Japanese automakers face hardest China future 17 Oct 2014 Sales are slowing in the world’s biggest car market. Japanese groups like Toyota, Honda and Nissan are losing market share as competition increases and nationalism intensifies. As the People’s Republic accounts for about a quarter of their global sales, stalling growth is costly.
Real estate rescue may not help China’s developers 16 Oct 2014 Homebuyers will still spend if prices and financing are attractive. But property companies are selling more for less, which beats down their margins. If a pick-up comes at the expense of profitability, things will continue to get worse for Chinese housebuilders.
CICC loses a princeling, gains investment appeal 15 Oct 2014 China’s first home-grown investment bank may lose some political stature without the son of ex-Premier Zhu Rongji at the helm. An IPO may have to wait. But things were already glum before Levin Zhu checked out. A new CEO may actually make CICC more appealing for outsiders.
China theme parks are an investment rollercoaster 15 Oct 2014 American operators including Universal Studios are eyeing the People’s Republic. Chinese households are forecast to spend $4.2 billion on fun fairs by 2018. But the worry that weaker consumer spending could rain out growth hopes is already hitting valuations of local groups.
China coal tariffs blacken Aussie free trade talks 14 Oct 2014 Import taxes will help China to protect its ailing domestic producers from a glut of cheap foreign supply. Yet raising the defences makes it even harder for Australia, a top exporter, to present a long-awaited agreement with its top trading partner as evenly balanced.
China’s Agile Property only the worst of the best 13 Oct 2014 The developer needs urgent assistance after its chairman was detained and a rights issue pulled. House prices are slumping. Yet despite these problems, Agile is one of the few property groups with some access to capital markets. The sector’s gravest dangers lie further from view.
Hong Kong weathers Occupy’s financial disruption 10 Oct 2014 Retailers and other companies have suffered, but the city’s financial system is unmoved. A prolonged standoff between pro-democracy students and the government matters less to the economy than China’s slowdown. Short of an escalation, fears of Occupy’s disturbance look overblown.
Tianhe investors sell first, ask questions later 9 Oct 2014 Shares in the Chinese chemical group plunged as much as 45 percent when they resumed trading after anonymous fraud allegations. Despite the company’s rebuttal, some mud has stuck. Existing shareholders may have to reach into their pockets to restore confidence.
Tyremaker’s woes deflate appeal of China JVs 9 Oct 2014 Cooper Tire is being forced out of its Chinese joint venture by the local partner which last year undermined a $2.5 bln sale of the U.S. company. The sale underscores the vulnerability of multinationals with shared Chinese operations – and gives dealmakers a new risk to navigate.
China’s real estate trophy hunt has further to run 8 Oct 2014 The $2 bln sale of New York’s Waldorf Astoria hotel to a little-known Chinese insurer echoes Japan’s U.S. property binge in the 1980s. But outbound investment from the People’s Republic is much lower than Japan at its peak. Expect China to add more landmarks to its portfolio.
Glencore Rio takeover would be harder than Xstrata 7 Oct 2014 Ivan Glasenberg’s miner-trader is stalking $90 billion iron giant Rio Tinto. Though there’s some logic to a deal, Glencore will be loath to pay much of a premium, and the clash of cultures would be extreme. Rio is also in a better position to resist than rival Xstrata in 2012.
China has two bad role models on dealing with debt 6 Oct 2014 Japan’s government shouldered the pain of corporate deleveraging, and the economy became comatose. South Korea crammed its debt onto households with only marginally better results. Now it’s China that has a problem with high leverage. The race is on to find a different strategy.
Chinese banks learn Western capital tricks 3 Oct 2014 The country’s largest lenders have changed the way they measure the riskiness of their loans. That has made their capital ratios look healthier. Western lenders have long taken the same approach. Even so, it’s another reason to question Chinese banks’ balance sheets.
Occupy misses real threats to Hong Kong’s future 2 Oct 2014 Most citizens have shied away from protests calling for electoral reform. Universal suffrage deserves public support, but erosion of rule of law and creeping censorship are bigger threats to prosperity. It’s unlikely these issues will erupt into an open standoff with Beijing.
Hong Kong harmony hits Beijing’s worst fears 1 Oct 2014 The tens of thousands of protesters occupying Central send a disturbing message to authorities: unrest can be both disruptive and peaceful. That resonates far more than images of violent conflict. Little wonder China is trying to make sure citizens look the other way.
China index: Time to reach for the bottle 1 Oct 2014 Our economic forecasting index slipped to 87.9 in August as the domestic economy struggled to recover. Truck sales plummeted by 25 percent and steel output sunk to a two-year low as home sales sputtered. The only positives: bank lending and the price of expensive spirits.
China house prices on brink of pessimism spiral 30 Sep 2014 As prices fall in most big cities, developers and banks are trying to lure buyers back to the market. But cheaper mortgages and less red tape are no match for sagging real price expectations. Short of giving cash to buyers, it is hard to arrest negative thinking once it sets in.
Hong Kong shreds hopes for orderly disorder 29 Sep 2014 Thousands of protestors have taken to the streets, at times clashing violently with police. Markets remain open, and the financial sector hasn’t been targeted directly. But the loss of control over a carefully planned disobedience movement has damaging long-term implications.
Yahoo may squeeze out a third activist helping 26 Sep 2014 Starboard’s Jeff Smith is following where Dan Loeb and Carl Icahn have trod before him. Ideas about buying AOL and spinning off Alibaba and Yahoo Japan tax-free aren’t exactly new. Yahoo’s discount valuation, however, might nevertheless benefit from the attention.
World should steel for peak China demand 26 Sep 2014 Chinese consumption of crude steel fell in August for the first time this century. Slowing housebuilding is adding financial strain to a troubled supply chain. A rethink of how much is enough for the world’s biggest steel user could also throw the global market off kilter.