When she was a teenager in the 1970s, Zhou Xiaoguang peddled trinkets city to city and slept on trains, a formative chapter in her creation of the world’s largest costume jeweler, Neoglory Holdings Group Co. Leveraging her empire of baubles, China’s “fashion-accessory queen” added hotels, offices and malls. The magnate took a seat in China’s national parliament, accepted business accolades, including Ernst & Young’s “Entrepreneur of the Year,” and erected the tallest skyscraper in Yiwu, a trading city south of Shanghai. Now, China’s economic slowdown is making Ms.
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The respite from defaults in China’s onshore bond market isn’t seen lasting as risks to the country’s economy grow, Bloomberg News reported. While the number of defaults in China’s $13 trillion bond market slid for a second straight quarter, down from a record high last year, June saw a resurgence as borrowing costs rose and liquidity tightened. Analysts and investors expect debt failures to rise in the months ahead, in tandem with slowing economic growth. New bond defaults dipped to this year’s low in May amid China’s targeted support measures to shield the economy from a U.S. trade war.
Closing Chinese outbound deals already was a difficult task. Growing trade tensions globally has made it even tougher, Bloomberg News reported. At $35 billion, the volume of Chinese outbound mergers and acquisitions is the lowest tally for the first six months of the year since 2013, according to data compiled by Bloomberg. The total represents a 75% drop from the peak of such M&A activity in the first half of 2016, when China National Chemical Corp. agreed to buy Swiss agrochemical maker Syngenta AG for $43 billion. Of the first-half total, only $6.8 billion was from U.S.
China’s banking regulator plans to tighten rules on so-called cash-management products, according to people familiar with the matter, impacting an estimated $2 trillion worth of the investments, Bloomberg News reported. The China Banking and Insurance Regulatory Commission aims to treat CMPs similar to money-market funds by imposing stricter rules on pricing and restricting where and for how long the inflows can be invested, the people said, asking not to be identified as the deliberations are private.
Datang Group, one of China’s biggest power generators, said a subsidiary in northwestern Gansu province that operates a coal-fired power station has applied for bankruptcy and liquidation after it defaulted on about 16.44 million yuan ($2.39 million) of debt, Reuters reported. China’s coal-fired power producers are struggling as Beijing promotes the use of renewable energy and opens up the state-controlled power market. Another Datang Group coal-fired plant went bankrupt last December.
A rare public default at a Chinese trust company is drawing attention to cracks in the Rmb7.9tn ($1.13tn) market for the investment products in the country, where similar failures have been dealt with behind the scenes in the past, the Financial Times reported. Anxin Trust, which missed payments on Rmb11.8bn for 25 trust products earlier this year, has been forced to publicly document its default because, unlike most trusts, it is listed on the Shanghai stock exchange.
One of the most opaque areas of China’s credit markets involves the practice of companies buying their own bonds, Bloomberg News reported. That may soon get a lot tougher, contributing to financing difficulties that are already bedeviling the nation’s policy makers. At issue is a sharp increase in scrutiny by financial institutions of the collateral that their counterparties offer up in the repurchase market, a crucial channel for short-term funding.
A statue of a golden bull, poised to charge, stands outside the headquarters of Xiangtan Jiuhua, a government-owned company that funds much of Xiangtan’s infrastructure investment. It has seen better days: the gold paint is flaking and the torso is cracked. That makes it a fitting symbol for public finances in the sprawling prefecture of 3m people in central China, and scores of similar cities across the country, where the ambitions of local officials have collided with heavy debt loads, The Economist reported.
China’s central bank has acknowledged its monetary tools are insufficient. The most powerful ones are proving too blunt to drill through a hardening financial system, a Bloomberg View reported. The country’s money markets have been shuddering since regulators took over Baoshang Bank Co. last month, despite initial assurances from the central bank and other authorities that they would maintain ample liquidity. While there has been little direct contagion, the seizure of the small commercial lender has hurt confidence.
Chinese lenders, including China Development Bank, Industrial and Commercial Bank of China and Exim Bank of China, have demanded at least $2.1 billion from embattled Indian tycoon Anil Ambani’s Reliance Communications Ltd., that slid into bankruptcy earlier this year, Bloomberg News reported. State-owned China Development Bank, with loans worth 98.6 billion rupees ($1.4 billion) was the biggest creditor to the indebted telecom company, according to a filing made by the Indian company to stock exchanges.