China’s efforts to restrain cryptocurrency trading and mining are adding to the wild moves in bitcoin and other markets, the Wall Street Journal reported. Already down hard from records set this year, bitcoin and other digital currencies sold off sharply last week after Chinese authorities renewed pressure on the country’s banks and payment companies to curb cryptocurrency-related transactions. Markets stumbled again after a powerful superregulator chaired by Vice Premier Liu He pledged to crack down on bitcoin mining and trading.
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China’s repo market shows just how risky China Huarong Asset Management Co.’s bonds are perceived to be within the mainland, despite being majority-owned by the finance ministry, Bloomberg News reported. Borrowers putting up a Huarong Securities 2023 bond for collateral now get just 40% of the note’s face value as cash, down from 91% at the start of April, according to China Securities Depository and Clearing Corp. data. The decline in effective value illustrates the stunning loss of confidence in a company that’s crucial to China’s banking system.
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Even by the standards of a record-breaking global credit binge, China’s corporate bond tab stands out: $1.3 trillion of domestic debt payable in the next 12 months, Bloomberg News reported. That’s 30% more than what U.S. companies owe, 63% more than in all of Europe and enough money to buy Tesla Inc. twice over. What’s more, it’s all coming due at a time when Chinese borrowers are defaulting on onshore debt at an unprecedented pace. The combination has investors bracing for another turbulent stretch for the world’s second-largest credit market.
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A cyberattack on Ireland’s health system has paralyzed the country’s health services for a week, cutting off access to patient records, delaying Covid-19 testing, and forcing cancellations of medical appointments, the New York Times reported. Using ransomware, which is malware that encrypts a victims’ data until they pay a ransom, the people behind the attack have been holding hostage the data at Ireland’s publicly funded health care system, the Health Service Executive. The attack forced the H.S.E. to shut down its entire information technology system.
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Concern over China Huarong Asset Management Co.’s financial health is deepening among domestic investors, threatening to worsen a selloff offshore, Bloomberg News reported. The firm’s thinly traded 19 billion yuan note due 2022 fell 12% to 70.2 yuan on Thursday, according to Bloomberg-compiled data, while its 3.54% domestic bond maturing in November dropped 24% to 75.3 yuan, both on pace for record lows. The company’s dollar bonds also declined, with a 3.75% bond due 2022 falling 5.5 cents on the dollar to 73.6 cents, its weakest level in more than a month.
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China is — yet again — looking to deal with its mountain of hidden debt. An absurd solution has emerged: just make it go away. But much like a landfill, it won’t ever quite disappear, according to a Bloomberg commentary. Earlier this month, Zhao Quanhou, a top researcher at the Chinese Academy of Fiscal Sciences, which is affiliated with the finance ministry, proposed that Beijing should dissolve some of its off-balance sheet debt by converting it into legal, or statutory, debt.
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BlackRock gave it money. So did Goldman Sachs. Foreign investors had good reason to trust Huarong, the sprawling Chinese financial conglomerate. Even as its executives showed a perilous appetite for risky borrowing and lending, the investors believed they could depend on Beijing to bail out the state-owned company if things ever got too dicey, the New York Times reported. Now some of those same foreign investors may need to think twice. Huarong is more than $40 billion in debt to foreign and domestic investors and shows signs of stumbling.
Global banks are losing share in the $186 billion lending market for Chinese borrowers offshore, falling behind local rivals boosting their presence just as the nation’s corporate sector recovers from the pandemic, Bloomberg News reported. Their portion of such lending has steadily dropped over the past decade, hitting 37% so far this year to May 17, well below the 11-year average of 51%, according to Bloomberg-compiled data. Last year the share fell to 29%, the lowest since at least 2010.
China’s economic activity grew at a slower pace in April as retail sales missed expectations, complicating the picture of a steady and balanced recovery in the world’s second-largest economy, the Wall Street Journal reported. Official data released Monday showed industrial output and fixed-asset investment beating market expectations and continuing to lead the recovery, but domestic consumer spending, which has lagged behind for months, remaining soft.
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China’s central bank injected medium-term cash into the financial system, in a push to keep borrowing costs low as the economy recovers from the virus pandemic, Bloomberg News reported. The People’s Bank of China added 100 billion yuan ($15.5 billion) of one-year funds with its medium-term lending facility on Monday, matching the amount coming due in a move that was expected by analysts. The authorities kept the interest rate unchanged at 2.95%.
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