Short news
June 12, 2017 Category Short news, Weekly
Finance
- Li Ruohong, a former Chairman of the Guangdong Development Bank – now China Guangfa Bank – and former Deputy Director of the Guangdong Financial Affairs Office, had his life sentence upheld. He was convicted of taking bribes totaling more than CNY50 million and illegal possession of firearms. His mistress and two brothers were also sentenced to between 6 and 11 years in prison for taking bribes.
- Fugitive tycoon Guo Wengui instructed his staff to produce fake business documents to apply for a CNY3.2 billion loan from the Agricultural Bank of China (ABC) in 2010, three former executives told a court in Dalian. Guo, who has close ties to disgraced former State Security Vice Minister Ma Jian, now lives in New York. He is wanted by Beijing for alleged corruption and is subject to an Interpol “red notice”.
- The China Insurance Regulatory Commission (CIRC) is set to tighten standards on the management of liability, investment, and liquidity risks, as it assesses solvency requirements for a second year, PricewaterhouseCoopers (PwC) said.
- China will expand the use of the renminbi in countries and regions involved in the Belt and Road Initiative by improving cross-border payment and settlement facilities for the currency, Yin Yong, Deputy Governor of the People’s Bank of China (PBOC), said at the CIC Forum 2017 in Beijing. The China Investment Corp (CIC), a sovereign wealth fund, manages part of China’s foreign exchange reserves.
- China’s foreign exchange reserves jumped to a seven-month high at the end of May on curbed capital outflows and a weakened U.S. dollar. The reserves hit USD3.05 trillion at the end of May, up USD24 billion from a month earlier, the People’s Bank of China (PBOC) said. It was the fourth straight month of increase, giving the central bank ammunition to defend the yuan.
- The People’s Bank of China (PBOC) set the yuan mid-point at 6.7858 against the U.S.dollar on June 7, its strongest level since November 9, 2016. The interest rate was only one element pushing up the yuan recently, especially in the offshore market, while the new factor added to the pricing model of the yuan by the central bank played a more significant role, Xie Yaxuan, Chief Economist with China Merchants Securities Co said.
- U.S. investment bank Goldman Sachs will continue to invest in its China business as it expects greater liberalization of the Chinese financial services industry, Lloyd Blankfein, Chief Executive of the bank, said. He added that the investment banking industry in China “should be given more freedom” as it is the basis for the success of other industries by providing financing, risk management and advice on business reorganization.
- China Rapid Finance (CRF), the Chinese financial technology business that recently listed in New York, expects to add up to three million users on its lending platform this year despite the government’s push to tighten restrictions on the online lending sector. One of China’s largest online consumer lending platforms in terms of number of loans transacted, CRF raised USD69 million on the New York Stock Exchange (NYSE) in late April, putting it on a fast track to tap China’s underdeveloped consumer finance businesses.
Foreign trade
- China and the U.S. should build on their initial consensus, and come up with a long-term plan to settle their trade disputes, U.S. Treasury Secretary Steven Mnuchin said. He added that instead of the 100 days originally agreed, the two sides had to enter a “one-year cycle of negotiations” to ensure the outcomes of talks were put into practice. The two nations announced some initial results of their trade talks on May 12, including China agreeing to let in U.S. beef, natural gas and financial services by mid-July, when the two sides are scheduled to wrap up a 100-day action plan to improve trade ties during high-level talks in Washington.
- China’s foreign trade grew 18.3% in May year-on-year to CNY2.35 trillion. China’s exports increased by 15.5% to CNY1.32 trillion and imports rose 22.1% year-on-year to CNY1.03 trillion, according to the General Administration of Customs. It produced a trade balance of CNY281.6 billion. The monthly trade surplus widened from April’s CNY281.6 billion but was 3.4% lower than in May last year. In dollar-dominated terms, exports rose almost 9% year-on-year, while imports jumped nearly 15%.
- China has condemned the European Commission (EC) for imposing new anti-dumping duties on its steel products. The Commission said it would levy duties of up to 35.9% on Chinese hot-rolled flat steel in a bid to create a level playing field with China. The EC said Chinese producers gain from preferential lending, tax rebates and other financial help that allow exports to the EU at artificially-low prices.
IPR protection
- The recently closed 2017 China Beijing International Fair for Trade in Services introduced auctions for the first time. Among the 107 auctioned items there were 35 intellectual properties, including the rights to cartoon characters, copyright of written works, and broadcast and adaptation rights to videos.
- The Liaoning provincial IP authority and the leadership office of the Liaoning pilot free trade area recently unveiled guidelines for IP work in the area. The guidelines suggested borrowing international common practices and experience of the existing domestic free trade zones in Shanghai and Fujian, and start reforms in the administration and enforcement of patents, trademarks, copyrights, integrated circuit designs and trade secrets.
Macro-economy
- China’s services industries grew at the fastest pace in four months in May. The Caixin General Services Purchasing Managers’ Index (PMI) rose to 52.8 in May from April’s 51.5. It was the highest reading since January’s 53.1 points. A reading above 50 indicates expansion.
- China National Building Material Group (CNBMG), the world’s largest construction material maker and the nation’s sixth largest glass maker, aims to turn Hong Kong-listed China Glass into a platform for overhauling China’s fragmented and troubled glass industry. China Glass also aims to pursue overseas expansion through acquisitions and building new plants in western developed markets and emerging markets along the new Silk Road initiative. China Glass wants to become one of the world’s top three glass makers by capacity in three year. China’s debt-laden glass industry’s low industry concentration – with the largest player commanding only around 10% of industry output – is a main reason for its poor profitability.
Mergers & acquisitions
- China National Chemical Corp (ChemChina) has completed the second settlement of its tender offer for Basel-based Syngenta, increasing its stake to 94.7%. ChemChina plans to delist Syngenta’s shares on the Zurich-based SIX Swiss Exchange and the New York Stock Exchange (NYSE) as soon as permitted by law and applicable regulations. Syngenta is the largest European producer of hybrid seeds and crop protection products.
- Chinese companies have less appetite for mergers and acquisitions this year as the government tightened scrutiny on cross-border investment flows, Ernst & Young said. The firm found 44% of Chinese companies said they have five or more M&A projects in the pipeline, down from 90% in last year’s survey, EY said in the China portion of its Global Capital Confidence Barometer report. The report surveyed over 2,300 executives globally, with 154 from China. In the first five months, exports increased by 14.8% from a year ago and imports jumped 26.5%. The gains reversed a 1.8% year-on-year decline in exports and 3% fall in imports during the same period last year.
- In a letter, 27 U.S. lawmakers have urged U.S. Treasury Secretary Steven Mnuchin to reject the proposed USD2.33 billion sale of U.S. aluminum products maker Aleris to China Zhongwang Holdings to protect U.S. security interests. The lawmakers said Aleris was involved in the production and testing of specialized alloys used by the defense industry, and the company’s research and technology were critical to U.S. economic and national security.
Real estate
- China Vanke said its second-largest shareholder, Shenzhen Metro Group, is considering raising its stake in the property developer. Trading of its yuan-denominated A shares was halted on the Shenzhen exchange, after they fell 1% to CNY20.87. The company’s Hong Kong-listed stock jumped as much as 5.2% to a one-month high of HKD21.3. Analysts say the surge in the share price reflects investors’ high expectations that the state-owned subway operator, an ally of Vanke’s management, will replace raider Baoneng Group as the largest shareholder after the transaction.
- China Evergrande Group shares hit another all-time high as the developer vows to repay all of its perpetual bonds by the end of June. China’s most-indebted developer said it had already redeemed 70% of its outstanding perpetual bonds. By the end of 2016, the developer owed more than CNY100 billion in perpetual bonds at an interest cost of CNY10.6 billion last year. Its contracted property sales in the first five months reached CNY183 billion, a 66% year-on-year rise.
- As many as 25 Chinese property developers have engaged in fierce bidding for six plots of land in Zhengding, Hebei province, now a district of the provincial capital Shijiazhuang, in which Chinese President Xi Jinping had worked in the 1980s. Local land prices have risen more than 800% since last December. The most expensive plot is now priced at CNY20,900 per square meter. The six plots sold for a total CNY4.2 billion, all going to local developers.
- China was the top country of origin in both the buying and selling of U.S. commercial real estate last year, according to the 2017 Commercial Real Estate International Business Trends report by the U.S. National Association of Realtors (NAR).
- Many Hong Kong apartment investors are taking a wait-and-see attitude as Deutsche Bank forecast collapsing property prices and an interest rate increase in the United States is expected. A mere 80 units were transacted so far out of the 206 offered in the third batch of apartments at Victoria Skye, developed by K&K Properties at the old Kai Tak airport site in Kowloon, even though 2,300 buyers had registered their interest. The first lots to sell were the smallest units that involved the least upfront payment. Hong Kong’s residential property prices, already the world’s highest by square footage, will likely decline by nearly half over the next 10 years as a rapidly ageing population combines with a rising supply of new apartments to dent demand, according to Deutsche Bank.
Retail
- Chinese household confidence took a beating from China’s weak stock market and measures to curb the property market. The China Wealth Index, compiled every two months by the Bank of Communications (BoCom) and research firm Nielsen, fell to 135 in May from March’s 138, which was the second highest on record. A reading above 100 reflects optimism among over 1,800 households interviewed.
Science & technology
- China is making preliminary preparations to send an astronaut to the moon, according to Yang Liwei, Deputy Director General of the China Manned Space Agency and China’s first man in space. Official approval and funding are expected soon, but the trip itself could still be many years off, possibly by 2036. China’s space budget is still only about one-tenth of that of the United States at about USD2 billion a year. China is also making progress building a spaceplane that can take off and land the way airplanes do. It would make going to space cheaper and more environmentally friendly.
Stock markets
- At least 18 China-listed companies mobilized employees to buy their shares, and said any losses incurred will be covered by the Chairmen of the respective companies on condition that the purchased shares are held for at least 12 months. The companies said the stock market needed to be stabilized amid “irrational” declines in share prices. The Shanghai Composite Index is down 4.5% from this year’s high in April amid government-led deleveraging in the financial sector.
Travel
- HNA Group has denied corruption allegations made by fugitive tycoon Guo Wengui and says it may pursue legal action against him. The comments were the company’s first public statements on the claims. Guo is wanted on corruption charges in China and has made a series of graft allegations against the Chinese government and company officials.
VIP visits
- Chinese President Xi Jinping had a meeting with California Governor Jerry Brown, who was in Beijing to attend a Clean Energy Ministerial meeting. Xi encouraged California to make more contributions to promoting China-U.S. cooperation in fields like technology, innovation and green development, and welcomed California to participate in the Belt and Road Initiative. The California government and China’s Ministry of Science and Technology signed an agreement for greater collaboration on countering climate change.
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