China emerges as construction powerhouse
PETER CAI BUSINESS SPECTATOR DECEMBER 12, 2014 11:31AM
CHINESE construction and engineering companies have emerged as major global players in recent years, overtaking their Western and Japanese rivals.
Indeed, Chinese companies account for five out of 10 top construction firms in the world by revenue, according to figures from International Construction Magazine,
China Communications Construction, which this morning paid $1.15 billion for Leighton Holdings’ John Holland unit, is the fifth largest builder in the world behind French engineering giant Vinci.
Listed on the Hong Kong and Shanghai stock exchanges it has a market capitalisation of approximately $23.5 billion.
However, the Chinese hold top three spots in the world. China State Construction and Engineering is the world’s largest builder.
Chinese companies have been expanding aggressively internationally in search of new opportunities as competition intensifies at home.
Though these companies have solid reputation for finishing big projects on time at home, some have experienced difficulties in operating project overseas and especially where they can’t bring in their own workers and engineers.
For example, China Metallurgical Group, the former contractor for CITIC Pacific’s disastrous Sino Iron Project in Western Australia significantly underestimated the cost of construction that played a major role in CITIC’s budget blowout.
The future prospect of Chinese contractors is likely to get a boost from Beijing’s new international economic strategy to spur more infrastructures investment in Southeast Asia and Central Asia.
Beijing has funded three new large multilateral financial institutions under Chinese leadership, with a combined money pool of $US240 billion: the New Development Bank, the Silk Road Infrastructure Fund and the Asia Infrastructure Investment Bank.
In 2012, Chinese contractors took the largest share of total global revenues, at 23.2 per cent or $US344 billion.
Banks lend surprisingly more in November
By Feng Jianmin | December 13, 2014, Saturday | Print Edition
CHINESE banks lent more than expected in November amid speculation that the central bank has decided to allow banks to lend more to boost the economy.
The banks’ new yuan loans totaled 852.7 billion yuan (US$137.8 billion) in November, up 228.1 billion yuan from the same month of last year, the People’s Bank of China said in a statement yesterday.
The loans were also above analysts’ hopes for 650 billion yuan, a Reuters poll said.
The PBOC said in the same online statement that China’s broad M2 money supply jumped 12.3 percent in November from a year ago, 0.3 percentage points slower than October and slightly less than expected.
The surprisingly higher lending last month indicated that monetary policies may remain accommodating as the PBOC has encouraged banks to expand lending, said China Securities Co analyst Wang Yang.
“We also notice an increase in bill financing, probably because banks are answering to the central bank’s call for easier credit,” Wang said.
There were market rumors that the PBOC has revised upward this year’s bank lending plan to 10 trillion yuan so that bank lending in December could still surpass 900 billion yuan.
Wang said the PBOC may cut reserve requirement ratio for banks this year, freeing up capital for lending, as the high-level Central Economic Work Conference meeting has decided that a stable economic growth remain a top priority for 2015.
Yesterday’s data also showed that total social financing, the broadest measure of credit supply, including loans, bank acceptance bills, corporate bonds and equity financing, totaled 1.15 trillion yuan last month, up sharply from October’s 662.7 billion yuan.
One observation to share...
China financial firms seek control deals in outbound M&A
HONG KONG - Chinese financial firms are targeting purchases of distressed banking assets coming on the market in Europe, having been urged by Beijing to expand their reach beyond emerging markets.
The first Chinese purchase of a European investment bank was announced this week, with Haitong Securities agreeing to pay 379 million euros ($470 million) for an investment bank in austerity hit Portugal.
Banco Espirito Santo de Investimento SA (BESI) is being sold by Novo Banco, the bank carved out of Banco Espirito Santo after it was rescued in August..
For China's second largest brokerage it's a modest-sized deal, equivalent to just 1.5 percent of Haitong's market value. But it demonstrates the changing character of acquisitions by Chinese financial firms.
These days they mostly seek controlling stakes, and now they are scouting Europe for opportunities, avoiding anything too big.
...
http://www.todayonline.com/business/chin...utbound-ma
China seems to be out to "buy up" the world using locally issued debt. Looks like some sort of financial warfare. Impoverished Western economies seem to be enjoying it though at the moment.
It would be dangerous to issue local debt and pay US$... it is a fundamental mismatch not only on the purchaser point of view but also increase burden on the central bank and implicit moral hazard if too big too fail.
But I haven't seen that yet unlike 1990s Japanese buying frenzy.
(15-12-2014, 12:24 PM)specuvestor Wrote: [ -> ]It would be dangerous to issue local debt and pay US$... it is a fundamental mismatch not only on the purchaser point of view but also increase burden on the central bank and implicit moral hazard if too big too fail.
But I haven't seen that yet unlike 1990s Japanese buying frenzy.
It does look like they are trying to get fund by doing IPOs on the HKSE also. Dalian Wanda Commercial Properties Co looks to be listing on HKSE to raise even more funds for international developments and purchase. They are now aiming for australian Hoyts cinema chain and US Lionsgate and MGM studios.
Some recent big ticket deals in progress that me knows about..
- Bank of China is purchasing a Manhattan office tower for a sum said to approach $600 million.
- Ping An Insurance has submitted a bid for The Squaire Germany ~$1 billion, Germany’s largest office building
- Taikang Life joined with Hong Kong-based private equity firm Gaw Capital Partners to submit a GBP 200 million ($313 million) joint bid for Milton Gate in London’s financial district
- Waldorf Astoria in Manhattan, for $1.95 billion to Anbang Insurance Group Co. of China
Could it be the start of buying frenzy? Looks like history likely to repeat again?
Why Beijing’s Troubles Could Get a Lot Worse
Bank rate cuts and anticorruption campaign are unlikely to stave off woes, says Anne Stevenson-Yang.
ByJonathan R. LaingDecember 6, 2014
Few foreigners know China as intimately as Anne Stevenson-Yang does. She has spent the bulk of her professional life there since first arriving in 1985, working as a journalist, magazine publisher, and software executive, with stints in between heading up the U.S. Information Technology office and the China operations of the U.S.-China Business Council. She’s now research director of J Capital, an outfit that works for foreign investors in China doing fundamental research on local companies and tracking macroeconomic developments.
Among other things, J Capital conducts trips for hedge fund managers, U.S. corporate executives, and bankers all over the Middle Kingdom, relying on Stevenson-Yang’s roster of government officials, Communist Party leaders, financiers, small- business operators, and ordinary citizens to take the pulse of economic and political developments.
Read More Here...
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Long Read but pretty good article for inside story to China..
More FTZs for China. It is more than market expected.
Three new FTZs to test market
China is to launch three pilot free trade zones to test greater opening up, a government meeting decided on Friday.
The new FTZs will be set up in coastal provincial areas of Guangdong, Fujian and Tianjin, the executive meeting of China's State Council decided, a year after it set up the pioneering China (Shanghai) Pilot Free Trade Zone.
The three areas will take on what are considered the boldest reform initiatives in decades - those now being applied in the Shanghai FTZ. They will be able to adopt "new reform trials that fit into local characteristics".
Experts said that by taking on Shanghai's trial, the new zones will be able to enjoy easier market access for foreign companies and more financial opening. Previously, the Shanghai FTZ has slashed the so-called negative list by 26.8 percent to 139 areas in July. The negative list is a list that names areas and circumstances where foreign investors are barred. Among the current 139 listed areas, 29 are fully prohibited while the rest are under conditional restriction.
Friday's meeting said the Shanghai FTZ has formed "replicable reform experiences" since its launch a year ago, and the central government has decided to "expand the trial to a greater scope to promote opening-up".
Some 12,000 firms have been established in the Shanghai FTZ since its launch in late September last year. Foreign trade in the zone reached 747.5 billion yuan ($122.25 billion) in its first year of operation, according to Xinhua.
zhaoyinan@chinadaily.com.cn
http://usa.chinadaily.com.cn/china/2014-...076652.htm
I’d be shocked if China is currently growing at a rate above, say, 4%, and any growth at all is coming from financial services, which ultimately depend on sustained growth in the rest of the economy. Think about it: Property sales are in decline, steel production is falling, commercial long-and short-haul vehicle sales are continuing to implode, and much of the growth in GDP is coming from huge rises in inventories across the economy. We track the 400 Chinese consumer companies listed on the Shanghai and Shenzhen stock markets, and in the third quarter, their gross revenues fell 4% from a year ago. This is hardly a vibrant economy.
Why Beijing’s Troubles Could Get a Lot Worse
http://online.barrons.com/articles/anne-...1417846773
Infrastructure projects, will continue to the key driver for growth...
China said to accelerate US$1 trillion in projects to spur growth
BEIJING (Jan 6): China is accelerating 300 infrastructure projects valued at seven trillion yuan (US$1.1 trillion) this year as policy makers seek to shore up growth that’s in danger of slipping below seven percent.
Premier Li Keqiang's government approved the projects as part of a broader 400-venture, 10 trillion yuan plan to run from late 2014 through 2016, said people familiar with the matter who asked not to be identified as the decision wasn’t public.
The National Development and Reform Commission, which will oversee the projects, didn’t respond to a faxed request for comment.
The move illustrates concern among officials that China’s planned shift to a domestic-consumption driven economy has yet to produce enough growth momentum.
...
http://www.theedgemarkets.com/sg/article...pur-growth