Tag Archives: Citigroup

Citigroup in China Get the latest finance and Business news from the former Reuters chief editor Doug Young.

INTERNET: Baidu Raises Funds, Reorganizes as Spin-Offs Loom

Bottom line: Baidu’s new reorganization is further evidence that the company plans to spin off its newer, money-losing units into separate companies, which could list on China’s OTC-style New Third Board later this year.

Baidu reorganizes

Online search leader Baidu (Nasdaq: BIDU) is in a couple of big headlines as it reportedly prepares to spin off some of its non-core businesses, led by word of a major reorganization that could help facilitate such spin-offs. A separate headline says that Baidu is also in talks for a $1 billion syndicated loan, in a move that is mostly market driven but also aims at getting fresh money to continue funding many of its loss-making newer businesses.

Baidu came under fire last year for its sluggish profit growth, as founder Robin Li insisted he would continue to invest heavily in his company’s loss-making businesses like its Nuomi group buying site and Qunar (Nasdaq: QUNR) online travel agency. Investors punished Baidu’s stock as a result, leading to reports earlier this year that Baidu was planning to spin off many of those businesses into separately listed companies. Read Full Post…

BANKING: Beijing Comes to Banks’ Rescue Again

Bottom line: A new Beijing bailout allowing banks to swap bad loans for shares of defaulting borrowers will only prolong China’s ballooning bad loan crisis, saddling lenders with shares of poorly run companies.

Beijing prepares new bank bailout plan

Exactly how many times can Beijing rescue the country’s ailing banks? The answer to that question appears to be “at least one more time”, and most likely quite a few more in the next few years. That’s my latest assessment on reading new reports that Beijing is finalizing yet another plan to relieve the burden of ballooning bad debt weighing on most of the nation’s banks.

I’ll discuss the latest rescue plan shortly, and also add why this particular plan is one of the least attractive I’ve seen so far. But before that, I should use this occasion to say once more how this move shows why Chinese banks aren’t a very good investment. Put simply, most of China’s banks still behave more like policy lenders than real commercial banks, making loans based on directives from Beijing and local government officials. Read Full Post…

BANKING: Citigroup, HK Investors Orphan China Banks

Bottom line: Foreign investors will give China bank IPOs a cold shoulder for the rest of this year due to concerns of a bad debt crisis, potentially driving valuations even lower than their already depressed levels.

Zheshang Bank delays IPO plan

A couple of banking stories are spotlighting the rapidly fading attraction of Chinese lenders to foreign investors, who fear the banks are standing on the cusp of a bad loan crisis fueled by China’s cooling economy. The first item has Citigroup (NYSE: C) selling its 20 percent stake in China Guangfa Bank for $3 billion, after original plans to list the bank collapsed due to lack of investor interest. The second item has China Zheshang Bank also delaying plans for a $1 billion Hong Kong IPO for similar reasons.

Both developments come as Chinese banks listed in Hong Kong now trade at extremely low multiples due to concerns about their individual health and China’s broader economic slowdown. Leading lender ICBC (HKEx: 1398; Shanghai: 601398) now trades at a paltry price-to-earnings (PE)  multiple of just 5, while Bank of China (HKEx: 3988; Shanghai: 601398) trades at an even lower 3.8. Read Full Post…

IPOs: Brokerages Still Hot As Orient IPO Charms Investors

Bottom line: Orient Securities IPO should price and debut strongly on strong sentiment towards brokerages, which should perform well over the short- to medium-term if China’s broader economy continues to slow.

Orient Securities IPO draws strong interest

Despite new uncertainties about their future, Chinese brokerages continue to remain a hot ticket as investors bet they’ll benefit from a booming domestic stock market and new business from a pilot program allowing more foreigners to buy Chinese stocks. That’s my assessment following word that the biggest domestic IPO since 2011, from Orient Securities, has been massively oversubscribed by a factor of more than 90. Put another way, some $150 billion worth of investor money is chasing the $1.6 billion offering, meaning barely 1 in 10 investors will be able to get any shares. Read Full Post…

BANKING: Citic Bank Orphaned By Spain’s BBVA

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…

SPD Bank Leads Shanghai Financial Consolidation

SPD Bank to buy Shanghai Trust

I don’t follow China’s domestic banks too closely, largely because all are controlled by the government and their actions are more often directed by policy initiatives than real commercial factors. But the latest moves surrounding SPD Bank (Shanghai: 60000), also known as Pudong Development Bank, indicate that this relatively young financial firm could be a player to watch as China moves ahead with a major overhaul of its stodgy financial sector. Just last week SPD made minor headlines with its purchase of a small asset manager, and now it’s back in the headlines with word that it will merge with Shanghai Trust, one of the city’s largest trust companies. Read Full Post…

ICBC Enters Global Mainstream With London Bond, New Designation

ICBC labeled “too big to fail”

ICBC (HKEx: 1398) has entered the realm of leading global banks, with word that China’s top lender has been officially declared “too big to fail” by a major world body, reflecting China’s increasingly important role in the world’s economy. ICBC’s growing importance to the global economy was also evident in its successful issue of the first yuan-denominated bond in London, part of China’s efforts to internationalize its currency with major state-owned banks like ICBC and Bank of China (HKEx: 3988; Shanghai: 601988) leading the campaign. Read Full Post…

IPO Froth Builds With Meteoric Qunar Debut

Qunar soars on trading debut

Two highly successful IPOs late last week by Chinese tech firms may officially mark the arrival of spring for such offerings after a long winter. But now that spring has finally come on so strong, the new question becomes: Is an overheated summer on the way? My answer to that question is “quite possibly”, following the very strong debut last Friday for Qunar (Nasdaq: QUNR) the fast-rising online travel site that hopes to someday take on industry leader Ctrip (Nasdaq: CTRP). Qunar’s meteoric debut follows the strong opening a day earlier for online classified advertising site 58.com (NYSE: WUBA), which rose 41 percent on its first trading day. Read Full Post…

Qunar, Ctrip In Fund-Raising Frenzy

Qunar makes public IPO filing

Update: After publishing this originally, a Qunar spokeswoman pointed out that Goldman Sachs was among the investment banks underwriting its IPO. So that changes the tenor of the last part of the post, which says that no premium investment banks were involved in the offering.

 

A long awaited year-end fund-flurry of fund raising by Chinese tech firms is gaining momentum, with online travel sites Qunar and Ctrip (Nasdaq: CTRP) leading the charge as investor interest finally returns to the market. Qunar has just made the first public filing for its long-delayed IPO, while Ctrip continues to dazzle the markets by raising the size of its recent mega bond offer for the second time, underscoring strong demand from investors. Read Full Post…

58.com IPO Accelerates With Swing To Profit

58.com makes first public IPO filing

China’s return to work following the weeklong National Day holiday has seen a sudden acceleration in the IPO plans by leading online classified advertising site 58.com, which has just made its first public filing for a New York listing. Interestingly but certainly not surprisingly, the company has suddenly turned profitable just in time for the listing. At least some Chinese media are questioning the sudden move into the profit column, and indeed such swings are often the result of creative accounting done to boost investor demand. Still, the offering looks like a potentially interesting one, following the successful debut of online game developer Forgame (HKEx: 484) in Hong Kong last week. Read Full Post…

Local China Banks March To HK

Huishang Bank targets HK IPO

The ongoing cash crunch at Chinese banks may be partly behind reports that a trio of regional banks are aiming to make IPOs in Hong Kong, with Bank of Shanghai, Huishang Bank and CGB all aiming to list in the second half of the year. These regional lenders may also be losing patience while waiting for China to lift a freeze on new IPOs that dates back to last year, which has led to a backlog of dozens of companies that want to make offerings. The China Securities Regulatory Commission (CSRC) had been giving signals that it could soon lift the freeze, though it may change its mind if the current sell-off on Chinese stock markets continues. Read Full Post…