Sinohydro

China Business Briefs 20/1/14

Lots of economic data out today, but the main stories are 1. another spike in interbank lending, and 2. the Shanghai Composite has gone under the 2000 barrier.  The systemic reasons for the sharp rise inter-bank lending are interesting, but we seem to be entering very dangerous territory for the Chinese economy, with the banks at particularly risk Their lazy days of soaking up low interest-paying deposits from the public to lend to SOEs are over. With the shadow banking industry also at risk, we are likely to see some severe pain in the financial sector. Accordingly, several state-owned banks are trading below their book value.

These are very delicate times.

ECONOMY

Crunch Escalates as Money Funds Rival Shadow Banks: China Credit – Bloomberg A doubling in China’s money-market funds in the past six months is draining bank deposits and raising the risk of financial failures during cash crunches, according to Fitch Ratings.

China Money Market Rates Soar – WSJ.com China’s financial system is showing fresh signs of stress with short-term borrowing costs for banks soaring on heavy demand for cash ahead of the Lunar New Year holiday and rising worries over the vast shadow-banking sector.

The rising rates in the money markets is also hammering stocks with the benchmark Shanghai Composite falling past the key level of 2000 to 1996.47, its weakest in almost six months and down 5.7% this year, the worst performer in Asia.

China banks in bond market push | News | IFRAsia China’s biggest banks are stepping up their use of the international capital markets in search of cheaper, longer-term funding.

Two Chinese lenders raised US$1.95bn in the US dollar bond market in the first two weeks of this year, more than half the US$2.67bn issued by China’s entire banking sector in 2013.

The deals have pushed credit spreads wider as market participants brace for a record volume of G3 bonds from Chinese banks in 2014.

Pressure Rises on Chinese Shadow Lender – WSJ.com Pressure is building on China’s largest bank and a major shadow lender to bail out investors facing a nearly $500 million hit, potentially the first loss for a key part of China’s vast but loosely regulated shadow-banking sector.

China Credit Trust Co., the shadow lender, told investors on Thursday that it may take legal action to recoup three billion yuan ($496 million) related to a troubled loan, without specifying against whom, according to a document reviewed by The Wall Street Journal.

Major banks in China see share prices fall below NAV|Markets|Business|WantChinaTimes.com Prices of China’s A-share banking stocks have one by one fallen below their net asset value (NAV) per share. The Industrial & Commercial Bank of China (ICBC) saw its prices fall as of Jan. 15, with the country’s other major state-run banks set to quickly follow, according to Shanghai Securities News and our sister paper Want Daily.

Among the 16 listed banks, 12 have seen their share prices fall below their NAV per share. The remaining four banks — Ping An Bank, Bank of Ningbo, China Minsheng Bank, and China Merchants Bank — may soon approach the line however, as there their price-to-book ratio, or P/B ratio, stands at just 1.01, 1.01, 1.09 and 1.04, respectively.

China’s economic growth slows in line with forecasts – Economic Report – MarketWatch Among other data released Monday, industrial production slowed to 9.7% annual growth in December, from November’s 10% gain. The Wall Street Journal and Reuters surveys put the median forecast at 9.8%.

December retail sales increased by 13.6% compared to the year-earlier period, after a 13.7% rise in November, with the result matching the projected increase from the Reuters survey.

China economic growth continues to cool – FT.com Gross domestic product in the world’s second-largest economy expanded 7.7 per cent in the fourth quarter compared with the same period a year earlier – a slowing from 7.8 per cent growth in the third quarter, according to figures released by the government on Monday.

China’s full-year GDP growth in 2014 is expected by economists to come in at about 7.4 per cent, which would be the country’s slowest pace since 1990, when Beijing faced international sanctions as a result of the 1989 Tiananmen Square massacre.

China’s economy grows 7.7 percent in 2013, more cooling seen | Reuters China’s economy grew 7.7 percent in 2013 after easing in the final three months on sagging investment growth, a cooldown that some analysts say is a sign of the more sober times ahead as the government wrestles to implement major reforms.

How Much Did Consumption Contribute to China’s 2013 GDP Growth? – China Real Time Report – WSJ Economists may not know for months how much China’s emerging consumer class contributed to last year’s 7.7% growth. But by one economist’s estimate, last year it continued to slide.

Ma Jiantang, chief of China’s National Bureau of Statistics, said consumption contributed 50% of GDP last year and investment 54.4%. Trade of goods and services was a negative 4.4%, he said.

China central bank guides yuan slightly lower, downside seen limited – The Economic Times China’s yuan edged down against the dollar on Monday after the central bank fixed a slightly weaker midpoint, but traders said any sharp correction would be suppressed by the central bank.

Spot yuan was trading at 6.0522 per dollar at midday, falling 0.03 per cent from 6.0502 at Friday’s close, after the People’s Bank of China (PBOC) set its midpoint at 6.1083, down 0.07 per cent from Friday’s 6.1041. Traders said December and 2013 economic data published by the government on Monday had no impact on trading as the yuan’s exchange rate remained in the tight grip of the central bank.

China 2013 new home sales surge past $1.1tn – FT.com China’s real estate frenzy continued unabated last year, with buyers snapping up more than $1.1trn worth of new homes, roughly the same amount as was spent on all home sales in the US in 2012.

China – which only embraced home ownership less than two decades ago – ramped up sales as the new premier Li Keqiang eased off on the previous administration’s attempt to artificially cap house prices.

Beijing land sales likely to set new monthly record|Markets|Business|WantChinaTimes.com By Jan. 16, the revenues from land sales in Beijing had exceeded 30 billion yuan (US$4.9 billion), but still many plots of lands are to be auctioned in the remainder of the month, said a department from the Beijing Municipal Bureau of Land and Resources.

Exporters in Guangdong’s Pearl River Delta seek relief from surging yuan | South China Morning Post A stronger yuan adds salt to the wounds of factory owners already suffering from rising wages, worsening labour shortages, weak demand and government policies of weeding out labour-intensive, pollution-inducing and energy-consuming industries.

The yuan’s appreciation shows no signs of abating, and it is on track to gain a further 2 to 3 per cent against the US dollar this year, economists say.

Chinese shipbuilding industry rides wave of restructuring – Xinhua | English.news.cn Though Chinese shipbuilding has yet to come in from the cold, recent restructuring, cuts in overcapacity and upgrades have given the troubled industry more hope, a report showed.

The industry received in 2013 new orders with dead weight tons (DWT) of 70 million, up 242 percent year on year, according to a report posted by the Information and Technology Ministry.

Lock-up shares worth 23 bln yuan come online – Xinhua | English.news.cn Lock-up shares worth 22.6 billion yuan (3.7 billion U.S. dollars) will become eligible for trade next week in China.

The volume marks a slight rise from the 20.83 billion yuan from Jan. 13 to Jan. 17, according to information from the Shanghai and Shenzhen stock exchanges.

Under the mainland’s market rules, major shareholders of non-tradable stocks are subject to one or two years of lock-up before they are permitted to trade.

Beijing Lays Siege to China’s Steel Output – China Real Time Report – WSJ The steel slowdown began in September, with the deceleration becoming most marked in November. In December, daily average production of the industrial metal fell to 2.01 million metric tons, China’s lowest level for the year.

The slide stems in part from an all-out campaign that President Xi Jinping’s government is waging to cut the industry’s bloated capacity and environmental pollution. China produces about half the world’s steel, and the amount of redundant capacity in the country is more than the annual steel output of the U.S. The overproduction has already weakened Chinese steel prices, which ended the year 7.2% lower than when 2013 began. Global composite carbon steel prices followed the trend, falling 2% last year, according to data from the consultancy MEPS.

Beijing-owned US debt sustains growth; not political tool: CNSWantChinaTimes.com As of November 2013, China owned US debt amounting to a total of US$1.3 trillion, and remains the country’s largest creditor.

US debts owned by China increased by 11% in 2013 from the previous year, the report said, adding that US debt remains an important market for China.

Minimum wage raised in 26 provinces, cities in China|Policy|Business|WantChinaTimes.com The paper reported that the minimum wage in Beijing, Zhejiang, Henan, Guizhou, Shanxi, Shandong, Jiangxi, Guangxi, Gansu, Ningxia, Tianjin, Shanxi, Shanghai, Guangdong, Yunnan, Xinjiang, Sichuan, Jiangsu, Jilin, Liaoning, Anhui, Fujian, Hunan, Hainan, Shenzhen and Inner Mongolia has been raised as of Dec. 31, 2013. The minimum monthly wage in Shanghai is now US$216, while the minimum hourly wage for a blue-collar worker in Xinjiang is US$2.

For China, north is a new way to go west – The Globe and Mail China is not an Arctic country. Its northernmost point on the Russian border – a settlement called Mohe that is nicknamed “China’s north pole” – is well shy of the Arctic Circle.

Yet in Beijing lately, officials have made a point of calling their country a “near Arctic” state. China is increasingly casting a hungry gaze north: Its companies are exploring for oil and resources that can be mined, its diplomats are making friends with Nordic countries – with the notable exception of Canada – and its yuan are paying for polar research projects in the Antarctic and Norway.

Hard luxury brands set up shop in Macau – FT.com Macau, the special administrative region of China and undisputed champion of the global gambling industry, is going through a period of unprecedented growth.

Given a Chinese population eager to place bets, and a gambling revenue of $45bn in 2013 – an increase of nearly 20 per cent on the previous year – it is easy to see why. And Macau’s gamblers have an appetite for luxury goods.

Citi offers automated RMB cross-border pooling in Shanghai free trade zone | Reuters Citi (C.N) said on Monday it had launched an automated RMB cross-border pooling solution for its clients in the China (Shanghai) Free Trade Zone, a move that could help multinational companies optimize their cash management and enhance capital efficiency.

The solution enables companies to automatically sweep RMB between their onshore and offshore entities freely, without providing supporting documents or applying for approvals on a deal basis.

Shanghai mayor vows progress on free-trade zone this year | South China Morning Post At the annual meeting of the city’s legislature, which opened yesterday, Yang Xiong underscored the significance of making the yuan fully convertible inside the 28.8-square-kilometre testing ground for economic reforms in the country.

The mainland’s first free-trade zone was launched in late September with the aim of allowing the yuan to be convertible on the capital account, meaning for investment and financial transactions. The details of the zone have yet to be announced.

Premier vows to help startups – Chinadaily.com.cn The premier promised better support from the government for student entrepreneurs facing difficult job-hunting prospects, and he said their perseverance will lead to larger possibilities of success when building up businesses.

Growth in China’s outbound investment not dramatic but steady – as it should be | South China Morning Post Official data may show faster growth for last year, but it will be still be nothing like the explosive gains in the middle of last decade.

Why not? Beijing just pegged foreign exchange reserves at US$3.82 trillion. There are hundreds of billions of dollars in foreign currency more at domestic banks. In that light, another US$50 billion last year would have been a drop in the bucket.

A Sino-British pact on cross-border fund sales? Not so fast | South China Morning Post As China opened up its economy to the world, Hong Kong has long enjoyed the exclusive right to develop certain new products and services.

Now there are straws in the wind that the mainland may not only sign a mutual recognition agreement with Hong Kong to allow the selling of fund products in each other’s markets but may soon also sign a similar accord with Britain.

London sees renminbi transactions take off – Business – Chinadaily.com.cn Rapidly rising renminbi transaction volumes are supporting London’s ambition of becoming the Western world’s offshore yuan center, according to figures released on Thursday by the City of London Corp.

Trade finance transactions using the Chinese currency totaled 27.94 billion yuan ($4.61 billion) in the first half of 2013, up from 13.8 billion yuan a year earlier.

China Vehicle Sales Reach 22 million Units in 2013 | China Briefing News China became the first country to sell in excess of 20 million auto units last year, with nearly 22 million passenger and commercial vehicles being sold in the country over that time. This figure represented a 14 percent increase over 2012, and was double the China Association of Automobile Manufacturers estimate. Of these, 59.7 percent of the market was taken by foreign joint ventures. Volkswagen replaced General Motors as the top China seller for the first time since 2003, while Ford sales grew by 49 percent and Japan’s Toyota enjoyed a record year, despite political problems with China.

COMPANIES

Dalian Wanda to List Two Businesses This Year: Wang Jianlin -Caijing Wan Jianlin, the richest Chinese man said he is attempting to list two of  Dalian Wanda Group’s businesses this year as his conglomerate keeps growing fast  in a slow-down of the world’s second largest economy.

The Dalian Wanda chairman didn’t disclose which businesses he is planning to  list but speculations have been focusing on Wanda Cinema Line, the largest  cinema operator in Asia and Wanda Commercial Properties Co. Ltd., which both  which have been waiting for an IPO on mainland markets for three years.

Petrochina Buy at Chinavestor Based on gas pricing reforms and higher oil prices, we expect Petrochina’s business prospects to improve over the forthcoming quarters. Given Petrochina’s share of the natural gas market, they are likely to overturn downstream losses incurred in 2012 and improve their share price significantly in 2013. The revisions in gas prices are predicted to be considerably higher for industrial users than residential users. Petrochina has traded at PER of 12.5x in 2012, reflecting a 56% premium over CNOOC (NYSE:CEO) , who utilizes more aggressive E&P tactics and realised higher EPS values.

China Grand Automotive Readies Hong Kong IPO – WSJ.com China Grand Automotive Services Co., in which U.S.-based private-equity firm TPG Capital has a stake, is planning to raise $500 million to $800 million in a Hong Kong initial public offering in the second quarter at the earliest, people with a direct knowledge of the deal said Monday.

Steel firms in China’s dirty North get the hammer|WantChinaTimes.com New Wuan Iron and Steel Group, the largest private steel firm in China’s largest steel-producing province, is slimming down its annual capacity to 8 million tons by 2017. The slash, more than 50% of its 2013 output, is indicative of major tremors in the nation’s steel industry, reports the Chinese-language Economic Observer.

Game firms in China solicit endorsements from Japanese porn stars|Markets|Business|WantChinaTimes.com Two years ago, when Japanese adult film star Sola Aoi showed up on stage at online clothing retailer VANCL’s end of year party and was hugged by Chinese business tycoons, it was seen by many in the industry as a fun way of boosting morale. Now, more and more internet firms are following suit, Sina’s technology news webportal reports.

Recently, Qihoo 360 Technology, an antivirus software firm, invited another Japanese adult film star, Takizawa Laura, to its annual party, attracting media attention, while one unnamed Shanghai video game firm, in addition to inviting a Japanese porn star to endorse one of its video games, reportedly offered a special prize for its best performing employee at its end of year party of a one-night-stand with the porn star.

China’s re-opened IPO highway proving a bumpy ride – FT.com In China, initial public offerings are a bit like London buses – you wait 14 months, and then 50 come along at once.

On Friday, the first new listed company since November 2012 – Neway Valve – made its trading debut in Shanghai. The stock rose more than 40 per cent, an encouraging sign for the hundreds of other new listings that are expected through the year.

1 Android Player That Wants to Piggyback on Apple Chinese manufacturer Huawei looks to stand out in the Android crowd with reverse charging in its Ascend Mate 2. It’s a solidly built 6-inch device, but do consumers really want to use one phone to charge another?

Opportunity in China’s food crunch – Craig Stephen’s This Week in China – MarketWatch The imminent listing of Shuanghui International Holdings in Hong Kong — which last year gobbled up America’s largest hog producer — is set to put China’s food industry in the spotlight. There is big money to be made feeding China as it faces up to a self-made food crunch.

Baidu continues to enter households with wireless music box Baidu (NASDA: BIDU), the Chinese internet giant best known for its search engine, has recently unveiled its latest hardware product – a wireless music-streaming box that retails for a smooth RMB 99 (about $16).

Chinese firm constructs high-speed railway in Turkey – People’s Daily Online A photo taken on Jan. 4, 2014 shows a trial train take a test run on the Ankara-Istanbul high-speed railway constructed by China Railway Construction Corporation Limited (CRCC) in Turkey. Chinese railway department officals said on Jan. 17 that second phrase of the principal project of Ankara-Istanbul high-speed railway has been completed, marking the first of its kind in overseas market is about to open to traffic in a short term.

Shell, PetroChina Gas Venture in Australia Reviewing Job Numbers – WSJ.com Royal Dutch Shell PLC (RDSB) and PetroChina Co. (PTR) are looking to cut jobs in an effort to contain costs at their venture in eastern Australia, where the energy companies plan to build a multibillion-dollar operation for extracting and exporting natural gas trapped in underground coal seams.

A spokesman for Arrow Energy Pty. Ltd., a 50-50 venture between Shell and its Chinese partner, said the company is focused on reducing overall costs and continues to assess options to develop its gas reserves. Those options include looking at possible collaboration opportunities, he said.

Xiaomi, Gionee grab 10th largest market share from HTC|Technology|Business|WantChinaTimes.com Taiwan’s HTC dropped out of the top ten for global smartphone market share last year as its Chinese rivals Xiaomi and Gionee saw their market shares increase, according to market research institution TrendForce and our Chinese-language sister newspaper Commercial Times.

US mulling partnership with China in Congo Inga 3 dam project | South China Morning Post In an unusual move, the US government is considering partnering with Chinese state firms in financing the US$12 billion Inga 3 dam in the Democratic Republic of Congo, one of the world’s costliest and possibly most controversial dams.

A Chinese consortium comprising Sinohydro and China Three Gorges Corp, both state-owned enterprises (SOEs), are bidding for the project, according to media reports.

Jidong Cement reaps hefty profit in 2013 – Xinhua | English.news.cn Tangshan Jidong Cement Co., Ltd, the largest cement supplier in northern China, estimated net profits in 2013 would rise between 70 percent and 100 percent year on year to reach over 306 million yuan (50 million U.S. dollars).

Earnings per share for Jidong stood at the range of 0.227 yuan and 0.267 yuan, up around 0.1 yuan from a year earlier, the company said in a business report filed on Saturday to the Shenzhen Stock Exchange.

Goubuli to slash bun prices in Tianjin – BUSINESS – Globaltimes.cn The price cut came shortly after Goubuli’s revelation of its plan to buy a famous American coffee chain. Without revealing the name of the coffee chain, Goubuli said on January 8 that the deal is expected to take place in the first half of the year.

Posted from Diigo.

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China Business Briefs 13/1/14

ECONOMY

Yuan Reaches 1993-High on Record Fixing as Taper Concern Eases – Bloomberg The currency advanced by the most in a month as the People’s Bank of China strengthened the daily fixing by 0.1 percent today to 6.0950 per dollar, the highest since a peg to the greenback was scrapped in July 2005. U.S. employers added 74,000 workers in December, the least since January 2011, the Labor Department said on Jan. 10. China had a trade surplus of $25.6 billion in December, according to official figures released Jan. 10.

China Moving Closer to Bank Failure: Xinhua-Caijing China is moving closer to allowing its banks actually fail, the official Xinhua reported, citing Yan Qingmin, deputy chairman of China Banking Regulatory Commission.

The market will have the final say in future, Yan told the forum, which means banks would have to stay out of the market if they end up insolvent. Such a remark from the regulator has signaled the state’s exit from its support to deposits in commercial banks and the government will for the first time allow its banks to go bankrupt, Xinhua said.

China’s 2013 exports rise 7.9%, imports up 7.3% – Business – Chinadaily.com.cn China’s exports rose 7.9 percent year on year to $2.21 trillion in 2013, while imports increased 7.3 percent to $1.95 trillion, customs data revealed on Friday.

The foreign trade surplus widened to $259.75 billion in 2013, an increase of 12.8 percent from a year earlier, said Zheng Yuesheng, spokesman for the General Administration of Customs.

Nation’s salary growth strong: Report – Business – Chinadaily.com.cn According to the 2014 Hays Asia Salary Guide, which was released on Thursday and polled about 2,600 employers across the region, 67 percent of the surveyed Chinese employers said they will increase employees’ salaries above 6 percent, compared with 66 percent last year.

US scrutinises Chinese investments most over national security: law firm | South China Morning Post The Committee of Foreign Investment in the United States (CFIUS) reviewed 23 transactions proposed by Chinese companies in 2012, followed by 17 for Britain, traditionally top of the list for scrutiny, and 13 for Canada, US law firm Kaye Scholer said in a report.

Investors still not sold on rail sector – BUSINESS – Globaltimes.cn Some see these losses as a sign that China’s rail assets are undervalued, despite a recent industry overhaul. In actuality though, investors have good reason to be bearish on the rail sector.

Chinese Developers Set to Increase Investment In Foreign Real Estate – Forbes Chinese developers have been purchasing big real estate projects in the world’s most important cities in the past year. They will continue the shopping spree this year, with other Chinese groups to follow the trend soon, according to real estate analysts.

New property bureau to be set up – BUSINESS – Globaltimes.cn China will establish a new bureau specifically designed for property registration this year in a push to facilitate property management reform, the Ministry of Land and Resources (MLR), the country’s top land regulator, said over the weekend, according to the Xinhua News Agency.

On top of the establishment of the new bureau, relevant regulations that will lay the ground for a unified regi­stration system will be released this year, Xu Deming, vice minister of land and resources, said Saturday at a two-day annual work conference.

China Believes that it Can Duplicate Our Success Given our recent success in producing oil and natural gas, it shouldn’t shock anyone that other countries believe they can follow suit. China now has hopes of doubling its oil production by 2030. Because it will be relying heavily on unconventional production methods, the help of current experts in these areas will be needed. Equipment & service providers Halliburton (NYSE: HAL) and Schlumberger (NYSE: SLB) have already begun successfully setting up shop in China. They will be helping producers like CNOOC (NYSE: CEO) and Royal Dutch Shell (NYSE: RDS-A  ) tap these vast resources. For more, tune in to the clip below.

Why China Wants to Kill Off Bitcoin The press releases may seem mundane, but the reality is, China has a big incentive to keep Bitcoin out of the hands of its citizens. China maintains very tight capital controls, limiting the amount of cash citizens can move outside the country.

Bitcoin effectively circumvents any and all capital controls. Prior to a widespread ban, Chinese citizens could buy Bitcoin to sell for another currency, or even buy homes in foreign lands. Yes, homes. Several homes have been listed with prices in Bitcoin.

COLUMN-Record China crude oil imports flatter to deceive: Clyde Russell | Reuters Taken together, net crude and fuel imports last year were 5.83 million bpd, up about 160,000 bpd, or 2.8 percent, from 2012’s 5.67 million bpd.

This figure is a truer reflection of the overall state of Chinese import demand.

Closer Look: Same Game, Different Names – The end of a listing freeze on mainland stock exchanges has reinvigorated investor appetites for new shares. This comes along with the intention of many company founders to cash out of newly-listed companies. When such demands intersect, sparks are bound to fly.

RMB appreciation unappreciated as inflation dampens affordability|WantChinaTimes.com The 35.7% appreciation in the value of the yuan during this eight-year period has been a positive development for Chinese exchange students studying overseas, but locals who have remained in the country are complaining that their money is becoming less valuable given that the consumer price index, the main measure of inflation, has averaged around 3.1% per year.

Milk, Games and Movies: China Stocks to Watch in 2014 – China Real Time Report – WSJ One area to watch: dairy products. The government’s relaxation of its one-child policy and antitrust measures targeting international competitors are both good news for the domestic milk industry, Bank of Communications Schroder Fund Management Co. said in a recent research report. Retail prices of China’s dairy products rose 5.7% in 2013 on-year, up from an increase of 3.2% in 2012, data from the National Bureau of Statistics showed—faster than inflation, which clocked in for the year at 2.6%.

China can avoid Japan-style property bubble: official | Reuters China’s policy fine-tuning and ongoing urbanization can help it to avoid a Japan-style property bubble, a senior housing official said, amid fears a housing market crash could lead to a hard landing for the world’s second-largest economy.

Beijing has allowed local governments to take differentiated property tightening measures, rather than a one-size-fits-all bid to cool the market, Vice Housing Minister Qiu Baoxing said in remarks published in the Southern Metropolis Daily.

Luxury cars drive UK exports to China – Telegraph British exports to China are rising at a blistering pace and are poised to overtake those of France for the first time in the modern era, driven by sales of Range Rovers and other luxury cars to the country’s new rich.

Fresh data released by China’s authorities show that imports from Britain rose 14pc to $19.1bn (£11.6bn) last year, with more than 40pc of total sales coming from vehicles and transport goods.

Closer Look: Why Overpriced IPOs are not a Reason for Intervention – All of them have one thing in common: the price-to-earnings (PE) ratio of their proposed offering price was much higher than the average PE ratio of comparable companies in the secondary market.

Five companies scheduled to start their online road shows for an initial public offering on January 13 postponed their issuance on the previous day, putting the number of companies to halt their stock issuance last minute at six.

China ‘equity return’ is a misnomer – Craig Stephen’s This Week in China – MarketWatch The lack of correlation between China’s growth and stock-market performance has frustrated money managers for years and spawned a variety of theories to try to explain this misnomer. Some look more useful than others, but they are worth reviewing as new explanations arrive.

Little consensus on renminbi appreciation this year | China Economic Review The bank’s Deputy Governor Yi Gang went a bit further last week, saying that China’s currency was close to equilibrium and would not require more intervention.

If that’s true, and China intends to stop buying US treasuries on a regular basis, the value of the yuan should appreciate considerably this year and in the years to come as China’s trade surplus is set to rise too. The IMF says the country’s current accounts surplus will double between 2013 and 2017.

COMPANIES

Death blast hits Sinopec for $963m – The Standard China Petroleum & Chemical Corporation (0386) announced yesterday it had suffered a direct loss of 751.72 million yuan (HK$963.69 million) from a deadly accident in Qingdao last November for which chairman Fu Chengyu has received disciplinary penalties.

Fu was given a demerit on administration, while vice chairman Wang Tianpu, president Li Chunguang, chief safety officer Wang Yongjian and supervisor and director of general production Yu Renming were given “serous demerit on administration,” the firm said.

Chinese app store Wandoujia seals $120 million in funding Wandoujia, one of China’s top Android app stores, has secured a massive $120 million in funding, the Beijing-based startup revealed today.

The investment is led by SoftBank (TYO:9984), the Japanese mobile telco, with some funds also coming from DCM and Kaifu Lee’s Innovation Works Development Fund (IWDF). It’s the second major cash boost for Wandoujia, coming long after its $8 million in series A funding in 2011, which was led by DCM and Innovation Works.

Billionaire Li’s PCCW, Pacific Century Premium Suspend Trading – Bloomberg PCCW Ltd. (8), controlled by billionaire Richard Li, and its property unit Pacific Century Premium Developments Ltd. (432) halted their shares from trading in Hong Kong.

Pacific Century Premium plans to release a statement relating to “inside information and unusual price and trading volume movements,” the company said in a filing today. Shares of the Hong Kong-based property developer surged 15 percent to HK$3.07 before the trading halt.

WeChat brings in over 100,000 taxi rides in 9 days It’s been about a week and a half since WeChat, the messaging app that’s dominating smartphones in China, added taxi booking and payments to its range of services. The maker of WeChat, Chinese web giant Tencent, added support for the Didi Dache service after investing nearly $100 million into it. Today the fine folks at 36kr say that the total number of completed transactions – meaning taxis hailed and paid for inside of WeChat – have surpassed 100,000.

KFC Crisis in China Tests Ingenuity of Brand Builder – WSJ.com More than a year into the crisis, Yum is still struggling. Now Mr. Su and Chief Executive David Novak say the Louisville, Ky., company can turn things around in 2014, vowing that new menu items and digital-media initiatives will revive the brand in China. “I fully expect a strong comeback year,” Mr. Su said in a rare interview last month.

Some investors are getting restless. Yum’s shares—which had been propelled for years by its China growth—are up only 12% since late November 2012, when Chinese state media started reporting on food-safety concerns surrounding KFC suppliers. The Dow Jones Industrial Average rose 26% in that period.

President Death Leaves Heir Overdue Rail Payments: China Credit – Bloomberg Shares in China’s second-biggest builder of railways have fallen 4.9 percent in Hong Kong since the company said Jan. 5 that President Bai Zhongren had died in an accident and that Chairman Li Changjin will take over his job before a successor is chosen. The yield on 2023 dollar-denominated debt of a company unit reached an eight-week high of 5.03 percent on Jan. 9, up from 3.88 percent when they were sold last January.

The Beijing-based company had 531.6 billion yuan ($87.9 billion) of liabilities on Sept. 30, data compiled by Bloomberg show. Its long-term debt to equity ratio of 129 percent would put it in the worst 3 percent on the Hang Seng Index, while its ability to cover interest payments with earnings would be in the worst 1 percent.

Li & Fung to Launch Factory-Safety Business – WSJ.com Li & Fung Ltd. , the buying agent for retailers including Wal-Mart Stores Inc. and Target Corp., said it is setting up the unit to provide factories with consulting services on safety, compliance and efficiency, as well as access to financing and insurance.

Dogfight on the cards | South China Morning Post A dogfight is looming in the horizon as more budget carriers come on stream, bringing them head-to-head with the likes of Cathay Pacific Airways, China Southern Airlines and Air China.

There are about 60 budget airlines operating nearly 1,000 aircraft in the Asia-Pacific but only four in Greater China – encompassing the mainland, Hong Kong, Macau and Taiwan – deploying fewer than 80 aircraft.

OCBC Said in Talks for All-Debt Financing for Wing Hang Deal – Bloomberg Oversea-Chinese Banking Corp. (OCBC) is in talks with lenders including Bank of America Corp. and HSBC Holdings Plc about an all-debt financing for its acquisition of Hong Kong’s Wing Hang Bank Ltd. (302), according to two people with knowledge of the matter.

Singapore-based OCBC plans to sell stock later to help repay the short-term loan, said the people, who asked not to be identified because the discussions are private. Talks between the companies are centering around a valuation of almost 1.9 times Wing Hang’s book value, though no terms have been finalized, one person said.

Service firms pay 67% of tax revenue – Xinhua | English.news.cn The service industry paid nearly two-thirds of Shanghai’s tax revenue last year and financial firms took the lead as they made up 40 percent of the 100 top service taxpayers, underlining the city’s goal to be a global financial center.

The Bank of Communications Ltd was the top service taxpayer with 16.2 billion yuan, followed by Shanghai Pudong Development Bank with 10.4 billion yuan, and Shanghai GM Sales Co Ltd with 8.4 billion yuan.

Onecard, China’s version of Coin, is your digital credit card As well as storing your credit cards and being swipe-able in China’s point-of-sale devices in stores, OneCard will go a couple of steps further than Coin in also storing prepaid cards and membership/loyalty cards. Even better, it promises to support the tap-to-pay function on Beijing’s and Shanghai’s public transport systems. It also incorporates NFC, but that’s of limited usage pretty much anywhere.

Moody’s assigns A1 to BOC Hong Kong Branch’s MTN program drawdown Moody’s Investors Service has assigned an A1 rating to the benchmark-size  senior unsecured notes to be issued by Bank of China Limited (BOC) Hong  Kong Branch.

ASIA CREDIT CLOSE: New issues feel impact of competition | Reuters Bank of China, meanwhile, also announced a two-tranche offering, which took the shine away from BoCom’s 3-year bonds printed last week, which were, therefore, last quoted at 186bp/184bp over the 2-year US Treasury, or 3bp wider.

Sinohydro Group Ltd : 32 Years After, No Power At Mambilla Hydro-Power Project | 4-Traders According to the report, the project was contracted at the sum of $3.2 billion (equivalent N508 billion) to the China Gezhouba Group Company Limited (CGGC) and another Chinese consortium, Sinohydro, with the proposed structure of the contract stipulating that Sinohydro cover 70 per cent of the project while CGGC would execute the remaining 30 percent.

Hong Kong Electric Eyes up to $3.6 Billion From IPO | 4-Traders HK Electric Investments, which owns power plants and electricity-distribution networks in the city, is selling 4.43 billion units in an indicative price range of HK$5.45-HK$6.30 each, it said in a statement late on Sunday. At the US$3.6 billion size, it will be the region’s top deal since Suntory Beverage & Food Ltd raised US$4 billion from an IPO in Japan in June, according to Dealogic.

£24bn rival to Panama Canal to break ground this year – Telegraph Its construction is essential to deal with a surge in global trade and the rise of colossal supertankers, many of which are too large for the ageing   Panama Canal, more than 500 miles to the south.

The project’s funding is being led by the Chinese telecoms billionaire Wang Jing, whose HKND Group won a licence for the development last year.

Chinese Startup Hopes to Capture Apple’s Magic – China Real Time Report – WSJ The Chinese company, which is planning to expand abroad, paid Apple co-founder Steve Wozniak to appear on Sunday in front of reporters at its headquarters in Beijing. Mr. Wozniak showed up at the event–labeled as the “Lei Jun & Woz Tech Talk”–with Xiaomi’s founder and chairman, Lei Jun, and told reporters that Xiaomi’s products were “excellent” and “good enough to crack the American market.”

What U.S. Coffee Chain Could China’s Goubuli Be Looking to Buy? – China Real Time Report – WSJ Zhang Yansen, chairman of closely held Chinese bun maker Goubuli, has been in the Chinese press this week saying he is in the final stages of negotiations to acquire a well-known American coffee chain, without disclosing the name. He gave some hints though: It has hundreds of shops in 40 countries spanning the U.S., Europe and Asia.

China Life Insurance Co. Ltd. (LFC): New Analyst Report from Zacks Equity Research – Zacks Equity Research Report – NASDAQ.com We maintain our Neutral recommendation on China Life as strong market position, growth in premiums and investment income is expected to outweigh the headwinds like higher expenses and declining cash flow.

Posted from Diigo.

China Business Briefs 23/12/13

ECONOMY

How Tighter Government Spending Contributed to China Rate Spike – China Real Time Report – WSJ The Chinese government usually draws down fiscal deposits — the amount of funds the government keeps in the financial system—more quickly in December, as it speeds up spending and fiscal disbursements before the end of the year, UBS economist Wang Tao said in a recent note.

That boost in government spending adds liquidity to the banking system, and the PBOC normally withdraws liquidity at the end of the year to offset the inflows. This time, though, the government’s tighter fiscal policy means year-end spending has been restrained, Ms. Wang said.

China Money Rates Surge as Banks Struggle to Meet Cash Demand – Bloomberg **Still climbing** The seven-day repurchase rate, a gauge of funding availability in the banking system, jumped 124 basis points today to 8.84 percent, the highest level since June 20, according to a daily fixing from the National Interbank Funding Center. The rate, which has more than doubled from 4.37 percent in the past week, touched a record 10.77 percent in June.

In China, Rates Soar, Stocks Fall, Businesses Fail – Forbes **Gordon Chang looking for signs of disaster** The Everbright offering, unfortunately for the bank, occurred in the wake of wide publicity of the November 29 bankruptcy filing of Liansheng Resources Group.  The failure of this coal miner, the biggest private company in inland Shanxi province, is even thought to threaten the Chinese banking system.

Why? It is not because Liansheng went down with debt of almost 30 billion yuan or because its creditor list included some of the best Chinese banks.  Liansheng, some think, could sink China’s shadow banking network, which could in turn expose the fragility of the state banks and trigger runs by depositors on those institutions.

Shanghai’s Cash Shortage Signals Stock Rebound: China Overnight – Businessweek Chinese stocks are poised to rebound from a one-month low as policy makers inject cash into the financial system to stem a surge in interbank lending rates, according to Oberweis Asset Management Inc.

Formula sellers face tighter rules – BUSINESS – Globaltimes.cn **About time. But auditing will be the key** Chinese consumers can seek compensation directly from baby formula retailers if they have bought milk powder with quality problems, signaling the country’s latest effort to guarantee food safety, experts said on Sunday.

After infant formula sellers compensate consumers, they can in turn ask for compensation from dairy producers if the producers are the source of the quality problem, China Food and Drug Administration (CFDA) said in a statement released on Wednesday.

No end in sight for bad-debt malaise at mainland Chinese banks | South China Morning Post **No indeed. This is a political problem. But the assumption that Beijing will simply solve it is a touch complacent** “Banks’ asset quality will continue to feel pressure next year, with both NPL balance and ratio expected to rise slightly,” said Luo Yi, an analyst at the brokerage. “But there’s no need to be too pessimistic because [Beijing] will gradually solve the local debt problem instead of letting it evolve into a crisis.

SDIC powers up cleaner energy |Companies |chinadaily.com.cn To contribute more to realizing the nation’s goal of building a beautiful China, the State Development and Investment Corp, a leading investment arm of the country in infrastructure and resources, has big plans for renewable and clean energy development in the coming years.

SDIC is investing 400 billion yuan ($65.57 billion) to build 21 hydropower stations along the Yalong River in Sichuan province. The development of the hydropower stations by the Yalongjiang Hydropower Development Co Ltd, a holding company of SDIC, is an important part of SDIC’s clean energy investment drive. When completed, the stations will have a combined generating capacity of 30 million kilowatts.

Japan Inc. rethinks China | McKinsey China **China now having to compete on quality, not just price, and losing more often. See below** My conversations with Japanese executives as usual focused largely on China. The sense I got from these was of a more purposeful intent to rebuild position, a shift away from the “nothing is going to work” attitude of earlier in the year. They are realising that the exchange rate shift has made a material difference in their competitiveness in China, and are becoming more specific on which market segments they can access and how.

Why One Chinese Textile Maker Sees His Future in the U.S. – China Real Time Report – WSJ Now, with labor and other costs rising at home, Chinese textile entrepreneurs are looking east over the Pacific and wondering whether it’s time to move back

“This industry doesn’t have a future in China,” said Zhu Shanqing, chairman of Keer Group. “It’s not just been difficult to grow, but it’s difficult to survive.”

China Mobile’s iPhone Factor – China Real Time Report – WSJ For China Mobile, the iPhone is a way to secure a large user base for its high-speed fourth-generation network, after the carrier has lost some of its market share over the past few years to smaller rivals China Unicom (Hong Kong) Ltd and China Telecom Corp. Both China Unicom and China Telecom already offer iPhones, and critics have also blamed China Mobile’s sluggish performance in part on its homegrown 3G mobile technology, which hasn’t been as popular as the 3G technology widely used around the world and also by China Mobile’s two rival carriers.

Plaudits in order as China slows economic growth | China Economic Review Not only are analysts unfazed by the moderation in some of China’s growth indicators, many welcome it as a jumping off point for real reform. “We think the strong growth rebound since July has run its course as the government shifts its focus from ‘stabilizing growth’ to ‘adjusting structure and promoting reform’ in 2014,” Barclays economists said in a note last week.

Global fund firms plot mainland China push | South China Morning Post Capital controls now ban such fund houses from selling products on the mainland but a mutual recognition agreement to be signed between Hong Kong and the mainland in the near future would allow cross-border selling. Hong Kong-domiciled funds with fund managers licensed by the Securities and Futures Commission would be allowed to be sold on the mainland, while mainland funds would be allowed to be sold in the city.

China Policy Institute Blog » GM-modified Corn, Protectionism and Normal China Why is China importing corn, or any other agricultural product for that matter? China has been a nation of farmers since before modernity. That it would need to import agricultural products—namely, rice, corn (and feed), cotton, soybeans—is surely news. The USDA reports that since 2008, China has used “price supports” to subsidize farmers, but its massive food inflation has benefitted American rather than  PRC farmers, since the discrepancy between Chinese domestic and global prices for agricultural products means farmers have been arbitraging all the way to the bank. US farmers may be trying to get MIR 162 corn past PRC customs, but PRC farmers are happy to have it to reduce cost and win market share.

Coal cooperation – BUSINESS – Globaltimes.cn China Taiyuan Coal Transaction Center is always crowded with people in December. The center hosts an annual year-end trade fair, and this year nearly 70,000 merchants arrived in Taiyuan, capital of coal-rich Shanxi Province in North China to attend the fair, which ran from December 12 to Thursday.

It was the second year for coal sellers and power utilities to negotiate prices themselves without government intervention, after China scrapped a regulation that capped spot thermal coal prices in December 2012.

Protection policies back in mainstream | South China Morning Post Pricing deregulation in the mainland’s insurance sector is set to force industry players to diversify from simple savings-type products to protection-oriented policies, AIA China chief executive John Cai says.

The insurance penetration rate on the mainland was very low, at 2 per cent, but the figure would keep rising, he said, driven by an increase in protection-type products.

A sweet Asian fruit tempts the troubled soft drink industry | Reuters An obscure melon once cultivated by Buddhist monks in China to sweeten tea could give the $8 billion U.S. diet soda industry a shot at winning back consumers concerned about artificial ingredients.

Japan store chain Lawson scales back expansion plans in China – FT.com **If your business plan depends on increased consumption, you’re probably not doing it right** Lawson, the Japanese convenience store chain, is slowing its expansion in China because it thinks the Chinese government has not done enough to spur consumption in the world’s second-largest economy.

COMPANIES

Fake Profit E-Mails at AgFeed’s Farms Back Fraud Claims – Bloomberg **Sounds like what happened with Longtop** The e-mails, which were translated from Chinese, and other documents obtained by Bloomberg News provide the first detailed glimpses behind what a U.S. Trustee in bankruptcy court called “massive fraud” in AgFeed’s Chinese operations. Managers in China openly discussed their methods for doctoring results, according to the e-mails. As evidence of irregularities began accumulating, executives and directors waited at least four months before disclosing any of it to investors, corporate documents show.

Apple, China Mobile sign long-awaited deal to sell iPhones | Reuters Apple Inc said it has signed a long-awaited agreement with China Mobile Ltd to sell iPhones through the world’s biggest network of mobile phone users.

In a deal that could add billions of dollars to its revenue, Apple said its smartphones will be available to China Mobile customers starting January 17. Pricing and availability details for the iPhone 5S and 5C lines will be disclosed at a later date, it said in a statement.

Hebei Iron may face closer watch | South China Morning Post Huge foreign investments made by Hebei Iron and Steel may face greater scrutiny by anti-graft investigators on the mainland and elsewhere after allegations of embezzlement and mismanagement at the company saw the sudden removal of its chairman, Wang Yifang.

Hundreds of millions of dollars were spent on Wang’s watch as he built the group into what the World Steel Association ranks as the world’s third-largest steel company, acquiring mines in Africa, Canada and the United States since taking charge in 2008. Even in the weeks before Communist Party bosses cut short his reign earlier this month, he was chasing new foreign partnerships.

China continues probe on Microsoft’s Nokia takeover – BUSINESS – Globaltimes.cn Such acquisitions usually get approval from China’s Ministry of Commerce after a 30-day first-phase investigation.

But currently, the deal has not been approved yet and is undergoing a second-phase anti-trust investigation, though regulators from some other countries and regions including the US have given the nod already, the report said, citing unnamed sources familiar with the matter.

Power giants work with a local touch – Headlines, features, photo and videos from ecns.cn|china|news|chinanews|ecns|cns **Smart move** Often criticized in the Western media for their role in Africa, Chinese companies have begun making changes to improve their image on the continent, increasingly creating jobs for local residents and offering educational opportunities to young Africans.

Sinohydro Corp Ltd, the international arm of the Power Construction Corp of China, is now seeing its first China-educated Angolan graduates working at different construction sites in their home country and abroad.

Qihoo Competitor iJinshan Claims 100 million Overseas Users Yesterday (December 22th, 2013), iJinshan announced that they stealthily released Clean Master, an Android storage management app, in English-language market about one year ago and had had more than 100 million users, at an event organized by local online news service Huxiu. Clean Master, in short, is for cleaning out Android phone storage and, at the same time, keeps your private information safe.

Schlumberger Limited. (SLB): Schlumberger: China & North America Focus For Next Year – Seeking Alpha Operationally, Schlumberger’s products and services have been able to increase productivity from the shale gas fields in the Ordos Basin. The Ordos basin is the second largest basin in China with a proven estimated reserve of around 10 billion tons. In the Ordos field, Schlumberger, in collaboration with PetroChina (PTR), has been able to increase the initial production, or IP, of wells by around 3.6 and 4.4 times at its two pilot wells. Recently, PetroChina discovered a vast amount of shale gas in the Sinchuan province. PetroChina has drilled around 20 wells in the region with an average of 10,000 cubic meters of gas per well per day. I expect Schlumberger to benefit from a collaboration with PetroChina.

China Technology News: Amazon taps into China’s cloud computing market China is the tenth country globally and the fourth  in Asia in which an Amazon data center will be built.

In the meantime, Amazon has signed a letter of intent with Beijing and  Ningxia to deliver the cities’ public services.

In addition to its partnership with Beijing and Ningxia, Amazon has also  formed an alliance with Sinnet and China Net Center. The two Chinese companies  will provide the necessary internet data center services (IDC) and an internet service provider (ISP) for Amazon’s public cloud computing services.

Leader to raise to 60,000 tonnes of steel products next year – Business News | The Star Online On its iron ore business, Leader Steel expects to sell about two million tonnes of iron ore and manganese to China by end-2014.

Tan said that the biggest shipment would be for China Railway Materials Company Ltd (CRM), China’s largest steel integrated trading and service provider.

Chinese aircraft producer makes export debut in Latin America – Xinhua | English.news.cn A Chinese aircraft manufacturer said Monday it has delivered two Y12E aircraft to Colombian airline Satena.

The delivery means the Y12 series aircraft has entered the civil aviation market in Latin America, according to the Harbin Aircraft Industry Group Co. Ltd. (HAIG), a subsidiary of Aviation Industry Corporation of China (AVIC).

Posted from Diigo.