Category: Banks

China Reform Holdings, a government-controlled group that manages a $30billion fund, launched last year. They are trying to revitalize China’s decreasing industrial sector with venture capital-style investments. The fund is backed by several state banks which include China Postal Savings Bank and China Construction Bank.

Now, they are hoping to invest at least 2 billion dollars with the Beijing-based private equity group JD Capital. JD Capital made its first major overseas acquisition in 2015, buying Ageas’ Hong Kong insurance company for $1.4 billion.

As Shen Jianguang, the chief economist at Mizuho Securities Asia said, “It’s an experiment to see how state enterprises manage their money.”

It is certainly worth noting that China’s banking system has now surpassed the eurozone’s as the world’s largest by assets. Interestingly, while China’s GDP surpassed the EU’s economic bloc in 2011, the banking system didn’t get to that spot until the end of 2016, according to analyses by the Financial Times. As explained on the Financial Times website,

“The lag reflects Beijing’s increased “financial deepening” — the term for the growth of a country’s financial system relative to gross domestic product. This has been fuelled by an extraordinary increase in bank lending since 2008, when the government unleashed aggressive monetary and fiscal stimulus to buffer the impact of the global crisis. “The massive size of China’s banking system is less a cause for celebration than a sign of an economy overly dependent on bank-financed investment, beset by inefficient resource allocation, and subject to enormous credit risks,” said Eswar Prasad, economist at Cornell University and former China head of the International Monetary Fund. Chinese bank assets hit $33tn at the end of 2016, versus $31tn for the eurozone, $16tn for the US and $7tn for Japan.”

Read the whole story and learn more.

 

China CITIC Bank Corp Ltd and Baidu Inc have recently announced plans to set up a direct bank to tap into China’s online finance market. This is China’s first partnership between an Internet firm and a lender. Initially, they plan to invest 2 billion yuan ($313.34 million) in cash as registered capital for the venture that they are calling Baixin Bank.

Baixin Bank would join the leagues of many other Chinese companies that are offering financial products through the Internet and mobile devices. The latest collaboration would combine CITIC’s financial products with Baidu’s online traffic data and reach.

In a joint statement recently, CITIC Chairman Chang Zhenming said that Baixin Bank will “better meet the growing needs” for financial services from small businesses. Baidu Chairman and Chief Executive Robin Li called this venture “an entirely new model of ‘Internet + banking.’”

The new China-backed Asian Infrastructure Investment Bank has received support from 57 countries that have signed on as charter members. The Obama administration is worried about the new bank and concerned that it will compete with Western-led institutions like the World Bank. However, such large institutions like the World Bank and the International Monetary Fund do not seem worried.

World Bank President Jim Yong Kim told reporters that he welcomed the new bank. As he said,

“Our full expectation is that we’ll continue to work with them very closely and that there are many projects that I can foresee either cofinancing or working together on.”

Australia has agreed to join the new China-led infrastructure bank while it still has some concerns about the governance of the bank. As Prime Minister Tony Abbott and Australian Treasurer Joe Hockey said in a joint statement, “The government has discussed the AIIB extensively with China and other key partners inside and outside the region. Key matters to be resolved before Australia considers joining the AIIB include the Bank’s Board of Directors having authority over key investment decisions, and that no one country control the bank.”

China placed a deadline on countries for the end of March to become founding members of the bank. They have explained that the founder status would allow the country to have some say over setting rules for the bank. Australia actually came under pressure last year from Washington not to join the bank. Washington worried that, if not governed correctly, the bank could contribute to corruption.

However, as the deadline approaches, many US allies including those in Britain, Germany and South Korea have announced that they plan to join. Australia hasn’t said how much it plans to contribute to the bank, but it could be as much as $3 billion.

 

Here are three recent stocks that have been featured  on Markets Emerging. Here is the overview:

1. Groupon Inc.: Jana Partners owns more than 7% of Groupon. As Co-Executive Editor Kara Swisher said,  “It’s an important space, obviously, because everything is going to the mobile device,” she said. “That’s where people are going to get their discounts and awareness of when sales are happening. But as a pioneer, Groupon is a really important company,” she added. “I don’t know what is going to happen to it at all, but it’s trying to establish itself as the player in this space and helping … small businesses get discounts, and it is a really competitive market.”

2. China Finance Online Co.: This is China’s first independent web-based securities trading platform called “Zhengquantong.” As Markets Emerging said, “Securities Master is the product of a new strategic partnership China Finance Online has entered into with the largest brokerage firm in China, CITIC Securities Co., Ltd., to seamlessly integrate China Finance Online’s state-of-the-art, web-based architecture with CITIC’s robust trading and settlement system.”

3. National Bank of Greece: They have extended gains as The Athens stock exchange general index moved up for a sixth consecutive day.