India shows China the way to deal with bad debt 6 May 2016 State-backed banks in both countries have lent too much to politically connected companies that are now in trouble. While India is pushing lenders to come clean, China is still not admitting the extent of the problem. Future growth depends on a proper cleanup.
Alibaba’s strong core comes with shaky periphery 5 May 2016 The Chinese e-commerce group’s revenue soared 39 pct year on year, faster than volumes of stuff sold on its sites. Alibaba also disclosed losses on its fintech, services and logistics affiliates. Those trends can co-exist, so long as online shopping growth stays sturdy.
China index: Bond boom drives rebound 5 May 2016 Breakingviews’ Tea Leaf index leapt to a 20-month high in March as stimulus kicked in. Exports and property investment grew at the fastest rate in over a year. Increased pollution points to busier factories. But by far the strongest factor was record issuance of corporate bonds.
Baidu shows health is a huge flashpoint in China 3 May 2016 A dying student accused the search giant of promoting false medical information. The ensuing probe has cut $5 bln from Baidu’s market value: a big move but not an overreaction. Health scandals are highly sensitive and authorities pay close attention to outbursts of online anger.
Gucci misses opportunity in "hell handbag" spat 29 Apr 2016 The Italian label wants Hong Kongers to stop burning paper versions of its $3,000 handbags at relatives’ graves. While it has a point, legally speaking, Gucci’s ire is misplaced. Wanting to spend the afterlife with a Gucci handbag is the ultimate pledge of brand loyalty.
Chinese banks’ stealth clean-up fools nobody 29 Apr 2016 Top lenders like ICBC and BOC are piling up bad loans yet still reporting flat earnings. Pliable regulators are cutting them extra slack. Investors did not trust the banks’ balance sheets anyway. The latest sleight of hand will only fuel their scepticism.
Baidu stops short of full download on local bets 29 Apr 2016 Sales are soaring yet earnings fell 19 pct last quarter at China’s top search engine. Baidu is finally outlining how a costly push into food, movies and maps fits with its main search business. But investors still have little insight into how and when this will start paying off.
Anglo American is winning race to cut debt pile 28 Apr 2016 The $1.5 bln the miner will raise from selling its Brazilian phosphate and niobium units is better than might have been expected. A multiple of 10 times EBITDA proves the company can still get a good price even in a downturn. Anglo is slowly but steadily sharpening its focus.
China’s next top corporate tourist is HNA 28 Apr 2016 The conglomerate has added Radisson owner Carlson Hotels to its portfolio of airlines, property and electronics. It has spent more than $15 bln outside the People’s Republic in a year. As with other Chinese buyers, outsiders can only guess at the logic of HNA’s grand tour.
Jack Ma’s jewel is a $20 bln mystery for Alibaba 27 Apr 2016 The e-commerce group’s financial affiliate is now valued at $60 bln. Alibaba has an option to take a 33 pct stake, or extend a profit-sharing agreement between the two. Yet their future relationship is clouded by regulatory uncertainty. Alibaba’s shareholders are in the dark.
Confucius say: Don’t confuse Ant with unicorn 26 Apr 2016 The $60 bln implied value of Chinese fintech group Ant Financial suggests PayPal-style innovation on steroids. It’s not so simple, though. The Alibaba affiliate’s fortunes may be tied more closely to the vagaries of PRC state capitalism than to private-sector disruption.
StanChart gets some emerging market relief 26 Apr 2016 The jump in the lender’s shares reflects comfort that business didn’t deteriorate in the first quarter. Recovering commodity prices and receding fears about China help sentiment. This was the stuff CEO Bill Winters can’t really control. Now to address the bits he hopefully can.
Hong Kong finds Alibaba dealmaking in poor health 26 Apr 2016 Regulators say the e-commerce group’s 2014 investment into its health unit breached takeover rules. Details are scarce and Alibaba does not have to compensate shareholders. Even so, the latest run-in is another reason for Hong Kong investors to be wary of Jack Ma’s company.
Evergrande pays steep price for Chinese listing 25 Apr 2016 China’s second-largest property developer is taking control of a smaller loss-making rival for $554 mln. The main benefit seems to be its target’s Shenzhen listing. With valuations higher at home, expect more Hong Kong-listed groups to seek out mainland investors.
Top Chinese travel agent makes an odd diversion 22 Apr 2016 Ctrip is buying a $463 mln stake in China Eastern Airlines, and could yet buy more. Investors in China’s largest web travel agency probably did not expect to own a minority stake in a state carrier. But this may be the only way Ctrip can avoid a damaging boycott by big airlines.
Review: A short tour of Jack Ma’s virtual mansion 22 Apr 2016 An insider’s account provides fresh insights into the origins of China’s most successful entrepreneur. Yet the tale of Ma’s rise reveals little about the inner workings of his e-commerce empire. Outsiders are no closer to disentangling Alibaba’s future from its founder.
Investors need help to stop cheap Chinese buyouts 21 Apr 2016 Minority shareholders are upset about a wave of stingy take-private offers from Chinese groups with U.S. listings. But they can’t do much because the firms are domiciled in offshore centres with fewer protections. Investors could find a sympathetic ear in a China-weary Congress.
Breakdown: Why are Chinese bond defaults surging? 21 Apr 2016 More state companies are failing to pay bondholders. This is partly necessity amid an economic slowdown, and partly a useful dose of market discipline. But the withdrawal of government support could spook investors, creating a credit drought.
Lexmark sale to China copies the Lenovo blueprint 20 Apr 2016 Apex Technology and partners are buying the U.S. printer-maker for $3.6 bln including debt. Unlike some of China’s splashy overseas deals, financing and regulators are not big risks, and the price seems fairly sober. Lenovo’s past forays into unloved tech niches offer a guide.
Finance wakes up to fintech’s systemic dangers 19 Apr 2016 The Bank of England’s Andy Haldane and Deutsche Bank boss John Cryan are among 53 financial leaders backing the launch of a new forum to debate financial technology. The abuse of data is a concern. But a bigger risk is how fast and obscurely money can move.