Blockchain for banks will eat its creators 27 Oct 2016 A transaction involving Wells Fargo and a cotton trader has made the payment technology a reality. Meanwhile a consortium-backed platform will soon share its code. Banks act like this is a good thing, but their role as middlemen in markets like corporate bonds and FX is at risk.
China is bluffing on shadow bank crackdown 27 Oct 2016 The central bank is broadening oversight of off-balance sheet finance in the $4 trln wealth management product industry. But increasing scrutiny of the obvious isn't much of a threat to banks that rely on WMPs for profit. Shadow banking supports growth and is here to stay.
Plenum adds to jitters over Chinese outbound M&A 25 Oct 2016 A leadership conclave this week is a prelude to a reshuffle of the party's top cadre. That's a distraction for the officials whose jobs hang in the balance at state firms like ChemChina. And it's one more reason to worry about the completion of Chinese outbound deals.
China’s “bicycle Ubers” worth taking for a spin 25 Oct 2016 MoBike and ofo are billed as sexy pedal-powered answers to the ride-hailing app. The startups, backed by local tech giants, are actually asset heavy and capital-intensive. They face unique risks, but pairing smart hardware with rental economics justifies some enthusiasm.
HNA checks in to Hilton at a high-season premium 24 Oct 2016 China's free-spending hospitality giant is plunking down $6.5 bln for 25 pct of the hotelier from Blackstone. It's paying 15 pct more than market for the honor. The LBO firm triples its money in the deal. HNA at least gains a valuable, if pricey, seat at an important table.
Berlin’s U-turn over Chinese bidders is worrying 24 Oct 2016 The government reversed its approval of the 670-mln-euro takeover of chip equipment-maker Aixtron. That looks like an attempt to protect Germany's tech industry, and backs up previous rhetoric. Shooting down the deal would hurt Aixtron, but the apparent wavering is more damaging.
Foreigners give Chinese drug maker a healthy glow 24 Oct 2016 CR Pharma is raising $1.8 bln from its Hong Kong IPO. A holding company structure and the rising price of donkey hide, a key ingredient, justify a discount valuation to peers. But a respectable roster of big foreign investors underscores the healthy prognosis for the sector.
China Oceanwide buys GE sloppy insurance seconds 24 Oct 2016 The private conglomerate run by Lu Zhiqiang is paying $2.7 bln for U.S. insurer Genworth Financial, which was spun out of the industrial giant and has since wasted away. It is not clear the Chinese buyer has what it takes to turn around Genworth, but the deal puts it on the map.
JPMorgan stages tactical retreat in China 21 Oct 2016 The U.S. bank could sell out of its minority position in a mainland securities joint venture. Many Western investment banks are stuck in these suboptimal JVs. However, the long-term promise of China's capital markets is huge. This may just be the prelude to finding a new partner.
Philippines U.S. “goodbye” can fix China FDI gap 21 Oct 2016 President Rodrigo Duterte's boast of ditching America for China plays well in Beijing. Cash is a major motivation. China is under-invested in the Philippines compared to elsewhere in Southeast Asia. Funds from the People's Republic can help Duterte deliver on big promises.
Hong Kong swats short-seller too hard 20 Oct 2016 Banning U.S. short-seller Andrew Left from Hong Kong's stock market for five years, and threatening future criminal penalties, is harsh. This will hurt the market's long-term health. The timing is also unfortunate, given concerns over rising mainland influence on the city.
Syngenta investors can depend on Chinese stomachs 20 Oct 2016 Talk of a state-ordered merger rattled shareholders of the Swiss agribusiness group, which has accepted a $43 bln takeover by ChemChina. But food security is crucial for Beijing and there are few comparable targets available. A failed deal would be a big embarrassment too.
China’s doped economy is low on happy pills 19 Oct 2016 China has notched up three successive quarters of eerily consistent GDP growth, but the results were medicated by housing speculation, government spending and the Fed's rate caution. That may have tranquilized investors, but as painkillers wear off, the economy's legs will wobble.
Alibaba courier aims high with New York IPO 18 Oct 2016 Chinese logistics group ZTO Express wants to raise up to $1.3 bln through a New York flotation. Sales are soaring, thanks to the e-commerce boom. But rival couriers are also scaling up. ZTO lacks the market dominance or margins to justify an Alibaba-style premium valuation.
Crown highlights risks of courting Chinese VIPs 17 Oct 2016 Shares in Crown Resorts crashed after China detained some staff. Investors had cheered moves by Australia's top casino company to distance itself from Macau. But this episode shows Chinese gamblers, and official attitudes, are crucial to gambling groups across the region.
Size-is-all Chinese M&A hits a chemical high 14 Oct 2016 Sinochem and ChemChina are in talks to create a group with nearly $100 billion in sales. Like other tie-ups between big state-owned enterprises, scale comes before economic rationality. Attempting to do this while ChemChina is also buying Syngenta is sheer folly.
China’s “social credit” makes for fearful economy 13 Oct 2016 China wants to use big data from courts, banks and government bureaus to purge miscreant firms and people from economic life. Better credit scoring would help cut fraud, but this proposal blurs social, political and economic criteria. The results will be unfair and inefficient.
Huawei and Lenovo salivate at Samsung phone fail 12 Oct 2016 The South Korean group's decision to scrap the Note 7 smartphone is a golden opportunity for Chinese rivals like Huawei and Lenovo to capture share in developed markets, while expanding into the premium segment. Execution will be key, and Huawei looks better prepared.
China’s debt swap is a deal nobody wants 12 Oct 2016 China latest debt swap is a clever piece of balance sheet engineering. The government wants to swap corporate debt for equity without bailing out banks or borrowers. But unless the state forces deals through, there won't be much appetite from either side.
Osram illuminates flaw in German takeover laws 11 Oct 2016 A potential Chinese bid for the lighting group is feeding concern about foreign tech takeovers. No national interest is at stake here and domestic ownership was no bar to job cuts. Other deals may be more ambiguous. Germany lacks a proper framework to address future challenges.