The Chinese government introduced a “green credit” guideline for commercial lenders on Friday to facilitate economic restructuring in a manner that’s environmentally friendly and saves energy.
The China Banking Regulatory Commission, the top banking regulator, ordered lenders to cut loans to industries with high-energy consumption and high levels of pollution or excessive capacity, and to strengthen financial support for green industries and projects.
The CBRC encouraged banks to evaluate, classify and rate the environmental and social risks inherent in their clients’ businesses and take the results as a key reference in their ratings and access to credit.
“Through credit controls, banks can have an influence on businesses’ awareness of energy savings, emissions-reductions and the benefits to the public,” said Yan Yanfei, deputy director-general of the statistics department at the CBRC.
He said that in the next step, the CBRC will set up some key indexes to make the guideline more specific and try to include adherence to the plan in the rating system.
Lenders also need to improve management of any overseas projects that they support, to ensure that the initiators of those projects comply with local environmental, land, healthcare and security legislation, according to the guideline.
Zhang Rong, the programme manager of environment and social standards at the International Finance Corporation of the World Bank Group, said the guideline is welcome, especially given the increased involvement of Chinese enterprises in the global market, and the increasing number of calls urging the overseas projects to take more care of the local environment and to reduce energy use.
“Actually Chinese banks have already made very good attempts at green credit, and they can learn from the mature technology and management systems that their international counterparts have already been using for some time,” Zhang said.
China Development Bank Corp, which makes nearly half of the total loans supporting overseas projects of Chinese enterprises, has just provided credit to a Chinese company that operates an iron ore mine in Africa. The funds will help the company move surface soil to a place of safety to protect the seeds of local plants, according to Lu Hanwen, deputy director-general of CDB’s Project Appraisal Department II.
By the end of 2011, CDB had lent 658 billion yuan ($104 billion) to support environmental protection, energy-saving and emissions-reduction projects, accounting for 12.7 per cent of the bank’s total outstanding loans.
Yang Bin, deputy general manager of Corporate & Investment Banking at Shanghai Pudong Development Bank Co Ltd, said banks have enough motivation to lend green credits because the demand from clients that they undertake green initiatives has been rising constantly.
Such loans have a lower non-performance ratio than other lending because enterprises can usually obtain strong incentives for green projects from the government to repay the loans, he said.
“And the rate of return against cost for green credits is much higher than other lending,” said Yang, adding that evaluating the environmental impact and energy-consumption of their clients will cost the banks little.
“But State-owned enterprises should also be ordered to implement green policies if the government wishes to achieve its energy-saving and emissions-reduction goals,” Yang said.
http://tourism9.com/ http://vkins.com/
2012年2月25日星期六
2012年2月21日星期二
Shanghai Launches RMB Investment Fund
21 February 2012
The Shanghai government-owned Shanghai International Group has led a group of official and private investors to establish a substantial renminbi (RMB)-denominated fund that targets the financing of Chinese corporate investment overseas.The RMB50bn (USD7.9bn) Sailing Capital International fund, which was set up on February 16, 2012, is expected to leverage some RMB150bn of total investments, or three times its original principal, by linking with bank finance.
It is hoped that the fund will aid both institutional investors and corporates in diversifying into overseas investments, and prioritize those investments that are priced and settled in RMB, as part of the globalization of the currency. In addition, it should encourage domestic companies to look at overseas expansion, possibly through mergers and acquisition opportunities.
The fund is also being looked on as part of the stated official intention that Shanghai will be a centre for onshore RMB trading, clearing and pricing by 2015, before it becomes an international financial centre by 2020.
A comprehensive report in our Intelligence Report series giving a country-by-country analysis of offshore investment funds, stock exchanges and trusts, with an analysis of the US QI regime, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://tourism9.cm/ http://vkins.com/
2012年2月20日星期一
Walmart Global eCommerce Announces Increased Investment in Yihaodian
BENTONVILLE, Ark., Feb. 19, 2012 /PRNewswire/ – Wal-Mart Stores, Inc. (NYSE: WMT – News) announced today that it has reached an agreement to increase its investment in the holding company of Yihaodian, a fast-growing eCommerce website in China, to bring Walmart’s total ownership stake to approximately 51 percent. Closing of the transaction is subject to Chinese government regulatory approval.
Launched in July 2008, Yihaodian offers more than 180,000 SKUs and has achieved a significant position in online grocery sales, as well as in categories such as baby/mom, consumer electronics and apparel. With 5,400 employees and an existing logistics network based in Shanghai, Beijing, Guangzhou, Wuhan and Chengdu, Yihaodian is serving a growing customer base with same-day and next-day delivery of essential daily items at competitive prices.
Neil Ashe, President and CEO of Walmart Global eCommerce, said, “This investment further enables Walmart to deliver a superb customer experience to Chinese consumers that are already connected to the world through smart phones and social media. We are on track to create the next generation of eCommerce, offering the latest in online innovations to give our customers a unique shopping experience.”
“We are very impressed with Yihaodian’s strong management team, solid competence in supply chain management and, like Walmart, they are committed to outstanding service to their customers,” Ashe continued. “Our further investment in Yihaodian demonstrates that we are committed to investing in China in a key growth industry and developing all that goes with it: logistics, infrastructure, innovative talent and new technologies that will help China meet its development goals. In addition to contributing to China’s eCommerce goals, with our increased investment in Yihaodian, we are pleased to be able to further contribute to China’s domestic consumption, help stabilize prices, and advance expansion in the middle and western regions.”
Gang Yu, co-founder and chairman of Yihaodian, said, “Walmart not only brings us nearly 50 years of retailing experience and history, but also innovative technology and eCommerce solutions that will help us better meet our customers’ needs. Their excellence in supply chain will enable us to improve our customer experience and operational efficiency.”
Junling Liu, co-founder and CEO of Yihaodian, said, “More than an investment of funds, Walmart will share its knowledge and technology together with its best-in-class practices in retail and transfer them to Yihaodian’s existing organization, leveraging these synergies with our local market expertise to deliver enhanced product offerings, lower prices and a better shopping experience for our customers.”
Ruisheng Sheng, spokesperson for Ping An Group, said, “Ping An welcomes the investment from Walmart. We continue to be a strategic investor in this exciting eCommerce business. With Walmart’s and Ping An’s strategic partnership and with the vision and leadership of the current management, we believe that Yihaodian will better serve Chinese consumers.”
About WalmartWal-Mart Stores, Inc. (NYSE: WMT – News) serves customers and members more than 200 million times per week at over 10,000 retail units under 69 different banners in 28 countries. With fiscal year 2011 sales of $419 billion, Walmart employs 2.1 million associates worldwide. Walmart continues to be a leader in sustainability, corporate philanthropy and employment opportunity. Additional information about Walmart can be found by visiting http://walmartstores.com and on Twitter at http://twitter.com/walmart. Online merchandise sales are available at http://www.walmart.com and http://www.samsclub.com.
About YihaodianLaunched in 2008, Yihaodian has become one of the leading B2C e-commerce companies in China. Offering more than 180,000 products, Yihaodian runs logistics centers in Shanghai, Beijing, Guangzhou, Wuhan, and Chengdu, along with delivery stations in 34 cities across China. Yihaodian is one of the fastest growing companies in China, and has earned first place for Deloitte Technology Fast500 Asia Pacific and first place for China Entrepreneur Magazine’s Future Stars of China Enterprises in 2011. Through innovation, Yihaodian is committed to bringing its customers a new lifestyle of one-stop online shopping and services with superior experience. For more information, please visit www.yihaodian.com.
About Ping An GroupPing An Insurance (Group) Company of China, Ltd (Hong Kong Stock Exchange under stock code “2318″& Shanghai Stock Exchange under “601318″) was established in 1988 in Shekou, Shenzhen. The Group is the first insurance company in China to have a shareholding structure. Today it has developed into an integrated financial services conglomerate with three core businesses: insurance, banking, and investment. Ping An was ranked No.147 in Forbes’ Global 2000 league table, No.107 in The Financial Times Global 500 list, and No.328 in Fortune Magazine’s Global 500 Leading Companies ranking and No.1 among China’s non-State owned enterprises. For more information please visit www.pingan.com.http://tourism9.com/ http://vkins.com/
Launched in July 2008, Yihaodian offers more than 180,000 SKUs and has achieved a significant position in online grocery sales, as well as in categories such as baby/mom, consumer electronics and apparel. With 5,400 employees and an existing logistics network based in Shanghai, Beijing, Guangzhou, Wuhan and Chengdu, Yihaodian is serving a growing customer base with same-day and next-day delivery of essential daily items at competitive prices.
Neil Ashe, President and CEO of Walmart Global eCommerce, said, “This investment further enables Walmart to deliver a superb customer experience to Chinese consumers that are already connected to the world through smart phones and social media. We are on track to create the next generation of eCommerce, offering the latest in online innovations to give our customers a unique shopping experience.”
“We are very impressed with Yihaodian’s strong management team, solid competence in supply chain management and, like Walmart, they are committed to outstanding service to their customers,” Ashe continued. “Our further investment in Yihaodian demonstrates that we are committed to investing in China in a key growth industry and developing all that goes with it: logistics, infrastructure, innovative talent and new technologies that will help China meet its development goals. In addition to contributing to China’s eCommerce goals, with our increased investment in Yihaodian, we are pleased to be able to further contribute to China’s domestic consumption, help stabilize prices, and advance expansion in the middle and western regions.”
Gang Yu, co-founder and chairman of Yihaodian, said, “Walmart not only brings us nearly 50 years of retailing experience and history, but also innovative technology and eCommerce solutions that will help us better meet our customers’ needs. Their excellence in supply chain will enable us to improve our customer experience and operational efficiency.”
Junling Liu, co-founder and CEO of Yihaodian, said, “More than an investment of funds, Walmart will share its knowledge and technology together with its best-in-class practices in retail and transfer them to Yihaodian’s existing organization, leveraging these synergies with our local market expertise to deliver enhanced product offerings, lower prices and a better shopping experience for our customers.”
Ruisheng Sheng, spokesperson for Ping An Group, said, “Ping An welcomes the investment from Walmart. We continue to be a strategic investor in this exciting eCommerce business. With Walmart’s and Ping An’s strategic partnership and with the vision and leadership of the current management, we believe that Yihaodian will better serve Chinese consumers.”
About WalmartWal-Mart Stores, Inc. (NYSE: WMT – News) serves customers and members more than 200 million times per week at over 10,000 retail units under 69 different banners in 28 countries. With fiscal year 2011 sales of $419 billion, Walmart employs 2.1 million associates worldwide. Walmart continues to be a leader in sustainability, corporate philanthropy and employment opportunity. Additional information about Walmart can be found by visiting http://walmartstores.com and on Twitter at http://twitter.com/walmart. Online merchandise sales are available at http://www.walmart.com and http://www.samsclub.com.
About YihaodianLaunched in 2008, Yihaodian has become one of the leading B2C e-commerce companies in China. Offering more than 180,000 products, Yihaodian runs logistics centers in Shanghai, Beijing, Guangzhou, Wuhan, and Chengdu, along with delivery stations in 34 cities across China. Yihaodian is one of the fastest growing companies in China, and has earned first place for Deloitte Technology Fast500 Asia Pacific and first place for China Entrepreneur Magazine’s Future Stars of China Enterprises in 2011. Through innovation, Yihaodian is committed to bringing its customers a new lifestyle of one-stop online shopping and services with superior experience. For more information, please visit www.yihaodian.com.
About Ping An GroupPing An Insurance (Group) Company of China, Ltd (Hong Kong Stock Exchange under stock code “2318″& Shanghai Stock Exchange under “601318″) was established in 1988 in Shekou, Shenzhen. The Group is the first insurance company in China to have a shareholding structure. Today it has developed into an integrated financial services conglomerate with three core businesses: insurance, banking, and investment. Ping An was ranked No.147 in Forbes’ Global 2000 league table, No.107 in The Financial Times Global 500 list, and No.328 in Fortune Magazine’s Global 500 Leading Companies ranking and No.1 among China’s non-State owned enterprises. For more information please visit www.pingan.com.http://tourism9.com/ http://vkins.com/
Tags
HONG KONG, February 20 (Reuters) – News and developments in Asia private equity from Reuters News for Lunar New Year and the week ending Feb. 17.
FEBRUARY 17
CARLYLE GROUP has begun the process of selling its over $300 million stake in Taiwan’s Ta Chong Bank Ltd, sources said, as it joins other private equity firms in looking to exit the island’s low-margin financial sector.
MMI INTERNATIONAL, a technology company owned by private equity fund KKR & Co LP, will price its $300 million five-year bond at 8 percent in New York, the bottom end of price guidance, after receiving strong support from U.S. investors, according to a source familiar with the matter.
AUSTRALIAN SURFWEAR company Billabong International rebuffed a $820 million private equity bid from TPG Capital , announcing plans to sell a stake in its Nixon watch brand and close up to 150 stores, sending its shares up by more than 50 percent.
CHINA HAS launched a 50 billion yuan ($7.93 billion) fund in Shanghai to aid overseas acquisitions by Chinese companies as part of efforts to promote international use of the yuan and build the commercial hub into a global financial center.
HANA FINANCIAL Group said that it had reached a deal with the labour union of Korea Exchange Bank (KEB) which had threatened to strike over possible job losses following Hana’s acquisition of KEB.
FEBRUARY 16
WINS INVESTMENT, the fund arm of Chinese property developer Gemdale, says it plans to double funds under management to take advantage of a government clampdown on property financing that could see smaller developers starved of funds.
L CAPITAL Asia, the private equity arm of the world’s biggest luxury goods group LVMH Moët Hennessy Louis Vuitton SA , could begin raising a new fund of more than $1 billion this year, as competition from Western brands creates opportunities to invest in Chinese retailers, its top executive said.
CANADA PENSION Plan Investment Board, which manages the country’s second largest pension fund, has hired former Goldman Sachs banker Mark Machin to head its Asia-Pacific business, according to a source close to the matter.
FEBRUARY 15
L CAPITAL has bought the 8 percent stake held by Wolfensohn Capital Partners in unlisted Indian ethnic wear chain Fabindia, two sources with direct knowledge of the matter said.
SOUTH KOREA’S National Pension Service (NPS), the world’s No.4 largest pension fund, plans to invest around $300 million in a real estate opportunity fund led by Blackstone Group , an NPS official said, amid the fund’s efforts to step up its investments in real estate assets.
U.S PRIVATE equity fund Norwest Venture Partners has invested $15 million in Manthan Systems, an unlisted Indian software products company, for a minority stake, the Indian company said on Wednesday.
WANT WANT China Holdings, the buyer of private equity fund MBK Partners’ Taiwan cable TV unit, will have to give more information to the island’s broadcast regulator concerning its media operations, the latest delay in the $2.4 billion deal.
JAPANESE PRIVATE equity secondary fund Ant Capital Partners said it closed its third Japanese secondaries fund at the end of December 2011 raising $140 million, attracting commitments from 15 Japanese institutional investors.
SOUTH KOREA’S SK Group is in talks to take over U.S. oil and gas company Chaparral Energy, a company 36 percent owned by CCMP, according to a source familiar with the matter.
FEBRUARY 14
TALKS BETWEEN Yahoo Inc and China’s Alibaba Group over the U.S. Internet giant’s Asian assets have hit an impasse, throwing their plans for a $17 billion tax-free asset swap into question, according to sources briefed on the situation.
CARLYLE SAID it would sell Talaris, a provider of cash-counting equipment, to Japan’s Glory Ltd for 650 million pounds ($1 billion), twice the value of its original investment.
INDONESIA WILL not implement a planned regulation to limit ownership in domestic banks, since it does not want to scare away potential foreign investors from the sale of state-owned Bank Mutiara, the state deposit agency (LPS) said.
FIDELITY GROWTH Partners, the private equity arm of Fidelity Worldwide Investment, along with existing investors have invested 2 billion rupees ($40.6 million) in Aptuit Laurus Pvt Ltd, an unlisted Indian pharma company.
EXCLUSIVE-AN Abu Dhabi sovereign wealth fund is exploring the sale of its $1.3 billion stake in Malaysian lender RHB Capital Bhd six months after buying the shares, sources familiar with the matter told Reuters, and has engaged in early talks with Japan’s Sumitomo Mitsui Banking Corp (SMBC).
FEBRUARY 13
U.S.-BASED private asset management firm Rohatyn Group said on Monday that it has agreed to acquire 60 percent of CapAsia, the private equity arm of Malaysia’s CIMB Group Holdings Bhd .
FEBRUARY 10
INDIA’S RELIANCE Communications reported its 10th straight quarter of declining profit as interest costs soared, with investors betting on a sale of the No. 2 mobile operator’s tower business to pare its heavy debt load.http://tourism9.com/ http://vkins.com/
FEBRUARY 17
CARLYLE GROUP has begun the process of selling its over $300 million stake in Taiwan’s Ta Chong Bank Ltd, sources said, as it joins other private equity firms in looking to exit the island’s low-margin financial sector.
MMI INTERNATIONAL, a technology company owned by private equity fund KKR & Co LP, will price its $300 million five-year bond at 8 percent in New York, the bottom end of price guidance, after receiving strong support from U.S. investors, according to a source familiar with the matter.
AUSTRALIAN SURFWEAR company Billabong International rebuffed a $820 million private equity bid from TPG Capital , announcing plans to sell a stake in its Nixon watch brand and close up to 150 stores, sending its shares up by more than 50 percent.
CHINA HAS launched a 50 billion yuan ($7.93 billion) fund in Shanghai to aid overseas acquisitions by Chinese companies as part of efforts to promote international use of the yuan and build the commercial hub into a global financial center.
HANA FINANCIAL Group said that it had reached a deal with the labour union of Korea Exchange Bank (KEB) which had threatened to strike over possible job losses following Hana’s acquisition of KEB.
FEBRUARY 16
WINS INVESTMENT, the fund arm of Chinese property developer Gemdale, says it plans to double funds under management to take advantage of a government clampdown on property financing that could see smaller developers starved of funds.
L CAPITAL Asia, the private equity arm of the world’s biggest luxury goods group LVMH Moët Hennessy Louis Vuitton SA , could begin raising a new fund of more than $1 billion this year, as competition from Western brands creates opportunities to invest in Chinese retailers, its top executive said.
CANADA PENSION Plan Investment Board, which manages the country’s second largest pension fund, has hired former Goldman Sachs banker Mark Machin to head its Asia-Pacific business, according to a source close to the matter.
FEBRUARY 15
L CAPITAL has bought the 8 percent stake held by Wolfensohn Capital Partners in unlisted Indian ethnic wear chain Fabindia, two sources with direct knowledge of the matter said.
SOUTH KOREA’S National Pension Service (NPS), the world’s No.4 largest pension fund, plans to invest around $300 million in a real estate opportunity fund led by Blackstone Group , an NPS official said, amid the fund’s efforts to step up its investments in real estate assets.
U.S PRIVATE equity fund Norwest Venture Partners has invested $15 million in Manthan Systems, an unlisted Indian software products company, for a minority stake, the Indian company said on Wednesday.
WANT WANT China Holdings, the buyer of private equity fund MBK Partners’ Taiwan cable TV unit, will have to give more information to the island’s broadcast regulator concerning its media operations, the latest delay in the $2.4 billion deal.
JAPANESE PRIVATE equity secondary fund Ant Capital Partners said it closed its third Japanese secondaries fund at the end of December 2011 raising $140 million, attracting commitments from 15 Japanese institutional investors.
SOUTH KOREA’S SK Group is in talks to take over U.S. oil and gas company Chaparral Energy, a company 36 percent owned by CCMP, according to a source familiar with the matter.
FEBRUARY 14
TALKS BETWEEN Yahoo Inc and China’s Alibaba Group over the U.S. Internet giant’s Asian assets have hit an impasse, throwing their plans for a $17 billion tax-free asset swap into question, according to sources briefed on the situation.
CARLYLE SAID it would sell Talaris, a provider of cash-counting equipment, to Japan’s Glory Ltd for 650 million pounds ($1 billion), twice the value of its original investment.
INDONESIA WILL not implement a planned regulation to limit ownership in domestic banks, since it does not want to scare away potential foreign investors from the sale of state-owned Bank Mutiara, the state deposit agency (LPS) said.
FIDELITY GROWTH Partners, the private equity arm of Fidelity Worldwide Investment, along with existing investors have invested 2 billion rupees ($40.6 million) in Aptuit Laurus Pvt Ltd, an unlisted Indian pharma company.
EXCLUSIVE-AN Abu Dhabi sovereign wealth fund is exploring the sale of its $1.3 billion stake in Malaysian lender RHB Capital Bhd six months after buying the shares, sources familiar with the matter told Reuters, and has engaged in early talks with Japan’s Sumitomo Mitsui Banking Corp (SMBC).
FEBRUARY 13
U.S.-BASED private asset management firm Rohatyn Group said on Monday that it has agreed to acquire 60 percent of CapAsia, the private equity arm of Malaysia’s CIMB Group Holdings Bhd .
FEBRUARY 10
INDIA’S RELIANCE Communications reported its 10th straight quarter of declining profit as interest costs soared, with investors betting on a sale of the No. 2 mobile operator’s tower business to pare its heavy debt load.http://tourism9.com/ http://vkins.com/
2012年2月13日星期一
China tells banks to roll over local govt loans – FT
SYDNEY (Reuters) – China has told its banks to start a huge roll-over of loans to local governments, the Financial Times reported, aiming to give itself more time to deal with a $1.7 trillion debt hangover from the global financial crisis.
The move underscores China’s determination to contain its 10.7 trillion yuan debt mess and forestall a potential loan crisis in the world’s No. 2 economy, analysts say.
As early as June 2011, the Chinese government had vowed to clean up its local debt either by shifting 2-3 trillion yuan of debt off local governments, forcing state banks to take some bad debt losses and selling select projects to private investors, sources told Reuters earlier.
Investors worry that China’s banks would suffer billions of bad loan losses and hobble the world’s growth engine at a time of anaemic global economic growth.
China’s mountain of local debt piled up after the 2008-09 financial crisis when Beijing ordered local governments to spend massively on infrastructure projects to buoy economic growth, which they did by borrowing heavily.
Analysts say Chinese banks are already rolling over or restructuring troubled loans to cash-strapped local governments unable to repay their debt. But the amount of loans being rolled over is not known as banks — and Beijing — are tight-lipped.
Worse, analysts say Chinese banks are hiding troubled loans by adamantly refusing to mark them as non-performing loans in financial statements before restructuring them, as per global best practice.
“This is bad regulation but I don’t think we are going to get a bank crisis,” said a bank analyst in Hong Kong.
In some cases, loans are being restructured by extending their maturities by as much as four years, the Financial Times said, citing bankers and analysts familiar with the matter.
Not all local government loans would be rolled over, the paper said, citing a person with knowledge of the plan.
Banks would determine if there was real demand for the investment. Continued funding for the construction of highways would be approved but less important projects, like massive city squares, might be cut off.
Banks would also consider whether investments were consistent with the government’s five-year plan for industrial upgrading and cleaner growth.
China has said that about half of the 10.7 trillion yuan of loans will mature over the next three years.
(Reporting by Richard Pullin in MELBOURNE and Koh Gui Qing in SINGAPORE, Editing by Dean Yates & Kim Coghill)
http://tourism9.cm/ http://vkins.com/
The move underscores China’s determination to contain its 10.7 trillion yuan debt mess and forestall a potential loan crisis in the world’s No. 2 economy, analysts say.
As early as June 2011, the Chinese government had vowed to clean up its local debt either by shifting 2-3 trillion yuan of debt off local governments, forcing state banks to take some bad debt losses and selling select projects to private investors, sources told Reuters earlier.
Investors worry that China’s banks would suffer billions of bad loan losses and hobble the world’s growth engine at a time of anaemic global economic growth.
China’s mountain of local debt piled up after the 2008-09 financial crisis when Beijing ordered local governments to spend massively on infrastructure projects to buoy economic growth, which they did by borrowing heavily.
Analysts say Chinese banks are already rolling over or restructuring troubled loans to cash-strapped local governments unable to repay their debt. But the amount of loans being rolled over is not known as banks — and Beijing — are tight-lipped.
Worse, analysts say Chinese banks are hiding troubled loans by adamantly refusing to mark them as non-performing loans in financial statements before restructuring them, as per global best practice.
“This is bad regulation but I don’t think we are going to get a bank crisis,” said a bank analyst in Hong Kong.
In some cases, loans are being restructured by extending their maturities by as much as four years, the Financial Times said, citing bankers and analysts familiar with the matter.
Not all local government loans would be rolled over, the paper said, citing a person with knowledge of the plan.
Banks would determine if there was real demand for the investment. Continued funding for the construction of highways would be approved but less important projects, like massive city squares, might be cut off.
Banks would also consider whether investments were consistent with the government’s five-year plan for industrial upgrading and cleaner growth.
China has said that about half of the 10.7 trillion yuan of loans will mature over the next three years.
(Reporting by Richard Pullin in MELBOURNE and Koh Gui Qing in SINGAPORE, Editing by Dean Yates & Kim Coghill)
http://tourism9.cm/ http://vkins.com/
China tells banks to roll over local govt loans: report
SYDNEY (Reuters) – China has told its banks to start a huge roll-over of loans to local governments, the Financial Times reported, aiming to give itself more time to deal with a $1.7 trillion debt hangover from the global financial crisis.
The move underscores China’s determination to contain its 10.7 trillion yuan debt mess and forestall a potential loan crisis in the world’s No. 2 economy, analysts say.
As early as June 2011, the Chinese government had vowed to clean up its local debt either by shifting 2-3 trillion yuan of debt off local governments, forcing state banks to take some bad debt losses and selling select projects to private investors, sources told Reuters earlier.
Investors worry that China’s banks would suffer billions of bad loan losses and hobble the world’s growth engine at a time of anaemic global economic growth.
China’s mountain of local debt piled up after the 2008-09 financial crisis when Beijing ordered local governments to spend massively on infrastructure projects to buoy economic growth, which they did by borrowing heavily.
Analysts say Chinese banks are already rolling over or restructuring troubled loans to cash-strapped local governments unable to repay their debt. But the amount of loans being rolled over is not known as banks — and Beijing — are tight-lipped.
Worse, analysts say Chinese banks are hiding troubled loans by adamantly refusing to mark them as non-performing loans in financial statements before restructuring them, as per global best practice.
“This is bad regulation but I don’t think we are going to get a bank crisis,” said a bank analyst in Hong Kong.
In some cases, loans are being restructured by extending their maturities by as much as four years, the Financial Times said, citing bankers and analysts familiar with the matter.
Not all local government loans would be rolled over, the paper said, citing a person with knowledge of the plan.
Banks would determine if there was real demand for the investment. Continued funding for the construction of highways would be approved but less important projects, like massive city squares, might be cut off.
Banks would also consider whether investments were consistent with the government’s five-year plan for industrial upgrading and cleaner growth.
China has said that about half of the 10.7 trillion yuan of loans will mature over the next three years.
(Reporting by Richard Pullin in MELBOURNE and Koh Gui Qing in SINGAPORE, Editing by Dean Yates & Kim Coghill)
http://tourism9.cm/ http://vkins.com/
The move underscores China’s determination to contain its 10.7 trillion yuan debt mess and forestall a potential loan crisis in the world’s No. 2 economy, analysts say.
As early as June 2011, the Chinese government had vowed to clean up its local debt either by shifting 2-3 trillion yuan of debt off local governments, forcing state banks to take some bad debt losses and selling select projects to private investors, sources told Reuters earlier.
Investors worry that China’s banks would suffer billions of bad loan losses and hobble the world’s growth engine at a time of anaemic global economic growth.
China’s mountain of local debt piled up after the 2008-09 financial crisis when Beijing ordered local governments to spend massively on infrastructure projects to buoy economic growth, which they did by borrowing heavily.
Analysts say Chinese banks are already rolling over or restructuring troubled loans to cash-strapped local governments unable to repay their debt. But the amount of loans being rolled over is not known as banks — and Beijing — are tight-lipped.
Worse, analysts say Chinese banks are hiding troubled loans by adamantly refusing to mark them as non-performing loans in financial statements before restructuring them, as per global best practice.
“This is bad regulation but I don’t think we are going to get a bank crisis,” said a bank analyst in Hong Kong.
In some cases, loans are being restructured by extending their maturities by as much as four years, the Financial Times said, citing bankers and analysts familiar with the matter.
Not all local government loans would be rolled over, the paper said, citing a person with knowledge of the plan.
Banks would determine if there was real demand for the investment. Continued funding for the construction of highways would be approved but less important projects, like massive city squares, might be cut off.
Banks would also consider whether investments were consistent with the government’s five-year plan for industrial upgrading and cleaner growth.
China has said that about half of the 10.7 trillion yuan of loans will mature over the next three years.
(Reporting by Richard Pullin in MELBOURNE and Koh Gui Qing in SINGAPORE, Editing by Dean Yates & Kim Coghill)
http://tourism9.cm/ http://vkins.com/
2012年2月6日星期一
Caixin Online: The basics of Chinese inbound investment deals
By Andrew Ross
BEIJING (
Caixin Online
) — An accelerating number of Chinese companies are engaging in acquisitions and joint ventures in the United States and while it’s generally understood that a large number of other Chinese companies are also considering doing so, many still hesitate.
The first point to note is that the rate of deals is increasing, and is doing so dramatically. A second point is that as a percentage of the total number of deals, small- to medium-size deals make up the majority, although there are a few larger ones, and the buyers are generally not SOEs (state-owned enterprises). Third, the industries of the acquired companies cover a broad range, from technology, apparel, consulting services, auto parts, hotels and many more.
/conga/story/misc/caixin.html
61611In 2011, several Chinese companies announced their intentions to enter into deals in the U.S., including Shanghai Pharmaceuticals
, with its publicly stated reasons being to seek new drugs to expand its product line and noting declining overseas prices and a strong Yuan, Bright Food Group, China National Materials Co. (Sinoma)
and Fosun Group, which stated it is looking at consumer brands. Many Chinese companies are going global in the U.S., more and more will be doing so, and for those Chinese companies for which this makes sense and which proceed to do so, they will be in very good company.
/quotes/zigman/1859134 CN:601607
+0.51%
/quotes/zigman/40694 HK:1893
+1.72%
So what are some of the strategies, procedures and lessons on pitfalls that can be garnered from recent deals?
Perhaps one of the most important points regarding engaging in transactions in the United States is to recall the reaction of many Chinese businesses when foreign companies came to China and sought to dictate that deals in China be done in the same manner as in those companies’ respective homelands. This generated ill feelings and often did and can easily result in failure in a deal. The same is true in the United States. Companies from many different countries make acquisitions in the U.S. all the time, and one of the accepted norms is that the deal will be done in “U.S. style.”
While not successful on occasion, the advisor for the U.S. company looking to be sold (especially a “hot” company) may seek to create an auction for the company, thus seeking to maximize the price and otherwise obtain the most favorable terms. Even if they do not succeed in doing this, they will generally seek to have the process move as rapidly as possible. Prospective buyers who are unwilling to follow an auction process when established or move too slowly are simply left behind. An important aspect in dealing with this is to be prepared. This means having done industry and market analysis in advance so as to be able to readily determine one’s interest and willingness to devote the necessary resources to explore the deal, and have ready or be able to quickly assemble a team of qualified Chinese and U.S. advisors.
Many U.S. businessmen object to the alleged slow deal pace of foreign businessmen (and not just Chinese), thus often giving U.S. buyers an advantage. Timing delays are, of course, a tactic to be considered; however they should only be used as deemed appropriate, such as to express reservations or concerns so as to try and enhance one’s bargaining position. However, a buyer should not allow its perceived slowness to cost it a deal it otherwise wants.
While most people properly say “a deal is not done until it is done,” in many U.S. negotiations the same often is not true of individual issues. Once an issue is resolved, it is generally not renegotiated absent special circumstances. A party which acts contrary to this undercuts its counter-party’s trust in it.
There is great significance in the U.S. placed on the transaction contract, as each party seeks to maximize its benefits and protections. As a general rule, legal counsel for a U.S. party, will seek as much protection for its client and clarity in the terms of an agreement as possible. This can be especially important for a buyer or investor. This often means lengthy detailed contracts, and also emphasizes the need for the parties to make decisions relatively quickly with respect to the many points involved. In fact, one view is that many U.S. business persons and their lawyers will only encourage ambiguity in an agreement if they think that addressing the ambiguity in the negotiations would result in it being resolved contrary to their interests or if they think they will have greater negotiating leverage on the point once the agreement is signed or the deal is consummated.
By having a contract be as detailed and precise as possible, the likelihood of a dispute is reduced. This is augmented by the fact that in the U.S. there is a very substantial body of court rulings and laws which help determine what a particular contractual phrase will mean in a particular context, thus creating even greater potential certainty. Finally, it should be recognized that other than private arbitrators and mediators and the courts — all of which are objective but the last of which is slow — no governmental entity or person such as a governmental bureaucrat plays a meaningful role in resolving contractual disputes.
While concerns abound over the possible legal burdens that Chinese companies face in the U.S., there are many reasons for Chinese companies to go global, and in particular to do so in the United States.
Read this commentary on Caixin Online.
Andrew Ross is partner and chair of the mergers and acquisitions practice group at Loeb & Loeb LLP. This article is an abridged version of a paper titled, “Acquisitions by Chinese companies in the United States: The case for moving forward now.”
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BEIJING (
Caixin Online
) — An accelerating number of Chinese companies are engaging in acquisitions and joint ventures in the United States and while it’s generally understood that a large number of other Chinese companies are also considering doing so, many still hesitate.
The first point to note is that the rate of deals is increasing, and is doing so dramatically. A second point is that as a percentage of the total number of deals, small- to medium-size deals make up the majority, although there are a few larger ones, and the buyers are generally not SOEs (state-owned enterprises). Third, the industries of the acquired companies cover a broad range, from technology, apparel, consulting services, auto parts, hotels and many more.
About Caixin
Caixin is a Beijing-based media group dedicated to providing high-quality
and authoritative financial and business news and information through
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• Get the Caixin
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61611
, with its publicly stated reasons being to seek new drugs to expand its product line and noting declining overseas prices and a strong Yuan, Bright Food Group, China National Materials Co. (Sinoma)
and Fosun Group, which stated it is looking at consumer brands. Many Chinese companies are going global in the U.S., more and more will be doing so, and for those Chinese companies for which this makes sense and which proceed to do so, they will be in very good company.
/quotes/zigman/1859134 CN:601607
+0.51%
/quotes/zigman/40694 HK:1893
+1.72%
So what are some of the strategies, procedures and lessons on pitfalls that can be garnered from recent deals?
Perhaps one of the most important points regarding engaging in transactions in the United States is to recall the reaction of many Chinese businesses when foreign companies came to China and sought to dictate that deals in China be done in the same manner as in those companies’ respective homelands. This generated ill feelings and often did and can easily result in failure in a deal. The same is true in the United States. Companies from many different countries make acquisitions in the U.S. all the time, and one of the accepted norms is that the deal will be done in “U.S. style.”
While not successful on occasion, the advisor for the U.S. company looking to be sold (especially a “hot” company) may seek to create an auction for the company, thus seeking to maximize the price and otherwise obtain the most favorable terms. Even if they do not succeed in doing this, they will generally seek to have the process move as rapidly as possible. Prospective buyers who are unwilling to follow an auction process when established or move too slowly are simply left behind. An important aspect in dealing with this is to be prepared. This means having done industry and market analysis in advance so as to be able to readily determine one’s interest and willingness to devote the necessary resources to explore the deal, and have ready or be able to quickly assemble a team of qualified Chinese and U.S. advisors.
Clinton calls U.N. veto on Syria a ‘travesty’
U.S. Secretary of State Clinton called the veto by Russia and China of the U.N. resolution on Syria a “travesty” as Syria’s President Bashar al-Assad attended mosque service. (Video: Reuters/Photo: Getty Images)While most people properly say “a deal is not done until it is done,” in many U.S. negotiations the same often is not true of individual issues. Once an issue is resolved, it is generally not renegotiated absent special circumstances. A party which acts contrary to this undercuts its counter-party’s trust in it.
There is great significance in the U.S. placed on the transaction contract, as each party seeks to maximize its benefits and protections. As a general rule, legal counsel for a U.S. party, will seek as much protection for its client and clarity in the terms of an agreement as possible. This can be especially important for a buyer or investor. This often means lengthy detailed contracts, and also emphasizes the need for the parties to make decisions relatively quickly with respect to the many points involved. In fact, one view is that many U.S. business persons and their lawyers will only encourage ambiguity in an agreement if they think that addressing the ambiguity in the negotiations would result in it being resolved contrary to their interests or if they think they will have greater negotiating leverage on the point once the agreement is signed or the deal is consummated.
By having a contract be as detailed and precise as possible, the likelihood of a dispute is reduced. This is augmented by the fact that in the U.S. there is a very substantial body of court rulings and laws which help determine what a particular contractual phrase will mean in a particular context, thus creating even greater potential certainty. Finally, it should be recognized that other than private arbitrators and mediators and the courts — all of which are objective but the last of which is slow — no governmental entity or person such as a governmental bureaucrat plays a meaningful role in resolving contractual disputes.
While concerns abound over the possible legal burdens that Chinese companies face in the U.S., there are many reasons for Chinese companies to go global, and in particular to do so in the United States.
Read this commentary on Caixin Online.
/quotes/zigman/1859134
Volume: 17.31M
Feb. 6, 2012 1:34p
Feb. 6, 2012 1:34p
/quotes/zigman/40694
Volume: 7.48M
Feb. 6, 2012 1:33p
Feb. 6, 2012 1:33p
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Hollywood to Be Wooed by $800 Million Chinese Media Fund
Paramount Pictures/Album/Newscom
LONDON — The Hollywood majors and tentpole productions are among the future investment partner targets for a heavyweight Chinese media fund created by China’s Harvest Alternative Investment group and Sun Redrock Investment Group.
The $800 million-fueled private equity fund, the Harvest Seven Stars Media Fund, aims to invest in studio projects with an eye to bringing them to the wider Asian market and mainland China.
Redrock Investment Group, founded by Chinese media entrepreneur Bruno Wu, and Harvest are currently ironing out deals with “major filmmakers and filmed entertainment providers” to invest in English and Chinese language content both for Asia and with the global box office potential.
Wu, speaking on a video conference call with Hong Kong and London, said he expects to be able to detail deals with Hollywood producers and filmmakers “within the next 30 days or so.”
The fund, currently “within sight” of raising the $800 million, aims to invest in Hollywood and beyond, according to Wu. One of the main factors in investing in Hollywood output will be that the projects are “roundly acceptable to Asian audiences,” Wu said.
He cited current movies such as Paramount’s Mission: Impossible – Ghost Protocol and the Sherlock Holmes franchise from Warner Bros. as being the sort of tentpole the fund would be interested in investing in.
The fund will operate in three distinct areas – mergers and acquitisions, distribution in Asia and movie content either through equity investment in companies or operating capital investment — and aims to make its first investments in May this year.
Harvest Seven Stars Media is being advised by Creative Artists Agency’s Beijing office.
Harvest Alternative Investment Group and Sun Redrock Investment Group boast over 70 years of experience in the Chinese media and finance sectors.
Wu said the new partnership emphasizes “our confidence in the strength and potential of the Chinese media industry and the wealth of talent within it. We look forward to cultivating this new joint venture and seeing it grow into one of the world’s leading media funds.”
Harvest Alternative Investment Group’s Lindsay Wright added: “The addition of this partnership to the Harvest Alternative Investment Group further supports our goal of developing a leading alternative product platform in China and globally.”
Hollywood players are being targeted with the promise of established Chinese media players at the fund offering them a way in to China and Asia at large and help with developing product for the market.
“The overwhelming majority of the titles released by Hollywood works in China,” Wu said. “But it doesn’t work in reverse. By that I mean big Chinese movies and stars aren’t seen as widely outside China.”
Wu said one of the ambitions would be to develop globally outward looking projects with Hollywood partners also.
Harvest Alternative Investment Group is the alternative investment arm of Harvest Fund Management founded in 1999 marking it out as one of the first 10 fund management institutions authorized by the Chinese government as part of its strategy to open up and develop its financial sector.
Sun Redrock Investment is part of Sun Media Group founded by Wu and Yang Lan operating five major divisions including Redrock Capital, Sun Enterprises Group, Sun Publishing Group and Sun Culture Foundation, a charitable foundation which promotes philanthropy and corporate social responsibility in China.
The $800 million-fueled private equity fund, the Harvest Seven Stars Media Fund, aims to invest in studio projects with an eye to bringing them to the wider Asian market and mainland China.
Redrock Investment Group, founded by Chinese media entrepreneur Bruno Wu, and Harvest are currently ironing out deals with “major filmmakers and filmed entertainment providers” to invest in English and Chinese language content both for Asia and with the global box office potential.
Wu, speaking on a video conference call with Hong Kong and London, said he expects to be able to detail deals with Hollywood producers and filmmakers “within the next 30 days or so.”
The fund, currently “within sight” of raising the $800 million, aims to invest in Hollywood and beyond, according to Wu. One of the main factors in investing in Hollywood output will be that the projects are “roundly acceptable to Asian audiences,” Wu said.
He cited current movies such as Paramount’s Mission: Impossible – Ghost Protocol and the Sherlock Holmes franchise from Warner Bros. as being the sort of tentpole the fund would be interested in investing in.
The fund will operate in three distinct areas – mergers and acquitisions, distribution in Asia and movie content either through equity investment in companies or operating capital investment — and aims to make its first investments in May this year.
Harvest Seven Stars Media is being advised by Creative Artists Agency’s Beijing office.
Harvest Alternative Investment Group and Sun Redrock Investment Group boast over 70 years of experience in the Chinese media and finance sectors.
Wu said the new partnership emphasizes “our confidence in the strength and potential of the Chinese media industry and the wealth of talent within it. We look forward to cultivating this new joint venture and seeing it grow into one of the world’s leading media funds.”
Harvest Alternative Investment Group’s Lindsay Wright added: “The addition of this partnership to the Harvest Alternative Investment Group further supports our goal of developing a leading alternative product platform in China and globally.”
Hollywood players are being targeted with the promise of established Chinese media players at the fund offering them a way in to China and Asia at large and help with developing product for the market.
“The overwhelming majority of the titles released by Hollywood works in China,” Wu said. “But it doesn’t work in reverse. By that I mean big Chinese movies and stars aren’t seen as widely outside China.”
Wu said one of the ambitions would be to develop globally outward looking projects with Hollywood partners also.
Harvest Alternative Investment Group is the alternative investment arm of Harvest Fund Management founded in 1999 marking it out as one of the first 10 fund management institutions authorized by the Chinese government as part of its strategy to open up and develop its financial sector.
Sun Redrock Investment is part of Sun Media Group founded by Wu and Yang Lan operating five major divisions including Redrock Capital, Sun Enterprises Group, Sun Publishing Group and Sun Culture Foundation, a charitable foundation which promotes philanthropy and corporate social responsibility in China.
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2012年2月3日星期五
PRESS DIGEST – Financial Times – Feb 3
Financial Times
GLENCORE AND XSTRATA CLOSE TO MERGER DEAL
Glencore and Xstrata (Dusseldorf: XTR.DU – news) have launched merger talks to create a $88 billion commodities trading and mining giant with the financial muscle to sweep up some of its biggest rivals. http://www.ft.com/cms/s/0/a672e172-4d6c-11e1-b96c-00144feabdc0.html#axzz1ksWapJt6
BT SET TO LAUNCH ‘ULTRA-FAST’ INTERNET
“Ultra-fast” broadband using direct fibre-optic connections will become available to most British homes and businesses next year, after a significant technological breakthrough by BT , the UK telecoms group. http://www.ft.com/cms/s/0/f7cad70c-4da6-11e1-b96c-00144feabdc0.html#axzz1ksWapJt6
SNB STANDS FIRM ON SWISS FRANC CAP
The independence of the Swiss National Bank risks being compromised due to political pressure following the departure of Philipp Hildebrand as chairman, the central bank’s acting chairman has warned. http://www.ft.com/cms/s/0/4109d3c8-4dbb-11e1-b96c-00144feabdc0.html#axzz1ksWapJt6
DEUTSCHE BANK CONCERNED BY ECB LOANS
Deutsche Bank (Xetra: 514000 – news) has risked a clash with the European Central Bank by indicating it sees a stigma attached to the long-term help offered to banks to try to ease the euro zone’s funding crisis. http://www.ft.com/cms/s/0/ad4e2782-4cda-11e1-8b08-00144feabdc0.html#axzz1ksWapJt6
SPANISH BANKS TOLD TO FIND BILLIONS
Spanish banks must find 50 billion euros ($65.86 billion)from profits and capital this year to finance a clean-up of their balance sheets or agree to merge with another bank by May to gain an extra year’s grace, according to Spain’s economy minister Luis de Guindos. http://www.ft.com/cms/s/0/34a3a576-4dc7-11e1-a66e-00144feabdc0.html#axzz1ksWapJt6
RECESSION PREDICTED TO RETURN TO UK
The British economy will suffer a modest contraction this year, according to an influential academic institute that is the first to forecast a return to outright recession for the UK. http://www.ft.com/cms/s/0/a891b292-4dc3-11e1-b96c-00144feabdc0.html#axzz1ksWapJt6
CHINA’S STATE GRID TO TAKE 25 PERCENT IN REN
State Grid Corporation of China is to acquire 25 percent of Portugal’s national power grid in the second large-scale Portuguese acquisition by a Chinese energy group in six weeks. http://www.ft.com/cms/s/0/41a0c572-4dba-11e1-b96c-00144feabdc0.html#axzz1ksWapJt6
CHINA CONSIDERING DEEPER INVOLVEMENT IN EFSF
China is considering how to get “more deeply involved” in resolving Europe (Chicago Options: ^REURUSD – news) ‘s debt crisis by co-operating more closely with European rescue funds, Chinese premier Wen Jiabao said on Thursday. http://www.ft.com/cms/s/0/7b5870fa-4d63-11e1-b96c-00144feabdc0.html#axzz1ksWapJt6
($1 = 0.6321 British pounds) (Reporting by Stephen Mangan)
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2012年2月1日星期三
Growth-Stage Technology Investor WestSummit Capital Adds Two New Partners
PALO ALTO, Calif. & BEIJING–(BUSINESS WIRE)– WestSummit Capital, a private equity fund with a core focus on growth-stage technology companies that have a substantial presence or a strategic interest in China, announced venture capital and private equity specialist David Lam has joined the firm as managing director, and Elise Huang has been promoted to partner. With over $200 million under management, WestSummit Capital is focused on fostering business growth and technology innovation as well as job and value creation in the technology, Internet/new media, telecommunications and clean technology sectors.
Founded in 2010 by four former technology executives, Raymond Yang, Datong Chen, Jay Deng and John Yu, WestSummit Capital holds a distinctive position in the market as an investor with strong Chinese roots, decades of executive and operational experience in Silicon Valley and China, and thirty-plus years of combined technology investment experience at venture capital and private equity firms in the United States and in China.
The founding partners have worked together in different ways since the mid-1900’s, graduated within three years of each other from China’s prestigious Tsinghua University, and hold over 110 years of combined executive operating experience including three NASDAQ listings and one M&A transaction.
“WestSummit Capital is one of the first China-based funds to go global and our portfolio spans China, the United States and Europe,” said Raymond Yang, a co-founder partner and Managing Director of WestSummit Capital. “We believe 2012 is a breakout year for growth-stage companies interested in moving into the Chinese market. We view ourselves as a value-add, strategic partner with regard to China-value creation for the companies we invest in. That’s where we add tremendous insight.”
Yang added, “Many executives are still wary of doing business in China because they do not know where to start or how to navigate in China’s business culture. And conversely, Chinese-based companies feel the same way about expanding into the West.
“Everyone on the WestSummit team has deep industry relationships, solid credentials, and hands-on operational and investment experience in both the U.S. and in China. Our team knows first-hand the key role that transparency plays in creating lasting shareholder value, and understands what it takes to win in the global marketplace. David’s addition and Elise’s promotion reflect our ongoing commitment to extending our team’s capabilities, reach and experience.”
The team
The WestSummit Capital partnership includes:
Two new partners with extensive private equity, technology and international investment banking experience and extensive industry connections:
Investment Portfolio
WestSummit Capital has been quietly building its portfolio over the past two years. The firm has lead or participated in investment rounds in companies based in the U.S., Europe, and China. Investments include:
WestSummit Capital is one of the first China-based technology growth-stage private equity firms in the industry. The firm invests in companies that have a substantial presence in or strategic interest in China and focuses on the technology, media, telecommunications and enabling clean tech sectors. WestSummit has offices in Beijing, China and Palo Alto, USA. More information can be found on the WestSummit Capital website at: www.westsummitcap.com
Suggested tags/keywords:
Private Equity, Europe, Fund, Investment, Investor, Venture Capital, VC, Growth-stage, technology, new media, clean tech, semiconductor, China, business, Chinese, IT, funding
Suggested tweet:
China-focused Growth-Stage Tech Investor WestSummit Capital adds New Ptnrs #venturecapital #fund #venture
Photos/Multimedia Gallery Available: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=50152808&lang=en
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Founded in 2010 by four former technology executives, Raymond Yang, Datong Chen, Jay Deng and John Yu, WestSummit Capital holds a distinctive position in the market as an investor with strong Chinese roots, decades of executive and operational experience in Silicon Valley and China, and thirty-plus years of combined technology investment experience at venture capital and private equity firms in the United States and in China.
The founding partners have worked together in different ways since the mid-1900’s, graduated within three years of each other from China’s prestigious Tsinghua University, and hold over 110 years of combined executive operating experience including three NASDAQ listings and one M&A transaction.
“WestSummit Capital is one of the first China-based funds to go global and our portfolio spans China, the United States and Europe,” said Raymond Yang, a co-founder partner and Managing Director of WestSummit Capital. “We believe 2012 is a breakout year for growth-stage companies interested in moving into the Chinese market. We view ourselves as a value-add, strategic partner with regard to China-value creation for the companies we invest in. That’s where we add tremendous insight.”
Yang added, “Many executives are still wary of doing business in China because they do not know where to start or how to navigate in China’s business culture. And conversely, Chinese-based companies feel the same way about expanding into the West.
“Everyone on the WestSummit team has deep industry relationships, solid credentials, and hands-on operational and investment experience in both the U.S. and in China. Our team knows first-hand the key role that transparency plays in creating lasting shareholder value, and understands what it takes to win in the global marketplace. David’s addition and Elise’s promotion reflect our ongoing commitment to extending our team’s capabilities, reach and experience.”
The team
The WestSummit Capital partnership includes:
Two new partners with extensive private equity, technology and international investment banking experience and extensive industry connections:
Investment Portfolio
WestSummit Capital has been quietly building its portfolio over the past two years. The firm has lead or participated in investment rounds in companies based in the U.S., Europe, and China. Investments include:
- Accent, supplier of a System-on-a-Chip (SoC) platform for smart meters (Italy)
- GigaDevice, provider of NOR flash memory (China)
- Inside Secure, provider of technology solutions for contactless payment and near-field communications (NFC) (France)
- SilkRoad Technologies, cloud-based human resource management software solutions (USA)
- Tilera, developer of a multi-core processors for Cloud Computing environments (USA)
- Unity Technologies, 3D gaming development software platform (USA)
- VeriSilicon, provider of custom silicon solutions and SoC turnkey services (China)
WestSummit Capital is one of the first China-based technology growth-stage private equity firms in the industry. The firm invests in companies that have a substantial presence in or strategic interest in China and focuses on the technology, media, telecommunications and enabling clean tech sectors. WestSummit has offices in Beijing, China and Palo Alto, USA. More information can be found on the WestSummit Capital website at: www.westsummitcap.com
Suggested tags/keywords:
Private Equity, Europe, Fund, Investment, Investor, Venture Capital, VC, Growth-stage, technology, new media, clean tech, semiconductor, China, business, Chinese, IT, funding
Suggested tweet:
China-focused Growth-Stage Tech Investor WestSummit Capital adds New Ptnrs #venturecapital #fund #venture
Photos/Multimedia Gallery Available: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=50152808&lang=en
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2012年1月23日星期一
Europe woes won’t stall trade finance in Asia
By V. Phani Kumar, MarketWatch
HONG KONG(MarketWatch) — Lessons from the global financial crisis and relatively stronger U.S. banks will likely protect Asian businesses from a repeat of the 2008 horror show, even as European debt troubles make trade loans more expensive and difficult to access.
A full-blown euro-zone crisis could still hit demand for Asian products and services harder than it has so far. But unlike the turmoil they faced in the aftermath of Lehman Brothers’ collapse, the region’s exporters are unlikely to suffocate this time around, gasping for credit like fish out of water, say bankers and analysts.
“The importance of trade finance to the global economy is better understood now than in 2008,” said Mark Williams, chief economist for Asia at Capital Economics. “One of the factors that contributed to the recovery in 2009 was the $250 billion of trade-finance guarantees announced by the [Group of 20 major economies]. In the event of a second global financial crisis, future guarantees are likely to be forthcoming.”
Trade finance is often compared to the oil that greases the moving parts of a machine. A simple and frequently used form of trade finance is a letter of credit, which is provided by an importer’s bank to pay for goods shipped by an exporter. As the U.S. dollar is the currency of transaction in most cases, trade is affected whenever there is a scarcity of dollars.
According to Dealogic figures, several European banks have consistently ranked among the top 30 providers of trade finance in the Asia-Pacific region, excluding Japan, between 2007 and 2011.
BBVA S.A.
, which has a major presence in Spain and Latin American markets, was the largest provider of such loans in 4 of the last 5 years. BBVA lost the top spot to China Development Bank Corp. only in 2009, when mainland Chinese banks opened their lending taps to fashion a recovery from the financial crisis.
/quotes/zigman/254684/quotes/nls/bbva BBVA
+1.03%
European banks’ exposure to trade finance in Asia is disproportionately large to their overall loans in the region.
But Capital Economics’ Williams cited the latest data from Bank of International Settlements as showing that euro-zone banks account for only 2.3% of total credit in emerging Asia. That is meager compared to their 47.3% share of lending in emerging Europe and 17.1% in Latin America.
One consequence of the ongoing sovereign-debt crisis in Europe is that it has effectively shut out several major European banks from U.S. money markets. Many of the European lenders that have historically been the big providers of trade finance in Asia are now scaling back their dollar-loan books.
.
/quotes/zigman/5065548/quotes/nls/c C
+1.06%
Saxena said that in the past, exporters could easily convert a letter of credit into money on presentation at a bank. But a scarcity of dollars is making that more difficult.
Edward George, a London-based soft-commodities specialist at Africa-focused Ecobank, said the cost of trade finance has risen by as much as 5 percentage points in some cases over the past year.
“Short-term trade finance has been the worst affected, whereas project finance is mostly protected by long-term agreements,” said George.
The impact is being felt, even after the U.S. Federal Reserve agreed late last year to lower the interest rates on currency swaps with five other major central banks from around the world.
Under such swaps, the Fed provides dollar liquidity to its counterparts, including the European Central Bank and the Bank of Japan. Those central banks can then inject dollars into their respective jurisdictions, when required.
Read full story on the currency swaps.
“Demand for U.S. dollars remains high, but the supply has dried up, and many banks are hoarding U.S. dollars for their preferred clients,” said George.
HONG KONG(MarketWatch) — Lessons from the global financial crisis and relatively stronger U.S. banks will likely protect Asian businesses from a repeat of the 2008 horror show, even as European debt troubles make trade loans more expensive and difficult to access.
A full-blown euro-zone crisis could still hit demand for Asian products and services harder than it has so far. But unlike the turmoil they faced in the aftermath of Lehman Brothers’ collapse, the region’s exporters are unlikely to suffocate this time around, gasping for credit like fish out of water, say bankers and analysts.
“The importance of trade finance to the global economy is better understood now than in 2008,” said Mark Williams, chief economist for Asia at Capital Economics. “One of the factors that contributed to the recovery in 2009 was the $250 billion of trade-finance guarantees announced by the [Group of 20 major economies]. In the event of a second global financial crisis, future guarantees are likely to be forthcoming.”
Asia’s Week Ahead: Central banks in focus
Asia’s spotlight is on monetary policy, including decisions from the Reserve Bank of India, the Bank of Japan and the Bank of Thailand. MarketWatch’s Rex Crum reports. (Photo: Getty Images)According to Dealogic figures, several European banks have consistently ranked among the top 30 providers of trade finance in the Asia-Pacific region, excluding Japan, between 2007 and 2011.
BBVA S.A.
, which has a major presence in Spain and Latin American markets, was the largest provider of such loans in 4 of the last 5 years. BBVA lost the top spot to China Development Bank Corp. only in 2009, when mainland Chinese banks opened their lending taps to fashion a recovery from the financial crisis.
/quotes/zigman/254684/quotes/nls/bbva BBVA
+1.03%
European banks’ exposure to trade finance in Asia is disproportionately large to their overall loans in the region.
But Capital Economics’ Williams cited the latest data from Bank of International Settlements as showing that euro-zone banks account for only 2.3% of total credit in emerging Asia. That is meager compared to their 47.3% share of lending in emerging Europe and 17.1% in Latin America.
One consequence of the ongoing sovereign-debt crisis in Europe is that it has effectively shut out several major European banks from U.S. money markets. Many of the European lenders that have historically been the big providers of trade finance in Asia are now scaling back their dollar-loan books.
Increased funding costs
That is in turn forcing an increase in the interest rates banks charge on trade finance./conga/story/misc/international.html
140756
“The reality is spreads have gone up fairly significantly — almost to the 2008 peak levels — over the last six weeks. I think that, in general, there will be some tapering off, but the higher spreads are here to stay,” said Ravi Saxena, managing director and Asia trade head at Citibank 140756
.
/quotes/zigman/5065548/quotes/nls/c C
+1.06%
Saxena said that in the past, exporters could easily convert a letter of credit into money on presentation at a bank. But a scarcity of dollars is making that more difficult.
Edward George, a London-based soft-commodities specialist at Africa-focused Ecobank, said the cost of trade finance has risen by as much as 5 percentage points in some cases over the past year.
“Short-term trade finance has been the worst affected, whereas project finance is mostly protected by long-term agreements,” said George.
The impact is being felt, even after the U.S. Federal Reserve agreed late last year to lower the interest rates on currency swaps with five other major central banks from around the world.
Under such swaps, the Fed provides dollar liquidity to its counterparts, including the European Central Bank and the Bank of Japan. Those central banks can then inject dollars into their respective jurisdictions, when required.
Read full story on the currency swaps.
Dollar hoarding
The situation is aggravated by hoarding of U.S. dollars, even when they are available.“Demand for U.S. dollars remains high, but the supply has dried up, and many banks are hoarding U.S. dollars for their preferred clients,” said George.
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Volume: 634,167
Jan. 20, 2012 4:01p
Jan. 20, 2012 4:01p
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2012年1月19日星期四
Analysis – China has multiple choices to avoid hard landing risk
BEIJING (Reuters) – China faces what could be its worst year of growth in a decade with policy firepower that developed nations can only dream of.
A record-breaking tax take expected to top 10 trillion yuan ($1.6 trillion) in 2011 gives Beijing fiscal scope to support growth and financial system liquidity, while monetary policy is perfectly poised for easing after a near two-year tightening cycle.
Contrast that with deep deficits across Europe and the United States and the orthodox policies forced upon central banks on both continents in a desperate bid to avoid a slide into economic depression.
It adds up to China having every chance to steer its economy safely from its slowest quarter of growth in 2- years, and still avoid a hard landing that would reverberate globally.
“There are caveats, but compared to its counterparts, China has plenty of policy flexibility,” Tim Condon, head of Asian economic research at ING in Singapore, told Reuters.
The release of some 1.2 trillion yuan of fiscal deposits in December signals how roomy China’s policy pockets are.
That injection was the single biggest factor behind a jump in money supply and bank credit in December, according to analysts at China International Capital Corp, China’s biggest investment bank.
Chinese banks extended 640.5 billion yuan in new loans in December, up from 562.2 billion yuan in November, while M2 accelerated to 13.6 percent from November’s 12.7 percent.
CICC reckons the odds of a January cut in the ratio of deposits that commercial banks are required to hold as reserves (RRR) have been dramatically reduced as a consequence.
SYSTEMIC LIQUIDITY
The implications of China’s fiscal strength are crucial for money markets. An outflow of government deposits from the balance sheet of the People’s Bank of China (PBOC) can boost systemic liquidity far in excess of an RRR cut.
“It’s getting increasingly important as the size is getting bigger,” Xu Hong, an analyst with Daton Securities in northern Chinese city of Dalian told Reuters.
Government deposits fell 891 billion yuan in the last month of 2010, 954 billion yuan in December 2009, and 1,045 billion yuan in 2008, whereas a mere 350 billion yuan was estimated to have been injected into the system by the 50 basis point cut in RRR to 21 percent announced on Nov 30, 2011.
Economists polled recently by Reuters forecast a further 200 bps of RRR cuts to come in 2012, but the impact of that would far less than the 1.7 trillion yuan of injections implied if the government has turned an estimated 800 billion yuan surplus in 2011 into the 900 billion yuan deficit originally budgeted.
Released fiscal funds are a key factor underlying accommodative liquidity in the interbank market, according to Zhou Binglin, an analyst with Guosen Securities.
“That’s possibly why fund supply is not too tight despite capital outflows for two consecutive months and the absence of central bank liquidity injection,” he wrote in a client note.
China’s foreign exchange reserves, the world’s largest, fell $20.6 billion in the fourth quarter to $3.18 trillion as the trade surplus shrank and capital flows reversed.
That fall reinforced the views of many analysts and investors that a PBOC policy move was imminent, but a closer reading of fiscal deposit data would have been a better guide.
“It’s a key fact to pay attention to, particularly at the end of a year, and it’s role is becoming more visible,” a bond trader in the interbank market, who declined to be identified, said.
CHANGING DYNAMICS
China’s surging tax flows are also changing credit dynamics at the local government level, with regional banks being cajoled into providing loans to pet projects in return for the promise of a share of soaring fiscal deposits.
A notice on the website of the Rugao government in China’s eastern Jiangsu province said that the allocation of fiscal deposits would be linked to the credit offered by banks.
“Many small banks are in desperate need of deposits, and fiscal deposits are too big to miss, for which they have to make concessions,” a regional banker in Zhejiang province said.
Banks need the deposits because monetary policy settings were tightened so sharply over the last two years to fight the inflationary side-effects of massive stimulus that Beijing launched in 2008 to cushion the economy from the impact of the global economic crisis.
Twin bubbles in real estate and local government debt are still being battled by Beijing, and are arguably the only — if significant — policy constraint faced as the world’s second-biggest economy faces another economic slowdown.
It’s certainly a factor preventing the government using well-stocked fiscal coffers for outright economic pump-priming, or allowing explosive growth in still elevated leverage levels.
But relatively speaking, China has plenty of room to move.
“Every country has constraints. China was almost as unconstrained as it could have hoped for in 2008 when the crisis hit. The response to that has reduced the flexibility they have now, but they have far more than their counterparts in the West have,” ING’s Condon said.
(Editing by Kim Coghill)
http://tourism9.com/ http://vkins.com/
A record-breaking tax take expected to top 10 trillion yuan ($1.6 trillion) in 2011 gives Beijing fiscal scope to support growth and financial system liquidity, while monetary policy is perfectly poised for easing after a near two-year tightening cycle.
Contrast that with deep deficits across Europe and the United States and the orthodox policies forced upon central banks on both continents in a desperate bid to avoid a slide into economic depression.
It adds up to China having every chance to steer its economy safely from its slowest quarter of growth in 2- years, and still avoid a hard landing that would reverberate globally.
“There are caveats, but compared to its counterparts, China has plenty of policy flexibility,” Tim Condon, head of Asian economic research at ING in Singapore, told Reuters.
The release of some 1.2 trillion yuan of fiscal deposits in December signals how roomy China’s policy pockets are.
That injection was the single biggest factor behind a jump in money supply and bank credit in December, according to analysts at China International Capital Corp, China’s biggest investment bank.
Chinese banks extended 640.5 billion yuan in new loans in December, up from 562.2 billion yuan in November, while M2 accelerated to 13.6 percent from November’s 12.7 percent.
CICC reckons the odds of a January cut in the ratio of deposits that commercial banks are required to hold as reserves (RRR) have been dramatically reduced as a consequence.
SYSTEMIC LIQUIDITY
The implications of China’s fiscal strength are crucial for money markets. An outflow of government deposits from the balance sheet of the People’s Bank of China (PBOC) can boost systemic liquidity far in excess of an RRR cut.
“It’s getting increasingly important as the size is getting bigger,” Xu Hong, an analyst with Daton Securities in northern Chinese city of Dalian told Reuters.
Government deposits fell 891 billion yuan in the last month of 2010, 954 billion yuan in December 2009, and 1,045 billion yuan in 2008, whereas a mere 350 billion yuan was estimated to have been injected into the system by the 50 basis point cut in RRR to 21 percent announced on Nov 30, 2011.
Economists polled recently by Reuters forecast a further 200 bps of RRR cuts to come in 2012, but the impact of that would far less than the 1.7 trillion yuan of injections implied if the government has turned an estimated 800 billion yuan surplus in 2011 into the 900 billion yuan deficit originally budgeted.
Released fiscal funds are a key factor underlying accommodative liquidity in the interbank market, according to Zhou Binglin, an analyst with Guosen Securities.
“That’s possibly why fund supply is not too tight despite capital outflows for two consecutive months and the absence of central bank liquidity injection,” he wrote in a client note.
China’s foreign exchange reserves, the world’s largest, fell $20.6 billion in the fourth quarter to $3.18 trillion as the trade surplus shrank and capital flows reversed.
That fall reinforced the views of many analysts and investors that a PBOC policy move was imminent, but a closer reading of fiscal deposit data would have been a better guide.
“It’s a key fact to pay attention to, particularly at the end of a year, and it’s role is becoming more visible,” a bond trader in the interbank market, who declined to be identified, said.
CHANGING DYNAMICS
China’s surging tax flows are also changing credit dynamics at the local government level, with regional banks being cajoled into providing loans to pet projects in return for the promise of a share of soaring fiscal deposits.
A notice on the website of the Rugao government in China’s eastern Jiangsu province said that the allocation of fiscal deposits would be linked to the credit offered by banks.
“Many small banks are in desperate need of deposits, and fiscal deposits are too big to miss, for which they have to make concessions,” a regional banker in Zhejiang province said.
Banks need the deposits because monetary policy settings were tightened so sharply over the last two years to fight the inflationary side-effects of massive stimulus that Beijing launched in 2008 to cushion the economy from the impact of the global economic crisis.
Twin bubbles in real estate and local government debt are still being battled by Beijing, and are arguably the only — if significant — policy constraint faced as the world’s second-biggest economy faces another economic slowdown.
It’s certainly a factor preventing the government using well-stocked fiscal coffers for outright economic pump-priming, or allowing explosive growth in still elevated leverage levels.
But relatively speaking, China has plenty of room to move.
“Every country has constraints. China was almost as unconstrained as it could have hoped for in 2008 when the crisis hit. The response to that has reduced the flexibility they have now, but they have far more than their counterparts in the West have,” ING’s Condon said.
(Editing by Kim Coghill)
http://tourism9.com/ http://vkins.com/
Resource fuels Toronto market surge
The Toronto stock market was higher Wednesday on rising resource and financial sector stocks that benefited from word the International Monetary Fund is looking to bolster its financial firepower to help defuse a global economic crisis.
The S&P TSX Composite Index eased into noon hour Wednesday up 52.64 points to 12,285.47.
The Canadian dollar recovered 0.14 cents to 98.62 cents U.S.
On the TSX, the financial sector rose while Royal Bank advanced 58 cents to $52.40 while Bank of Nova Scotia gained 71 cents to $52.52.
Major deal making helped send the TSX industrials sector up sharply. Shares in Finning International Inc. climbed $1.35, or 5.53%, to $25.75 after it said it will acquire the Caterpillar distribution and support business formerly operated by Bucyrus in South America, the U.K., and Western Canada. The deal is worth $465 million U.S. Vancouver-based Finning is the world’s biggest Caterpillar dealer.
Canadian National Railways advanced 97 cents to $78.89.
The energy sector ran up as the February crude contract on the New York Mercantile Exchange improved on Tuesday’s $2 jump (see below). Suncor Energy gained 69 cents to $33.91 and Cenovus Energy climbed 83 cents to $35.89.
The base metals sector gained as other commodity prices were weak with March copper ahead two cents at $3.75 U.S. a pound after the Chinese economic report in particular sent the metal jumping nine cents Tuesday. China is the world’s biggest copper consumer. Teck Resources was up 94 cents to $40.79 while HudBay Minerals was ahead 26 cents to $10.96.
The gold sector was higher as Goldcorp Inc. climbed 32 cents to $45.99.
The consumer discretionary sector provided lift with auto parts giant Magna International ahead 95 cents to $40.95.
The IMF said it aims to add $500 billion U.S. to its resources so it can give out new loans to help mitigate a worsening financial crisis. The Washington-based institution said its staff estimates that countries around the world will need about $1 trillion U.S. in loans over the coming years.
Most of the concerns centre on the 17-nation euro-zone, which has been embroiled in a debt crisis for around two years.
Thanks to some $200 billion U.S. that European countries have recently promised to the IMF, it is already more than one third on its way to reaching its fundraising goal.
ON BAYSTREET
The TSX Venture Exchange rallied 4.90 points to 1,542.62, while the Nasdaq Canada index sifted off 0.39 points to 403.03
All but one of the 14 Toronto subgroups gained by lunch hour. Industrials progressed 1.5%, global base metals gained 1.4%, and the metals and mining group was 0.9% stronger.
The lone laggard was in information technology, down 0.2%.
ON WALLSTREET
In New York, equities edged higher Wednesday, as investors welcomed the International Monetary Fund plan to boost its bailout fund to contain Europe’s debt crisis.
The Dow Jones Industrials gained 49.01 points midday to 12,531.10
The S&P 500 added 5.66 points to 1,299.33, while the Nasdaq Composite picked up 21.96 points to 2,750.04.
Investors also had the latest bank earnings report to mull over, with Goldman Sachs reporting fourth-quarter earnings that beat forecasts but revenue well below expectations. Goldman shares spiked 5% as CEO Lloyd Blankfein said in a statement that he was seeing “encouraging” signs of improvement in the markets and economy.
Goldman’s mixed results came a day after Citigroup missed earnings estimates, while results from Wells Fargo were in line with expectations. Bank of America and Morgan Stanley are scheduled to release their results on Thursday.
Yahoo shares rose after the Web portal announced late Tuesday that co-founder Jerry Yang has resigned from the board of directors and all other positions at the company.
Shares of Carnival rose modestly, after falling 14% the day before. The cruise line operator said it may suffer a more than $100 million U.S. hit to its profit from the grounding of the Costa Concordia off the coast of Italy.
The euro firmed above $1.28 against the U.S. dollar on the news.
While the IMF’s beefed up lending capacity is good news, obstacles remain on the path toward a resolution to Europe’s debt crisis.
Greek government officials and the group representing private sector investors and banks are resuming talks Wednesday to try to nail down how big a writedown private investors are willing to take on the country’s bonds.
Economically speaking, producer prices fell 0.1% in December, the government reported Wednesday. Economists surveyed by Briefing.com expected a rise of 0.1% during the month.
A report from the Federal Reserve showed that industrial production rose 0.4% in December, slightly below expectations, while capacity utilization rose to 78.1%, in line with economist expectations.
Treasury prices for the 10-year note dipped, pushing yields up to 1.86% from Tuesday’s 1.85%. Treasury prices and yields move in opposite directions.
Oil for February delivery gained another 23 cents to $100.94 U.S. a barrel.
Gold futures for February delivery fell $7.00 to $1,648.60 U.S. an ounce.
http://tourism9.com/ http://vkins.com/
The S&P TSX Composite Index eased into noon hour Wednesday up 52.64 points to 12,285.47.
The Canadian dollar recovered 0.14 cents to 98.62 cents U.S.
On the TSX, the financial sector rose while Royal Bank advanced 58 cents to $52.40 while Bank of Nova Scotia gained 71 cents to $52.52.
Major deal making helped send the TSX industrials sector up sharply. Shares in Finning International Inc. climbed $1.35, or 5.53%, to $25.75 after it said it will acquire the Caterpillar distribution and support business formerly operated by Bucyrus in South America, the U.K., and Western Canada. The deal is worth $465 million U.S. Vancouver-based Finning is the world’s biggest Caterpillar dealer.
Canadian National Railways advanced 97 cents to $78.89.
The energy sector ran up as the February crude contract on the New York Mercantile Exchange improved on Tuesday’s $2 jump (see below). Suncor Energy gained 69 cents to $33.91 and Cenovus Energy climbed 83 cents to $35.89.
The base metals sector gained as other commodity prices were weak with March copper ahead two cents at $3.75 U.S. a pound after the Chinese economic report in particular sent the metal jumping nine cents Tuesday. China is the world’s biggest copper consumer. Teck Resources was up 94 cents to $40.79 while HudBay Minerals was ahead 26 cents to $10.96.
The gold sector was higher as Goldcorp Inc. climbed 32 cents to $45.99.
The consumer discretionary sector provided lift with auto parts giant Magna International ahead 95 cents to $40.95.
The IMF said it aims to add $500 billion U.S. to its resources so it can give out new loans to help mitigate a worsening financial crisis. The Washington-based institution said its staff estimates that countries around the world will need about $1 trillion U.S. in loans over the coming years.
Most of the concerns centre on the 17-nation euro-zone, which has been embroiled in a debt crisis for around two years.
Thanks to some $200 billion U.S. that European countries have recently promised to the IMF, it is already more than one third on its way to reaching its fundraising goal.
ON BAYSTREET
The TSX Venture Exchange rallied 4.90 points to 1,542.62, while the Nasdaq Canada index sifted off 0.39 points to 403.03
All but one of the 14 Toronto subgroups gained by lunch hour. Industrials progressed 1.5%, global base metals gained 1.4%, and the metals and mining group was 0.9% stronger.
The lone laggard was in information technology, down 0.2%.
ON WALLSTREET
In New York, equities edged higher Wednesday, as investors welcomed the International Monetary Fund plan to boost its bailout fund to contain Europe’s debt crisis.
The Dow Jones Industrials gained 49.01 points midday to 12,531.10
The S&P 500 added 5.66 points to 1,299.33, while the Nasdaq Composite picked up 21.96 points to 2,750.04.
Investors also had the latest bank earnings report to mull over, with Goldman Sachs reporting fourth-quarter earnings that beat forecasts but revenue well below expectations. Goldman shares spiked 5% as CEO Lloyd Blankfein said in a statement that he was seeing “encouraging” signs of improvement in the markets and economy.
Goldman’s mixed results came a day after Citigroup missed earnings estimates, while results from Wells Fargo were in line with expectations. Bank of America and Morgan Stanley are scheduled to release their results on Thursday.
Yahoo shares rose after the Web portal announced late Tuesday that co-founder Jerry Yang has resigned from the board of directors and all other positions at the company.
Shares of Carnival rose modestly, after falling 14% the day before. The cruise line operator said it may suffer a more than $100 million U.S. hit to its profit from the grounding of the Costa Concordia off the coast of Italy.
The euro firmed above $1.28 against the U.S. dollar on the news.
While the IMF’s beefed up lending capacity is good news, obstacles remain on the path toward a resolution to Europe’s debt crisis.
Greek government officials and the group representing private sector investors and banks are resuming talks Wednesday to try to nail down how big a writedown private investors are willing to take on the country’s bonds.
Economically speaking, producer prices fell 0.1% in December, the government reported Wednesday. Economists surveyed by Briefing.com expected a rise of 0.1% during the month.
A report from the Federal Reserve showed that industrial production rose 0.4% in December, slightly below expectations, while capacity utilization rose to 78.1%, in line with economist expectations.
Treasury prices for the 10-year note dipped, pushing yields up to 1.86% from Tuesday’s 1.85%. Treasury prices and yields move in opposite directions.
Oil for February delivery gained another 23 cents to $100.94 U.S. a barrel.
Gold futures for February delivery fell $7.00 to $1,648.60 U.S. an ounce.
http://tourism9.com/ http://vkins.com/
Toronto stock market advances amid rising oil prices, IMF announcement
TORONTO – The Toronto stock market was higher Wednesday morning on rising resource and financial sector stocks that benefited from word the International Monetary Fund is looking to bolster its financial firepower to help deal with a global economic crisis.
The S&P/TSX composite index gained 99.58 points to 12,332.41 while the TSX Venture Exchange climbed 5.69 points to 1,543.41. The Canadian dollar edged up 0.21 of a cent to 98.71 cents US.
The IMF said it aims to add US$500 billion to its resources so it can give out new loans to help mitigate a worsening financial crisis. The Washington-based institution said its staff estimates that countries around the world will need about $1 trillion in loans over the coming years. Most of the concerns centre on the 17-nation eurozone, which has been embroiled in a debt crisis for around two years.
Thanks to some $200 billion that European countries have recently promised to the IMF, it is already more than one third on its way to reaching its fundraising goal.
U.S. markets were higher after investment bank Goldman Sachs delivered quarterly earnings that beat expectations.
It said net income fell 58 per cent to US$1 billion or $1.84 a share because of lower investment banking fees in a quarter marked by choppy financial markets. But that easily beat expectations of $1.28 a share.
Goldman’s quarterly revenue fell 30 per cent to $6 billion and its shares were ahead $5.09 or 5.21 per cent to US$102.77.
The Dow Jones industrial index was ahead 56.69 points to 12,538.76. The Nasdaq composite index gained 22.57 points to 2,750.65 while the S&P 500 index climbed 7.29 points to 1,300.96.
Sentiment was also helped along by data out Wednesday showing that U.S. factory output surged in December by 0.9 per cent, the most in year. Stronger demand for business equipment, vehicles and energy offered the most visible evidence that manufacturing has roared back from the depths of the recession.
On the TSX, the financial sector rose 0.66 per cent while Royal Bank (TSX:RY) advanced 58 cents to $52.40 while Bank of Nova Scotia (TSX:BNS) gained 71 cents to $52.52.
Major dealmaking helped send the TSX industrials sector up 1.9. per cent. Shares in Finning International Inc. (TSX:FTT) climbed $1.35 or 5.53 per cent to $25.75 after it said it will acquire the Caterpillar distribution and support business formerly operated by Bucyrus in South America, the U.K., and Western Canada. The deal is worth US$465 million. Vancouver-based Finning is the world’s biggest Caterpillar dealer.
Canadian National Railways (TSX:CNR) advanced 97 cents to $78.89.
The energy sector ran up 1.13 per cent as the February crude contract on the New York Mercantile Exchange improved on Tuesday’s $2 jump, rising 53 cents to US$101.24. Traders had been encouraged by data showing that China, the world’s second largest economy, reported 8.9 per cent growth in the fourth quarter, slower than the previous quarter but strong enough to indicate it would avoid an abrupt slowdown.
And in the U.S., government data showed manufacturing in New York expanded at the fastest pace in nine months.
Analysts said higher oil was also supported by tension between Iran and Saudi Arabia, as well as a move by France to accelerate the EU’s implementation of an embargo on Iranian oil exports.
Saudi Oil Minister Ali al-Naimi has said Saudi Arabia was ready to pump more oil if needed to make up for a shortfall in Iranian exports. That came as Iran warned Gulf nations not to make up any shortfall and that it may shut the Strait of Hormuz, which is used to transport about a fifth of the world’s oil.
Suncor Energy (TSX:SU) gained 69 cents to $33.91 and Cenovus Energy (TSX:CVE) climbed 83 cents to $35.89.
The base metals sector gained 1.18 per cent as other commodity prices were weak with March copper ahead two cents at US$3.75 a pound after the Chinese economic report in particular sent the metal jumping nine cents Tuesday. China is the world’s biggest copper consumer. Teck Resources (TSX:TCK.B) was up 94 cents to $40.79 while HudBay Minerals (TSX:HBM) was ahead 26 cents to $10.96.
The gold sector was 0.34 per cent higher even as February gold on the Nymex dropped $3.10 to US$1,652.50 an ounce. Goldcorp Inc. (TSX:G) climbed 32 cents to $45.99.
The consumer discretionary sector provided lift with auto parts giant Magna International (TSX:MG) ahead 95 cents to $40.95.
Investors also digested analysis from The World Bank which warned Wednesday of a possible slump in global economic growth. It also urged developing countries to prepare for shocks that could be more severe than the 2008 crisis.
The bank cut its growth forecast for developing countries this year to 5.4 per cent from 6.2 per cent and for developed countries to 1.4 per cent from 2.7 per cent. For the 17 countries that use the euro currency, it forecast a contraction, with a growth outlook to be negative 0.3 per cent from growth of 1.8 per cent.
European markets were mainly higher as London’s FTSE 100 index inched up 0.07 per cent, Frankfurt’s DAX was up 0.37 per cent while the Paris CAC 40 lost 0.23 per cent.
http://tourism9.com/ http://vkins.com/
The S&P/TSX composite index gained 99.58 points to 12,332.41 while the TSX Venture Exchange climbed 5.69 points to 1,543.41. The Canadian dollar edged up 0.21 of a cent to 98.71 cents US.
The IMF said it aims to add US$500 billion to its resources so it can give out new loans to help mitigate a worsening financial crisis. The Washington-based institution said its staff estimates that countries around the world will need about $1 trillion in loans over the coming years. Most of the concerns centre on the 17-nation eurozone, which has been embroiled in a debt crisis for around two years.
Thanks to some $200 billion that European countries have recently promised to the IMF, it is already more than one third on its way to reaching its fundraising goal.
U.S. markets were higher after investment bank Goldman Sachs delivered quarterly earnings that beat expectations.
It said net income fell 58 per cent to US$1 billion or $1.84 a share because of lower investment banking fees in a quarter marked by choppy financial markets. But that easily beat expectations of $1.28 a share.
Goldman’s quarterly revenue fell 30 per cent to $6 billion and its shares were ahead $5.09 or 5.21 per cent to US$102.77.
The Dow Jones industrial index was ahead 56.69 points to 12,538.76. The Nasdaq composite index gained 22.57 points to 2,750.65 while the S&P 500 index climbed 7.29 points to 1,300.96.
Sentiment was also helped along by data out Wednesday showing that U.S. factory output surged in December by 0.9 per cent, the most in year. Stronger demand for business equipment, vehicles and energy offered the most visible evidence that manufacturing has roared back from the depths of the recession.
On the TSX, the financial sector rose 0.66 per cent while Royal Bank (TSX:RY) advanced 58 cents to $52.40 while Bank of Nova Scotia (TSX:BNS) gained 71 cents to $52.52.
Major dealmaking helped send the TSX industrials sector up 1.9. per cent. Shares in Finning International Inc. (TSX:FTT) climbed $1.35 or 5.53 per cent to $25.75 after it said it will acquire the Caterpillar distribution and support business formerly operated by Bucyrus in South America, the U.K., and Western Canada. The deal is worth US$465 million. Vancouver-based Finning is the world’s biggest Caterpillar dealer.
Canadian National Railways (TSX:CNR) advanced 97 cents to $78.89.
The energy sector ran up 1.13 per cent as the February crude contract on the New York Mercantile Exchange improved on Tuesday’s $2 jump, rising 53 cents to US$101.24. Traders had been encouraged by data showing that China, the world’s second largest economy, reported 8.9 per cent growth in the fourth quarter, slower than the previous quarter but strong enough to indicate it would avoid an abrupt slowdown.
And in the U.S., government data showed manufacturing in New York expanded at the fastest pace in nine months.
Analysts said higher oil was also supported by tension between Iran and Saudi Arabia, as well as a move by France to accelerate the EU’s implementation of an embargo on Iranian oil exports.
Saudi Oil Minister Ali al-Naimi has said Saudi Arabia was ready to pump more oil if needed to make up for a shortfall in Iranian exports. That came as Iran warned Gulf nations not to make up any shortfall and that it may shut the Strait of Hormuz, which is used to transport about a fifth of the world’s oil.
Suncor Energy (TSX:SU) gained 69 cents to $33.91 and Cenovus Energy (TSX:CVE) climbed 83 cents to $35.89.
The base metals sector gained 1.18 per cent as other commodity prices were weak with March copper ahead two cents at US$3.75 a pound after the Chinese economic report in particular sent the metal jumping nine cents Tuesday. China is the world’s biggest copper consumer. Teck Resources (TSX:TCK.B) was up 94 cents to $40.79 while HudBay Minerals (TSX:HBM) was ahead 26 cents to $10.96.
The gold sector was 0.34 per cent higher even as February gold on the Nymex dropped $3.10 to US$1,652.50 an ounce. Goldcorp Inc. (TSX:G) climbed 32 cents to $45.99.
The consumer discretionary sector provided lift with auto parts giant Magna International (TSX:MG) ahead 95 cents to $40.95.
Investors also digested analysis from The World Bank which warned Wednesday of a possible slump in global economic growth. It also urged developing countries to prepare for shocks that could be more severe than the 2008 crisis.
The bank cut its growth forecast for developing countries this year to 5.4 per cent from 6.2 per cent and for developed countries to 1.4 per cent from 2.7 per cent. For the 17 countries that use the euro currency, it forecast a contraction, with a growth outlook to be negative 0.3 per cent from growth of 1.8 per cent.
European markets were mainly higher as London’s FTSE 100 index inched up 0.07 per cent, Frankfurt’s DAX was up 0.37 per cent while the Paris CAC 40 lost 0.23 per cent.
http://tourism9.com/ http://vkins.com/
2012年1月17日星期二
Caixin Online: China fund official:Barriers to investments abroad
By Gao Xiqing
BEIJING (
Caixin Online
) — Chinese overseas investment has grown from zero before reform and opening-up in the late 1970s into a behemoth today. It is projected that the total will reach $500 billion during the 12th Five-Year Plan, which covers 2011 through 2015.
Chinese companies are an emerging force on the stage of international investments. Due to the immensity of the country’s foreign exchange reserve and its fervent expansion of overseas investments, Chinese investors have had the world’s attention since the financial crisis of 2008.
While the movement has gone quite well so far, we still faced many challenges, some external and some internal.
/conga/story/misc/caixin.html
61611Every nation has laws and organizations to supervise foreign investments. There were two levels of challenges in the supervision realm that Chinese overseas investments faced.
The first was that the laws and regulations of some countries are particularly complicated. In those countries, it is easy to wander down the path of illegality if one stops paying attention for even a moment. The second was that some countries put up obstacles to Chinese investments via the legal or supervisory systems because of ideological or political concerns. Another major challenge for China’s new overseas investment drive is a lack of experience.
First and foremost, we lack an understanding of investment products. Many investment products abroad are either completely nonexistent at home or have just emerged, whether they are swaps, hedging or stock index futures. These products or vehicles have grown complex in developed markets. One must be especially competent in handling the technical aspects, for even the slightest misunderstanding could easily result in losses.
We are probably most familiar with direct investments. However, in many countries and in many industries we have no precedent to follow. Our lack of experience exacts greater demands on us in risk management.
The next challenge is a lack of experience in project design, investment structures and negotiations. How can we identify good opportunities, develop projects or find suitable partners? How can we design an effective structure to manage investments, taxes and repatriation of investment income? How can we extract better terms and conditions from negotiations? These questions demand that we respond to the challenges carefully and study diligently. We must also make the utmost use of highly experienced talent — lawyers, accountants and other intermediaries.
Then comes a lack of understanding of foreign cultures and societies. Many investment activities cause cultural or societal friction in target countries. Some countries have developed complex feelings toward China as it has rapidly grown. Many people in those countries (not only supervisory organizations) look at China through culturally or ideologically colored glasses.
The world still hasn’t entirely adjusted to the reality of China’s rise, nor is our rise welcomed everywhere. We must be prepared to encounter some setbacks while we are investing abroad. In addition, the societies and governments of some investment target countries are especially complex. So we must research diligently and find top-notch consultants before investing. It is of the utmost importance that we maintain the stability and safety of investments, and that we avoid passively becoming entangled in local political, economic or social conflicts.
While Chinese investors are making great contributions to the growth and stability of the global economy, we must avoid certain immature attitudes. While it is true that Chinese corporations are becoming a force to be reckoned with in international investment markets, some of our investors put on arrogant attitudes — as though they believed that everybody ought to be seeking them. This attitude is not good for China’s image. It will also negatively affect the investors’ ability to attract opportunities, and in the long term it will harm development potential.
One big difference between Chinese overseas investment and that of developed Western nations is that we lack talent. The West has been involved in overseas investment for several hundred years, so their talent pool is vast. But Chinese efforts have only just begun. One could say that our first generation of investors has just emerged from the clay.
Our greatest challenge is to establish a mechanism to attract talents, retain them and allow talents to rise to their full potential. It’s not enough just to hire them; we must also be able to train them and build a reserve of talented individuals.
These are only a few of challenges facing China as a newbie in international investment. These are all just developmental problems, and we should have faith that we can resolve them. And despite these challenges, many new opportunities are appearing on the international market. For example, some high-quality assets have been devalued due to current market turmoil.
Also, some sellers’ urgent need for cash means we can negotiate stellar provisions and agreements that would be difficult to obtain under normal circumstances. As long as we analyze issues scientifically and approach them carefully, we can seize all opportunities and fulfill our fiduciary duty.
Read this commentary on Caixin Online.
The author is Vice Chairman and General Manager of China Investment Corp
http://tourism9.cm/ http://vkins.com/
BEIJING (
Caixin Online
) — Chinese overseas investment has grown from zero before reform and opening-up in the late 1970s into a behemoth today. It is projected that the total will reach $500 billion during the 12th Five-Year Plan, which covers 2011 through 2015.
Chinese companies are an emerging force on the stage of international investments. Due to the immensity of the country’s foreign exchange reserve and its fervent expansion of overseas investments, Chinese investors have had the world’s attention since the financial crisis of 2008.
While the movement has gone quite well so far, we still faced many challenges, some external and some internal.
About Caixin
Caixin is a Beijing-based media group dedicated to providing high-quality
and authoritative financial and business news and information through
periodicals, online and TV/video programs.
• Get the Caixin
e-newsletter
Caixin is a Beijing-based media group dedicated to providing high-quality
and authoritative financial and business news and information through
periodicals, online and TV/video programs.
• Get the Caixin
e-newsletter
61611
The first was that the laws and regulations of some countries are particularly complicated. In those countries, it is easy to wander down the path of illegality if one stops paying attention for even a moment. The second was that some countries put up obstacles to Chinese investments via the legal or supervisory systems because of ideological or political concerns. Another major challenge for China’s new overseas investment drive is a lack of experience.
First and foremost, we lack an understanding of investment products. Many investment products abroad are either completely nonexistent at home or have just emerged, whether they are swaps, hedging or stock index futures. These products or vehicles have grown complex in developed markets. One must be especially competent in handling the technical aspects, for even the slightest misunderstanding could easily result in losses.
China brings the Cultural Revolution to Hong Kong
Opinion Journal: The Communist Party is stepping up the attack on pro-democracy thought leaders in Hong Kong.The next challenge is a lack of experience in project design, investment structures and negotiations. How can we identify good opportunities, develop projects or find suitable partners? How can we design an effective structure to manage investments, taxes and repatriation of investment income? How can we extract better terms and conditions from negotiations? These questions demand that we respond to the challenges carefully and study diligently. We must also make the utmost use of highly experienced talent — lawyers, accountants and other intermediaries.
Then comes a lack of understanding of foreign cultures and societies. Many investment activities cause cultural or societal friction in target countries. Some countries have developed complex feelings toward China as it has rapidly grown. Many people in those countries (not only supervisory organizations) look at China through culturally or ideologically colored glasses.
The world still hasn’t entirely adjusted to the reality of China’s rise, nor is our rise welcomed everywhere. We must be prepared to encounter some setbacks while we are investing abroad. In addition, the societies and governments of some investment target countries are especially complex. So we must research diligently and find top-notch consultants before investing. It is of the utmost importance that we maintain the stability and safety of investments, and that we avoid passively becoming entangled in local political, economic or social conflicts.
While Chinese investors are making great contributions to the growth and stability of the global economy, we must avoid certain immature attitudes. While it is true that Chinese corporations are becoming a force to be reckoned with in international investment markets, some of our investors put on arrogant attitudes — as though they believed that everybody ought to be seeking them. This attitude is not good for China’s image. It will also negatively affect the investors’ ability to attract opportunities, and in the long term it will harm development potential.
One big difference between Chinese overseas investment and that of developed Western nations is that we lack talent. The West has been involved in overseas investment for several hundred years, so their talent pool is vast. But Chinese efforts have only just begun. One could say that our first generation of investors has just emerged from the clay.
Our greatest challenge is to establish a mechanism to attract talents, retain them and allow talents to rise to their full potential. It’s not enough just to hire them; we must also be able to train them and build a reserve of talented individuals.
These are only a few of challenges facing China as a newbie in international investment. These are all just developmental problems, and we should have faith that we can resolve them. And despite these challenges, many new opportunities are appearing on the international market. For example, some high-quality assets have been devalued due to current market turmoil.
Also, some sellers’ urgent need for cash means we can negotiate stellar provisions and agreements that would be difficult to obtain under normal circumstances. As long as we analyze issues scientifically and approach them carefully, we can seize all opportunities and fulfill our fiduciary duty.
Read this commentary on Caixin Online.
The author is Vice Chairman and General Manager of China Investment Corp
http://tourism9.cm/ http://vkins.com/
China's bad debt risks expose systemic shortcomings
BEIJING (Reuters) – Bad debts in China’s banks painfully expose the shortcomings of an archaic financial system geared to lend to the beck and call of government economic policy, rather than when it is profitable.
The crux of the problem is rising distrust of official appraisals of China’s 10.7 trillion yuan local government loans, which surged on the orders of government as it rolled out a 4 trillion yuan economic stimulus programme at the end of 2008.
Banks say less than 1 percent of the loans are in trouble, a number some investors say is too low to be real as lending unleashed to spur economic growth at its weakest point implies a rising risk of bad debt as the economy slows again.
“I talk to so many people and they say the same thing: they do not trust the data coming from Chinese banks,” said James Antos, a bank analyst at Mizuho Securities Asia in Hong Kong.
China’s state audit office said earlier this month it had uncovered 530 billion yuan worth of irregularities with local government debt, leaving investors wondering how much clean-up work remains to be done.
Lacking information, investors are jumping to conclusions. Some think all local government loans are bad. More sober guesstimates assume 2-3 trillion are sour and banks’ non-performing ratios may quadruple to 5 percent, from an average 1.1 percent.
Investors’ worst fears are a cover-up that threatens financial stability in the world’s No. 2 economy.
This is especially so if Beijing orders banks to lend aggressively this year to support the economy and counter Europe’s slowdown, fuelling a vicious cycle of state-directed lending with poor credit judgment that leads to bad loans.
More immediately, the risk is that rising loan losses hit banks’ net profits and capital bases, forcing another government-led bailout like that a decade ago when Beijing spent billions on capital injections to shore up state-backed lenders.
OPTIMISTS EYE REPAYMENT
Optimists say Beijing will pay the debt, or let local governments sell bonds to repay loans used mainly for building infrastructure. Investors like the former option as it is clean and fast, but Beijing is non-committal.
Markets hate that uncertainty, which is one reason why Chinese bank shares have underperformed.
Their average price-to-book ratio of 1.3 is half that of Indonesian banks, according to Reuters data, after the Shanghai financial index plunged some 37 percent in the last two years.
“Certainly a good number of loans made in the last three years will go bad,” said David Madden, a managing partner at DAC Financial Management, a $425 million private equity firm in Hong Kong focused on trading Chinese bad debt.
“They weren’t necessarily made with the highest levels of credit analysis.”
China’s cumulative loan growth is the second fastest in the world’s emerging economies at around 55 percent, after Belarus, and a third faster than India’s 40 percent, Fitch Ratings said.
Yet Chinese banks insist bad loans are falling, not rising.
Their weighted-average non-performing loan ratio dipped 0.1 percent in the third quarter from the previous three months, Citi data showed. In contrast, Indian banks’ weighted-average ratio rose 7.5 percent, hurt in part by a falling rupee.
Non-performing loans are those where borrowers have not made payments for at least 90 days and are in or close to default.
Investors suspect banks are concealing bad loans by adamantly refusing to label them as non-performing when cash-strapped governments cannot repay.
Instead, analysts say banks have — or will — quietly restructure loans by extending maturities, violating best practice where loans are marked non-performing before being restructured.
China’s top state-owned banks declined to comment.
CONSTRAINED BY ACCOUNTING RULES
“The market does not like the fact that you are trying to hide loans which do not meet current terms,” said an analyst at a foreign bank in Hong Kong who declined to be identified.
That Chinese banks are concealing bad debt would be even more apparent if they continue to report enviably low non-performing loans in their 2011 results in March, analysts said, since a fifth of all local government loans matured last year.
In banks’ defence, they could argue their provision coverage of 190 percent is among the highest in Asia, meaning they have put aside 1.9 yuan for every yuan of dud loan — although this ratio looks good when banks recognise lower levels of bad debt.
Margarita Ho at PricewaterhouseCoopers in Beijing said banks are also constrained by China’s accounting rules.
“The accounting rules do not permit banks to provide reserves for losses based on future events, regardless of how probable they are,” she said.
But some investors argue the economic reality is that China has more bad loans than it is admitting to, especially with its economy now slowing, and so its financial stability is at stake if Beijing does not act more forcefully.
“You kind of let the bad news ride until you are forced to accept it,” said Madden from DAC. “But I don’t think kicking the can down the road is, ultimately, a smart thing to do.”
(Reporting by Koh Gui Qing; Editing by Nick Edwards & Kim Coghill)
http://tourism9.cm/ http://vkins.com/
The crux of the problem is rising distrust of official appraisals of China’s 10.7 trillion yuan local government loans, which surged on the orders of government as it rolled out a 4 trillion yuan economic stimulus programme at the end of 2008.
Banks say less than 1 percent of the loans are in trouble, a number some investors say is too low to be real as lending unleashed to spur economic growth at its weakest point implies a rising risk of bad debt as the economy slows again.
“I talk to so many people and they say the same thing: they do not trust the data coming from Chinese banks,” said James Antos, a bank analyst at Mizuho Securities Asia in Hong Kong.
China’s state audit office said earlier this month it had uncovered 530 billion yuan worth of irregularities with local government debt, leaving investors wondering how much clean-up work remains to be done.
Lacking information, investors are jumping to conclusions. Some think all local government loans are bad. More sober guesstimates assume 2-3 trillion are sour and banks’ non-performing ratios may quadruple to 5 percent, from an average 1.1 percent.
Investors’ worst fears are a cover-up that threatens financial stability in the world’s No. 2 economy.
This is especially so if Beijing orders banks to lend aggressively this year to support the economy and counter Europe’s slowdown, fuelling a vicious cycle of state-directed lending with poor credit judgment that leads to bad loans.
More immediately, the risk is that rising loan losses hit banks’ net profits and capital bases, forcing another government-led bailout like that a decade ago when Beijing spent billions on capital injections to shore up state-backed lenders.
OPTIMISTS EYE REPAYMENT
Optimists say Beijing will pay the debt, or let local governments sell bonds to repay loans used mainly for building infrastructure. Investors like the former option as it is clean and fast, but Beijing is non-committal.
Markets hate that uncertainty, which is one reason why Chinese bank shares have underperformed.
Their average price-to-book ratio of 1.3 is half that of Indonesian banks, according to Reuters data, after the Shanghai financial index plunged some 37 percent in the last two years.
“Certainly a good number of loans made in the last three years will go bad,” said David Madden, a managing partner at DAC Financial Management, a $425 million private equity firm in Hong Kong focused on trading Chinese bad debt.
“They weren’t necessarily made with the highest levels of credit analysis.”
China’s cumulative loan growth is the second fastest in the world’s emerging economies at around 55 percent, after Belarus, and a third faster than India’s 40 percent, Fitch Ratings said.
Yet Chinese banks insist bad loans are falling, not rising.
Their weighted-average non-performing loan ratio dipped 0.1 percent in the third quarter from the previous three months, Citi data showed. In contrast, Indian banks’ weighted-average ratio rose 7.5 percent, hurt in part by a falling rupee.
Non-performing loans are those where borrowers have not made payments for at least 90 days and are in or close to default.
Investors suspect banks are concealing bad loans by adamantly refusing to label them as non-performing when cash-strapped governments cannot repay.
Instead, analysts say banks have — or will — quietly restructure loans by extending maturities, violating best practice where loans are marked non-performing before being restructured.
China’s top state-owned banks declined to comment.
CONSTRAINED BY ACCOUNTING RULES
“The market does not like the fact that you are trying to hide loans which do not meet current terms,” said an analyst at a foreign bank in Hong Kong who declined to be identified.
That Chinese banks are concealing bad debt would be even more apparent if they continue to report enviably low non-performing loans in their 2011 results in March, analysts said, since a fifth of all local government loans matured last year.
In banks’ defence, they could argue their provision coverage of 190 percent is among the highest in Asia, meaning they have put aside 1.9 yuan for every yuan of dud loan — although this ratio looks good when banks recognise lower levels of bad debt.
Margarita Ho at PricewaterhouseCoopers in Beijing said banks are also constrained by China’s accounting rules.
“The accounting rules do not permit banks to provide reserves for losses based on future events, regardless of how probable they are,” she said.
But some investors argue the economic reality is that China has more bad loans than it is admitting to, especially with its economy now slowing, and so its financial stability is at stake if Beijing does not act more forcefully.
“You kind of let the bad news ride until you are forced to accept it,” said Madden from DAC. “But I don’t think kicking the can down the road is, ultimately, a smart thing to do.”
(Reporting by Koh Gui Qing; Editing by Nick Edwards & Kim Coghill)
http://tourism9.cm/ http://vkins.com/
2012年1月16日星期一
Caixin Online: China pension funds closer to stock investing
By Lan Fang
BEIJING (
Caixin Online
) — China’s struggling securities market is getting a psychological shot in the arm on rising expectations that pension funds may soon provide hundreds of billions of yuan in new investment cash.
Since his appointment in late October, China Securities Regulatory Commission (CSRC) Chairman Guo Shuqing has mentioned several times that he wants to widen securities market access for pension and housing provident funds.
Chen Liang, director of fund oversight at the Ministry of Human Resources and Social Security (MHRSS), said a consensus could be reached soon among key parties involved in pension fund investment talks.
/conga/story/misc/caixin.html
61611Various government authorities including the CSRC, MHRSS and the National Development and Reform Commission have been discussing since late last year broad issues such as investment target qualifications, government policies, fund operations, market oversight and legal responsibilities, Chen said. They’ve also discussed opening the stock market to housing provident funds, which companies manage for employees’ future housing purchases.
A “breakthrough development” that would let urban pension funds — government-run social security funds for most workers in China’s cities — buy and sell stock was recently reached, said Ji Ning, deputy head of the Employment and Income Distribution Department at the National Development and Reform Commission (NDRC).
Discussions are likewise continuing over whether private insurance schemes for rural workers, few of whom are eligible for social security, will be allowed to follow suit.
Neither securities regulators nor fund managers have set a possible timetable for unleashing the full power of pension funds on the nation’s stock exchanges. For now, the government limits market access to certain social security and annuity funds, which can invest up to 40% of their assets in securities.
As of the end of 2010, the nation’s urban pension funds controlled a cumulative 1.5 trillion yuan ($238 billion), including 857 billion yuan managed by the National Social Security Fund Council. The rural insurance plan, an option for farm workers and other self-employed launched in 2009, held 42.3 billion yuan.
These and related disagreements have brewed for years while, according to reports, some pension-linked insurance funds have gone ahead and invested in stocks.
The State Council’s official position is that any change in pension investment policy should put safety first. The cabinet wants strict supervision of stock trading by pension funds, for example, and has called for tighter laws and regulations before regulators broaden investment channels.
For officials at MHRSS and NDRC, however, a main sticking point has been a disagreement over which government agency would actually invest pensioners’ money.
Caixin has learned MHRSS, NDRC and other agencies have reached a basic consensus on most pension-securities issues. For example, they’ve agreed individual accounts and a trust model should be used for all stock investing.
http://tourism9.com/ http://vkins.com/
BEIJING (
Caixin Online
) — China’s struggling securities market is getting a psychological shot in the arm on rising expectations that pension funds may soon provide hundreds of billions of yuan in new investment cash.
Since his appointment in late October, China Securities Regulatory Commission (CSRC) Chairman Guo Shuqing has mentioned several times that he wants to widen securities market access for pension and housing provident funds.
Chen Liang, director of fund oversight at the Ministry of Human Resources and Social Security (MHRSS), said a consensus could be reached soon among key parties involved in pension fund investment talks.
About Caixin
Caixin is a Beijing-based media group dedicated to providing high-quality
and authoritative financial and business news and information through
periodicals, online and TV/video programs.
• Get the Caixin
e-newsletter
Caixin is a Beijing-based media group dedicated to providing high-quality
and authoritative financial and business news and information through
periodicals, online and TV/video programs.
• Get the Caixin
e-newsletter
61611
A “breakthrough development” that would let urban pension funds — government-run social security funds for most workers in China’s cities — buy and sell stock was recently reached, said Ji Ning, deputy head of the Employment and Income Distribution Department at the National Development and Reform Commission (NDRC).
Discussions are likewise continuing over whether private insurance schemes for rural workers, few of whom are eligible for social security, will be allowed to follow suit.
Neither securities regulators nor fund managers have set a possible timetable for unleashing the full power of pension funds on the nation’s stock exchanges. For now, the government limits market access to certain social security and annuity funds, which can invest up to 40% of their assets in securities.
As of the end of 2010, the nation’s urban pension funds controlled a cumulative 1.5 trillion yuan ($238 billion), including 857 billion yuan managed by the National Social Security Fund Council. The rural insurance plan, an option for farm workers and other self-employed launched in 2009, held 42.3 billion yuan.
Two sides
Supporters and skeptics of pension fund stock investing are among those participating in the ongoing negotiations. The former include government officials, who say funds would help stabilize the nation’s securities markets, which weakened in 2011. Doubters include State Council members, who call stock investing too risky for public funds earmarked for retirees.A hard landing for the Chinese economy
Mark Faber, Editor and Publisher of The Gloom, Boom & Doom Report in Hong Kong, talks to Barron’s Michael Santoli at the 2012 Barron’s Roundtable conference about the consequences of a coming economic slowdown in China.The State Council’s official position is that any change in pension investment policy should put safety first. The cabinet wants strict supervision of stock trading by pension funds, for example, and has called for tighter laws and regulations before regulators broaden investment channels.
For officials at MHRSS and NDRC, however, a main sticking point has been a disagreement over which government agency would actually invest pensioners’ money.
Caixin has learned MHRSS, NDRC and other agencies have reached a basic consensus on most pension-securities issues. For example, they’ve agreed individual accounts and a trust model should be used for all stock investing.
http://tourism9.com/ http://vkins.com/
Asia Private Equity Weekly News, January 16, 2011
HONG KONG, December 26 (Reuters) – News and
developments in Asia private equity from Reuters News for the
holiday period, and the week ending Jan. 13.
JANUARY 13
TPG Capital LP is willing to invest about $1
billion in Japan’s Olympus Corp in a joint deal with
Sony Corp or another suitor circling the scandal-hit
company, a person familiar with TPG’s thinking said.
INVESTORS HAVE approved a year-long extension of a $4.7
billion property megafund from Morgan Stanley, a company
spokesman told Reuters on Friday.
JANUARY 12
HONY CAPITAL, one of China’s most successful private equity
funds, said on Thursday that it had raised nearly $4 billion
from investors, defying the increasingly tight fundraising
climate.
THE SALE of Indian developer DLF Ltd’s luxury hotel
chain, Amanresorts International, has stalled due to
lower-than-expected bids by shortlisted companies, two sources
with direct knowledge of the matter said.
JANUARY 11
ALIBABA GROUP has reduced the size of its debut
loan to $3 billion, three sources told Reuters.
LUNAR CAPITAL, a China-focused private equity fund, will pay
close to $100 million to buy a controlling stake in China’s
Yeehoo Group Ltd, a baby products maker, a source familiar with
the matter told Reuters.
AUSTRALIA’S BRAMBLES Ltd, the world’s top pallet
supplier, received first offers from private equity groups for
its U.S. document management business valued at more than $2
billion, three sources said.
JANUARY 10
JAPANESE STATE-sponsored fund, Innovation Network of Japan,
said its investment in overseas acquisitions by Japanese
companies is likely to increase this year, helped by a stronger
yen and an increase in asset sales abroad.
MALAYSIA-BASED private equity firm Navis Capital Partners
said it has completed the sale of its Dunkin’ Donuts and Au Bon
Pain businesses in Thailand to Sub Sri TPC Pcl for 1.32
billion baht ($41.56 million).
AUSTRALIAN PRIVATE equity firm Pacific Equity Partners
baulked at sweetening its A$711 million ($730 million) offer for
cleaning services company Spotless Group Ltd, raising
the prospect it could walk away from the bid.
KKR & Co has made a buyout approach to Australian
underwear manufacturer Pacific Brands Ltd that a
newspaper said could be worth $614 million, boosting its shares
20 percent and sparking talk other firms could attract similar
offers.
INDIA’S ASK Property Investment Advisors is close to raising
10 billion rupees ($192 million) for a fund that will invest in
property projects in five Indian cities, Chief Executive Amit
Bhagat said.
AMSTERDAM-BASED law firm Loyens & Loeff said it is opening a
Hong Kong office to capitalise on increased Asian interest in
investing in Benelux countries.
JANUARY 5
BLACKSTONE GROUP LP will conclude fundraising for its
latest buyout fund in January, raising just over $16 billion,
three people familiar with the matter said.
NEWQUEST CAPITAL Partners said it plans to invest up to $200
million in the next 12-18 months to acquire private equity
portfolios in Asia.
JANUARY 4
JAPAN’S RECRUIT Co has paid $410 million to buy two
temporary staffing agencies in the U.S. and Europe from buyout
firm Cerberus Capital Management, the human resources
company said, as it seeks to expand overseas.
JANUARY 3
TEMASEK HOLDINGS Pte Ltd said it has set up a new
subsidiary called Pavilion Capital Pte Ltd that will invest
primarily in privately owned firms in North Asia.
RED FORT Capital, an India-focussed real estate private
equity firm, is set to raise a $500 million fund that will
invest in commercial and residential assets, two sources told
Reuters.
DECEMBER 30
NATURAL GAS fuel firm Clean Energy Fuels Corp,
whose investors include Chesapeake Energy Corp,
Temasek’s Seatown Holdings and Asia private equity fund RRJ
Capital, said it has received $150 million from investors
including Boone Pickens.
DECEMBER 29
CHINESE WIRE maker Fushi Copperweld Inc said it
received a revised proposal from co-chief executive Li Fu, Abax
Global Capital and TPG Growth Asia Inc to take the company
private for $9.50 per share in cash.
DEALTALK – TOUGH IPO conditions in India are driving
secondary deals between private equity investors.
CHINA NO longer wants foreign-funded automobile factories or
polysilicon plants, but would welcome overseas investment in
hospitals and financial leasing firms, according to updated
inward investment guidelines.
ALIBABA has hired a Washington lobbying firm in a sign that
the Chinese e-commerce company would be willing to make a bid
for all of Yahoo Inc in the event that talks to unwind
their Asian partnership fail.
DECEMBER 28
AN AFFILIATE of U.S. private equity giant Blackstone has
bought a company that owns a special economic zone in India from
the country’s top listed developer DLF Ltd and its partner for
8.1 billion rupees ($153 million).
JAPANESE PRIVATE equity firm Unison Capital said it will buy
Asahi Tec, a maker of iron castings used in automobiles
that is majority owned by Belgian private equity investor RHJ
International SA, for $310 million excluding debt.
BANKRUPT JAPANESE consumer lender Takefuji Corp
gained a new lifeline when financial group J Trust Co Ltd
said it would invest $325 million after a previous
agreement with struggling A&P Financial of South Korea fell
through.
NOMURA HOLDINGS Inc said it would become the first
Japanese financial group to be allowed to make private equity
investments in China and would invest in a private equity fund
managed by Jiu You Equity Investment Management LLP.
DECEMBER 26
CARLYLE GROUP said it has named Kazuhiro Yamada as
co-head of its Japanese operations, replacing Masao Hirano, who
will resign from the private equity firm.
DECEMBER 23
DEALTALK-ASIA’S private equity firms face a shrinking pool
of bank loans as European lenders pull back from the region,
crimping both investments and re-financings for buyout-backed
companies and adding to the list of challenges the industry will
meet in 2012.
AUSTRALIAN PAPER manufacturer PaperlinX Ltd said it
has received an incomplete and conditional proposal from an
unnamed private equity firm for its business, while it predicted
a loss for the first half as European markets weakened.
http://tourism9.com/ http://vkins.com/
developments in Asia private equity from Reuters News for the
holiday period, and the week ending Jan. 13.
JANUARY 13
TPG Capital LP is willing to invest about $1
billion in Japan’s Olympus Corp in a joint deal with
Sony Corp or another suitor circling the scandal-hit
company, a person familiar with TPG’s thinking said.
INVESTORS HAVE approved a year-long extension of a $4.7
billion property megafund from Morgan Stanley, a company
spokesman told Reuters on Friday.
JANUARY 12
HONY CAPITAL, one of China’s most successful private equity
funds, said on Thursday that it had raised nearly $4 billion
from investors, defying the increasingly tight fundraising
climate.
THE SALE of Indian developer DLF Ltd’s luxury hotel
chain, Amanresorts International, has stalled due to
lower-than-expected bids by shortlisted companies, two sources
with direct knowledge of the matter said.
JANUARY 11
ALIBABA GROUP has reduced the size of its debut
loan to $3 billion, three sources told Reuters.
LUNAR CAPITAL, a China-focused private equity fund, will pay
close to $100 million to buy a controlling stake in China’s
Yeehoo Group Ltd, a baby products maker, a source familiar with
the matter told Reuters.
AUSTRALIA’S BRAMBLES Ltd, the world’s top pallet
supplier, received first offers from private equity groups for
its U.S. document management business valued at more than $2
billion, three sources said.
JANUARY 10
JAPANESE STATE-sponsored fund, Innovation Network of Japan,
said its investment in overseas acquisitions by Japanese
companies is likely to increase this year, helped by a stronger
yen and an increase in asset sales abroad.
MALAYSIA-BASED private equity firm Navis Capital Partners
said it has completed the sale of its Dunkin’ Donuts and Au Bon
Pain businesses in Thailand to Sub Sri TPC Pcl for 1.32
billion baht ($41.56 million).
AUSTRALIAN PRIVATE equity firm Pacific Equity Partners
baulked at sweetening its A$711 million ($730 million) offer for
cleaning services company Spotless Group Ltd, raising
the prospect it could walk away from the bid.
KKR & Co has made a buyout approach to Australian
underwear manufacturer Pacific Brands Ltd that a
newspaper said could be worth $614 million, boosting its shares
20 percent and sparking talk other firms could attract similar
offers.
INDIA’S ASK Property Investment Advisors is close to raising
10 billion rupees ($192 million) for a fund that will invest in
property projects in five Indian cities, Chief Executive Amit
Bhagat said.
AMSTERDAM-BASED law firm Loyens & Loeff said it is opening a
Hong Kong office to capitalise on increased Asian interest in
investing in Benelux countries.
JANUARY 5
BLACKSTONE GROUP LP will conclude fundraising for its
latest buyout fund in January, raising just over $16 billion,
three people familiar with the matter said.
NEWQUEST CAPITAL Partners said it plans to invest up to $200
million in the next 12-18 months to acquire private equity
portfolios in Asia.
JANUARY 4
JAPAN’S RECRUIT Co has paid $410 million to buy two
temporary staffing agencies in the U.S. and Europe from buyout
firm Cerberus Capital Management, the human resources
company said, as it seeks to expand overseas.
JANUARY 3
TEMASEK HOLDINGS Pte Ltd said it has set up a new
subsidiary called Pavilion Capital Pte Ltd that will invest
primarily in privately owned firms in North Asia.
RED FORT Capital, an India-focussed real estate private
equity firm, is set to raise a $500 million fund that will
invest in commercial and residential assets, two sources told
Reuters.
DECEMBER 30
NATURAL GAS fuel firm Clean Energy Fuels Corp,
whose investors include Chesapeake Energy Corp,
Temasek’s Seatown Holdings and Asia private equity fund RRJ
Capital, said it has received $150 million from investors
including Boone Pickens.
DECEMBER 29
CHINESE WIRE maker Fushi Copperweld Inc said it
received a revised proposal from co-chief executive Li Fu, Abax
Global Capital and TPG Growth Asia Inc to take the company
private for $9.50 per share in cash.
DEALTALK – TOUGH IPO conditions in India are driving
secondary deals between private equity investors.
CHINA NO longer wants foreign-funded automobile factories or
polysilicon plants, but would welcome overseas investment in
hospitals and financial leasing firms, according to updated
inward investment guidelines.
ALIBABA has hired a Washington lobbying firm in a sign that
the Chinese e-commerce company would be willing to make a bid
for all of Yahoo Inc in the event that talks to unwind
their Asian partnership fail.
DECEMBER 28
AN AFFILIATE of U.S. private equity giant Blackstone has
bought a company that owns a special economic zone in India from
the country’s top listed developer DLF Ltd and its partner for
8.1 billion rupees ($153 million).
JAPANESE PRIVATE equity firm Unison Capital said it will buy
Asahi Tec, a maker of iron castings used in automobiles
that is majority owned by Belgian private equity investor RHJ
International SA, for $310 million excluding debt.
BANKRUPT JAPANESE consumer lender Takefuji Corp
gained a new lifeline when financial group J Trust Co Ltd
said it would invest $325 million after a previous
agreement with struggling A&P Financial of South Korea fell
through.
NOMURA HOLDINGS Inc said it would become the first
Japanese financial group to be allowed to make private equity
investments in China and would invest in a private equity fund
managed by Jiu You Equity Investment Management LLP.
DECEMBER 26
CARLYLE GROUP said it has named Kazuhiro Yamada as
co-head of its Japanese operations, replacing Masao Hirano, who
will resign from the private equity firm.
DECEMBER 23
DEALTALK-ASIA’S private equity firms face a shrinking pool
of bank loans as European lenders pull back from the region,
crimping both investments and re-financings for buyout-backed
companies and adding to the list of challenges the industry will
meet in 2012.
AUSTRALIAN PAPER manufacturer PaperlinX Ltd said it
has received an incomplete and conditional proposal from an
unnamed private equity firm for its business, while it predicted
a loss for the first half as European markets weakened.
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Analysis: China developers launch funds to bridge finance gap
BEIJING (Reuters) – China’s fledgling real estate investment fund market could see a surge of activity in 2012 as property developers launch their own vehicles in a desperate bid to bridge an estimated $111 billion financing gap in the year ahead.
A government-led clampdown on bank, bond, equity and trust market financing for real estate has left developers with little choice other than to set up their own funds, which have raised barely 10 percent of the sum in the past two years that needs to be found to refinance maturing debt in 2012.
On the upside, China‘s high net-wealth families still favor property investment and funds give them an alternative to buying the physical asset while retaining exposure to the sector.
“Of course, it will take time, but in the next decade, you will see the Chinese property market become more institutionalized,” Frank Marriott, Savills’senior director of real estate capital markets for the Asia-Pacific, told Reuters.
Time is not on the developers’ side. Slowing sales and falling prices are hitting just as refinancing pressures are soaring. Analysts widely expect industry consolidation to accelerate in 2012 and some players, even big ones, will have to sell assets and quit the market.
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Reuters China Property Watch http://r.reuters.com/deh85s
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
About $2.2 billion of syndicated property loans and club deals will become due this year, according to Thomson Reuters data, while a further 117 billion yuan ($18.6 billion) needs to be found to repay maturing real estate trusts.
Add in the other credit lines that need repaying and developers need to find over 700 billion yuan this year, according to Hua Xia Times, a Chinese business newspaper in Beijing.
Major developers such as China Overseas Land & Investment , Gemdale Corp and Forte, are among the first firms to have launched their own funds.
Others including China Vanke , the country’s biggest listed property firm by sales, chose to set up funds jointly with their peers to help each other survive tough times.
And more will follow.
“We must make more friends and widen our financing sources. That will help our future growth,” Zhu Tong, chairman of Sun Real Estate, a mid-sized developer in Beijing, told an industry forum in Beijing last week.
A total of 29 property funds raised $4.1 billion in 2011, a big improvement on the $2.9 billion raised by 28 vehicles in 2010, according to consultancy Zero2IPO.
Industry analysts expect more than $6 billion will be raised in 2012 and that the property fund market will expand at an annual rate of 40-50 percent over the next few years.
The funds target wealthy entrepreneurs, with an investment threshold of 10 million yuan and above and are expected to offer annual returns of at least 25 percent, said Fu Zhe, a Zero2IPO analyst in Beijing.
“Private investors still have a strong interest in the property sector as there are really not many other options for them,” Su Xin, chairman of Go-high Investment, which invests in commercial real estate, told an industry forum last week.
His company’s recent survey in Wenzhou, Ordos and some coal-rich cities in northwestern Shaanxi province — places with some of the biggest speculative property bubbles in the last decade — shows that investment interest in property remains robust.
FUNDING CONSTRAINTS
That’s lucky for Chinese developers given the funding constraints in the wake of government pledges to pull home prices back to a reasonable level after a decade of rocketing real estate inflation that saw prices surge 10-fold in 10 years in key cities across China.
Not only have the major state-backed banks been told to cut credit lines, the government has also halted all financial innovations to channel money into its targeted property sector. These include non-public trust funds launched by Chinese trust firms in private placements to channel funds to the sector and the long-awaited exchange-traded real estate investment trusts (REITs).
But it’s going to take more than luck for developers to survive the financing drought.
Banks have prolonged mortgage loan approvals, forcing developers into a hand-to-mouth existence of surviving on downpayments and then seeing the bulk of the cash from sales going directly to the accounts of contractors and suppliers.
“That means even after you’ve sold residential units at a cheaper price, the cash in your hand still does not increase,” Ren Zhiqiang, the outspoken chairman of Huayuan Property , told a forum last week.
As a result, the balance sheets of many Chinese developers deteriorated in 2011. Greentown China , a major player in eastern China, is now struggling to survive and having to sell assets to do so.
Developers are compelled to dig deep into internal reserves for working capital. Internal funding, including new property funds raised, was 41 percent of total financing in the industry in the first 11 months of 2011, up from 38 percent and 33 percent in the same period of 2010 and 2009 respectively, according to the National Bureau of Statistics.
New loans to the property sector accounted for only 17.5 percent of banks’ total new local-currency lending in the first three quarters of 2011, down from 31.1 percent in the year 2007, according to data from the People’s Bank of China.
With Beijing showing no mercy in cracking down on property speculation, developers like Greentown China that expanded rapidly in the past few years and have the high gearings to prove it, will have to sell land and half-built projects to repay debt.
That is why the real estate fund route is considered to have so much potential. It helps developers keep control of their assets and gain control of their finances.
Cao Shaoshan, chairman of Orizon Capital, is excited about the outlook of Chinese property funds.
He believes China’s maturing real estate market means developers will specialize more on construction while outsourcing fundraising. But it won’t happen fast enough for many struggling developers.
“The Chinese property fund sector is still at an infancy stage,” Cao said. “It’s unable to change the financing landscape a lot in the short term.”
(Reporting by Langi Chiang and Nick Edwards; Editing by Matt Driskill)
http://tourism9.com/
A government-led clampdown on bank, bond, equity and trust market financing for real estate has left developers with little choice other than to set up their own funds, which have raised barely 10 percent of the sum in the past two years that needs to be found to refinance maturing debt in 2012.
On the upside, China‘s high net-wealth families still favor property investment and funds give them an alternative to buying the physical asset while retaining exposure to the sector.
“Of course, it will take time, but in the next decade, you will see the Chinese property market become more institutionalized,” Frank Marriott, Savills’
Time is not on the developers’ side. Slowing sales and falling prices are hitting just as refinancing pressures are soaring. Analysts widely expect industry consolidation to accelerate in 2012 and some players, even big ones, will have to sell assets and quit the market.
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Reuters China Property Watch http://r.reuters.com/deh85s
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
About $2.2 billion of syndicated property loans and club deals will become due this year, according to Thomson Reuters data, while a further 117 billion yuan ($18.6 billion) needs to be found to repay maturing real estate trusts.
Add in the other credit lines that need repaying and developers need to find over 700 billion yuan this year, according to Hua Xia Times, a Chinese business newspaper in Beijing.
Major developers such as China Overseas Land & Investment , Gemdale Corp and Forte, are among the first firms to have launched their own funds.
Others including China Vanke , the country’s biggest listed property firm by sales, chose to set up funds jointly with their peers to help each other survive tough times.
And more will follow.
“We must make more friends and widen our financing sources. That will help our future growth,” Zhu Tong, chairman of Sun Real Estate, a mid-sized developer in Beijing, told an industry forum in Beijing last week.
A total of 29 property funds raised $4.1 billion in 2011, a big improvement on the $2.9 billion raised by 28 vehicles in 2010, according to consultancy Zero2IPO.
Industry analysts expect more than $6 billion will be raised in 2012 and that the property fund market will expand at an annual rate of 40-50 percent over the next few years.
The funds target wealthy entrepreneurs, with an investment threshold of 10 million yuan and above and are expected to offer annual returns of at least 25 percent, said Fu Zhe, a Zero2IPO analyst in Beijing.
“Private investors still have a strong interest in the property sector as there are really not many other options for them,” Su Xin, chairman of Go-high Investment, which invests in commercial real estate, told an industry forum last week.
His company’s recent survey in Wenzhou, Ordos and some coal-rich cities in northwestern Shaanxi province — places with some of the biggest speculative property bubbles in the last decade — shows that investment interest in property remains robust.
FUNDING CONSTRAINTS
That’s lucky for Chinese developers given the funding constraints in the wake of government pledges to pull home prices back to a reasonable level after a decade of rocketing real estate inflation that saw prices surge 10-fold in 10 years in key cities across China.
Not only have the major state-backed banks been told to cut credit lines, the government has also halted all financial innovations to channel money into its targeted property sector. These include non-public trust funds launched by Chinese trust firms in private placements to channel funds to the sector and the long-awaited exchange-traded real estate investment trusts (REITs).
But it’s going to take more than luck for developers to survive the financing drought.
Banks have prolonged mortgage loan approvals, forcing developers into a hand-to-mouth existence of surviving on downpayments and then seeing the bulk of the cash from sales going directly to the accounts of contractors and suppliers.
“That means even after you’ve sold residential units at a cheaper price, the cash in your hand still does not increase,” Ren Zhiqiang, the outspoken chairman of Huayuan Property , told a forum last week.
As a result, the balance sheets of many Chinese developers deteriorated in 2011. Greentown China , a major player in eastern China, is now struggling to survive and having to sell assets to do so.
Developers are compelled to dig deep into internal reserves for working capital. Internal funding, including new property funds raised, was 41 percent of total financing in the industry in the first 11 months of 2011, up from 38 percent and 33 percent in the same period of 2010 and 2009 respectively, according to the National Bureau of Statistics.
New loans to the property sector accounted for only 17.5 percent of banks’ total new local-currency lending in the first three quarters of 2011, down from 31.1 percent in the year 2007, according to data from the People’s Bank of China.
With Beijing showing no mercy in cracking down on property speculation, developers like Greentown China that expanded rapidly in the past few years and have the high gearings to prove it, will have to sell land and half-built projects to repay debt.
That is why the real estate fund route is considered to have so much potential. It helps developers keep control of their assets and gain control of their finances.
Cao Shaoshan, chairman of Orizon Capital, is excited about the outlook of Chinese property funds.
He believes China’s maturing real estate market means developers will specialize more on construction while outsourcing fundraising. But it won’t happen fast enough for many struggling developers.
“The Chinese property fund sector is still at an infancy stage,” Cao said. “It’s unable to change the financing landscape a lot in the short term.”
(Reporting by Langi Chiang and Nick Edwards; Editing by Matt Driskill)
http://tourism9.com/
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