Private equity firm Warburg Pincus, based in New York, recently invested in a second round of funding for outlet store chain Sasseur Cayman Holdings, along with L Capital Asia, the private equity fund backed by LVMH Group. The investment was estimated at about USD100 million with more commitment in the future. Headquartered in Chongqing, Sasseur now operates four large outlet stores in Chongqing, Hangzhou and Nanjing, which mainly sell out-of-season apparel, shoes, leather goods and accessories. The stores are a major destocking channel for luxury brands. Warburg Pincus first invested in Sasseur in 2011, then a small player with a single store in Chongqing. It is now the second-largest shareholder in Sasseur. Last year, sales revenue of the top 50 retailers in China fell 0.7% due to a slowing economy and as a result of the e-commerce boom. Yet Sasseur maintained a growth rate of more than 30% and expanded into more second-tier cities including Hefei, Xian, Guiyang and Kunming. Warburg Pincus, which has invested nearly USD5 billion on the mainland since entering the market in 1994, is now a shareholder in more than 30 Chinese enterprises in the finance, consumer, energy, technology and health-care sectors.

Hong Kong Exchanges and Clearing (HKEx) has told brokers in a circular that from February 23, it will allow investors to short-sell Shanghai-listed A shares under the Shanghai-Hong Kong Stock Connect scheme. Short-selling is used for hedging and to profit in bearish markets. This marks the first reform of the cross-border trading scheme since it kicked off on November 17. The turnover of A shares through the Hong Kong stock exchange stood at CNY2.67 billion as of February 17, the last trading day before the Lunar New Year break, representing just 1% of the Shanghai market’s turnover. Ben Kwong, Director of KGI Asia, said the new measure would help boost turnover as short selling would enable investors to continue trading even during market downturns. Investors can only short-sell stocks that are designated to be traded under the Stock Connect scheme, according to the HKEx circular. Before short-selling, the investors would need to borrow stocks from brokers at a margin, as is the standard practice in Hong Kong. The short-selling ratio – the number of shares sold short as a proportion of the total number of the same stock held by all investors in Hong Kong at the beginning of the trading day – will be capped at 1% and no more than 5% over 10 consecutive days. The turnover under the scheme has been underwhelming. The total quota of CNY300 billion set for overseas buyers of Chinese stocks was expected to be exhausted in 23 days as the daily quota was set at CNY13 billion. But after two months, only a third, or CNY100 billion, of the quota has been used up. Southbound trading, or mainland investors buying Hong Kong stocks, has seen only 10% of the quota used.

In the first six weeks of 2015, about two dozen billionaires emerged following initial public offerings (IPOs) of – among others – an airline, a video-game developer and a drug-store chain. After a 14-month standstill beginning in October 2012, IPOs resumed in China last year. More than 20 new stocks started trading in January, the most since the same month a year earlier. The offerings follow a 49% rise in the Shanghai Composite Index, the world’s best-performing index in 2014. The rally on the Shenzhen Stock Exchange has produced at least three new billionaires: Xiao Fen, whose electronics company, Shenzhen Fenda Technology Co, invested in a maker of Google Glass-like products; Ruan Hongxian, Chairman of Yunnan Hongxiang Yixintang Pharmaceutical Co, China’s third-biggest publicly traded drug-store chain; and Zhou Wei, Chairman of medical software developer Shanghai Kingstar Winning Software Co. In Shanghai, where gains in the first day of trading are capped at 44% and subsequent daily increases are limited to 10%, Wang Zhenghua, the 70-year-old Chairman of Spring Airlines Co, landed a USD1.3 billion fortune after the stock surged by the daily limit in the nine days after its trading debut. No company produced more billionaires than the finance affiliate of Alibaba Group Holding. Zhejiang Ant Small & Micro Financial Services Group Co, the parent of electronic payment operator Alipay, doubled its valuation to about USD50 billion last month ahead of a private placement and an anticipated IPO.

Chinese holidaymakers are now Spain’s biggest spenders, outstripping Russians for the first time. Between April and September last year, Chinese tourists accounted for 31% of Spain’s tourist revenue, according to tourist spending consultancy Global Blue. During the same period, spending by Russians – previously the biggest spenders per head – fell by 14.3% after worsening relations between the European Union and Russia and the fall in the value of the rouble against the euro. More sings in Chinese are appearing and museums have started issuing Chinese-language maps. Some hotels are offering access to Chinese TV stations and adapting their menus to cater to Chinese tastes. Ten Spanish cities have joined an organization called Chinese Friendly to promote the Spanish tourist market on Chinese social media and at tourism fairs. A record 287,866 Chinese citizens visited Spain last year, up 13.9% compared to the previous year, according to the United Nations World Tourism Organisation. While British, German and French tourists head for the beach, Chinese tourists tend to prefer visiting Spain’s biggest cities. Chinese tourists who visited Spain in 2013 spent an average €2,040 on a package deal as well as €167 a day on shopping, mainly clothing, the South China Morning Post reports.

Automotive

• Carmakers including Ford Motor, Daimler and Nissan Motor are looking at ways to give drivers safe, hands-free access to mobile apps in China. They have asked Tencent to adapt its popular WeChat chatting app with about half a billion active monthly users to be used in cars. Drivers would be able to sync their phone to the car’s software system and control specific WeChat functions through voice commands or limited use of buttons.

Finance

• Dutch bank SNS Reaal announced it was selling 100% of its insurance arm Vivat Verzekeringen to Chinese insurer Anbang for €150 million. Anbang also planned to pump up to €1 billion into the ailing insurer to recapitalize and help redeem internal loans within the SNS Reaal group of €552 million, Dutch Finance Minister Jeroen Dijsselbloem said in a statement. Anbang Insurance Group has also agreed to pay about USD1 billion for a 63% controlling stake in Tong Yang Life Insurance, South Korea’s eighth-largest life insurer.
• Shanghai Life Insurance Co received approval to operate in the Shanghai pilot free trade zone (FTZ). The newly-established insurer, with a registered capital of CNY2 billion, will offer both insurance and asset management services, as well as traditional life insurance and health insurance products. Invested by a consortium of eight state-owned and private companies, the company is backed by the Shanghai city government and the local insurance regulator. The consortium is led by Lanhai Holdings, a real estate developer affiliated to Zhong Ying Enterprises.
• High-yield debt issuers from China’s property sector will switch onshore this year as China cuts interest rates, while those developers rated investment-grade will stay abroad as they are less affected by the still unfolding Kaisa crisis, say analysts. “Investors see the Kaisa incident as more company-specific rather than sector-wide,” said Standard & Poor’s Corporate Ratings Director Christopher Yip. Despite a slow start, offshore issuance will probably catch up later with the full-year amount likely to match last year’s, he added.
• People’s Bank of China Deputy Governor Hu Xiaolian has been appointed the Chairwoman of Export-Import Bank of China. Hu is replacing Li Ruogu, who is retiring. Former Bank of Shanghai Chairman Fan Yifei was appointed a Member of the central bank’s Communist Party committee, in preparation for him to be nominated a Deputy Governor. There has been no mention so far of a possible replacement of PBOC Governor Zhou Xiaochuan, who has held the post for over a decade.

Foreign investment

• Some manufacturers are relocating from China to Mexico to take advantage of the lower production costs and the proximity of the United States market. Boston Consulting Group said manufacturing in Mexico was now 4% cheaper than in China, while a decade ago it was 6% more expensive. Other companies are relocating to Southeast Asia.
• Japanese contracted investment in China rose by 46.9% year-on-year in January. The number of new enterprises set up by Japanese investment increased by 3.5% and actual investment rose by 3.2%. Japan’s direct investment in China fell by 38.8% year-on-year in 2014 to USD4.33 billion. The decline, compared with a fall of about 4% in 2013, reflects soured bilateral relations, as well as rising operational costs in China.
• Unilever said that its newly opened global manufacturing base in Sichuan province would play a key role in its China operations and serve as a vital conduit for expansion into the third- and fourth-tier cities of the country, although its sales in China fell by 20% in the fourth quarter. The new factory in Meishan, Sichuan, is the third world-class green manufacturing base of the Anglo-Dutch company in China, in addition to manufacturing units in Tianjin and Hefei, Anhui province.

Foreign trade

• China’s cotton imports slid 44.9% year-on-year to 161,200 metric tons in January, highlighting the challenges that domestic textile manufacturers face in a weak world market. Exports of garment and yarn products fell 12.4% and 7.6% to CNY96.86 billion and CNY59.47 billion, respectively. Shoe exports declined 10.8% to CNY34.88 billion, according to the General Administration of Customs. Cotton reserves rose to 11 million tons last year, half of the global total.

Health

• Huang Fengping, former Deputy Director for the Shanghai Municipal Commission of Health and Family Planning, was sentenced to 19 years in prison for accepting bribes and embezzling more than CNY4.4 million. His case was linked to British drugmaker GlaxoSmithKline (GSK), although this was not mentioned by the court.
• A rising number of H7N9 bird flu cases has prompted Guangdong to close live poultry stalls for the rest of the month. It was the first year in living memory in Guangdong that live chickens will not be sold during the Lunar New Year period.

Macro-economy

• Modernizing Chinese agriculture will help to counter slower economic growth by driving investment in rural infrastructure and boosting consumption, says China’s Premier Li Keqiang. It could also help digest some of the excess capacity in China’s steel and cement industries, as well as create new jobs. “Farmers are the country’s largest consumer group. By increasing farmers’ incomes through accelerating agricultural modernization, we can activate farmers’ huge potential consumption demand,” the Premier said.
• The outlook for business conditions in China over the next three months fell to a record low in February, according to the MNI China Business Indicator. A tightening of credit to companies, among other factors, drove expectations to the lowest level since March 2007, when Deutsche Börse Group began conducting the survey.
• The world’s top 10 Chinese billionaires are all self-made and none of them were born in the year of the sheep, according to a study by consultancy firm Wealth-X. The richest three were born in the year of the dragon, considered the most auspicious Chinese zodiac year. Cheung Kong Group Chairman Li Ka-shing retains the top ranking with a net worth of USD30.6 billion. Lee Shau-kee, Chairman of Henderson Land Development, is second with USD26.6 billion. Alibaba Group Chairman Jack Ma is third at USD26.5 billion.
• Beijing and Zhangjaikou in Hebei province have launched a joint bid to organize the 2022 Winter Olympic Games. The budget submitted to the International Olympic Committee (IOC) has been kept relatively small at USD3 billion – less than a tenth of the USD40 billion it spent on the 2008 Summer Olympics. Last year’s Games in Sochi, Russia, at USD51 billion, were the costliest Winter Olympics ever. Beijing and its bidding rival Almaty, in Kazakhstan, are competing to come up with the lowest budget to host the 2022 event. An IOC evaluation committee will visit Beijing at the end of March for a final assessment, and the winner will be announced on July 31.

Mergers & acquisitions

• Shanghai-based East Money Information Co plans to acquire 70% of Xizang Tongxin Securities Co, the latest example of finance portal sites buying brokerages to enlarge their business scope. Shanghai DZH, a finance information service firm which operates gw.com.cn, also signed a similar cash and share agreement worth CNY8.5 billion with Xiangcai Securities in January.

Real estate

• Home price drops were recorded in 64 cities last month, compared to 66 in December. Prices were flat in four, compared to three in November, while rising in two cities. While first- and second-tier cities registered virtually no change in price, drops of more than 0.5% month-over-month were found in third-tier cities.” The average price of new homes in the country’s four first-tier cities rose for the second consecutive month in January. New home prices in Quanzhou, in Fujian province, fell 1.7% from December to lead the drop. Shenzhen in Guangdong Province, and Ganzhou, in Jiangxi province, registered price increases last month.
• A national government database of property ownership is to be tested later this year and should be fully operational by 2017. The Ministry of Land and Resources said the database would be put online within the year and be expanded in 2016. The database will be used to track the assets of corrupt officials who try to hide the extent of their wealth.
• Prime office space in Hong Kong leased by financial companies from mainland China was 148,000 sq ft last year, a 51% jump from 2013, according to data from realtor CBRE Group. Industrial Securities and Sino Life Insurance were among those that had rented new offices in Hong Kong’s central business district in the past two quarters, CBRE said.

Stock markets

• Investment companies are expected to soon be allowed to invest in start-up companies listed on the over-the-counter (OTC) equity market. With more than CNY10 trillion under the management of insurers, even a fraction of their investments in the third board would give the new market a new lease of life. China launched the third board at the end of 2013 in Beijing after expanding the original OTC market mainly to accommodate delisted companies in a nationwide equity trading platform. At the end of last year, about 1,600 start-ups were trading on the electronic system with a total market capitalization of CNY440 billion.
• High compliance costs and low valuations contributed to 14 Chinese companies choosing to delist from United States stock markets last year. A bumper year for Chinese IPOs in the United States – thanks largely to Alibaba’s record USD25 billion listing – has overshadowed a retreat from that market by almost as many Chinese firms that entered it.

Travel

• Small taxi-hailing firm Yidao Yongche has filed a complaint at the Ministry of Commerce (MOFCOM) and the National Development and Reform Commission (NDRC) against the proposed merger of taxi-booking apps Kuaidi Dache and Didi Dache. They allege that it would result in a mega-company that would control a combined 90% or more of market share in the domestic taxi-booking business.
• The newly opened Hello Kitty Park in Anji county, Zhejiang province, is the latest addition to an increasingly crowded market for amusement parks in China. The park, set on 60 hectares, houses a grand castle, a themed theatre, an aqua amusement zone and a dozen rides including a Ferris wheel. However, of the roughly 3,000 theme parks in China, only 30% are profitable, according to Yang Yanfeng, Researcher at the China Tourism Academy.