It’s been a blistering summer so far, but housing prices in the Greater Bay Area’s three biggest cities have been cool. In Hong Kong, there are no points for guessing why recent home sales have seen developers cut prices, while even the secondary markethas seen weakness, and the outlook appears bleak. Guangzhou and Shenzhen, meanwhile, are treading water as the central government has maintained its stance that “housing is for living not for speculation”.Continue reading Housing in big cities stays cool
China’s closely followed rankings of trading cities has four out of the top to from the Greater Bay Area. Shenzhen is No. 1, followed by Shanghai, Dongguan, Suzhou, Zhuhai, Xiamen, Guangzhou, Ningbo, Tianjin and Beijing.
Moreover, Dongguan is closing the gap on Shanghai, according to the, published by the General Administration of Customs of China. Zhuhai, meanwhile, jumped two positions from last year’s list. Driving this has been both cities designation as pilot zones for cross-border e-commerce. Zhuhai’s adoption was the most aggressive – perhaps due to its proximity to neighboring Macau. Last year, Zhuhai had cross-border e-commerce between January and June this year worth RMB220 million, up more than 26 times YoY.
Chinese media were awash with glowing reports yesterday trumpeting a milestone in the Fortune 500 global rankings. For the first time, there are more Chinese companies on the list than American: 129 to 121. What we find most interesting on the list is the presence of 20 companies from the Greater Bay Area.
Below is a snapshot of how Chinese companies grew on the Fortune 500 over the past 20 years.Continue reading 20 GBA firms in Fortune 500
Foreign shareholding limitations are being scrapped in securities, asset management and futures firms by next year, a year ahead of schedule, according to the Financial Stability and Development Commission.
Only those who haven’t been paying enough attention, or who don’t subscribe to insightful newsletters, should be surprised by the announcement of 11 reform measures pledging to allow foreign capital access to more sectors including bond markets, insurance, asset management and pension funds.Continue reading Financial opening accelerated
With the central bank issuing RMB2 billionin RMB-dominated treasury bonds in Macau for the first time today, market participants have high hopes for future development. Chongwa (Macau) Financial Asset Exchange Company (MOX), the first bond management and exchange platform in Macau, has signed a cooperation memo with China Central Depository and Clearing Company (CCDC) to promote the interconnection of their respective bond markets.
This memo mainly focuses on the construction of a distribution system and other infrastructure development. Earlier last month, Macau was said to be considering launching a yuan-based stock market but no further details have been announced.
Readmore in Chinese.
The meeting with US President Donald Trump has not yet taken place. But President Xi Jinping took his opportunity at the G20 summit today to lay out China’s commitment to the next round of its Opening and Reform program, pledging five major initiatives. According to a release from the People’s Daily, these included:
- Further opening
We are about to release a 2019 edition of the negative list of foreign investment to further expand the opening of agriculture, mining, manufacturing and service industries. Six new free trade pilot zones will be established, and an additional new section in the Shanghai Free Trade Zone, while we will accelerate the process of building a free trade port in Hainan.
- Expand imports
We will further proactively reduce tariffs, work hard to eliminate trade barriers, and drastically reduce the intermediary costs for imports. We will continue to host the second edition of the China International Import Expo.
- Improve business environment
We will implement a new foreign investment law on January 1 next year, introduce a punitive damage compensation system, enhance the civil and criminal protection, and improve the protection of intellectual property.
- Equal treatment for all
We will completely remove the restrictions on foreign investment access outside the negative list. We will treat all registered companies in China equally, establish and improve complaint mechanisms for foreign-funded enterprises.
- Promote economic and trade relations
We will push forward a regional comprehensive economic partnership agreement, accelerate the negotiation of China-EU investment agreements and the China-Japan-Korea Free Trade Agreement. Read more.
After its success distributing Beyond Meat Inc.’s mock beef patties in Asia, Hong Kong-based start-up Green Monday has a new food challenge: convince Chinese consumers to try its lab-grown meatless pork, reports DealStreetAsia.
Company founder David Yeung sees demand for meatless pork from China’s increasingly sophisticated, health-conscious and globalized young consumer pool – the coffee-slurpers, in other words. Green Monday currently sells its meatless pork in Hong Kong, Singapore, Taiwan and the Philippines.
The company says it’s in late-stage discussions with e-commerce platforms and big restaurant and supermarket chains to stock its meatless pork in China by the end of this year. Its first partnerships in China will be with companies it already works with in other Asian markets, like hotel chain Hyatt and Walt Disney Co. Read more.
As a price war intensifies among banks competing to offer loans to small businesses, the central bank said that it will encourage large banks to provide more support for smaller companies that have yet to borrow money from financial institutions, reports Caixin Global.
The country’s five biggest state-owned banks (ICBC, Agricultural Bank, Construction Bank, Bank of China and Bank of Communications) expanded their lending to small businesses – defined as companies with total credit lines under RMB10 million ($1.5 million) – by at least 30% this year. In the first five months this year, the average interest rate of the loans the banks issued to small businesses was 4.79%, down 0.65 percentage points from last year’s average.
Last week, Guangdong announcedthat it will ensure at least RMB45 billion in low-interest loans are made available via the provincial brand of Bank of China to help fund the growth of small and micro enterprises (SMEs). Readmore.
Investors pushed up stock markets worldwide over the past 24 hours on renewed hopesfor a high-level breakthrough in US-China relations. This followed news that Presidents Trump and Xi had a phone call yesterday, initiated by the White House, and that they plan to meet at the G20 meeting in Japan at the end of the month.
Smart people who obviously don’t invest very well, such as ourselves and other China analysts we know, are unlikely to be moved by the news. The US-China relationship is deteriorating inexorably due to a wide range of factors and influences, many of which are undoubtedly “civilizational” – to use the word the way the late Samuel P. Huntington would have wanted it used – and which are highly unlikely to be resolved by the two leaders when they meet in Japan.
Nevertheless, the markets may be right to assume that Trump will call off the attack dogs on Huawei, or ease some of the tariffs that are hurting both countries, regardless of what Xi says to him at the G20. We will just have to wait and see.
What is becoming clearer, however, from where we sit, is that it is starting to matter less to China whether Trump announces a deal or doesn’t, because China is far better placed to handle the fallout of the trade war than vice versa. It is not just due to Ren Zhengfei’s confidence. It can be seen by the rapidly expanding line of companies outside the Oval Office’s door, asking for relief from the tariffs; the volatility and the relative importance to the economy of the US stock market versus China’s; and research showing that American consumers will likely have to scrape together another US$2,000 each annually as prices start to rise at Walmart and Amazon – in a country where 40% of citizens say they cannot afford a US$400 medical emergency bill.
By contrast, Chinese consumers are showing no signs of lagging, a year after the trade war began, while a new investment splurge is well under way – especially in 5G and high-speed trains – that will stimulate the economy well enough for the next decade to manage the shock loss of foreign demand for China’s traditional export-oriented manufacturers. China’s debt worries? Being dealt with, and something to worry about later, in any case, not right now, which is where we are focused.
This is not about picking sides in a fight; it is about seeing how the fight is shaping up. To us, it seems to be shaping up relatively well for China, and it seems like there is real cause for optimism about the country as an investment destination, as it continues to open its markets further to foreign participation. We still haven’t seen the worst impact of the most recent US tariffs show up in China’s trade statistics, for sure. But if we were betting people, we would be betting now that getting a deal done in Japan is far less important to President Xi than it is to his comrade in the White House.
A memorandum of understanding signed by Hong Kong and mainland authorities will allow the city’s regulator to gain access to audit papers on the mainland. This marks a step toward resolving a long-running tussle between the mainland and overseas regulators on inspecting the audit work conducted on foreign-listed Chinese companies, reports Caixin Global.
In the future, the Hong Kong Financial Reporting Council will be able to make requests to the mainland regulator for assistance in gaining access to audit working papers of Hong Kong audit firms located on the mainland, according to the accord.