2017-06-25

Who Gets Dongbei Steel?

EO: 东北特钢关键一周:破产可能性不大,谁会最终接盘?
Northeast special steel time is running out.

July 10, is the Northeast Special Steel Group and the bankruptcy administrator to Dalian Intermediate People's Court to apply for a second extension of the draft deadline for submission of reorganization plan.

According to Article 79 of the Bankruptcy Law, the debtor or the manager shall submit the draft of the reorganization plan to the people 's court and the creditors' meeting within six months from the date when the people 's court determines the debtor' s reorganization. If the prescribed period expires, the people 's court may adjudicate for a period of three months if the debtor or the manager requests and has justifiable reasons. Where the debtor or the administrator fails to submit the draft plan for reorganization, the people 's court shall decide to terminate the reorganization procedure and declare the debtor bankrupt.

On July 10, it was the law that allowed the final deadline for the reorganization of the Northeast Special Steel.

From October 10, 2016 to July 10, 2017, a total of 273 days, which is the process of the Northeast special steel reorganization cycle. During this period, around the reorganization, the parties to the Northeast Special Steel and strategic investors and many creditors negotiations stalemate.

Inside the Northeast Special Steel, on the strategic investors, that is, the reorganization of the acquisition of who is who, has been rumors constantly.

On 21 June, an unnamed person from the subsidiary of the Northeast Special Steel Company told the Economic Observer that since the end of last year, the Anshan Iron and Steel Group and the Northeast Special Steel have been in constant contact with each other during this period. Anshan Iron and Steel can pick up the rumors of the Northeast Special Steel.

The company where the people, during this period with a total of two positive contact with Anshan Iron and Steel, respectively, the Northeast Iron and Steel Company of the assets of the assessment and audit. The person reported to the Economic Observer, in addition to Anshan Iron and Steel, there is no other intention to investors at the level of the subsidiary had a similar contact.

Top or Not? Chinese Media Discuss Housing

The PBoC second quarter depositor survey is being cited as evidence the buying restrictions aren't dampening demand. (Coverage of survey here.)
iFeng: 史上最严调控浇灭买房人的热情?央妈给出意外答案

A separate article says the turn in first- and second-tier cities is clear.
"As the current market trading volume in the overall low level, can basically determine the June market transactions compared to May basically flat, narrow range." Yan Yue Jin that the recent part of the city for the control policy began to "patch ", Which will be the corresponding urban housing transactions in different directions, varying degrees of impact.

"The country has more than 36 cities 'limited sales', is becoming the current local market regulation and control of new ideas, has also become the round from March to start the national multi-city regulation and control of new features. There are more cities in the future will be implemented" Zhang Dawei told reporters, "inventory data has been a 21-month low, is expected in 2017 the real estate market is difficult to optimistic in the whole year, especially in the third quarter of the year," Zhang Dawei told reporters that the new control measures, a certain period of time limit transfer, can effectively reduce speculation. The traditional off - season will appear more obvious cooling performance.
iFeng: 一二线城市楼市量价双跌“拐点”初现

Some developers are back to using stealth price increases via charges for decorating and furnishing a new apartment.
However, in some places the limit is not true price. Recently reported that there have been some developers in Guangzhou through the "double contract" to circumvent the government limit policy, making house prices down, not only significantly increased the proportion of buyers down payment, but also makes the net sign price and the actual sales price Far away, leading to distortion of official data on primary housing prices.

The so-called "double contract" is two contracts, one is required to sign the purchase contract, the other is the decoration contract, the amount of the two contracts together is the total purchase price, and decoration contract amount can not be loan, The down payment in the purchase contract is paid together. This practice in 2013 that round of property market regulation in the more, then the local government introduced a regulatory policy to put an end to this phenomenon.

At present, Beijing, Shanghai, Nanjing and other cities limit the price effect is obvious, the market has cooled. As a result of strict regulatory policy, housing sales are more formal, there is no "double contract" phenomenon, so the net sign price can more accurately reflect the actual transaction price. However, in some second-tier cities and three or four lines of the city, "double contract" phenomenon is not uncommon, in addition to bundled with the construction or fine decoration, even more simply net sign a price, the actual sales is another price.
iFeng: 二三线城市双合同致房价明降暗升 地方监管应动真格

SOEs Inflating Profits

SCMP: Audit report reveals China’s economic fault lines
An official audit report published on Friday said that 18 of the 20 state-owned firms that were audited have in recent years inflated their revenues by more than 200 billion yuan (US$29 billion) and boosted their profits by 20 billion yuan with faked business and manipulated books.

The companies audited include China National Petroleum Corporation, China State Shipbuilding Corporation and Sinochem Group.
Much of China’s spectacular growth has been fuelled by lending.

Lu Zhengwei, chief economist from Industrial Bank, said that although the fake profits only accounted for a small proportion of total takings at the country’s state-owned entities – less than 2 per cent – it showed the problems they had deleveraging.

2017-06-23

Beijing Has Mortgage Lending Standard: 25pc Total Lending

Mortgages only accounted for 28 percent of new lending in May, a new all-time low. Banks have a minimum standard of 25 percent. Since mortgages are 28 percent through May, they'll have to fall to 21 percent for the rest of the year. The lending standard could also crush credit growth rates.
At the end of May, individual housing loans increased by 90.76 billion yuan compared with the beginning of the year . The proportion of newly added loans was 28% , which was lower than that in the first quarter of 2017 (37.6%) and 2016 (47%), down 9.3 and 18.7 percentage points, trending towards a reasonable ratio.
According to the report, Beijing banks have a target for mortgage lending: 25 percent of new lending. Since the ratio is 28 percent at the end of May, it requires a decline to 21 percent in the rest of 2017.

From January 2017 onwards, the People's Bank of Operations in the MPA assessment to further highlight the credit policy-oriented effect assessment, in accordance with the macro-prudential requirements, to join the individual purchase loan growth factor, the Beijing area of ​​all banks strict control of individual purchase loans Accounting for the proportion of all new loans, and the annual control target is determined to be about 25% of the reasonable level.

From the implementation of the situation, the first quarter of 2017 new personal purchase loans accounted for 36.1% of all new loans fell sharply from the fourth quarter of 2016 proportion of 67.4%, down about 31 percentage points. Especially as the main bank in Beijing, the main bank more obvious: ICBC Beijing Branch fell to 24%, Construction Bank Beijing Branch fell to 29%, Bank of China Beijing Branch fell to 15%, Agricultural Bank of China branch in Beijing fell to 35% , China Merchants Bank Beijing branch fell to 23%.

From these two words can be found, the Beijing area for the new mortgage accounted for the minimum standard control at 25%.

According to the May data, the current Beijing new mortgage accounted for 28%, if you want to reach 25% level, what will happen next?

According to the previous year lending of 605.9 billion yuan, and a 10% new loans growth rate, we estimate that in 2017 Beijing new loans may reach about 660 billion. 25% of that is 165 billion, that is, Beijing's new mortgage size to control the level of 165 billion or so.

The first five months, Beijing banks have issued 90.7 billion housing loans, then that is, the next 7 months left 165 billion -90.7 billion = 74.3 billion or so the amount of loans.

Just to say, if the remaining 7 months to 2016 all new loans for the base calculation, according to 10% growth rate, then all the loans may also be issued about 340 billion.

In this case, 74 billion (74.3 billion) accounted for only 21.7% of the 340 billion, that is, if the future to achieve 25% of the new housing loans accounted for the target, the remaining 7 months, the proportion of mortgages in total lending can not exceed 21%.

To know that the 25% threshold can be said to be a minimum standard, if more than expected, then the future does not rule out the individual months of the new mortgage accounted for less than 15%, or even lower.
Beijing lending was 324 billion in the first five months. Plus 340 billion for the rest of the year comes to 664 billion. However, what if banks can't offset the decline in mortgage lending? We'll find out very soon if there are other borrowers prepared to step in to the gap created by the slowdown in mortgage lending.


iFeng: 楼市传来大消息:房贷数据创新低 房价受影响大

2017-06-22

China Chooses Deflation, For Now

Bloomberg: China's Banking Regulator Seeks Details of Wanda, Fosun, HNA Loans
The China Banking Regulatory Commission asked some banks to provide information on overseas loans made to Dalian Wanda Group Co., Anbang Insurance Group Co., HNA Group Co., Fosun International Inc. and the owner of Italian soccer team AC Milan, according to people familiar with the matter.

The inquiries, which come a week after reports of an investigation into Anbang’s chairman, are likely to put a further chill on China’s outbound takeovers after tighter capital controls cut deal activity this year by 56 percent from the same period in 2016. By targeting some of the country’s most powerful tycoons, Xi Jinping’s government may be sending a signal of its commitment to cleaning up the financial system before a key Communist Party leadership reshuffle later this year.

“We are now in an environment where preventing financial risks is lifted as the top priority, so I think the regulators are trying to gauge the total exposure,” said Wei Hou, a Hong Kong-based analyst at Sanford C. Bernstein. “Regulators must have seen some red flags.”

...Shares of billionaire Guo Guangchang’s Fosun and related companies tumbled in Hong Kong, mirroring a similar rout at units of Wanda. Fosun International fell as much as 9.6 percent, while Shanghai Fosun Pharmaceutical Group Co.’s dropped as much as 7.8 percent.

Wanda Film Holding Co. tumbled as much as 10 percent in Shenzhen, its biggest loss since January 2016, before its shares were suspended from trading. Wanda Properties International Co.’s 2024 notes plunged as much as 10.7 cents on the dollar to 101 cents in morning trading in Hong Kong, the biggest drop on record, according to Bloomberg-compiled data.

“I don’t think it’s the right time to invest or buy into these companies,” said Alex Wong, a director of asset management at Ample Capital Ltd. in Hong Kong. “Sometimes this kind of event can accelerate very quickly.”
The ChiNext fell 1.44 percent on the day, all of it in afternoon trading following the news.

2017-06-21

Will China Run out of Reserve? What's Your DXY Target?

CFR: China Isn’t Going to Run Out of Reserves Anytime Soon
At the same time, I think the evidence continues to mount that the scale of outflows is significantly a function of expectations—so the best way to limit outflows is simply to hold the exchange rate stable for an extended period of time (technical note: China has an ongoing current account surplus, so stable reserves imply ongoing outflows at a modest pace).
China merely provides the fundamental backdrop. This is entirely a story about the U.S. dollar. If the U.S. dollar declines, then China dodges a bullet. Global credit growth will revive, global economic growth will follow, the U.S. dollar will decline. If instead credit growth remains tight, global economic growth will disappoint, and the U.S. dollar will rally.

23.1pc of Depositors Plan to Buy Home in Next 3 Months, New High

The PBoC Q@ surveys are out. Depositor sentiment declined slightly from Q1. The number the press locked onto was 23.1 percent of depositors saying they plan to buy a house in the next three months. It was the highest total ever recorded.

The question asked was: do you have any big spending plans in the next 3 months? Respondents could choose more than one. Travel was tops at 33.6 percent, education 26.2 percent, healthcare 23.6, big consumer item 23.3, house 23.1, entertainment 18.3, insurance 14.6.

iFeng: 央行:23.1%居民准备未来3个月买房 比例创新高
PBoC Depositor Survey: 2017 年第二季度城镇储户问卷调查报告 (pdf)

The banker survey shows bankers more confident about the macro economy, but the only time they were less pleased with monetary policy was in 2011.

Banker Survey: 2017年第二季度银行家问卷调查报告 (pdf)

Entrepreneur confidence is at its highest level since the first quarter of 2014. The foreign and domestic orders index crossed 50 percent, the first time in at least 3 years. The last time these were well above 50 percent was in 2011.
Entrepreneur survey: 2017年第二季度企业家问卷调查报告 (pdf)

2017-06-20

MSCI Adds China to EM Index at 0.7pc

Marketwatch: MSCI to add 222 China A shares in emerging-markets index
The move, which was widely anticipated, could trigger an inflow of as much as $210 billion into China’s equities over the next five years, according to Goldman Sachs.

“This is a significant and highly symbolic recognition of China’s importance to the global economy, and a big vote of confidence in the Chinese growth story from MSCI and its clients,” said Danny Dolan, managing director of China Post Global, in emailed comments.

Even so, the immediate impact on the Chinese stock market from portfolio rebalancing following MSCI’s announcement is likely to be muted, according to Capital Economics.

“What’s more, a steady increase in the inclusion of A-shares in the MSCI Emerging Markets Index will probably only happen if China continues to liberalize her financial markets, including granting greater access to foreign investors and addressing fears over capital controls,” said John Higgins, an economist at Capital Economics, in a note.