Myth of central bank omnipotence is hard to kill 24 Mar 2016 A few weeks ago global policymakers were supposedly out of ammo. Now a weakening dollar and recovering markets have prompted gossip they were secretly in cahoots. A better explanation is that central bankers have recognised that trying to boss investors around is futile work.
China’s phony bad loan fix sends wrong signal 23 Mar 2016 Regulators may let big lenders like Bank of China hold fewer provisions against dodgy credits. That will boost reported earnings but weaken balance sheets just as financial strains are growing. The willingness to bend the rules is another reason to avoid Chinese bank shares.
Online boom carries windfall to Chinese couriers 23 Mar 2016 Alibaba-backed delivery company YTO has unveiled a $2.7 bln backdoor listing in Shanghai. China’s e-commerce boom means demand for logistics has soared. Though higher wage costs are squeezing margins, growth will continue. Besides, the valuation doesn’t look excessive.
Selldown at IMAX China is off-script but smart 23 Mar 2016 The big-screen movie company faced a deluge of potential stock sales in April as a “lock-up” following last year’s flotation expired. Letting two backers pare back early, in return for committing to hold the rest of their shares for longer, is unusual but avoids a sudden selloff.
Bang & Olufsen buyout hinges on China bass boost 22 Mar 2016 The Danish electronics maker is in bid talks with Chinese luxury distributor Sparkle Roll. Both companies’ business models are under pressure. At B&O’s inflated $447 mln price it would be hard to make a deal stack up – unless sales can be massively increased in China.
China’s falling art sales paint ugly picture 22 Mar 2016 The country’s art market shrank by a whopping 23 percent in 2015. A slowing economy and corruption crackdown make for cautious buyers and sluggish sales. Meanwhile, the huge quantity and dubious quality of new artworks are undermining collectors’ confidence.
In China, life insurance doesn’t last a lifetime 22 Mar 2016 Customers have piled into policies that let them cash out early while pocketing high returns. The need to attract punters is forcing insurers to buy riskier assets. Now regulators are reining in the practice. The crackdown should make the industry safer, but also less profitable.
Marriott’s Starwood deal suffers China syndrome 21 Mar 2016 To trump an interloping bid from Beijing’s Anbang, Marriott raised its offer for its hotelier rival to $13.6 bln. Even with more cost cuts, the math suggests significant value destruction. Anbang may have reasons to pay up, but Western buyers can’t be so careless of shareholders.
China’s debt mountain will get even bigger 21 Mar 2016 Total borrowing reached about 250 pct of GDP last year. The state could take some of the burden from stretched corporations and local governments. But pressure to meet unrealistic growth targets means monetary policy remains loose and overall leverage is likely to keep rising.
It’s time for Marriott to check out of Starwood 18 Mar 2016 The U.S. hotelier has 10 days to sweeten its offer after China’s Anbang won over the Westin owner with a $13.2 bln cash deal. Marriott may struggle to top that without destroying value for its shareholders. Pocketing the break fee and moving on beats a bidding war.
Review: A tycoon’s vision for Chinese consumers 18 Mar 2016 Wang Jianlin says business books are “nonsense” that entrepreneurs don’t need. His own “The Wanda Way” is no exception. Though China’s richest man explains how his overseas M&A spree serves his aim to dominate the country’s consumer market, it fails to deliver juicy details.
Tencent gaming and ad boom adds fuel to deal binge 18 Mar 2016 The Chinese web giant’s revenue topped $5 bln in the fourth quarter, fuelled by mobile games and explosive growth in advertising. To keep up with rivals, the group has been investing heavily in e-commerce and finance. So long as it keeps growing, Tencent can sustain the spree.
Emissions reach encouraging pre-peak peak 16 Mar 2016 Pollution from energy production has levelled out. The IEA says that the U.S. and China burning less coal has helped to win a battle in the global fight against climate change. But to win the war on emissions, India must be persuaded to rein in its use of the dirty fuel.
China insurance boom shows need for quality assets 16 Mar 2016 Ping An’s net profit grew 38 percent last year as the country’s middle class rushed to buy protection. Rapid inflows put extra pressure on insurers to secure decent returns. As domestic asset quality deteriorates, it’s little wonder insurers are increasingly shopping overseas.
China’s soccer field of dreams lacks paying fans 15 Mar 2016 Tycoons and corporate giants are spending hundreds of millions of dollars on local clubs and foreign players. Media groups are bidding up the value of broadcasting rights. To be viable, though, China’s leagues need to attract lots of paying viewers. That’s hardly an open goal.
Anbang’s U.S. hotel block bookings getting pricey 14 Mar 2016 The Chinese insurer is in a hurry, leading a $13 bln offer for Starwood on top of a $6.5 bln deal to buy Strategic Hotels from Blackstone and its $2 bln purchase of the Waldorf Astoria in 2014. It’s hard to see how they all meet Anbang Chairman Wu Xiaohui’s own financial targets.
Hotel spree sates China’s taste for overseas glitz 14 Mar 2016 Foreign hotels are becoming corporate China’s trophy assets of choice. Buyers want to reduce their exposure to a slowing domestic market and capture the growing flow of overseas tourist dollars. Anbang Insurance’s mooted $6.5 bln takeover of Strategic Hotels won’t be the last.
China $5 bln property swap is constructive reform 14 Mar 2016 CITIC is selling residential real estate on the mainland at a decent 1.6 times book value to focus on commercial development. In return, it gets shares and assets from China Overseas Land. It’s a sign Beijing is getting serious about making giant state-owned firms more efficient.
Vanke’s white knight is a grey outline 14 Mar 2016 The Chinese developer could sell a stake to Shenzhen’s metro operator in return for assets worth as much as $9 bln. There may be commercial logic to a union that would help Vanke see off a possible hostile suitor. But details are scarce. Shareholder celebrations look premature.
China debt swap could leave banks in capital hole 11 Mar 2016 A new rule will allow banks to exchange loans for equity. If used on a large scale it would ease pressure on ailing companies. But lenders would also have to recognize losses, hitting their capital ratios. As the banks’ major shareholder, Beijing will end up footing the bill.