Sino-Forest’s debt games are bad for creditors
By Wei Gu
The author is a Reuters Breakingviews columnist. The opinions expressed are her own
Sino-Forest has sent a chilling message to its bondholders. The Chinese timber company, embroiled in an accounting scandal, has decided not to pay $10 million of interest, even though it purports to have more than enough cash to do so. That leaves it in breach of its debt covenants, and heading towards a default on its bonds. Why it has done this is a puzzle.
Wen paves way for yuan depreciation
By Wei Gu
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
Premier Wen Jiabao has said that China will make the yuan more flexible “in either direction”. That may sound strange; up to now, talk of enhancing the yuan’s flexibility has always meant a one way journey – upwards. But the case for devaluation is getting stronger. So is the case for setting the yuan freer.
China’s own “Little Greeces” should help themselves
By Wei Gu
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
China can’t afford to be smug about the euro zone’s woes. Although the nation’s total debt comes to no more than 44 percent of GDP, China has some overextended regions of its own – Little Greeces. Hainan province, for example, has amassed debt close to 100 percent GDP. The new policy of allowing local governments to issue their own bonds may make the problem worse.
China’s Tencent slows as new Internet models bloom
By Wei Gu
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
Bigger is generally deemed better in China’s billion-strong consumer market. Tencent, the nation’s second-biggest Web firm by market value, has been jumping into every new hot Internet sector. But the strategy is backfiring. The firm’s year-on-year profit growth slowed to a four-year low of 14 percent during the third quarter. Tencent needs to think beyond scale for the sake of it.
Japan Inc’s earnings problems are home grown
By Wei Gu
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
Something is amiss with Japan’s biggest names. Sony, Panasonic and Honda were three whose earnings were battered in the latest quarter, but they weren’t alone. Earnings at the 493 Japanese companies that announced results as of Oct. 31 were 57 percent short of their forecasts, according to Deutsche Bank. Excuses abound, from earthquakes to weak U.S. demand. But it’s problems at home that make them so susceptible.
Debt triangles return to haunt Chinese firms
By Wei Gu
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
Chinese companies’ robust earnings growth doesn’t tell the full story. Despite strong net income growth, operating cashflow deteriorated sharply in the first half. Many companies increased credit to customers to drum up sales as demand weakened. If those customers can’t pay, the resulting bad debt could hit companies and their lending banks. Similar “debt triangles” haunted Chinese companies in the 1990s.
Pfizer milk bid could fortify China’s M&A hopes
(The author is a Reuters Breakingviews columnist. The opinions
expressed are her own)
By Wei Gu
HONG KONG, Oct 25 (Reuters Breakingviews) – Pfizer’s (PFE.N: Quote, Profile, Research)
powdered milk business could fuel a new wave of China-led
foreign acquisitions. Mengniu Diary (2319.HK: Quote, Profile, Research) is weighing up a
possible $10 billion bid for U.S. pharma giant’s nutrition
division. Unlike past deals in consumer goods, which focused on
China’s low labour costs, this looks more linked to the
country’s rising consumer demand. Buying foreign brands may also
help China shake off worries about its food safety, if bidders
tread carefully.
Breakingviews-Pfizer milk bid could fortify China’s M&A hopes
(The author is a Reuters Breakingviews columnist. The opinions
expressed are her own)
By Wei Gu
HONG KONG, Oct 25 (Reuters Breakingviews) – Pfizer’s (PFE.N: Quote, Profile, Research)
powdered milk business could fuel a new wave of China-led
foreign acquisitions. Mengniu Diary (2319.HK: Quote, Profile, Research) is weighing up a
possible $10 billion bid for U.S. pharma giant’s nutrition
division. Unlike past deals in consumer goods, which focused on
China’s low labour costs, this looks more linked to the
country’s rising consumer demand. Buying foreign brands may also
help China shake off worries about its food safety, if bidders
tread carefully.
Breakingviews-China Mobile’s cash pile is a $50 bln dilemma
(The author is a Reuters Breakingviews columnist. The opinions
expressed are her own)
By Wei Gu
HONG KONG, Oct 6 (Reuters Breakingviews) – China Mobile
(0941.HK: Quote, Profile, Research, Stock Buzz) has a $47 billion dilemma: what to do with its cash
pile. The company already has more cash on hand than famously
flush U.S. tech firm Apple, and it is adding $8 billion a year
at the current rate. Suitable foreign acquisitions targets are
scarce, and buying back shares may be tough given the company’s
majority state ownership. The best thing might be to invest in
growth at home.
Jingdong IPO tests U.S. appetite for China stocks
(The author is a Reuters Breakingviews columnist. The opinions
expressed are her own)
By Wei Gu
HONG KONG, Sept 8 (Reuters Breakingviews) – Jingdong, the
Chinese online retailer, hopes to raise up to $5 billion in New
York. If it does it will set new records for U.S. Internet
initial public offerings.
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