Financial

Issuers return to ‘dim sum’ bond market

In recent weeks, a handful of multinational corporations have tapped the offshore ‘dim sum’ bond market in Hong Kong even despite tightening liquidity, rising funding costs. The return of international issuers also comes in spite of concerns that slower renminbi appreciation will weigh on investor appetite. We think that this steady supply by foreign issuers is not surprising: for multinationals with mainland subsidiaries, it is still much more cost-effective to raise renminbi offshore than to borrow from onshore banks.

  • 15 February 2012

Beijing confirms bank loan roll over, Wuhu reverses property gambit

China has instructed its banks to roll over loans to local governments, confirming an effective bailout of Local Government Financial Vehicle (LGFV) debt that has been underway since at least November last year (CC Nov 3 2011 Financial China). The confirmation, reported by the Financial Times today, provides some context to Premier Wen Jiabao’s comment yesterday that Beijing will “fine-tune” its economic policy this year. We think the fine-tuning will mainly come in the shape of a further loosening in liquidity policy.

  • 13 February 2012

January new loans lower than expected

New loans extended by Chinese banks in January totalled Rmb 738.1bn, down from Rmb 1,026bn in January last year and undershooting market expectations that new loans would come in at above Rmb 1tn for the month. We think the lower than expected loan growth is largely due to the Chinese New Year holiday, which fell in January this year but in February in 2011, damping commercial activity for around a week at the end of the month. In our view, the slower loan growth may point to weakening investment activity and slightly slowing growth but does not signify a sharp slowdown.

  • 10 February 2012

Liquidity loosening underway to forestall defaults

The authorities have begun 2012 by showing an intent to keep defaults to a minimum in both property and LGFV segments to avoid systemic risk.

  • 09 February 2012

Selected financial charts

A selection of key financial data for February.

  • 09 February 2012

CC Funds - Currency swaps are lure for 'dim sum' issuers

More and more foreign issuers are expected to tap the offshore renminbi (CNH) 'dim sum' bond market this year thanks in part to favourable rates in Hong Kong's rapidly-growing cross-currency swap market. We believe that issuance by foreign issuers will be strong if liquidity in both these markets continues to grow, and US$/CNH cross-currency swap rates continue to rise faster than 'dim sum' bond yields.

  • 07 February 2012

China's GDP figures suggest further liquidity easing

China's 4Q11 GDP growth rate of 8.9%, down from 9.1% in 3Q11, shows a slowing economy that is more resilient than many have expected. However, we think that clear signs of a slowdown in fixed asset investment is likely to spur progressive liquidity easing in 1H12.

  • 17 January 2012

Fall in China forex reserves adds pressure for liquidity easing

Data from the People's Bank of China (PBOC) published today shows a $20.6bn, or 0.6 %, fall in China's official foreign exchange reserves which slipped to $3.18tn in 4Q11. A fall in reserves in both November and December represents the first consecutive monthly fall since the first quarter of 2009. We think the figures show continued outflows of "hot money" and raise pressures for a further easing in domestic liquidity.

  • 13 January 2012

Selected financial charts

A selection of key financial data.

  • 12 January 2012

Default risks goad Beijing into loosening curbs

During 2012 authorities are set to relax restrictions they have imposed on bank support for local government financing vehicles (LGFVs) and on the property market because the rising risk of defaults among LGFV and trust companies will oblige Beijing into a softer stance. Some aspects of this predicted relaxation may be announced and some, such as a few recent initiatives, may be communicated through largely confidential “window guidance” from regulators to financial institutions.

  • 12 January 2012

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