Lower-cost iPhone won’t fill Apple’s China hole 12 Sep 2013 The latest model is cheaper and will work on China Mobile’s upgraded network. But at more than $700, it’s still too expensive to appeal to the masses. Apple will need to do more to reverse its status as an also-ran in the world’s largest smartphone market.
Apple gives finger to the skeptics 10 Sep 2013 New plastic and gold iPhones arrived with software, speed and camera upgrades. In lieu of a watch or TV, biometric security features provided the wow factor. Though the bottom-line benefits for Apple aren’t immediately clear, it may have just started a mobile payments revolution.
Apple event more likely evolution than meteor 9 Sep 2013 Investors and the tech giant’s fans are clamoring for a hit new gadget on Tuesday – a watch, a TV or something else. History and rumors suggest they may have to settle for improvements to existing devices. Financially, a deal to sell iPhones through China Mobile could matter more.
Kazakh deal shows China’s enduring thirst for oil 9 Sep 2013 Buying into the Kashagan oilfield gives China’s national oil producer access to one of the world’s last great finds. The $5 bln cost of the stake - plus $3 bln to help Kazakhstan fund a tricky expansion - shows that, for China, resources are still scarcer than capital.
Review: Will the real Mao please stand up? 6 Sep 2013 Mao’s portrait watches over Beijing, but it’s still impossible to know the man behind the myth. Journalist Edgar Snow had rose-tinted specs; writers Jung Chang and Jon Halliday saw red. Mao’s legacy is volatile, and China’s current leaders invoke his name at their own risk.
AMC offers investors back-row seats, no popcorn 5 Sep 2013 The debt-laden cinema chain has filed for an IPO just a year after the Chinese owners bought it. AMC needs to reduce its borrowings in order to meet ambitious investment plans. In return for helping out, investors get shares with few votes and few rights. It’s a poor showing.
Not all Asian countries need to fear the Fed 5 Sep 2013 Plunging currencies have raised contagion concerns. But not all nations are equally vulnerable to receding tides of dollar liquidity. A Breakingviews interactive map shows that while no Asian economy is entirely immune, none is as badly exposed as India.
China’s bad debt could leave $500 bln equity hole 4 Sep 2013 That’s how much the biggest lenders would need if 10 percent of their loans go bad and balance sheets continue to expand, according to a Breakingviews calculator. Though earnings can cover some of the shortfall, the potential hit explains why valuations are languishing.
The lessons for China from Japan’s lost decade 3 Sep 2013 China faces many of the challenges that hobbled its Asian rival in the late 1980s: a debt-fuelled property boom, less competitive exports, and an ageing society. China is still urbanising and can avoid deflation, but only if it learns from Tokyo’s error by cleaning up its banks.
Minzhong reprieve doesn’t dispel short-seller risk 3 Sep 2013 A bid from the Chinese food group’s largest shareholder has neutralised questions about the company’s accounts. It’s a reminder of the risks for short-sellers going after Asian targets. But the ongoing slide at commodities trader Olam shows concerns aren’t easily dismissed.
China graft purge needs carrot as well as stick 2 Sep 2013 A probe into the head of the state asset regulator suggests even the mighty can’t escape the law. Fear is a powerful tool for fighting high-level corruption. But unless China also cuts opportunities and incentives for graft such cases amount to little more than score-settling.
Xiaomi can’t afford to let its hype go to waste 30 Aug 2013 The Chinese smartphone maker, which just poached a top Google exec, has ballooned in value to $10 billion in just three years. Based on current sales, that isn’t a stretch. But scale brings risk: Xiaomi needs a “moat” if it is to become China’s Apple, and not its Palm Inc.
China growth index: Good month for train-spotters 30 Aug 2013 Breakingviews’ forward guide to China’s economy has picked up, including rail freight volumes, an important sign of domestic demand. Summer’s PMI readings also improved. But most of the alternative growth indicators remain negative. Things are far from full steam ahead.
China’s consumers aren’t living up to sales pitch 28 Aug 2013 Purchases of almost everything have slowed sharply; some retailers are struggling to pay back debts. The most likely culprit is decelerating investment, which drags on incomes. China’s consumers will have their day, but the idea they alone can sustain growth looks threadbare.
China’s debt molehills could turn into mountains 27 Aug 2013 Banks have reported low overall bad debt levels. But locally, risks are mounting. The east coast and retail sector are two areas where credit conditions are getting worse. In China, regional problems can escalate rapidly, and investors have poor visibility over where risks lie.
Asia sell-off will expose weak corporate defences 26 Aug 2013 Market turbulence invites comparisons with Asia’s last financial crisis. Though most economies are in better shape this time, corporate leverage has risen. Higher interest rates, slower growth, and falling currencies will lay bare companies that failed to learn past lessons.
China can learn from Russia on political martyrs 26 Aug 2013 The trial of Bo Xilai echoes that of Mikhail Khodorkovsky eight years ago. Like the jailed Russian oligarch, Bo could some day become a symbol for the regime’s failings. The difference: China’s leaders have a chance to keep their prosperity promises. Fail, and Bo may come back.
Nepotism is giving way to elite breeding 26 Aug 2013 JPMorgan’s family-related hiring in China is under investigation. Though the old practice of automatic jobs for the kids of the elite is on the decline globally, the young rich profit from privileged upbringings. The new nepotism is fairer, and more troubling, than the old.
Bo Xilai trial says little about China rule of law 21 Aug 2013 For the ousted Communist hotshot, a guilty verdict is a foregone conclusion. Investors, however, care more about China’s handling of commercial cases than political show trials. While courts are far from efficient, there are signs a lacklustre system is becoming more predictable.
China price probes may be too much of a good thing 20 Aug 2013 The regulator is getting tough on companies that set minimum prices. The practice is common, easy to identify and hurts consumers. The market benefits when rules are enforced, but the risk is that China’s competing trustbusters are motivated by glory as much as duty.