Short news
June 6, 2017 Category Short news, Weekly
Finance
- The China Development Bank (CDB) will invest CNY250 billion in projects linked to the Belt and Road Initiative during the next three years. Up to CNY100 billion will be earmarked for infrastructure projects while a further CNY100 billion will be invested in industrial cooperation. Another CNY50 billion will be used for financial cooperation projects. CDB has assets of more than CNY14 trillion and has more than 500 projects in the pipeline for Belt and Road regions worth over USD350 billion. The CDB also signed a memorandum with Deutsche Bank for an initial cooperation plan worth about USD3 billion during the next five years.
- Standard & Poor’s is likely to follow its regular ratings review schedule for China, and does not see any basis at this point for an out-of-schedule committee meeting, Kim Eng Tan, Asia-Pacific Senior Director of Sovereign Ratings said. His remarks came after Moody’s Investors Service cut its sovereign rating on China to a1, putting them on par with those of Fitch Ratings. S&P has an aa-rating on China with a negative outlook that it has maintained since March 2016. S&P last changed its rating on China in late 2010, when it upgraded it by one notch.
- The People’s Bank of China (PBOC) set the yuan’s daily fixing at 6.8090 to the U.S. dollar on June 1, its strongest level since November, while the overnight yuan interbank rate in Hong Kong (HIBOR), an indicator reflecting the cost for short selling of the yuan, spiked to the highest level in six months. The rise in the yuan exchange rate occurred after the central bank’s move to add a counter-cyclical factor to the pricing model for the currency. The adjustment aims to reduce the potential for “herd behavior” in the foreign exchange market.
- The State Administration of Foreign Exchange (SAFE) has issued a notice requiring banks to report every cash withdrawal made outside China’s borders, and every overseas card transaction valued over CNY1,000. Banks must submit a report of overseas transactions on a daily basis from September 2. Overseas withdrawals are capped at CNY10,000 per day, and CNY100,000 per year, for UnionPay cardholders.
Foreign investment
- Nokia has signed an agreement with state-owned investment company China Huaxin Post & Telecommunication Economy Development Center to set up a joint venture – Nokia Shanghai Bell – to integrate Alcatel-Lucent Shanghai Bell and Nokia’s China operations. Nokia will own 50% plus one share of the new joint venture, with China Huaxin owning the remainder. Mike Wang, Nokia’s President in China, said the upcoming 5G mobile communication technology will create big opportunities.
Macro-economy
- Average salaries in China’s information technology industry have exceeded those in the financial sector for the first time since 2008, according to China’s National Bureau of Statistics (NBS). Average annual income was CNY122,478 per person in the former, surpassing average annual income of CNY117,418 in the latter. It was the first time that the technology sector’s wage level was higher than finance’s since industry-specific wage data became available in 2008.
Real estate
- China’s richest man Wang Jianlin has lost up to CNY200 million in a Spanish deal concluded three years ago because of a shift in exchange rates. Wanda Hotel Development Co has sold its stake in the Plaza de Espana 19 Development to Spanish property company Baraka Global Invest. The sales price was €272 million, higher than the €265 million Wanda had paid, but due to the depreciation of the euro and the strengthening of the yuan, Wanda lost on the deal. Wanda’s plans to redevelop the hotel, shopping mall and apartments never materialized.
- Norman Chan, Chief Executive of the Hong Kong Monetary Authority (HKMA), said the high demand for units in the Ocean Pride development was reminiscent of the property market’s 1997 peak, that eventually led to a market crash and a six-year slump. There are risks that the property bubble may burst in the city, he said. Nicholas Brooke, Chairman of Professional Property Services Group agreed, saying that there were similarities to 1997 in terms of price rises, the queuing, long upward cycle and the strong general buying momentum in the market. Hong Kong’s average April home prices increased 20% from a year ago, making the city the world’s most expensive residential market. The price surge surpassed the previous peaks in 2015 and in 1997.
Stock markets
- Hong Kong Exchanges and Clearing (HKEX) will launch the consultation for a third board that caters to start-ups and technology firms that do not qualify for listings on the main board and the Growth Enterprise Market as early as in two weeks’ time, said Chief Executive Charles Li. The new so called “Third Board” would cover companies that are pre-profit and even pre-revenue, such as some biotechnology companies that had just “one discovery or one patent”.
- The Hong Kong unit of Robeco is opening its first mainland China fund to outside money. Chief China Investment Officer Victoria Mio will target European clients who want to invest in Chinese equities. “There’s potential for valuation re-rating. It’s a market that offers a lot of good investment opportunities that you cannot find overseas,” she said. Rotterdam-based Robeco managed USD154 billion of assets as of the end of March, and the portfolio Mio manages was valued at about USD450 million.
- China’s securities market regulator has rejected more initial public offering applications from companies amid efforts to improve the quality of listed companies and protect the interests of individual investors. The China Securities Regulatory Commission (CSRC) in May reviewed iPO application documents from 64 companies, and nine of them, or 14% of the total, failed to get the approval to go public. The rate was higher than the 12% in April and the 11.6% for the first five months of this year.
Travel
- China Railway Rolling Stock Corp (CRRS) has sold its products to 102 countries and regions, and plans further expansion. The group’s assets abroad have surged from CNY3 billion in 2013 to CNY30.6 billion last year, and the number of overseas employees has jumped from 509 in 2013 to 4,808 last year. CRRS will deliver its first metro cars to Istanbul later this year, and plans to build a freight train factory in Canada. CRRC’s total orders from abroad in 2016 surged by 40% to USD8.1 billion.
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