Bottom line: Beijing and local governments need to let struggling companies fail and stop ordering banks to continue lending to them, or risk exacerbating the country’s growing bad debt crisis.
Banks ordered to lend to sinking companies
A couple of news stories last week cast a spotlight on how local governments are preventing banks from effectively managing their growing volume of bad loans, creating obstacles that could cause the problem to worsen and even spiral out of control. Neither story was actual “news”, but instead detailed practices increasingly used by local officials to support struggling state-owned companies, often to the detriment of local banks.
In one case officials ordered banks to lend to a failing local ship builder, even though the company was almost certain to default. The other case detailed how local officials had compiled lists of struggling companies for their own records, but then withheld the information from banks due to worries that disclosure might cause those companies to lose access to new loans. Read Full Post…
The following press releases and news reports about China companies were carried on August 23. To view a full article or story, click on the link next to the headline.
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Yahoo (Nasdaq: YHOO) Ad Partner Media.net Sells to China Group for $900 Mln (English article)
Tencent (HKEx: 700) Closes More than 35,000 WeChat, QQ Accounts with Gambling Links (Chinese article)
China Selfie App Meitu Aims to Raise up to $1 Bln in HK IPO (English article)
US Clearance of ChemChina’s Syngenta Deal Removes Key Hurdle (English article)
LeEco (Shenzhen: 300104) Finally Solves TV Licensing Issue After 2 Years in Limbo (Chinese article)
Bottom line: Lufax’s reiteration of plans for an IPO by year-end indicate China’s regulator may increase new listing approvals as the market stabilizes, while progress in Yunda’s backdoor listing also may reflect a relaxing attitude by the regulator.
Lufax sticks to plan for IPO by year-end
After an anemic flow of domestic IPOs so far this year, building pressure and a stabilizing stock market may finally be prompting the regulator to step up the pace as we head into fall. That appears to be the thinking at Lufax, China’s leading P2P lender, which says it is still targeting an IPO by the end of this year, after previously indicating China would be its first choice for such a listing. Meantime, an easing of the IPO climate won’t come soon enough for parcel delivery firm Yunda, which has joined many of its peers in moving ahead with a backdoor listing plan in Shenzhen. Read Full Post…
Bottom line: Apple’s announcement of its first China R&D center looks like a hastily crafted initiative aimed at generating positive publicity, but is unlikely to halt its recent slide in the market.
Apple announces first China R&D center
Just a day after new data showed just how badly Apple(Nasdaq: AAPL) is stumbling in China, the iPhone maker has finally taken a step it should have made long ago with the announcement that it will build an R&D center in the country. Apple’s hesitation over such a move has been quite embarrassing, especially since China has surged to become its second largest market in the last 3 years. The lack of such investment is also embarrassing for China because India, a much smaller market for Apple, became the first Asian recipient of an R&D center from the US tech giant earlier this year. Read Full Post…
The following press releases and news reports about China companies were carried on August 20-22. To view a full article or story, click on the link next to the headline.
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Xiaomi Suits Up for a Debut on Apple’s (Nasdaq: APPL) US Home Turf (English article)
Tencent Boosts JD.com (Nasdaq: JD) Stake to 21.25 Pct Becomes Top Stakeholder (Chinese article)
Lufax Plan for IPO by Year-End Unchanged, Prefers Domestic China Listing (Chinese article)
Yunda Follows Other Parcel Delivery Firms with Plans for 17.7 Bln Yuan Back Door Listing (Chinese article)
China Unicom (HKEx: 762) to Eliminate Roaming Fees From October (Chinese article)
Bottom line: Lei Jun’s resignation as YY chairman to focus on his struggling Xiaomi reflects his own fading star power, while Huawei is unlikely to reach its goal of taking 10 percent of the India smartphone market by the end of next year.
Lei Jun steps down as YY chairman
A couple of smartphone stories are in the headlines on this final day of the work week, capping a flurry of industry news that reflects the turmoil in China’s overheated market. Both items are relatively second-tier news, led by the resignation of Lei Jun from his position as chairman of social networking site YY (Nasdaq: YY) to focus on reviving his ailing Xiaomi smartphone empire. The other item has market leader Huawei hyping India, where it is getting set to launch a manufacturing facility and has ambitious plans for taking 10 percent of the market. Read Full Post…
Bottom line: The scrapping of a buyout offer for Momo could reflect growing obstacles to re-listing in China, and could presage the abandoning of more similar buyout bids for US-listed Chinese companies.
Momo abandons privatization bid
In a relatively surprising development in the wave of privatization bids for US-listed Chinese companies, social networking app operator Momo (Nasdaq: MOMO) has just announced a group proposing to buy out the company has withdrawn its offer. No reason was given for the reversal, and instead Momo used the official announcement to focus on its latest financial results and outlook. The move came as a surprise because the buyout deal had very strong financial backing from a group that included e-commerce giant Alibaba (NYSE: BABA) and venture capital giant Sequoia Capital. Read Full Post…
The following press releases and news reports about China companies were carried on August 19. To view a full article or story, click on the link next to the headline.
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Momo (Nasdaq: MOMO) Announces Withdrawal of Privatization Offer (GlobeNewswire)
Lei Jun Resigns as YY (Nasdaq: YY) Chairman to Focus on Xiaomi Revival (Chinese article)
Bottom line: Lenovo’s latest results show a company in transition as it overhauls its struggling smartphone business, and could presage a fledgling turnaround as it focuses on mid-range models with its young Zuk brand.
Lenovo at a turning point?
Newly released quarterly results from the struggling Lenovo (HKEx: 992) are showing some early positive signs, as the company seeks to turn around its miserably performing smartphone business. Lenovo stumbled badly in smartphones, which will play a vital role in its future as its older PC business rapidly matures. The company bet heavily on cheap, low-end models that initially gained big market share, especially in its home market, but then later fizzled due to lack of brand recognition and a reputation for poor quality. Read Full Post…
Bottom line: Rumors of a LeEco purchase of Smartisan are probably true as the company seeks a wealthy backer to continue funding its operations, and a deal could be announced in the next 2 months.
Smartisan in rumored sale talks to LeEco
Rumors surrounding a possible sale of the uppity Smartisan smartphone brand are rippling through the headlines today, providing some lively entertainment in the overheated sector. This particular story is drawing attention mostly due to Smartisan’s founder, the slightly pretentious Luo Yonghao, who was trying to parlay his success as China’s best-known English teacher into a smartphone brand. But Luo’s plan hasn’t materialized quite the way he imagined, and Smartisan is often rumored to be doing quite poorly and losing big money. Read Full Post…
The following press releases and news reports about China companies were carried on August 18. To view a full article or story, click on the link next to the headline.
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Baidu (Nasdaq: BIDU), Ford (NYSE: F) Invest $150 Mln in Radar Tech Firm Velodyne (Chinese article)
