China’s financing units for local governments, already grappling with bloated debts, now face an even bigger predicament -- a build-up of credit guarantees that leave them vulnerable to surging defaults, Bloomberg News reported. Around 2,000 of these platforms, known as local government financing vehicles, have offered a total of 7 trillion yuan ($1 trillion) of guarantees to loans, bonds and shadow financing for domestic companies, said Lv Pin, an analyst at CITIC Securities Co. That surpasses the tally of LGFVs’ own outstanding local bonds, Bloomberg-compiled data show.
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Unirule Institute of Economics, a Beijing-based think tank advocating free market policies, “will cease public activities under its name temporarily”, its parent company said. Beijing Unirule Consulting Co Ltd said bit.ly/2BwSir1 on Monday its license was revoked after the company received an "Administrative Penalty Notice" on Oct. 22, Reuters reported.
It’s been a tough couple years for Pactera Technology International Ltd. The tech outsourcing arm of embattled Chinese conglomerate HNA Group Co. has been ditched by Bank of America Corp. and Goldman Sachs Group Inc., sued over a collapsed acquisition and cut deep into junk territory by Moody’s Investors Service, Bloomberg News reported.
A weak set of finance data points to a deepening Chinese growth slowdown into 2019, highlighting the government’s challenge in getting loans to private companies and other cash-starved parts of the economy, the Financial Times reported. The data were released amid a debate within the bureaucracy about how best to encourage the banking system to overcome its reservations and lend more to the private sector.
A group of countries including the US, Brazil and China has objected to EU plans for splitting up sensitive import quotas with Britain after Brexit, in the latest sign of how big trading powers are stepping up their demands about how the UK’s departure should be handled, the Financial Times reported.
New banks loans in China likely fell in October due to a seasonal lull but were still well ahead of historical trends as policymakers urge lenders to keep cash-starved firms afloat as the economy slows, a Reuters poll showed. Banks likely extended 862 billion yuan ($196.56 billion) in net new yuan loans in October, a traditionally weaker month due to long holidays, according to the poll, which surveyed 32 analysts, Reuters reported.
First came the sweeping government pronouncements. Then the flurry of actions, all aimed at shoring up China’s capital markets and rescuing struggling private companies. But are they working? Weeks into China’s latest campaign to support the world’s worst-performing major stock market and address record defaults, there have been some successes: equities are far less volatile and more companies are selling debt at a lower cost, Bloomberg News reported.
In the span of just 11 months, China went from having no distressed dollar-denominated corporate bonds to having more than any other emerging market, Bloomberg News reported. The world’s second-biggest economy has 15 bonds whose option-adjusted spreads over U.S. Treasuries were above 1,000 basis points as of Nov. 6, according to a Bloomberg Barclays index. That’s more than all the other nations combined. An ongoing trade war and slower economic growth after years of breakneck expansion are straining the nation’s highly-leveraged corporate sector.
Chinese brokerages are boosting capital to protect against a market plunge that threatens the value of $640 billion worth of shares pledged as collateral. Securities firms have extended more than a third of China’s stock-backed loans, which may go sour and force lenders to offload the shares, Bloomberg News reported. To cushion themselves, at least three of the country’s biggest brokerages have announced capital raising plans in recent months, joining the nation’s big banks in strengthening buffers.