Dongfeng Motor

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.

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China Business Briefs 4/2/14

Economy   Finance   Auto   Infrastructure   Energy   Telecoms   Property   Travel   Tech   Agriculture

Economy

Chinese factories act to keep staff in saddle in Year of the Horse – FT.com Many factories across the Pearl River Delta, the manufacturing workshop of the world in Guangdong, are trying to find ways to keep workers. This has become more important as demographic changes – particularly the one-child policy and a government push to create jobs inland – have made staffing harder.

But the world’s factories cannot simply rely on outings, returning bonuses and lucky draws. What workers really want is better pay and benefits, says Geoff Crothall of China Labour Bulletin. While wages in Guangdong have posted double-digit rises in recent years, the minimum wage in Shenzhen – the highest in China – is still only about $300.

Why Did One Of The World’s Largest Generic Drug Makers Exit China? – Forbes The broader questions that Actavis’ CEO pointed towards as a rationale for the company’s exit from China are not wrong.  Surveys conducted by various American and European business groups in China all point towards worrying trends which suggest China is becoming fundamentally less hospitable to foreigners than in years past.  Favoritism towards domestic companies by government purchasing is nothing unique to China, unless you consider that China’s 144,500 State Owned Enterprises (SOE) represent 35% of the country’s industrial revenue (a percentage many economists believe greatly under-represents the economic impact of SOEs). Add to the SOE’s position the role of the Chinese government as purchaser of great amounts of pharmaceuticals and medical devices, and you can see what the comments of Actavis’ CEO ring true to many.

Bilateral China / US Investment ‐ Is 2014 the Year? | The National Law Review Times are changing, however. There has been a rapid increase in the amount and rate of investment by Chinese companies in the United States in the last three years. At the end of the second quarter of 2013, the United States with cumulative investment from China of $57.8 billion ranked only behind Australia with $59.2 billion.2 With the September 2013 closing of the Shuanghui International acquisition of pork producer, Smithfield, for $7.1 billion and several large real estate investments, the United States took the lead as the preferred destination for China investment.3 Included within the United States numbers during the first nine months of the year is $12.2 billion invested in 55 Greenfield projects and acquisitions in the United States.4

The Great Debtscape In short, over the past five years China has rectified one of its famous “imbalances” — excessive reliance on external demand — and made a good start on fixing the other (excessive reliance on investment spending). But a growing chorus of observers views China’s economic future with trepidation. In mid-January, Ray Dalio, who runs Bridgewater Associates, the world’s biggest hedge fund, declared that China was a bubble. And earlier that month, Patrick Chovanec, a well-known China bear, warned that “China’s leaders are riding a runaway train that they don’t quite know how to stop.”

China Demand Still Buoys Global Producers – WSJ.com From southern Africa to southern Asia, investors have soured on many commodity-rich emerging markets boosted in the past by China’s ravenous appetite for what is grown from the soil or extracted from the mines. But so far, a slowing China hasn’t hurt its suppliers much.

That is because massive Chinese demand hasn’t significantly weakened and many emerging economies now have their own consumers to help pick up any slack. The global market jitters, economists and executives say, reflect less an actual falloff in China’s appetite and more a bet that China’s growth will continue to taper off.

Finance

Judge’s Ruling On Accounting Firms In China Touches on Hong Kong Units – WSJ.com But in a potential broadening of the issue at hand, the ruling by SEC Administrative Law Judge Cameron Elliot also spotlighted another practice of note in the auditing of Chinese companies that trade on U.S. markets. In some instances, a Hong Kong unit of a Big Four auditor acts as the company’s official auditor, but the bulk of the audit work is outsourced to the same firm’s affiliate in mainland China.

That could raise issues under U.S. auditing rules, which suggest that an audit firm should do a “material” amount of the work to be entitled to serve as a company’s principal auditor and sign the audit opinion.

Guess which bank has the most valuable brand While the value of bank brands in Russia, India and Brazil fell, China continued to perform strongly. The value of the lenders’ brands there rose by $19 billion during the year, and there are now three Chinese banks ranked in the top 10 — Industrial and Commercial Bank of China (ICBC), China Construction Bank and the Agricultural Bank of China.

Asia Markets live blog: Shares falling on U.S. cue – The Tell – MarketWatch China might soon loosen its tight grip on its banking sector. The official Xinhua News Agency reported Monday that it’s an inevitable choice for China’s financial reform to allow banks to fail.

It quoted Yan Qingmin, vice chairman of the China Banking Regulatory Commission, as saying that the government would let market force play a larger role in the banking system and allow commercial banks to “go out of market” if they turn insolvent.

This Chinese online retailer’s IPO documents could be a bit too candid – Quartz The prospectus for Chinese online retailer JD.com’s planned $1.5 billion US public offering, filed recently with the Securities and Exchange Commission, offers up a warts-and-all look at the risks of investing in a Chinese internet company. And there are a lot of warts—over 40 pages worth—listed in the “risk factors” section, including:

We don’t really know what we’re doing in some businesses. The company recently expanded into internet finance, providing supply-chain financing to supplier and loans to customers. “We have limited experience in operating an internet finance business,” the prospectus admits.

SEC Ruling May Be a Death Knell for Chinese Stocks Woes for Chinese tech stocks are significant. The argument goes that as long as Chinese authorities outright ban Chinese companies from submitting required information to the SEC, such audits are not acceptable. So far Chinese companies have circumvented such requirement by submitting audits conducted by the big four auditor firms’ Chinese affiliates. But again, the SEC said those audits done in China, even by the big four auditors’ affiliates, are not good.

And this raises an interesting issue. Major Chinese companies, as well as smaller ones, are in jeopardy meeting the deadline to submit quarterly and annual reports on time.

SEC, Deloitte, Longtop case resolution raises hopes for solving US audit ban – Governance – The Corporate Treasurer The SEC has dropped its case against Deloitte’s China arm and Longtop Financial Technologies, pointing the way through a broader audit ban crisis.

US houses to boost funds on offer in Hong Kong to tap opportunities in China | South China Morning Post Two US fund houses, Principal Global Investors and Franklin Templeton, have unveiled plans to add to their Hong Kong-domiciled offerings in order to tap into mainland China opportunities under a soon-to-be signed mutual recognition scheme.

Bitcoin Exchange BTC China Resumes RMB-Based Deposits | China Briefing News Bobby Lee, CEO of the Bitcoin exchange BTC China, has announced that customers are once again able to purchase Bitcoin by depositing RMB directly into the company’s corporate bank account.

The decision by BTC China comes after the exchange stopped accepting RMB deposits in response to a Dec. 5 memo from the People’s Bank of China warning national financial institutions not to trade in Bitcoin.

Auto

China’s carmakers have yet to make their marque – FT.com Dongfeng, one of China’s “Big Three” car groups alongside Shanghai Auto and First Auto Works, has more joint ventures with international car groups than any of its domestic peers. Including Korean partner Hyundai, it currently operates four joint ventures and signed a fifth partnership agreement in December with Renault. The Wuhan-based company is also poised to take a 14 per cent stake in Peugeot as part of €3bn capital raising.

Dongfeng’s four joint ventures account for more than 90 per cent of the group’s annual passenger car sales, dwarfing those of its own Aeolus brand. It is an imbalance shared by all of China’s state-owned car companies and helps explain why the country that boasts the world’s biggest car market has, unlike Japan and Korea before it, thus far failed to produce a national champion of its own that can compete globally.

Beijing licence plates fetch twice the price of the car on black market | South China Morning Post Beijing’s clampdown on new car registrations is creating a scramble for licence plates and fuelling a boom on the black market, where prices have soared as high as US$33,000, almost double the price of China’s best-selling car, the Ford Focus.

This year, Beijing will cut the allocation of new number plates by 40 per cent to 150,000, meaning only one in 150 will get a plate.

As China’s Auto Sales Surge, Lunar New Year Travelers Opt for Road Trips – WSJ.com A long car ride home can sound appealing to the alternative. China’s top economic planning body estimates that during the 40-day period around the holiday Chinese will take 3.62 billion rides on trains, planes, buses and ships. China’s rails are carrying an average of 6.8 million passengers each day, according to transport ministry officials.

Many hitting the road are carpoolers. According to 58.com Inc., a U.S.-listed Chinese online marketplace, the number of posters looking for or offering Lunar New Year rides is four times the amount a year ago.

Infrastructure

Giant pipeline brings unaffordable water to China’s north|Policy|Business|WantChinaTimes.com The eastern route of China’s South-North Water Diversion project officially began drawing and diverting water last November and December from the Yangtze River to 71 counties, cities and areas in Jiangsu, Shandong and Anhui provinces. The much-needed water comes, however, at a price many local officials find difficult to swallow.

Even though water prices have yet to be finalized, the preliminary estimate for the high fees has drawn negative comments from officials in Jiangsu and Shandong.

Energy

China imports more natural gas in 2013 – BUSINESS – Globaltimes.cn China saw its aggregate volume of natural gas imported from overseas jump 25 percent year on year in 2013, approaching one-third of its apparent consumption, a new report has showed.

The country imported 53 billion cubic meters of natural gas last year, 31.6 percent of its domestic gas output plus imported volume, according to a report released by an economic and technological academy under China National Petroleum Corporation, the country’s state-owned oil giant.

China’s Xinjiang sizzles with green energy – Xinhua | English.news.cn Xinjiang Uygur Autonomous Region, a major power supplier in China, has accelerated the development of green energy as it recorded higher installed capacity in 2013.

Statistics with the Xinjiang branch of the State Grid Corporation of China (SGCC) showed that by 2013, the combined installed capacity of wind power, hydropower and solar power stations exceeded 1,368 million KW, accounting for about one third of all installed capacity in Xinjiang.

Singapore Refining Co to invest over $500 mln in gasoline, power units – Yahoo Finance Singapore Refining Co (SRC) said on Tuesday it will invest more than $500 million to build gasoline and power generation units at its refinery on Jurong Island.

SRC operates a 290,000 barrels per day refinery and it is a 50:50 joint venture between Chevron Corp and Singapore Petroleum Co, a wholly owned subsidiary of PetroChina International Co.

Why Is China Buying So Much Methanol? In March 2013, IHS Chemical found that the demand for methanol was growing faster in China than any other part of the world — the country increased consumption 23% from 2010 to 2012 and is expected to consume half the world’s production of methanol this year, which is about 32 million tons. By contrast, the United States currently consumes about 6.5 million tons. IHS Chemical expects the demand for methanol in China alone to triple by 2022.

So, what’s fueling China’s interest in methanol?

Telecoms

4.8 million WeChat Users Participated in the Lucky Money Game on Chinese New Year Eve 4.82 million WeChat users took part in the Lucky Money game on 2014 Chinese New Year eve, as disclosed by WeChat’s parent company Tencent. Launched several days before, the feature that adds gamification elements to giving and receiving digital Lucky Money became an immediate hit among WeChat users. Kingsoft even developed a plugin that automatically harvests lucky money for WeChat users.

Property

Tight availability of funds drives Chinese developers abroad to raise cash | South China Morning Post Driven by concern about the availability of funds, more than a dozen mainland developers, including China Overseas Land & Investment, Dalian Wanda, Guangzhou R&F and Greenland, raised more than 50 billion yuan (HK$63.5 billion) offshore in the first month of the year.

Home-buy hopefuls run into banks feeling the pinch – The Standard State-owned banks including Industrial and Commercial Bank of China (1398), China Construction Bank (0939), Agricultural Bank of China (1288), and Bank of China (3988) are reluctant to provide discounts to boost mortgage businesses.

China Guangfa Bank, Ping An Bank and China Minsheng Banking (1988) are tightening as well.

Travel

Ireland goes the extra mile for Chinese visitors | South China Morning Post UnionPay card machines aren’t the only reason mainland Chinese tourist flock to Dublin. Firstly, Ireland eased its visa restrictions last year, after the UK tightened theirs, chuckle, chuckle. The RMB has appreciated 40 per cent in recent years over the euro, which means China’s new travelling middle class gets far more bang for their buck in euroland. Ireland’s high sales taxes and VAT can be claimed back at the airport, reducing real prices even further. You also get the latest lines of European branded products, so they can stock up on their favourite Hermes, Chanel, Louis Vuitton, Burberry and Ireland’s own Waterford Crystal, also popular with Chinese customers.

Tech

Lenovo Slumps on Analyst Downgrades After Buying Spree – Bloomberg Lenovo Group Ltd. (992), which announced $5 billion of deals last month to bolster its server and smartphone businesses, plunged the most in five years in Hong Kong after the stock was downgraded by at least five brokerages.

Lenovo fell 16 percent to HK$8.41 at the close of trade, cutting $2.2 billion from its market value in the biggest decline since January 2009. The world’s biggest maker of personal computers was cut at UBS AG (UBSN), Morgan Stanley (MS), Jefferies Group LLC, JI-Asia Research Ltd. and Kim Eng Securities Ltd., according to data compiled by Bloomberg.

Lenovo said to turn to security insiders for deal approval – DailyHerald.com Lenovo Group Ltd. has turned to national security insiders to win U.S. approval to buy Google Inc.’s Motorola Mobility phone unit, which is based in Libertyville, and International Business Machines Corp.’s low-end server business, people familiar with the two deals said.

The world’s largest personal-computer maker hired attorneys at Steptoe & Johnson LLP who held positions at the Central Intelligence Agency and the Homeland Security Department to guide its Motorola review through a key interagency panel, one of the people said. Covington & Burling LLP partners David Fagan and Mark Plotkin are representing Lenovo in the IBM server deal, according to another person familiar with the matter.

VyprVPN enters Great Firewall-evading VPN market Now a new contender has entered the fray, boasting greater security and privacy than all its competitors. VyprVPN uses a new proprietary protocol called Chameleon, developed by Switzerland-based Golden Frog. Chameleon “scrambles OpenVPN packet metadata to ensure it’s not recognizable via deep packet inspection” and is specifically “designed to mask Internet traffic to defeat VPN blocking in restrictive environments like China.”

Agriculture

China cancels deal to buy Thai rice due to graft probe: Thai minister | Reuters China has canceled a deal to buy 1.2 million tonnes of Thai rice after Thailand’s anti-corruption agency launched investigations into a state rice-buying scheme, the Thai commerce minister said on Tuesday.

“China lacks confidence to do business with us after the National Anti-Corruption Commission started investigations into the transparency of rice deals between Thailand and China,” Niwatthamrong Bunsongphaisan told reporters.

Posted from Diigo.

China Stock Watch 24/1/14

Stock performance was mixed today, after the sharp ups and downs of the past week. Ten rose on the day, with Dongfeng Motor easily the best of them, up 2.98% to HK$11.74, on news of approval of a joint venture with Volvo; none of the other nine put on more than 1%, though SAIC Motor came closest, appreciating by 0.92% to RMB13.92.

Declines were led by Noble Group, down 2.55% to SG$0.955, helping make it the second worst performer over the week (see below), and Ping An Insurance, down 1.12% to RMB40.54.

The stories of the tax haven accounts does not seem to have particularly disturbed Chinese stocks, despite revelations concerning Sinopec and PetroChina, for example. The dump of 37,000 documents pertaining to offshore accounts from China, Hong Kong and Taiwan will take time to comb through, and one should be prepared from more stories blowing up over the coming weeks (if the Guardian and co are doing their job properly). Yet I somehow wonder how much of a problem this will be for the biggest Chinese stocks. If their biggest shareholders are institutional investors, such as state pension funds etc, then the expectation of a “shareholder revolt” can be forgotten. It would simply be too embarrassing for the party. This is not to say that executives won’t be punished, but a full-frontal assault bringing up awkward details is not the party’s style.

The Shanghai Composite closed at 2,054.39, gaining 12.21 points (+0.60%).

Name Price Change Mkt cap 52wk high 52wk low EPS P/E
Sinopec 4.6 +0.02 (0.44%) 536,200.43M 7.03 4.05 CN¥0.62 7.48
PetroChina 7.62 0.00 (0.00%) 1.39B 9.5 7.08 CN¥0.68 11.28
ICBC 3.4 0.00 (0.00%) 1.19B 4.53 3.38 CN¥0.74 4.62
China Construction Bank 3.92 0.00 (0.00%) 980,043.05M 5.19 0 CN¥0.85 4.63
Agricultural Bank 2.37 +0.01 (0.42%) 769,762.02M 3.28 2.35 CN¥0.50 4.72
Bank of China 2.5 +0.02 (0.81%) 698,411.38M 3.26 2.45 CN¥0.53 4.71
China Mobile 76.40* -0.60 (-0.78%) 1.54B 89.2 74.9 HK$8.20 9.31
Noble Group 0.955 -0.025 (-2.55%) 6,328.86M 1.27 0.785 SGD0.04 26.13
China State Construction 3.04 +0.02 (0.66%) 91,200.00M 4.18 2.9 CN¥0.62 4.94
CNOOC 12.72* -0.02 (-0.16%) 567,915.65M 16.52 12.04 HK$1.89 6.71
China Railway Construction 4.24 +0.01 (0.24%) 52,311.17M 6.25 3.95 CN¥0.84 5.04
China Railway Group 2.46 +0.01 (0.41%) 52,397.75M 3.36 2.3 CN¥0.44 5.61
SAIC Motor 13.19 +0.12 (0.92%) 145,427.22M 19 11.83 CN¥2.05 6.43
China Life Insurance 14.36 -0.15 (-1.03%) 405,881.15M 22 12.88 CN¥0.97 14.86
Dongfeng Motor 11.74* +0.34 (2.98%) 101,153.25M 13.28 9.48 HK$1.38 8.52
China Shenhua 14.37 +0.12 (0.84%) 285,813.84M 25.28 13.97 CN¥2.25 6.38
Ping An Insurance 40.54 -0.46 (-1.12%) 320,920.41M 53.27 31.69 CN¥3.45 11.75
China Telecom 3.68* +0.02 (0.55%) 297,831.12M 4.4 3.48 HK$0.26 14.23
China Communications Construction 3.86 0.00 (0.00%) 62,434.48M 5.79 3.74 CN¥0.81 4.77
Bank of Communications 3.74 0.00 (0.00%) 277,742.60M 5.68 3.65 CN¥0.84 4.44

Week’s Movers

For a change, more stocks rose over the week (twelve) than fell (five). Transport and infrastructure stocks did best – with SAIC Motor gaining 5.69%, China Railway Group 3.36% and China Railway Construction 3.16%, while China State Construction put on 2.36%. As we’ve consistently seen in the business briefs, Chinese companies are busy constructing roads, harbours and rail throughout Africa, central Asia and increasingly in Europe, too.

CNOOC led the fallers, precipitated by missing annual production targets, and for the third year in a row, losing 8.88% over the week.

risers

fallers

China Business Briefs 23/1/14

ECONOMY

Markit Economics – Press releases HSBC China Flash Manufacturing PMI (PDF)

China factory data show contraction; stocks fall – MarketWatch China’s manufacturing sector is showing an unexpected contraction in January, albeit a mild one, according to initial results from HSBC’s monthly survey released Thursday. The “flash” version of the HSBC/Markit China manufacturing Purchasing Managers’ Index fell to a six-month low of 49.6, down from a final December reading of 50.5, with the result sending Chinese stocks and the Australian dollar all lower. Economists had expected the flash PMI — which usually includes 85%-90% of total responses used for the final report — to print at 50.3, according to a Bloomberg News forecast. Results below the 50 level indicate contraction, while those above 50 suggest growth.

China PMI Signals First Contraction In 6 Months; Drops Most Since May | Zero Hedge With every component of HSBC’s China Manufacturing PMI either dropping or showong slower growth, it is hardly a surprise that the much-watched survey of economic strength dipped into contractionary territory. At 49.6 this is the lowest since July 2013 and dropped month-over-month by the most since May 2013. HSBC argues this is “domestic demand cooling” but new export orders tumbled at an accelerating pace as did employment. Of course, the silver lining is that because the prices components did not show acceleration then the PBOC has room to ‘stimulate’ to avoid repeating growth deceleration but that appears – despite today’s further CNY 120 billion reverse repo – to not be the plan for the PBOC for now (given the 20-plus percent YoY gains in house prices).

Judge Suspends Chinese Units of Big Four Auditors – WSJ.com The Chinese units of the Big Four accounting firms should be suspended from auditing U.S.-traded companies for six months, a judge ruled, a move that could complicate the audits of dozens of Chinese companies and some U.S.-based multinationals.

The audit firms, plus a fifth China-based accounting firm, broke U.S. law when they refused to turn over documents about some of their clients to the Securities and Exchange Commission to aid the commission in investigating those U.S.-traded Chinese companies for possible fraud, ruled Cameron Elliot, an SEC administrative law judge.

China’s Real-Estate Investment Boom Set to Continue in 2014 – China Real Time Report – WSJ Chinese outbound commercial real-estate investment is estimated to exceed $10 billion this year, after it doubled to $7.6 billion last year from 2012’s $3.3 billion, according to data from Jones Lang LaSalle. Rival brokerage Colliers International is more bullish, saying it expects Chinese investors to spend at least twice as much on overseas property assets this year as last year.

Among some of last year’s higher-profile investments were Shanghai’s Fosun International purchase of the Chase Manhattan Plaza in New York for $725 million in October and state-owned conglomerate Greenland Holding Group’s 70% stake in Brooklyn’s $5 billion Atlantic Yards project. Greeland also paid $1 billion for a piece of land in Los Angeles on which it plans to build a hotel, office units, serviced residences and high-end homes.

President Xi Jinping’s Crackdown on Official Gift-Giving Is Transforming How Business Is Done in China – WSJ.com An unexpected peak-season rut for China’s calendar business illustrates how broadly a corruption crackdown has challenged business as usual. Private clubs are shutting down following official criticism they are extravagant; officials attend meetings without watches and belts to avoid suspicion they have ill-gotten wealth; military officers, once able to ride high in imported SUVs, were recently told to drive only domestically made vehicles.

The campaign may be beginning to drag on China’s economy by reducing demand, economists said after a report this week showed last year’s gross domestic product growth held steady at 7.7%.

China Bailout Costs Jump Seen in Policy Bank Yield Surge – Bloomberg The average yield premium over the sovereign for five-year debt sold by China Development Bank, Export-Import Bank of China and Agricultural Development Bank of China widened 90 basis points from an August low to 142 basis points on Jan. 17, the highest in Chinabond data going back to 2007. The gap was 138 basis points yesterday. Yields have climbed on safer assets, including CDB’s, as delays in restructuring bad loans are stretching the central government’s ability to guarantee debt, Bank of America Merrill Lynch wrote in a report this week.

China creates teams to spearhead economic change, with top leaders in charge | Reuters China has created six teams to supervise its boldest economic and social changes in 30 years, with President Xi Jinping and Premier Li Keqiang personally taking charge, state media said on Wednesday.

Xi has been appointed the head of the central leading group for comprehensive reforms that will oversee the six teams, with Li as his deputy, state radio said after the group held its first-ever meeting.

Gazprom targets May for China gas deal, angles for pre-payments Gazprom on Wednesday proposed signing a major China gas export deal in May, as industry sources indicated that the Russian gas giant may offer a lower price in return for billions of dollars in upfront payments.

Industry sources say that Gazprom is hoping for $10-$11 per mmBtu from China. China is believed to pay $9 per mmBtu to Turkmenistan, the former Soviet state in Central Asia that beat Gazprom to the Chinese market.

China Auto Industry News | China to Account for 30% of Global Auto Sales by 2020 | China Car Times – China Auto News A recent study from KPMG indicates that the Chinese market will continue to expand considerably with it expected to account for 30% of global automotive sales by 2020 alone.

The study, carried out by KPMG as part of its fifteenth annual Global Automotive Executive Survey highlights many key points in the development of the Chinese auto industry which will coincide with the development of other BRIC markets which KMPG believes will benefit the top ten OEM manufacturers in China and to a lesser extent to the following ten.

Let the WMP house of cards fall apart next week | China Economic Review It’s time to let China’s wealth management house of cards fall apart. A potential US$500 million default at China Credit Trust (CCT) next week is the perfect place to start.

The 345 investors that bought CCT trust products through Industrial and Commercial Bank of China (ICBC) in 2011 aren’t sitting on buried treasure. Rather, the underlying assets for those products are a few dilapidated coal mines in Shanxi province. The price of coal has dropped 40% since a group of hungry investors poured their cash into the trusts, a form of wealth management product (WMP). The plant and equipment at the mine have also no doubt fallen in value.

China must spend $330 billion more to do fair share on climate – report | Reuters China must increase spending on emission cuts and clean technologies by 2 trillion yuan ($330 billion) to do its fair share to halt climate change, a report by Beijing’s Central University of Finance and Economics said.

China, the world’s biggest-emitting nation, has already pledged to spend 520 billion yuan to help prevent global temperatures from rising more than 2C, according to Chen Bo, co-author of the report.

Migrants find a home for capital in pursuit of foreign residence[1]- Chinadaily.com.cn Migration for investment in overseas real estate markets has become a top choice for Chinese applicants, according to a report on China’s migration status released on Wednesday.

The Annual Report on Chinese International Migration 2014 shows that a growing number of Chinese investors are rushing to go abroad in order to buy properties and establish permanent residence in places like Europe and North America.

Shadow Banking Again in the Limelight-Caijing The General Office of the State Council recently introduced a new set of  guidelines – known as Document No. 107 – to curb the country’s massive shadow  banking system. The guidelines are widely regarded as China’s highest level  document aimed at regulating risky off-balance-sheet lending.

Document No. 107 officially defines the shadow banking system in China for  the first time. It also clarifies responsibilities of the country’s central bank  and the separate regulatory agencies for the banking, securities and insurance  sectors when it comes to supervising shadow-banking activities, and pledges to  establish a regulatory framework featuring both central- and local-level  regulation.

China abandons its pursuit of growth at all costs – FT.com Implicit in this change of direction is a trade-off between growth and economic efficiency. The government is expecting growth of about 7.5 per cent in 2014. In previous years it has made its forecast deliberately low and then come in triumphantly above expectations. This year, if anything, it could go the other way. By the end of 2014 growth may be slowing towards 6 per cent, even if the result for the year as a whole is still likely to be 7 per cent or above.

China Reforms Hydro-Electricity Prices – WSJ.com China on Wednesday said it would reform the price that power-grid operators pay to hydropower plants for electricity to encourage investment in the industry.

Chinese officials admitted last month that the country is struggling to meet its 2015 targets for clean-energy production. China wants non-fossil fuels to make up 11.4% of its energy mix by 2015, but consumption reached only 9.4% in 2012.

For Liquor Makers, Cheer Dries Up in China – WSJ.com The crackdown on conspicuous consumption—part of an anticorruption drive led by President Xi Jinping—has hit spirits companies harder than most. Profit warnings, executive departures and restructuring drives have all been linked to the ban.

China is the world’s biggest alcohol market, making up 38% of global spirits consumption, according to the International Wine & Spirit Research industry body. The country is especially important for cognac makers: Rémy Cointreau derives about 40% of its total profit from cognac sales in China, while sales of the French liquor account for 15% of  Pernod Ricard S’s earnings.

China listings no lure to investors after closure of 3.6m trading accounts | South China Morning Post The number of mainland stock accounts containing funds shrank to a three-year low of 53.7 million on Friday, a drop of 3.6 million from the June 2011 peak.

The retreat, spurred by slowing economic growth and a shift towards higher-yielding wealth management products, is fuelling losses in the Shanghai Composite Index that erased US$571 billion of market value in the past four years and sent the gauge to a five-month low on Monday.

12 new free-trade zones to follow in Shanghai’s footsteps | South China Morning Post The 12 would include Guangdong, which has been lobbying the central government by highlighting its economic ties with Hong Kong, and Tianjin , Xinhua cited an official source as telling its subsidiary the Economic Information Daily. It did not name the remaining 10.

He said other candidates included Zhejiang’s Zhoushan , which consists of several islands with a focus on the shipping business; Qingdao , an important port city; Chengdu , a southwestern business hub; Wuhan , a central province; and Hangzhou , where e-commerce giant Alibaba is based.

Hi-tech industry helps Shenzhen beat GDP goal | South China Morning Post Mayor Xu Qin will tell delegates that the city’s economy grew by 10.5 per cent last year compared with 2012. Xu early last year set a target of a 9 per cent rise in gross domestic product. Per capita GDP in the city reached US$22,000.

Xu’s work report said Shenzhen’s six strategic industries – biotechnology, information technology, new energy, new materials, telecommunications and the cultural and creative industry – recorded growth of 19.8 per cent last year.

Wealthy Chinese want British education for their children – FT.com The Hurun Report, a closely watched annual survey of China’s entrepreneurs and investors, found that 29 per cent gave Britain as the ideal country for their children’s secondary education, followed by the US with 26 per cent.

The influx of Chinese in Britain’s education system would have spillover effects for the rest of the economy, he added. “These people will have two years in the UK at sixth form, followed by four years at university, followed very likely by a year or two of work experience. So they’re going to have a very personal relationship with Britain for the best part of 8 years.”

Chinese Hotels Drop Stars to Score Political Points – China Real Time Report – WSJ Amid China’s anti-extravagance sweep, hotels are downgrading themselves to score political points – and win back business from politicians. A year ago this week, President and Communist Party Chairman Xi Jinping declared war on “undesirable practices” by officials that he said risked creating an “invisible wall that separates the party from the people.”

COMPANIES

Chinese oil giants make use of offshore shell companies in Caribbean | World news | theguardian.com The country’s biggest oil companies – Sinopec, PetroChina and the China National Offshore Oil Company (CNOOC) – are among the world’s largest businesses, but executives in the industry are embroiled in multiple corruption probes, many tied to networks of shell companies around the world.

Research by the International Consortium of Investigative Journalists (ICIJ) based on leaked financial records from the British Virgin Islands, reveal dozens of companies tied to the three oil giants, many of which are not disclosed on any publicly available filings by the businesses.

China Insurer Ping An Promises to Look Into ‘VIP’ Investment Product Collapse – China Real Time Report – WSJ One of China’s largest insurers said it will look into allegations from investors that some of its salespeople sold them another firm’s product that they now say has collapsed.

In a statement to The Wall Street Journal on Wednesday, Ping An Insurance Group Co. said the company forbids its insurance agents from selling products on behalf of other financial institutions.

ICBC May Pay Part of Funds in Troubled Trust: Time-Weekly – Bloomberg ICBC and China Credit Trust may each take responsibility for 25 percent of payments for the 3 billion-yuan ($496 million) trust, the newspaper reported on its website today, citing a person it didn’t identify. The Credit Equals Gold No. 1 product raised money for a coal mining company that collapsed after its owner was arrested. The government of Shanxi province, where the company was based, may take responsibility for the remaining 50 percent, according to the report on the website of Guangzhou city-based Time-Weekly.

Special Report: How Caterpillar got bulldozed in China | Reuters The night of the awards on November 16 three Caterpillar lawyers were wrapping up an eight-hour grilling of Wang Fu, Siwei’s chairman. Major accounting problems had been unearthed at Siwei headquarters in the gritty Chinese city of Zhengzhou. Two months later, on January 18, 2013, Caterpillar said it had discovered “deliberate, multi-year, coordinated accounting misconduct” at Siwei.

Wang was sacked. Caterpillar took a non-cash goodwill impairment charge of $580 million – 86 percent of the value of the deal. The company says it was caught unaware by the problems at Siwei and only discovered them in November 2012, five months after the deal closed.

Are Lenovo and IBM Finally Close to Another Deal? It has taken a long time, but Lenovo (NASDAQOTH: LNVGY) and IBM (NYSE: IBM) may be about to finally strike a bargain for IBM’s x86 server business. Lenovo has openly acknowledged its interest in this business, but the companies have been at odds on deal terms. With ongoing share loss in the server business and a desire to reallocate capital to higher-returning businesses like software and services, IBM would do well to close this deal.

Yu E Bao Deals with the Pressure of Being No. 1 – As of January 15, Yu E Bao has more than 250 billion yuan in investment from over 49 million users, says Tian Hong Asset Management Co., the company that manages Yu E Bao. That makes it the 14th-largest money market fund in the world, data from Bloomberg shows. Combined with other investment funds, the amount managed by Tian Hong has exceeded 260 billion yuan.

An excerpt of the interview follows.

Text, Chat, Profit: Tencent Launches Investing on WeChat – China Real Time Report – WSJ The new service is no doubt aimed at competing with Alibaba’s service, which was introduced last year. It’s also likely a ploy by Tencent to entice users to link their bank and WeChat accounts. The fund, called Licaitong, offers an impressive 7.3940% seven-day annualized yield, besting Yu’e Bao’s rate by almost 1%.

Magnum Entertainment Soars on First Nightclub IPO in Hong Kong – Bloomberg Magnum Entertainment Group Holdings Ltd. (2080), the first nightclub operator to go public in Hong Kong, more than doubled on its first day of trading.

Magnum raised $16.3 million in an initial public offering, selling shares at the top end of a marketed range, according to data compiled by Bloomberg. The stock jumped as high as HK$3.21 from its offer price of HK$1.50, and traded at HK$3.05 at 9:57 a.m. local time.

China Mobile shakes up fixed-line broadband | South China Morning Post A welcome development looks set to shake up China’s fixed-line broadband sector this year, with word that leading wireless carrier China Mobile (0941.HK; NYSE: CHL) is offering aggressive pricing after receiving a license to offer fixed-line service late last year. Of course I’m speaking from the consumer’s perspective, since China’s 1.3 billion consumers and millions of businesses have had little or no choice for the last decade when choosing a fixed-line broadband supplier.

Qihoo 360 to distribute and facilitate Disney’s mobile gamesWantChinaTimes.co The two companies reached an agreement on Wednesday. Disney Mobile will sign over the intellectual property rights to its mobile games to Qihoo while the Chinese company’s 360 Mobile Assistant will use Qihoo’s resources to distribute and facilitate the games. The two companies will also provide various Disney-related products such as browser skins and computer desktop wallpapers of Disney images, said Jiang Zuwang, director of the Qihoo’s Mobile Gaming group.

Top Chinese App and Mobile Game Trends in 2013: Wandoujia Chinese Android app distributor Wandoujia (or SnapPea) and research institute iResearch jointly released a report on the hottest trends of Chinese mobile apps and games in last year.

Square-like Chinese startup QFPay swipes $16.5M in series B funding QFPay, maker of a Square-like gadget for taking e-payments via a smartphone, has secured series B funding worth $16.5 million, 36Kr reports today.

QFPay’s main product is QPOS, which looks like a mini calculator. It connects wirelessly to Android tablets or phones, or iPhone or iPad; or there’s a wired version that hooks up to a PC. It can be used by retailers of all sizes to take credit card or bank card transactions.

The Himalayan Times : Two banks asked to set aside Rs 1.5bn to pay MWSDB – Detail News : Nepal News Portal Himalayan Bank Ltd (HBL) and Bank of Kathmandu (BoK) will have to deposit Rs 1.51 billion at the central bank for possible payment to Melamchi Water Supply Development Board, according to a court order.

HBL will have to deposit Rs 660 million and BoK has to deposit Rs 850 million as a provision to pay MWSDB the counter guarantee amount. The two Nepali banks stand to lose about Rs 1.5 billion to the project after their client — China Railway 15 Bureau Group Corporation — failed to complete the construction of the tunnel.

LNG Stock Prices: Three Reasons 2014 Will Bring the Biggest Gains Yet China continues to turn more to natural gas as a solution to the country’s air pollution problem. It aims to triple the use of natural gas by 2020 to above 300 billion cubic meters from approximately 100 billion cubic meters now.

China only began importing LNG in 2006, but by the end of 2012 it had six LNG import terminals in operation. The total capacity of these terminals is 18.8 million tons of LNG.

Four of the terminals are run by CNOOC Ltd. (NYSE ADR: CEO) and two by the parent of PetroChina Co. Ltd. (NYSE ADR: PTR).

Addax signs 10-year Gabon petroleum deal – Business – Chinadaily.com.cn Addax Petroleum Corp, the biggest overseas subsidiary of Sinopec Group, has won a 10-year contract to extract oil at three fields in Gabon.

At peak production, the company will account for about 20,000 barrels a day, or nearly one-eighth of the African country’s oil output.

New batch of dairy brands recommended – BUSINESS – Globaltimes.cn The China Dairy Industry Association (CDIA) announced Wednesday the second batch of the association’s recommended baby formula brands. Twelve baby formula products from six domestic dairy companies were promoted in a press conference held in Beijing Wednesday.

The six companies are Zhejiang Beingmate Technology Industry and Trade Co, Beijing Sanyuan Foods Co, and four regional dairy brands.

LifeWatch announces strategic partnership with China Telecom for the sale of medical smartphones LifeWatch AG (SIX Swiss Exchange: LIFE), the leading wireless cardiac monitoring service provider in the U.S., makes a huge step forward in its strategy to complement its offering with products and ser- vices that are independent from third party payees. Today, Yacov Geva, CEO, signed a binding memorandum of understanding with China Telecom with a potential of more than USD 400 million sales of medical smartphones LiveWatch V and subsequent generation and related services in China over five years.

China Mobile Ltd. (ADR) (CHL): China Mobile: A Long-Term Buying Opportunity – Seeking Alpha Although CHL is currently facing some headwinds, the company has an enviable history of growth. From 2003 through 2012, CHL increased both revenue and EPS every year with a 9-year CAGR of 14.7% and 13.7%, respectively. Although rivals China Unicom and China Telecom grew revenues at a faster pace in recent years, their growth came at the expense of profitability as both companies spent heavily on marketing and subsidies to attract CHL customers. For example, although CHL has lagged badly from 2009 through 2012 in terms of revenue, the company has outpaced both CHU and CHA in terms of EPS growth at a 3-year CAGR of 3.9% vs. 0% for CHA and a negative 9.1% for CHU.

WeChat 5.2 Supports Nine Categories of Mobile Payments It now supports making payments for Didi (the taxi app venture backed by Tencent), Licaitong (the mutual fund, released several days ago, similar to Alipay’s Yuebao), purchases on Tencent’s online retailer Yixun, QQ Coins (the virtual currency used in Tencent ecosystem), movie tickets, lottery tickets, making donations, phone bills and splitting bills.

Volvo AB: Chinese Authority Approves Dongfeng Motor JV – WSJ.com Swedish truck maker Volvo AB (VOLV-B.SK) Wednesday said the National Development and Reform Commission in China on Jan. 7 approved the establishment of a previously announced joint venture between the company and China’s Dongfeng Motor Group Company Ltd. (0489.HK).

Volvo in January last year announced an agreement with Dongfeng to acquire 45% of the Chinese vehicle maker’s new subsidiary Dongfeng Commercial Vehicles, which will include a large part of its medium and heavy duty commercial vehicles business.

Posted from Diigo.

China Stock Watch 20/1/14

Lots of economic data in today, with the quarterly GDP figure the biggest of them all. The 7.7% annualised rate sounds hunky-dory, especially from a Western perspective (the UK economy, for example, has still not approached its 2008 peak – it has had negative growth over the past six years), but the merest closer look provides a lot of worrying trends and fears of systemic failures. The whole basis for Chinese economic development over the past thirty years looks like it has come to a pretty juddering halt. (Though the tremors have been discernible for some time). The main players in the current setup are now hurting badly, as can be seen by their share performance. The state-owned banks (in several cases trading around net asset value, and which are trading around their 52-week low), both provide early portents of financial stress and are some of the main causes of the economic malaise. I am not usually so bearish, but recent trends seem to be adding up to a very worrying picture. Xi Jinping and Li Keqiang have a real job on their hands.

Fourteen of the major stocks (it’s hard to call them “blue chip”) fell on the day, while only three rose and two were flat. China Life Insurance showed the biggest decline, down 2.53% to RMB14.23, while Dongfeng Motor came next, going down 1.87% to HK$11.56. Only Agricultural Bank, CNOOC and China Construction Engineering came out of the day ahead, with CNOOC doing the best with a rise of 0.72% to HK$13.96.

The Shanghai Composite finally breached the 2000 level, closing down 13.70 points (-0.68%) to finish at 1,991.25. My prediction of sufficient share buy-backs to prop up the market were evidently wrong. It may be down to lack of ready cash on the part of the SOEs, but who can tell?

Name Price Change Mkt cap 52wk high 52wk low EPS P/E
Sinopec 4.6 -0.06 (-1.29%) 536,200.43M 7.03 4.05 CN¥0.62 7.48
PetroChina 7.63 -0.12 (-1.55%) 1.40B 9.5 7.08 CN¥0.68 11.29
ICBC 3.39 -0.02 (-0.59%) 1.19B 4.53 3.38 CN¥0.74 4.61
China Construction Bank 3.9 -0.03 (-0.76%) 975,042.84M 5.19 3.8 CN¥0.85 4.61
Agricultural Bank 2.37 +0.01 (0.42%) 769,762.02M 3.28 2.35 CN¥0.50 4.72
Bank of China 2.46 -0.02 (-0.81%) 687,236.81M 3.26 2.45 CN¥0.53 4.63
China Mobile 76.75* -1.10 (-1.41%) 1.54B 89.2 74.9 HK$8.19 9.37
Noble Group 1.01 -0.01 (-0.98%) 6,726.49M 1.27 0.785 SGD0.04 27.92
China State Construction 2.97 -0.01 (-0.34%) 89,100.00M 4.18 2.9 CN¥0.62 4.82
CNOOC 13.96* +0.10 (0.72%) 623,278.49M 16.52 12.04 HK$1.89 7.38
China Railway Construction 4.11 0.00 (0.00%) 50,707.30M 6.26 3.95 CN¥0.84 4.88
China Railway Group 2.38 0.00 (0.00%) 50,693.76M 3.36 2.3 CN¥0.44 5.43
SAIC Motor 12.48 -0.15 (-1.19%) 137,599.07M 19 11.83 CN¥2.05 6.08
China Life Insurance 14.23 -0.37 (-2.53%) 402,206.74M 22 12.88 CN¥0.97 14.72
Dongfeng Motor 11.56* -0.22 (-1.87%) 99,602.35M 13.28 9.48 HK$1.38 8.4
China Shenhua 14.09 -0.14 (-0.98%) 280,244.76M 25.28 13.97 CN¥2.25 6.26
Ping An Insurance 40.75 -0.11 (-0.27%) 322,582.79M 53.27 31.69 CN¥3.45 11.81
China Telecom 3.62* -0.04 (-1.09%) 292,975.16M 4.42 3.48 HK$0.26 14.02
China Communications Construction 3.8 +0.01 (0.26%) 61,463.99M 5.79 3.74 CN¥0.81 4.7
Bank of Communications 3.72 0.00 (0.00%) 276,257.35M 5.68 3.65 CN¥0.84 4.42

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 Stock Watch 13/1/14

A decent day for the major Chinese stocks, for the first since the post-Third Plenum euphoria wore off, it seems. Fourteen of the twenty gained on the day, with Dongfeng Motor by far the best performer, gaining 3.2% to close to HK$11.62. Sinopec, oddly enough, was the second best, up 1.36% to close at RMB4.48. This seems odd given the cost of the Qingdao refinery explosion and the loss of executives, but Chinese SOE executives are always disposable, and regularly rotated by the party machinery. One supposes it could have been worse. The Piper Alpha disaster cost 167 lives and £1.7 billion. Hopefully this will get safety regulations on Chinese oil and gas producers enforced with far greater stringency. The safety record in the mining industry does not inspire confidence elsewhere.

Only four stocks fell, with China State Construction doing worst, going down 1.01% to RMB2.95. SAIC Motor, China Life Insurance and Ping An Insurance all fell by less than 1%.

Nonetheless, the Shanghai Composite fell 3.73 (-0.19%) to close at 2,009.56. That barrier is awfully close.

Name Price Change Mkt cap 52wk high 52wk low EPS P/E
Sinopec 4.48 +0.06 (1.36%) 522,212.61M 7.03 4.05 CN¥0.62 7.28
PetroChina 7.56 +0.03 (0.40%) 1.38B 9.5 7.08 CN¥0.68 11.19
ICBC 3.54 +0.01 (0.28%) 1.24B 4.53 3.4 CN¥0.74 4.81
China Construction Bank 4.01 +0.05 (1.26%) 1.00B 5.19 3.8 CN¥0.85 4.74
Agricultural Bank 2.41 0.00 (0.00%) 782,753.85M 3.28 2.38 CN¥0.50 4.8
Bank of China 2.52 +0.03 (1.20%) 703,998.67M 3.26 2.48 CN¥0.53 4.75
China Mobile 77.85* +0.05 (0.06%) 1.56B 91.1 74.9 HK$8.20 9.5
Noble Group 1.04 0.00 (0.48%) 6,892.16M 1.27 0.785 SGD0.04 28.63
China State Construction 2.95 -0.03 (-1.01%) 88,500.00M 4.18 2.9 CN¥0.62 4.79
CNOOC 13.88* +0.12 (0.87%) 619,706.69M 16.62 12.04 HK$1.89 7.33
China Railway Construction 4.14 +0.02 (0.49%) 51,077.42M 6.46 3.95 CN¥0.84 4.92
China Railway Group 2.38 0.00 (0.00%) 50,693.76M 3.41 2.3 CN¥0.44 5.43
SAIC Motor 13.01 -0.05 (-0.38%) 143,442.62M 19 11.83 CN¥2.05 6.34
China Life Insurance 14.18 -0.12 (-0.84%) 400,793.53M 22 12.88 CN¥0.97 14.67
Dongfeng Motor 11.62* +0.36 (3.20%) 100,119.31M 13.28 9.48 HK$1.38 8.44
China Shenhua 14.57 +0.08 (0.55%) 289,791.76M 25.28 14.4 CN¥2.25 6.47
Ping An Insurance 39.5 -0.07 (-0.18%) 312,687.61M 53.27 31.69 CN¥3.45 11.45
China Telecom 3.73* +0.03 (0.81%) 301,877.74M 4.42 3.48 HK$0.26 14.44
China Communications Construction 3.85 +0.01 (0.26%) 62,272.73M 5.79 3.8 CN¥0.81 4.76
Bank of Communications 3.82 +0.02 (0.53%) 283,683.61M 5.68 3.65 CN¥0.84 4.53