Archive

Reuters blog archive

from Breakingviews:

Banks’ bad IPO habits spread to China bond deals

Photo

By Una Galani

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

Asia’s investment bankers’ bad habits from initial public offerings have spread to Chinese bond deals. A scarcity of new equity offerings has forced underwriters to crowd onto a dwindling number of issues. Though bond issuance is booming, the pile-up is happening on the debt side too.

Bond issuance by Chinese companies has risen almost fivefold in seven years, according to data from Thomson One. Chinese companies have raised $233 billion on- and off-shore since January, putting them on track to issue a record volume of bonds in 2013. It’s a stark contrast to IPOs, where the amount raised by Chinese companies has halved to just $9.2 billion this year.

But the bond boom has prompted banks to scramble for a role on new issues. Sinopec Capital had 12 book runners when it raised around $3.5 billion in April, while China Galaxy Securities and Huatai Securities used the same number of banks on deals worth less than $600 million each. In 2007, the maximum number of book runners on any Chinese deal was seven.

from Ian Bremmer:

Making sense of China’s meager typhoon aid

Faced with a devastating typhoon a mere 700 miles away, Chinese President Xi Jinping this week pledged financial support for the Philippines, as did nearly every other industrialized nation. Australia offered $30 million; the Europeans $11 million; the United Arab Emirates promised $10 million. China offered $100,000.

The media backlash was immediate. Within days, an embarrassed Beijing upped its pledge to $1.6 million. That’s still less than a sixth of the total offered by Japan, China’s main regional rival. In 2010, China overtook Japan as the second-biggest economy in the world.

from Breakingviews:

Four ways to tell China is serious about markets

Photo

By John Foley 

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

China’s new buzzword is “decisive”. That’s how the ruling party described the role it wants markets to play in the economy. It’s hard to see whether it’s more than just talk. But there are four visible ways to tell whether China means business.

from Breakingviews:

Apollo and Cooper can still do a deal

Photo

By Una Galani
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

The buyout of Cooper Tire & Rubber Co hasn’t gone flat yet. The U.S. company and Indian buyer Apollo Tyres are locked in a legal battle over an agreed $35 per share offer. But both sides insist they still see merit in a union that will create the world’s seventh biggest tyre manufacturer. Adjusting Apollo’s offer to reflect the potential cost of removing the two main roadblocks to the deal suggests a revised bid of at least $27 per share.

from Breakingviews:

China plenum is far cry from what might have been

Photo

By John Foley

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

China’s third plenum was a study in anti-performance. This meeting of the ruling party’s top figures traditionally gives each new generation of leaders an opportunity to make big gestures. What emerged on Nov. 12 was only promising policies wrapped up in bland talk. Yet there is an important message: big economic changes may come, but politics remains a matter for Party insiders only.

from Breakingviews:

Doubly dysfunctional press hinders China cleanup

Photo

By John Foley

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Graft hurts growth; transparency helps. It sounds simple, but in China, the arrest of a domestic journalist for defamation and heavy-handed treatment of foreign news organisations suggest the message isn’t getting through. A free press can’t make corruption go away on its own. Without one, however, the economic benefits of any clean-up will be limited.

from MacroScope:

Moments difficiles

Breaking news is S&P’s downgrade of France’s credit rating to AA from AA+ putting it two notches below Germany. Finance Minister Pierre Moscovici has rushed out to declare French debt is among the safest and most liquid in the euro zone, which is true.

What is also pretty unarguable is S&P’s assessment that France’s economic reform programme is falling short and the high unemployment is weakening support for further measures. There's also Francois Hollande's dismal poll ratings to throw into the mix.

from Breakingviews:

Suntech casts shadow over China capital raisings

Photo

By John Foley 

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Suntech has gone from solar panel maker to financial black hole. The stricken company is fighting with creditors who want to see it liquidated after it defaulted on interest payments in March. Proposals to sell assets and take Chinese government cash seem unlikely to help investors avoid huge losses. For investors it’s a lesson in what happens when things really go wrong with Chinese companies.

from Breakingviews:

China’s Singles’ Day shows market power of one

Photo

By John Foley

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

China’s retail sector is about to be plunged into collective madness. On Nov. 11, online shoppers are likely to snap up over $4 billion of goods when prices halve in celebration of “Singles’ Day”. Billed as a celebration of unmarried people, the event is actually a cue for massive online discounting. Consumers benefit, but the best deal goes to Alibaba, which reinforces the dominance of its Tmall and Taobao online marketplaces while leaving sellers to do the heavy lifting.

from Anatole Kaletsky:

This weekend, China will plot its economic future

The ponderously named Third Plenary Session of the 18th Central Committee of the Chinese Communist Party, which takes place this weekend, is a more important event for the world economy and for global geopolitics than the budget battles, central bank meetings and elections that attract infinitely more attention in the media and financial markets.

The obvious reason for this meeting’s importance is that China is destined in the long run to become the world’s biggest economy and a political superpower. And the Third Plenum, traditionally held roughly 12 months after the appointment of a new Party leadership, has been used twice before as an occasion for the new leaders to spell out the main strategies they hoped to implement as they consolidated their power. At the Third Plenum in 1978, Deng Xiaoping launched the market reforms that unleashed the power of the profit motive in China, and it was at the corresponding event in 1993 that Jiang Zemin accelerated the process of dismantling state-owned enterprises and integrating China into the world economy that culminated with China’s accession to the World Trade Organization in 2001.

  •