October 01, 2010
China Moves Towards Credit Default Swaps
Two significant reforms underway this week in China: Beijing approved expanding Shanghai's interbank market to a "National Interbank Loan Trading System" with 21 big banks signed up for interbank lending and word in Lujiazui is that real Credit Default Swaps are coming. And Reuters reports today that short-term commercial paper will be traded in the interbank market creating a new vehicle for short term financing and away from dependence on bank lending.
Bank lending has expanded enormously in China in answer to the Panic of '08. Today over 45 trillion Yuan or $6.8 trillion US dollars in bank lending are outstanding a number not far off that in the USA....
Labels: banking, financial news, money, panic of 2008
Andy Xie Changes His Mind
China hand Bill Bishop at Forbes' China Tracker blog calls out Andy Xie for now saying Chinese real estate is not a bubble but may have peaked and will decline slowly thanks to government actions. Again I ask what became of the China Crash Call? Will Marc Faber, Jim Chanos, Gordon Chang, the editorial boards of the Wall Street Journal, Financial Times, Nomura Securities, etc., change their tune too....?
Labels: financial news, propaganda
September 30, 2010
China Relaxes Rules on Gold Imports
According to Reuters, the World Gold Council says China's central bank announced rules in August that will allow Chinese more banks to import and export directly on the global market. As China is slowly building its central bank holding of gold this means that China may soon play an important role in the global trade for bullion....
Labels: banking, currencies, financial news, gold
September 09, 2010
What Happened to the China Collapse Call?
Stephen Green of Standard Chartered Bank (Shanghai), an expert in China's stock markets, writes in Bloomberg that China is returning to a "Sweet Spot" for foreign investment as the Chinese economy is neither too hot nor too cold. China may see an influx of $100 billion (US dollars) in FDI this year.
Morgan Stanley's Chief Economist for China Qing Wang (he replaced Andy Xie) calls it the "Goldilocks Scenario" and has advised for some time that Beijing's mandarins are skilled at using the right policy tools at the right time and have succeeded so far in avoiding hyperinflation and any crash including it appears a property bubble.
If China is Goldilocks what about the Bears that said China was too hot/cold and ready to crash? Mark Faber, Jim Chanos, and others may have some explaining to do if China doesn't disintegrate soon...
Labels: chinese stocks, economy, financial news, morgan stanley
Deutsche Bank Enters ChongQing
German financial powerhaus Deutsche Bank was given permission to open a branch bank by the Chongqing municipality's banking regulators and authority. Over ten foreign banks have already set up shop in Chongqing - China's most dynamic city - including HSBC, Bank of East Asia, ABN-AMRO, and ANZ of Australia. Chongqing recently declared financial services to be a "pillar" industry of the giant independent municipality's economy and a focus of investment and innovation over the long term...
Labels: banking, financial news, globalization
March 30, 2010
Shanghai To Launch Yuan Funds, REITs
Before the Panic of '08 China's State Council created the little-known National Office of Financial 30 to direct a series of financial liberalizations in Chinese capital markets. The financial crisis and Beijing's mammoth stimulus spending delayed many of the reforms. But word is Shanghai is on the cusp of getting approval for two major initiatives -- launching foreign Yuan private equity funds and Real Estate Investment Trusts (REITs).
A "trial plan for participation of foreign investment in Renminbi investment funds" is close to approval. This will allow certain foreign investors, most likely big institutions such as the Carlyle Group, to invest in Chinese private equity funds via a mechanism that would grant a quota of Yuan directly to the foreign investor.
Property developers in Pudong (Shanghai) and Tianjin appear to the driving force behind establishing REITs in mainland China. Details for Chinese REITs are still being sorted out but word from Yan Qingmin, head of the Shanghai office of the China Banking Regulatory Commission, is that REITs should get the green light in the 1st half of this year. Rumour is Citic Securities, the brokerage of Citic Group - China's premier transnational corporation - may be the first to establish a REIT.
The intent of the Financial 30 is to expand private sector access in bank lending and to channel investment to Chinese small and medium enterprises as well as other breakthrough type reforms. The ShenZhen GEM board, for example, grew out of the program....
Labels: banking, finance, financial news, reform
March 29, 2010
China Business News for Monday 29 March 2010
- Geely Buys Volvo - Chinese carmaker Geely becomes the 1st Chinese auto maker to buy a legendary brand with its $1.8 billion (US dollar) acquisition from Ford Motor. Analysts say for the venture to work Geely will need to take a different approach something Geely just may be able to pull off given its reputation as China's biggest privately owned auto company....
- Rio Tinto Ex-employees Sentenced in China to prison on bribery and theft charges with terms ranging from 7 to 14 years. Australian Foreign Minister Stephen Smith criticized the verdicts and said it may impact relations with China. China is Australia's top trading partner....
- AFP says a World Gold Council report sees Chinese gold consumption doubling over the next decade. Although currently the world's leading gold producer China could exhaust its known gold reserves in just 6 years if gold consumption reaches the same degrees as India....
- Sinopec Buying Upstream Assets from its parent China National Petroleum Corp. including Angola assets valued at $2.6 billion (US dollars) all in a bid to ensure petroleum reserves....
- China's National Social Security Fund To Invest Overseas and its Chairman Dai Xianglong specifically mentioned USA, EU, and India as investment targets. Currently the fund has around $114 billion (US dollars) available and aims to more than double in size in 5 years to 2 trillion Yuan....
Labels: business news, Chinese business, financial news
March 26, 2010
Shanghai Starts Index Futures, Short-Selling Next
Trading in stock index futures will begin April 16 in Shanghai according to Reuters. The Shanghai Financial Futures Exchange will offer futures contracts on the CSI 300 index (made up of 300 leading shares from Shanghai and ShenZhen exchanges). Initial capital requirements will be hefty (500,000 Yuan or over $73,000 US dollars) and margin requirements around 15%. Coming soon short-selling in stocks will be allowed on 40 shares of the Shanghai Composite Index (which 40 shares is unavailable at this time - if you have insight, please let me know) and margin trading is promised as part of a plan to slowly liberalize Shanghai's capital markets...
Labels: csi 300, financial news, futures, shanghai composite
March 12, 2010
Reunification Watch: Taiwan Approves Financial Integration
Taiwan's Financial Supervisory Commission - the Taipei government's financial regulator - approved direct investment by mainland Chinese banks, brokerages, and insurance companies in Taiwan. Several Chinese financial businesses are interested in setting up branches on Taiwan and investing in Taiwan companies. Bank of China and Bank of Communications are known to seek expansion to Taiwan. Taiwan news sources say the Commission still needs to inform the Executive Yuan and Taiwan's parliament but the new rules could be in place as soon as next week....
Labels: banking, financial news, reunification, taiwan
February 10, 2010
Reunification Watch: Taiwan to Allow Mainland Investment in Financial Sector
Mainland China based brokerages and insurance companies may be allowed to directly invest in Taiwan financial institutions according to the Taiwan Financial Supervisory Commission. A final decision has not been approved. Moving forward, Chinese banks famously awash with capital to spend, may be allowed to invest in Taiwan's financial businesses as part of the big Economic Framework Agreement still under consideration....
Labels: financial news, reunification, taiwan
January 27, 2010
Chinese Skies: Southwest, British Airways Jets Financed by China
Airbus announced an agreement today with CDB Leasing, a leading leasing company in China, to cooperate in financing and leasing of Airbus jet planes worldwide. Under the agreement CDB Leasing will arrange financing solutions to airlines to buy Airbus planes. CDB Leasing is majority owned by Beijing's China Development Bank. Chinese banks are playing an increasingly important part in passenger plane financing. Already big Chinese banks including Bank of China and Commercial and Industrial Bank have financed planes operated by Southwest Airlines and British Airways. Reflect on that the next time you board....
Labels: aircraft, financial news, foreign relations, jet planes
December 29, 2009
China Seeks More Gold
A century ago China stubbornly stuck to a silver standard for its currency while the USA, British Empire, and Japan chose gold to back their currencies. The decision to stick with silver may have led to the rapid deterioration of China's preeminent position in trade, the collapse of the ancient Qing Dynasty, and the Chinese civil war. Earlier this year Beijing revealed that it quietly added to its gold reserves for years and that China had amassed over 1,000 tons giving it the world's 5th biggest gold stash. The faded great powers of Europe (Germany, France, and Italy) still have more but the USA is tops with nearly 9,000 tons in Fort Knox and Wall Street vaults.
Remarks by Ji Xiaonan, a senior mandarin at the Chinese State Council's State-Owned Assets Supervision & Administration bureau, reveal that Beijing may aim to displace the USA and own 10,000 tons of gold within less than a decade. Ji Xiaonan was quoted in the highly influential Economic Information Daily in late November. The newspaper dates back to 1981 and is often used to air visionary ideas on central government policy. Ji said that within only 3 to 5 years China could accumulate 6,000 tons of gold which would put Chinese reserves ahead of all nations but the USA.
Beijing's method of acquiring additional gold is not to buy directly on world markets but to mine it. The surprise increase in Chinese official gold reserves came from domestic purchases and Beijing is pushing for acquisitions of foreign gold mines. And so today in Canada mining stocks rose on news that Tongling Nonferrous Metals Group and China Railway Construction Corp. will take over Corriente Resources a Vancouver based mining conglomerate with interests in gold mining in Ecuador.....
Labels: financial news, foreign investment, gold
September 03, 2009
Beijing Converts 50 Billion $ to SDR [CORRECTION]
[CORRECTION: Reuters reports that the People's Bank of China will use Yuan not dollars to buy the IMF SDRs.]
In a move celebrated by the IMF, the Chinese central bank will convert $50 billion into SDRs or Special Drawing Rights bonds. SDRs are based on a basket of convertible currencies and were created by the IMF in the 1970s to convert away from gold. Whether SDRs convert as easily into gold is another matter for speculation. Whether SDR or gold, this is further evidence of Beijing's unease over its world's largest holdings of US dollars.....
Labels: dollar, financial news, forex, gold
August 06, 2009
TIPS, Gold for China Reserve Mix
The USA Treasury will sell $75 billion in bonds next week and has promised to include more TIPS or Treasury Inflation Protected Securities. Speculation is that Beijing requested (demanded?) more TIPS in the mix of sales although Treasury refuses to comment when pressed as to whether China was behind the new emphasis on longer term TIPS including the possibility of 30 year bonds.
Meanwhile gold output rose over 13% in China for the 1st Half of 2009 to 146.5 tons. It is widely believed that Beijing buys most if not all domestic gold production. That leaves open speculation that Chinese gold reserves have grown by over 146 tons already this year....
Labels: financial news, gold, treasury
April 23, 2009
China SWF Refines Its Mission, Looks to Europe
Recent reports that German auto conglomerate Daimler offered to sell a significant stake to China's Sovereign Wealth Fund - the China Investment Corp (CIC) - follow the comments of CIC chairman Lou Jiwei at this year's Bo'ao Forum that the SWF is getting encouraging words from Euro area companies desperate for cash. After being burned by hefty investments in the USA financial sector (Blackstone, Morgan Stanley), CIC is looking elsewhere for investments. Australian mining giant Fortescue has also sought out CIC.
And the announcement that Beijing's State-owned Assets Supervision and Administration Commission will soon form a "CIC 2.0" to invest solely in domestic companies as part of China's central government drive to restructure Chinese business means the CIC may focus entirely on foreign investments...
Labels: financial news, global economy, swf
April 21, 2009
CHINA BUSINESS NEWS FOR APRIL 21, 2009
Here are the leading business and finance stories pushed by Xinhua for 04/21/09:
*China says nationwide drive improves food safety monitoring
BEIJING, April 21 (Xinhua) -- China said Tuesday that food safety monitoring had improved since it launched a nationwide drive in December against illegal additives.
*China, Russia sign oil cooperation agreement
BEIJING, April 21 (Xinhua) -- China and Russia officials signed an oil cooperation agreement here Tuesday, which Chinese Vice Premier Wang Qishan described as a major breakthrough in bilateral energy cooperation.
*Crisis won't affect Airbus China assembly target: official
TIANJIN, April 21 (Xinhua) -- Leading world aircraft producer Airbus will cut monthly global production of the A320 in October but its assembly target in China won't change, a senior company official said Tuesday.
*China's insurance premiums expand 10 pct in 1Q, regulator reports
BEIJING, April 21 (Xinhua) -- Insurance premiums paid in China rose 10 percent in the first quarter from a year earlier, to 327.67 billion yuan (47.96 billion U.S.dollars), the China Insurance Regulatory Commission (CIRC) said Tuesday.
*Chinese enterprises are 70 percent private: official
FUZHOU, April 21 (Xinhua) -- More than 70 percent of Chinese enterprises are now privately-owned, said Zhong Youping, vice minister of the State Administration for Industry and Commerce of China here Monday.
*China to launch sixth remote-sensing satellite
TAIYUAN, April 21 (Xinhua) -- China is scheduled to launch a new remote-sensing satellite into the space Wednesday, a spokesman with the Taiyuan Satellite Launch Center in north Shanxi Province said Tuesday.
*China won't copy U.S. and EU in bioenergy development: legislator
CHONGQING, April 21 (Xinhua) -- Rigid domestic demand for grain crops has forced China to turn its back on corn and rapeseed, the traditional raw materials used by the West for bioenergy production, and focus on crops whose annual output stands much higher, said an agricultural legislator Monday.
*Overseas investors in China moving west amid financial crisis
XI'AN, April 21 (Xinhua) -- A Hong Kong-based energy firm has located its regional headquarters in the ancient Chinese capital of Xi'an, one of the latest overseas companies to seek opportunities in western China amid the global financial crisis.
Labels: business news, financial news
July 15, 2008
China Business News for July 15, 2008
Courtesy the Reuters UK press digest here's what the Chinese papers have to say:
CHINA SECURITIES JOURNAL
-- The China Securities Regulatory Commission issued rules under which brokerages must appoint compliance officers to help them strengthen internal controls and obey securities industry regulations.
-- Western Securities, which is planning a domestic stock market listing, reported that net profit in the first half of 2008 fell to 401 million yuan ($58.6 million) from 760 million yuan a year earlier as the stock market slumped.
-- More than 60 percent of domestically listed Chinese retail companies have said their profit growth continued in the first half of this year, thanks to stable economic growth and rising incomes, according to local consultancy Wind.
-- The China Securities Regulatory Commission issued rules under which brokerages must appoint compliance officers to help them strengthen internal controls and obey securities industry regulations.
-- Western Securities, which is planning a domestic stock market listing, reported that net profit in the first half of 2008 fell to 401 million yuan ($58.6 million) from 760 million yuan a year earlier as the stock market slumped.
-- More than 60 percent of domestically listed Chinese retail companies have said their profit growth continued in the first half of this year, thanks to stable economic growth and rising incomes, according to local consultancy Wind.
SHANGHAI SECURITIES NEWS
-- Chongqing Steel (601005.SS: ) estimated net profit in the first half of this year jumped at least 60 percent from a year earlier, helped by rising product prices and expanding output.
-- Chongqing Steel (601005.SS: ) estimated net profit in the first half of this year jumped at least 60 percent from a year earlier, helped by rising product prices and expanding output.
-- TCL Corp (000100.SZ: ) said trade in its shares would be suspended for one day on Tuesday pending a major announcement.
-- Property developer Beijing Huaye (600240.SS: ) said its controlling shareholder had promised not to sell newly tradable Huaye shares on the market through 2009, and in the following year would only sell shares at a minimum of 12.00 yuan.
-- Net profit at Guoyan Securities (000728.SZ: ) tumbled more than 50 percent in the first half of this year, mainly because of a 140 million yuan operating loss in core business.
CHINA BUSINESS NEWS
-- Baosteel Group has agreed to buy an 8 percent stake in southern China's Zhanjiang Port through the purchase of new shares in Zhanjiang, making Baosteel the third largest shareholder in the port, which may eventually go public, a senior Zhanjiang executive said.
FINANCIAL NEWS
-- Insurance companies have paid claims totalling 386 million yuan by July 12, which represents 86.4 percent of total claims.
-- Analysts said the huge increase in savings deposits, by 1.378 trillion yuan in June, indicated that consumers were more conservative due to high inflation.
-- China's foreign exchange reserves increased by an average of $42.2 billion per month in the second quarter, higher than the monthly trade surplus plus direct foreign investment, reflecting the pressure of capital inflows in anticipation of appreciation of the renminbi, said analysts.
CHINA DAILY (www.chinadaily.com.cn)
-- A BBC documentary alleging China has violated the UN arms embargo in Darfur is biased and made with ulterior motives, China's special envoy for Darfur said. Liu Guijin said "China's arms sales were very small in scale and never made to non-sovereign entities. We have strict end-user certificates."
-- Government departments should coordinate to monitor capital in the form of foreign direct investment, which could be a source of "hot money", said Zhang Ming, an economist at the Chinese Academy of Social Sciences. Zhang estimated speculative funds amounted to $1.75 trillion.
-- The Sichuan earthquake has left 1.4 million farmers in about 4,000 remote villages in absolute poverty. A State Council anti-poverty official said the government should "pump in a minimum of 12 billion yuan ($1.75 billion)" into the poor villages in the coming three years to ensure the villagers' basic necessities in Sichuan, Gansu and Shaanxi provinces.
-- The Sichuan earthquake has left 1.4 million farmers in about 4,000 remote villages in absolute poverty. A State Council anti-poverty official said the government should "pump in a minimum of 12 billion yuan ($1.75 billion)" into the poor villages in the coming three years to ensure the villagers' basic necessities in Sichuan, Gansu and Shaanxi provinces.
PEOPLE'S DAILY
-- China will promote a household contract system in the management of collective forestry land and ownership of trees nationwide, an important step to boost the enthusiasm of farmers in planting and increase their income.
-- China's agriculture products are safe and can be used for visitors at Beijing's August Olympics. ($1 = 6.84 yuan)
Labels: business news, china, financial news
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