The following press releases and news reports about Chinese companies were carried on February 23. To view a full article or story, click on the link next to the headline.
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Tsinghua’s $2.6 Bln Taiwan Deals to Face Unprecedented Government Scrutiny (English article)
Huawei Debuts MateBook Notebook PC at Mobile World Congress (Chinese article)
HK Lays Out Case Against Short Seller Citron Research’s Andrew Left (English article)
ICBC (HKEx: 1398) Says Cooperating With Madrid Anti-Money Laundering Probe (HKEx announcement)
Parcel Delivery Service SF Express Prepares for Domestic IPO (Chinese article)
Bottom line: China Postal Bank’s signing of several major global institutions as cornerstone investors reflects the attractiveness of conservative financial service firms as China’s economy slows.
Conservative Postal Bank draws big global investors
What’s likely to be this year’s biggest IPO has just moved one step closer to market, with word that Postal Savings Bank of China is near a deal to sell about 15 percent of itself to a group of mostly foreign investors ahead of a planned $20 billion new offering. This particular IPO will provide one of the most conservative choices yet to investors looking to buy into China’s financial services market.
That’s because Postal Bank historically served as a place for consumers to park their savings, and did little actual lending like traditional banks. That difference appears to be a major factor making Postal Bank so attractive now compared with more traditional lenders like ICBC(HKEx: 1398; Shanghai: 601398), which are standing on the cusp of a bad loan crisis as China’s economy rapidly slows. Read Full Post…
The following press releases and media reports about Chinese companies were carried on July 30. To view a full article or story, click on the link next to the headline.
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Alibaba (NYSE: BABA) Cloud Unit Sets Sights on Amazon in $1 Bln Global Push (English article)
Giant Interactive Seeks 100 Bln Yuan Valuation in China Re-Listing Plan (Chinese article)
ICBC (HKEx: 1398) VP Zheng Wanchun May Become New Minsheng Bank Chief (Chinese article)
Departing China Mobile (HKEx: 941) Workers Complain of No Raises in 10 Years (Chinese article)
China’s Great Short Seller Suddenly Turns Bullish (English article)
The following press releases and media reports about Chinese companies were carried on July 17. To view a full article or story, click on the link next to the headline.
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Tesla (Nasdaq: TSLA) Unveils New Model X, to Go on Sale in China Next Year (Chinese article)
Bottom line: China needs to let traditional banks behave more independently and encourage them to take risks, or risk seeing them overtaken by private, entrepreneurial financial companies.
Alibaba bank goes online
China’s 2 leading e-commerce companies were in the headlines last week with major new moves in the financial services sector, continuing a trend that has seen private firms pose the first serious challenge in decades to China’s banking establishment. One move saw Alibaba (NYSE: BABA) launch its online bank, MYbank, as part of a Beijing pilot program to allow private companies into the sector. The other saw JD.com (Nasdaq: JD) form a credit scoring joint venture, aiming to tap its huge volumes of transaction data to help rate the creditworthiness of individuals. Read Full Post…
Bottom line: Citic Securities’ new tie-up with China’s Social Security Fund should bring it major new business, while CCB’s Indonesian tie-up talks reflect its approach of moving slowly into emerging markets for its nascent global expansion.
Citic Securities ties with Social Security Fund
Two big finance stories are casting a spotlight on different trends in China’s rapidly transforming financial services sector as Beijing tries to create an industry that can compete with the big global players. The larger news is domestically focused, with leading stock brokerage Citic Securities (HKEx: 6030; Shanghai: 600030) in a major new tie-up with China’s Social Security Fund that will see the pair cooperate in a wide array of financial services areas. The other news is outward looking, and has China Construction Bank (HKEx: 939; Shanghai: 601939) in talks to form a relatively modest new tie-up with a local bank in Indonesia. Read Full Post…
Bottom line: Bank of China’s plan to create a Southeast Asian unit around its Hong Kong-based BOCHK looks like a smart move that will give investors a chance to buy shares of its more commercially-focused global operations.
Bank of China to create separate SE Asia unit
Chinese banks have always been a difficult investment option for westerners due to their heavy reliance on China, where they take orders from Beijing leaders that use them as an economic policy tool rather than letting them act like real commercial lenders. The banks’ international operations are more interesting from an investor’s perspective, as they tend to behave more commercially because they have to competite in markets where they don’t enjoy any special government-granted advantages.
The problem is that international operations are usually just a tiny business for most of the big Chinese banks, even as industry leaders ICBC (HKEx: 1398; Shanghai: 601398) and Bank of China (HKEx: 3988; Shanghai: 601988) spend billions of dollars on offshore acquisitions and other overseas expansion. That’s why a new plan by Bank of China looks particularly exciting, as it will finally give stock buyers an option to invest exclusively in the company’s offshore operations, in this case in Hong Kong and Southeast Asia. Read Full Post…
Bottom line: The refusal of many banks to follow a Beijing directive to support the sagging property market looks encouraging, and could show these state-run lenders are finally beginning to behave more commercially.
Banks break with policy-lending past
It appears I owe an apology to big Chinese state-run banks, after years of calling them policy lackeys of Beijing with very little commercial instinct. Just a day after criticizing top lender ICBC (HKEx: 1398; Shanghai: 601398) for making a blatantly political $4.3 billion infrastructure loan to Pakistan (previous post), a new report is saying a growing number of banks are defying a recent Beijing order to boost their mortgage lending to support the sagging domestic real estate market.
This kind of action certainly won’t please economic planners in Beijing, but it marks a huge step forward for the banks in their drive to become more commercial and earn some real respect from investors. Read Full Post…
Bottom line: ICBC’s $4.3 billion lending program for Pakistani power projects is being driven by Beijing policy directives, while Bank of China’s US expansion is a commercially driven move to tap Chinese demand for US real estate.
ICBC in Pakistani power projects
New stories involving 2 of China’s “Big 4” lenders are casting a spotlight on the love-hate relationship that many investors have with these mammoth banks that sometimes act commercially but more often make decisions based on directives from Beijing. The larger item has ICBC (HKEx: 1398; Shanghai: 601398), China’s biggest bank, committing to a massive new $4.3 billion lending program to help develop Pakistan’s energy sector. The other has Bank of China (HKEx: 3988; Shanghai: 601398) planning a modest expansion in the US, as it looks to tap a growing appetite for American real estate by Chinese investors. Read Full Post…
Bottom line: ICBC is likely to ultimately get approval to buy 20 percent of Taiwan’s SinoPac Financial, while Bright Food’s newly closed purchase of Israel’s Tnuva should boost its bid to become China’s first global food group.
Bright Food closes Tnuva buy
I got a sense of deja vu on reading the latest announcement from ICBC (HKEx: 1398), saying China’s leading lender has extended a deadline to buy 20 percent of Taiwan’s SinoPac Financial (Taipei: 2890), 2 years after the tie-up was first disclosed. That’s because this deal looks strikingly similar to another proposed tie-up between leading Chinese telco China Mobile (HKEx: 941; NYSE: CHL) and one of its Taiwan peers, which ultimately crumbled after repeated extensions. In both cases political sensitivities undermined the deals, though such sensitives could play less of a role in the ICBC-SinoPac deal.
At the same time, I’ll also admit my surprise to read that another sensitive deal has closed that will see Shanghai-based food giant Bright Food Group buy Tnuva, Israel’s largest dairy. That deal was first announced about a year ago, but concerns were quickly raised that Israel might veto it over national security concerns. But the latest reports say the purchase has finally closed, handing Bright a major victory in its quest to become China’s first global food giant. Read Full Post…
The following press releases and media reports about Chinese companies were carried on March 27. To view a full article or story, click on the link next to the headline.
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US Questions China At WTO On Banking Technology Restrictions (English article)
Tesla (Nasdaq: TSLA) Completes China Overhaul, No Short-Term Sales Targets (Chinese article)
