China

While multinationals have been bleating about tumbling sales in China, official retail data from the world’s second-biggest economy tells a more robust story. What gives? The correct read on Chinese shoppers’ propensity to buy is key both for the companies who are increasingly dependent upon the market and for the country itself: consumption, billed as a new growth engine, is required to offset the slowdown in investment.

When Chinese property developer Agile Property Holdings Ltd. said this month that its chairman was taken into custody by authorities, the disclosure was a shock to Western banks that lent the company money, The Wall Street Journal reported. Foreign lenders in China have been stung by a string of suspected fraud cases and problem loans in the country as Beijing investigates company executives and seizes assets in a crackdown on corruption. Agile Property has a large debt payment due in December and has been scrambling to raise funds.

LDK Solar Co., the Chinese solar-cell maker that defaulted on its bonds this year, filed for bankruptcy in the U.S. to help carry out restructurings already under way in Hong Kong and the Cayman Islands, Bloomberg News reported. Xinyu, China-based LDK filed for Chapter 15 protection today in Wilmington, Delaware, listing about $1.13 billion in debt and $510 million in assets as of May 31. Chapter 15 is the section of the bankruptcy code used by foreign companies restructuring abroad to fend off creditors and distribute payments in the U.S.

China is lowering down payment requirements and discounting mortgages as declining housing sales put a drag on the economy, Bloomberg News reported. After four years of government restrictions to cool housing prices that had tripled since 2000, the central bank is reversing course, making it easier for homeowners to buy second properties. They are not likely to get back into the market, several analysts said, until prices become more affordable.

The Chinese developer Agile Property Holdings, battling an industry slowdown and speculation about ties to China’s former security chief, said that it was in talks with banks about extending a bridge loan and that the founder’s family would commit to lending $200 million, the International New York Times reported on a Reuters story. Shares in the company, valued at around $2.1 billion, slumped by as much as 31 percent on Monday to five-year lows as they resumed trading after a week’s halt.

China has taken a big step towards the resolution of its mounting local government debt burden with the introduction of a legal framework allowing cities and provinces to issue debt directly, Reuters reported. Last week's regulations make it clear that the central government will not bail out local obligations, a key step in creating a municipal bond market that analysts expect will reach Rmb1trn (US$164bn) of new issues in 2015.

Shanghai Chaori Solar Energy Science & Technology Co., which earlier this year became the first Chinese company to default on its domestic corporate bonds, plans to bring in a new controlling shareholder and two bond guarantors, The Wall Street Journal reported. The bond guarantors will likely honor the bond’s full payments, both in principal and interest. Developments at Shanghai Chaori—which failed to pay most of its bond interest in March—are being closely watched.

China stepped up its efforts on Tuesday to transform doomsday scenarios for its domestic property market into merely another round of déjà vu. The central bank reinforced efforts to boost mortgage lending by banks, building on the small but significant turnaround that beyondbrics noted in mid-September. The new policies allow buyers who already own one home but have paid off their mortgage to be considered as first-time buyers, thus qualifying for a mortgage downpayment of 30 per cent of the cost of the loan.

China's Fosun International Ltd has upped its bid for Portugal's Espirito Santo Saude (ESS) to 4.82 euros a share or 460.5 million euros ($584 million) in total, stepping up the battle over the hospital business of the indebted Espirito Santo family, Reuters reported. Portugal's CMVM market regulator said late on Friday it registered the all-cash offer by conglomerate Fosun's Portuguese insurance unit Fidelidade, while also extending by a week to Oct. 10 a rival offer by Mexico's Grupo Angeles, the first to bid for ESS. Angeles initially offered 4.3 euros a share for the company on Aug.

China is likely to delay its financial reform agenda in favour of stabilising growth, economists and investors say, in a move that could hinder efforts to correct distortions in the economy, the Financial Times reported. Deregulation of interest rates was a key plank in the ambitious reform agenda that top Communist party leaders approved last November, which promised to give market forces a “decisive” role in capital allocation.