China’s push into food trading will be piecemeal 6 Mar 2014 State-backed COFCO is eyeing an agriculture joint venture with Singapore’s Noble, a week after taking control of Dutch grain trader Nidera. COFCO’s mission to ensure China’s food security is finally translating into large overseas acquisitions. Yet targets remain in short supply.
Chinese solar troubles go deeper than debt 5 Mar 2014 LDK Solar is trying to avoid the fate of bankrupt rival Suntech. Yet even if it could restructure away its debts, LDK’s high costs make it look uncompetitive. Peers like GCL Poly seem overvalued, pricing in a solar renewal that may not last.
China’s internet still has room for the little guy 5 Mar 2014 Shares of YY, a lesser known social network, rose 14.9 pct after it beat estimates. YY has two things going for it: some unusual technology, and positive earnings. That may not be enough to elbow aside China’s tech giants, but down the line it might help it get bought by one.
China’s savviest developer shows property strains 4 Mar 2014 SOHO’s earnings fell 47 percent in the second half of 2013. A shift from sales to letting means cash flows are dwindling. When the most financially sophisticated players show cracks, it’s time to worry. At least SOHO’s lenders are supportive. Lesser rivals may be less fortunate.
Sun Art shows foreign retailers can crack China 4 Mar 2014 The French-Taiwanese hypermarket operator boosted net profit by 15 percent last year, even as rival Wal-Mart struggled on the mainland and Tesco pulled out. Tight control of operating costs was crucial to its success. Encroaching online rivals make that all the more important.
The do-no-harm case for a stronger yuan 3 Mar 2014 Debates over the fair value of the currency, which has slid 1 percent in a week, miss the point. What really matters is the trajectory that causes least financial and social damage. Halting the build-up of foreign exchange reserves is crucial. Appreciation looks the best course.
Deadly assault brings new kind of risk to China 2 Mar 2014 The shocking knife attack that killed at least 33 in the Southwest suggests rising ethnic tension. Until now, belief in China’s relative stability has helped keep its cost of capital down. Even a small reassessment may hit assets, from real estate to the yuan, at a fragile time.
Macau casino stocks are priced for perfection 28 Feb 2014 A building boom will expand capacity in China’s gambling enclave. But to justify their valuations, casinos not only need to attract more punters but encourage them to spend more at the tables. Any slowdown in visitor numbers or increased competition could test excited multiples.
SoftBank’s Alibaba stake both blessing and burden 27 Feb 2014 Billionaire chief Masayoshi Son is expanding the Japanese internet firm through M&A. But its 37 pct stake in the Chinese e-commerce giant dominates its valuation, according to a Breakingviews calculator. When Alibaba goes public, SoftBank may come under pressure to let it go.
China’s yuan plan looks too clever by half 27 Feb 2014 The central bank seems set on bashing speculators betting on a stronger yuan, without changing the currency’s long-term appeal. The trick is to target low volatility that fuels trades. But it’s a fine balancing act – and risks rewarding those who were betting on a China downturn.
China internet Godzilla moment is in the making 26 Feb 2014 Like the nuclear waste that spawned the fictional monster, China’s peculiar conditions – from scale to censorship – have allowed tech behemoths to grow. Can they run rampage outside their home market? Tencent has a good chance; e-commerce group Alibaba may find it harder going.
Weibo IPO plan stretches financial logic 25 Feb 2014 Listing a $500 million stake in China’s version of Twitter looks like a response to sky-high tech valuations. But investors can already buy shares in parent Sina, whose value is mostly made up of Weibo already. They should be skeptical about the idea that two plus two is five.
China’s yuan slide not nice but necessary 24 Feb 2014 The currency has reversed course, rapping the knuckles of investors who had been betting on continued gains. The unwinding of speculative trades could remove a useful source of inflows, and add pressure to the parched system. Still, adding more market forces is mostly helpful.
Sinopec spinoff shows desire to pump valuation 24 Feb 2014 The Chinese oil giant plans to sell up to 30 percent of its marketing division, which operates 30,000 forecourts and brings in half the group’s revenue. Exposure to China’s consumer boom should lure investors. More importantly, it suggests Sinopec is serious about boosting value.
Miners are finding that disinvestment pays 20 Feb 2014 For an industry wrestling with the end of a once-in-a-lifetime demand surge, big miners aren’t faring badly. Prices are still high, and results at Rio Tinto and BHP Billiton show austerity working. Supply trends favor lower ore prices, but diggers may reap big profits for a while yet.
WhatsApp’s Chinese copycat deserves its premium 20 Feb 2014 Tencent’s WeChat app is worth around $30 bln. That’s more than the $19 bln Facebook paid for its U.S. rival, even though the Chinese version has two-thirds as many users. But customer numbers matter less than the ability to make money. WeChat’s prospects justify a higher valuation.
Pimped-up Peugeot ready to steer away from crisis 19 Feb 2014 The French carmaker’s 3 bln euro capital hike is the missing link in its turnaround. Peugeot has tackled overcapacity and costs, invested in new cars, and found a capable new CEO. It is set to go global. But it will be encumbered by its new, complex shareholder structure.
Fear and loathing in China’s trust industry 19 Feb 2014 The $1.8 trillion sector is the enfant terrible of Chinese finance. The inherent mismatch between long-term loans and shorter-dated investments means trust products depend on confidence to survive. Yet widespread failures are less of a risk than reckless bailouts.
China copper IPO seeks gold in financial recycling 18 Feb 2014 Unloved Chinese companies with U.S. listings will be watching China Metal. Just 15 months after it quit the NYSE, the copper recycler is going public in Hong Kong at 10 times its last public market value. With earnings polished by tax refunds, any upside may be short-lived.
China potential sparks electric car investment 18 Feb 2014 The People’s Republic is already the biggest car market. Now the likes of Tesla and parts maker Wanxiang are betting on a boom in electric vehicles. Though infrastructure lags behind the West, a dense urban population and strong central planning could give the market a jolt.