Troubled state finance company China Huarong Asset Management on Thursday successfully completed its biggest bond redemption since default worries erupted in April, but investors remain concerned about its long-term health and that of its peers, Nikkei Asia reported. The company, originally set up to manage soured loans extended by Industrial and Commercial Bank of China, repaid a $900 million bond right on time. Huarong over the weekend also repaid a 500 million yuan ($78.3 million) domestic bond, according to Bloomberg.
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China’s central bank is trying to restrain the surging exchange rate of its currency, temporarily backtracking in efforts to make the tightly controlled yuan more flexible and market-oriented, the Associated Press reported. On Monday, commercial lenders were ordered to hold more of their foreign currency as reserves in the central bank to limit sales after the yuan hit a four-year high of 6.3674 to the U.S dollar. The People’s Bank of China is trying to deter speculators after the yuan rose by about 12% against the dollar since May.
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China’s finance ministry is considering a proposal to transfer its shares in China Huarong Asset Management Co. and three other bad-debt managers to a new holding company modeled after the one that owns the government’s stakes in state-run banks, Bloomberg News reported. Policy makers are re-examining the proposal, which was first tabled three years ago, as part of discussions on how to deal with the financial risks posed by Huarong.
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China's factory activity expanded at the fastest pace this year in May as domestic and export demand picked up, though sharp rises in raw material prices and strains in supply chains crimped some companies' production, a business survey showed on Tuesday, Reuters reported. The Caixin/Markit Manufacturing Purchasing Managers' Index (PMI) rose to 52.0 last month, the highest level since December and inching up from April's 51.9. Analysts polled by Reuters had expected the index to remain at 51.9. The 50-mark separates growth from contraction on a monthly basis.
The U.S. banned imports of tuna, swordfish and other seafood from a Chinese fishery company, citing evidence of forced labor on its distant-water vessels, the Wall Street Journal reported. U.S. Customs and Border Protection agents will detain shipments containing seafood harvested by China’s Dalian Ocean Fishing Co., officials said, in the latest example of Washington confronting Beijing over human-rights issues.
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China's banking regulator has asked lenders to stop selling investment products linked to commodities futures to mom-and-pop buyers to curb investment losses amid volatile commodity prices, Reuters reported. It has also asked lenders to completely unwind their existing books for these products, which they manufacture and sell to individual investors. The China Banking and Insurance Regulatory Commission's (CBIRC's) order to exit these products has not been reported before. It issued the order this year.
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China's market regulator has begun an investigation into suspected anti-competitive practices by KE Holdings, the country's biggest housing broker whose top backer is Tencent Holdings, Reuters reported. The investigation is the latest into China's big so-called "platform" companies that match sellers and buyers, several of which have been accused by regulators of exploiting consumers.
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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.
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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