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…
A year after it shook up China’s stodgy banking sector with the launch of its Yu’ebao savings product, e-commerce leader Alibaba looks set to give the market another shot of needed innovation in a new tie-up with 7 major banks. This time the aim is to promote lending to small and medium-sized enterprises (SMEs), with a focus on manufacturers and especially exporters. Such companies often have difficulty getting loans from traditional banks for reasons I’ll explain shortly. Thus this new partnership aims to use Alibaba’s mountains of financial data on these smaller companies to help the banks better understand underserved SMEs that are a critical player in China’s economy. Read Full Post…
Yet another firm is teetering on the brink of default for a relatively large bond, joining a small but growing list of such companies as Chinese investors learn about the risk of buying debt from shaky companies in struggling industries. This time it’s a little-know construction company called Huatong Road & Bridge Group that’s warning it could soon default on interest and principal payments for 400 million yuan ($65 million) in bonds set to mature later this month. The announcement is the latest of a slow but steady trickle of similar news that hints at distress due to China’s slowing economy. Read Full Post…
PayPal watches a China licenses first foreign e-payments firm
China has issued so many electronic payment licenses by now that I mostly ignore the steady stream of announcements about new licensees, who now number more than 250. I was getting ready to ignore the latest report of a new batch of such licenses, when my attention was attracted by a news bit deeper in the story saying the fifth batch of awards included the long-anticipated first license for a foreign-backed company. The move looks promising for a number of foreign companies that have been waiting impatiently for years to enter the market, led by eBay’s (Nasdaq: EBAY) PayPal online payments unit. Read Full Post…
A couple of headlines are underscoring the high risk that China’s financial sector could soon pose for both domestic and international investors, as the nation’s financiers look for the most creative but not necessarily the safest ways to raise money. In the first instance, China Merchants Bank (HKEx: 3968; Shanghai: 600036) has officially joined the nation’s big national banks in a move to Europe, choosing the free-wheeling Luxembourg market as its first destination. Meantime, media are reporting that yet another domestic Chinese financial product is about to default, joining a growing list of such distressed high-yield offerings. Read Full Post…
Newly released data are showing an inevitable slowdown at Yu’ebao, Alibaba’s inaugural financial product that has shaken up China’s stodgy banking industry since its launch a year ago. The data released by Alibaba’s Tianhong Asset Management, which officially runs Yu’ebao, also shows the product’s return rate has dropped considerably from earlier levels, which will further undermine its attractiveness. Separately, media are reporting that Alibaba has tentatively chosen the date of August 8 for its highly anticipated New York listing, which had been previously rumored due to its significance as a lucky day on the Chinese calendar. Read Full Post…
The list of Chinese companies defaulting on their bonds continues to grow, with word that timber firm China Forestry Holdings (HKEx: 930) has missed an interest payment as it tries to repurchase the notes. I’ll admit that one reason I’m focusing on this news is because of a recent conversation I had with a Chinese banker, who explained to me what happens behind-the-scenes when companies have difficulty making bond payments. That explanation shows why we haven’t seen too many bond defaults yet, despite constant media reports that China’s banks are struggling under mountains of unreported non-performing loans. Read Full Post…
A day after I wrote about a conflict that threatened to delay the premier of the new “Transformers” movie in China, media are reporting the commercial dispute in the matter has been resolved. Meantime, leading Chinese private equity investor Fosun International (HKEx: 656) is also catching the Hollywood fever that has been infecting Chinese media companies lately, announcing a major new investment in a start-up production house led by a former Warner Bros (NYSE: TWX) chief. Both of these stories show that the through train connecting China and Hollywood continues to gain momentum, and even Beijing is getting on board to help solve business disputes that could otherwise cost millions of dollars in lost sales. Read Full Post…
