Short news
February 27, 2017 Category Short news, Weekly
Finance
- HNA Group has acquired a 3.04% stake in Deutsche Bank. The purchase makes HNA the fourth-largest shareholder in the German lender, after BlackRock, which holds 6.07%, and two sovereign wealth funds that are controlled by Qatar, which together hold 6.1%. HNA could still increase its stake, but would keep it below 10%. HNA Capital, a financial group under HNA Group, has operations in more than 100 countries, and it deals with businesses include leasing, insurance, internet banking, securities and futures. Its total assets exceed CNY340 billion.
- Ant Financial plans to invest USD200 million in Kakao Pay, South Korean internet service provider Kakao Corp’s mobile pay platform. Kakao Pay will connect to the 34,000 stores currently using Alipay in South Korea. There are more than 14 million customers using Kakao Pay. Instant messenger tool Kakao Talk is installed on at least 97% of South Korean smartphones.
- The Chinese government said it would push ahead with supply-side structural reform and to keep a close watch on eight types of financial risks, including non-performing loans and high leveraging in the stock market.
- The China Insurance Regulatory Commission (CIRC) “will never allow the insurance industry to be turned into a rich boys’ club,” or let it become the sanctuary or war chest of corporate raiders, buyout artists and so-called “financial crocs,” said CIRC Chairman Xiang Junbo at a Beijing press conference. He said the CIRC would impose the most severe punishment on companies that breach its rules, suspend their businesses or revoke their licenses. Chinese insurers invested CNY1.89 trillion in mutual funds and equities as of November, or 12% of their total assets.
- U.S. Treasury Secretary Steven Mnuchin’s comments on whether to brand China a currency manipulator signal reduced chances of a trade war and are positive for the yuan, according to Royal Bank of Scotland Group. The two nations will seek to limit any conflict to a controllable level, said Harrison Hu, Chief Greater China Economist at RBS in Singapore.
- China will keep its corporate tax rate at 25% for the time being, ignoring calls by leading entrepreneurs to reduce the burden on businesses. The National People’s Congress (NPC) left the rate unchanged in amending the corporate income tax law on February 24. But the amount companies can deduct for charitable donations was raised to encourage philanthropy. Changes to the tax regime have previously saved companies CNY500 billion.
- The China Banking Regulatory Commission (CBRC) has issued a new rule requiring peer-to-peer (P2P) lending platforms to use third-party banks for custody of funds in an effort to curb financial fraud. A P2P lending platform should sign an agreement with only one commercial bank to safeguard the funds, and all P2P lenders should meet the custody requirement in six months, the regulator said. 209 online P2P platforms have already signed such agreements with commercial banks, accounting for 8.8% of all P2P lenders, according to Online Lending House, a portal that tracks the sector. There were 2,448 online P2P lending platforms operating in the country at the end of 2016.
- Wang Yincheng, Vice Chairman of state-owned People’s Insurance Group of China (PICC) is being investigated for “discipline violations”, which usually includes corruption.
- China’s private equity (PE) and venture capital (VC) fundraising set a new record in 2016, and will continue to rise in 2017 bolstered by a surge of yuan-backed funds, according to PricewaterhouseCoopers (PwC). A record USD72.51 billion was raised by PE and VC firms in China last year, up an annual 49%. Yuan funds were worth USD54.89 billion, up 177% year-on-year, and took up 76% of total fundraising of the sector.
- China’s Finance Ministry is investigating possible irregularities in the ways several local governments have obtained loans, as part of wider efforts to keep borrowing in check and avoid widespread defaults. It asked provincial governments in Inner Mongolia, Shandong, Henan, Chongqing and Sichuan to address the irregularities.
Foreign trade
- China became Germany’s largest trading partner for the first time in 2016, knocking off the U.S. from the top spot it held in 2015. Germany’s trade with China rose to €170 billion in 2016, surpassing the trade volumes of €167 billion with France and €165 billion between Germany and the U.S.
- The U.S. International Trade Commission (USTC) has removed duties on truck and bus tires imported from China. The decision followed a previous ruling by the U.S. Department of Commerce in January to slap anti-dumping duties of up to 22.57% and countervailing duties of up to 65.46% on certain China-made truck and bus tires. The two countries’ tire products were different from, and complementary to, each other, and Chinese tires met the growing demand in the United States, China’s Ministry of Commerce (MOFCOM) said.
- China’s steel exports fell 23.2% year-on-year to 7.42 million tons in January as trade barriers rose. Exports dropped 3.5% to 108.4 million tons last year. In January, China imported 1.09 million tons of steel, up 17.7% year-on-year. In 2016, there were 48 trade cases filed by 20 countries and regions against China’s steel products, up 29.7% from a year earlier.
Macro-economy
- China will “stabilize and improve its macro-economic policies” and deepen reforms to achieve its economic and social development goals this year. The nation will continue to adopt a pro-active fiscal policy and prudent monetary policy, according to a meeting of the Political Bureau of the Communist Party of China, which was presided over by President Xi Jinping.
- The Longyangxia Dam Solar Park in Qinghai province is the world’s largest solar farm with 4 million solar panels. The 27 square kilometer farm is almost the size of Macao, and can generate 850 megawatt of clean energy, enough to supply power to 200,000 households. China is the world’s largest solar power producer by capacity, with a total installed capacity of 77.4 GW at the end of 2016. Solar plants generated 66.2 GW of China’s electricity last year, accounting for 1% of the country’s total power generated.
- China’s centrally-administered state-owned enterprises (SOEs) cut 2,730 subsidiary legal entities last year. The central SOEs reduced loss and management costs by CNY4.39 billion and CNY4.91 billion respectively, in 2016. Major problems include weakness in core business, too many sideline businesses, low efficiency and excessive layers of administration and management, state media said. China has 102 central SOEs, which manage the bulk of the country’s state assets.
- China will widen market access for private investors to medical care, education, care for the elderly, culture, sports and other social sectors. Public-private partnerships will be widely encouraged, and the government also encourages setting up investment funds based on private investment.
Real estate
- Home price growth slowed for the fourth consecutive month in January. Average new home prices grew 0.2% month-on-month, compared with December’s 0.3% rise. In third-tier cities, the average price of new homes rose 0.4% in January, the same as the previous month, marking a stable trend.
Retail
- Walmart Stores said it aims to add 30 to 40 new stores in China, including three to five Sam’s Club outlets, in 2017 as well as upgrade current stores and continue to work with JD.com. It will invest more than CNY300 million to upgrade and remodel around 50 current stores.
Science & technology
- Nobel laureate C.N. Yang and Turing Award winner Yao Qizhi have become Chinese citizens and officially joined the Chinese Academy of Sciences (CAS) as Academicians – the highest academic title in China. They are the first overseas scientists to relinquish their U.S. citizenship to join the CAS. Yang, 94, will join the mathematical physics department, while Yao, 70, will enter the information technology and science department. Yang and Yao now live in China after working for many years in the U.S. and are professors at Tsinghua University in Beijing.
- Shanghai’s Pudong district will build a Tsung-Dao Lee Research Center in the Zhangjiang area, along with a batch of new world-class scientific institutes in a bid to develop the area into a “national science center.”The research center is named after the Shanghai-born scientist who won the Nobel Prize for physics in 1957 and will focus on particle physics and astrophysics as well as quantum science and technology.
Stock markets
- The appetite of Chinese investors for U.S. dollar-denominated assets is “huge” and offshore funds available for investment are growing despite curbs by Chinese authorities to stem capital outflows, Yim Fung, Chairman of Guotai Junan International Holdings, told the South China Morning Post. The Hong Kong listed subsidiary of state-owned brokerage Guotai Junan Securities reported a flat 1% increase in net profit to HKD1.01 billion for the financial year ended December 31, 2016.
- At least six underachieving firms are likely to be expelled from the stock exchange as they have forecast that their 2016 earnings will be in the red for a third consecutive year. They are Shanghai-listed Jilin Jien Nickle Industry, Kunming Machine Tool, as well as Shenzhen-listed Pangang Group Steel Vanadium & Titanium and Chongqing Jianfeng Chemical. The other two firms, Geeya Technology and Huaze Cobalt & Nickel Material, both violated securities laws and are also facing a potential delisting. Only 2% of mainland-listed companies reporting three consecutive years of losses have been delisted since the stock market was established in 1990.
- The China Insurance Regulatory Commission (CIRC) has punished a second company in just two days for short-term speculation, suspending the insurance arm of leading property developer Evergrande Group from trading in stocks for one year. Two former executives were banned from the insurance sector for five and three years.
- Liu Shiyu, Chairman of the China Securities Regulatory Commission (CSRC), said the regulator will accelerate the pace of IPO approvals, signaling the CSRC’s intention to reduce government intervention in share sales and allow the market to play a bigger role. It would also increase oversight of market manipulation and illegal activities.
Travel
- CRRC Changchun Railway Vehicles Co will supply 100 subway cars for Metro Line 2 in Mashhad, the second-biggest city in Iran in May. The company already started to ship subway cars to Iran in 2016 after it signed a USD1.39 billion contract to supply 1,008 subway cars to Teheran, the Iranian capital, over a five-year period.
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