John's Feed
Apr 3, 2013

Tencent’s troubles reflect monopolistic shift

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

By John Foley

BEIJING, April 3 (Reuters Breakingviews) – WeChat could be
China’s killer app – if disgruntled rivals don’t kill it off.
The smartphone messaging service, which has amassed 300 million
users in just over two years, has attracted the ire of mobile
network operators worried about their margins. It sounds like
vested interests squashing innovation. More likely, it’s old
monopolists fighting to keep out a new one.

Mar 28, 2013
via Breakingviews

China shadow bank curbs attack symptom not cause

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By John Foley

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

China is getting tough on shadow banks, but not on the causes of shadow banking. New rules will force mainstream lenders to cap their exposure to some of the riskier off-balance sheet products they have sold to customers – in particular, those that are effectively repackaged corporate debt. That limits a big source of risk for banks, but creates a new one for the Chinese economy.

Mar 27, 2013
via Breakingviews

Chinese credit alarms sound in the east

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By John Foley

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

Credit alarm bells are ringing in China’s east. Earnings from three of the country’s top four lenders show that while the national ratio of bad debts to loans is still falling, stress is building in coastal regions. Problems in an area rich in private sector businesses and manufacturing could be a national concern.

Mar 26, 2013
via Breakingviews

China retailers stumble in pursuit of growth

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By John Foley

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

China’s growth can be disruptive as well as lucrative. GOME and Li Ning, two of the country’s biggest retail brands, have both reported slumping sales and losses in a market that seems to be expanding. Shifting consumer habits have made competition fierce and profitability elusive.

Mar 22, 2013
via Breakingviews

Exposed bondholders suffer solar burns in China

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By John Foley

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

Who wants equity-like risk for a debt-like return? Investors in bust Chinese solar panel maker Suntech got something close when they bought $575 million of convertible bonds back in 2008. Even though the bonds remain unconverted, the company’s bankruptcy could leave them with pennies – little better off than regular shareholders. Yet the lessons appear to be going unheeded.

Mar 20, 2013
via Breakingviews

China rail reform skirts big question: who pays

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By John Foley

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

China’s massive rail expansion is good for the economy. Burying it under $420 billion of debt isn’t. The long awaited dismantling of China’s sprawling Ministry of Railways and creation of a new rail company, announced on March 10, is a good moment to change track.

Mar 18, 2013
via Breakingviews

China’s new market watchdog may lack teeth

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By John Foley

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

As head of China’s new market watchdog, Xiao Gang has a tough mission: to bite the hand that fed him. While head of Bank of China, he oversaw an unprecedented lending spree that helped get China’s economy out of a hole. His next mission, as boss of the China Securities Regulatory Commission, will be to beef up the country’s capital markets – weakening the big banks’ stranglehold.

Mar 13, 2013
via Breakingviews

China’s solar bonds leave dim hope of payback

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By John Foley

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

Dim prospects for payback await bondholders in China’s Suntech Power Holdings. The stricken solar panel maker, unlikely to meet a $541 million bond payment due on March 15, has persuaded over half its foreign creditors to hold off for two months. On purely financial grounds, it’s hard to see how the bondholders could come away with anything in the event of a default. What value remains is a bet that China values foreign investors too much to snub them outright.

Mar 11, 2013
via Breakingviews

China starts 2013 the way it can’t hope to go on

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By John Foley

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

China began 2013 with the same old economic model. Growth for the first two months of the year was driven mainly by exports and real estate. The increase in construction appears to have been fuelled by credit. The current trajectory can continue only by pumping ever more leverage, and risk, into the system.

Mar 8, 2013
via Breakingviews

China’s currency inflows could be illusory

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By John Foley

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

China’s currency is a fickle measure of confidence in the country’s fortunes. For much of 2012 the yuan stagnated, causing investors to hold back on previous bets on its appreciation. Recent data suggests they have been piling back in to the Chinese currency – but that may not last.