Bottom line: A new $3.5 billion bank loan to help pay for game developer Supercell and an investment in shared bike service Mobike extend Tencent’s savvy strategy of targeted backing for companies that can quickly contribute to its core businesses.
Tencent nears mega loan for Supercell buy
Leading Internet company Tencent (HKEx: 700) is in a couple of major investment headlines as the new week begins, one in the virtual realm and the other grounded on the streets of major cities like Beijing and Shanghai. The larger of the items comes with word that Tencent is on the cusp of securing a $3.5 billion loan to help pay for its pending purchase of a controlling stake in Finnish game maker Supercell. The other item has the company leading a recent funding round for Mobike, operator of a shared bicycle service that is helping to revive China’s biking tradition. Read Full Post…
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: 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: 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…
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…
