Short news
May 8, 2017 Category Short news, Weekly
Finance
- China’s top-five state-owned banks – Industrial and Commercial Bank of China (ICBC), Agricultural Bank of China (ABC), Bank of China (BOC), China Construction Bank (CCB) and Bank of Communications (BoCom) – posted stable profit growth of 1.68% year-on-year in the first quarter. Profits of the five banks totaled CNY267.5 billion in the first three months. ICBC led on profit of CNY75.8 billion, while based on profit growth from a year earlier, CCB led with an increase of 3.03%.
- HNA Group has become the largest shareholder in Germany’s biggest lender Deutsche Bank after raising its stake to 9.92%, surpassing U.S. management firm Blackrock’s 5.88% stake. Deutsche Bank suffered a €1.4 billion loss in 2016, but it reported strong first-quarter results last week. HNA invested in the bank as it believes the shares of the bank are “substantially undervalued and are an attractive investment”.
Foreign investment
- Foxconn Technology Group plans to open a production center in Hengyang, Hunan province for Amazon, as part of its effort to diversify and reduce its reliance on Apple. The plan includes building a precision-molding demonstration park and Amazon production center in the city. Foxconn and Amazon have been cooperating since 2007, and Foxconn is the sole manufacturer of the Amazon Echo.
Foreign trade
- U.S. President Donald Trump does not intend to trade away American jobs for China’s help on North Korea, U.S. Commerce Secretary Wilbur Ross said, adding that there were “constructive” talks with Beijing underway on trade issues. Asked if the need for China’s on North Korea had made it more difficult to be tough with Beijing on trade issues, Ross said he did not think so.
Macro-economy
- Xu Kuangdi, 79, who was Mayor of Shanghai from 1995 to 2001 and played a key role in building the Pudong New District into China’s financial hub, is expected to also play a major role in the development of the Xiongan New Area southwest of Beijing.
- Fifteen of China’s 31 provincial-level regions recorded faster growth than in the same period last year. Heilongjiang and Liaoning provinces were among those that achieved higher first-quarter growth at 6.1% and 2.4% respectively.
- The erosion of Chinese manufacturing might accelerate if Beijing fails to keep up with business tax cuts in the United States, but analysts also cautioned that the central government’s scope to reduce the corporate tax burden would be limited given the need to keep up public spending on infrastructure to make sure growth stayed on track The People’s Daily said the proposed U.S. tax cuts would “wreak chaos in the international taxation order” and “incite a tax war”.
- Plans for railways linking the planned Xiongan New Area in Hebei province with neighboring Beijing and Tianjin were disclosed recently. There will be two railway stations in the area: Xiongan Railway Station and Xiongan East Railway Station. The Beijing-Xiongan rail route will connect Xiongan New Area with Beijing’s planned second airport, 55 kilometers to the north of Xiongan, while the Tianjin-Xiongan railway route will connect the area with Tianjin’s new railway station. Xiongan residents will be able to reach Beijing and Tianjin in about 30 minutes.
Mergers & acquisitions
- China’s Ministry of Commerce (MOFCOM) has decided to greenlight the merger of Dow Chemical and DuPont after nearly a year of antitrust investigations, but asked the two to divest some businesses as preconditions of the approval. The two companies’ dominance in pesticides, weed killers and several other products will likely increase after the consolidation of their marketing power and R&D divisions. The Ministry believes the post-merger conglomerate will control nearly 40% of China’s weed killer market, 75% for acid copolymers and 100% for ionomers.
Real estate
- About 40 Beijing homebuyers staged a protest outside the Beijing Municipal Commission of Housing and Urban-rural Development, protesting the local government’s unprecedented home purchase tightening policies, which resulted in a sudden drop in the value of some real estate assets, such as apartments built on land earmarked for commercial purposes. Some who recently bought an apartment are unable to obtain loans to pay off the remaining money due, and can’t get their down payment back.
- China pledged that half of the houses to be built by 2020 will be “green buildings,” which is expected to boost building energy efficiency by 20% from 2015, the Ministry of Housing and Urban-Rural Development said. The area of modular buildings is forecast to take up 15% of the newly-built homes by 2020. Modular buildings save 50% of construction time compared with the traditional method, according to ModSpace, a U.S.-based construction company. The gross output of the building industry is expected to grow 7% annually from CNY18.1 trillion in 2015 to 2020.
- Shanghai will introduce a lottery system for sales of new residential projects as demand is overtaking supply. The lottery will guarantee “transparent and fair distribution” of units, and is part of the city’s measures to curb speculation in the housing market. Shanghai’s housing regulator also said real estate developers, agents and sales companies are forbidden from getting involved in speculative home sales.
Retail
- Coca-Cola has quietly launched its super-luxurious Swiss sparkling water – called Valser – in China, but the question is, will consumers buy the expensive water. The price for a 750 ml bottle is CNY64, equivalent to two Starbucks cappuccinos or six bottles of the French premium mineral water Evian. In 2013, China overtook the United States to become the world’s biggest bottled water market by volume, growing from 19 billion liters annually to 37 billion liters from 2010 to 2015. Consultancy Zenith International predicts it will expand by a further 58% by 2019.
- China again topped the list of completed retail developments worldwide last year, with seven cities being among the 10 most active markets. In 2016, around 5.75 million square meters of shopping centers were completed, compared with 12.5 million sq m built around the globe last year. Shanghai, with annual completion of 1.11 million sq m, came out top last year. Beijing, Chongqing, Chengdu, Nanjing, Shenzhen and Tianjin were also among the 10 most active cities globally, which also included Mexico City, Moscow and Melbourne.
- China’s consumer demand for gold rose 8% year-on-year to 282.4 tons in the first quarter of 2017, compared with an 18% drop in global demand due to diminishing central bank buying and a previous high base, the World Gold Council said. China’s investment in gold bars and coins jumped 30% to 105.9 tons in the first quarter, the fourth-highest on record, while jewelry demand fell 2% year-on-year.
Stock markets
- Tang Hanbo, the first Chinese trader to be penalized by regulators for breaching securities regulations involving Hong Kong stocks, is seeking a judicial review in Hong Kong to invalidate a search conducted in his residence, claiming the gathering of evidence was unlawful. Tang, a Chinese citizen living in Hong Kong, was slapped with CNY1.2 billion in fines and penalties by the China Securities Regulatory Commission (CSRC) for breaching the country’s securities rules in the share dealings of Feng Xin China Holdings and Tian Ge Interactive Holdings during the August 2015-June 2016 period.
Travel
- DreamWorks Animation, creator of the cartoon films Shrek, Madagascar and Kung Fu Panda, has pulled out of the Shanghai DreamCenter, a multibillion-yuan business and cultural development beside the Huangpu river in Shanghai. The project’s remaining partners insist the DreamCenter remains on track. DreamWorks Founder Jeffrey Katzenberg had been a high-profile champion of the project since he and Li Ruigang, Chairman of China Media Capital Group, unveiled plans in 2012 for the cluster of grade-A office buildings, cinemas and retail and entertainment venues in Shanghai’s fast-developing West Bund area. DreamCenter was advertised as a rival to New York’s Broadway and London’s West End.
- China is working on next-generation bullet trains with a maximum operational speed of 400 kilometers per hour that will be ready by 2020. New materials, such as carbon fiber and aluminum alloy, will be used to help reduce weight and enhance energy efficiency. The new trains will be used to link countries in the Belt and Road Initiative markets. The new bullet train will be tested on a portion of the Beijing-Shenyang high-speed railway line.
- Construction of the long-awaited Hong Kong-Zhuhai-Macao Bridge is nearing completion as workers began to install the final piece of an underwater tunnel. The road link is scheduled to open to traffic this year. The bridge will shorten the current four-hour drive from Hong Kong to Zhuhai to just 30 minutes. The 55-kilometer Hong Kong-Zhuhai-Macao Bridge includes a 6.7-kilometer underwater tunnel and a 22.9 km bridge above the water’s surface, making it the longest cross-sea bridge in the world.
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