Tag Archives: China Construction Bank

News Digest: November 15, 2011

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The following press releases and media reports about Chinese companies were carried on November 15. To view a full article or story, click on the link next to the headline.

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◙ Bank of America (NYSE: BAC) Sells Most of China Construction (HKEX: 939) Stake (English article)

◙ Mobile Game Developers Sue Baidu (Nasdaq: BIDU) for Piracy (English article)

◙ Huawei Buys Symantec (Nasdaq: SYMC) Stake in JV for $530 Million (English article)

◙ LDK Solar (NYSE: LDK) Revises Q3 and Fiscal 2011 Guidance (PRNewswire)

◙ HiSoft (Nasdaq: HSFT) Reports Q3 2011 Financial Results (PRNewswire)

Message to Beijing: Privatize the Big 4 Banks 对中国政府说：将四大银行退市吧

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I’m going to be a bit controversial today and make a bold suggestion that may seem obvious to some, namely that China should privatize its big 4 banks and let them resume their role as the state-owned policy lenders that they were for their first 50 years. The idea may sound extreme, but it’s exactly the approach that Beijing seems to be taking first by forcing its banks to issue billions of dollars worth of new shares to shore up their balance sheets last year, and now by announcing it will buy up even more of their stock to support their sagging shares. The banks’ majority shareholder, the central government-controlled Central Huijin, provided few specifics other than to say it has started buying up shares in the top 4 lenders, ICBC (HKEx: 1398; Shanghai: 601398), China Construction Bank (HKEx: 939; Shanghai: 6019399), Bank of China (HKEx: 1398; Shanghai: 601398) and Agricultural Bank of China (HKEx: 1288; Shanghai: 601288). (English article) Let’s review the facts: Huijin, which controls a third or more of each of those banks, already boosted its holdings in the 3 of the 4 last year when each made a multibillion-dollar share rights offering to strengthen their balance sheets after a year-long lending binge ordered by Beijing to prop up the economy at the height of the global financial crisis in 2009. This new buy-back will put even more of the banks’ shares into Huijin’s hands, boosting the central government’s ownership even further. Shares of all 4 banks jumped in late Monday trading in Hong Kong on the news, and we could well see those gains extended on Tuesday. But the banks’ shares are still down sharply over the last year, falling 40-50 percent from their 52-week highs. The main reason for their poor performance is that investors realize that despite their publicly listed status, all 4 banks still take their orders from Beijing and show no signs of changing those habits, making them less attractive as growth companies. That said, it would make more sense for Beijing to just end the charade and take all 4 of the banks private again so they can continue in their role as policy tools of the central government.

Bottom line: Beijing’s latest move to buy back sagging shares in the country’s top 4  lenders further underscores their function as policy lenders that should be privatized.

Related postings 相关文章:

◙ Record Profits Bolster Banks as Storm Looms 创纪录利润有助银行抵御楼市低迷隐忧

◙ ICBC Discovers China’s Latest Low-Cost Export: Currency 工行将从非洲人民币结算业务中获益

◙ China Merchants Bank Kicks Off “Capital Raising II” 招商银行掀起第二轮融资热潮

News Digest: August 30, 2011

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The following press releases and media reports about Chinese companies were carried on August 30. To view a full article or story, click on the link next to the headline.

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◙ SAIC (Shanghai: 600104) Profit Beats Estimates After GM, VW China Sales Climb (English article)

◙ Bank of America to Sell 13.1 Bln China Construction Bank (HKEx: 939) Shares (Businesswire)

◙ Youku (NYSE: YOKU), DreamWorks Animation In “Kungfu Panda” China Distribution Deal (PRNewswire)

◙ LDK Solar (NYSE: LDK) Reports Q2 Financial Results (PRNewswire)

◙ Tencent (HKEx: 700) Video Invests Over RMB 100 Mln on Infrastructure (English article)

CCB Explores Overseas Step to Indonesia

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The conservative China Construction Bank (HKEx: 939; Shanghai: 601939), the nation’s second largest lender, may be preparing to take its first big steps onto the global stage, with an Indonesian deal that looks interesting though a bit risky. Media are reporting that the bank is in talks to buy a stake in closely held PT Bank Maspion Indonesia, whose owners want to sell more than 50 percent. (English article) The news comes not long after reports  that CCB’s bigger rival, ICBC (HKEx: 1398; Shanghai: 601398), was in talks to buy a controlling stake in the Argentine unit of South Africa’s Standard Bank for $700-$800 million, as China’s largest lenders, with encouragement from Beijing, seek to spread their wings beyond their protected home market. (previous post) At first glance the potential CCB deal looks interesting. Indonesia is a developing market with many similar characteristics to China, which would allow CCB to leverage its experience to do business there. What’s more, PT Bank looks very manageable in terms of its size, with a modest value of around $200 million. My major concern comes in terms of regulation. According to the media reports, Indonesia is currently considering legislation that would limit foreign shareholders to holding minority stakes in banks. If PT Bank Maspion were a large lender with an experienced management team, this restriction might be less worrisome. But considering its smaller size, the lack of majority control could severely limit CCB’s ability to manage this new asset if it ended up buying a stake, restricting it to the role of a largely passive investor as its Indonesian management ran the show. That said, perhaps CCB would be better off as a more passive investor for its first major purchase abroad, allowing it to become more familiar with doing business outside China while leaving day-to-day business to locals who know the market better. On the whole, I would weigh in as neutral on this deal, which looks like a relatively risky but manageable first step onto the global stage for CCB.

Bottom line: CCB’s potential purchase of a minority stake in a mid-sized Indonesia lender looks like a risky but manageable first step for the bank onto the global stage.

Related postings 相关文章:

◙ ICBC Sees Potential in Argentina 中国工商银行：阿根廷市场有潜力

◙ Bocom Chases Global I-Bank Business With Big Bucks 交通银行打算花大价钱吸引投行人才

◙ Banks: CCB Bets on Downturn, BOC Keeps Head in Sand 中行依旧高歌猛进，建行趋向保守

New UnionPay Tie-Up Boosts US Presence in IPO Run-up 中国银联携手US Bancorp 未来有望两地上市

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Despite an ongoing high-profile dispute with global credit card leader Visa (V.N), leading Chinese credit and debit card transaction processor UnionPay is pushing ahead with its plans to become a top global player, signing a new tie-up with US Bancorp (NYSE: USB), the fifth largest US bank. (English announcement) The deal, which comes not long after a similar tie-up between UnionPay and Visa’s closest global rival MasterCard (NYSE: MA), will see UnionPay cards accepted by some 1 million US and European merchants who use US Bancorp’s Elavon financial network. The deal should come as a nice boost not only to UnionPay and its stakeholders, which include China’s top banks, but also to hotels, restaurants and other US shops on the Elavon network, which will now be able to accept credit and debit cards from the growing tide of Chinese traveling to the US and Europe for business and pleasure. This deal is the latest in a growing string of similar tie-ups for UnionPay over the last two years, as it looks to set up a global network to rival those of Visa and MasterCard, leveraging the growing spending power of consumers in its home China market where it has a monopoly on credit and debit card transaction processing services. The company is growing rapidly, with a profit of 972 million yuan, or about $150 million, last year, up 30 percent from the previous year. A recent small share of its sales valued the company at more than $11 billion. With growth potential well above that of its major stakeholders, I suspect UnionPay will make a dual IPO in Shanghai and Hong Kong in the next 12 months, as its major shareholders, which include leading banks ICBC (HKEx: 1398; Shanghai: 600398) and China Construction Bank (HKEx: 939; Shanghai: 601939), look to raise more cash to bolster their shaky balance sheets. Such an offering could be one of the hottest in quite a while, as investors flock to a company with the clearest potential to take advantage of the growing spending clout of Chinese consumers.

Bottom line: UnionPay’s latest tie-up with US Bancorp will give the company a nice boost in the US and Europe, in the run-up to a blockbuster IPO in the next 12 months.

中国银联与全球信用卡领头羊维萨卡(Visa)的高调纠纷尽管还在继续，但这一中国主要的信用卡交易处理商正致力发展成为全球顶级运营商的宏图大计，与美国第五大银行US Bancorp(USB.N) 签署了新的合作协议。前不久，中国银联和Visa的宿敌万事达卡(MA.N)刚刚达成类似的合作协议。该协议将使中国银联卡被大约100万使用US Bancorp金融网络的美欧商户所接受。该协议不仅对中国银联及其股东是个推动，也有利于使用US Bancorp的Elavon结算平台的酒店、宾馆和其他美国店铺，他们将能接受来自中国游客的信用卡和借记卡消费。这也是中国银联过去两年一系列合作项目中的最新一起。中国银联垄断着中国国内的信用卡和借记卡交易处理服务，中国银联希望凭借中国国内消费者日渐增长的消费力为杠杆，建立一个全球性网络，抗衡Visa和万事达卡。中国银联的发展速度很快，去年的利润达到了9.72亿元(约1.5亿美元)，同比增长了30%。由于其增长潜力远远好于主要股东的业绩，我认为，中国银联在未来12个月将寻求在上海和香港进行两地上市，因包括工商银行(601398.SS)(1398.HK)、建设银行(601939.SS) (0939.HK)等在内的主要股东希望筹集更多资本支持自身摇摇欲坠的资产负债表。类似IPO可能会是相当长一段时间内的热门投资之一，因投资者将涌向一个明显有潜力利用中国消费者消费力的公司。

一句话：中国银联和US Bancorp的最新合作将使银联在美欧市场获得良好发展，为未来12个月的重量级IPO作好准备。

Related postings 相关文章:

◙ China Merchants Bank Kicks Off “Capital Raising II” 招商银行掀起第二轮融资热潮

◙ Hilton, Starwood Roll Out Welcome Mat for Chinese 喜达屋、希尔顿迎合中国消费者

◙ ICBC Sees Potential in Argentina 中国工商银行：阿根廷市场有潜力

China Merchants Bank Kicks Off “Capital Raising II” 招商银行掀起第二轮融资热潮

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Move over, QE II. Chinese banks, unsatisfied with the hundreds of billions of dollars they raised to bolster their balance sheets just two years ago, appear to be gearing up for Capital Raising II, with China Merchants Bank’s (HKEx: 3968 Shanghai: 600036) announcement that it will raise up to $5.4 billion through simultaneous rights offers in Hong Kong and Shanghai. (company announcement; English article) China Merchants is no doubt counting on the short memories of many investors, hoping they will forget that it announced a similar program almost exactly two  years ago to raise a more modest $2.6 billion. So if my math is correct, China Merchants will have raised about $8 billion through these two offerings — a staggering amount when you consider its market cap in Hong Kong is only about $9 billion. Analysts will tell you this new round of CR II, which will undoubtedly be followed by more similar announcements from other major Chinese banks, is designed to meet Beijing’s ever rising capital adequacy ratio requirements as it tries to cool a racing economy that got that way in large part due to excessive state-ordered lending at the height of the global financial crisis. But this latest capital raising by China Merchants is starting to looking increasingly like an outright recapitalization of Chinese banks, which are no doubt woefully unprepared for the economic downturn and resulting piles of bad debt that many believe are coming. The small bit of good news in this is that Beijing, as the majority shareholder of all the major banks, will ultimately foot most of the bill for this ongoing recapitalization. The bad news is that the banks’ minority shareholders will also have to pay part of the bill, and that these stocks are likely to take a beating in the months ahead.

Bottom line: China Merchants announcement of its second major fund-raising in just two years looks like an outright recapitalization, and underscores the shaky position of all Chinese banks.

新一轮量化宽松来了。中国银行业不满足於两年前数千亿美元的集资规模，如今似乎将再次进行融资。中国招商银行<600036.SS><3968.HK>宣布，将在香港和上海发行权利股，筹集54亿美元。招行无疑是寄望於许多投资者健忘，希望他们记不起该行在两年前曾宣布过类似计划，集资26亿美元。所以，如果我计算正确的话，招行两次筹集资金总额约为80亿美元–鉴於招行在香港市值仅约为90亿美元，上述募资规模确实惊人。分析师会告诉你，本次新一轮融资是为满足中国政府不断提高的资本充足率要求，中国其他大型银行无疑亦将宣布类似举措。中国正试图为其经济降温，中国出现这种局面很大程度是因为全球金融危机最严重时，中国政府要求增发贷款过多。但招行本次筹资日益像是中国银行业一次资本重组，中国银行业显然未对经济低迷做好充足准备，许多人认为，大量坏账即将出现。好消息是，中国政府和各银行大股东终将为此次资本重组埋单。坏消息是，银行小股东也将不得不承担一部分费用，这些银行股未来数月或遭重创。

一句话：时隔两年，中国招商银行再次宣布大规模融资，看似一次彻头彻尾的资本重组，凸显中国各银行的问题。

Related postings 相关文章:

◙ China Readies Market for More Bank Begging 中资银行准备再筹资

◙ ICBC: Maintaining Profits, As Shareholders Foot the Bill

◙ Beijing Money Shut-Off Reaches a Roar, Real Estate Suffers 银行贷款下降 房地产市场受压