China Economic News

[Behappyalways]

Fund Used to Bailout Stock Markets Lose 12 percent in Value
http://english.caixin.com/2016-04-29/100938512.html

[Behappyalways]

China's Coming Bank Bailout
http://www.bloomberg.com/gadfly/articles...-a-bailout

[gzbkel]

Quite heavy handed I think.

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China ordering investment firms, online lenders to shut offices to head off social unrest

[SHANGHAI] China's authorities, seeking to forestall potential social unrest due to growing failures of investment firms and online lenders, are ordering many to break leases and close their storefronts on busy streets - lest they become magnets for protesters.
[...]
http://www.businesstimes.com.sg/governme...off-social

[Behappyalways]

China Presses Economists to Brighten Their Outlooks

https://www.gfmag.com/topics/syndicate/3...r-outlooks

[BlueKelah]

Quite heavy handed I think.

---
China ordering investment firms, online lenders to shut offices to head off social unrest

[SHANGHAI] China's authorities, seeking to forestall potential social unrest due to growing failures of investment firms and online lenders, are ordering many to break leases and close their storefronts on busy streets - lest they become magnets for protesters.
[...]
http://www.businesstimes.com.sg/governme...off-social

wow pretty drastic, i thought their property market was going up and up and up??

this probably is just the surface of what's really happening on "main street" in china. I reckon there are many online lender and investment firms which are Ponzi types. Widespread defaults would be interesting to watch.

[CityFarmer]

The debt-insurer in China. Why JP is confident on the company, even after a lesson in US just years ago?

The junk-rated, JPMorgan-owned China bond insurer growing at 40%

BEIJING (May 5): For most of the world’s bond insurers, a junk credit rating would be a devastating blow. Selling promises to pay someone else’s debt is a whole lot harder when your own financial strength is in doubt.

Unless, that is, you’re in China.

As the country’s bond insurance industry grows at a record pace, not even a cut to junk by Moody’s Investors Service has been able to stop the expansion of China United SME Guarantee Corp, a top-five debt insurer whose shareholders include JPMorgan Chase & Co and Siemens AG. United SME says the April 7 downgrade had virtually no impact on its onshore business, which surged by as much as 40% in the first quarter.
...
http://www.theedgemarkets.com/sg/article...growing-40

[BlueKelah]

The debt-insurer in China. Why JP is confident on the company, even after a lesson in US just years ago?

The junk-rated, JPMorgan-owned China bond insurer growing at 40%

BEIJING (May 5): For most of the world’s bond insurers, a junk credit rating would be a devastating blow. Selling promises to pay someone else’s debt is a whole lot harder when your own financial strength is in doubt.

Unless, that is, you’re in China.

As the country’s bond insurance industry grows at a record pace, not even a cut to junk by Moody’s Investors Service has been able to stop the expansion of China United SME Guarantee Corp, a top-five debt insurer whose shareholders include JPMorgan Chase & Co and Siemens AG. United SME says the April 7 downgrade had virtually no impact on its onshore business, which surged by as much as 40% in the first quarter.
...
http://www.theedgemarkets.com/sg/article...growing-40

Reckon its due to the lure of how much profit they can get from doing it. With negative interest rates and what not across most of the developed world, there has to be somewhere for all the excess liquidity to go to get a higher return no matter how risky it is. They may be overconfident of a government bailout in case anything bad happen??

Some people just don't learn from history.

[specuvestor]

^^ maybe they did learn from history. They learnt that they take the upside and not liable for the downside.

[CityFarmer]

^^ maybe they did learn from history. They learnt that they take the upside and not liable for the downside.

I like the statement. May be interesting to find out more on the debt insurer biz model, likely very different from peers outside China.

[BlueKelah]

CLSA Sees China Bad-Loan Epidemic With $1 Trillion of Losses

Chinese banks’ bad loans are at least nine times bigger than official numbers indicate, an “epidemic” that points to potential losses of more than $1 trillion, according to an assessment by brokerage CLSA Ltd.
Nonperforming loans stood at 15 percent to 19 percent of outstanding credit last year, Francis Cheung, the firm’s head of China and Hong Kong strategy, said in Hong Kong on Friday. That compares with the official 1.67 percent.
Potential losses could range from 6.9 trillion yuan ($1.1 trillion) to 9.1 trillion yuan, according to a report by the brokerage. The estimates are based on public data on listed companies’ debt-servicing abilities and make assumptions about potential recovery rates for bad loans.

QuickTake China's Pain Points
Cheung’s assessment adds to warnings from hedge-fund manager Kyle Bass, Autonomous Research analyst Charlene Chu and the International Monetary Fund on China’s likely levels of troubled credit. The IMF said last month that the nation may have $1.3 trillion of risky loans, with potential losses equivalent to 7 percent of gross domestic product.
‘Shadow Banking’
CLSA estimates bad credit in shadow banking -- a category including banks’ off-balance-sheet lending such as entrusted loans and trust loans -- could amount to 4.6 trillion yuan and yield a loss of 2.8 trillion yuan.
CLSA cites a diminishing economic return on stimulus pumped into the economy as among the reasons for a worsening outlook, with Cheung saying at a briefing that bad loans had the potential to rise to 20 percent to 25 percent.

“China’s banking system has reached a point where it needs a comprehensive solution for the bad-debt problem, but there is no plan yet,” he said in the report.
In one initiative, the government may let banks convert some bad loans into equity, a tool used to bail out the banking system and state-owned enterprises in the 1990s. IMF staff are among those to have warned that such a move could backfire by lending support to debt-laden “zombie” companies that should be allowed to fail.

Including “special mention” loans, where repayment is at risk but the debt is yet to be classified as nonperforming, China’s troubled loans stood at about 5.5 percent of outstanding credit at the end of last year, according to official data.