China Preferred Shares Seen As Market Rescue Plan; Second Major Ghost City Emerges; Chinext Ends IPO Profit Requirement; Haixin Debt 5 to 7 Times Larger Than Reported

Preference shares, prescription for ailing China stock market?
According to the CSRC, the face value of one preference share in China is set at 100 yuan (16.2 U.S. dollars).

A listed company refers to one listed on a stock exchange. An unlisted public company is one that is not listed but has either issued or transferred shares to more than 200 shareholders.

According to the CSRC, three kinds of listed companies are eligible to issue preference shares, including some blue chips, companies with merger and acquisition plans, and those which perform a common share buyback to lower registered capital.

Stock market commentator Ai Tangming said the scope for eligible companies was wider than he expected, indicating that the state regulator is eager to release reform dividends to boost the capital market.

.....Investors widely predicted banking shares will be included first in the program. Banks rose across the board on Friday with the Industrial and Commercial Bank of China, the nation's largest state-owned lender, rising 1.83 percent, and China Construction Bank, the second largest, up 2.38 percent. The index tracking the banking sector jumped 4.39 percent.
Preferred shares will draw more money into the equity market, but it isn't a big enough policy to spark a jump in shares. Like in the increased ceiling on foreign ownership, it is a positive reform that raises the present value of the Chinese stock market, but the benefits are long-term while the risks are heavily concentrated in the short-term.

Elsewhere, "the renminbi may depreciate 10% over 2 years and that will lift home prices": 人民币未来两年或贬值10% 央行若降准房价将再次上涨. I believe Chinese home prices will fall in foreign currency terms and also in terms of gold. A 10% depreciation in the yuan isn't nearly enough to spark a price increase if there's a major decline.

There's some good info in the article though:
Analysts believe that the mainland real estate enterprises listed in Hong Kong a few years ago most of the debt borrowed a lot of dollars, the interest rate is usually around 8% to 10% in the appreciation of the renminbi stage, partly offset by interest rates and exchange rates. But once the tide of RMB devaluation, interest rates and exchange rates will be superimposed. Data show that only the fourth quarter of last year, the mainland real estate enterprises issued in Hong Kong more than 80 billion dollars in bonds, some small real estate bill rate is above 10%, for example Wuzhou International up 13.75 percent coupon rate. 2 percent devaluation last two months, the cost of debt means that developers will increase accordingly.
Again, the small change in renminbi is an issue, but the bigger issue is home prices. A 2% decline in the yuan isn't going to mean much versus a 20% drop in home prices.

Meanwhile, the "second Ordos" arrives in Fugu, Shaanxi: 府谷或成鄂尔多斯第二 民间借贷崩盘楼盘价格腰斩 (Fugu may become the second Ordos; Prices cut in half)
March 20 at 10 am, Fugu County, Shaanxi Province 70-80 people gathered in front of the county government, has dressed beautiful young women, there are also white-haired old man, their common goal is to collect debts.

A creditor told the "China Times" reporter, the debtor's name is Zhang Xiaoli, she operated by Hong Chang Xin Shaanxi Coal Industry Group Corporation (hereinafter referred to as Hong Chang-hsin) illegal deposits from the public up to 21 billion yuan, involving hundreds of persons. Today, not only do not pay back the money, people have been faceless. Creditors had a collective petition to the county Office of petitions, hoping the government solve the problem.

This is just a fragment of Fugu private lending collapse, starting in 2012, the private lending Fugu chain began full break, but has its roots in the local economic pillars - the coal industry's decline. Private lending collapse also caused Fugu county's credit crisis and the resulting general tightening of capital chain. In order to resolve the growing number of private lending disputes, after the Spring Festival, the county set up a fight and disposal of illegal fund-raising work of the Leading Group Office (hereinafter referred to as non-office hit).
Coal production is big in Shaanxi as it was in Inner Mongolia, where Ordos is located.

Property domino

Fugu County, a staff member told reporters that the collapse of private lending, resulting in a credit crisis Fugu city. Over the past more than ten million borrowed a phone call away, even the receipts do not have to fight. Even now borrow 10,000 yuan from relatives and friends have no one would dare to borrow, human relations indifferent.

Another civil servant, also said in the past, Fugu funds are "live", flowing, and hands every household money. Today it is fully tightened, most of them lying on the bank to sleep.

In this regard, the most sensitive reaction is the real estate industry. Fugu New "Xin Yuan toward" a real estate manager, told reporters, because the developers have capital chain tension, markdowns for the return of funds, and the intensity is still very great.

Newspaper reporter in "New One" real estate visit also learned that the highest real estate prices from 12,000 yuan / square meter, now dropped to 7000-7500 yuan / square meter, a drop of nearly half.

Price cut even trigger a chain reaction, from the "New One" near "the capital of the Golden Mile" Property owners meeting occurred just recently, the cause of the delay is the developer submitted. But the aforementioned real estate manager, told reporters that the real reason is dissatisfaction with the real estate owners refused to cut prices, take the opportunity to reject all moved.

March 19, "the capital of the Golden Mile," the sales staff also told reporters that the real estate prices are currently still 9,200 yuan / square meter, in the future it will not cut prices because their goal is to build the first new district Fugu mansion .

Chinext ends the requirement that IPO companies have been continuously profitable and also expanded the number of industries eligible to list, up from 9. 创业板IPO取消盈利持续增长要求

Haixin Steel detonation wave of defaults (海鑫引爆钢铁违约潮)
Steel industry has been the default risk of the steel trade extending to the upstream, namely raw iron ore and steel companies in the field. Latest developments is the new financial reporter informed sources from the industry, the largest private steel plant in Shanxi Haixin Iron and Steel Group Co., Ltd. (hereinafter referred to as Haixin Iron and Steel) funding strand breaks, deep debt crisis, the risk of exposure to $ 15 billion 20 billion yuan.

Informed sources told Caixin reporter, Minsheng Bank loan exposure Haixin Iron and Steel Department said the outside world is much larger than the current 3.0 billion. In this regard, Minsheng Bank President Hong Qi is not recognized. Hong Qi said that the current local government is actively involved in the matter, "(Haixin) far not reached (the debt crisis) time." Minsheng Bank to Finance Brand Management in the new official reply claimed that the current Haixin Iron and Steel Group Co., Ltd. in Minsheng Bank credit exposures 1.95 billion yuan, all of the Department of collateral loans. "I'm OK now and the relevant government departments and banks a consultation jointly resolve risks, to help companies weather the storm."

And a bonus ghost city for the future: Are China's 'ghost' cities building towards economic ruin?
More than 150 square kilometres of property floor space will be built and put on the market in the next three years, enough to house 3 million more people in a city with a population of just 4.3 million - prompting fears Guiyang will be home to China's next ghost city, alongside infamous examples in Inner Mongolia's Ordos and in Wenzhou.

No comments:

Post a Comment