Bottom line: Trina’s new loan and BYD’s uncertain outlook for EV sales this year reflect continued reliance of new energy technology companies on state support, which could pressure them as government incentives get retired.
Trina, BYD fueled by state support
Two new energy stories are in the headlines today, reflecting the progress but also the continued reliance on government support that this up-and-coming group of companies faces. That particular reality isn’t new, though some who were hoping the industries would become commercially independent more quickly may be disappointed. But more important, this reality could challenge many of the companies in the next 2-3 years in the face of disappearing support from governments that believe they have already given enough incentives to this slowly-developing group.
The first development has solar panel maker Trina (NYSE: TSL) announcing $143 million in financing for a new plant in Thailand, with all of the money coming from local lenders that almost certainly have government ties. The second has electric car maker BYD (HKEx: 1211; Shenzhen: 002594) reporting annual results that showed a surge in its EV business last year thanks to government incentives, setting the stage for a possible rapid slowdown this year as those incentives get set to retire. Read Full Post…
Bottom line: Apple’s accelerated China store openings and February roll-out of its Apple Pay service represent efforts to boost its local profile, as the broader China smartphone market shows signs of saturation and is likely to contract this year.
Apple Pay coming to China in February
Global smartphone leader Apple (Nasdaq: AAPL) is kicking off the New Year by accelerating its efforts in China on two fronts, opening more of its trademark Apple Stores as it also prepares a February launch for a local version of its Apple Pay electronic payments service. Both campaigns have been in the headlines in recent days, extending a broader campaign by CEO Tim Cook to pay more attention to a market that could soon surpass the US to become Apple’s biggest.
At the same time, these latest campaigns come amid a growing chorus of predictions that sales of Apple’s iPhones could soon start to slow sharply. A primary factor behind that slowdown could be China, where the smartphone market has become saturated and is expected to contract in 2016 after 3 years of explosive growth. Read Full Post…
Bottom line: Major new moves by Minsheng Investment, SPD Silicon Valley Bank and Ant Financial spotlight Shanghai’s leading role in China’s push to liberalize its financial services sector with more private investment.
Shanghai leads charge into private banking
Three Shanghai banking stories are in the headlines today, spotlighting the leading role the city is playing as China tries to develop a private banking sector. Leading the trio of headlines is the year-old China Minsheng Investment, a major new private equity company backed by the nation’s oldest private bank, which is exploring a major new infrastructure project in Indonesia.
The second story has media reporting that Ant Financial, the finance unit of e-commerce giant Alibaba (NYSE: BABA), will become the biggest tenant in Shanghai’s new tallest building when Shanghai Tower opens for business soon. The final news bit involves Shanghai’s own SPD Bank (Shanghai: 600000), whose joint venture with US-based Silicon Valley Bank has finally received permission to do business in China’s currency, the yuan, 3 years after the venture’s formation. Read Full Post…
Bottom line: Shanda’s participation in a bid for a US financial firm marks the start of the company’s move into finance, and reflects the broader rise of a new group of major private equity investors in Shanghai.
Shanda joins bid for US investment firm
Following its failed bid to become a major online entertainment company, the Shanghai-based Shanda is trying its hand at deal-making, with word that it’s part of a group making a bid for major US financial firm Russell Investments. Shanda’s entry to the private equity realm marks a growing trend that is seeing Shanghai-based companies emerge as some of China’s most aggressive homegrown private equity investors.
That trend is being led by Fosun International (HKEx: 656), which has been one of China’s biggest international buyers these last 2 years with a number of high-profile investments in Europe and North America. More recently Fosun has been joined by the aggressive China Media Group, which is connected to Shanghai’s leading media company SMG, and whose name is also showing up on a growing number of high profile investments. And then there’s the recently formed China Minsheng Investment Corp, an offshoot of the entrepreneurial China Minsheng Bank (HKEx: 1988; Shanghai: 600016), which is also being quite aggressive. Read Full Post…
Bottom line: Fosun is prepared to up its latest bid for Club Med by another 20-30 percent, while Anbang needs to be careful in its investments to avoid ending up with a portfolio of overvalued, underperforming assets.
Fosun ups Club Med bid
Two of China’s most active institutional investors are in the headlines today, led by a new sweetened bid from private equity giant Fosun International (HKEx: 656) as it competes with an Italian group to buy French vacation resort operator Club Med (Paris: CU). Meantime, another recently acquisitive investor Anbang Insurance is back in the headlines, with word that it’s boosted its stake in Minsheng Bank (HKEx: 1988 Shanghai: 600016), China’s oldest and largest privately owned lender. Read Full Post…
Earlier reports of e-commerce leader Alibaba’s strong political ties appear to be overstated, following word that archrival Tencent (HKEx: 700) has become the first of China’s major Internet firms to win a highly sought banking license. Both companies had been aggressively expanding into financial services over the past year, though each was reliant on partnerships with other companies that already had licenses to offer services in the highly regulated sector dominated by big state-run companies. But now Tencent will be able to offer many of those services on its own, following this ground-breaking award of a license from the nation’s banking regulator. Read Full Post…
Just weeks after a group of seasoned managers launched a major new fund in Shanghai, word is out that another top money manager is preparing to launch yet another fund aimed at selling China companies to global investors. The man behind the latest fund-raising drive is Yu Bin, a former director from China Investment Corp (CIC), China’s sovereign wealth fund. Yu is part of a new generation of market-savvy Chinese fund managers to emerge over the last decade, often after returning from the west where they received both education and experience working for major global fund houses and investment banks. Read Full Post…
Following reports last month of the imminent formation of a major new private equity investor, media are now saying the company, China Minsheng Investment, has formally registered and is gearing up to make its first investments. The new company certainly has the resources and connections to quickly become a major player on both the domestic and global private equity scenes, with an initial 50 billion ($8 billion) in registered capital. Now it appears the company will start by helping to consolidate China’s embattled solar panel-making sector, which will become its first focus area. Read Full Post…
An interesting new player may soon be coming to China’s crowded and highly fragmented private equity scene, with word that a major company has been set up by a group of leading entrepreneurs in Beijing and Shanghai. The company has a hefty 50 billion yuan in investment, equating to $8 billion. The player would be an important addition to China’s fast emerging field of major private equity firms, most of which are headed by entrepreneurial chiefs who are increasingly looking abroad for good investments. Read Full Post…
The following press releases and media reports about Chinese companies were carried on November 19. To view a full article or story, click on the link next to the headline.
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Mary Ma’s New Role At HK Securities Regulator: New Life For Alibaba IPO? (Chinese article)
Xiaomi to Convert After-Sales Locations to Retail Stores (English article)
Minsheng Bank (HKEx: 1988) Gets Approval For 20 Bln Yuan Bond Issue (HKEx announcement)
ZTE (HKEx: 763) To Roll Out Smart Watch In 2014 – Executive (Chinese article)
AsiaInfo-Linkage (Nasdaq: ASIA) Announces Stockholder Vote Date For Buyout (PRNewswire)
I seem to be using the phrase “flavor of the day” quite a bit these days, as quite a few emerging products and sectors like smart TVs and social networking services (SNS) are suddenly drawing interest from a wide range of companies in established industries. The latest sector to get my “flavor of the day” moniker is banking and financial services, with word that Gree (Shenzhen: 000651), one of China’s top appliance makers, is looking to enter the space. I have no particularly strong feelings about Gree, though I have to say that this new move looks ill-conceived and is a telltale sign that the broader rush into banking services is quickly becoming overheated. Read Full Post…
