China

It started with an unverified rumor from an obscure social media account: Yichuan Rural Commercial Bank was insolvent. Within hours of the post on Tuesday, more than 1,000 worried customers had lined up to withdraw their money, Bloomberg News reported. By Wednesday, a run on the bank had prompted local authorities to arrange more than 30 billion yuan ($4.3 billion) of liquidity injections. As branch staff sought to restore confidence, they displayed stacks of cash to convince depositors that there was enough to go around.

China’s Fosun Tourism Group said on Friday it would acquire the Thomas Cook and related hotel brands for 11 million pounds ($14.25 million), in a bid to expand its presence in the tourism business, Reuters reported. The assets include trademarks, domain names, software applications and licenses of the British travel firm and related hotel brands, Hong Kong-listed Fosun said, adding that it did not plan to buy overseas assets or businesses related to Thomas Cook for the time being.

Chinese conglomerate Fosun is close to acquiring Thomas Cook’s brand and its intellectual property assets, which could allow the business to be revived again as an online travel agent just months after collapsing into administration, the Financial Times reported. The deal to acquire the Thomas Cook assets could be announced as soon as this week, said two people briefed on the situation, although they cautioned that the deal had not been finalised. A number of other groups have been bidding, including rival travel agency, Tui.

China has long been a nation of savers. For decades, its citizens socked away much more of their incomes than Americans do. The pool of capital that was created powered China’s economic rise, The Wall Street Journal reported. Banks used their bulging deposits to fund factories and roads. The government became a key global creditor, bankrolling infrastructure overseas and buying up more than $1 trillion in U.S. Treasury bonds. The savings also fueled tensions with other countries. Western leaders said China was discouraging spending to tilt the global economy in its favor.

A Chinese bank has placed a record convertible bond, raising more than $7bn in an offering that drew more than $1tn worth of orders, the latest bumper deal in a year that has seen issuance of the equity-linked instruments hit a fresh high in China, the Financial Times reported.

China Minsheng Investment Group will cut compensation of its top and mid-level executives from this month to support strategic restructuring, it said in an announcement, Bloomberg News reported. The Shanghai-based company that aspired to become China’s answer to JPMorgan Chase & Co. said on Tuesday it will reduce salaries for senior and mid-level management by as much as 83% to lower costs. Average cuts for senior and mid-level management will be 53% while ordinary employee pay will remain unchanged, it said.

In the bond world, a plain-vanilla default isn’t the scariest thing. What can be worse is a back-room deal to avoid or obscure one, a Bloomberg View reported. China needs to be on guard. No doubt, China’s economy is slowing. In September, industrial profits fell 5.3% from a year ago, the deepest slump since 2015. Yet China Inc.’s credit profile seems to be improving. So far, only $8.6 billion in bonds outstanding have negated on their obligations, versus $15.3 billion in 2018, data compiled by Bloomberg show.

China’s Jingye Group has fuelled hopes of a rescue deal for British Steel with plans to send a delegation to the second-biggest UK steelmaker’s main plant in Scunthorpe, the Financial Times reported. Hebei-based Jingye, which also owns hotels and a medicines business alongside its main steelmaking operations, is due to visit the Lincolnshire steelworks next week.

Norwegian Air Shuttle has sealed a long-awaited joint venture with one of China’s biggest banks in a deal designed to bolster a balance sheet strained by the low-cost carrier’s breathless pace of expansion, the Financial Times reported. The joint venture, 70 per cent owned by a subsidiary of state-controlled China Construction Bank, will be responsible for financing 27 Airbus A320neo aircraft that Norwegian expects to be delivered in 2020-23.

Chinese defaulted bonds just sold at a discount of as much as 97% in an anonymous auction. Six defaulted notes changed hands, with the cheapest selling for as little as 3 yuan in an auction organized by the China Foreign Exchange Trade System on Wednesday, Bloomberg News reported. That’s a record low for a sale of this type. One didn’t sell, according to an exchange statement on its official WeChat account. The sale is a sign of investors’ increasing tolerance of risk in China’s nascent distressed debt market amid a broader boom in onshore high yield trading.