CX Daily: China Denies Sweeping Plan to Merge Banks
Financial risk /
Banking regulator denies sweeping plan to force mergers
China’s banking regulator denied it is considering a sweeping wave of mergers involving problematic small and midsize banks, saying it will not take a “one-size-fits-all” approach to tackling the risks facing the world’s biggest banking system.
Bloomberg reported Thursday that Chinese financial regulators are discussing a plan to merge or restructure troubled banks with less than 100 billion yuan ($14.3 billion) of assets as part of intensifying efforts to buttress small lenders.
Zhou Liang, a vice chairman of the China Banking and Insurance Regulatory Commission, told us Sunday the regulator would instruct some small banks to shrink their interbank businesses and those outside their registered region and industry. But he said it would be impossible to take the kind of comprehensive measures reported.
FINANCE & ECONOMICS
Trade war /
Trump sows doubt on trade talks with pushback on tariff unwind
President Donald Trump said the U.S. hasn’t agreed to roll back tariffs on China, muddying hopes raised by China and even some of his own aides that the U.S. was ready to lift some tariffs to secure a trade deal.
“I haven’t agreed to anything. China would like to get somewhat of a rollback — not a complete rollback, because they know I won’t do it,” Trump told reporters Friday. U.S. bonds rallied and stocks slipped on lowered optimism for a trade truce. On Thursday, China’s Ministry of Commerce spokesman Gao Feng said negotiators had discussions and “agreed to remove the additional tariffs in phases as progress is made on the agreement.”
October Credit Slumps Amid Weak Corporate Demand
China’s new credit growth fell more than expected in October, reflecting weak corporate financing demand amid the economic downturn.
Data from the central bank showed that the country added 618.9 billion yuan ($88 billion) in total social financing in October, falling sharply from about 2.27 trillion yuan in September and 737.4 billion yuan in the same month of 2018. A Caixin survey found a median estimate by economists of 940 billion yuan.
New credit growth in October slowed to the weakest pace since at least 2017 based on Bloomberg data, reflecting weak corporate demand for credit and seasonal effects. The weakening credit growth fueled expectations that China may embark on further easing measures.
Chinese Firms May Have Easier Time Selling Stock
Corporate stock sales in China may get a further boost as the country’s securities regulator steps up efforts to help cash-strapped companies weather China’s economic slowdown.
The China Securities Regulatory Commission (CSRC) Friday unveiled plans to relax controls over publicly listed companies' follow-on offerings more than two years after it clamped down on such activities. Investors have been calling on the CSRC to remove the secondary share sale curbs. Still, some analysts say the proposed loosening is more market-friendly than they expected.
China will have enough natural gas this winter to meet demand: Officials
Demand for natural gas is expected to total 145 billion cubic meters to 150 billion cubic meters during this year’s winter heating season, which typically runs from November to March, said Sinopec, one of the country’s top suppliers. That would represent a rise of 5% to 8% from last winter, or about half the rate of increase for the 2018 heating season.
Supply of natural gas, on the other hand, is expected to total 143.8 billion cubic meters to 145 billion cubic meters — roughly the same as demand, the company said. The forecast growth in demand would be about half or less than the rates for 2017 and 2018, when consumption of natural gas grew 15.3% and 18.1% for the entire year, respectively.
Foreign capital /
U.S.-China capital war is a bad idea, former U.S. official says
Any attempt to limit U.S. investors’ portfolio inflows into China would risk reprisals and have “enormous unintended consequences,” according to Craig Phillips, a former top aide to Treasury Secretary Steven Mnuchin.
U.S. President Donald Trump’s administration was considering such restrictions in late September as the U.S.-China trade dispute deepened. Preventing private investors from holding Chinese securities would invite retaliation from China, Phillips said at the China Finance Association’s annual conference in New York.
Caixin Summit /
Lawrence Summers urges U.S., China to practice 'strategic reassurance' amid trade tensions
China and the United States should pursue mutual “strategic reassurance” and each should allow the other to achieve goals in its own way instead of trying to bring each other down, former U.S. Treasury Secretary Lawrence Summers told an annual Caixin Summit Saturday.
Summers further said the nations could address their trade disputes in a multilateral framework that would serve both countries' interests, rather than having the U.S. as “both prosecutor and judge.”
Quick hits /
China is likely to cap annual coal imports at 300 million tons
Former Indian central bank chief says final trade war deal might need a change of U.S. president
Caixin Summit: Trade war is hurting U.S., says ex-finance minister
Caixin Summit: Don’t abandon traditional industries while encouraging new technology, renowned
Caixin Summit: Dealing with stablecoins is like handling a monster, official says
BUSINESS & TECH
Rare earths /
China raises annual rare earths quota even as Trump disputes tariff rollbacks
China, the world’s largest producer of rare earths, set the elements' 2019 mining quota at 132,000 tons and smelting and separation quota at 127,000 tons, according to a Friday announcement from the Ministry of Industry and Information Technology. These represent 10% and 10.4% increases respectively from 2018 allotments.
This year’s announcement came three months later than last year’s quota reveal. On Thursday, the Ministry of Commerce said China and the U.S. agreed to roll back tariffs on each other’s goods in phases, raising expectations of an imminent deal. U.S. President Donald Trump later disputed that.
Two more Chinese companies settle for less in U.S. IPOs
Two more Chinese companies making IPOs on the Nasdaq raised significantly less than they hoped, signaling that investors are no longer content to sink money into rapidly growing, money-losing Chinese companies. The change hammered valuations as startups slash their IPO targets to adapt to the new environment.
36Kr Holdings Inc., a Beijing-based news and data provider, raised $20 million in its Friday debut. It finished the day down 10% after slashing its initial offering from 3.6 million to 1.4 million American depositary shares (ADSs) at $14.50 apiece, the low end of its indicative price range. On the same day, health and wellness product retailer Ecmoho Ltd. raised $44 million by offering 4.4 million ADSs at $10 apiece, falling short of its goal to raise $150 million.
Alibaba’s ‘Double 11’ shopping gala reaches new high as Hong Kong IPO looms
Don’t tell Alibaba’s much-hyped “Double 11” shopping extravaganza about China’s slowing economy. The company surpassed its 2018 one-day sales record of 213.5 billion yuan ($30.5 billion) less than 17 hours into the latest shopping fest.
Orders placed via Alipay on Alibaba’s e-commerce and services platforms, including overseas units Lazada and AliExpress, hit the 100 billion yuan ($14.3 billion) milestone less than 64 minutes after midnight, more than 40 minutes faster than last year. By 8 a.m., the figure had surpassed 150 billion yuan. The company's wishes came true around 5 p.m. when the new one-day sales record was announced.
‘Double 11’ spending boom comes at environmental cost, study warns
Tencent eyes U.S. gamers through deeper ties with Nintendo: Report
As Chinese authorities tighten domestic scrutiny over games with measures including a curfew for teenage players, Tencent is eyeing the U.S. market, where it has already acquired stakes in American studios like Epic Games and Activision Blizzard.
The partnership with Nintendo is part of Tencent’s plans to expand out of China. A Tencent official said the company wants to “create console games with Nintendo characters and learn the essence of making console games from Nintendo engineers,” the Wall Street Journal reported Sunday. Nintendo wants to leverage the Tencent tie-up to fast-track localization of its Switch games in China, where authorities remain vigilant about foreign-made titles.
Quick hits /
Government-backed report points finger at AI, foreign websites for spreading ‘misinformation’
How a high-performing rural school left rural kids behind
China mulls further electric-car subsidy cuts
Caixin Summit: China’s tech industry shows most innovation potential, but challenges loom, insiders say
Caixin Summit: How should China protect tigers and other wildlife?
After tiger show crackdown, can circuses change their stripes?
Tencent’s Pony Ma gallops back onto list of world’s best-performing CEOs
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