China

India’s Reliance on Chinese cash comes with risks

17 Jan 2012

India Inc is feeling the pinch as dollar liquidity dries up. With EU banks retrenching, Asian competitors are picking up the slack. It’s nice to have options but Chinese funding is still seen as a last resort. Politically hard to swallow, it often comes with strings attached.

China’s $100 bln missing reserves look ominous

16 Jan 2012

Poor-performing European investments caused some of the unexplained decline in the foreign reserves pile in the fourth quarter. But over half of it looks like money leaving the country. The exit of hot money is welcome. Genuine capital flight would be another story.

China’s car surplus should worry global giants

13 Jan 2012

Auto sales by volume grew at the slowest pace in 10 years in 2011. Gridlocks and pollution limit demand potential at home. But ambitious manufacturers are unlikely to down tools. Soon Western carmakers may have to deal with keener and stronger Chinese exporters.

China will fudge Iran oil sanctions

12 Jan 2012

Simple disobedience of the U.S. freeze would give China cheap oil, but it can’t afford the cost of angering Uncle Sam. Total obedience would push up prices, and could spark social unrest in China. But Beijing can probably find a middle way: do just enough to placate the Americans.

Ferretti’s yachts find fitting berth in China

12 Jan 2012

The luxury yacht-maker embodies modern finance’s turbocharged highs and lows. Buoyed by the rise of the super-rich, it made one buyout house a fortune, then helped sink another. Ferretti is now being sold to a state-backed Chinese group for around a fifth of its peak valuation.

China’s likely finmin choice a win for reformists

11 Jan 2012

Lou Jiwei could be a good choice to run the finance ministry. As head of sovereign fund CIC, he has rare experience of global finance, and has been vocal about fiscal and other changes. A step up would strengthen the reformist streak in China’s consensus-driven political machine.

Shale oil set to take edge off crude price

9 Jan 2012

Gas from shale has flooded the U.S. market, providing 20 pct of supply and squashing prices. Rock-derived oil, by contrast, may add only about 4.5 pct to global supply by 2020. But that would still cover the expected rise in Chinese demand and help keep a lid on crude inflation.

"Tax less, spend less" policy could help China

9 Jan 2012

Beijing takes too big a share of the pie. Fiscal revenue grew by a quarter in 2011. Lower taxes for the poor and retailers can help spur consumption. That may mean Beijing has to spend less on infrastructure, but higher levies on property and resources would help close the gap.

China’s lead in patents masks lag in innovation

5 Jan 2012

The rising economic giant probably topped the world as a place to file applications in 2011. But the dodgy quality of many patents and foreign activity contradict the idea of a surge in homegrown ingenuity. As it has in manufacturing, China will catch up - but it’s not there yet.

Short-selling could give China long-term boost

5 Jan 2012

China may bolster short-selling by setting up a new securities lending exchange. More shorts would help curb excessive speculation and rekindle interest in the market. However, since Beijing is likely to remain firmly in control, expect things to move slowly.

China’s M&A dragon will blow hot in 2012

4 Jan 2012

Falling prices and tight credit mean state-backed buyers can play to their strengths. Two newly minted oil deals, and Three Gorges’ Portuguese swoop, show Beijing’s burgeoning appetite. Big name bids may follow, while China’s savers and consumers unwittingly foot the bill.

China’s growth may dip below 8 percent in 2012

3 Jan 2012

Three things could push the country’s GDP growth to a ten-year low: falling house prices, a slump in property investment, and slowing exports. All will take their toll on consumer confidence. Last time, Beijing stimulated the economy; it can ill afford a second round.

Beijing will face fresh yuan dilemma

30 Dec 2011

The yuan’s six-year rise is likely to end, if not reverse, in 2012. The trade surplus is shrinking, inflation has eroded the currency’s real value and foreign investors are selling. But the U.S. still wants a revaluation. That would only increase the chance of a hard landing.

China firepower pips politics in $3.5 bln EDP win

23 Dec 2011

Portugal has got a neat deal from China’s TGC for 21 pct of its main utility: a top price and a jumbo credit facility. China can press its advantages when it sees strategic value like EDP’s technology and LatAm growth. That mattered more than German lobbying for E.On’s rival bid.

Jack Ma could pay high price to be rid of Yahoo

23 Dec 2011

The Alibaba founder wants to buy back most of Yahoo’s stake in his e-commerce giant. An earlier spat over their payment unit Alipay showed Ma has nuisance value and may deter other bidders. But financing it won’t be easy. After selling at the bottom, he risks paying a peak price.

Sino-Forest investor tests limits of activism

21 Dec 2011

Richard Chandler, the troubled Chinese firm’s biggest investor, made a fortune from contrarian bets. He may be right to back Sino-Forest amid doubts over its accounting. But its structure, which strongly favours the company, gives investors little hope of exercising their rights.

Wukan protests rooted in finance not freedoms

19 Dec 2011

Riots over land sales by local governments are getting more common. As prices rise and land gets scarce, villagers like Wukan’s want more of the profit. A government pay-off is usually the answer. But it looks like China’s model of rapid development is due for an overhaul.

Weibo set to get duller but more valuable

16 Dec 2011

China’s Twitter has proved a thorn in the side of the Party. Now comes the clampdown, including new plans to force microbloggers to use their real names. Being brought to heel will make Sina Weibo less controversial and less interesting. But it needn’t hurt its commercial value.

Fracking tie-up makes sense for shale-rich China

16 Dec 2011

Buying a piece of Frac Tech, a U.S. gas services company, for a mooted $2.2 billion would be a savvy move by China’s national energy majors. Frac Tech’s drilling technology should be easy to copy, and could help China unlock 140 years of gas supplies. The strategic benefits justify a premium price tag.

Sino-Forest debt games are bad for creditors

15 Dec 2011

The decision not to pay $10 mln interest may push the scandal-hit Chinese timber firm towards default and a restructuring process. Bond holders are in a weak negotiating position. Most of the assets, if they really exist, are inside China, where it is hard to enforce claims.