China can afford to quit infrastructure binge 13 Jun 2016 State backed enterprises stepped up fixed-asset investment by a fifth in the year to May. Much of this spending will be wasteful and will add to the country’s huge debts. Given a fairly robust labour market, China could safely take a much harder line on inefficient SOEs.
Virgin Australia buoyed by China’s M&A tourists 10 Jun 2016 Chinese conglomerate Nanshan is buying 20 pct of Australia’s No. 2 carrier weeks after HNA took a 13 pct stake. Both pledge to prop up its balance sheet. The benefits for the buyers are vague. That puts them in the same camp as the foreign airlines that already back Virgin.
Tencent can win with a $9 bln bet on Supercell 10 Jun 2016 The Chinese web giant is reportedly talking about buying the maker of Clash of Clans at an unexpectedly high $9 bln valuation. Such a big deal would be a first for Tencent. But buying the games-maker from Japan’s SoftBank could pay off - if Supercell can keep churning out gems.
Jack Ma’s healthcare buyout is hard to stomach 9 Jun 2016 The Alibaba boss’s buyout firm is bidding $1.4 bln-plus for U.S.-listed iKang. His minimum bid is 20 pct cheaper than an unfriendly approach from a rival, now dropped, which iKang’s CEO countered with a poison pill. Unless Ma pays more, outside investors will feel pretty icky.
Disney and Wanda can both ride China’s park boom 8 Jun 2016 Mickey Mouse’s owner is opening a $5.5 bln Shanghai theme park. Meanwhile local rival Wanda, run by China’s richest man, plans a string of cheaper attractions in smaller cities. Despite Wanda’s fighting talk, the two serve different markets, and can thrive simultaneously.
China’s planners spread confusion in web finance 7 Jun 2016 Regulators have barred foreigners from investing in an internet bank backed by web giant Tencent. It’s not clear if the rule extends to online finance groups like $60 bln Ant Financial - or even who counts as a local investor. The uncertainty will curb valuations and IPO options.
Inter Milan typifies China’s muddy sporting goals 6 Jun 2016 Chinese money is pouring into foreign teams, rights and agents. Now Suning is paying $307 mln for 70 pct of Inter Milan. A mainland retail giant is not an obvious owner for a top Italian soccer club. But these deals are all about anticipating a politically backed sports boom.
SoftBank’s Alibaba selldown is elegantly coded 5 Jun 2016 The Japanese group has raised $6.6 bln by selling securities that swap into shares in the Chinese e-commerce giant. The transaction looks fiddly – but allows SoftBank to navigate U.S. securities laws while keeping some upside. Close links with Alibaba were also crucial.
Thaihot’s $1.4 bln HK insurance deal looks fiery 3 Jun 2016 The little-known Chinese group has paid almost double recent valuations for local bank Dah Sing's insurance unit after a fierce auction. The deal is part of a drive to diversify from property. But China's currency controls may interfere with efforts to attract mainland customers.
MSCI can still afford to shun China stocks 2 Jun 2016 The index compiler must once again decide whether to add mainland shares to global benchmarks. Though regulators have made some reforms, memories of last summer’s mass suspensions and state intervention are still fresh. Another delay would give China more reason to open up.
Keeping Kuka German may require going French 1 Jun 2016 Economic minister Sigmar Gabriel is trying to forge a counterbid for the robot maker. Yet Chinese Midea’s $5 bln offer is already frothy. Berlin would have to turn to industrial politics à la française, and maybe even take a direct stake. Better to let markets run their course.
Currency controls are grit in China’s M&A machine 1 Jun 2016 A spate of cancelled deals has raised questions about whether Chinese buyers are having trouble getting money out of the country. Though the People's Republic has tightened controls, officials can waive them. But circumventing rules takes time – putting bidders at a disadvantage.
China’s HNA buys frenemies at Virgin Australia 31 May 2016 The Chinese behemoth may be able to improve its foothold in a key market by buying 13 pct of its peer Down Under. Virgin is a struggling carrier, however, in need of a huge capital injection and it already has three other big airline investors. That caps HNA’s potential returns.
China’s sports deals hit the hogwash jackpot 30 May 2016 Mainland money is pouring into Western teams, rights, agents, and competitions. Bold M&A often comes with empty talk and hyperbole. The world of sport is not much better. Throw in the grand designs of China’s political leaders and you have a near-unbeatable trifecta of nonsense.
Wanda’s $4.4 bln buyout bid is just good enough 30 May 2016 Wang Jianlin is offering his property firm’s Hong Kong investors a stingy 10 pct premium to the IPO price 17 months ago. The Chinese tycoon will pocket better returns if it relists on the mainland. Yet while minority investors have reason to hold out, doing so would be risky.
Zoomlion deals fresh blow to China M&A credibility 27 May 2016 The Chinese machinery-maker has walked away from a bid for U.S. rival Terex. After other high-profile failed deals, this further dents the prospects for other mainland bidders eyeing Western targets. At least Zoomlion’s own finances will be a bit more robust.
A truly international yuan is a long way off 27 May 2016 New data shows use of the Chinese currency for global payments is declining and has fallen behind the Canadian dollar. China’s plans to internationalise the yuan are at odds with capital controls. Pressure on the yuan makes this a tricky time to liberalise the currency regime.
Time for Lenovo to get a grip in mobile 27 May 2016 The tech giant is a trailblazer for Chinese firms going global by doing deals overseas and adopting Western governance. The ill-judged takeover of Motorola’s old mobile business is testing that reputation. Absent a quick turnaround, Lenovo’s credibility will take a real dent.
U.S. probe forces Alibaba in the right direction 26 May 2016 The Chinese e-commerce giant’s accounting is under investigation. Depending on the outcome, Alibaba may have to consolidate its loss-making logistics business. If the scrutiny helps shed light on some of the group’s many blind spots, investors will be better off.
China “super-regulator” no match for foreign peers 26 May 2016 The People’s Republic may create a more powerful financial watchdog with the teeth to prevent a repeat of last summer’s policy missteps. The new body would boost policy coordination. But the power of top party leaders and provincial officials means it will still lack real bite.