Funding Crisis in China’s Property Market

Summary Based on our interviews, we believe the property sector will face a liquidity crisis when the peak of debts come due in the second half of 2017 and beginning of 2018. According to the Centaline Group, China’s property developers raised Rmb1.14trn in 2016 through privately raised company bonds, corporate bonds, medium term notes and […]

China’s Bond Rout and the Shadow Market

Summary Chinese banks have been relying on two sources of credit for liquidity – interbank loans and private loans through the Shadow Banking market. Interbank loans are controlled by bank policies and by the central bank (PBOC). Shadow loans are issued by private creditors. The liquidity crunch over the past week has been blamed by […]

Quick Thoughts on Timing of China’s Debt Crisis

China’s Crisis Timing? I’ve been getting questions recently on when China may hit the crisis point.Timing for a crisis is always tricky. The short answer — no catalyst yet. I see three parameters: 1) The amount and type of credit at risk. 2) The state of the fundamental economy. 3) General “perception” among individuals. On […]

China Oceanwide: Synergies with Genworth Financial

China Oceanwide Holdings Group Co., Ltd. (715 HK) announced in October it plans to acquire 100% of the outstanding shares of Genworth Financial Inc. (GNW NYSE). The purchase will be made through its affiliated company, Asia- Pacific Universe Investment, for US$5.43 per share in cash, 4.2% more than the closing price of the date of […]

Notes from China: Privatizing Debt

We just returned from a trip interviewing banks and local lenders in Fujian Province and Shanghai. These local lenders include pawn shops, private families, and small businesses. They provide short and medium-term loans to consumers. Two points jumped out: 1) Consumers are leveraging up by withdrawing equity from their assets, mainly property and autos. This […]

Bloomberg Radio:

Andrew Collier, Managing Director, Orient Capital and Senior Fellow, Mansfield Foundation joined Yvonne Man and Bryan Curtis to discuss the APEC meeting and the outlook for the Chinese economy. Collier is skeptical about Chinese growth and also argues that the Chinese may pull back from the use of the military in the South China Sea […]

The Politics of the Syngenta Deal

Will Chem China Get its Money? We’ve been doing some work recently on the proposed Chem China acquisition of Syngenta. The documents submitted so far are woefully inadequate, forcing investors to rely on press reports from Caixin Magazine in Beijing. That has left many investors scratching their heads figuring out if the financing is solid. […]

ChinaChem/Syngenta Deal – How Will it Be Funded?

In August, the U.S. approved China National Chemical Corp.’s proposed $43 billion takeover of Swiss seed company Syngenta AG, overcoming domestic opposition on security grounds. Given the history of Chinese foreign acquisitions, one of the concerns remains the ability of ChemChina to raise the funds for the proposed purchase. In this note, we analyze several sources of capital and the political implications of the financing behind the deal.