John's Feed
Mar 27, 2013
via Breakingviews

Chinese credit alarms sound in the east

Photo

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

Photo

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

Photo

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

Photo

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

Photo

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

Photo

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

Photo

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

Photo

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.

Mar 5, 2013
via Breakingviews

Three roadmaps for an urbanizing China

Photo

By John Foley

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

China is at an urban crossroads. Almost 53 per cent of its population lived in cities and towns at the end of 2012. In another two decades, China will probably be nearing the 80 percent urbanization level common in the West – suggesting some 1.1 billion city-dwellers. Premier designate Li Keqiang wants urbanization to put people first. The question is: where in China will he put them?

Mar 4, 2013
via Breakingviews

China’s gains tax won’t put a roof on house prices

By John Foley

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

China’s house prices are too high and local tax revenue too low. What better way to address both problems than taxing capital gains on property? China’s cabinet has promised to enforce such a levy on homeowners. While that drove down the share prices of property developers, it is unlikely to do the same for real estate values.