China index: Xi’s annus horribilis 1 Feb 2016 Breakingviews’ Tea Leaf Index may have ended the year on a modest high, but a look back over 2015 shows China’s economy moving slowly. Sagging steel production, exports and rail freight contributed to the lowest 12-month average since President Xi Jinping first took office.
Alibaba offers two insights into China economy 28 Jan 2016 The e-commerce giant’s third-quarter revenue rose 32 pct, above expectations. It shows China shifting to more consumption. But it also shows that Alibaba, like China, needs new ways to grow. Forays into local services and the cloud make it a less useful proxy for the consumer.
Zoomlion’s U.S. tilt shows power of state support 28 Jan 2016 The Chinese machinery maker’s $3.3 bln approach to rival Terex defies financial logic, but could make political sense. Beijing makes no secret of its desire to build global brands. Giving Zoomlion the green light suggests it has official backing to be one of China’s flagbearers.
AgBank scam gives Chinese banks new risk black eye 26 Jan 2016 Agricultural Bank of China is trying to track down $595 mln missing in Beijing. Though it’s a tiny fraction of the state-owned behemoth’s balance sheet, suspected embezzlement is another reason to doubt risk controls. The only benefit is that expectations are already low.
Philips’ failed deal puts Chinese bids in the dark 22 Jan 2016 The Dutch firm’s sale of 80 pct of its specialty lighting arm to a Chinese fund has failed on U.S. security fears. Philips’ Lumileds unit has tech smarts and stateside operations, but this looks like regulatory overreach. Pending Chinese bids for hardware now seem less certain.
China’s online arms race shows no sign of cooling 20 Jan 2016 Meituan-Dianping has raised $3.3 bln – a huge sum for a startup. The group deals site was created from a merger that was meant to curb brutal competition in China. But this new warchest, plus the huge resources of rivals like Alibaba, suggests the subsidies will keep flowing.
China’s foreign M&A can keep defying gravity 20 Jan 2016 A $10 bln splurge this year on outbound deals, stretching from ovens to gay-dating apps, contrasts sharply with the global shortfall of confidence in China. Local firms remain well-funded and keen to diversify. Absent a real financial crisis, or a state veto, deals will continue.
China’s just-so growth no balm for slowdown fears 19 Jan 2016 The world’s second-largest economy grew 6.9 pct last year, in line with government targets. The official picture of a gradual slowdown is at odds with market jitters. Yet the numbers do little to ease investors’ key concerns: yuan devaluation and the risk of a messy debt crisis.
Taiwan’s new president inherits old economic woes 18 Jan 2016 The island’s fortunes are uncomfortably tied to the tech industry and China, both of which are weakening. The electoral triumph of opposition leader Tsai Ing-wen reflects deep distrust of the mainland. Yet Taiwan’s president needs to keep her giant neighbour onside.
JD emulates Alibaba with black-box finance unit 18 Jan 2016 A fundraising has valued the Chinese e-commerce group’s financial division at $7 bln. The business dabbles in loans, payments, and crowdfunding. Yet JD.com does not disclose its financials. As with larger rival Alibaba, outside investors can only guess at its true worth.
Weaker yuan would be no panacea for China Inc 14 Jan 2016 A sharp devaluation would yield some winners and losers: machinery-makers would gain and airlines would suffer. But overall this would do little for the real economy. Exports are a declining driver of Chinese growth.
Offshore squeeze sets back China’s yuan goals 13 Jan 2016 The central bank has sucked renminbi out of Hong Kong, sending overnight interest rates soaring. The show of force helps stabilise the short-term exchange rate. But it delays the gradual shift to a less controlled currency, and will force officials to tighten capital controls.
Wanda builds an empire Hollywood can only dream of 13 Jan 2016 China’s richest man is buying a U.S. studio for $3.5 bln. His Dalian Wanda group and rivals like Alibaba Pictures are investing in all sorts of film businesses. Such vertical integration - banned in the United States - shows the allure of one of China’s fastest-growing sectors.
China’s troubles catch Japan off-guard 12 Jan 2016 Japan is highly sensitive to its larger neighbour’s economic health. Market turmoil is also strengthening the yen, threatening profit and prices. This could hardly come at a worse time: policymakers already battling deflation and stagnation have few levers left to pull.
Smartphones battle web giants for China payments 12 Jan 2016 Apple and Samsung are joining the fight for mobile wallets in the People’s Republic. The smartphone makers have teamed up with state-owned UnionPay to take on dominant web groups Alibaba and Tencent. UnionPay’s card network and technology may give the new alliance an edge.
U.S. jobs bring gorging market bears up short 8 Jan 2016 Strong employment gains in December support the Fed’s planned gradual rate hikes. The global New Year stock slide stalled, too. Chinese markets stabilized, and investors relished the 292,000 American jobs added last month. The outlook may be murky, but it’s not all bad.
China’s new economy most vulnerable to stock slide 8 Jan 2016 Recent market jitters have dragged valuations for Shanghai-listed groups below their 10-year average. But the Shenzhen bourse, which is dominated by private sector firms, remains relatively expensive. A loss of confidence by retail investors risks choking more vibrant groups.
China proves fast learner of painful market lesson 7 Jan 2016 It ditched a stock-market circuit breaker days after its introduction. Quite right: the mechanism did more to stir concern about pent-up selling pressures than to calm markets. The speed with which China made this volte-face bodes well for its integration into global markets.
China’s FX fall is a new market blight 7 Jan 2016 The yuan’s fall is a new ingredient in a cocktail of concerns that includes slowing growth in emerging economies, lower oil prices and geopolitical tensions. Copycat Asian currency moves would unleash a new wave of disinflation which central bankers are ill-equipped to battle.
China market confusion has investors fearing worst 7 Jan 2016 The tumbling yuan may be a sign the People’s Republic sees currency devaluation as a solution to its economic woes. Or maybe planners are struggling to adapt to more liberal markets. Suspended stocks heighten the sense of chaos. For the rest of the world, the signs are ominous.