China’s capital flight lands on New York doorsteps 19 Mar 2015 Chinese investors have pumped $10.4 billion into U.S. real estate in two years, most of it in Manhattan. And that doesn’t include the homes they actually live in. Americans should welcome their new neighbours. The question for China is how many of its elite it can stand to lose.
Chinese developers’ debt tricks come home to roost 18 Mar 2015 Investors are still mystified by how housebuilder Kaisa’s borrowings more than doubled in six months, bringing it close to collapse. The answer may lie in two kinds of accounting sleight of hand, seemingly blessed by auditors. Kaisa isn’t the only property company being creative.
China’s art market paints itself into a corner 13 Mar 2015 The People’s Republic has become one of the world’s largest art hubs, with sales of $12 bln in 2014. Yet minimalist cross-border trade sketches a picture of an introverted giant: heavy duties and local tastes mean most of the action is staying firmly within China’s borders.
Asia’s Alibaba wannabes buy into wishful thinking 12 Mar 2015 A new generation of Asian e-commerce companies is inviting comparison with Jack Ma’s tech colossus. The analogy is useful but not always flattering. Like Alibaba these young companies benefit from fast-growing online markets - but are less likely to become true giants.
Kaisa haircut is bad omen for China property debt 9 Mar 2015 The troubled developer’s proposed restructuring leaves creditors facing lower interest rates and delayed repayments. A shrinking cash pile and the sudden appearance of $5.6 bln of previously hidden debt should alarm all investors in the sector. Kaisa may not be an isolated case.
China’s internet sector runs on harmonious enmity 9 Mar 2015 For Amazon to open a store on rival online retailer Alibaba’s website sounds like sleeping with the enemy. But competition in China’s e-commerce sector isn’t as fierce as it seems. The big internet companies have too little. Their customers meanwhile have too much.
Chinese FX intervention could be due a comeback 6 Mar 2015 For over a decade a weak yuan brought in export revenues. Then a rising currency attracted investment. The falling exchange rate helps the former but puts the latter in jeopardy. In order to avoid a financial crisis, stronger is probably better, even if it means more meddling.
Lenovo smartphone market grab risks backfiring 6 Mar 2015 The Chinese group is planning to launch a new mobile brand in China just months after completing its $2.9 bln Motorola takeover. Juggling separate brands may help fend off domestic upstarts like Xiaomi. But with margins already razor-thin, Lenovo is in danger of overstretching.
China’s lower growth target is missed opportunity 5 Mar 2015 Premier Li Keqiang says GDP will grow about 7 pct this year. Though the lack of precision helps, the goal may still force the government into short-term stimulus or fudging the numbers. For all its progress, China is still not ready to scrap its big, reassuring objective.
JD.com tries Alibaba’s route to e-commerce profit 5 Mar 2015 Transactions that match buyers with retailers on the Chinese group’s website grew 220 pct in the fourth quarter, far outstripping growth in direct sales. Acting as a middleman, like larger rival Alibaba, may offer better margins. Earnings are still absent, but look less elusive.
Alibaba’s split nationalities invite trouble 3 Mar 2015 Taiwan wants to boot the e-commerce group out for not declaring itself Chinese. Yet Alibaba’s home changes depending on who asks. China’s taxman sees Hong Kong, licensing bodies see China, and investors see the Cayman Islands. The confusion may encourage regulatory meddling.
China rate cut shows back-to-front monetary policy 2 Mar 2015 The clip to borrowing costs won’t much change life for credit addicts or for savers. The central bank’s move is little more than a signal from on high that planners are up with events. When it comes to managing the Chinese economy, official interest rates play a limited role.
Asian telco IPOs show investors still yield-hungry 26 Feb 2015 Investors snapped up shares in Thailand’s Jasmine broadband fund and may do the same for Hong Kong provider HKBN, reflecting the view that U.S. interest rates will remain lower for longer. As long as money remains cheap, shareholders will chase generous and reliable dividends.
China takes least useful polluters to the cleaners 24 Feb 2015 A revamped law that makes it cheaper to clean up than mess up is facing its first test in the courts. Offenders now risk unlimited fines, shut-downs and jail time. It sounds encouraging, though like many of China’s reforms, it leaves room for Beijing to pick winners and losers.
China developers build up four storeys of trouble 17 Feb 2015 The default and restructuring of housebuilder Kaisa may have been unexpected, but China’s property developers are also showing visible signs of strain. From financial extensions to split-level sales, there are a few recurring features that give cause for concern.
China property dispute unearths debt skeletons 16 Feb 2015 Days after rattling creditors with a late interest payment, developer Kaisa has disclosed borrowings double those it reported at the end of June. It may be a tactic to force lenders into a restructuring. Still, it’s a reminder that many of the sector’s horrors remain unexcavated.
China taxi app merger shows limits of web rivalry 16 Feb 2015 The tie-up of two apps backed by Alibaba and Tencent is a rare truce in China’s apparently highly competitive tech sector. Taxi drivers won’t like it, passengers may not notice and investors should be better off. For even bitter rivals, more pricing power is irresistible.
China web metrics add up to little for investors 13 Feb 2015 Economic indicators stop being useful as they become targets. The numbers tech companies like Alibaba and JD.com bandy around are no exception. Each defines its metrics differently, and there is much room for spin. As business models evolve, these numbers will go from confusing to irrelevant.
Baidu’s mobile success brings lasting pains 12 Feb 2015 Handheld devices make up more traffic than PC for China’s biggest search company. Yet revenue and margins have disappointed because advertisers don’t pay as much on smartphones. Baidu’s self-reinvention is necessary, but investors may not have realized how costly it would be.
Yahoo’s Alibaba spinoff attracts big discount 11 Feb 2015 The company’s plan to distribute its stake in the Chinese company hasn’t excited investors. A Breakingviews calculator suggests they are attaching a 34 pct discount to the U.S. tech firm’s Alibaba shares – assuming Yahoo’s core business is worth something. That’s too cautious.