Asia’s inflation challenge – not enough of it 11 Nov 2013 Credit-fuelled domestic demand is not pushing up prices. Exports are weak, so producers are dumping surpluses locally at low prices. Also, rising Asian currencies have made imports cheaper. Tepid inflation increases the real cost of debt, which may slow investment.
Doubly dysfunctional press hinders China cleanup 11 Nov 2013 Arrests of domestic reporters and heavy-handed treatment of foreign news organisations risk leaving China without an effective graft watchdog. Beijing may prefer top-down purges to chaotic exposés, but press curbs carry economic costs. Investors can’t tell fact from factionalism.
Suntech casts shadow over China capital raisings 8 Nov 2013 The stricken solar panel maker is fighting bondholders who want to see it liquidated. Despite a vague offer of local government cash, its $270 mln enterprise value looks deluded. For investors piling into Chinese companies, it’s a lesson in what happens when things go wrong.
White male banker jabs at finance’s glass ceiling 8 Nov 2013 HSBC chief Stuart Gulliver says the bank must rethink its culture to attract and retain more senior women. Though the insight is hardly new, it’s still unusual for male CEOs to publicly admit the problem. The next challenge is for HSBC to show it can live up to Gulliver’s ideal.
Lenovo’s tablet ambition may require M&A repeat 8 Nov 2013 The Chinese group defied shrinking global PC sales to increase revenue and expand margins. But its dependence on China leaves it exposed. Lenovo did well after absorbing IBM’s laptop business in 2005. It may need a similar trick to speed its shift into tablets and smartphones.
China’s Singles’ Day shows market power of one 7 Nov 2013 Online shoppers may snap up over $4 billion of goods when prices halve on Nov. 11. But the best deal goes to Alibaba. Singles’ Day will further entrench the dominance of its platforms Tmall and Taobao. Faced with such market clout, sellers have little choice but to join in.
U.S. investors’ love of tech defeats fear of China 6 Nov 2013 Shareholders are snapping up Chinese technology stocks listing in the United States. It’s a contrast with recent years, when accounting and governance scandals led many to shun mainland shares. Though red flags remain, the lure of rapid revenue growth is trumping caution.
China enters era of enlightened numerology 5 Nov 2013 Premier Li says GDP must grow at least 7.2 percent to create enough urban jobs. In reality, the quality of employment now matters more than quantity. The new minimum looks less of a fetish, and more a useful indicator of how China’s leaders will balance reform with stability.
China web giants take on backers at their own game 5 Nov 2013 Tencent’s potential funding for U.S. app Snapchat shows China making strides into Silicon Valley. Chinese tech firms’ cash and contacts make them an attractive alternative to regular venture capital. And unlike a VC, Tencent faces little pressure to show investors its returns.
China banks inch towards being global competitors 1 Nov 2013 CCB’s purchase of a small Brazilian bank for $730 million is easy for Western rivals to ignore. So are plans for lenders to open branches in the UK. But as China’s outbound financial flows expand, its banks will follow - especially if they get a taste for investment banking fees.
Macau results show not all casinos can be winners 1 Nov 2013 Gambling in the former colony has boomed this year as high rollers defy China’s slowing growth and corruption crackdown. Most gaming stocks have doubled in the past twelve months. But disappointing results from MGM point to growing competitive pressures.
China’s banks languish in valuation twilight zone 31 Oct 2013 The likes of ICBC and CCB earn double the return on equity of global rivals, but trade on the same multiple of book value. Investors are suggesting those returns won’t last. Valuations will only adjust when Chinese banks address fears about what’s lurking on their balance sheets.
China Index: Waiting for the Party to start 31 Oct 2013 The economy held more or less level in September, despite an unexpected drop-off in exports, according to Breakingviews’ alternative growth index. With new leaders set to reveal plans for the next decade at the “third plenum” later this month, the inertia could be short-lived.
Three questions to ask of China’s "third plenum" 30 Oct 2013 Hopes are high for November’s huddle of top Communist Party officials. At previous meetings, leaders unveiled plans that jolted China’s economy. Specific reforms may not surprise, but there could still be big clues about whether anything has really changed under the new guard.
Mud sticks for China’s warring heavy industries 29 Oct 2013 Rivals Zoomlion and Sany have faced accusations of fraud, espionage and even attempted kidnapping. Competition is meant to spur efficiency, but the chronically oversupplied construction machine sector shows that without clear rules and a working market, the reverse can happen.
China bank IPO shows rewards of financial alchemy 24 Oct 2013 Bank of Chongqing’s remarkable 32 percent return on equity relies on a trick that is all the rage for the country’s lenders: repackaging loans to look like low-risk investments in other banks. For investors it’s a profit opportunity. For regulators, it’s a potential nightmare.
Li Ka-shing still has what investors want 23 Oct 2013 Asia’s richest man may be an octogenarian but he still knows when to buy and sell. While the listed bits of his empire show a mixed record, Li’s two prized holding companies have matched or beaten the market. That provides valuable pointers as Li readies a new batch of IPOs.
Alibaba creative governance should come at a cost 22 Oct 2013 New York says the Chinese e-commerce group could list with a structure that lets insiders nominate directors. Hong Kong regulators disagreed. The debate is really about the value of shareholder democracy. Investors should be wary of giving up their rights cheaply.
Starbucks’ China price is driven by demand 22 Oct 2013 State television is upset the coffee chain charges more for a latte in Beijing than in Chicago. Import duties and real estate costs - and China’s managed exchange rate - may partly explain the gap. But it is Starbucks’ aspirational status in China that gives it pricing power.
Li Ka-shing still has options after ParknShop flop 21 Oct 2013 The tycoon’s Hong Kong supermarket chain’s mooted valuation of over $3 billion was ambitious. But there are other ways to raise funds for investment. ParknShop might be more palatable as part of an IPO of its parent, Li’s higher-margin giant retail group A.S. Watson.