China

China’s bond market regulator launched an investigation on Thursday into a default by a mining firm, the latest in a series of setbacks for state-backed companies as the government winds down support for an economy hit hard by the COVID-19 pandemic, Reuters reported. The National Association of Financial Market Institutional Investors (NAFMII) said it was launching a “self-disciplinary” investigation into Yongcheng Coal & Electricity Holding Group Co Ltd, which defaulted less than a month after issuing a new bond.

Debt-laden China Evergrande Group said it has decided to terminate a reorganisation plan with Shenzhen Special Economic Zone Real Estate & Properties Group Co Ltd, ending a long-awaited backdoor listing plan in Shenzhen, Reuters reported. Market concern has mounted in recent weeks that Evergrande - whose borrowings totalled 835.5 billion yuan ($123.93 billion) at end-June - was headed for a cash crunch if it could not get Chinese approval for the listing plan that has languished for four years.

China suspended Ant Group’s $37 billion listing on Tuesday, thwarting the world’s largest stock market debut with just days to go in a dramatic blow to the financial technology firm founded by billionaire Jack Ma, Reuters reported. The Shanghai stock exchange said it had suspended the company’s initial public offering (IPO) on its tech-focused STAR Market, prompting Ant to also freeze the Hong Kong leg of its dual listing scheduled for Thursday.

Chinese financial institutions, not only the country’s official creditors, are working to help ease the debt woes of African nations, which have worsened due to the pandemic-induced global economic downturn, Beijing’s top Africa diplomat said on Friday, Reuters reported. China, Africa’s largest creditor, has agreed to take part in a World Bank and International Monetary Fund-supported initiative to suspend debt service on official bilateral debt for poorer countries.

China Evergrande Group has taken to seeking loans at above-average interest rates in the shadow banking market, where caution even there over its cash flow hints at an increasingly fraught effort to reduce the property sector's biggest debt, Reuters reported. The developer, which owed 835.5 billion yuan ($125 billion) at June-end, has been shopping around for cash among small banks and private trusts at high rates to fund developments, as proposed limits to the permitted size of real estate debt stymie big-bank lending.

As Chinese official slogans go, “one bank, one policy” may lack the revolutionary fervor of “let a hundred flowers bloom” or “smash the four olds.” But don’t be fooled by the bureaucratic banality of this mantra recently adopted by China’s banking regulator. Its patchwork one-bank, one-policy approach to a cascade of regional bank failures could trigger a wider financial crisis in the world’s second largest economy, Bloomberg News reported in a commentary.

To understand why some of China Evergrande Group’s strategic investors agreed to throw the embattled developer a $13 billion lifeline last month, look no further than their own sources of revenue, Bloomberg News reported. Interior decorator Grandland Group Holdings Co.’s listed unit gets almost 58% of its sales from Evergrande. Hangzhou Robam Appliances’s sales jumped after deepening its cooperation with Evergrande. And the developer has been the largest source of revenue for door maker Beijing Jiayu over the last four years, according to company filings.

In a related story, the Financial Times reported that over the past two decades, China has emerged as the biggest bilateral lender to Africa, transferring nearly $150bn to governments and state-owned companies as it sought to secure commodity supplies and develop its global network of infrastructure projects, the Belt and Road Initiative.

There is much to admire in China’s recovery. Between the second and third quarters, its economy expanded by 4.9 per cent. It is unique among the world’s largest economies in that the IMF expects it to avoid a contraction this year, the Financial Times reported. That owes much to Beijing’s success in stamping out Covid-19, along with the country’s manufacturing prowess. Yet, digging into the numbers, the picture is not quite as rosy as it may seem. Long before the pandemic, the world’s second-largest economy looked dangerously unbalanced.

China Evergrande Group, the country’s most indebted property developer, on Wednesday said it has raised $555 million in a secondary share sale, settling for half its initial target and sparking a 16% drop in its share price, Reuters reported. To help pay debt, the firm sold 260.65 million shares at HK$16.50 ($2.13) each - the low end of a price range flagged by its bankers in a term sheet when the deal launched on Tuesday.