Bankers need to follow the money into China
By Wei Gu
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
China’s mainland is the new battle ground for global banks. Goldman’s new vice chairman Mark Schwartz is set to be based in Beijing, and others will follow. Mainland exchanges account for the majority of this year’s initial public offerings in Asia. The challenge for global banks will be finding their niche, and adequate talent.
Domestic demand blesses $3 billion Felda IPO
By Wei Gu
HONG KONG, June 14 (Reuters Breakingviews) – Malaysian palm
oil supplier Felda priced near the top of the range, making it
the second biggest offering of 2012, and propelling Kuala Lumpur
to the top of Asia IPO tables. The reason isn’t just demand for
oil but for stocks. South-East Asia’s investors are still
hungry.
Full view will be published shortly.
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CONTEXT NEWS
– Malaysia’s Felda Global Ventures Holdings priced its IPO
at 4.55 ringgit, or $1.43, a share on June 13, near the top of
its indicative range. The company raised $3.1 billion, making it
the world’s second-biggest IPO this year behind Facebook, which
raised $16 billion in May.
Beijing a fitting base for new Goldman vice chair
By Wei Gu
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
Mark Schwartz is about to become the most senior expat banker in Beijing. The incoming vice chairman and Asia chair of Goldman Sachs is eschewing the easier climes of Hong Kong, where most of his rivals reside, in what looks a shrewd move for the Wall Street bank. Beijing is under pressure to grow its under-developed capital markets, and bring in foreign capital and expertise. Those who can help are likely to be rewarded.
China moves in right direction on bank flexibility
By Wei Gu
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
China has made a tentative step on the long road towards market-determined interest rates. In addition to cutting the benchmark interest rates on loans and deposits on Thursday, the central bank widened the bands around the benchmarks.
Time for China to look beyond Deng’s big ideas
By Wei Gu
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
It doesn’t matter if a cat is black or white, so long as it catches mice. Cross the river by feeling for stones. Followers of China’s economic development are familiar with these aphorisms, both attributed to Deng Xiaoping, who set the country on the path of steady and rapid economic growth after Mao Zedong’s turbulent era. Those ideas were timely three decades ago. Now they too often serve as excuses for bad habits and delayed reform.
High-end luxury looks exposed as China slows
By Wei Gu
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
The cancellation of Graff Diamonds’ $1 billion Hong Kong initial public offering is the latest sign that high-end luxury goods companies are losing their shine. Hong Kong’s formerly bubbling art and property markets are cooling as mainland Chinese money ebbs. Tightening credit at home has played a role, and China’s political cycle may be another cause.
EU probe shows hidden costs of China subsidies
By Wei Gu
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
Subsidies are an old Chinese practice that is causing new headaches. The European Commission is poised to launch a big trade case against China over state credit given to telecoms equipment manufacturers, according to the Financial Times. Yet the companies in question, such as Huawei and ZTE, are competitive enough not to need such perks. Beijing’s support for national champions makes it easy for others to cry foul play.
China doesn’t need a policy U-turn
By Wei Gu
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
The last thing China’s economy needs now is another giant stimulus package. Premier Wen Jiabao has raised investors hope for a policy U-turn by saying that growth deserves more attention. But Beijing shouldn’t panic this time. Unlike in 2008, there are no massive job losses threatening stability, and still too much money sloshing around from the last stimulus. Structural reforms are the right remedy.
China diversified dot-coms avoid Facebook pitfalls
By Wei Gu
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
High-growth Chinese internet companies may be surprisingly defensive investments. True, fears about the cyclical advertising business have driven down shares in Renren, China’s Facebook lookalike. But other Chinese dot-coms should suffer less. Strong roots in gaming, whose revenue is still surging, makes diversified players like Tencent and Sohu comparatively recession proof.
Long-awaited Yahoo deal heaps pressure on Alibaba
By Wei Gu
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
Alibaba has finally reached a truce with Yahoo. The Chinese e-commerce giant is offering at least $7 billion to buy back its own shares from the U.S. internet group, recapturing half the stake Yahoo acquired in 2005 for $1 billion. The timing is good, since Facebook’s IPO has left cashed-up investors who could help finance the deal. But a successful outcome will heap pressure on Alibaba.
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