Sorry about there being no blogpost yesterday. Enjoy today’s bumper issue.
Beijing Tests Tools to Tackle Bad Debt – WSJ.com China’s government is gearing up for a spike in nonperforming loans, endorsing a range of options to clean up the banks and experimenting with ways for lenders to squeeze value from debts gone bad.
Write-offs have multiplied in recent months. Over-the-counter asset exchanges have sprung up as a way for banks to find buyers for collateral seized from defaulting borrowers and for bad loans they want to spin off. Provinces have started setting up their own “bad banks,” state-owned institutions that can take over nonperforming loans that threaten banks’ ability to continue lending.
Caixin Explains: What the Central Gov’t Thinks of Shadow Banking – Problems regarding shadow banking have long concerned the central bank and the China Banking Regulatory Commission (CBRC), but it was not until a meeting in July that the State Council made a priority of addressing the problem. A lot more attention was paid to the CBRC’s research on the matter, which constituted the basis of the document that was circulating.
The CBRC had argued that trust companies and some off-balance-sheet operations of commercial banks were not shadow banking, considering that they were not highly leveraged. Also, the Ministry of Commerce had long opposed treating pawn shops and financial leasing companies as shadow bankers.
China uncovers thousands of disaster risks in oil and gas sector | Asia-Pacific | BDlive China has uncovered about 20,000 disaster risks in its oil and gas sector during a nationwide safety probe following a pipeline blast that killed 62 people last year, the country’s safety watchdog said on Thursday.
People’s Bank of China keeps pressure on money markets – FT.com Last week, hours before 2013 came to an end, the People’s Bank of China delivered an unwelcome surprise to some of the country’s biggest banks. Despite frazzled nerves after a liquidity squeeze just one week earlier, the central bank told them it wanted to conduct a bond repurchase operation, a move that would take cash out of their hands for a few days.
“Everyone said it was like a new year’s message from the PBoC. They were telling us that money is going to stay tight,” says a senior credit trader with a European bank in Shanghai.
China Keeps Dancing With a Lehman Moment – Chovanec – MoneyBeat – WSJ China’s year-end cash crunch, the one that the government didn’t want journalists to call a cash crunch, is a very serious situation, Patrick Chovanec, chief strategist at Silvercrest Asset Management, said this morning on the MoneyBeat show.
Oilweek – The big chill China is an oil-producing superpower. Last year the country’s state-owned oil companies spent $35 billion buying foreign assets. One result: the country’s state-owned enterprises (SOEs) now produce almost as much oil outside the country as such OPEC kingpins as Kuwait and the United Arab Emirates. These overseas acquisitions are being operated as commercial investments, in the sense that oil from far-flung businesses is mostly being used to supply traditional markets. Add those volumes to China’s position as the world’s fifth-largest producer from domestic fields and the end result is a network of SOEs that is global in scope.
Women Add To Their Lead On Forbes China’s New List Of 50 Top Financial Planners – Forbes Women added to their majority on the new list, taking up 31 spots, compared with 28 last year. Their success, according to Forbes China managing editor Bridge Kang, comes in part from a convention in Chinese households that “men earn the money and women manage it.” That in turn helps female professional financial planners and advisers build good relationships among industry executives and customers, Kang said.
China Exports to Face Tough 2014 as Yuan Climbs – China Real Time Report – WSJ China’s export growth was disappointing in the final month of 2013due to lackluster demand from developed markets, data released Friday showed.
But there could be more problems in store for China’s exporters in 2014 as the yuan currency’s continued appreciation against the U.S. dollar makes the country’s goods more expensive in world markets.
Maturing of municipal bonds puts pressure on Chinese cities｜WantChinaTimes.com Municipal bonds worth 285 billion yuan (US$47.1 billion) will be due in 2014 and bonds worth 140.6 billion yuan (US$23.2 billion) will be due in 2015, according to Shanghai-based China Business News. The total outstanding amount of municipal bonds in the nation is estimated in a range of 2.7-3.3 trillion yuan (US$447-546 billion), the paper reported.
China Auto Industry News | China Ends Microgrowth Myth With 13.9% Growth | China Car Times – China Auto News 2011 and 2012 ushered in the era of ‘micro -growth‘ for the Chinese auto market where auto sales slipped from the 30-40% range as seen in the previous decade to to 2.5% and 4.3%, respectively. It was widely thought, and accepted, that micro growth would be the norm rather than the exception for the Chinese automotive market. However, 2013 saw a strong rebound to 13.9% sales growth where sales grew to just under 22 million units over the course of the year with an exceptionally strong December where sales rose 17.9% year-on-year to 2.13 million units according to China Association of Automobile Manufacturers (CAAM)
Fitch’s China shadow banking guru quits – FT.com Charlene Chu, who as a senior director of Fitch Ratings was among the first to flag the growth of China’s massive shadow banking sector, is leaving the credit rating agency. Her departure ends an eight-year spell as a thorn in the side of the Chinese banking industry.
Ms Chu was one of the first to highlight the dangers of both shadow banking and China’s mammoth stimulus plan, rolled out in early 2009 in response to a collapse in global trade.
China iron ore imports grow 10% in 2013 – FT.com The strength of Chinese iron ore demand confounded analysts last year, with 2013 imports rising 10 per cent year-on-year to 820m tonnes, as steel mills defied expectations with an 8 per cent rise in output, according to estimates by the state-backed industry association.
Reversal of fortune in China’s peer-to-peer lending boom – FT.com Dozens of the P2P lending websites that sprang up in recent years have shut down. The biggest companies are unscathed so far, but the rapid collapse of smaller rivals highlights the mounting difficulties in the Chinese micro-lending industry as economic growth slows and monetary conditions tighten.
It is a dramatic reversal of fortune for China’s peer-to-peer websites, which, for a small service fee, connect people wanting to invest money with those looking to borrow small amounts.
Dubai property market attracting more Chinese investors｜Markets｜Business｜WantChinaTimes.com The bubble created in Dubai’s real estate market burst in 2008, but the sector is now making a comeback, attracting global investors including those from China, reports Shanghai’s China Business News.
Housing prices in Dubai have surged by nearly 30% over the past year, with Dubai-based real estate developers, such as Nakheel Properties, recruiting salespeople that can speak Chinese to attract Chinese investors entering the market.
China central bank guides yuan slightly lower, downside seen limited – Economic Times China’s yuan edged down against the dollar on Thursday after the central bank fixed a slightly weaker midpoint but traders said the potential for any sharp correction was limited as Beijing appeared to want to keep the yuan largely stable for now.
Spot yuan was trading at 6.0546 per dollar at midday, falling 0.06 percent from 6.0512 at Wednesday’s close, after the People’s Bank of China (PBOC) set its midpoint at 6.1109, down 0.05 percent from Wednesday’s 6.1079. “Thursday’s midpoint guides the yuan to weaken slightly,” said a trader at a Chinese state-owned bank in Shangh
Chinese banks rush to float bonds abroad｜Economy｜News｜WantChinaTimes.com McKinsey predicted that Chinese banks will raise 2 trillion yuan (US$330 billion) in funds from overseas markets, via issuance of stocks and bonds, in the next five years.
The trend will be fueled by the increasing difficulty of Chinese banks in raising funds on the domestic market due to rising bad debts, a sluggish stock market, rising funding costs, and the deleveraging process.
China mulls national pollution permit trading system | Reuters China will look into establishing a nation-wide trading system for pollution permits as part of efforts to use market mechanisms to help clean up its environment, the country’s top environment official said.
In remarks published on the website of the Ministry of Environmental Protection (www.mep.gov.cn) on Friday, minister Zhou Shengxian said China was working on new regulations for pollution permits and would also publish proposals for new pilot trading projects as soon as possible.
Private capital to play bigger role in China’s healthcare services｜Policy｜Business｜WantChinaTimes.com Investors from Hong Kong, Macao and Taiwan can now run their own hospitals in every city at prefecture level or above, while it was previously stipulated that they could do so only in municipalities and provincial capital cities, according to a circular publicized by the National Health and Family Planning Commission on Thursday.
Investors from foreign countries can also set up wholly foreign-funded medical institutions in the newly established Shanghai Free Trade Zone and in certain other regions, according to the circular, which was jointly signed by the commission and the State Administration of Traditional Chinese Medicine, although it did not specify the other regions.
Half of China’s coastal outfalls over-discharging sewage – Xinhua | English.news.cn Half of China’s 156 coastal outfalls are discharging excessive sewage into the ocean, according to the State Oceanic Administration.
According to a survey conducted by the administration in November, 78 ocean outfalls are discharging excessive sewage, with municipal drainage being the biggest contributor.
Survey results showed that South China’s Guangxi is the most serious among six coastal provincial regions in over-discharging. Fourteen of its 15 ocean outfalls discharged excessive sewage.
China to expand cross-border use of RMB: PBOC – Xinhua | English.news.cn China will continue to expand the cross-border use of the Chinese currency, the Renminbi or yuan, this year, China’s central bank said Friday.
The Chinese yuan’s cross-border settlement reached 3.64 trillion yuan(596.6 billion U.S.dollars) in the first eleven months of 2013, which was 350 times the amount in 2009, the People’s Bank of China (PBOC) said at a work-planning meeting.
China fires back at U.S. for criticism on fishing curbs | Reuters China defended on Friday its new fishing restrictions in disputed waters in the South China Sea against criticism from the United States, saying the rules were in accordance with international law.
Beijing claims almost the entire oil- and gas-rich South China Sea and rejects rival claims to parts of it from the Philippines, Taiwan, Malaysia, Brunei and Vietnam.
Washington called the fishing rules “provocative and potentially dangerous”, prompting a rebuttal from China’s foreign ministry on Friday.
Securities regulator shares audit data with US counterparts – Business – Chinadaily.com.cn The China Securities Regulatory Commission has shared the audit details of four Chinese companies listed abroad with overseas regulators, in a further move to crack down on illegal activities and protect the interests of investors, the watchdog said on Friday.
Cabinet approves new zones – Business – Chinadaily.com.cn China’s cabinet on Friday approved the establishment of new zones in Northwest China’s Shaanxi and Guizhou provinces in the southwest, the latest move to open up inland regions.
Shaanxi’s Xi’an-Xianyang New Area and Guizhou’s Guiyang-Anshun New Area got the nod from the State Council, adding to a string of “new areas”.
Some previous new areas are the Chongqing Liangjiang New Area (approved in 2010) and the Lanzhou New Area (2012). But while the Chongqing and Lanzhou areas were designated as State-level development areas, along with four other such areas, the two latest areas approved didn’t achieve that top position.
Proposed pension reform divides opinion – Business – Chinadaily.com.cn The public is critical that government officials do not need to input into the country’s pension pool but will enjoy higher annuities after retirement than their peers from enterprises and farming due to different plans.
China adopts different pension plans for enterprise employees, rural residents, urban dwellers and workers with government and government-sponsored institutions. This has caused a gap in pension payments, Zheng Gongcheng, a professor with Renmin University of China, told the People’s Daily, flagship newspaper of the Communist Party of China (CPC).
China’s Liquidity Paradox-Caijing Consider this: Despite China’s swelling foreign-exchange reserves – the result of persistent current-account surpluses – market and interbank short-term interest rates are soaring. How did this happen, and what should policymakers do about it?
China December Exports up 4.3Pct, Trade Surplus $25.6B-Caijing China’s exports grew 7.9 percent in 2013 while imports expanded 7.3 percent from a year ago, resulting in a trade surplus growth of 12.8 percent, government data showed.
Trade surplus in the year hit 1.61 trillion yuan ($259.8 billion), with exports at 13.72 trillion yuan ($2.21 trillion) and imports 12.11 trillion ($1.95 trillion), according to data released by the General Administration of Customs today in Beijing.
China Disciplines 48 For Pipeline Explosions In Qingdao – WSJ.com Two Sinopec executives in charge of the pipeline and a safety director were removed from their positions, Xinhua said. Three local officials in charge of an economic development zone in the Huangdao district of Qingdao—where the blasts occurred—also were dismissed, according to Xinhua.
In 2011, the State Council issued similar disciplinary warnings to 64 people responsible for four accidents at state-owned China National Petroleum Corp., the country’s largest energy company. Jiang Jiemin, CNPC’s former chairman, was among those disciplined for the accidents, which included a pipeline explosion in the port city of Dalian that didn’t result in casualties. Mr. Jiang was promoted two years later to head a government commission that oversees state-owned companies.
China Petroleum and Chemical Rating Increased to Buy at TheStreet (SNP) | Ticker Report China Petroleum and Chemical (NYSE:SNP) was upgraded by investment analysts at TheStreet to a “buy” rating in a note issued to investors on Wednesday, Stock Ratings Network reports.
China Petroleum & Chemical Corporation (Sinopec) (SNP): New Analyst Report from Zacks Equity Research – Zacks Equity Research Report – NASDAQ.com We are downgrading our recommendation on Sinopec to Underperform from Neutral, ahead of fourth quarter results.
China Railway tops charts for proper monetary insulation｜WantChinaTimes.com China Railway Group, the nation’s largest construction company, came in on top for accounts receivable, tight cash flows and provisions for bad debt among China’s 36 listed firms related to the high speed rail sector, National Business Daily reports.
China Railway issued a statement on Jan. 6 to clarify that its high level of debt is related to the nature of the industry and not dissimilar from others in the sector. Its liability-asset ratio of 84.84% remains normal and the risk controllable. What should be noticed its high debt ratio has remained for years, the report said.
China’s State Grid buys biggest chunk of HK Electric’s IPO: sources | Reuters Government-owned State Grid Corp of China is coming in as the biggest cornerstone investor in a Hong Kong initial public offering (IPO) worth up to $5.7 billion by Li Ka-shing-backed HK Electric Investments, people familiar with the matter told Reuters.
Li’s Power Assets Holdings Ltd is planning to list its Hong Kong electricity business, HK Electric Investments, as it seeks funds for overseas expansion. The IPO is set to be launched on Monday, they added.
The first Chinese game console: Huawei’s Tron Tron is a small, cylindrical console that runs Android 4.2.3 and connects to TVs via HDMI (it is capable of 1080p output). All told, it’s about the size of a coffee mug. Huawei says the device will sell for $120 or less and come with 16 or 32 GB of storage. Internally, it’s using Nvidia’s Tegra 4 processor, and the Tron also has wi-fi and bluetooth connectivity and even a USB 3.0 port. Here’s a video of the thing in action via Huawei News:
Fosun buys Portuguese insurer for $1.4b – Chinadaily.com.cn Fosun International’s chairman Guo Guangchang said in statement on Thursday that the Hong Kong-listed company outbid US investment fund Apollo Global Management LLC to acquire an 80 percent stake in state-owned Caixa Seguros e Saude SGPS SA, Portugal’s largest insurance group, which is owned by state bank Caixa Geral de Depositos SA.
Shui On Land CEO Resigns as Billionaire Lo Takes Active Role – Bloomberg Shui On Land Ltd. (272), the Chinese developer that’s been selling assets to cut debt, said Chief Executive Officer Freddy Lee quit after less than three years and billionaire Chairman Vincent Lo will resume a more active role.
Shui On has been selling assets as it seeks to pay down debt and improve its cash position. The developer announced last month that it will sell a project in Shanghai to China Life Insurance Group Co. for 3.32 billion yuan ($549 million). New York-based Brookfield Property Partners in November invested $500 million into Xintiandi, which operates the popular entertainment complex in Shanghai.
U.S. Market Still Out of Reach for Chinese Car Makers – WSJ.com GAC Motor isn’t the only Chinese auto company shunning this year’s U.S. show. For the first time since Chinese auto maker Geely Automobile Holdings Ltd. debuted at the show in 2006, no Chinese car company will hold an exhibit this year.
Five years ago, many Chinese auto makers were hatching ambitious plans for going global. While some have been stepping up efforts to build their presence in emerging markets, for the most part they have fallen silent on their ambitions tapping demand in developed economies.
Kuga recall leaves buyers bruised – BUSINESS – Globaltimes.cn Chang’an Ford will recall 80,857 Ford Kuga SUVs produced between September 21, 2012 and November 13, 2013 from February 21, 2014 because of substandard steering knuckles, Chang’an Ford announced on December 27, 2013 on its website.
Goubuli prepares to put big dough into expansion- Chinadaily.com.cn An eatery giant known for its steamed stuffed buns, and with an ambitious expansion plan to buy a United States coffee chain, is joining a growing number of Chinese enterprises in going global.
Greenland Group Plans for A-share Listing-Caijing China’s state-owned property developer Greenland Holding Group Co. said today it aims to float shares in the domestic stock market.
The company plans to submit materials for an A-share listing to China’s securities regulator as soon as next month, said Greenland chairman Zhang Yuliag today.
Observer-Reporter | Chinese coal giant enters Greene Co. natural gas joint venture Officials with Energy Corporation of America and China Shenhua Energy Co. subsidiary Shenhua America Holdings Corp. announced a 50/50 joint venture to develop 25 natural gas wells in Greene County over the next 18 months.
China Tops Rolls-Royce’s Largest Market in 2013-Caijing China has toppled the US to become the largest market for Rolls-Royce Motor Cars in 2013 with the country’s growing class of crass new riches.
The British-headquartered luxury carmaker sold 3, 630 cars around the world last year, up from 3, 575 a year ago. 2013 also marked its fourth consecutive year to report record sales.
Infiniti China Sales Surge – WSJ.com Infiniti, the premium car division of Nissan Motor Co., said its auto sales in China surged 54% in 2013 and the brand expects to maintain its growth momentum this year in the world’s largest auto market.
The company sold 17,108 Infiniti-brand cars in China last year, Johan de Nysschen, senior vice president of Japanese auto maker Nissan Motor and president of Infiniti, said Saturday. Infiniti posted a 16% decline in sales in 2012 amid a territorial dispute between Japan and China over uninhabited islands in the East China Sea.
Tencent’s Personal Cloud Storage Service Micro Cloud Releases 2.0 Version Chinese Internet giant Tencent recently released version 2.0 for its personal cloud storage Micro Cloud (Weiyun in Chinese) with a number of features that aims to turn the product into an integration service from a storage service. The new 2.0 version is expected to hit market on January 15 (source in Chinese).
WeChat’s Rank Rocketed up in the U.S. during Recent Holiday Season, but Dropped down soon AppAnnie has added new features to its free Store Stats tool that you can track apps’ performance on Google Play, iOS, Amazon, and Mac App Store apps in up to 10 countries at once.
For instance, you can see the rank history of WeChat on iOS Store in multiply countries as below. What immediately drew my attention is a peak during the past holiday season. The graph in orange is WeChat’s performance on the U.S. iOS Store. It’s unknown what marketing efforts by Tencent, WeChat’s parent company, helped it.
Steve Wozniak drops into Xiaomi Beijing HQ According to former Google and Android VP turned Xiaomi executive Hugo Barra, who just posted a photo and some details to his Google+ page, Woz is a new convert to their phones. Woz declared that it’s “very emotional for me to be a part of Xiaomi now” – a reference to him using a Xiaomi Mi3 (not working for the ambitious phone-maker).
A tale of two China stocks: NQ Mobile vs. Baidu – The Cody Word – MarketWatch Put simply, I know how hard it is to stay on top of and believe in the numbers that U.S.-based companies publish. To think that I could successfully do so in most any foreign-based company is rather insane. On the other hand, when I see someone like Muddy Waters’s Carson Block target a company like NQ Mobile out of China, it piques my interest, because I do think there’s money to be made finding companies who are pushing the envelope overseas.
Sam’s Club Has Potential in China Because China has the largest population in the world (1.35 billion people), you would think that this move should automatically lead to exceptional results. However, if you look at retailers that have attempted to make names for themselves in China in recent years, their moves haven’t gone so well, and this group includes Wal-Mart. Sam’s Club differs from Wal-Mart’s namesake stores, and this might be a positive for the potential of Sam’s Club in China going forward.
Warren Buffett’s Chinese Cars Are Coming to the U.S. (BRK-B, GM) BYD has done some intriguing work with hybrids and electric cars. But BYD has a long history of optimistic predictions, and the company has had a rough time staying competitive even in its home market. But the Berkshire Hathaway investment has given the company some global cred. Is it time to take them seriously?
Ford and Tencent Work Together To Bring Tencent’s QQ Music To Cars | China Car Times – China Auto News Ford have teamed up with Tencent’s QQ, China’s largest chat and social platform, to introduce QQ Music into all Ford SYNC systems. QQ Music features China’s leading online music streaming platform, and is the most popular music app among Chinese smartphone users, with more than 200 million monthly users and 40 million daily users.
Tencent, Alibaba Have their Eyes on Mobile Payment Prize – The transactions are part of what is sometimes referred to as online-to-offline, or O2O, business, an arena where Alibaba and Tencent are busy battling for supremacy. Late last year, Tencent, which is listed in New York, invested in Didi Dache. Before that, Alibaba put cash into promoting a similar app, called Kuaidi Dache.
And the rivalry is not limited to taxi-hailing apps. The two firms are expanding their offline frontiers to shopping malls, movie theaters, convenience stores and restaurants. Both are beefing up their mobile payment systems – the key to connecting online and offline services – to compete head to head with credit cards and cash payments.
BoCom HK rides wave of bond issuance – Debt – Deals – News – FinanceAsia.com Bank of Communications (BoCom) Hong Kong branch raised a $700 million three-year senior unsecured note on Wednesday, smartly riding the wave of other bond issuance that has hit the debt markets in the first week of the new year.
The bank’s debut Reg S-registered paper had an initial guidance of 170bp over Treasuries and ended up pricing 25bp tighter at 145bp over Treasuries, according to a term sheet.
Surprising hedge fund plays include Bitcoin and China stocks (ACGBY)-ACGBY-PNGAY-Stockhouse news Two examples that come to mind are Ping An Insurance Group Co. (OTO: PNGAY, Stock Forum) and the U.S. listed version of Agricultural Bank of China (OTO: ACGBY, Stock Forum), both of which are known to be heavily owned by hedge funds. To this day, despite China stocks being in a bear market, PNGAY has not only seen increased liquidity due to hedge fund presence, but the stock recently experienced a run-up that can only be attributed to hedge fund-created momentum.
China Railway Group Ltd : China : CHINA Railway Group to FUND the UK s £50bn high-speed RAIL LINE | 4-Traders China Railway Group has approached Downing Street to fund the UK s £50bn high-speed rail line. This comes a month after Chinese premier Li Keqiang expressed China s interest in the infrastructure project to Cameron.
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.
Chinese Tycoon’s Vanishing Seen Linked to Probe of State-Firm Officials – WSJ.com Hua Bangsong, one of China’s richest men, controls a vast engineering-services empire, Wison Group, which develops chemical plants for the nation’s major oil companies and international giants like Germany’s BASF SE. But the 48-year-old hasn’t been seen by colleagues since August, when he was detained by Chinese investigators.
Bank of China London Branch successfully issues 2.5 billion RMB Bonds | 4-Traders On 9th January 2014, the book building of the first London offshore RMB bonds issued by Bank of China London Branch was successfully completed? making it the highest value single issue of RMB bonds in London and providing UK and European investors with an additional high quality RMB product.
Fears OCBC may overpay for Wing Hang | Macau Business Daily Oversea-Chinese Banking Corp, Southeast Asia’s second-biggest lender, fell to an almost four-week low in early Singapore stock trading yesterday amid concern it may pay too much to take over Hong Kong’s Wing Hang Bank Ltd.
MVP Group pushes JV talks with CNOOC for Recto Bank | ABS-CBN News The group of business titan Manuel V. Pangilinan is aiming to reach a commercial agreement with state-owned China National Offshore Oil Co. Ltd. (CNOOC) to finally pave the way for exploratory works at the disputed Recto Bank in the West Philippine Sea, its spokesperson yesterday said.
World’s largest bank opens branch in Calgary Industrial and Commercial Bank of China, the largest bank in the world in total assets, officially opened a Calgary branch Wednesday.
The move marks the first foray into Alberta for the bank’s Canadian subsidiary, known as ICBK. There are already five branches in Toronto and two in Vancouver.
Industrial and Commercial Bank of China : Pak-Sino to constitute Experts Working Group | 4-Traders Pakistan and China have decided to constitute an ”Experts Working Group” on setting up energy and development projects in Pakistan with focus on their financing.
This was decided at a meeting between Water and Power Minister Khawaja Asif and Industrial and Commercial Bank of China (ICBC) Chairman Jiang Jianqing in Beijing.
Construction of the Yaoundé-Nsimalen highway takes shape – Business in Cameroon 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.
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