FINTS

2016-07-27

June Fixed Asset Investment Falls 72pc in Liaoning


Soure: NBS.

Yunfeng Defaults for 6th Time

Bloomberg in March: China's No. 3 Developer Makes Deals as Default Risks Escalate
China’s third-largest developer is sustaining its pace of deal making even as bond investors start to price in a higher risk of default.

The yield spread on Greenland Holdings Corp.’s $600 million 5.875 percent 2024 notes over U.S. Treasuries has widened 47 basis points this year to 404. There is a 6.89 percent probability it will miss debt payments in the next 12 months, according to the Bloomberg Default Risk model that tracks metrics including share performance, debt and cash flow. While the risk of default has declined from a late-January peak of 8 percent, it’s the highest among the nation’s biggest developers.

Greenland announced 2 billion yuan ($308 million) in Chinese acquisitions since December -- after buying properties in Los Angeles and Toronto in a global push since 2012 -- and on Friday said it will list hotel-focused real estate investment trusts in Singapore. China International Capital Corp. said the expansion had burdened Greenland with debt and that the company’s reputation could be damaged after a Caixin magazine report on March 1 that 20.5 percent-owned affiliate Shanghai Yunfeng Group Co. was in default.
Fitch in March: Reported Default by Yunfeng Will Not Affect Greenland's Ratings
Fitch Ratings says that the ratings of Chinese homebuilder Greenland Holding Group Company Limited (Greenland; BBB-/Negative) are not affected by the reported missed payments by its 20.5%-owned associate Yunfeng Group Limited (Yunfeng) on its onshore debt instruments. This is because Yunfeng's debt is non-recourse to Greenland. Furthermore, if Greenland decides to assist Yunfeng - or is directed by its shareholders to do so - such assistance will not be sufficient to hurt its credit profile, since Yunfeng's net debt represented only 5.5% of Greenland's debt at end-June 2015.

Media reported in late February 2016 that Yunfeng had missed the coupon payment on a privately placed onshore debt instrument in early 2016, and failed to redeem another similar debt when Yunfeng's leverage ratio breached debt covenants and bondholders exercised their put option for immediate repayment. Fitch has been unable to verify the details of Yunfeng's alleged default.

Yunfeng, which operates in the energy industry, ceased to be a subsidiary of Greenland - the second-largest homebuilder in China by contracted sales - on 1 October 2015. This was after Greenland ended the equity custody agreement with Shanghai Greenland Assets Holding Co. Ltd (Greenland Assets), a 34% shareholder of Yunfeng. Both Greenland and Greenland Assets are ultimately owned by the Shanghai municipality.

Greenland, in an announcement on 1 March 2016, said that Yunfeng has been operating independently and that it has not provided any debt guarantee to Yunfeng. Nonetheless, Greenland said that, as one of the shareholders, it would assist Yunfeng to "properly handle the related matters", provided that it is compliant with relevant laws and regulations.
Yunfeng recently defaulted for the sixth time.

Sina: 云峰债六次违约 投资人要求证监会全面彻查绿地上市
Sina Financial News July 27 message, according to financial reports, "15 Yunfeng PPN004" (Yunfeng private debt) is about to expire on July 30, the lead underwriter Guangdong Development Bank has verbally inform investors, the current private debt will continue to default. This is since January this year, Yunfeng PPN six consecutive breach of contract.

  July 26, "15 Yunfeng PPN001" Fifth holders meeting voted to adopt a "15 Yunfeng PPN001 holders meeting vote on the motion book." Vote book suggested that "in view of the existence of the Green Group Tao Feizhai behavior, there is a huge difference in the financial data and financial data disclosed in the listing documents with the Greenland Group Yunfeng Group disclosure requirements of China Securities Regulatory Commission to thoroughly investigate the Greenland Group listed Compliance , a thorough investigation of the existence of financial fraud "; and requested" green holding Group Co., Ltd. of Shanghai Yunfeng (Group) Co., Ltd. issued '15 Yunfeng PPN001 'unconditional and irrevocable joint and several responsibility to ensure security until maturity payment. "

  Investors believe Yunfeng private debt defaults are "Greenland Group, the largest shareholder did not return the money, malice the default, and questioned the use of the Green Group and Yunfeng Group table listing and financing, after the announcement that is listed on a piece of paper lifted Yunfeng stake hosting relationship with burden rejection suspect fraud IPO's. "

A Shares Slide in Morning Trading

Only 140 A-shares up in the morning session, 2435 down. Shares held up until near 11 am.


There are three speculations on the drop today.

First, A Politburo meeting yesterday mentions inhibiting asset bubbles, but this news was ignored until 11 am...

iFeng: 政治局释放重磅信号:改革、楼市、股市怎么变

Second, tougher regulations on the market, again out early and ignored until 11 am...

Sina: A股降“妖”警报拉响 交易所盯盘盯得更紧了


Third, faster IPOs. There have been about 1 IPO a day since they restarted in November, but the pace is accelerating. But this story is the oldest, out yesterday...

Sina: IPO加快发行节奏的压力:有利也有弊

Maybe it is just time for a drop...

Irony of the day: a stock due to be delisted in two weeks (recently covered here) is limit up.

Lack of Credit and Trust Crushing Private Investment

People's Daily: 提振民间投资 还需政策定心丸
It should be said that these are important factors that can not be ignored, but not the key factor, trust and lack of credit is the cause of private investment growth slowed the most important reason.

 In a market economy, trust and credit is very important. In the 21st century, especially since the global financial crisis, the government and state-owned investment has been very strong background, private investment has been seriously marginalized. In recent years, private investors about bartering case was investigated and continuous exposure, all sectors of society in the face of social credit private investors and the government, social image, reduced social trust. A few years ago the government through debt construction project, there has been a lot of lack of credit phenomenon, private investors can not get their own returns; in some places because few private investors to financial strength is not strong and have a "uncompleted project", making the government private investors and mutual trust in serious decline.

  Trust and credibility in the fall, there is no doubt that private investment will have an extremely negative impact, thereby affecting the growth rate of private investment. In the more popular PPP project as an example, although private investors wishing to participate in PPP projects, will be in the hands of social capital, more contributions to society, but also derive a certain return, but in practice it is not so easy.

  On the one hand, the government for political risk considerations, is often difficult to effectively grasp the scale of cooperation, give private investors an acceptable rate of return is not a political risk, which could have so many cooperation projects, difficult to promote the emergence of phenomenon. On the other hand, even if the two sides can reach a consensus on cooperation projects, but private investors are worried that the government of bad faith, once the leadership change may be difficult to fulfill the agreement, not sure. Ultimately, the project is also making a lot of talk and no results.
For it's part, Beijing is launching a bunch of projects to attract investment.

Sina: 北京将分批推出吸引民间投资项目清单 吸引民资需大手笔
n order to reverse this year in April a continuous downward trend of private investment, Beijing has issued "on promoting supply-side structural reforms to further improve the work of private investment measures" to come up with 27 specific measures. Where major projects around the 2022 Winter Olympics, the Beijing city center, the construction of the new airport, will launch a batch list of projects to attract private investment.

Provinces Drag Heels on Overcapacity Cuts, Push Credit to Zombies

Reuters: China's provinces enlist banks to defy overcapacity cuts
In Shanxi province, China's top coal producing region, the government told financial institutions to maintain coal sector lending at least at last year's levels, increase awareness of the industry's "pillar and strategic status" and not recall loans to seven local government-owned coal groups, according to a document released on the government's website in May.

Shanxi's deputy governor Wang Yixin told banks at an industry event on Wednesday that it was in their mutual interest to support the seven, which at the end of 2015 reported total liabilities of more than 1 trillion yuan ($150 billion) and an average liability-to-asset ratio of about 83 percent, according to Reuters calculations.

"What Shanxi's good coal companies need the most right now is the confidence of investors and the help from financial institutions - as we cross the river on the same boat," Wang said, and urged banks to roll over the companies' loans and buy their bonds.

Three senior executives at China's top coal producers all said they could secure loans at a rate equal to or lower than the central bank's benchmark rate, suggesting banks were lending a sympathetic ear to that call.

"In China, the most important thing is stability," said a manager at the Shanxi branch of one of China's big four state-owned asset management companies that help banks dispose distressed loans.
China.org: Excess coal output cut by 29% in H1
Local governments and state-owned firms in China have completed 29 percent of the 2016 coal overcapacity reduction target in the first six months, with some regions still yet to take concrete action, officials said Tuesday.

Seventeen provincial-level governments and some of the country's largest state-owned companies have jointly cut 72.27 million tonnes in coal production capacity, about 29 percent of the 250-million-tonne coal reduction target for the year, according to the National Development and Reform Commission.

Central province Hunan and eastern province Jiangsu completed 82.9 and 78.2 percent of their cuts in the first six months, while Beijing, the northern province of Shanxi and northwestern Xinjiang were halfway through. Nine other provinces have yet to make any dent to their coal production overcapacity.
Cut 100 percent on December 31. Goal hit! The real worry isn't the slowness to cut production, but the increase in debt. Slowly reducing overcapacity amid a short-term price bounce is understandable and there's not a guarantee of trouble down the road. Add more debt to a zombie firm and a crisis is a near certainty.

2016-07-26

Shenzhen Court Orders Homebuyer to 1.1 Million Yuan for Breach of Contract

Fearful that buying restrictions announced on March 25 would deflate the housing market, in addition to making it impossible for him to borrow enough money under the new rules, a Mr. Zhang backed out of a deal to purchase a home. Mr. Zhang sued to get out of the contract. The seller counter sued for breach of contract and won. The court ordered the return of Mr. Zhang's 500,000 yuan deposit, but also ordered him to pay 1.1 million yuan in damages for breach of contract. The house in question was originally priced at 9.4 million, cut to 9.22 million after renegotiation.

iFeng: 怕房价会下跌购房者毁约 结果损失了100多万

Trump Leads In Key Swing State Counties

Axiom Strategies, in collaboration with Remington Research Group, has studied election results in seven battleground states to identify Axiom’s Battleground Counties. These counties historically reflect statewide results, so monitoring them will be key in analyzing the 2016 presidential race. Check back regularly to see the latest polling in these counties, which may determine the next President of the United States.
ANALYZING 2016

Trump is currently holding a landslide lead.

Home Interest Mortgage Deduction Coming to China

Expected to shave 15-45% off the cost of a mortgage, though a final policy is not yet set in stone.
Jia Kang told the media: "Personal Income Tax deductible mortgage has made it clear, as progress, time to look at tax reform of the central requirements of the time is about 1 year, but this year could not keep up with the certainty that this program will be. across the country. "

Jia Kun at the forum also suggested that first-tier cities and popular second-tier cities, Nanjing, Xiamen, Hefei has been the introduction of property tax conditions. "Real estate tax difficult indeed but I think, a second-tier cities may be relatively hot first pilot through legislation after the real estate tax."

...Asia-Pacific Urban Real Estate Research Institute Xie Yifeng said, "For most people, they can save 15% - 45% of mortgage interest."
iFeng: 个税将抵扣房贷啦 以后房贷利息可省15-45%