private placement of shares to current substantial shareholders. The 383 million-Singapore-dollar (US$303 million) investment will raise the Singaporean bank’s stake in the Chinese lender to 20% from 15.35%.

1.4M Apple Inc. (AAPL) iPhone 5S Shipped For China Mobile’s Launch Apple Inc. (NASDAQ:AAPL) is ready to kick off its China Mobile launch with a bang. A new report surfaced that Foxconn shipped about 1.4 million iPhone 5S units for the launch at China Mobile Ltd. (NYSE:CHL) (HKG:0941).

Agricultural Bank of China goes live with Avaloq platform in Hong Kong The Avaloq group, an international leader in integrated and comprehensive banking solutions, has successfully put the Avaloq Banking Suite into operation at Agricultural Bank of China’s Hong Kong branch.

Chinese Real Estate Developer Dalian Wanda Group Still Has Plenty of Cash to Burn – China Real Time Report – WSJ Wanda, which is one of a handful of large but unlisted property developers in China, still has plenty of cash to burn: The company said over the weekend at its annual meeting that its revenue jumped 31% on-year to hit 186.6 billion yuan ($30.9 billion) in 2013. That marked the eighth consecutive year its revenue rose by more than 30%, the company said in a statement on its website that 2013.

To date, Wanda said it has 380 billion yuan worth of assets world-wide and has opened 85 malls and 54 hotels across China.

Posted from Diigo.