China best to keep cool head over yuan bill 21 Oct 2011 Beijing has hit out over a mooted U.S. currency bill that could lead to tariffs. China is getting more assertive, and can no longer rely on U.S. firms to fight its corner. But starting a war of words may alienate its remaining supporters, and make the bill more likely to pass.
Slower Chinese GDP growth adds to financial risk 18 Oct 2011 In the past, strong growth has helped Beijing smooth over problems with bad loans. But 9.1 percent may not be fast enough to deal with excesses in non-bank lending and real estate. It sounds like U.S. subprime – the financing that supported growth now threatens to undermine it.
Shanda’s opportunistic MBO may start a trend 18 Oct 2011 Its founder looks to be exploiting the plunging share prices of China’s U.S.-listed dotcoms. Shanda’s cash pile will cut the amount he has to put in. Delisting from the United States paves the way for a relisting in China. Others frustrated by rising U.S. scrutiny may follow suit.
China’s biggest insider has poor market timing 14 Oct 2011 Huijin, the state fund that has been buying up bank stocks, isn’t a great role model for investors. It sold in the past when shares were cheap, and has made poor returns on previous dips into the market. No wonder investors don’t seem to be following its lead.
China joins ranks of the credibility-impaired 12 Oct 2011 Investors were unmoved by a pledge from Beijing to buy bank shares. In 2008, a similar statement pushed equities up 10 percent in a day. The long global crisis has shown the limited ability of governments to deal with financial tensions. China no longer looks like an exception.
Russia and China close but not yet allies 12 Oct 2011 Putin’s visit to Beijing highlights the deepening co-operation between the two giants. But they remain worlds apart on big issues, and trade between them is small. Apparent agreement on issues like U.S. policy and Syria shouldn’t worry the world just yet.
HK banks’ yuan strategy looks bad for earnings 11 Oct 2011 Taking deposits in the Chinese currency isn’t the opportunity it first seemed for Hong Kong’s lenders. The business is barely profitable, and migration of savings into yuan has exacerbated a HK dollar shortage, pushing up the cost of deposits and threatening to hurt margins.
China’s bank intervention is a Band-Aid at best 10 Oct 2011 Buying shares of ICBC and its peers in the market sends a signal the government will stand behind its lenders. Cracks in the property market and non-bank lending suggest it may be necessary. The move should reassure depositors, but won’t spare banks from the trouble that looms.
Sinopec shows quirks of Chinese resource M&A 10 Oct 2011 The Chinese energy group has offered a massive 120 pct premium for Canadian producer Daylight. Like similar Chinese deals, the $2.2 bln offer works because of strategic necessity, still-high commodity prices, cheap capital and a shareholder none too fussed about value creation.
China Mobile’s cash pile is a $50 bln dilemma 6 Oct 2011 The Chinese telecom has more cash than Apple, but few ways to spend it. There are no logical acquisition targets, and state ownership makes it tricky to buy back shares. The best bet may be to invest in growth. Future profits may suffer as competition from the Internet heats up.
Trade war remains a distant prospect 5 Oct 2011 The U.S. and China are once again raising the spectre of mutually destructive protectionism. But globalisation has gone so far that trade restrictions would have painful and immediate consequences in every country. That’s why the threats won’t go far beyond angry skirmishes.
U.S. currency slap looms as China least deserves it 3 Oct 2011 A bill enabling sanctions on Chinese goods may pass the Senate this week, even though the yuan has appreciated strongly on a trade-weighted basis. China’s central bank has been guiding the currency stronger despite falling markets. For the U.S. to lash out now looks a mistake.
China’s property market faces crisis of trust 27 Sep 2011 Hangzhou developer Greentown is under scrutiny for using trust structures to funnel debt into its projects. Trusts have spread rapidly to become a critical source of funding for property companies. But a crisis of cash flow, or confidence, could see a messy unravelling.
Rise of red capitalists need not be bad for China 27 Sep 2011 China’s richest man, Liang Wengen, may get a seat on the Communist Party’s elite central committee. It smells of crony capitalism, but there could be advantages to giving the private sector a bigger role in government. This may even help China nurture entrepreneurship.
Time to close China’s VIE loophole 26 Sep 2011 No-one benefits from the fuzziness around the VIE, a structure that lets foreigners take quasi-ownership of Chinese companies in restricted sectors like the web. Their usage is spreading. VIEs make regulators look weak, and investors risk losing their shirts. Clarity is needed.
Offshore yuan investors get a rude awakening 23 Sep 2011 Chinese currency traded in Hong Kong fell sharply. Yet the onshore yuan, protected by China’s capital controls, barely moved. Investors may not have expected offshore to behave just like another Asian currency. This may pour cold water on the offshore market’s rapid development.
IMF issues timely warning on ultra-low rates 21 Sep 2011 Just as Ben Bernanke and his crew contemplate further easing, a new IMF report lays out the multiple threats created by such loose monetary policy. In rich nations, small firms suffer while in emerging markets, capital inflows produce bubble conditions. The FOMC should pay heed.
IMF financial crisis indicator bodes ill for China 21 Sep 2011 The fund has found a measure of credit growth that could predict crunches. It makes the Middle Kingdom look precarious and heralds problems for Turkey and Vietnam. The IMF’s crisis-spotting record is lousy. But overheating nations shouldn’t dismiss what seems a sensible metric.
China’s pursuit of stability risks greater stress 20 Sep 2011 Some claim China’s economy is a bubble set to burst while others think slowing growth and inflation warrant looser policy. Ethan Devine of Indus Capital argues that in fact China’s economy is both too hot and too cold, with structural reforms needed to bring it back into balance.
China’s taste for European loans leaves it exposed 20 Sep 2011 Borrowers tapping cheap dollars to beat tight credit at home have racked up $333 billion in foreign loans, as much as 60 percent from European banks. If Europe’s crisis forces those banks to turn tail, it could jeopardise a small, but important source of cheap liquidity.