Cutting rates, as the central bank just did, is far less simple than when China’s economy was in its pliant infancy. New ways to save, borrow and arbitrage have sprouted, and don’t all respond predictably to orders. It will take more to alleviate private sector growing pains.
Kotak Mahindra’s $2.4 billion all-share offer for ING Vysya is a rare example of consolidation amongst India’s sizeable private banks. Founder Uday Kotak needs to reduce his stake. Dutch group ING’s willingness to accept a smaller shareholding in a larger group is also key.
It’s one of the Chinese e-commerce group’s crown jewels. Yet public investors don’t control it, and can’t reliably estimate its worth. Only select Alibaba executives see the affiliate’s inner workings. Since they own most of its shares, there is room for interests to diverge.
Chinese bankers who allegedly helped a rogue CEO siphon off $102 mln have some things in common with London’s abusive FX traders. Institutions are sprawling, regulators weak and loyalties mainly local. At least China’s willingness to micromanage ought to help curb bad behaviour.
The first cut to lending rates since 2012 shows the limits of Beijing’s tolerance of slowdown. It should save some riskier loans from going bad, and breathe some life into a zombified property market. But huge adjustments remain, and long-suffering savers will still be left worse off.
Smartphone maker Xiaomi and e-commerce giant Alibaba are stretching their business models by investing in online TV programming. If viewers pay up content might turn fickle ad revenues and one-off sales of hardware into predictable revenue streams.
Prime Minister Shinzo Abe is seeking a fresh political mandate to delay next year’s planned increase in the sales tax by 18 months. But fragile demand means investors will be sceptical of the new schedule. A better strategy would be to link the tax hike to growth in real wages.