China’s bond market is hosting a battle of wills between the country’s leadership and lower-ranking officials and corporate bosses, The Wall Street Journal reported. They are fighting over perpetual bonds, debtlike securities that lack a maturity date and technically never need to be repaid. Issuance has surged since the start of 2018, partly because state-backed companies see them as a way to hit Beijing-mandated debt-reduction targets without going through a painful restructuring or diluting government control.
China
Embattled Chinese conglomerate HNA Group has denied accusations of embezzlement and financial irregularity made by a rival group of shareholders in Hong Kong Airlines (HKA) as the two sides fight for control of the struggling carrier, Reuters reported. The allegations were made by Zhong Guosong and Frontier Investment Partner who between them control 61 percent of HKA’s shares. On Tuesday, they declared they had taken control of the carrier and made Zhong, a former HKA director, chairman after an extraordinary shareholder meeting.
China’s Anbang Insurance Group Co said it would reduce its registered capital by nearly one-third, the latest government-directed step of a massive restructuring of the debt-laden conglomerate to curb financial risks, Reuters reported. A state takeover work group, which has seized control of Anbang since February last year, has decided to trim the company’s registered capital to 41.5 billion yuan ($6.21 billion) from 61.9 billion yuan, pending approval from the China Banking and Insurance Regulatory Commission, Anbang said in a statement released on Tuesday.
The loan default in Hong Kong by HNA Group Co. unit CWT International Ltd. is causing tremors in Singapore, Bloomberg News reported. Listed real estate investment trusts in the city-state that count CWT as a tenant dropped on concerns there might also be missed rent payments. Shares of Cache Logistics Trust extended declines Wednesday to the lowest in more than a month. Mapletree Logistics Trust, meanwhile, is down 4.1 percent since Monday, on track for its biggest weekly decrease since February 2018. CWT’s Singapore business is among the top 10 tenants of both landlords.
China’s growth will likely slow to 6.2 percent this year and 6 percent in 2020, as more of the economy shifts toward consumption and services, according to a biennial report by the Organization for Economic Co-operation and Development, Bloomberg News reported. OECD estimated 2019 expansion would be 6.3 percent in an outlook published last year. China faces risks "tilted to the downside," including large-scale corporate defaults, a collapse of housing prices and rising geopolitical tensions, the OECD wrote in its economic survey on China published Tuesday.
So, the Chinese economy does have a pulse after all. Credit extension by banks and bond issuance by local governments are supporting some kind of revival in infrastructure investment, and a 30 per cent rise in the Chinese equity market since the start of this year is helping to lift the intensely pessimistic mood that paralysed Chinese spending in the latter part of 2018, the Financial Times reported. The stimulus policies that China started to introduce last summer, and intensified more recently, now seem to be reviving the patient.
CWT International Ltd., controlled by HNA Group Co., failed to pay interest on a HK$1.4 billion ($179 million) facility, prompting lenders to demand immediate repayment of the loan, the company said Tuesday, Bloomberg News reported. The Hong Kong-listed company will have to make good on the payment by 9 a.m. April 17 to prevent lenders from taking action, it said in a statement to the Hong Kong stock exchange.
Chinese independent refiner Shandong Haiyou Petrochemical Group aims to restart its key crude oil unit in June, a year after it was idled following a bankruptcy filing, according to four sources with knowledge of the matter, Reuters reported. The refinery in Juxian county in the eastern province of Shandong is preparing to restart a 70,000 barrels per day crude unit shut since last May after local government-led investment helped the firm clear most of its debts. “The dead is returning...
Local governments in China have flooded the market with Rmb1.2tn ($179bn) in bond issuance during the first three months of the year, in another sign of how Beijing hopes to kick-start economic growth with infrastructure spending, the Financial Times reported. The fundraisings represent a dramatic shift in how China is allowing smaller governments to raise debt — there was no local bond issuance during the first quarter over the past two years, according to data from Moody’s. The efforts come as China faces its slowest rate of economic growth in almost three decades.
China’s savers are turning a deaf ear to government warnings about one of their favorite investments. Individuals hold nearly 90 percent of instruments known as wealth management products, a record share, because many believe they’re shielded from losses -- a view officials have tried hard to discourage, Bloomberg News reported. The assumption of safety has been buttressed by the fact that the large banks that issue WMPs have at times dipped into their own balance sheets to protect investors from losses or even outright defaults.