I’ll be the first to admit I’m far from an expert on China’s banks, but the latest signs coming from the sector lead me to wonder if perhaps Agricultural Bank of China (HKEx: 1288; Shanghai: 601288), the least respected of the country’s big 4 lenders, may be best positioned to weather the bad loan crisis sowing chaos in the industry. China’s broader banking sector is facing one of the worst crises since many of the nation’s banks started going public in the mid-2000s, as lenders are unable to collect billions of dollars in loans made for questionable infrastructure projects during the global financial crisis. The problems is being compounded by the nation’s current economic slowdown, fueled in large part by anemic exports and foreign investment as the rest of the world grapples with lingering effects of the global recession.
Tag Archives: ICBC
News Digest: August 31, 2012 报摘： 2012年8月31日
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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- China to Overtake United States in Smartphone Shipments in 2012 – IDC (Businesswire)
- ICBC (HKEx: 1398) Announces H1 Results (HKEx announcement)
- Canada Opposition Attacks Govt Over CNOOC’s (HKEx: 883) Nexen Bid (English article)
- Securities Firms Ban Qihoo 360 (NYSE: QIHU) Apps Due to Privacy Concerns (English article)
- Unicom (HKEx: 762), China Telecom (HKEx: 728) to Lower iPhone 5 Subsidies (Chinese article)
Banks: Citi Grows, ICBC Tries Dim Sum 花旗推积极扩张计划 工行首发点心债
Beijing’s new openness to global banks is leading a growing number of foreign lenders to test the China market, with US giant Citigroup (NYSE: C) becoming the latest to announce an aggressive expansion plan to tap the new open atmosphere. At the same time, China’s own banks are continuing their own global expansion by offering a wider array of yuan-denominated services to foreign investors, with leading bank ICBC (HKEx: 1398; Shanghai: 601398) making its first major offering of so-called dim sum bonds in Hong Kong. The 2 trends are both part of China’s efforts to build a world-class financial services industry as it tries to wean its banks from their history of policy-based lending to big state-owned enterprises and make them more commercially driven.
Crisis-Hit China Firms Gain Banking Ally 国开行贷款助中国概念股私有化
It seems that short sellers aren’t the only ones trying to make some quick money from the confidence crisis plaguing US-listed Chinese stocks, with word that state-owned lender China Development Bank (CDB) is also trying to capitalize on the situation by providing loans to help some companies privatize. If true, the reports would just mark the latest twist in a saga that started more than a year ago when short sellers began to expose a series of accounting scandals at US-listed Chinese firms, sparking a sell-off in their shares. CDB’s move may also auger the start of a bigger wave of privatizations that could see some big US- and Hong Kong-listed companies go private as well.
ICBC Enters Insurance, US 工行开疆辟土：进军美国 涉足保险
China’s top bank ICBC (HKEx: 1398; Shanghai: 601398) is making more smart moves in its drive to look more like a commercial lender, consummating previously announced deals that should provide good starting points to develop new business areas with big potential. The first of those has seen the bank close its acquisition of a mid-sized US lender, paving the way for it to enter that important market; while the second has seen ICBC close its purchase of a controlling stake in a China-based insurance joint venture, setting the stage for it to enter a sector with big potential in its drive to become a more fully-diversified lender.
News Digest: July 7-9, 2012 报摘： 2012年7月7-9日
The following press releases and media reports about Chinese companies were carried on July 7-9. To view a full article or story, click on the link next to the headline.
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◙ Hebei Steel Gets Approval to Invest in Canadian Iron Ore Miner (English article)
◙ ICBC (HKEx: 1398) Completes Purchase of Stake in AXA-Minmetals Assurance (HKEx announcement)
◙ Sinopec (HKEx: 386) Extends Deadline for China Gas (HKEx: 384) Offer Until Aug 6 (HKEx announcement)
◙ Tencent (HKEx: 700 Tests Video, Voice Calling for Weixin (English article)
◙ Only 2 Chinese Companies List on NYSE In First Half of 2012 (Chinese article)
Alibaba Buyout: Finally Something for Investors 阿里巴巴筹资为机构投资者提供良机
E-commerce leader Alibaba’s long-awaited announcement that it will buy back 20 percent of its shares from Yahoo (Nasdaq: YHOO) is finally offering investors something they haven’t seen in a long time: A new chance to buy into a Chinese Internet firm that actually earns money. Unfortunately for most investors, they won’t have a chance to buy into the company anytime soon, as Alibaba is likely to sell most of its recently repurchased shares to big institutional buyers willing to fork over a minimum of tens of millions of dollars and more likely hundreds of millions of dollars for a piece of China’s top e-commerce company. But smaller institutional and retail investors could also get their opportunity in the not too distant future, with word that the buyout deal announced earlier this week provides strong incentives for Alibaba to make its own IPO by the end of next year, a deal that could help to return some excitement to the struggling market for Chinese Internet stocks. Just a day after announcing its landmark buyback, Alibaba is reportedly already in talks with a number of institutional buyers who want to purchase some of the stake, including Singapore’s massive sovereign wealth fund Temasek, which wants to invest some $500 million, according to a Chinese media report. (Chinese article) That kind of investment wouldn’t come as a surprise at all, as Temasek has always been particularly bullish on China, with a special interest in companies that are leaders in their spaces. Earlier this month Temasek purchased a major stake in ICBC (HKEx: 1398; Shanghai: 601398) for $2.5 billion, picking up shares that were being sold off by Goldman Sachs (NYSE: GS). (previous post) I would expect to see other major financial investors, including other sovereign wealth funds, insurance companies and pension funds, buying into Alibaba in these latest talks, with a probable minimum investment of $100 million each. On the other hand, don’t look for any new strategic investors like Yahoo to sign on in this new round of stake sales. That’s because Alibaba’s founder Jack Ma seems determined to run his own show and, based on his unhappy experience with Yahoo, doesn’t want strategic investors looking over his shoulder and offering suggestions. But while strategic investors may be out, Alibaba is clearly aggressively courting the financial investors, seeking to quickly sign them up to help it pay off the billions in debt it is assuming to buy back the Yahoo stake for a total of $7.1 billion. The company already counts such big names as Japan’s Softbank and Russia’s Digital Sky Technologies among its current investors, and will no doubt be looking for more high profile names to raise its own profile. While anyone with less than $100 million is unlikely to get a stake in this latest fund raising round, there should still be plenty of opportunity to buy into Alibaba for smaller investors if it moves ahead with an expected plan for an initial public offering by the end of next year. Such an offering could come as a big boost for Chinese Internet stocks in general, which were once investor darlings but have become pariahs over the last year due to a series of accounting scandals. Investors have also grown increasingly intolerant of Chinese web companies that are losing money, which describes the big majority of firms to list over the last 2 years. An Alibaba IPO would address both of those issues, providing a company with reliable accounting due to its relatively long history and major foreign investors, as well as a company that is highly profitable. From a broader market perspective, an Alibaba IPO will be good for the market by offering a quality company with strong long term prospects both at home and abroad. But on the downside, that offering won’t come for at least a year, meaning the broader market for China Internet companies could remain in the doldrums for quite some time unless another exciting offering comes along.
Bottom line: Alibaba’s new capital raising will offer good opportunities for institutional buyers, and an IPO as soon as next year could return some excitement to the weak market for China Internet stocks.
Related postings 相关文章:
◙ Yahoo, Alibaba in Slow-Motion Divorce 雅虎和阿里巴巴踏上漫漫离婚路
◙ Alibaba-Yahoo Buyout: Back to Square One 阿里巴巴股权回购重回起点
◙ Alibaba’s Yahoo Buyback: Deal Finally Near? 阿里巴巴回购雅虎所持股权可能为期不远
ICBC Boosts BEA Ties; Buyout Ahead? 工商银行促进与东亚银行关系：未来完全收购？
Chinese lenders are in the headlines today with news that the US has given the green light for 3 of China’s top 4 banks to establish a presence in the world’s largest banking market, including approval for ICBC’s (HKEx: 1398) $140 million purchase of 80 percent of the US unit of Hong Kong’s Bank of East Asia (HKEx: 23). (English article) But while many are looking at the bigger picture, applauding this long-awaited opening of the US to Chinese banks, I’m more interested in the growing relationship between ICBC, China’s largest bank, and Bank of East Asia (BEA), one of Hong Kong’s largest and oldest family owned banks. ICBC’s relationship with BEA dates back at least 3 years, with the 2009 announcement that ICBC would purchase a similar 70 percent of BEA’s Canadian unit for about $80 million. The finalization of this latest agreement to purchase a majority of BEA’s US unit would make ICBC the controlling owner of BEA’s former North American business, with BEA remaining as a junior partner with minority stakes in both the US and Canada. This approach looks similar to what ICBC has done in Africa and Latin America, where it has forged a similar relationship with Standard Bank (Johannesburg: SBKJ) by first buying a 20 percent stake in the South African lender in 2007, and then last year purchasing a majority of Standard Bank’s Argentine unit. (previous post) I personally like this approach, as it has allowed ICBC to enter new markets in Africa, South America and now North America by buying existing assets from banks that have already established a presence in those markets. In both cases, ICBC has also wisely chosen to keep its foreign partner in the equation after its purchases by allowing Standard Bank and BEA to both remain as minority shareholders. This strategy allows ICBC to draw on its partners’ expertise in those markets, while also allowing ICBC to use its own huge resources to expand these new units. The big difference between BEA and Standard Bank is in their size. While Standard Bank was valued at about $28 billion at the time of ICBC’s stake purchase in 2007, BEA is much smaller, with a market capitalization of about $8 billion. That difference leads me to wonder if this new romance between ICBC and BEA could eventually lead to an outright marriage between the pair in the next 2 years, which strategically looks like a very nice fit. In fact, BEA has been frequently named as a takeover target due to its size and strategic location, with a base in Hong Kong and strong ties to China and North America. Those ties could look especially attractive to ICBC, which only has a limited presence in Hong Kong and is now using BEA’s North American ties to enter the US and Canada. It’s probably still too early to say if this budding romance will really end in a marriage, but if these recent partnerships in the US and Canada work out well, I would put the chances for such a tie-up in the next few years at more than 50 percent.
Bottom line: ICBC’s latest tie-up with Bank of East Asia in the US is part of a smart overseas investment strategy that could end up in a marriage between the 2 banks.
Related postings 相关文章:
◙ 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
◙ ICBC Sees Potential in Argentina 中国工商银行：阿根廷市场有潜力
◙ Bank of China Considers Offshore I-Banking 中国银行考虑收购RBS投行资产
News Digest: May 11, 2012 报摘： 2012年5月11日
The following press releases and media reports about Chinese companies were carried on May 11. To view a full article or story, click on the link next to the headline.
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◙ Proview Refuses Apple (Nasdaq: AAPL) $100 Mln Offer for iPad Trademark – Source (Chinese article)
◙ Yum (NYSE: YUM) to Open Restaurants in Suning (Shenzhen: 002024) Stores (English article)
◙ ICBC (HKEx: 1398) Gets Fed Nod as Chinese Banks Seek US Growth (English article)
◙ SEC Charges Deloitte Shanghai with Refusal to Produce Documents (SEC announcement)
◙ SMIC (HKEx: 981) Reports Q1 Results (HKEx announcement)
◙ Latest calendar for Q1 earnings reports (Earnings calendar)
Singapore Votes For ICBC 新加坡看好中国工商银行
After scooping up a steady stream of Chinese bank shares being dumped by other major institutional investors over the past year, the Singapore government appears to be placing its bets on China’s biggest lender, ICBC (HKEx: 1398; Shanghai: 601398), based on its latest move. Before I get into the details behind the lmove by Temasek, Singapore’s big sovereign wealth fund, I should say that I agree that ICBC looks like the most attractive of China’s big bank stocks, both due to its traditional position as a business lender in the domestic market and also for its smart foreign expansion strategy focusing on developing markets. Now let’s take a look at the actual news, which has Temasek confirming that it is selling $2.4 billion worth of shares of 2 other top Chinese lenders, Bank of China (HKEx: 3988; Shanghai: 601398) and China Construction Bank (HKEx: 939; Shanghai: 601939). (English article) That sale comes just weeks after Temasek purchased around $2.5 billion worth of ICBC shares from Goldman Sachs (NYSE: GS), which joined other major global banks including Bank of America (NYSE: BAC) and Royal Bank of Scotland (London: RBS) in selling off big stakes they purchased in China’s major lenders 5-6 years ago. (previous post) Throughout the sell-off, Temasek has been one of the few cash-rich investors that has continued to show an interest in the Chinese bank shares, which many investors have avoided over concerns they may be on the brink of a long downturn if and when many of the questionable loans they made under Beijing’s economic stimulus plan during the global financial crisis start to sour. Now Temasek is finally realizing it may not be too smart to invest so much money in this particular sector, and is trimming its holdings to focus on ICBC, which it sees as the strongest player in the group. As I said above, I personally agree with Temasek since ICBC is probably the best positioned to suffer the least in the coming downturn for China’s banking sector. As a lender to businesses, ICBC should have less exposure to the real estate sector, which is expected to drop sharply in the next 2 years as Beijing shows a steadfast determination to cool the country’s overheated property market. On the global front, ICBC has made a steady stream of targeted investments in emerging markets in Latin America, Africa and Southeast Asia, seeking to leverage its expertise in those kinds of markets to diversify from its strong dependence on China. Last year the bank’s profits from overseas operations rose 18 percent, trailing its 37 percent rise in overall profits that year. But as profit growth from domestic operations slows or even contracts in the months ahead, steadiness in the international business will help ICBC to outperform many of its peers.
Bottom line: Singapore’s focus on ICBC reflects the bank’s relatively strong position compared with its peers as the broader Chinese banking sector heads into a downturn.
Related postings 相关文章:
◙ Bank of China Results: Downturn Ahead 中行业绩黯淡 或预示银行业将迎来低迷期
◙ ICBC, Huawei: It’s Cold Out There 工商银行、华为：国外市场冷清
◙ Goldman Flees ICBC as Bank Crisis Looms 中国银行业危机隐现 高盛迅速转让工行股票
Bank of China Results: Downturn Ahead 中行业绩黯淡 或预示银行业将迎来低迷期
Bank of China (HKEx: 3988; Shanghai: 601398) made news earlier this week when it became China’s first member at the prestigious London Metals Exchange (English article), but its latest headlines are far less positive as it reported lackluster growth in the first quarter that was below market expectations. (earnings announcement; English article) The 10 percent profit growth for the quarter was less than half the 28 percent growth rate from a year earlier, when Bank of China and its peers were reaping big new profits after a lending binge ordered by Beijing to stimulate the domestic economy during the global economic crisis. With the economy now showing signs of slowing sharply as the government tries to cool the real estate market and tame inflation, many fear that Chinese banks could start to see many of the loans they made during that binge start to sour. Recent weakness in the stock market, following a rally early in the year, could add to the problems, as many recent bank loans have gone to fund stock buying. From a purely numerical perspective, Bank of China’s 10 percent profit rise doesn’t look too bad, since that kind of growth rate is certainly respectable. But more worrisome is growth rate’s slowing, which is likely to accelerate in the next 2 quarters and could even turn negative by the end of the year. Bank of China is one of the nation’s top 4 lenders, and first-quarter results will come out later today from the other 3, ICBC (HKEx: 1398; Shanghai: 601398), China Construction Bank (HKEx: 939; Shanghai: 601939) and Agricultural Bank of China (HKEx: 1288; Shanghai: 601288). I would expect all 3 of the other big lenders to report slowing profit growth as well, signalling a recent rally for their stocks could soon be finished. Most of China’s major bank stocks performed poorly for most of last year on concerns that they would soon face a flood of bad loans after the lending binge of 2009 and 2010. But most have bounced back since then as Beijing took steps to address the problem, including allowing many lenders to raise billions of dollars in new capital to strengthen their balance sheets. Bank of China’s own shares have risen nearly 50 percent since hitting a low early last October. Perhaps sensing that the rally may soon be over, Goldman Sachs (NYSE: GS) became the latest major shareholder in a Chinese bank to sell down its stake earlier this month, dumping more of its stock in ICBC. (previous post) Goldman joined Bank of America (NYSE: BAC) and Citigroup (NYSE: C), which last year also sold off large stakes in China Construction Bank and Pudong Development Bank (Shanghai: 600000), respectively, partly due to concerns about a looming Chinese banking crisis. Following this lackluster Bank of China earnings report, investors will be watching closely to see if the other 3 banks also report weak earnings, and also if any are showing signs of growing bad loans. If the reports are weak, which seems likely, look for a sell-off in Chinese banking shares next week, which could mark the beginning of a long downturn for the sector.
Bottom line: Bank of China’s lackluster first-quarter report could mark the beginning of a long downturn for Chinese lenders and their stocks.
Related postings 相关文章:
◙ Goldman Flees ICBC as Bank Crisis Looms 中国银行业危机隐现 高盛迅速转让工行股票
◙ UnionPay Stirs IPO Pot With Big Numbers 银联有望上市
◙ AgBank Results: First Look at Banking Winter 中国农业银行财报：银行业的冬天
