Hong Kong IPOs: back with a whimper
It’s tempting to think that the Hong Kong IPO market is finally back to good health. Two $1bn+ deals have been completed in the past few days and on Wednesday, one of them shot up on its debut.
But don’t pop the champagne just yet. While the deals got done, they did so with a lot of legwork. And its too early to tell whether they will ultimately offer much reward for investors. Continue reading »
China: property prices rising (again)
While many Chinese data points attract dubious looks – last month’s curious trade release for example – one set of figures looks pretty convincing. Official numbers for house prices released on Monday confirmed what private sector statistics told us last week – China’s property boom is back, and it’s moving at a rapid clip.
Of the 70 cities tracked by the National Bureau of Statistics, 67 saw prices rise in April from the previous month. That’s equivalent to 96 per cent, up from just 50 per cent in October. Continue reading »
China’s recovery is “painfully slow”
Official figures released on Monday showed that China’s economy is not getting worse – industrial production rose a touch, as did retail sales. Fixed asset investment fell slightly, but stayed above 20 per cent year on year growth.
But those banking on a speedy bounce in Chinese growth are unlikely to take much comfort. Continue reading »
Dim sum benchmark launch could bring ETFs into a growing market
Dim sum bonds showed signs of fatigue last year, despite their young age. Issuance of offshore renminbi bonds grew compared to 2011 – but only by a whisker, while a summer sell-off in the Chinese currency prompted a spike in borrowing costs. On both counts, it was a far cry from the market’s early days of breakneck growth and barely visible coupons.
But 2013 has begun on a more steady footing, with growth returning and yields falling once again. And soon the market will get a further boost – with the launch of benchmark index products. Continue reading »
China: bronze heads, carrots and sticks
What’s the connection between China, Christie’s, two bronze heads and the portfolio investor?
Quite a lot, actually. There’s a lesson for everyone doing business in China in the recent settlement of the long-running row between Beijing and the international auction house over the heads of a rabbit and a rat that once adorned the Emperor’s Summer Palace. Continue reading »
When is a BBB- borrower actually a AA+? No, this isn’t financial trickery of the kind made famous in the US subprime fiasco (and perhaps repeated in China in 2012). It’s a new facility offered by the Asian Development Bank to promote cross-border borrowing within Asia.
Under the scheme, the ADB-backed fund guarantees the debt of a corporate issuer, and effectively lends out its rating, regardless of the company’s actual rating. It’s been a year in the making, but finally the scheme has broken the seal. Continue reading »
China: less bang for its credit buck
In China, it’s often the case that the numbers themselves are a source of confusion, if not outright disbelief. But sometimes the numbers also speak for themselves. And one in particular is telling: credit intensity.
This measures the amount of credit needed to generate growth, and it has risen rapidly in the past six months to near its highest level. In other words, when it comes to GDP, China is getting less bang from it’s credit buck. Continue reading »
China’s shark’s fin soup slowdown
Pretty much everyone agrees that China’s Q1 growth figure was a miss. At 7.7 per cent, it sits below consensus (8 per cent) and down from the previous quarter (7.9 per cent).
As you’d expect, analysts have been scrambling to make sense of it all, with reasons given ranging from dead pigs to cold weather. But one thing keeps cropping up: the luxury crackdown. Continue reading »
China’s alternative shareholder returns: sesame seeds
When Chinese stock exchange operators insisted that listed companies give 30 per cent of profits back to shareholders in dividends, this probably wasn’t what they had in mind.
But Shenzhen-listed Nanfang Black Sesame, which processes sesame seeds and rice noodles, has suggested rewarding investors in the form of sesame powder. Continue reading »
Are Hong Kong IPOs just too boring?
You wait months for a decent-sized Hong Kong IPO, then a load of them come along at once. But news that Bank of Shanghai will be looking to raise as much as $2bn may not be greeted with cheers from deal-starved investors.
For them, it must be starting to feel like groundhog day – with each new deal looking exactly the same as the last. Continue reading »
Yum Brands in China: flu shot?
Airlines stocks were the first to feel pangs of fever when bird flu raised its ugly head again in China earlier this month. Shares in many Asian carriers nosedived last week, with some recording double digit falls in single trading sessions.
But while many of them have since shown full or near recoveries, there’s one stock that still looks decidedly peaky: Yum Brands. Continue reading »
Selling China to buy Japan?
Hong Kong has endured almost daily thunderstorm warnings in recent weeks. On Friday, as markets reopened after a one day holiday, the gloom was clear to see in the equity market. The Hang Seng dropped 2.9 per cent.
Though the spectre of a fresh flu epidemic was cited as the immediate cause, there are deeper currents dragging the Hong Kong market down. Continue reading »
Malaysia: investors’ election nerves
Finally it’s happening. On Wednesday morning Malaysian prime minister Najib Razak dissolved parliament in preparation for a general election. The date has yet to be set, though it’ll come by the end of the month.
More importantly for investors, it is likely to be the most closely fought race in the country’s democratic history, and nerves about the pending election have been clear in both the debt and equity markets for some time. Continue reading »
Are IPOs such a problem for Shanghai?
China’s equity rally has clearly run into some trouble in recent weeks. The Shanghai index dropped a further 1 per cent on Wednesday, taking it into negative territory for 2013. Among the plethora of reasons offered for the stumbling run is the overhang of IPOs, and the potential that some of them might come to market soon.
But would a series of new issues really be so bad for the market? Continue reading »
China’s booming fake muni bonds
Despite racking up huge debts, China’s local governments aren’t allowed to issue bonds to help pay them off. Although there is a small trial programme underway, the market is still effectively closed.
However, the ban doesn’t stretch to local government finance vehicles – LGFVs for short – which are technically corporations, even though they do the work of a government body. Bonds issued by LGFVs – called chengtou bonds – have been booming. Continue reading »
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