Author: sangfundu

China Looks to Gambling Opportunities in Matsu

China and Matsu are hoping that the offshore island group of Matsu will attract a large number of gamblers from China. As Anita Chen, a Taipei-based managing director for US-based lobbying firm Park Strategies said, “People that are looking to building casinos anywhere in Taiwan are eyeing Chinese tourists.”

The Matsu government explained that they had a turn out of 40% of eligible voters, and a vote of “yes” from 1795 voters (as compared to 1341 no). Matsu has a population of about 10,000 and is eager to attract tourists since it has been hit by a drawdown of troops in the Taiwan Strait.

It is predicted that Matsu will need three to five years to set up their gambling industry. They need to finish getting the Gambling Act approved by the Taiwan Cabinet and then need to put together a bid for an operator. It could take another three years from that point before the casino is actually built and ready for operations.

Automobile Boost in China for May

May was a very good month for automobile makers and distributors in China. Vehicle sales rose 16% in China year-on-year in May. The data from the industry showed that 1.61 million units were sold during the month of May, showing a strengthening and strong recovery for the world’s largest automobile market. While the sale of passenger vehicles had gone up 12.5% in April, they went up 22.6% in May to 1.28 billion, according to the figures from the China Association of Automobile Manufacturers.

In 2011, the auto sales in China had a dramatic downturn when the government pulled back some of its incentives and some cities slapped harder restrictions on car numbers to get rid of pollution and congestion. While auto sales had increased more than 32% in 2010, they increased by only 2.5% in 2011.

Now, a company like General Motors has a 21.3% surge in May, showing a record number of auto sales. State media has also reported that policymakers are thinking about reviving policies to subsidize the buying of smaller vehicles in rural areas. This will help to increase consumption and help with the economy.

China Selects Rural Area for Economic Pilot Program

In a fascinating and much-anticipated move, China has finally selected a province to begin a pilot project for financial reforms in the rural economy. Lishui in coastal Zhejiang will be the focus for the pilot program intended to help bridge the gap between the villages and the cities in terms of wealth. The People’s Bank of China (PBOC) has published guidelines for the pilot program with instructions to help the city of Lishui to build a financial infrastructure.

As the central bank said in a published statement on Thursday, "Through financial reforms and innovations, our goal is to set up a multi-layer, low-cost, wide-coverage modern rural financial service system in the pilot area."

China’s economy has a great deal of imbalance due to the financial differences in the urban and rural areas. The goal of the program is to help to create more economic stability by distributing the wealth more evenly and by helping those in rural populations to gain a better economic footing.

Trends in Asia Investing Today: A Glimpse at Oasis Investment Limited

Although some sources claim that Asian hedge funds have been struggling over the past year or so, there is much evidence to show this not the case. For instance, during the last year somewhere between 30 and 40 new funds were launched in Asia, including a significant number of high profile funds in Hong Kong.

Oasis Investments Limited, CICC Asset Management, and Azentus were among those more news-worthy funds which were launched last year, revealing the fact that hedge funds are still a popular investment vehicle for many investors looking for opportunities in the Asian market.

It is interesting to examine more closely the launching of the Oasis Investments Limited fund to see just how exciting the Asian market still is for investors. The Oasis Investments Master Fund II is a multi-strategy hedge fund that opened up to external investors at the end of the summer of 2011, aiming for total assets under management of $1 billion before closing the door to new money. Since the fund is a continuation of the strategies which were utilized during the 14 months the fund was operating internally with its own capital it is not surprising that much excitement was stirred when the fund began to seek outside investors hoping to cash in on something even close to the 100 percent annualized rate for its internal investors that the Oasis Investments Limited fund had returned during the past 14 months.

China Consumer Sector Booming According to DBS Group Research

According to many, the Chinese consumer sector is really the hot spot to watch at the moment. As DBS Group Research explains, the consumer sector allows for "beauty of both sides."  This means, as they explain it, that these consumer companies offer "better resilience during the harsh times as well as fruitful returns whenever skies clear again."

The Chinese government is encouraging this emphasis as well, creating policies that help with consumption. They have focused on increasing minimum wage, limiting the medical costs that individuals can accrue, building more affordable housing and increasing transportation systems.

As the yuan continues to appreciate, this also increases the potential purchasing power that mainlanders have.  There will be more interest in gold, luxury items and high-end merchandise, according to the DBS Group. In addition, the government implemented energy saving subsidies in 2011 that will help the home appliance industry.

Companies to watch, according to the DBS Group include: China Foods, China Resources, and Golden Eagle Retail Group.

Trade Between China and North Korea Dramatically Increases

In a fascinating turn of events, North Korea is taking notes from China and starting to create megamarts like Walmart.  Pyongyang will soon have a superstore like Walmart.  The new consumer approach in North Korea is part of an official campaign that they launched three years ago to build up their economy – and to change the image of their leader Kim Jong Un.

The Kwangbok area supermarket in downtown Pyongyang is the first of these examples.  Consumers there can get everything from Minnie Mouse pajamas to popcorn to frying pans.  As shopper Pak So Jong said, "It is very good to come to this shop and buy goods which I like by feeling them and looking over them myself."

The Chinese has been introducing these cheap goods to a small niche market in Northern Korea in the country’s border regions.  Time will tell if it will take off, and if this will be a brilliant economic move for China.

Trade between China and North Korea has been booming for the last few years.  In 2010, North Korea did $3.5 billion in trade with China, which was a 30% increase from the year before. That figure increased to $5.1 billion in the first 11 months of 2011, a 70% increase from 2010.

China: The “Last Untapped Market on Earth”

China consumer spending is on the rise, and it’s showing that China can be a powerhouse for companies selling a vast range of products.  At the Central Economic Work Conference in December, policymakers said that they will "increase the proportion of the middle class" in 2012 and that this will transform the country from one where products are made to one where they are purchased.

Retail sales rose 17% from January through November of 2011.  President Hu Jintao is hoping that retail sales will increase by more than 15% annually over the coming five years and that they will get to 32 trillion yuan by 2015.

In addition, by 2015, China may actually beat out Japan as the world’s center for luxury market goods, according to research that was released by McKinsey & Company.

And companies are starting to follow suit. Apple Inc. recently changed its line that says, “Designed din California, Made in China” to say “Designed in California, Made for China” for its new Shanghai store.

Tesco China, the UK-based grocery and merchandising retailer has more than 100 outlets in China.  Their corporate affairs senior vice president Lu Haiqing said, that China is the "last untapped market on Earth."

New Introduction to the Chinese Finance Market

 

China may be launching an exciting new plan for the finance market – junk-bonds.  The China Securities Regulatory Commission (CSRC) has been in meetings with executives from the various brokerage houses and discussed having a market for high-yield bonds.

Zhou Ruanfan, a senior vice president from the Pengyuan Credit Rating Co. Ltd. Was quoted by the China Business News as saying that CSRC has already drafted rules for the bonds. These bonds would offer higher yields and more risk than the typical investment-grade corporate bonds that are already offered.

Those in the know agree that a high-yield bond market will help to support China’s economic growth by offering financing to smaller firms, as Yin Jianfegn explained.  As Yin said,

"Rating agencies will gain, underwriters will gain, companies will gain, and investors may gain as well.”

However, Yin warned that the junk-bond market won’t transform the financial market overnight.  As Yin said, "It would be unrealistic to expect the junk-bond market to make a fundamental change in China's bond market structure.”

 

New Year Spending Up With Year of the Dragon

China’s week-long Lunar New Year is always good for the financial sector – and this year was no exception.  The retail sector saw a 16.2% surge year on year to 470 billion yuan ($67.87 billion) during the New Year holiday recently. Consumers were seen to enjoy purchases on food, wine and clothes.

The commerce minister reported that sales on clothes was 18.7%, jewelry rose 16.4% and food rose 16.2%, according to a statement that was posted on the ministry website on Saturday.

The peak travel period, from January 8th, 2012 to February 16th was also supposed to be very good for business.  Chinese people typically travel to be with family and friends during the holiday period. Trips on trains, planes and boats were expected to reach 3.2 billion during the height of the travel period, creating a 9.1% increase from last year.

Private Equity Firm Invests in China Outfitters

Many eyes are on men’s casual wear companies at the moment in China. The global private equity firm KKR & Co L.P. has announced that it plans to invest US$60 million in the Hong Kong initial public offering of China Outfitters Holdings Ltd 1146.HK.

As David Liu, CEO of KKR Greater China, said,

“The menswear market in China has enormous growth potential. Market leaders such as China Outfitters have significant room to increase market share.”

Private equity firms have been moving more into the field of offering pre-IPO financing. This field, prior to the 2008 financial crisis, was almost exclusively filled with hedge funds.

China Outfitters has menswear manufacturing and sales locations in China, but also have a long list of foreign brands. Their foreign brands include JEEP, Santa Barbara, Polo & Racquet Club and London Fog. In China, they make and sell menswear.