Bottom line: The collapse of a cross-investment between China’s Citic Bank and Taiwan’s CTBC Financial reflects growing cross-strait tensions, and could signal a chill in major new cross-strait investments over the next 4 years.
Citic Bank scraps Taiwan investment
In a troubling sign for companies doing business across the Taiwan Strait, an equity swap between China’s Citic Bank (Shanghai: 601988) and Taiwanese peer CTBC Financial (HKEx: 2891) has collapsed due to regulatory issues. In this case it appears that Taiwan scuttled the deal for reasons I’ll explain shortly, though a Citic spokesman emphasized no politics were involved. But regardless of the stated reasons, this particular development seems to reflect growing tensions between Taiwan and China under a new Taiwanese administration that’s far more wary of Beijing than its predecessor. Read Full Post…
The following press releases and news reports about China companies were carried on August 27-29. To view a full article or story, click on the link next to the headline.
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Wanda Agrees to Build $9.5 Bln Culture Project in China (English article)
Bottom line: Beijing should eliminate barriers that are slowing the flow of private money into lending services, in a move to offset a slowdown in lending from traditional banks that are dealing with a growing bad-loan crisis.
Obstacles hinder private lending growth
A flurry of headlines last week highlighted the recent move by private companies into China’s financial services market, led by reports that Apple(Nasdaq: AAPL) could become the first major foreign company to offer electronic payments in the country. At the same time, a chilly reception for a Hong Kong IPO by regional lender Qingdao Bank (HKEx: 3866) highlighted the difficulties many traditional Chinese banks now face due to concerns about a looming bad debt crisis.
Beijing regulators should be commended for their recent efforts to open up the financial services market to more private investment, but should consider accelerating the campaign by streamlining bureaucracy for big and well-financed domestic and foreign names like Apple and Tencent(HKEx: 700). It should also consider a similar streamlining of bureaucracy for foreign banks, many of which have left China off their global roadmaps due to stiff restrictions that make doing business difficult. Read Full Post…
Bottom line: Baidu’s new joint venture bank with Citic could help it catch up to stumbling private banks backed by Tencent and Alibaba, which are struggling due to restrictions on their operations by Beijing.
WeBank seeks new funding
Two headlines are highlighting the opportunities and challenges that private banking is presenting for China’s Internet giants. The larger of the news items has online search leader Baidu(Nasdaq: BIDU) forming a joint venture with traditional banking giant Citic Bank (HKEx: 998), as it plays catch-up with Internet rivals Tencent(HKEx: 700) and Alibaba(NYSE: BABA). The second headline involves Tencent’s recently formed WeBank online bank, which is reportedly looking to raise $1 billion nearly a year after its official launch.
China’s Internet companies have rushed into financial services over the last 2 years, as Beijing tries to breathe new life into a stodgy sector previously dominated by big state-run firms. Both Tencent and Alibaba have been at the forefront of the movement, with each getting licenses to open private banks earlier this year under a new pilot scheme. But the transition has been filled with obstacles, partly due to lack of regulation but also because of resistance from the traditional banks. Read Full Post…
The following press releases and media reports about Chinese companies were carried on November 18. To view a full article or story, click on the link next to the headline.
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Former Google (Nasdaq: GOOG) China Chief Plans to Take Startup Incubator Public (English article)
Fox International Inks Production Deal With China’s Huace (Shenzhen: 300133) (English article)
Movie Ticket Booking Platform Weiying Shidai Wins 1.5 Bln Yuan Series C Funding (English article)
The following press releases and media reports about Chinese companies were carried on November 17. To view a full article or story, click on the link next to the headline.
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Tsinghua Unigroup to Invest $47 Bln to Build Chip Empire (English article)
Bottom line: China needs to accelerate the opening of its banking sector to foreign participation, or risk losing overseas expertise and investment dollars that could revitalize the sector.
BBVA sells down Citic Bank stake
Spain’s Banco Bilbao Vizcaya Argentaria (BBVA) became the latest major foreign bank to check out of China last week, when it sold off half of its stake in Citic Bank, a unit of one of the nation’s leading financial services groups. The move follows a similar series of sales by other major foreign financial firms over the last 5 years, depriving China’s state-run banks of valuable expertise they could have used as they make the transition from their past as policy lenders to more commercially-oriented institutions. Read Full Post…
Bottom line: BBVA’s cut-back in its alliance with Citic represents the latest divorce between western banks and Chinese partners, with little new foreign investment likely in the sector for the next 2-3 years.
BBVA sells stake in Citic unit
A trend that’s been quiet for more than a year has popped back into the headlines, with word that Spain’s second largest bank has dumped its stake in a holding company tied to Chinese financial services conglomerate Citic Group. This particular deal is being driven by a number of factors, including a need for cash by Spain’s Banco Bilbao Vizcaya Argentaria SA (BBVA). But the bottom line is that BBVA and other major foreign banks have ended most of their similar alliances with Chinese partners over the last 3 years after such tie-ups failed to produce any strategic benefits. Read Full Post…
The following press releases and media reports about Chinese companies were carried on December 24. To view a full article or story, click on the link next to the headline.
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Citic Bank Buys BBVA’s Stake In Financial Unit For $1.05 Bln (English article)
Billionaire Wang’s Dalian Wanda (HKEx: 3699) Property Firm Falls in HK Debut (English article)
MIIT Says To Issue 4G FDD-LTE Licenses Next Year (Chinese article)
NQ Mobile (NYSE: NQ) Board Authorizes Up to $80 Mln Share Buyback (PRNewswire)
Enlight Media (Shenzhen: 300251), Qihoo (NYSE: QIHU) Form Online Video JV (English article)
Investors may be giving a cold shoulder to many new Chinese companies lining up to list overseas, but one name that’s not having any such troubles is Citic Group, one of China’s oldest and most entrepreneurial financial services conglomerates. Ironically, Citic isn’t even making a formal IPO as it seeks to list in Hong Kong, but instead is making a massive back-door offering using its Citic Pacific (HKEx: 267) unit as the vehicle. The latest reports say a group of top-tier global and domestic investors are lining up to buy into the new back-door listing, reflecting Citic’s attraction as an alternative for buyers looking to gain exposure to China’s financial services sector. Read Full Post…
Two of this year’s biggest IPOs are both in the headlines, kicking off what’s likely to become a steady flow of news surrounding upcoming listings for e-commerce leader Alibaba and Citic Group, one of China’s oldest and most successful conglomerates. Citic is the more interesting in this latest pair of news bits, since this is the first time we’ve heard about the group’s plans to go public via a backdoor offering through its Hong Kong-listed Citic Pacific (HKEx: 267) unit. Meantime, media are reporting that investment banks are so eager to underwrite Alibaba’s IPO that they’re offering to accept record low fees for their services. Read Full Post…
