Shanghai Daily Business
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SHANGHAI shares rose to a two-year high yesterday when Hong Kong stocks climbed to a fresh record as investors tracked another milestone on Wall Street, but Asia-wide markets struggled to keep up the recent momentum.
But while the afternoon saw a slight wobble across the region and some analysts warned of a possible correction, traders remain bullish on equities thanks to a healthy global economic outlook, optimism over the impact of Donald trump’s tax cuts and strong corporate earnings.
The Shanghai Composite Index gained 0.87 percent to 3,474.75 points, the highest close since the end of 2015.
After the market closed, data showed the Chinese economy grew a forecast-beating 6.9 percent in 2017, the first annual improvement since 2010.
The GDP reading follows strong trade data last week, which showed the humming global economy had propelled China’s export machine.
“This momentum, especially the part fueled by external demand, may carry on well into 2018,” said Wei Yao, chief China economist at Societe Generale.
Hong Kong’s Hang Seng Index ended 0.4 percent higher at 32,121.94, holding above the 32,000 mark it broke in the morning for the first time in its history. The market has fallen only once in the past 17 trading days.
Seoul was slightly higher, while Bangkok and Jakarta also rose. However, Tokyo dipped 0.4 after a late sell-off on profit-taking but still sits at 26-year highs, while Sydney was marginally lower and Singapore shed 0.5 percent. Wellington and Manila were also down.
A survey by Bank of America found fund managers were upbeat about the outlook and see equities continuing to rise into next year.
And Lucy MacDonald, chief investment officer for global equities at Allianz Global Investors, told Bloomberg Television: “It’s time for relative caution but we’re still overall pro-equity.”
However, she added: “Nominal returns in markets are liable to be lower than they’ve been in the recent past.”
There was also a word of caution from Joachim Fels at Pacific Investment Management, who said: “The fact that the fear is gone is the main reason why we should be worried.”
Traders started on the front foot after Apple said it will pay almost US$40 billion in taxes to repatriate US$350 billion following Trump’s tax cuts, adding that it will also boost jobs, hike wages and spend more on innovation.
“This is exactly the encouragement that Trump’s tax policy constructed for. The move by Apple will influence and at the same time impose pressure on other multinationals to follow suit,” said Shane Chanel, equities and derivatives adviser at ASR Wealth Advisers.
The pound held gains against the US dollar after climbing on Wednesday on comments from European Commission chief Jean-Claude Juncker that he would welcome any British attempt to rejoin the EU after it leaves. The remarks raised hopes Britain could exit on more favorable terms than have been expected and follow speculation about a possible second referendum.
“Some smooth-talking from Jean-Claude Juncker helped propel the pound ... as he appeared to not only suggest that the UK could come back after they leave but equally in the change of tone reflects that a ‘soft’ Brexit is now becoming a high probability,” said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader.
Bitcoin rose above 10 percent to US$11,000, according to Bloomberg data, a day after falling through the US$10,000 mark for the first time since mid-December.
China cuts its holdings of US Treasury securities in November, after adding US$8.4 billion in October.China’s holdings of US Treasuries dropped by US$12.6 billion to nearly US$1.18 trillion in November. China remained the largest holder of US Treasuries.Japan, the second-largest holder of US Treasuries, also cut its holdings by US$9.9 billion to US$1.08 trillion in the month. Japan has cut its Treasuries holdings for four straight months.By the end of November, overall foreign holdings of US Treasury securities slightly fell to US$6.34 trillion from October’s revised US$6.35 trillion.The State Administration of Foreign Exchange, China’s top forex regulator, recently dismissed a foreign media report that China was considering slowing down or even halting its purchase of US securities.China’s forex reserves have been invested in a diverse and decentralized manner to keep assets safe and ensure they grow in value steadily, the SAFE said in a statement. Like other investment moves, the purchase of US Treasuries is market-based behavior and is subject to professional management based on market conditions and investment targets, said the statement. China’s forex reserves rose for 11 months to US$3.14 trillion at the end of December, as the economy got on a firmer footing and the government stepped up regulation of illegal capital transfers and overseas investment.
Housing markets in China’s 15 major cities were generally stable for another month in December as differentiated rein-in policies to curb speculation continued to take effect, data released yesterday by the National Bureau of Statistics showed.Four of the 15 cities, including first-tier ones and key second-tier cities, saw decline in new home prices from November. Prices in three cities were flat from a month earlier, and the remaining eight posted month-on-month growth, according to the bureau, which monitors property prices in 70 Chinese cities.In the four first-tier cities, new home prices in Shanghai added 0.3 percent from November, the only gainer among the four. Prices in Beijing were flat while those in Guangzhou and Shenzhen fell 0.2 percent and 0.3 percent, respectively.On an annual basis, prices in nine cities retreated between 0.2 percent and 3 percent while those in the remaining six cities rose by between 0.1 percent and 5.5 percent from a year earlier, according to the bureau.“Price fluctuations on a monthly basis in the 15 major cities were all within a moderate range, indicating a largely stable housing market,” said Liu Jianwei, a senior statistician at the bureau.“On an annual basis, the majority of these cities recorded lower prices.”Nationwide, new and pre-owned home prices in the four first-tier cities fell year on year for 15 consecutive months in December.Meanwhile, lower-tier cities were showing some signs of picking up, the bureau’s data suggested.New home prices in second and third-tier cities rose 0.6 percent and 0.5 percent month on month, respectively, both 0.1 percentage points faster than that in November.In the pre-owned housing market, prices in second and third-tier cities both climbed 0.3 percent, the same pace from a month earlier.In a separate statement yesterday, the bureau released annual property sales and investment data for 2017.Sales of new homes, excluding government-subsidized affordable housing, rose 11.3 percent last year to 11.02 trillion yuan (US$1.7 trillion), up from the 9.9 percent growth in the first 11 months of 2017.By area, new homes sold last year climbed 5.3 percent from 2016 to 1.45 billion square meters, slowing from a 5.4 percent gain in the first 11 months.By investment, about 7.5 trillion yuan were invested in residential development nationwide last year, an annual increase of 9.4 percent, 0.3 percentage points slower than that in the first 11 months.
An Airbus A380 of Emirates Airlines lands at Dubai’s International Airport. Emirates yesterday said it has struck a US$16 billion deal to buy 36 A380 aircraft just days after Airbus said it would have to halt production without new orders. Emirates placed firm orders for 20 of the aircraft with options for a further 16. Deliveries are scheduled to start in 2020. Emirates is already the world’s biggest customer for A380 with 101 in its fleet and 41 more firm orders previously placed.
HNA Group Chairman Chen Feng has expressed confidence that China’s aviation-to-financial service conglomerate will manage its cash crunch, and continue to receive support from banks and other financial institutions this year.
The liquidity problem exists “because we made a big number of mergers,” even as the external environment became more challenging and China’s economy “transitioned from rapid to moderate growth,” impacting the group’s access to new financing, Chen said.
“Rate hikes by the Federal Reserve and deleveraging in China caused a liquidity shortage at the end of the year for many Chinese enterprises,” Chen said. “We’re confident we’ll move past these difficulties and maintain sustained, healthy and stable development.”
It was a rare acknowledgment by a top company official that HNA is facing financing problems. In recent weeks, local banks have privately and publicly voiced concern after HNA failed to repay some obligations, including aircraft lease payments, and as surging debt drove up the cost of the group’s short-term fundraising to new highs.
Significant moves are expected. HNA’s flagship Hainan Airlines Holding Co, Bohai Capital Holding Co, the parent of aircraft leasing firm Avolon, and Tianjin Tianhai Investment, which controls California-based Ingram Micro, all have suspended trading pending major announcements.
Ingram Micro, which HNA bought for roughly US$6 billion, is part of the US$50 billion worth of transactions the conglomerate announced over the last two years. They also included big stakes in Hilton Hotels Worldwide Holdings and Deutsche Bank.
HNA’s Chief Executive Adam Tan said in November that the company was selling some real estate and other assets to improve liquidity and comply with national policy.
Chen, speaking at his office in Haikou, Hainan Province, where HNA has its headquarters, said he wasn’t involved in decision making for any transactions and declined to comment on fundraising plans.
After years of “extraordinary development,” Chen said HNA was now focused more on integrating operations, creating synergies between resources at home and overseas, and improving group management.
“Our business has become so big that we need to improve efficiency,” said Chen. “The long-term goal remains unchanged, which is to become a world-class enterprise,” he said. “2018 is our year of effectiveness.”
HNA’s leverage has alarmed some analysts and its “aggressive financing policy” caused S&P Global Ratings in November to downgrade its assessment of the company’s creditworthiness. HNA in recent weeks also has raised additional financing by selling expensive short-term debt and pledging more of its shares for loans.
Group borrowing, including bank loans and bonds, surged by more than a third over the first 11 months of last year to 637.5 billion yuan (US$99.3 billion), according to a China bond market filing. Group assets reached 1.2 trillion yuan at the end of June, according to a separate bond market filing.
In December, HNA said it received pledges of support for 2018 from eight big domestic policy and commercial banks, including China Development Bank, the Export and Import Bank of China, and the Industrial and Commercial Bank of China.
The company also said it still had 310 billion yuan in unused credit facilities from financial institutions.
Chen said financial institutions continued to support HNA because of the quality of its assets and projects. “We provide local employment, tax revenue and development,” he said.
HNA’s financing troubles have been exacerbated by regulatory investigations in multiple countries after the group announced changes to its shareholding structure in July. While securing clearances from German, Irish and UK authorities, the group also has experienced setbacks in Switzerland and New Zealand.
Australia and New Zealand Banking Group this month dropped plans to sell its UDC finance unit to HNA after the New Zealand regulator blocked HNA’s application, citing uncertainty about the group’s ownership and controlling interests.
China’s going abroad, change in its foreign exchange policy and the doubts of foreign governments presented challenges, Chen said. “Some people are uncomfortable.”
He said HNA still faces a problem of experience, which has been tested by a complex global environment. “Our young leadership team, including myself, hasn’t managed a global enterprise,” Chen said.
PPDai, China’s first online P2P (peer-to-peer) lending platform listed in the US market, said yesterday that it will invest 1 billion yuan (US$156 million) within three years to set up a new research institute.The money invested in the new PPDai Smart Finance Institute will be used to fund artificial intelligence, blockchain, finance cloud and Big Data sectors, said Zhang Jun, co-founder and chief executive of Shanghai-based PPDai.“It’s the first company to invest more than the ‘1 billion yuan’ line in the P2P industry to develop intelligent and secure online finance services in China,” Zhang said.PPDai, which launched an initial public offering in New York in November, has also formed a consultant team consisting of executives and researchers from FICO and CalTech. It is also cooperating on AI with research institutes under the Ministry of Industry and Information Technology, Zhejiang University and the National University of Singapore.
SONY Corp expects its business in China to grow strongly this year amid a market of 230 million middle-class consumers who are upgrading their consumption patterns, the company’s China president said yesterday in Shanghai.
In the first half of Sony’s fiscal year ended on September 30, the Japanese company’s revenue jumped 40 percent year on year in China on brisk sales of new-technology TVs, professional cameras, sensors used in smartphones and game devices and services.
Sony still managed to expand even as the entire domestic TV and smartphone markets faced sluggish growth close to saturation points, industry insiders said.
“It’s one of the best fiscal years for Sony China recently thanks to our products and strategies,” Takahashi Hiroshi, Sony China’s president, said in Chinese.
Sony China will continue to focus on middle or high-end users as China has “enough market space” with 230 million middle-class consumers and a “big trend” for consumption upgrade, said Hiroshi.
CHINA saw more balanced cross-border capital flow in 2017 as willingness to purchase the greenback waned thanks to rising confidence in the yuan and the domestic economy.
Chinese banks’ net forex settlement deficit fell significantly last year, according to the State Administration of Foreign Exchange.
Commercial banks bought US$1.64 trillion worth of foreign currencies, up 14 percent year on year, while selling US$1.76 trillion, down 1 percent compared with 2016. This resulted in a net forex settlement deficit of US$111.6 billion, down by a whopping 67 percent year on year.
SAFE pointed out that the forex market has seen more balanced demand and supply, with the fourth quarter of last year reporting a settlement surplus of US$1.2 billion.
An index weighing bank clients’ willingness to purchase forex fell 9 percent year on year, while individual cross-border remittances and deposits also shrank significantly compared with 2016.
“The year 2017 marked the threshold when China’s cross-border capital flow transited from net outflow to general balance,” said SAFE spokeswoman Wang Chunying.
China’s forex reserves ended the downward trajectory of the previous two years to gain US$129.4 billion in 2017, while its current account surplus remained in a reasonable range and the financial account saw net capital inflow in the first three quarters of last year.
Wang attributed the more balanced forex supply and demand to steady domestic economic expansion, acceleration of the financial sector’s opening as well as a recovering global economy.
Cross-border capital flow will continue to remain generally stable as China’s emphasis on high-quality growth will boost market confidence and more opening-up efforts will lure more capital, said Wang.
CHINA'S economy expanded by a more-than-expected 6.9 percent last year, amid the deepening of supply-side reforms, the National Bureau of Statistics said yesterday.
The annual growth of GDP was above the government's official target of 6.5 percent and marked a recovery from a 26-year low of 6.7 percent in 2016.
GDP growth in the fourth quarter was 6.8 percent, the same as the third quarter but slower than the 6.9 percent growth in the first two quarters.
The services sector led growth with an increase of 8 percent, outpacing the industrial sector's 6.1 percent and the agricultural industries' 3.9 percent.
Services continued to make up 51.6 percent of the countryÕs 82.71 trillion yuan (US$12.85 trillion) GDP.
Industrial value-added output expanded 6.6 percent year on year in 2017, up from 2016Õs 6 percent led by high technology and equipment manufacturers.
ÒThe domestic economy was steady, positive, and above expectations,Ó the statistics bureau said. ÒEconomic dynamism, momentum, and potential have been released and the stability, coordination and sustainability have significantly enhanced.Ó
Ning Jizhe, the bureauÕs head, said in a briefing that structural reforms achieved important progress last year with capacity reduction in high energy consumption industries, lower debt burden of industrial companies, and greater investment in agriculture and environment protection.
Momentum gathered in the Ònew economyÓ Ñ referring to new skills, new products, new industries, and new business models.
Ning highlighted that 13 million new jobs were created last year, and the foreign exchange reserves rose to US$3.14 trillion.
YesterdayÕs figures showed retail sales up 10.2 percent year on year, slightly lower than the 10.4 percent increase in 2016.
Fixed-asset investment rose 7.2 percent year-on-year, down 0.9 percentage points from 2016.
Specially, private investment reached 38.15 trillion yuan, up 6 percent year on year, 2.8 percentage points faster than the previous year, accounting for 60.4 percent of the total investment.
Online sales of physical goods rose 32.2 percent to 7.18 trillion yuan, amounting to 15 percent of total retail sales, 2.6 percentage points higher than 2016.
Cheng Shi, chief economist of ICBC International, attributed the faster-than-expected economic growth last year to emergence of new momentum instead of government stimulus in investment.
ÒThe year 2017 concluded in a steady way after surprising recovery in the first half,Ó said Cheng. ÒBenefits of supply-side have been released, and macro-economic policies in the new age are expected to support and accelerate the shift from traditional industries to new momentum, creating new room for high quality development in China.Ó
The institute said ChinaÕs GDP growth could still reach 6.9 percent this year as a long-term recovery trend is consolidated.
Earlier data showed ChinaÕs consumer inflation was 1.6 percent last year, cooler than the 2 percent for 2016, while the factory-gate prices rose for the first time in six years. Foreign trade recorded its first expansion in three years under strong domestic and external demand.
Standard Chartered Bank forecast ChinaÕs GDP will be ÒmoderateÓ this year, up to 6.5 percent, with greater emphasis on reforms in pursuit of higher quality of development.
ÒWhile the government has continuously emphasized stability in the process of moving forward, we sense a tilt in the balance toward faster reforms and increased risk-taking in 2018, which marks the 40th anniversary of the launch of ChinaÕs reform and opening up,Ó the bank said in a note.
The bank said potential risks to the economy include smaller property investment, lower growth and higher inflation, as well as escalating trade friction with the United States.
CHINA’S per capita disposable income stood at 25,974 yuan (US$4,033) in 2017, up 7.3 percent year-on-year in real terms, official data showed yesterday.
The increase was 1 percentage point faster than the 6.3 percent rise registered in 2016.
Separately, urban and rural per capita disposable income reached 36,396 yuan and 13,432 yuan, respectively, in 2017, up 6.5 percent and 7.3 percent in real terms after deducting price factors, according to the National Bureau of Statistics.
In 2017, China had 286.52 million rural migrant workers, up 1.7 percent from 2016.
Their average monthly income was 3,485 yuan, up 6.4 percent year on year.
By 2020, China aims to double the per capita income of its urban and rural residents from 2010 levels, to build a moderately prosperous society.
CHINA’S economy is likely to experience stable growth this year, although continuing deleveraging efforts, regulatory tightening and subsequent liquidity concerns are the key challenges, says investment management services firm Fidelity International.
The stock market recorded one of its longest rising runs as it entered 2018, leading investors to the question whether the momentum can be sustained or whether a decline is due.
“The A-share market (shares listed on the Chinese mainland) hit the bottom in 2016 and since then it has experienced a continuous rebound. I believe the trend is likely to last in 2018, as valuation is still attractive in global content,” said Lynda Zhou, Fidelity’s equity portfolio manager.
She said that China’s ongoing supply-side reform will benefit cyclical sectors such as coal, steel and cement by fostering a more robust market with a better supply-demand balance.
In terms of sectors, a number of domestic brands in the automobile and home appliance industries have grabbed market share from foreign players in recent years. “Domestic automobile brands captured 40 percent of market share in China in 2017, compared to the 20 percent back in 2003,” Zhou said.
Also, high-end manufacturing is a market set to expand, as China is leading the way in surveillance and communication technology industries.
“China is on track to further accelerate innovation over the long term. All of these driving forces will propel the economic growth in 2018 and beyond,” Zhou said.
Corporate earnings are expected to remain strong this year despite an expected slowdown compared with 2017.
The overall valuation for A-shares is still below the global average, which is a chance for investors, while some overpriced stocks with high growth can expect a correction that will lead to additional market volatility.
As for the bond market, Freddy Wong, Fidelity’s fixed income portfolio manager, believes the authorities will step up further on regulatory tightening.
He added that inflation and the expected looming interest rate rise by the central bank can bring additional risks that might also drive the yield curve upward.
“Banking, property, consumer and infrastructure will be the major sectors dominating China’s bond market,” Wong said.
CHINA Eastern and Hainan airlines will allow passengers to use their smartphones on planes from today — but not to make actual phone calls.
The two airlines announced the move yesterday after the industry regulator issued a guideline to lift the ban on mobile phones.
Spring Airlines, a Shanghai-based carrier like China Eastern, said it will allow passengers to use phones in the air from “early this year.”
From today, passengers on China Eastern flights are able to use their smartphones as well as laptops, iPads, e-books and other small-size portable electronic devices throughout the whole flight, the carrier said.
Previously, the use of phones was banned on flights by Chinese carriers. However, intercoms, remote-control toys and other devices with remote-control or radio transmitting equipment remain out of bounds on aircraft. Flouting the rules can mean a fine of up to 50,000 yuan (US$7,610).
According to the new rule on the use of portable electronic devices released yesterday, smartphones must be shifted to flight mode and the communication function must be turned off, China Eastern said.
That means passengers will merely be able to take pictures or use in-flight Wi-Fi services on their devices rather than make phone calls in the air.
Phones with no flight mode facility still have to be turned off throughout the flight, according to the airline.
Demands from passengers
Furthermore, earphones or chargers must be detached during taxiing, take-off, descending and landing.
Spring has launched an evaluation and will apply to the Civil Aviation Administration of China soon, said the budget carrier’s spokesman Zhang Wu’an. He noted “passengers must obey the order of the crew to turn off the devices once any inference was noticed.”
There have been increasing demands from passengers to be allowed to keep their smartphones switched on throughout their flights, the CAAC said in the guideline released on Tuesday.
“The administration has made technical tests to conclude that the condition has been mature to lift the ban on portable devices in the air,” the CAAC said in the evaluation guideline.
It allows domestic airlines to evaluate the impact of portable electronic devices on flights and come up with their own management policies. Airlines will have to first carry out an evaluation, submit an application and get agreement from the administration before allowing passengers to use phones on flights, a CAAC official said.
The carriers must issue specific rules on the category of devices to be allowed and when they must be switched off. For instance, smartphones and other portable electronic devices must be turned off when the airplanes are flying in low visibility weather conditions or if any interference is being caused, according to the guideline.
‘Cabin will be far noisier’
“I don’t think it is necessary to use mobile phones on planes, and I am more concerned about flying safety,” said Georges Billard, a French freshman from Bordeaux at Shanghai’s Fudan University.
“The regulator should focus more on the security angle, rather than to allow the usage of phones,” he added.
“I prefer to be free from the endless WeChat messages and e-mails on phones and take some rest in the air,” said Zhao Yun, a civil servant working for a government body. “I’m afraid the cabin will become far noisier when passengers can make video communications or play games on their phones.”
According to an online survey about the usage of smartphones on airplanes, more than half of the respondents said they “don’t want the ban to be lifted” or that they “don’t care.” Nearly 80 percent of the respondents said they feared smartphones could affect flying safety.
Many foreign carriers have allowed the use of smartphones during flights in the wake of the popularity of in-flight Wi-Fi services. At present, in-flight Wi-Fi services are available on a majority of airlines in the United States, Europe, Singapore and China’s special administrative region of Hong Kong.
More than 78 percent of overseas flights feature Wi-Fi functions. That compares with only about 2 percent of airlines in China, the world’s second-largest air-travel market.
The new regulation will boost the development of in-flight Wi-Fi services among Chinese airlines, Spring’s Zhang said. He added that Spring Airlines has equipped two aircraft with Wi-Fi facilities and will launch an Internet service soon.
China Eastern has opened Wi-Fi services on 74 of its aircraft. All its long-distance international routes have been equipped with Wi-Fi services, according to the airline.
PetroChina’s logo is seen at its petrol station in Beijing. Profit of China’s petrochemical industry in 2017 grew at the fastest pace in six years, the China Petroleum and Chemical Industry Federation said yesterday. The sector’s 2017 profit is estimated to exceed 850 billion yuan (US$132 billion), an increase of 30 percent. Revenue from core operations totaled 14.5 trillion yuan last year, up 12.5 percent. The petrochemical industry has been hindered by overcapacity along with security and environmental constraints. A State Council guideline issued in August 2016 said China must increase the competitiveness of the industry.
CHINA’S mobile phone sales fell 27.1 percent last year as the market became saturated after several years of rapid growth.
In 2017, China’s mobile phone sales totaled 491 million units, down 27.1 percent from a year earlier. The number of newly released models also fell 12.3 percent from a year ago to 1,054, according to the China Academy of Information and Communications Technology, a research arm of the Ministry of Industry and Information Technology.
In December alone, China’s mobile phone sales tumbled 32.5 percent year on year, signaling a more sluggish market, said CAICT.
On Tuesday, ZTE, China’s biggest listed telecom equipment maker, became the first major Chinese smartphone vendor to release a foldable dual-screen smartphone, Axon M, which will be available from Saturday at a starting price of 3,888 yuan (US$600).
It’s time to bring consumers “tech-savvy” products to create a new market space when the whole market is close to saturation, said Cheng Lixin, chief executive of ZTE’s mobile devices.
Smaller Chinese smartphone vendors, including 360 and Meizu, have also unveiled high-end and innovative products and planned to expand overseas to seek opportunities amid the “tough” domestic market environment.
Xiaomi, which is reported to launch an initial public offering this year, aims to double overseas revenue in 2018 by expanding in India and Europe. It’s also “seriously preparing” to enter the US market, Xiaomi Chairman Lei Jun said last month.
THE assets of foreign banks in Shanghai saw year-on-year growth of 13 percent in 2017, while their bad-loan ratio stood below the industry’s average, the banking regulator said yesterday.
Overseas banks in Shanghai recorded 1.56 trillion yuan (US$243 billion) in assets at the end of 2017, accounting for 10.6 percent of the city’s entire banking sector, according to the Shanghai Office of the China Banking Regulatory Commission.
The non-performing loan ratio of foreign banks in Shanghai stood at 0.34 percent at the end of last year, below the industry’s average of 0.57 percent and down 0.17 percentage points from the first half of 2017.
Overseas banks and their Chinese counterparts jointly launched 13 projects worth 89.5 billion yuan last year to deepen their cooperation.
The city’s foreign banks have also seen 671.7 billion yuan in outstanding loans to Chinese clients involved in the Belt and Road initiative.
Meanwhile, they backed the development of local science and technology firms. Data from the regulator showed these banks had served 440 such firms by the end of the third quarter of 2017, up 43.8 percent from the start of the year. The outstanding loans to these clients topped 14 billion yuan at the end of September, up 53.9 percent from the start of 2017.
Shanghai was home to 230 foreign banking institutions from 29 countries and regions at the end of last year, the regulator said.
Volkswagen said yesterday that it sold a record number of vehicles in 2017, putting it on track to hold on to the title of world’s largest carmaker two years after its “dieselgate” emission scandal.Some 10.7 million vehicles from VW or its subsidiaries ranging from Porsche and Audi to Skoda and Seat rolled out of dealerships last year — an increase of 4.3 percent over the previous year, the carmaker said.“We are grateful to our customers for the trust these figures reflect,” Chief Executive Matthias Mueller said.VW’s sales look likely to outstrip Japanese rival Toyota’s, which is expected to stand at around 10.35 million units.Nevertheless, the Wolfsburg-based group is still facing a growing challenge from the Renault-Nissan-Mitsubishi alliance, which also laid claim to the top spot yesterday.Its chief Carlos Ghosn told the French national assembly that, excluding trucks, Renault-Nissan-Mitsubishi sold 10.6 million vehicles worldwide last year.“The alliance is the world’s biggest carmaker, that’s just been confirmed,” Ghosn said, arguing that the VW figure included 200,000 heavy trucks, which shouldn’t be included in the total.VW’s strong performance underlines its recovery from the blow it was dealt two years ago, when it admitted in September 2015 to cheating regulators’ emissions tests on millions of diesel cars worldwide.It has since begun to rebuild its reputation in some of the world’s most important markets, with Chinese sales adding 5.1 percent to 4.2 million vehicles last year and US sales rising 5.8 percent to 625,000 vehicles.Growth was more spectacular in South America, at 23.7 percent, but sales only reached 522,000 units in absolute terms.Meanwhile, sales in Central and Eastern Europe including Russia increased by 13.2 percent to 745,000 vehicles.But growth in Western Europe was more sluggish, with shipments up 1.4 percent at 3.6 million units.Looking to the group’s different brands, generalist VW booked an increase of 4.2 percent to 6.2 million units, while Skoda added 6.6 percent to 1.2 million and Seat 14.6 percent to 468,000 units.Luxury Porsche shipped 246,000 cars, up 3.6 percent year on year, while Audi fell behind high-end rivals BMW and Mercedes-Benz, with 0.6 percent growth to 1.9 million vehicles sold.Truckmaking units MAN and Scania both grew 11.6 percent.
CHINA’S luxury market is expected to grow by low double digits in 2018 after posting the highest expansion in the past five years in 2017, with market momentum still vibrant.
Bain & Co said in its 2017 China Luxury Report yesterday that new consumers — those aged between 20 and 34 — were major contributors to the luxury market’s growth last year.
Chinese spending in the domestic luxury market grew 20 percent to 142 billion yuan (US$22 billion) last year, outpacing purchases overseas.
Luxury spending from China contributed to 32 percent of the global luxury market over the past year, with renewed consumer confidence and narrowing price gaps for luxury goods between overseas and domestic markets contributing to the spending boom.
Compared with mature consumers, millennials start purchasing luxury goods at an earlier age and buy more frequently. They purchased an average of eight times last year, compared with five times for other buyers.
Cosmetics, women’s wear and jewelry were the top categories, and sales of them surged over 20 percent annually, surpassing the growth of other categories.
“In response to the booming appetite of millennials, we’re seeing luxury brands repositioning themselves to better reach this influential demographic group, particularly through digital media that we know plays an influential role in shaping younger consumers’ opinions about luxury and fashion,” said Bruno Lannes, partner at Bain’s China office and author of the report.
Although they saw a high growth rate, online channels only contributed to 9 percent of overall sales. That’s expected to continue to pick up in the future, with more brands planning to open their proprietary websites.
The report said creating “newness” and offering innovative ideas will be important if brands hope to capture the new generation of consumers.
Brands should also consider partnering with fashion icons and keep a “trendy” image, the report said, to cater to the individualism of millennials.
THE bronze sculpture of a bull that stands near the New York Stock Exchange serves as a symbol of Wall Street’s power perhaps this year more than ever.
Since US President Donald Trump took office a year ago, the principal US stock indexes have gained by leaps and bounds, hitting a record string of records.
“I have not seen such enthusiasm on Wall Street since Ronald Reagan,” said Peter Cardillo of First Standard Financial, who has seen nine US presidents come and go since 1971, when he started working at the heart of global finance.
In 2017, the S&P 500 soared 19.4 percent while the blue-chip Dow Jones Industrial Average gained 25 percent and the tech-heavy Nasdaq added 28.3 percent — the strongest performances since 2013.
Only two other presidents, Democrats Barack Obama and Franklin Roosevelt, saw higher gains in the broad-based S&P 500 during their first years in office.
Analysts say euphoria over the tax overhaul that slashed corporate rates, which Trump signed last month, fed Wall Street’s buying frenzy, along with rising prosperity and job creation after a decade of slow economic recovery.
“We got a very generous tax cut and of course it favors corporate America and so basically that means that we’re going to see capital investments rise at a hefty pace, and that could create more jobs,” Cardillo said.
After the tax package was enacted in December, some companies wasted no time in announcing pay raises and rosy earnings — including automaker Fiat Chrysler, commercial banking giant Wells Fargo and global retailer Wal-Mart.
But many companies have said the windfall will go to increased payments to shareholders and share buybacks rather than more investments and job creation.
In addition to the Christmas present of tax cuts, Trump’s pro-business attitude has comforted investors.
‘Not related to Trump’
“Around him, the people in charge of the American economy come directly from Wall Street and Goldman Sachs,” said Gregori Volokhine, president of Meeschaert Financial Services.
That includes senior White House economic advisor Gary Cohn and Treasury Secretary Steven Mnuchin, among others.
“It’s a team of insiders. Donald Trump lets things happen and what happens is market friendly.”
Those welcome signals from the White House come against the backdrop of steady economic expansion, with the US economy growing every year since 2010, fueling the good mood on Wall Street.
Trump and his team are seen as having given the economy a “boost,” Cardillo said, noting that “the US economy and job creation were already robust before him.”
But the healthy US outlook is also part of a bigger, global picture.
The International Monetary Fund estimates the world economy will grow by 3.7 percent this year after expanding by 3.6 percent in 2017, further lifting demand for US exports.
And as Volokhine noted, “last year, the most successful financial markets in the world were Argentina, Nigeria and Turkey.
“It was obviously not related to Donald Trump.”
Underscoring the impact of global conditions on the US economy, he noted that the 55 percent of American companies on the S&P 500 that are export-dependent have become even more competitive due to the weakening of the US dollar, which fell nearly 10 percent last year.
Meanwhile, individual investors, who are cautiously dipping their toes back into American stock markets after suffering so heavily in the financial meltdown of 2008, seem largely unconcerned by Trump’s penchant for controversy.
“Everything he does is not perfect but Donald Trump does what he promised,” said Steven Kinney, who has been investing on Wall Street for four years.
HONG Kong stocks hit an all-time high yesterday, breaking a record that had been in place for more than 10 years, while the Shanghai Composite Index ended higher for a second day, refreshing a two-month high and extending the strong performance since late December.
But most other major Asia markets fell into the red with energy firms hit by a dive in oil prices.
The US dollar rebounded from morning losses to extend Tuesday’s recovery though Bitcoin was well down following what one analyst called a “cryptocalypse” that saw digital currencies take a hammering.
Hong Kong’s Hang Seng Index spent most of the day in negative territory after ending at a record-high close on Tuesday. But late buying saw shares stage a recovery to finish up 0.3 percent at 31,983.41 — overtaking its previous high seen on October 30, 2007.
The HSI surged by a third in 2017 and has continued its stellar run at the start of the new year, with a record 14-day winning streak only ending on Monday.
Analysts now expect the index to press on with its advance to as high as 34,000 by the end of the year.
The Shanghai Composite hit the highest level since the end of 2015 during the morning session, but later edged down to 3,444.67, the highest close since November 13, 2017, and up 0.24 percent from Tuesday.
The strong rally from December 28 has sent the index higher by 5.2 percent.
Large caps listed in Shanghai led the gains as 36 of the 50 largest listed companies by market value rose.
However, most other markets in the region tracked losses on Wall Street, where investors returned from a long holiday weekend to political horse-trading as Washington lawmakers struggle to avert a crippling government shutdown.
While a deal to fund programs is expected to be met by tomorrow’s deadline, the uncertainty provided an opportunity to cash in after all three main indexes hit peaks last week.
The retreat also comes after a blistering start to the year for equity traders, and Hartmut Issel, head of Asia-Pacific equity and credit at UBS AG Wealth Management in Singapore, told Bloomberg Television that “it’s more of a healthy correction” in stocks.
“The last two and a half weeks have been very strong and in some cases we were really wondering if you extrapolate this another three or four weeks we would have exhausted the potential we saw for the entire year.”
Tokyo shed 0.4 percent on a stronger yen, while Sydney fell 0.5 percent, Singapore slipped 0.4 percent and Seoul fell 0.3 percent. However, there were gains in Manila and Wellington.
Among the big losers were energy firms after both main oil contracts sank more than 1 percent as expectations of falling US stockpiles were overshadowed by worries that Russia is considering ending its role in an output freeze with OPEC.
PetroChina, CNOOC and Sinopec in Hong Kong all lost more than 1 percent while Japan’s Inpex was 1.2 percent lower. Rio Tinto tumbled more than 3 percent in Sydney, where Woodside Petroleum lost 0.5 percent.
On forex markets the dollar pressed on with a small recovery against its major peers after falling to a three-year low against the euro. But analysts say a move globally toward tighter monetary policy could keep pressure on the greenback.
“Expectations are increasing that other ... central banks are readying to enter a path of interest rate normalization, with the European Central Bank and Bank of Japan joining (the Federal Reserve) spearheading the shifting central bank narrative for 2018,” said Stephen Innes, head of Asia-Pacific trading at OANDA.
However, Bitcoin was down almost 8 percent at US$10,900, according to Bloomberg data, having slumped around 15 percent on Tuesday as the volatile cryptocurrency market continues to suffer broad losses.
The selling spread to other alternative digital units, with Ethereum, Ripple and Litecoin all losing about a quarter of their value on Tuesday.
Bitcoin is down from record highs approaching US$20,000 in the week before Christmas, having rocketed 25-fold over the year, hit by concerns about a bubble and worries about crackdowns on trading it.
“It’s been a Cryptocalypse overnight with Bitcoin and other virtual currencies coming under heavy selling pressure,” said Greg McKenna, chief market strategist at AxiTrader.
But Shane Chanel, equities and derivatives adviser at ASR Wealth Advisers, sounded a slightly positive note, saying: “Not all hope is lost. The cryptocurrency market is privy to these wild swings and seasoned veterans in this space have seen this happen many times previously.
“Not saying that it couldn’t be different this time but every major correction has been followed up by a rally more powerful than the last.”
China, the world’s largest emitter of greenhouse gases, wants to shed that unwelcome status by becoming the world’s largest market in carbon trading.The process began with pilot projects in 2013, leading up to a trading start in 2020. The initial trading will be limited to the power industry.Under the program, power companies will be given carbon quotas, or credits. Those who emit below their quotas can sell unused credits to companies that pollute beyond quotas.The 1,700 power plants included in the first round of trading emit an aggregate 26,000 tons of carbon dioxide a year, the equivalent of burning 10,000 tons of coal, said Li Gao, director of climate change at the National Development and Reform Commission.In the future, the trading system will be expanded to include steel, chemicals, building materials, papermaking and nonferrous metals.Coal power plants were the first to be targeted because they account for a third of all carbon emissions. Coal burning has been fingered as a prime culprit in blanketing northern cities in smog every year. The number of coal plants in China fell to 7,000 by the end of 2017 from 10,800 in 2015 amid industrial restructuring that closed the most inefficient plants. Still, new coal plants are being built because “the business is still profitable because of relatively low coal prices,” said James Zhou, an employee at a state-owned power plant.But day by day, plants like that will “face higher costs, especially after carbon trading starts,” said Li Chen, operational director of Shanghai Carbon Favor New Energy Technology Development Co. “They have to pay more every year because carbon trading won’t end.”Li Chen specializes in carbon management. He welcomes the advent of carbon trading. “It has finally come!” he said. “The government has shown its serious ambition to create the world’s largest carbon trading market.”Pilot projects in the carbon-trading scheme began in 2013 and concluded at the end of last year. Nearly 3,000 companies and public institutions in China traded 197 tons of carbon valued at 4.5 billion yuan (US$700 million) through last September 30. The Shanghai municipal government, which was part of the pilot program, expanded the number of companies included in the project to 279 last year from 197 in 2013. It is now urging all listed companies to include carbon emission data in their annual reports.Though actual carbon trading is still two years away, its specter looms large. Many companies are beginning to realize they will have no choice but to adapt.Li Chen recalls the time five years ago when a materials company asked his firm to calculate its carbon emissions to see how it compared with other industries on environmental protection. But the interest was short-lived.“They quit us soon after,” he said. “At that time, the calculation was meaningless to most clients as the trading hadn’t started. They would say to us, ‘Even if I can prove the new product saves more carbon, so what? I can barely make profit from it.’”But Li Chen said more companies are coming to his offices nowadays seeking information on carbon trading as the start year approaches. He said his firm did a carbon assessment for a Zhejiang-based nonferrous metals company, which resulted in the installation of solar panels and turned losses into profits. “Companies are realizing that that they will have to pay for their carbon footprint in the future,” he said. “And we are not talking about a one-year cost. It will have to be part of their long-term business strategies.”Carbon trading is expected to give a big boost to renewable energy industries and create new jobs.Xu Liang, who earned a master’s degree in environmental governance in Germany eight years ago, said he switched to the recycling industry from carbon emissions management in China because he didn’t see much progress in that industry at the time.“But now,” he said, “I would urge people to study environmental engineering because the time is ripe for change.” Good as it all sounds, reducing carbon emissions has not proven easy worldwide.Carbon prices in the European Union’s cap-and-trade system dropped to about five euros (US$5.29) at the beginning of 2017 after years of trading stagnation. Experts said the price of carbon dioxide should be about US$30 a ton, and they blamed an excessive issuance of credits for damping the market. In China’s carbon-trading pilot cities, the price of carbon has ranged from 60 yuan a ton in Beijing to 5 yuan in Chongqing.Jiang Zhaoli, deputy director of the climate change division at the National Development and Reform Commission, said the ideal carbon price in the future should be between 200 and 300 yuan a ton.“Below that,” he said, “companies won’t feel the pressure and will have little motivation for trading. China must develop standards for issuing quotas.”Li Chen said the mechanics of the carbon trading market changes are complex and more refinement is needed to ensure smooth implementation. But he remains optimistic.“This step toward blue skies,” he said, will “spur market players to speed up preparations for the coming changes.”