Ping An Insurance

China Business Briefs 16/4/14

There won’t be a posting of the business briefs tomorrow, as I am flying to Beijing (in about three hours) for a two week visit. I will try to keep on posting once there, but visits and reunions may take precedence.

I am looking forward to seeing Iain Shaw and co, former staff of the Beijinger (and former colleagues of mine) who are starting up The Cleaver Quarterly, a magazine on Chinese food around the world. Check out their kickstarter thing here if you’re interested.

Economy Finance Auto Infrastructure Energy Telecoms Property Travel Tech Agriculture Retail Healthcare

Economy

China’s first quarter GDP grows 7.4% – Business – Chinadaily.com.cn China’s economy grew 7.4 percent year on year in the first quarter of 2014, the National Bureau of Statistics (NBS) revealed on Wednesday.

The NBS said that preliminary data showed the nation’s gross domestic product (GDP) reached 12.8213 trillion yuan ($2.08 trillion) in the first quarter.

The figures suggest growth in the world’s second-largest economy in the beginning of year 2014 was stable and that the economy was generally in good health, as Chinese authorities promoted reforms, innovation, restructuring and improvement of people’s well-being, according to the NBS.

Chinese incomes continue surging in Q1 – BUSINESS – Globaltimes.cn The average per capita disposable income rose 11.1 percent year on year to 5,562 yuan (908.82 US dollars) in the first quarter. Deducting inflation, the actual growth was 8.6 percent, according to the NBS.

The income gap between urban and rural residents narrowed with the actual income growth in rural China 2.9 percentage points higher than that in its urban areas in the first quarter, according to the NBS.

China’s Economic Growth Slows to Six-Quarter Low After Credit Reined In – Businessweek China’s expansion moderated to the weakest pace in six quarters and property construction plunged, testing leaders’ commitment to keep reining in credit as risks mount of a deeper slowdown.

Gross domestic product rose 7.4 percent in the January-to-March period from a year earlier, the statistics bureau said today in Beijing, compared with the 7.3 percent median estimate in a Bloomberg News survey of analysts. Industrial production and fixed-asset investment trailed projections.

China’s expansion slows as property construction falls | Money | The Malay Mail Online Gross domestic product rose 7.4 per cent in the January-to- March period from a year earlier, the statistics bureau said today in Beijing, compared with the 7.3 per cent median estimate in a Bloomberg News survey of analysts. Industrial production and fixed-asset investment trailed projections.

The weakest first-quarter property-investment growth since 2009 signals credit is tight and demand is faltering, adding to economic and default dangers as Premier Li Keqiang grapples with risks from shadow banking and local-government debt. A deeper slowdown would put pressure on leaders to expand stimulus or limit the pace of changes intended to give market forces a bigger role in the world’s second-largest economy.

Chinese Police Confront Trust Investors Demanding Repayment – Bloomberg Chinese investors demanding their money back from a troubled 973 million-yuan ($156 million) high-yield product in Shanxi province were confronted by police in front of a China Construction Bank Corp. (939) branch.

People wearing white masks with the words “despicable bank” and “pay back our money” were among at least 30 investors facing special-forces officers in dark uniforms in Taiyuan city, about 521 kilometers (324 miles) southwest of Beijing. The nation’s second-largest bank is the custodian of the Songhuajiang River No. 77 trust, which missed six payments as of last month, according to the Economic Observer.

Electricity, Steel Hint at Economic Uptick in China – China Real Time Report – WSJ Official data shows China’s economy in the first quarter grew at its slowest pace in 18 months, but two proxies point to some resilience.

Electricity output—an indicator favored by Premier Li Keqiang over gross domestic product—and crude steel production grew faster in March than in the preceding two months. In addition, steel output in March hit a record high, the National Bureau of Statistics said.

China’s slowing growth potential minefield for leaders – The Globe and Mail Slowing growth presents a potential minefield for Chinese leadership, whose chief concern is maintaining a rising standard of living for its own people. To that end, officials have sought to discount the value of GDP as a measure of well-being, instead deliberately underscoring other statistics. “Maybe a more important thing to look at is employment and income,” said Mr. Sheng. And those numbers still look good. The first quarter saw 3.74-million urban jobs created, slightly more than the year before. Rural income is up 10.1 per cent, while urban salaries swelled 7.2 per cent. At the same time, consumer price index growth of 2.3 per cent has allowed many of those gains to flow in to consumer pockets, rather than back into groceries.

Slowdown curbs Q1 lending activity – Headlines, features, photo and videos from ecns.cn Money supply growth decelerated further in March amid a reform-induced economic slowdown, according to figures released on Tuesday by the People’s Bank of China.

The central bank said that the expansion of M2, a broad measure of money supply, slowed to 12.1 percent year-on-year from 13.3 percent in February. The market consensus was for an increase of 13 percent.

Slower deposit growth, which limits banks’ ability to lend, was a factor. Yuan deposit growth fell to 11.4 percent year-on-year in March from 12.5 percent in February.

Higher-value exporters survive turmoil in market[1]- Chinadaily.com.cn Higher-value Chinese exporters are more immune than low-cost manufacturers in the face of market turmoil from such things as weak demand, exchange-rate fluctuations and rising costs, said exhibitors at the Canton Fair that opened on Tuesday.

China not Currency Manipulator: US Treasury-Caijing “China’s currency yuan, or renminbi (RMB) appreciated on a trade-weighted basis in 2013 but not as fast or by as much as is needed,” the US Treasury said  in the latest semi-annual Report to Congress on International Economic and  Exchange Rate Policies.

According to the report, the yuan appreciated by 2.9 percent against the US  dollar in 2013, and China’s current account surplus declined to 2.1 percent of  gross domestic product (GDP) in 2013, down from 2.3 percent of GDP in 2012 and  from a peak of over 10 percent in 2007.

Yangtze River Delta becomes epicentre for China credit risk | South China Morning Post Suzhou, an ancient city in Jiangsu province 100 kilometres west of Shanghai, lives in legend as one of China’s most beautiful, famous for its elegant gardens and charming canals.

More recently, it became an industrial powerhouse, sitting at the heart of the Yangtze River Delta region that, along with the Pearl River Delta in Guangdong, drove the mainland’s economic boom.

Now it is ground zero for a painful corporate deleveraging that has tacit government approval. A third of all loan delinquencies come from the region, and credit is getting harder to come by.

Finance

Citic Pacific to Pay $36B for Parent’s China Assets – Bloomberg The steelmaker and property developer will pay 49.9 billion yuan in cash and issue almost 16.6 billion shares at HK$13.48 each, according to a Hong Kong exchange filing today. Citic Group Corp. will hold 75 percent of Citic Pacific following the transaction and a share sale by the Hong Kong company, it said.

The transaction comes as Chinese President Xi Jinping advocates the most sweeping changes since Deng Xiaoping’s liberalization in 1978, including loosening yuan trading and allowing more private investments in state businesses. The deal gives Citic Pacific a stake in China’s largest brokerage, as well as banking, energy and infrastructure assets.

China Money Network − S&P Downgrades Fosun International’s Credit Rating Shanghai-headquartered Chinese privately owned conglomerate Fosun International Ltd. has been downgraded by Standard & Poor’s Ratings Services because of the company’s increasing leverage level as a result of its acquisitions, according to a notice issued by S&P.

Fosun’s long-term corporate credit rating is downgraded to BB from BB+ with stable outlook.

BRIEF-Ping An Insurance’s Jan-Mar premium income totalled 108 bln yuan | Reuters Ping An Insurance Group Co of China Ltd

* Says January-March premium income totalled 108 billion yuan ($17.37 billion)

Source text in Chinese: link.reuters.com/tan58v

BRIEF-China Life Insurance’s Jan-Mar premium income totalled about 132.2 bln yuan | Reuters China Life Insurance Co Ltd

* Says January-March premium income totalled about 132.2 billion yuan ($21.25 billion)

Source text in Chinese: link.reuters.com/tet58v

Auto

Volvo likely to become China’s next official car brand: report|Companies|Business|WantChinaTimes.com **I wonder what % of Audi’s revenues come from China** China’s president Xi Jinping, who visited the Chinese-owned Volvo car plant in Ghent, Belgium on April 1 during his European trip, seems to have become the best spokesman for the automobile brand after a photo of him and the Volvo XC60 model was published. Volvo could likely become the new choice for official cars in China, according to the Guangzhou-based Time Weekly.

Infrastructure

SOE accounting puzzle blurs frugality drive – Headlines, features, photo and videos from ecns.cn **Article repeated from Xinhua – evidently CRCC’s arse is being kicked** Many Chinese state-owned enterprises(SOEs) that were under fire last year for exorbitant “reception” fees hid the item in their latest financial results, renewing public concerns over their sincerity to cut extravagance.

China Railway Construction Corporation Ltd. (CRCC), one of the country’s largest construction companies, spent 837.5 million yuan (135.1 million U.S. dollars) on receptions in 2012. The company was punished following public outrage over the alleged abuse of state assets.

In its 2013 financial report released in late March, CRCC canceled the item called “receptions” in its accounting statement. Meanwhile, the item named “management fees,” which included the sub-item “receptions” in the 2012 report, surged by nearly 2.2 billion yuan last year.

World’s longest plateau rail tunnel completed – People’s Daily Online The Xinguanjiao Tunnel, the world’s longest plateau rail tunnel on the Qinghai-Tibet Railway, was completed on Tuesday, local authorities said.

Spanning 32.645 km, the tunnel was finished on Tuesday afternoon, making it the longest rail tunnel in China, according to Zhi Changying, an official with the China Railway Tunnel Co. Ltd. (CRTC), a partner in the project.

Sierra Leone Sports: Bo stadium handed over to Salone « Awoko Newspaper Renowned Chinese company, Xinjiang Beixin construction and Engineering Group Company Limited on Friday April 11th handed over the four thousand seater stadium to government through the Ministry of Sports.

Before the handing over ceremony, one of the Engineers Tai Xie who also doubles as interpreter told Newday that they started the construction of the Stadium on the 25th of December 2008 and they finished the project on 25th December 2013 spanning over a five year period.

Energy

China Natural Gas Output Rises in March to Highest in Two Years – BloombergNatural gas output in the world’s largest energy consumer rose 7.6 percent to 11 billion cubic meters last month, data from the National Bureau of Statistics in Beijing show today. That’s the highest since March 2012. NBS didn’t release output figures for January 2013 because the data was distorted by the Lunar New Year holiday.

The Chinese government sees expanding gas supply as a way to curb air pollution that has frequently exceeded limits recommended by the World Health Organization. The National Energy Administration said in its work plan in January that gas output is forecast to rise 12 percent from a year earlier to 131 billion cubic meters this year.

China State Grid Considers Dollar Issue Amid State-Giant Sales – Bloomberg State Grid Corp. of China, the nation’s largest power distributor, is considering a dollar-denominated bond offering following sales from other government-backed giants.

The company will meet investors in the U.S. and Asia from April 21, according to a person familiar with the matter, who asked not to be identified because the details are private. China Petrochemical Corp., known as Sinopec Group and parent of Asia’s largest oil refiner, raised $5 billion selling securities April 2 in Asia’s biggest dollar bond offering in a decade.

China builds up nuclear power grid – Business – Chinadaily.com.cn “China will install another 800 gigawatts of capacity for nuclear power, about 70 percent of which will use our technology for steam turbines and other key components,” Chen Chaoming, vice-president of Nuclear China-Alstom Thermal, told reporters in Beijing during the 13th edition of Nuclear Industry China, organized by the Chinese Nuclear Society.

“Despite the post-Fukushima delays,” he said, referring to the Japanese disaster of three years ago, “China’s nuclear market has a huge potential for growth. Basically, it is because China’s nuclear industry is still at a nascent stage. Power generated by nuclear plants accounts for less than 2 percent,” he said.

PetroChina Company Ltd.: Notice of Annual General Meeting for the year 2013 NOTICE IS HEREBY GIVEN that an annual general meeting of PetroChina Company Limited (the “Company”) for the year 2013 (the “Annual General Meeting”) will be held at 9 a.m. on 22 May 2014 at Beijing Oriental Bay International Hotel, 26 Anwai Xibinhe Road, Dongcheng District, Beijing.

PLN teams up with Chinese firms on marine project | The Jakarta Post State owned electricity company PT PLN has teamed up with three Chinese companies — Technology Intern Shijiazhuang Enric Gas Equipment Co. Ltd, Ocean Engineering Design & Research Institute of CIMC and PT Enviromate Technology International Cui Li — to develop marine transportation of compressed natural gas (CNG) in Indonesia.

The marine CNG transportation project, which will transport CNG from Gresik, East Java to Lombok, West Nusa Tenggara, via a CNG vessel, is the first project of its kind in the world.

Telecoms

Huawei world’s top communications equipment supplier in 2013|Companies|Business|WantChinaTimes.com Drawing from China’s huge mobile communications market, Huawei became the world’s largest communications equipment supplier in 2013, overtaking Ericsson, according to the Chinese-language CBN Weekly.

The company raked in net profits of US$3.47 billion on sales of US$39.5 billion in 2013, compared with US$1.9 billion and US$35.3 billion for Ericsson. Cisco was third.

Property

China First-Quarter Home Sales Post Decline on Tight Credit – Bloomberg The value of homes sold fell 7.7 percent to 1.1 trillion yuan ($177 billion) in the three months to March from the same period a year ago, the National Bureau of Statistics said today. The last time home value sales dropped in the first quarter was in 2012. New property construction declined to 291 million square meters (3.1 billion square feet) in the quarter.

Is glut developing in retail building sector?[1]- Chinadaily.com.cn Despite a rapid growth in retail sales, less-experienced developers could soon be learning a hard lesson from a market with a supply glut, says a retail property trend report released by Cushman & Wakefield, the world’s largest privately held real estate services company.

The report forecast that the new supply of commercial properties in 30 cities that it monitors will total 75 million square meters, and a peak of new supply with more than 20 million sq m will flood the market this year.

Hoping for Price Rises? Here’s the Harsh Reality, CCTV Tells Home Buyers – China Real Time Report – WSJ China’s latest message about the property market is simple and aimed at the man on the street: The home you’ve bought isn’t a one-way bet. Deal with it.

That message has been pumped out through China’s state broadcaster as part of Beijing’s efforts to curb people’s enthusiasm for homes as an investment tool. Such appetite for property has driven economic growth, but also led to imbalances in the country’s economy and social tension.

Hebei Hopes to Turn Cities into Satellites by Pushing Them into Beijing’s Orbit – The housing market in Baoding heated up after media reports that provincial officials in Hebei want to develop some cities into satellites of Beijing, and Baoding might host some central government offices.

A Hebei official has said the idea is still just that, and that the central government has not approved anything.

However, the plan shows the province is enthusiastic about developing its economy, and has identified problems in the capital – overcrowding, heavy traffic and terrible air pollution – as problems it could use to its advantage.

Travel

WeChat Adds Air Ticket Booking Service | TechNode WeChat’s m-commerce offerings has added flight booking service that is provided by LV.com (formerly 17u.cn), a Chinese online travel service Tencent has a stake in. Payments, of course, are supported by WeChat Payment.

Firms decline to comment on merger rumors – BUSINESS – Globaltimes.cn Ctrip.com International and Qunar.com Inc, two Chinese NASDAQ-listed online travel service providers, both declined to comment Tuesday on market rumors that they will merge in a deal that would create an online travel service giant with a market capitalization of over $10 billion.

The rumors, as reported by China Business Journal over the weekend, claimed that search engine giant Baidu Inc, the majority shareholder in Qunar, will swap its shares in Qunar for Ctrip shares, resulting in Baidu taking a controlling stake in Ctrip.

Sikorsky Helicopter Receives Chinese Nod – Analyst Blog – NASDAQ.com **UK political buffs may remember Sikorsky from the Westland affair** Sikorsky Aircraft Corp., a unit of  United Technologies Corp. (UTX), declared that its S-76D aircraft has received China’s  certification, jumpstarting its delivery to Chinese customers.

The Civil Aviation Administration of China (CAAC) issued a validation type certificate for the helicopters, which will  support expansion of Sikorsky’s operations in a potentially  profitable market and strengthen its foothold in the Chinese market.

Tech

Alibaba Plans Hong Kong-Style Fee as Carrot for IPO Banks – Businessweek Alibaba Group Holding Ltd. is planning to award about one-third of the fees for its initial public offering in the form of incentive bonuses to coax better performance from underwriters, people with knowledge of the matter said.

China’s largest e-commerce company plans to pay at least 1.1 percent of the total IPO proceeds in fees, two people said, asking not to be identified discussing private information. Estimates of Alibaba’s valuation suggest the company could raise as much as $18 billion in the sale, making the potential fee pool almost $200 million. While the e-commerce giant is preparing for an IPO in New York, performance incentives are common in Hong Kong and have been used by companies including Agricultural Bank of China Ltd.

China’s Alibaba sees profit double ahead of long-awaited IPO As the tech world awaits Alibaba’s US IPO, here are some new financial figures to chew on. The Chinese ecommerce juggernaut pulled in US$3.06 billion in revenue in Q4 2014, which is up 66 percent on the same period a year before. Alibaba’s Q4 net income hit $1.36 billion in net income in Q4, which has more than doubled (up 110 percent) from the previous year.

Alibaba’s Q4 numbers were boosted by the popularity of China’s equivalent of Cyber Monday, which happens every November 11. On that day, Alibaba’s Tmall and Taobao marketplaces saw $5.7 billion spent by shoppers in just 24 hours.

Baidu enters China’s mobile payments war with Baidu Wallet Baidu (NASDAQ:BIDU), the Chinese tech giant best known for its search engine, announced yesterday it will roll out a new mobile wallet app called Baidu Wallet (baidu qianbao), reports Jinghua.cn (via Techweb).

Like its main rivals from Alibaba (Alipay) and Tencent (Tenpay and WeChat Payments), Baidu Wallet serves as a Swiss army knife for the average Chinese consumer’s finance needs. By binding bank cards to the app, users can transfer money to friends’ accounts, top up their SIM cards, pay for virtual goods in video games, purchase movie tickets, and buy goods from any vendor that accepts Baifubao, Baidu’s third-party payment solution.

Agriculture

Noble Group to sell stake in agriculture unit for US$1.5b – Channel NewsAsia China’s largest grain trader COFCO Corp will buy a 51 per cent stake in Singapore-listed Noble Group Ltd’s agriculture business unit for US$1.5 billion, Noble said on Wednesday.

The two companies plan to form a partnership that will link COFCO’s grain processing and distribution business with Noble Agri’s agricultural unit.

Noble Group Limited – Did it sell the agriculture business at right price – which of the brokers is right? – Yahoo Singapore Finance After failing to spin off its agriculture business in 2011 it has now again plans for an IPO after divesting majority stake to COFCO. The question still remains whether this segment deserves better valuations.

Retail

An Overview of China’s Retail Industry | China Briefing News Underpinned by the steady rise of household income, China’s retail market has become one of the most lucrative and rapidly growing in the world. China is currently the world’s second largest retail market, and Asia’s largest. It is expected to surpass the U.S. to become the world’s largest retail market by 2016. After years of accelerated growth and annual expansion rates of 10 percent or more, China’s growth in 2013 slowed down to 7.7 percent – level with the figure for 2012. This slowdown in growth is consistent with China’s effort to carry out a major overhaul aimed at weaning its economy off its decades-long reliance on heavy industry, export-oriented manufacturing, state-driven investment, as well as investment in infrastructure. Meanwhile, to rebalance the nation’s economy, policymakers are attempting to shift towards a more consumption- and service-driven model, hoping to foster and sustain more productive growth over the next decade and beyond.

Reaching for the red | China Economic Review This is a characteristic trait seen in previous emerging markets like Japan that eventually opened up their palates to other varieties, notes Guilllame Delglise, CEO of Vinexpo, a global wines and spirits exhibition, but it will take time for the same to happen in China.

In an interview during a recent visit to Shanghai, Delglise, who was previously Asia Pacific director for Laurent-Perrier, also told China Economic Review that officials in Beijing are not inclined to serve champagne to their guests, and explained why that might be good for marketers of bubbly as they chase affluent urban youngsters at fancy nightclubs.

Healthcare

China Money Network − TPG, Fosun’s Privatization Target Chindex Receives Higher Takeover Proposal NASDAQ-listed Chindex International, Inc., the operator of high-end United Family hospitals in China, says the company has received a superior take-private proposal from an unspecified financial bidder, according to a company release.

The new bidder is willing to pay $23 per share for all outstanding American Depository Shares (ADS), valuing the company at around $414 million.

Posted from Diigo.

China Business Briefs 28/1/14

Sorry about the lack of posts yesterday. Beijing seems to hit my immune system with frequent minor ailments. All a bit wearisome.

ECONOMY

China Credit Trust Says It Reached Pact on Troubled Product – Bloomberg China Credit Trust Co. said it reached an agreement to restructure a high-yield product that sparked concern over the health of the nation’s $1.67 trillion trust industry and contributed to a global selloff in emerging-market assets.

The agreement includes a potential investment in the 3 billion-yuan ($496 million) product, Beijing-based China Credit Trust said on its website today, four days before payment is due. The two-line statement didn’t identify the source of funds, or say whether investors would get their money back.

China shadow bank says reached pact to avoid default – Yahoo Singapore Finance In a notification to investors, obtained by Reuters, the trust firm declared that an accord had been reached and advised investors to contact client managers, but the document, did not say how or when investors would be repaid.

Citing an unnamed investor in the trust product, Caixin, a respected financial magazine, reported on Monday that the agreement allows investors to recover their invested principal, but not the final interest payment originally promised.

China Trust Default Avoided…What Comes Next? – Forbes A default of the “Credit Equals Gold #1” trust product has been avoided. What happens in the coming months will either push China closer towards a financial crisis or help it gradually step back from the edge.

Heard on the Street: China’s Default That Wasn’t – WSJ.com Like clockwork, a mysterious third party has sprung to the rescue, allowing China Credit Trust to repay the principal on high-yield investment products tied to a struggling coal miner. Savers will miss some interest payments and get a lower effective yield, but otherwise escape unharmed. So does the reputation of Industrial and Commercial Bank of China, the country’s largest commercial lender, which sold the trust products to clients.

The hand of the state seems to be at work. Officials in the miner’s home province were actively involved in coming up with a solution, The Wall Street Journal reported. The bailout involves the third-party investor taking an equity stake in the coal company, which came only after the company suddenly gained approval to restart a closed mine.

China’s top diplomat wants free-trade deal with Europe | Reuters Beijing’s top diplomat called on Monday for China and the European Union to consider a multi-billion-dollar free-trade deal, a once unthinkable step that shows a big improvement in relations between two of the world’s largest markets.

“There are bright prospects for China-EU business cooperation,” Chinese State Councillor Yang Jiechi told reporters after meeting EU foreign policy chief Catherine Ashton ahead a visit to Brussels by President Xi Jinping in March.

China Trade Puzzle Revived as Hong Kong Data Diverge – Bloomberg China’s trade numbers, distorted by fake exports (HKETEXPC) last year, are set to come under renewed scrutiny after a discrepancy between Hong Kong and Chinese figures for bilateral trade widened to the largest in eight months.

Hong Kong’s December imports from China fell 1.9 percent from a year earlier to HK$176 billion ($22.7 billion), the city’s statistics department said yesterday. That compares with $38.5 billion in exports to Hong Kong reported earlier this month by China’s customs administration, up 2.3 percent, based on data compiled by Bloomberg.

China Property New Loans Hit $380Bln in 2013, Accounting 1/3 of Total-Caijing China’’s property sector attracted 2.34 trillion yuan (about $384 billion) of new loans in the past year, representing nearly a third of the total from the banking institutions, a central bank report showed.

Outstanding yuan-denominated lending to the property sector from both Chinese and foreign financial institutions to the property sector rose 19.1 percent year-on-year to 14.61 trillion yuan by the end of 2013, the People’s Bank of China said.

Total loans outstanding at commercial banks amounted to 71.9 trillion yuan at the end of December, up 14.1 percent year-on-year and compared with a growth rate of 15.0 percent in the previous year.

Currencies and banks: the two big questions about China | The A-List But in the financial world the Chinese remain a little more hesitant. Two big issues kept recurring, one international, the other domestic:

-will the renminbi soon rival the dollar as a global reserve currency?

-is the rapid growth of shadow banking an accident waiting to happen?

China’s debt-fuelled boom is in danger of turning to bust – FT.com Debate rages over how this tale will end. Most analysts believe that the Chinese economy will once again expand by more than 7 per cent this year, despite ballooning private sector debts. But the pessimistic minority has history on its side. Only five developing countries have had a credit boom nearly as big as China’s. All of them went on to suffer a credit crisis and a major economic slowdown.

Banks see slower growth in assets – Frontpage – BUSINESS – Globaltimes.cn Assets of the banking industry ­totaled 148 trillion yuan ($24 trillion) by the end of 2013, up 12.8 percent from a year earlier, according to data released Sunday by the China Banking Regulatory Commission (CBRC). The growth rate was the lowest since 2003, when the CBRC first started revealing such data.

Banking assets mainly refer to ­financial institutions’ lending assets. Meanwhile, total liabilities reached 137.9 trillion yuan.

Beijing says US should stop new dumping probe on solar cells | South China Morning Post China’s commerce ministry called on the United States on Sunday to stop anti-dumping investigations into imports of solar power products from China, expressing “serious concern” and vowing to defend its producers.

“The Chinese side expresses serious concern,” the commerce ministry said in a statement on its website. “China urges the United States again to carefully handle the current … investigations, be prudent in taking measures and terminate the investigation proceedings.”

Life Insurance in China, Key Trends and Opportunities to 2017 – PR Newswire – The Sacramento Bee The report provides in depth market analysis, information and insights into the Chinese life insurance segment, including: • Benchmarking analysis of the BRICS (Brazil, Russia, India, China and South Africa) countries • The Chinese life insurance segment’s growth prospects by life insurance categories and customer segments • The various distribution channels in the Chinese life insurance segment • The competitive landscape in the Chinese life insurance segment • A description of the life reinsurance segment in China • Detailed analysis of the regulatory framework in China

Oil Companies Using New Logic in Their Overseas Acquisitions – Among mergers and acquisitions of global upstream oil and gas assets over the past few years, one trend has seen European and American companies selling while national oil companies in China and Russia have been buying.

“In 2013, global M&A transactions of upstream oil and gas assets were the lowest since 2008,” said a January report by IHS, an energy consultancy. The report said that from 2010 to 2012, global M&A transactions of upstream assets totaled US$ 600 billion, with 2012 the highest in a decade, at US$ 250 billion. But this fell to US$ 136 billion in 2013.

Capital’s Expensive Plan to Fight Air Pollution Misguided, Expert Says – However, Tao Guangyuan, executive director of the Sino-German Renewable Energy Cooperation Center, said that while the sum shows determination, the government’s approach might be unnecessarily costly. (The center is supported by the governments of China and Germany.)

Much of the 760 billion yuan will go toward converting coal-burning power plants into ones that burn natural gas. Tao says the government will need to invest heavily in equipment and production facilities, but doing this will also create a long-term financial burden because gas is more expensive than coal.

Selling products and Services into China The big issue today is not so much how to make product in China, but how to sell product and services to China, be that within China or from outside China. Needless to say, the “within China” part is where the complicated legal regulations and hence the tensions can arise.

China’s guarantee companies face survival problems amid slowing economy|WantChinaTimes.com Since the second half of 2011, the government’s four trillion stimulus policy began to ebb, followed with a tightening monetary policy and the implementation of macro-economic control. Bad debt from soft government funds exploded from small and medium-sized enterprises, leading to rising pressure on guarantee companies.

Reforms to fuel Shanghai’s growth in 2014 – Xinhua | English.news.cn Economists believe the city’s financial sector is going to grow even more this year, while Shanghai Mayor Yang Xiong estimates the city economy will grow by 7.5 percent. A series of reforms in the landmark Shanghai Free Trade Zone, including changes to capital accounts and interest rates, are expected to add new sources of growth to the financial sector.

Talent returns to China, but progress slow – Business – Chinadaily.com.cn A report on returned overseas talent compiled by Wang found that more than 270,000 people came back in 2012, an increase of 46 percent over 2011, adding that rapid economic development in China is one of the major attractions.

Of those who returned, more than 30 percent took jobs or started a business in areas such as new materials, energy, biotechnology and electronic information.

8.8% salary hikes expected for 2014 – Chinadaily.com.cn Salary increases are expected to hit 8.8 percent in 2014, a slight rise on the 8.6 percent for 2013, according to a survey issued by 51job.com, a human resources service provider.

It found that the highest salary increases occurred in the financial sector, reaching 10.4 percent, followed by real estate (10.1 percent), high tech (9.9 percent) and bio-pharmaceuticals (9.2 percent).

Li reaffirms commitment to social welfare system[1]- Chinadaily.com.cn During his visit, the premier highlighted the importance of social relief work and urged the governments to do a better job in providing basic welfare to disadvantaged people.

“The government has to tighten up the network of social security. A welfare system must be in place for the poor to fall back on if they encounter difficulties,” he said. “Otherwise, these disadvantaged people can easily impact the bottom line of society.”

Hong Kong export growth misses forecast | South China Morning Post The growth, which lagged economists’ forecasts of a rise of 4 to 5 per cent, underscored a weak economic recovery in the United States and disappointing demand in Europe in the wake of the 2008 global financial crisis, they said.

However, some economists expected better prospects this year on the back of recent strength in the US recovery while Europe’s turmoil hit its bottom.

China probes death of official who liquored up at lavish banquet | Reuters **”negative social impact” is my new favourite euphemism** The Central Commission for Discipline Inspection is investigating Chen Ruixi, deputy mayor of the small city of Sanming in coastal Fujian province, who attended the banquet, as well as his colleagues.

One official died suddenly after the feast, held at the canteen of a private company, the agency said, adding that the event had made a “negative social impact”.

COMPANIES

Citic’s bad loan writeoff a sign of strain in China’s mid-sized banks | South China Morning Post China Citic Bank’s shareholders have agreed for the bank to more than double bad-loan writeoffs for last year, the latest sign of how much China’s economic slowdown is costing the country’s mid-sized banks.

At a meeting in Beijing yesterday, shareholders signed off as expected on management’s plan to write off 5.2 billion yuan (HK$6.6 billion) in non-performing assets, Citic said in a Hong Kong stock exchange filing. The bank originally budgeted for two billion yuan in writeoffs.

Lenovo expands into internet service marketWantChinaTimes.com The Lenovo Group, one of the world’s largest PC suppliers, is placing putting more emphasis on catering to internet services in a bid to become more competitive, reports Shanghai-based First Financial Daily.

Instead of focusing on only hardware production, the company is shifting towards an operational style that will also values software capabilities and offering customized internet services.

Mobile Tourism Service Yikuaiqu Nets Millions of Dollars in Series A Financing Yikuaiqu, a tourism app, announced that it has raised millions of dollars in Series A financing led by Shenzhen Hight-tech Investment and followed by Shenzhen Capital Group, etc. The company has secured millions of yuan of angel investment in 2012. The capital will be used in research and development of its travel applications for scenic spots, said Liang Jiankun, CTO of the company.

Suning Commerce Fully Acquires Group-purchasing Site Manzuo with Nearly 10 Million Dollars Suning Commerce (SZ:002024) announced that it fully acquired group-buying site Manzuo for nearly $10 million (source in Chinese), continuing its expansion into Internet industry after becoming the largest shareholder of peer-to-peer video streaming service PPTV last year.

In addition to maintaining independent operation, Manzuo will also take over the group-buying and travelling businesses under Suning. Feng Xiaohai, founder of Manzuo, will be named as the head of Suning’s local life sector. The acquisition procedure will be completed by the end of this March.

Alibaba unveils its three games for Laiwang and Taobao The games are available on two of Alibaba’s mobile apps. Users who update Laiwang, Alibaba’s social messaging app, to the new 4.5 version, will notice a new tab under the “Explore” page with a castle icon. Pressing the tab takes users to the app’s new game center, which currently features two titles.

Not unexpectedly, all three titles fit firmly in the “casual” genre, which have proven to be popular among game developers looking to reach broad audiences, and social networks looking to keep up user retention. Of the games on Laiwang, “Pa Pa Pa” bears a resemblence to Line’s Bubble Pop, while “Po Po Po” recalls Simon. Taobao’s “Crazy Toy,” meanwhile, has many of the trappings of King’s Candy Crush Saga.

China Mobile Ltd. (ADR) (CHL): China Mobile Shakes Up Fixed-Line Broadband – Seeking Alpha A welcome development looks set to shake up China’s fixed-line broadband sector this year, with word that leading wireless carrier China Mobile (HKEx: 941; NYSE: CHL) is offering aggressive pricing after receiving a license to offer fixed-line service late last year.

After-school Tutoring Service TAL Education Injects 150 Million Yuan in Childcare Portal Babytree TAL Education (NYSE:XRS), a K-12 after-school tutoring services provider formerly known as Xueersi, announced today it will inject 150 million yuan ($24.79 million) of strategic investment in childcare portal Babytree. Babytree has secured a combined $20 million of investments in previous rounds.

The acquisition of Babytree will help TAL to include pre-school children into its target customers. TAL has acquired education site Kaoyan.com for 50 million yuan last year.

Flying the flag for Chinese cars – Xinhua | English.news.cn Chinese carmaker Hong Qi, or Red Flag, is pressing to have its brand move into the mainstream here in China after years of supplying vehicles to the Chinese government.

Six months ago, Red Flag opened this showroom in Beijing’s exclusive Jinbaojie Street, which makes them almost neighbours with other top name carmakers such as Ferrari and Maserati. So what makes Red Flag Sales Manager Wang Rui Chao believe customers will come to his showroom and not theirs?

Drilling services provider COSL expects deep-water revenue boost | South China Morning Post China Oilfield Services (COSL), the mainland’s dominant provider of offshore drilling services, expects more work and a greater contribution from more capital-intensive deep-water jobs will lift revenues this year.

However, the company warned that the subdued outlook for oil prices will constrain the upside for drilling rates.

China’s Tencent WeChat App Targets U.S. Users – China Real Time Report – WSJ The fast-growing smartphone messaging application is now trying to expand in the U.S. market with a newly launched promotional campaign.

According to WeChat’s Chinese website, here’s how the new promotion works: Tencent is asking people who hold Google accounts to connect their accounts with WeChat, so they can invite their Google contacts to join WeChat. People can win a $25 Restaurant.com gift card from Tencent by getting five of their Google contacts to join WeChat.

Tencent Fully Acquires Map Service Linktech Navi with 60 Million Yuan Chinese Internet giant Tencent continues its acquisition spree this year by pouring 60 million yuan ($9.92 million) of funding in Beijing-based mapping service Linktech Navi for a 100% stake in the company (source in Chinese).

Founded in 2001, Linktech Navi is accredited with the state Grade-A qualification on surveying and mapping. The company’s main businesses are digital maps, navigation system, GPS vehicle monitoring solution, LBS application solution, etc. Linktech Navi’s customers include automobile manufacturers, like Chery, Shac, and Hawtai Motor, navigation services, telecos, among others.

Closer Look: Developers Build Banking Ties with Stake Purchases – Hong Kong-listed Evergrande Real Estate Group expanded into banking by acquiring a 4.5 percent stake in Beijing-based Huaxia Bank for 3.3 billion yuan last week.

A source close to the property developer said the purchase is a strategic investment. Huaxia has a strong balance sheet that can improve Evergrande’s financials. It may help Evergrande finance at a lower cost, he said.

BRIEF-China Life Insurance expects 2013 net profit up 120 pct on investment gains | Reuters China Life Insurance Co Ltd

* Says expects 2013 net profit up 120 percent y/y versus net profit of 11.1 billion yuan ($1.8 billion) previous year

Source text in Chinese: link.reuters.com/wac46v

BRIEF-Ping An Insurance 2013 premium income totalled 268.7 bln yuan | Reuters Ping An Insurance Group Co of China Ltd

* Says 2013 premium income totalled 268.7 billion yuan ($44.4 billion)

Source text in Chinese: link.reuters.com/seb95v

allAfrica.com: Ethiopia: Halfway Point Reached in Inner-City Rail Project (Page 1 of 2) While China Railway Group Limited (CREG) won the contract for the construction of the lines, it was the Metal & Engineering Corporation (MetEC) that was charged with supplying the tracks and the trains to transport passengers. Once complete, the tracks will be of standard size (1.435m wide) double track for the whole route.

LNG import: SSGC, ECC likely to award $1.4b contract today – The Express Tribune EVTL had submitted the offer for LNG services in partnership with China Harbour Engineering Company, a subsidiary of China Communications Construction Company, which has been blacklisted by the World Bank until January 2017.

However, the government cleared the company, saying that the project was not being funded by the World Bank, therefore, EVTL could not be disqualified. However, “a question arises why such clause was made part of the tender when it could not be implemented,” an official asked.

SKAI Holdings secures AED737.6m (USD201m) of financing from China’s ICBC for its Viceroy Dubai Palm Jumeirah projectReal Estate – Zawya SKAI Holdings, the Dubai-based real estate investment company, today announced it has secured AED737.6m (US$201m) of financing for its AED3.75bn Viceroy Dubai Palm Jumeirah, ensuring the project is fully funded.

The financing agreement, which further reaffirms SKAI Holdings commitment to the UAE’s hospitality sector, was arranged by the Industrial and Commercial Bank of China (ICBC), China’s largest bank, marking its first project financing deal for a hospitality project in the Middle East.

BRIEF-China’s Jiugui Liquor says police investigating theft, financial impact uncertain | Reuters China’s Jiugui Liquor Co Ltd

* Says police investigating 100 million yuan ($16.53 million)stolen from its account with Agricultural Bank of China’s Hangzhou Branch, financial impact of the theft still uncertain

Chinese Pork Supplier WH Group Said to Apply for $6b IPO – Bloomberg WH Group Ltd., the Chinese company that bought the world’s biggest pork supplier last year, applied to the Hong Kong stock exchange for an initial public offering, said two people with knowledge of the matter.

The company plans to seek as much as $6 billion from the offering in the first half, the people said yesterday, asking not to be identified as the information is private. WH Group changed its name from Shuanghui International Holdings Ltd. this month.

The WSJ Weekend Interview with Erik Prince: Out of Blackwater and Into China – WSJ.com Now, sitting in a boardroom above Hong Kong’s Victoria Harbour, he explains his newest title, acquired this month: chairman of Frontier Services Group, an Africa-focused security and logistics company with intimate ties to China’s largest state-owned conglomerate, Citic Group. Beijing has titanic ambitions to tap Africa’s resources—including $1 trillion in planned spending on roads, railways and airports by 2025—and Mr. Prince wants in.

Nicaragua canal fast-tracked with Chinese boost The Chinese company, HK Nicaragua Canal Development Investment Co. Ltd., is working with the Nicaraguan government on a massive canal project experts say could take 11 years to finish, cost $40 billion and require digging about 130 miles (200 kilometers) of waterway.

Just as the Panama Canal was a projection of growing U.S. power at the start of the 20th century, the Nicaragua project already reflects China’s influence and financial clout around the world. Another Hong Kong-based company has been operating port facilities on both ends of the Panama Canal.

ICBC Chief: China’s Shadow Banking Overblown – TheStreet Viewers of China’s state-run television Saturday heard the head of the Industrial and Commercial Bank of China say shadow-banking problems in the country have been overblown and “distorted.”

ICBC Chairman Jiang Jianqing, interviewed by CCTV television at the World Economic Forum in Davos, Switzerland, said “society has over-exaggerated and completely distorted the severity of shadow banking” in China.

I did not disown rail deal – AG | The Star Githu further discounted claims that his office’s endorsement of the commercial agreement signed between Kenya Railways and the China Road Corporation was also an approval of the tendering process. He said the SGR the logic of the financing agreement had “the making of a closed tender”.

Posted from Diigo.

China Business Briefs 26/1/14

Not much happening today with the imminent Chinese New Year.

ECONOMY

Fear grips markets as investors worry about China’s growth and US profits | South China Morning Post Fear is back in the market. Investors are worried about slower economic growth in China, a gloomier outlook for US corporate profits and an end to easy-money policies in the United States and Europe. They’re also fretting over country-specific troubles around the world – from economic mismanagement in Argentina to political instability in Turkey.

MOC calms talk of more FTZ pilots – Xinhua | English.news.cn China is still reviewing the applications of prospective new free trade zone (FTZ) pilots and hasn’t green-lit the establishment of any yet, a commercial official said on Friday.

“We are still studying other places’ FTZ applications and the State Council hasn’t approved any new set-up,” said an official of the Ministry of Commerce’s International Trade and Economic Relations Department.

re: The Auditors » Blog Archive » One Way Or Another: The SEC Versus The Chinese Big Four Firms Let’s break down the companies affected by the judge’s decision. I am assuming it will eventually be implemented in some form.

The PCAOB site lists 151 companies with mainland China auditors. That compares with 132 companies with audits signed by Hong Kong firms. (Numbers are skewed for KPMG which reports all issuer audits on one form, filed by Hong Kong, but PCAOB attributes all KPMG China issuer audits to mainland China.) The mix is different. PwC dominates on the mainland but an independent firm, Albert Wong & Co, has the most audits of Chinese issuers in Hong Kong.

I agree with Professor Paul Gillis that the ban will not affect US-listed companies audited by Hong Kong firms immediately, unless or until those companies start requiring SEC fraud investigations, too. In that case, the SEC and PCAOB will run into the same problem they have on the mainland. The PCAOB is prohibited from inspecting its registered firms auditing US issuers in Hong Kong. The SEC will run into the same “Chinese secrecy law” when trying to get audit work papers out of Hong Kong to investigate frauds as it has out of Shanghai or Beijing.

Reforms will result in fairer competition in China – Business – Chinadaily.com.cn Ongoing reforms in China will result in fairer competition in the country, the vice president of a leading business school said Friday.

Consumers in China will be better off thanks to tougher competition on the market, Hellmut Schuette, vice president and dean at China Europe International Business School told Xinhua in an interview on the sidelines of the World Economic Forum.

Major bank headquarters maintain deposit interest rate – Xinhua | English.news.cn China’s five major state-owned banks said Friday that their headquarters still maintain the deposit interest rate and surges reported on Thursday were individual cases by some branches for special clients or businesses.

The People’s Bank of China (PBOC), the central bank, announced on June 7, 2012 that the upper limit of the floating band of deposit rates would be adjusted to 1.1 times the benchmark, or up 10 percent at most. Local commercial banks began lifting the deposit interest rate after the announcement.

China Seeks to Attract Skilled Foreign Workers-Caijing China will speed up the exploration of immigration policies this year to  attract skilled foreign workers, a senior official said on Thursday.

However, Zhang Jianguo, head of the State Administration of Foreign Experts  Affairs, did not give details on when the policies will be  introduced.

Hangzhou closes live poultry markets to combat bird flu[1]- Chinadaily.com.cn Hangzhou, the capital of eastern China’s Zhejiang province, has suspended the trading of live poultry in order to halt the spread of the H7N9 bird flu virus.

The city banned the trading in its main urban areas on Friday, according to local health and industrial and commercial departments.

Solar industry bouncing back on mainland China after prolonged downturn | South China Morning Post The mainland’s solar panel industry is showing signs of booming again after a prolonged downturn – raising fears of another bust when the splurge of public money that is driving a spike in demand dries up.

But industry officials worry fast-growing generation capacity will increase fiscal pressures on China and Japan and force them to cut subsidies, which will then hit demand, just as happened with previous big solar users Germany, Spain and Italy.

COMPANIES

China’s Fosun Wants To Surpass Ping An Insurance In 2014 – Forbes For Guo Guangchang, chairman of China’s largest privately owned conglomerate Fosun Group, the ultimate goal is to be like Warren Buffett. To transform Fosun into a long-term strategic investment company much like Bershire Hathaway, the goal in 2014 would be to beat Ping An Insurance, the mainland’s second largest insurer that also provides financial and banking services, Guo said.

SOHO to increase Beijing holdings to 50% – Business – Chinadaily.com.cn SOHO China, a Hong Kong-listed property developer that specializes in commercial property, intends to hold half its property in Shanghai and half in Beijing, the company’s chairman said on Thursday.

Pan Shiyi made this comment when explaining that SOHO had sold out three projects in Shanghai last year.

“As we found that our holding property had reached 75 percent in Shanghai and only 25 percent in Beijing, we decided to restructure our portfolio to achieve a 50-50 split in both Beijing and Shanghai,” said Pan.

Spring Airlines bucks industry trend with 10% profit growthWantChinaTimes.com At a time when most airlines have seen profit declines due to restricted business flight demand, Spring Airlines, China’s only budget airline, reversed the downtrend to see profit growth of around 10% last year, Shanghai-based China Business News reports.

In 2013, total profits in China’s airline industry reached 27.3 billion yuan (US$4.5 billion), down 7.7% from 29.6 billion yuan (US$4.9 billion) a year earlier, while Spring Airlines, which owns 40 aircraft, enjoyed a profit growth of about 10%.

Tesla China chief unveils aggressive growth plan for China | Reuters U.S. electric carmaker Tesla Motors Inc (TSLA.O) expects its China sales to contribute one third of global sales growth this year, a senior executive said, adding that a trademark issue stalling full-entry into China had been resolved.

Veronica Wu, vice president of Tesla’s China operations, told Reuters the Palo Alto, California-based company planned to open stores in 10-12 Chinese cities by the end of 2014, including its flagship store in Beijing that opened late last year.

Tesla Announces Lower-than-Expected Price of $121k for Model S in China Tesla Motors, the electronic car startup co-founded by PayPal billionaire Elon Musk, announced that Model S will be sold for 734,000 yuan (US$121,280), lower than over 1 million yuan as previously speculated by the public.

Tesla claimed this is a fair price, although it is still about 40% more expensive as compared with $81,070 in the U.S. According to Tesla, the extra amount is generated from taxes, customs duties, and transportation costs. The company also breaks down the amount to $3,600 for shipping and handling, $19,000 for customs duties and taxes, and $17,700 for VAT.

America is in an Energy Renaissance; Don’t Get Too Excited About Cheap(er) Oil One reason for a potential surge in price is a major uptick in Chinese demand. 2013 was the slowest oil demand growth for China in decades, but next year, PetroChina (NYSE: PTR) estimates it will more than double last year’s growth. This could put a higher premium on international oil prices for the year, and further down the road as China becomes more and more reliant on oil imports.

25-year corporate tax holiday for US$ 1.3 billion offshore Colombo Port City | The Sundaytimes Sri Lanka The move to build Colombo Port City follows an unsolicited tender from China Communications Co. Ltd (CCC). The project is more expensive than the Mattala Rajapaksa International Airport (US$ 210 million), Phase 1 of the Hambantota Port (US$ 361 million) or the Colombo-Katunayake Expressway (US$ 350 Million) put together.

Noble’s macro trading head in Asia quits to make hedge fund comeback | Reuters Noble Group Ltd’s  head of macro trading in Asia, Allan Bedwick, has quit and is preparing to make a comeback in the hedge fund industry, sources said on Friday.

Bedwick managed his macro hedge fund firm, Sequence Asset Management, until 2012 and had moved to Noble Group last year.

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 21/1/14

After yesterday’s pessimism over the spiking interbank rate and worries over trust product defaults, stocks rebounded upon a RMB2255bn liquidity injection from the PBOC. Cash shortages were partly down to the run-up to Chinese New Year, although evidently the influence of funds from Alibaba and Ping An Insurance, for example, which offer substantially over the bank rate, is helping dry up bank deposits. The expectation is that with the PBOC sitting on massive FX reserves, it will be able to smooth over the bumps as banks have less deposits, SOEs have less access to capital (and hence are issuing more overseas bonds), and as the trust products and the shadow banking industry fail to provide the promised dividends. Time will tell, but the basic system of the Chinese economy is undergoing a rapture, and chances are there will be victims. Stocks trading around or even below book value is an almighty red flag.

On today’s trading, then, railway stocks did best, with China Railway Group gaining 2.19% to RMB4.2 a share, and China Railway Construction adding 1.68% to close at RMB2.42. Twelve of the twenty major stocks closed up, though only the aforementioned pair, SAIC Motor and Ping An Insurance put on over 1%. CNOOC had a very bad day, going down 6.3% to HK$13.08 on news that it had failed to meet production targets for the third year running. Energy stocks were otherwise flat, with China’s slower growth believed to herald lower growth in energy usage; both Sinopec and PetroChina finished the day as they started.

The Shanghai Composite closed at 2,008.31, having gained 17.06 points, or 0.86%.

Name Price Change Mkt cap 52wk high 52wk low EPS P/E
Sinopec 4.62 0.00 (0.00%) 538,531.74M 7.03 4.05 CN¥0.62 7.51
PetroChina 7.63 0.00 (0.00%) 1.40B 9.5 7.08 CN¥0.68 11.29
ICBC 3.4 0.00 (0.00%) 1.19B 4.53 3.38 CN¥0.74 4.62
China Construction Bank 3.92 +0.02 (0.51%) 980,043.05M 5.19 3.8 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 2.47 0.00 (0.00%) 690,030.45M 3.26 2.45 CN¥0.53 4.65
China Mobile 77.15* +0.50 (0.65%) 1.55B 89.2 74.9 HK$8.19 9.41
Noble Group 1 -0.01 (-0.99%) 6,660.21M 1.27 0.785 SGD0.04 27.64
China State Construction 3 +0.02 (0.67%) 90,000.00M 4.18 2.9 CN¥0.62 4.87
CNOOC 13.08* -0.88 (-6.30%) 583,988.72M 16.52 12.04 HK$1.89 6.91
China Railway Construction 4.2 +0.09 (2.19%) 51,817.67M 6.25 3.95 CN¥0.84 4.99
China Railway Group 2.42 +0.04 (1.68%) 51,545.76M 3.36 2.3 CN¥0.44 5.52
SAIC Motor 12.68 +0.20 (1.60%) 139,804.19M 19 11.83 CN¥2.05 6.18
China Life Insurance 14.3 +0.08 (0.56%) 404,185.29M 22 12.88 CN¥0.97 14.79
Dongfeng Motor 11.52* -0.04 (-0.35%) 99,257.71M 13.28 9.48 HK$1.38 8.37
China Shenhua 14.15 +0.06 (0.43%) 281,438.12M 25.28 13.97 CN¥2.25 6.29
Ping An Insurance 41.37 +0.65 (1.60%) 327,490.79M 53.27 31.69 CN¥3.45 11.99
China Telecom 3.61* -0.01 (-0.28%) 292,165.84M 4.42 3.48 HK$0.26 13.98
China Communications Construction 3.81 +0.02 (0.53%) 61,625.74M 5.79 3.74 CN¥0.81 4.71
Bank of Communications 3.73 +0.01 (0.27%) 276,999.97M 5.68 3.65 CN¥0.84 4.43

China Business Briefs 19/1/14

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

ECONOMY

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

COMPANIES

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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