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from Breakingviews:

Macau casino stocks are priced for perfection

By Ethan Bilby

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

Macau’s casino stocks are priced for perfection. A building boom will expand capacity in China’s gambling enclave. But to justify their valuations, gaming operators not only need to attract more punters but encourage them to spend more at the tables. Any slowdown or increased competition could test excited multiples.

The former Portuguese colony is running out of room. Hotels are effectively full, even though over half of the 29 million tourists who visited Macau in 2013 were day-trippers. That is why casinos are rapidly adding capacity. The total number of four- and five-star hotel rooms in Macau will grow 40 percent by 2018, according to Las Vegas Sands.

Last year, Macau’s six licenced casino operators raked in some HK$321 billion ($41.4 billion) in combined revenue. If visitor revenues expand in line with hotel capacity, then revenue would reach about HK$450 billion by 2018. Apply the industry’s margin of around 21 percent, and the casinos’ combined EBITDA would reach roughly HK$95 billion.

from Breakingviews:

SoftBank’s Alibaba stake both blessing and burden

By Una Galani

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

SoftBank’s investment in Alibaba must be one of the most successful of all time. Billionaire chief Masayoshi Son injected just $20 million into the Chinese e-commerce giant in 2000. Today, the 36.7 percent shareholding accounts for a large chunk of Japanese group’s market value. As Alibaba heads toward an initial public offering, however, Son’s investment blessing may become a burden.

from Counterparties:

MORNING BID-All the metal in China

Without a lot of fanfare, the U.S. equity market has worked its way back to a few points of all-time highs, as concerns over emerging markets (largely related to Ukraine) have magnified, as have worries over China's struggling growth.

That's once again produced the "best house in a bad neighborhood" effect for the U.S. stock market; bond yields remain range-bound in the 2.70 to 2.75 percent area, the 10-year still reflects a value that doesn't suggest economic acceleration or worries over massive slowing either.

from Anatole Kaletsky:

The case against a Chinese financial crisis

A severe slowdown in China is viewed as among the greatest risks facing the world economy this year, and Thursday’s dismal news on Chinese manufacturing output exacerbated these fears. But the really important news from Beijing pointed in the opposite direction: Bank lending in China, instead of slowing dramatically as many economists had expected, accelerated in January to its fastest growth in four years.

This means China is unlikely to act as a brake on the global economy in the months ahead -- despite the recent weak manufacturing figures. It also suggests that predictions of a credit crunch or financial crisis in China will likely prove wrong -- or at least premature.

from Breakingviews:

Fear and loathing in China’s trust industry

By John Foley

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

China’s trust sector is the financial system’s enfant terrible. It’s a 10.9 trillion yuan ($1.8 trillion) industry built on taking short-term funding and channeling it into longer-term investments. That mismatch has already led some trust products to unravel, and more will follow. What causes concern isn’t so much trusts failing as them being foolishly rescued.

from Breakingviews:

China copper IPO seeks gold in financial recycling

By Una Galani

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

Financial recycling is putting a gold polish on the initial public offering of a Chinese copper company. Just 15 months after it quit the New York Stock Exchange, China Metal Resources Utilization is set to go public in Hong Kong at 10 times its last market value. It’s the first of a large group of unloved stocks to perform the “Chinese flip”, exploiting the valuation gap between U.S. and Hong Kong exchanges.

from Breakingviews:

From soccer pitch, lessons on Chinese tycoon risks

By Una Galani

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

Chinese investors are setting their sights on trophy assets in the West, and soccer teams look like fair game. The case of English football club Birmingham City, whose main shareholder and former president just sold a stake to an obscure Chinese company, offers a cautionary tale. Big personalities make risky shareholders, but China brings extra anxieties.

from Breakingviews:

Alibaba tests the limits of non-bank banking

By John Foley

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

Alibaba isn’t a bank. But for customers it’s getting hard to tell the difference. Users of China’s dominant e-commerce website can now deposit funds, make investments, take out loans and even give out gifts of virtual cash. In taking on China’s lenders, Alibaba and its online rivals may be taking on bank-like risk.

from Breakingviews:

Alibaba tests the limits of non-bank banking

By John Foley

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

Alibaba isn’t a bank. But for customers it’s getting hard to tell the difference. Users of China’s dominant e-commerce website can now deposit funds, make investments, take out loans and even give out gifts of virtual cash. In taking on China’s lenders, Alibaba and its online rivals may be taking on bank-like risk.

from Ian Bremmer:

Is the China-Japan relationship ‘at its worst’?

At the Munich Security Conference last month, Chinese Vice Foreign Minister Fu Ying said the China-Japan relationship is “at its worst.” But that’s not the most colorful statement explaining, and contributing to, China-Japan tensions of late.

At Davos, a member of the Chinese delegation referred to Shinzo Abe and Kim Jong Un as “troublemakers,” lumping the Japanese prime minister together with the volatile young leader of a regime shunned by the international community. Abe, in turn, painted China as militaristic and overly aggressive, explaining how -- like Germany and Britain on the cusp of World War One -- China and Japan are economically integrated, but strategically divorced. Even J.K. Rowling has played her part in recent weeks, with China’s and Japan’s ambassadors to Britain each referring to the other country as a villain from Harry Potter.

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