Shanxi Govt Owned Bank Goes Public, Guess Who Buys First

Caixin: Jinshang Bank to Launch $435 Million Hong Kong IPO
Shanxi Qin New Energy Group Co., a coal miner in the Shanxi province, and state-owned investor Taiyuan Industrial Park Investment Holdings Co. each subscribed for $50 million of shares. Chen Xing Development Holdings Ltd., a Hong Kong-listed Shanxi property developer, subscribed for $22 million of shares.


SME Lending Backfire: Big Banks Poach Small Bank Clients

Central planning fails again.

Caixin: Policy Steering Credit to Small Businesses Is Costing Small Banks Their Clients
In an attempt to meet government targets for lending to small enterprises, some big banks in some regions have poached high-quality clients from small and midsize local lenders by offering them lower interest rates, the law-enforcement inspection team of the Standing Committee of the National People’s Congress (NPC), China’s top legislature, said Wednesday in a report (link in Chinese). Such clients typically have a low risk of default.


The West Will Restrict Foreign Home Ownership

A new study shows foreign ownership was the main culprit in housing unaffordability in Vancouver. When the next growth cycle hits, the number of global middle and upper class who can afford houses in Western cities will rise an order of magnitude.

Smaller countries already have laws restricting foreign ownership for the same reason.

Also, if you think immigration isn't having a huge impact as well...nationalism is only getting started. Politicians and parties on the wrong side of these issues are going to be out of power for a generation or more.
SCMP: Foreign ownership main culprit for Vancouver’s unaffordable housing, a top destination for Chinese funds, ‘unimpeachable’ study says
The white paper by Josh Gordon, an assistant professor at Simon Fraser University’s school of public policy, found a near-perfect 96 per cent (or 0.96) correlation between various metro Vancouver municipalities’ price-to-income ratios (a common measure of unaffordability), and the proportion of their detached houses in which at least one owner was a non-resident.

A leading researcher who was not involved in Gordon’s study said its findings were “unimpeachable”: the more that a Vancouver municipality was favoured by non-resident owners, the more unaffordable its detached houses tended to be.


Baoshang Bank Failure Still Rippling

Caixin: In Depth: How Baoshang Takeover Shook Secretive Corner of Bond Market
Beijing-based New China Fund Management recently said it was forced to default on some products after failing to get loans. The mid-size investment house is among a number of nonbank institutions that have felt a funding crunch as contagion fears spread in the wake of the Baoshang takeover. Ironically, the owner of New China Fund Management was previously controlled by the owner of Baoshang.

Although the central bank called Baoshang an isolated case, distrust among counterparties sparked by the incident have pushed up borrowing costs for smaller banks and nonbank institutions.


Rate Cuts Won't Help Stock Market

Everyone is focused on what happens after the Fed cuts rates, but this chart made me realize it might be what came before.
From Acting Man: How Do Stock Prices React to Rate Cuts by the Fed?

It says 140 days on the chart. It's possible the December decline and Fed's dovish shift back then is where that red line falls, or the May decline and the expectation of a dovish shift in June. Even if that interpretation is wrong, the stock market has gained over the past 140 days. The prior examples may not hold much predictive value.

And then there's this lunacy from CNBC: The one reason why the Fed should cut rates ‘four times’ over the next 12 months
The market researcher predicts the Federal Reserve will cut rates not once, not twice — but multiple times starting in July.

His chief reason: Inflation is non-existent.

“Inflation is surprising them to the downside consistently, and the market is telling them that they can cut rates,” the Bianco Research president told CNBC’s “Trading Nation’ on Friday. “The market is pricing in four cuts over the next year —three over the next three [Fed] meetings.”

On Wednesday, the Fed indicated it’d be open to slashing rates next month. Stocks reacted by rallying to fresh highs. The S&P 500 is now on track for its best first half of the year since 1997.

“Trust the market. It wants a lot of rate cuts. It’s been saying that for months,” he said. “They’re saying, ‘Look, you’ve got room to lower rates. Lower the cost of capital and maybe provide more stimulus without the fear of inflation. So, do it.’”
This forecast reflects complete failure by the central bank. Far better for them to hike rates and claim responsibility for a correction or bear market and recession if they want to retain their power, than to admit they have no control over inflation. Once the market realizes they have no power (people are still dense 10 years into global central bank failure), the next step will be realizing they cannot stop inflation.


Update on Citic Guoan

Citic Guoan is asking for help from Citic.

Caixin: Bank of Beijing to Cover $360 Million Debt of Citic Guoan
Amid rising concerns from the market and creditors, Citic Guoan has asked its former parent Citic Group for help, Caixin has learned. Citic Group reported Citic Guoan’s debt situation to the Ministry of Finance before the Lunar New Year holiday and has created a team to help negotiate a restructuring plan. Details of the plan, however, have not been disclosed.

Webb on Future of Hong Kong

Bloomberg: An Investor’s Vision for the Future of Hong Kong (Podcast)
There’s been a series of historic marches in Hong Kong, with millions of people taking to the streets to protest against an extradition bill that they think will give China more power over the city. On this episode of Odd Lots, we talk to David Webb, one of Hong Kong’s most unusual and well-known investors. Webb has amassed a fortune by investing in local stocks but he also advocates for change in Hong Kong’s volatile market, where big swings and lackluster corporate governance are often the norm. Here, he talks about how he sees the future of Asia’s biggest financial center in the wake of the protests. He also gives his thoughts on U.S.–China relations.


Japan Cracks? Questions Over Monetary Policy Grow

This story came out a few days ago, I'm surprised it didn't get more press, but the Fed meeting likely overshadowed. Next week will be the G20. This story sounds like it might be bigger than both.

Reuters: How Japan turned against its 'bazooka'-wielding central bank chief
Three years on, there is a broad consensus that Japan’s experiment in shock-and-awe monetary policy has failed. An intense debate is under way within the BOJ over why Kuroda’s assumptions about how he could fundamentally change the trajectory of the economy proved wrong and what the bank’s next steps should be. The picture that emerges is of a central bank under pressure and at a moment of reckoning.

...Japan’s banks have lobbied energetically against Kuroda’s policies. Under Kuroda, the BOJ has flooded Japan’s economy with so much cash that the average interest rate on new loans has cratered, cutting the banks’ margins. Big banks have shuttered branches, while smaller banks have struggled to merge.

Under pressure, some banks are scrambling to diversify. One remarkable example: In western Japan, Yamaguchi Bank says it is renting out space at one of its branches for a wine bar that is slated to open next month. The bet is that diners might also open an account or take out a loan, the bank says.

In April, the BOJ issued a warning for the first time in almost three decades that financial institutions were at risk of over-extending loans to real estate borrowers as they chased returns.

CITIC Guoan Isn't Paying Its Bills

I saw a Chinese headline this morning about Bank of Beijing having to make good on its credit guarantee of Citic Guoan. I did a search for news in English and didn't find anything yet, but did find they also triggered a credit guarantee in March, have a real estate "property-tech" subsidiary accused of not paying their bills and they were aggressive in taking stock-pledged loans. Citic Guoan is separate from Citic, but the latter still has a substantial stake in the company.

March, Caixin: Bank of Beijing Stuck Making $5.81 Million Payment on Debt It Guaranteed
Bank of Beijing has had to pay some 39 million yuan ($5.81 million) in interest on behalf of Citic Guoan Group Co. Ltd., as it serves as guarantor of 2.5 billion yuan of the company’s debts.

The lender said in a stock exchange filing that it signed off as guarantor for the principal and interest from Citic Guoan’s 2.5 billion yuan debt investment plan to finance the renovations of some old buildings in the capital.
China’s property innovators are hitting the headlines again this month as a property marketing and management platform tied to one of the country’s biggest investment conglomerates is reported to have defaulted on its financial commitments.

A long-term rental housing business operated by Guoan Family, an affiliate of state-linked CITIC Guoan Group, has been accused by landlords of not paying rent on the apartment that it leases to tenants, according to an account by the local media.
Today, Caixin: 中信国安25亿债权违约 担保方北京银行全额埋单
(Bank of Beijing, the guarantor of citic guoan's 2.5 billion creditor's rights default, pays the full bill)
Citic Guoan Group's 2.5 billion yuan debt default was eventually "paid" by advances from the guarantor Bank of Beijing. On the evening of June 21, the bank of Beijing (601169.SH) issued a notice announcing that it would fulfill its guarantee responsibility for all principal and interest.

The Bank of Beijing said that after the advance under the guarantee, the guarantee business was terminated, but this did not mean the formation of final losses. At present, the Bank of Beijing has taken a number of asset preservation measures for the business. The book value of the preserved assets can cover the risk of the advance, which has played a role in mitigating the risk of the business. The Bank will fully safeguard the legitimate rights and interests of the bank through recovery from the debtor and other means.

The 2.5 billion yuan debt plan of CITIC Guoan Group has a total of five years. The original maturity date is 2020 and the annual interest rate is 5.6%. CITIC Guoan Group has previously promised to pay interest on a quarterly basis. The source of repayment is the comprehensive income of CITIC Guoan Group. The 2.5 billion yuan will be used for land removal, shareholder loan repayment and supplementary working capital for the cotton patch rebuild project in citic guoan.

The initial credit report issued by United Credit Rating Co., Ltd. shows that the credit rating of the return right of the investment plan is AAA, and the credit rating of the debt paying subject is AA+. The Bank of Beijing has provided it with an unconditional and irrevocable joint and several liability guarantee for the full amount of principal and interest.

However, in the first quarter of this year, an insurance asset manager told Caixin that his 2.5 billion yuan insurance asset management debt plan held by CITIC Guoan Group could not pay interest. The bank of Beijing, as the guarantor, paid 39.453 million yuan in interest on behalf of citic guoan after negotiation. (See Caixin.com's report "Citic Guoan Group's 2.5 Billion Credits Owe Interest Will Bank of Beijing Pay? 》)

It is worth noting that the creditor's rights investment plan has an accelerated maturity clause. If CITIC Guoan Group fails to pay interest on the investment funds within six months from the first interest payment date (March 12), the creditor's rights investment plan will mature ahead of schedule, with the maturity date being September 3, 2019.

According to the latest announcement of the Bank of Beijing, on May 27, 2019, the creditor's rights investment plan will expire ahead of schedule after being voted by the beneficiaries' meeting under the plan. On June 20, due to the failure of CITIC Guoan Group to make its own payment, Bank of Beijing, as the guarantor, voluntarily fulfilled its guarantee responsibility for all principal and interest according to the terms of the guarantee. "Under this business, the Bank voluntarily fulfilled its guarantee obligation, which is conducive to locking up risk exposure and pursuing recovery from the debtor in accordance with legal provisions and relevant legal agreements".

Since 2019, the turmoil in citic guoan has continued. On January 7, a debt dispute between CITIC Guoan Group and Beijing Zhongguancun Bank led to a court freeze of 300 million yuan. On January 10, citic guoan MTN004 plunged sharply, almost halving. In addition, creditors have applied to the court to freeze the assets of CITIC Guoan Group for preservation. (See "citic guoan's Troubled Group Executives Trapped in Vortex" for details).
Citic was heavily involved in making stock pledged loans:
In the successive crises, citic Guoan group, on the one hand, tried to coordinate its relationship with creditors in the hope of reaching a settlement, and on the other hand, it sent a distress signal to the original major shareholder China citic group co., ltd. Before the Spring Festival in 2019, CITIC Group had already reported the situation of CITIC Guoan Group to the Ministry of Finance. Subsequently, CITIC Group set up a high-level working group to deal with the problems of CITIC Guoan Group. The reorganization is imminent. (For details, I heard that "it is difficult for the citic guoan storm to be leveled and CITIC Group to help it out").

At present, there are three A-share listed companies under CITIC Guoan Group, including citic guoan (000839.SZ, holding 36.44% of shares, with a cumulative pledge of 99.37%), Baiyin Nonferrous (601212.SH, holding 32.27%, with a cumulative pledge of 99.89%), and Citic Guoan Wine (600084.SH, holding 32.72%, with a cumulative pledge of 89.15%), most of which have been pledged. On June 21, citic guoan closed up 2.61% at 4.32 yuan/share, Baiyin Nonferrous Metals closed up 1.50% at 4.74 yuan/share, and ST Citic Guoan Wine closed up 4.89% at 2.36 yuan/share
Bloomberg: China Looks for a Savior in the Shadows
Beijing has invited non-bank financial institutions to play a larger and more formal role in the aftermath of the first regulatory takeover of a commercial lender in two decades. Interbank rates have ballooned since the seizure of Baoshang Bank in late May, raising funding costs for financial companies. This week, the central bank asked its biggest state-owned banks to support large brokerages such as Citic Securities Co., Huatai Securities Co. and China International Capital Corp

...As a cash crunch looms, it’s worth asking why the central bank suddenly cares about brokers’ funding channels. Citic Securities, for instance, has only 673 billion yuan ($93 billion) in assets, in line with a mid-size regional bank. It’s also questionable whether brokers deserve bigger credit lines, considering their aggressive over-the-counter margin financing helped engineer the stock market’s spectacular boom and bust four years ago.

...When money is tight, company founders often pledge their shareholdings in exchange for loans from securities firms. This is a unique feature among China’s brokers, with trillions of yuan of such loans outstanding. Citic Securities, for instance, expanded this business to 25.9% of its total equity at the end of 2018, while smaller brokers such as Everbright Securities Co. more than doubled such loans since 2016.
Reuters: Citic Guoan Wine Says Controlling Shareholder's 34.5% Stake Frozen By Court To Date

China Cuts Credit Flow to Real Estate

Caixin: China Suspends Some Developers’ Bond Sales to Rein in Risks
The move follows recent measures by China to keep the housing market in check by reining in excessive borrowing by property developers. Several builders that were found to have bid aggressively in land auctions saw their bond and other debt issuance plans in the exchange market suspended by regulators, people familiar with the matter said earlier this month.


SOEs Taking Over Private Solar

The state sector keeps on winning.

Caixin: State Sector Gobbles Up Private Solar Firms Reeling From Slashed Subsidies
The most recent sign of this trend occurred earlier this month when a subsidiary of state-owned China Huaneng Group Co. Ltd. signed a “cooperation intent agreement” to buy a 51% stake in solar power producer GCL New Energy Holdings Ltd. (GNE), according to a filing posted by its parent, GCL-Poly Energy Holdings Ltd., on the Hong Kong Stock Exchange.


Chinese Developers In Search of Dollars

Dollars are expensive.

Caixin: Tight Credit Drives Chinese Developers Abroad for Financing
Offshore financing costs for Chinese developers averaged at 8.13% during the first five months of 2019, a jump from 7.05% in 2018, according to the CRIC report. The costs climbed to 9.80% in May.

Logic of Strategy: Coalition of the willing builds in South China Sea

Asia Times: Coalition of the willing builds in South China Sea
While Europe’s military footprint in the area is still modest, the presence of a growing number of like-minded powers in China’s adjacent waters highlights shared concerns about Beijing’s strategic ambitions for the area.

Europe’s entry also arguably gives greater international legitimacy to Washington’s freedom of navigation and overflight operations in the area, maneuvers China has consistently branded as illegal and a violation of its sovereignty.

Interbank Spreads Widen in China, Regulators Threaten 3 Year Ban on Bad Actors

It's cash crunch time again with June 30 end of quarter approaching.

ZH: Meanwhile In China, Echoes Of Lehman As Interbank Market Freezes
In ominous echoes of what happened before, and certainly after the Lehman failure, it has gotten far harder for corporate bonds to be accepted as collateral for repo financing as lenders increasingly demand top quality bonds such as Chinese sovereign bills and policy bank notes as pledges, with Bloomberg noting that "traders are having second thoughts on taking even AAA rated short-term bank debt as security in the wake of last month’s seizure of Baoshang Bank"

As a result, funding among China’s financial institutions has become clogged, in some cases to the point of paralysis, which have already caused borrowing costs to spike for brokerages and smaller banks . The timing couldn’t be worse, not only due to China's slowing economy, but with liquidity traditionally far tighter at the quarter-end, and further adding to the wide-ranging ramifications of the bank seizure. All this could mean higher defaults, according to Bloomberg Economics.

“Non-bank financial institutions are actually the biggest buyers of corporate bonds in China, and if their funding chain breaks, demand for bonds, particularly those that can hardly be pledged for borrowing, will certainly get hurt," said David Qu at Bloomberg Economics in Hong Kong. “Weaker companies will suffer a rising cost when selling new bonds, which may eventually lead to higher default risks.”
This is gaining attention in Chinese financial media. 21st Century has an entire section dedicated to the topic.

21st Century: 非银信用保卫战
Sogou: Focus on the Safeguard of Non-bank Credit

21st Century: 同业存单结束下滑趋势:今日计划发行2389亿元,利率继续分化
Sogou: Interbank certificates of deposit end downward trend: 238.9 billion yuan is planned to be issued today, with interest rates continuing to diverge
"At present, 300 million yuan has been paid for one-month, three-month and one-year terms, with interest rates of 3.3%, 3.48% and 3.95% respectively. If you think the price is appropriate, you can announce the issue separately today." Traders of a city commercial bank in southwest China, which is issuing A-A certificates of deposit, told the inquirers that the bank had issued NCD one after another in early June. Each issue was subscribed for, "We have issued more than 2 billion out of a total of 4 billion."

Traders of a city firm in central China told reporters in 21st century business herald that the bank has plans to issue A-A certificates of deposit in the near future, and the market is fine.

Yesterday, information released by China Monetary Network showed that the interbank market actually issued 173 interbank certificates of deposit, totaling 93.83 billion yuan. According to estimates, the subscription rate was 78.26%, up from 77.8% last Friday.

Among them, the interest rate for AAA certificates of deposit in January was 2.8564%, and that for AAA certificates was 3.3328%, with a spread of 47.6 Bp, up 5.6 BP from last Friday's spread. The interest rate for the three-month AAA certificates of deposit is 2.9147%, the A-A certificate is 3.3921%, and the spread is 47.7 BP. The interest rate for one-year AAA certificates of deposit is 3.2684%, AAA is 3.8615%, and the spread is 62.4 BP. Both have expanded from last Friday.
Wu Di, an analyst at Huaxin Securities Research and Development Department, told reporters in 21st century business herald that the continued differentiation of inter-bank certificates of deposit grade spread is due to the decline in market risk appetite after the inter-bank certificates of deposit broke through the exchange and began to redefine low-grade inter-bank certificates of deposit. Although some easing policies have been made, there will definitely be a process of clearing market risks.
Regulators are threatening a 3-year ban on banks that do not honor repo pledges in the interbank market.

21st Century: 独家丨监管窗口指导敦促债券质押式回购履约,否则有可能停业务三年
Sogou: Supervision window guidance urges bond pledge repurchase to perform the contract, otherwise it may stop business for three years
On June 18, a number of bond traders confirmed to reporters in 21st century business herald that some institutions had received guidance from the regulatory authorities and would avoid default on pledge repo transactions starting today. If any organization goes against the wind, it may face the punishment of suspending relevant businesses for three years in the future. In order to prevent further aggravation of panic, the supervision requires institutions that have already defaulted on transactions or are at risk of default to do their utmost to ensure compliance. There are several ways for the market, one is to borrow money, the other is to sell bonds if it cannot borrow money or to offer substantial discounts for pledge financing. There is really no action to solve the problem with its own funds. If its own funds are insufficient, it can seek help from shareholders.

A senior manager of a securities firm's asset management company also said: "after the meeting last Sunday, the liquidity of the securities firm's proprietary business has eased somewhat, but the products are still the same. yesterday, there were some securities firms that defaulted on the repurchase of their products. There are also some who have used their own funds and received their own pledged bonds through a third party. "

At the same time, some market makers are also guided by the window, hoping to accept the pledge of some low-rated bonds, but with a certain discount rate. For example, the market reported that Citic Securities' proprietary trading began to pay out money today. The pledge criteria for accepting bonds are: AAA bonds accept 85% pledge, AA+ bonds accept 75% pledge, and AA bonds accept 65% pledge.

Zhang Xu, chief fixed income analyst of Everbright Securities, believes that in fact the People's Bank of China and the financial supervision department stand higher and look further, have more information than market participants and have a more comprehensive grasp of market dynamics. In contrast, the perspective of a single trading individual is relatively narrow, and it is easy to give a wrong perception of the market in a biased way and form unnecessary panic mood.
Reuters: China's small banks turn to exchanges for cash as money markets tighten
The volume of repurchase agreements on the Shanghai stock exchange, in which banks and other financial firms borrow money from each other using bonds as collateral, surged as borrowers sought an alternative to the over-the-counter interbank money market.

Traders said the lower borrowing costs on the exchange and the less stringent requirements for collateral drove smaller players to the exchange.

“Cost of borrowing on the exchange is lower,” said a trader at a Chinese bank in Shanghai.

The interbank markets were affected not just by shortages of cash but also concerns over the quality of the pledged collateral.

Traders said collateral requirements had tightened in the interbank market in the wake of regulators taking over the troubled and credit-laden Inner Mongolia-based Baoshang Bank.

Borrowers could still pledge their corporate bonds on the exchange for repos but lenders in the interbank markets had turned picky.
Bloomberg: China’s Lehman Moment Is Drawing Closer
That means counterparty risk and solvency risk have arrived – together.

With liquidity-related stress spreading and interbank confidence waning, financial regulators are asking large brokerages to take over the role of providing financing to small and medium-size enterprises from lower-tier banks, the financial news website Caixin reported Tuesday. Big brokers have a better understanding of credit risk than obscure provincial banks in any case, the thinking goes. Securities companies have been asked to issue financial bonds eligible for use as collateral, increase quotas for short-term debt, and ease funding pressures for nonbank financial institutions.

The decision to turn to brokerages is stunning. For a start, brokers aren’t banks; they don’t have the ability to take deposits and don’t create money, so their ability to expand liquidity is far more constrained. Secondly, regulators are relying on a securities industry that only four years ago oversaw a spectacular boom and bust in China’s stock market that was fueled by excessive over-the-counter margin financing.


China Home Prices Accelerate Rise in May

The Reuters headline below is what I've been talking about here since the credit spike in January, China has very little room for stimulus if they aren't willing to risk another expansion of the housing market. The flip side is there's little evidence China can grow credit and the economy without the housing market, government/SOE infrastructure and industries with overcapacity such as steel. Rising home prices, new highs in steel production and easing of debt limits on local governments points to China relying on its old development strategy.

Reuters: China's home prices growth fastest in five months, raises policy challenge
Average new home prices in China’s 70 major cities rose 0.7% in May from the previous month, picking up from a 0.6% rise in April and the quickest pace since December, according to Reuters calculations based on National Bureau of Statistics (NBS) data on Tuesday.

That marked the 49th straight month of price gains. Sixty-seven of the total 70 cities surveyed by the NBS reported higher prices in May, the same as April.

On an annual basis, home prices increased 10.7% in May, unchanged from April’s growth rate.

Beijing has repeatedly urged local governments to keep runaway prices under control, but a recent easing in credit conditions, pent-up demand for housing, and an implicit government mandate to prevent a collapse have kept the market surprisingly resilient.

But further curbs on home buyers would risk adding to pressure on China’s economy, which has seen sales slowing due to weaker domestic demand and an escalating trade war with the United States.

CN Stock: 房市到底是冷还是热?涨幅虽有收窄,但三四线城市依然火爆
Sogou: Is the housing market cold or hot? Although the increase has narrowed, the third-and fourth-tier cities are still booming.http://translate.sogoucdn.com/pcvtsnapshot?from=auto&to=zh-CHS&tfr=translatepc&url=http%3A%2F%2Fnews.cnstock.com%2Fnews%2Cbwkx-201906-4389547.htm&domainType=sogou
Judging from the changes in sales prices of commercial housing in 70 large and medium-sized cities released by the Bureau of Statistics, in May, the number of cities with rising prices of new houses was 67, and the number of cities with rising prices of second-hand houses was 55, all the same as in April.

Judging from the index, the price increase of both new and second-hand houses is slowing down. Taking the second-hand housing that can better reflect the real situation of the market as an example, it is estimated that the price of the second-hand housing in 70 large and medium-sized cities rose 0.43% month on month in May, 0.1 percentage point lower than that in April.

Wang Ruochen, a researcher at the Yi Ju Real Estate Research Institute, told reporters in the Shanghai Stock Exchange newspaper that the rise in house prices in 70 cities in May narrowed month on month, meaning that the popularity of the spring has begun to decrease. With the tightening of real estate policies in hot cities, the rise is expected to continue to narrow in the coming months.

Zhang Dawei, an analyst with Centaline Real Estate, said that the market showed that the Indian summer had subsided in May, and the market decline was mainly due to the intensive release of a series of continuously tightening regulatory policies. In addition, after the rise of house prices in some regions, the availability of houses with high cost performance has decreased, affecting the enthusiasm of home buyers.

According to incomplete statistics, ministries and local governments implemented a total of 41 regulatory measures on real estate in May, slightly less than 60 in April, but the intensive release for two consecutive months shows that the trend of tightening regulatory policies will continue.
As I reiterate in all these stories, credit drives prices. Controls will work if credit growth stays in a very modest downtrend in June. If real estate cools though, something else has to drive growth.


Chinese Homebuyers Find Their Home Was Mortgaged By Developer

Some developers have sold encumbered homes to unsuspecting buyers.

iFeng: 开发商涉嫌假购房 回迁户20年办不成房产证
Sogou: Developers Suspected of Fake House Purchase
The original question: why did it take 20 years for the reporter to go to Guangzhou Haizhu district to carry out an interview and survey on the returned households?Property ownership certificate(Letter Investigation)

Editorial comrade:

We live in Guangzhou Haizhu District Baogang Avenue Sui Long Garden's resettlement households. At the beginning of this century, we were resettled here, but we found that the real estate had already been mortgaged and pre-sold by the developers before moving in, and could not be handled.Property ownership certificate. This has greatly affected our daily life. Over the years, we have repeatedly reflected our demands through various channels, but the problem has not been solved.

Some returned households

On May 21, the reporter drove to Baogang Avenue in Haizhu District of Guangzhou City and walked along a path. He was confronted by an 11-story high-rise building, which is what the reader called Sui Long Garden Community. Why can't the move-back households be delayed?Property ownership certificate? The reporter immediately launched an interview investigation.

Returned households reflect:

Before moving in, the real estate has been mortgaged and pre-sold for mortgage.

Suilong Garden Community and ItsPeripheral area, originally belonged to Longtian Zhijie, Baogang Avenue, Haizhu District, Guangzhou City. In 1995, with the approval of relevant departments of Guangzhou City, the plot was requisitioned for construction of commercial and residential buildings. Among them, some are developed and constructed by Guangzhou Beijing Company and some by Shengping Company. Guangzhou Beijing Company immediately set up a project company, Baoshan Company, to carry out demolition and reconstruction on the Guangzhou Beijing plot, and built an 11-storey commercial and residential building in 2000, which is the Guangzhou Long Garden residential area seen by the reporter.

Li Jiang (not his real name) is 78 years old this year. I still remember vividly the experience of moving back to China and running a license in these years and feel quite helpless. He agreed to demolish the house in October 1997 and moved into Suilong Garden Community in October 2000 according to the agreement with Suijing Company. "I stayed there for seven or eight years.Property ownership certificateNo one has been interested in this matter. We have repeatedly asked Sui Jing Company for assistance in handling the certificate, but we can't find Wu Shangping, then the head of the company. It was not until 2010 that the general office of Guangzhou municipal government forwarded the Guangzhou municipal land and resources bureau's handling of solving the problems left over from the city's history.Property ownership certificateNotice of Several Opinions on the Issue ",we began to reflect our demands to government departments and seek solutions to the problem. The result was that our relocated house was sealed up by the court due to the debt problem of Guangzhou Beijing Company. "Li Jiang said.

After judicial proceedings, the relocated house in Li Jiang was successfully unsealed in 2014. In November of that year, Li Jiang came to Guangzhou Real Estate Transaction Registration Center with great expectation and applied for handling.Property ownership certificate. However, on January 20, 2015, Li Jiang was blindsided by a "Notice of Supplementary Certificate Data" issued by Guangzhou Real Estate Transaction Registration Center. The notice stated that the relocated house in Li Jiang had been mortgaged to the business department of Guangdong Branch of Agricultural Bank of China in 1999. Only after the mortgage cancellation certificate was submitted can it be handled.Property ownership certificate.

"When I checked in, I didn't know the property was mortgaged." Li Jiang took out the receipt for the purchase of the same year and said, "His previous house was small, and when he moved back, he changed to a larger one, making up the difference of 25 square meters. Sui Jing Company obviously has mortgaged the house, why do you still charge me? " According to reports from Li Jiang, there are 28 returned households that "mortgage first and move in later".

During the interview, the reporter met Yang Yuan (pseudonym) who moved back to his home. He said that his house might be "sold two times for one room". Yang Yuan signed a relocation agreement with Sui Jing Company in January 1998, then moved into Sui Long Garden Community. In 2014, Sui Jing Company also issued a relocation certificate to Yang Yuan. Even so, Yang Yuan'sProperty ownership certificateIt has never been possible.

The mystery was solved by Yang Yuan after he inadvertently noticed a real estate sales contract dispute in Guangzhou's court system in 2018. He is very strange to the plaintiff and the defendant, but the real estate in dispute is his relocated house. What surprised Yang Yuan even more was that according to some information introduced in the second instance civil judgment of Guangzhou Intermediate People's Court, his relocated house had already been pre-sold and mortgaged by others.

Yang Yuanshun found that at least 22 households in Suilong Garden District had already been pre-sold by Baoshan Company, and the relevant buyers had already gone through mortgage formalities in the bank.

Functional response:

Developers are suspected of buying fake houses and mortgages and taking bank funds.

According to the clues provided by the relocated households, the reporter learned that in 1999, Xiao Sui Company borrowed 6.5 million yuan from the bank, and Baoshan Company, as a guarantee, mortgaged 28 properties in Sui Long Garden Community, that is, the relocated houses of Li Jiang and others to the bank. At the same time, according to the report of the returned households, the person in charge of Sui Jing Company at that time was Wu Shangping, and the person in charge of Xiao Sui Company at that time was Wu Suiyi, the son of Wu Shangping. "Guangzhou Beijing Company was a subsidiary of Guangzhou Beijing Office at that time. Baoshan Company, the project company established by Guangzhou Beijing Office, undertook the government-led demolition and renovation project. How can public interests be used to pay for private enterprises?" Li Jiang said.

Due to various factors, Guangzhou Haizhu District Court enforced the auction according to law. Zhonghui Company successfully auctioned in 2005. The auction proceeds of more than 82 million yuan were managed by the Executive Board of Guangzhou Haizhu District Court.

In this regard, some functional departments have proposed to allocate part of the money to solve the bank mortgage problem, thus helping the relocated households to run their certificates smoothly. However, Haizhu District Court clearly pointed out that the auction proceeds should be used for compensation and resettlement in priority and should be earmarked for special purposes. "It can only be used to solve the problems on the Guangzhou-Beijing plot, and cannot help other enterprises and plots to repay debts." The problem of 28 households such as Li Jiang has not been solved so far.

According to reports from Li Jiang, Yang Yuan and others, many of the "home buyers" in the relocated houses suspected of "selling one house for two" are Wu Shangping's relatives and company employees. This has been confirmed by Guangzhou's housing construction and planning departments.

Huang Chengjun, deputy director of Guangzhou's Housing and Urban-Rural Construction Bureau, said: "This problem is not limited to this building. When money is tight, some developers will use fake house purchase and mortgage to get bank funds and continue to develop with bank money. "

Huang Wenyu, deputy researcher of Guangzhou Real Estate Registration Center, said: "Most of the real estate registration was in 1998 and 1999. At that time, our information management system was not perfect. Developers were only required to register the real estate directly. At that time, they did not check the identity information of the buyers and did not check the purchase price."

Returned households reflect:

There is a dispute over the "floor covering clause" for land transfer. Developers are wrangling and the interests of returned households are affected.

In the interview and investigation, another group, 32 returned households from Shengping plot, were resettled in Suilong Garden plot on Suijing plot. Later, the two plots of land were merged into one, and were successively recovered by the government free of charge, then auctioned and auctioned by judicial auction, both of which were developed and constructed by Zhonghui Company. In the process of such changes and transfers, who should the 32 returned households claim their rights to? has become "a mess".

According to Bi Zhao (pseudonym) of the returned households, in May 1995, the Guangzhou municipal authorities approved the first phase of the Shengping plot project, involving the relocation of 75 households. Among them, 32 households chose property rights replacement and moved back to Suilong Garden Community in 2000. Since then, the Shengping plot has not been demolished. The whole plot has been identified as idle land. The Guangzhou municipal government has taken it back free of charge and listed it for sale in the municipal real estate transaction registration center.

In February 2006, Zhonghui Company successfully won the land parcel. Guangzhou Municipal Bureau of Planning and Natural Resources (known as Guangzhou Municipal Bureau of Land Resources and Housing) signed a land transfer contract with Zhonghui Company, which stated a special clause: "Under this contract, Party B shall be responsible for the compensation and resettlement of the land parcel, and the area of the land parcel to be demolished shall be about 9885 square meters. This area is the statistical data of file search, not the actual compensation and resettlement data. Party B shall be responsible for all compensation and resettlement according to the actual situation in the demolition process. " In response, Li Yuehua, a staff member of Guangzhou Planning and Natural Resources Bureau, said that this is a "bottom-covering clause" to ensure that the historical problems left over from the plot are solved.

However, different subjects have different opinions on this "bottom-covering clause", and developers are also pushing each other. According to Bi Zhao, they once looked for Shengping Company, only to find that their license had been "revoked". Looking for Sui Jing Company, the latter has always said that it should be based on the assignment contract and its special terms and conditions, and Zhonghui Company should be "responsible for all compensation and resettlement". Besides, its Sui Jing plot has been auctioned by the judiciary and should seek help from the court and the land department to solve the problem.

Since 2017, 32 relocated households have repeatedly sued Zhonghui Company, which was rejected one by one by the court, believing that Shengping Company has been resettled and "should handle the property right registration formalities for its houses". At the same time, the company also cited the scope of demolition permit in the demolition permit no 40 of 2006 as the reason that 32 relocated households were not within the "actual scope" stipulated in the special terms of the contract. On the grounds of the demolition settlement certificate issued by Guangzhou City Housing Demolition and Relocation Office in 2011, it is believed that the "settlement" proves that it is not necessary to be responsible for 32 relocated households ...

However, a judgment of Guangzhou Intermediate People's Court showed that Mo Moumou was a relocated family in Shengping plot and agreed that Shengping Company would pay the temporary relocation subsidy on a regular basis. Later Shengping Company would not pay any more. Mo so-and-so took Zhonghui Company to court and asked Zhonghui Company to continue to pay and settle the property. The court finally ruled in favor of Mo so-and-so. "Our houses were demolished by Shengping Company. Why did the verdict differ?" Bi Zhao said.

During the interview and investigation, several relocated households raised objections to the "Demolition Settlement Certificate" issued by the Guangzhou Demolition Office. At the same time, they hoped that the relevant departments would give an authoritative explanation of the "actual scope" and "full compensation and resettlement" in the special terms of the transfer contract as soon as possible, clarifying the main responsibility, "and" don't let us and the developers fall into endless verbal battles. "

Functional response:

Zhonghui Company should bear the responsibility. Its 20 houses have been restricted from sale.

With the doubts of the returned households, the reporter further verified with the relevant departments. First of all, regarding the reason why the relocated households in charge of Shengping Company will be relocated to the relocated buildings constructed by Suijing Company, the relevant responsible person of Guangzhou State-owned Land Housing Expropriation Office, Mai Huimin, gave an explanation: Shengping Company is actually a project company established by Suijing Company, and the business connection between them is normal, and the relevant departments are also informed.

It is understood that Guangzhou Municipal Planning and Natural Resources Bureau (known as Guangzhou Municipal Bureau of Land, Resources and Housing) restricted the sale of 20 units of Zhonghui Yayuan Phase I, a real estate developed by Zhonghui Company, in May 2014. In response, both Li Yuehua and Maihuimin explained in an interview with reporters that the 32 returned households did not fall within the actual scope of the assignment contract, which stated that "the area to be demolished for the plot is about 9,885 square meters". However, as long as the plot is in Shengping, Zhonghui Company should bear the responsibility according to the contract.

Since then, Zhonghui Company has submitted an administrative reconsideration to the Guangdong Provincial Housing and Construction Department, requesting to unlock 20 houses, and the appeal has been rejected. In addition, the "decision to reject the application for administrative reconsideration" issued by the Guangdong provincial housing and construction department also contains the reply opinions of Guangzhou municipal planning and natural resources bureau (known as Guangzhou municipal land and resources and planning Committee): since the land parcel has been sold twice before and after, the compensation agreement has been signed or the owners who have not handled the property rights have been resettled, which cannot be reflected in the scope of the demolition permit no 40 of 2006. Therefore, in addition to completing the compensation and resettlement of all houses within the scope of the demolition notice, the compensation and resettlement of other owners within the whole plot should also be solved.

Recent developments:

The municipal government said that the relocated households were innocent, and it was necessary to draw inferences from one instance and promote the resolution of similar problems.

During the interview, some relocated households introduced that they had reported their demands through various channels for more than 100 times, but there was still no result. "I have spent my whole life on this house, but in the end I still can't get it."Property ownership certificateMing. "

Because it cannot be done all the year round.Property ownership certificateThe daily life of the relocated households is also greatly affected: children cannot go to school nearby, traveling abroad is difficult, and even water and electricity meters cannot be installed normally. Due to the unclear property rights of the houses, the hearts of the relocated households have always been uncertain: the court system often conducts on-site investigations and claims to seal them up; The houses suspected of "selling one house for two" are often harassed and demanded to vacate.

"In any case, the relocated households are innocent and really victims." On May 29, when reporters came to Guangzhou again to exchange information with relevant leaders and departments in Guangzhou and Haizhu District, Xing Xiang, Deputy Secretary General of Guangzhou Municipal Government, said that the above-mentioned series of problems were often caused by developers taking advantage of some loopholes in the system and supervision. The next step is to try hard to solve the problems, and draw inferences from other examples to push forward the solution of a series of similar problems left over from history.

According to reports, Guangzhou municipal party Committee and municipal government attach great importance to the resettlement of sui long garden. municipal leaders in charge of the city held special meetings to organize the municipal housing construction, planning, public security, judicial administration and other departments and the municipal intermediate people's court, Haizhu district government and Haizhu district court to set up special working groups. At present, the ad hoc working group is paying close attention to checking the basic situation of the companies and real estate involved in the case, earnestly listening to the opinions of the relocated households, and sorting out and studying the solutions. Xing Xiang also made it clear that the next step would be to adopt a two-pronged approach of administration and justice. According to different situations such as seizure, mortgage, mortgage, etc., policies would be implemented in different categories and comprehensive treatment would be adopted to solve the problem as soon as possible. At present, all kinds of work are under way.

This newspaper will continue to pay attention to when the returned households can obtain the real estate certificate.

■ After editing

Effectively safeguard the interests of the masses

Dozens of relocated households have moved into new houses, but in the past 20 years, the real estate certificate has not been provided. The "sequelae" caused by the demolition and reconstruction have damaged the interests of the masses.

It should be said that the demolition and reconstruction is a good thing led by the government, improving the living environment, improving the city's appearance, the fundamental purpose is to let the masses live a better life. In order to do a good job, it is necessary to ensure that the demolition and reconstruction work is carried forward along the track of the rule of law and that the legitimate interests of the masses in the demolition and resettlement are respected and protected. For example, we should strengthen the supervision of the whole process of demolition and reconstruction, and resolutely say "no" to all acts that developers may do to harm the interests of the masses, resolutely stop them, and resolutely put an end to negligence, shielding and connivance. Another example is that once the masses' real estate disputes and interests are infringed upon, they should study and solve the problems in time and take active actions in the face of difficulties and contradictions in their work.

Adhering to the people-centered development idea, effectively protecting the interests of the masses, and solving problems for the masses are the obligatory duties and missions of the Party committee and government. I hope that the relevant local departments will have a unified understanding, form a joint force, and grasp it to the end so that these dozens of returned households can get their property certificates as soon as possible.


Deleveraging Deflates Real Estate Financing

A bump in SOE and local government financing will be needed to offset the slowdown in real estate financing this month, or China will not hit credit growth targets.

iFeng: 房企融资遭遇“黑五月” 40家房企融资骤降52.07%
After changing the previous loose expectations, the housing financing environment has tightened again in the near future. In May, the housing financing quota fell by more than 50%, and the housing enterprises encountered financing “black May”.

The official also issued a policy to tighten housing financing. Some experts predict that the tightening of housing financing in the future is a general trend. For some high-turning housing enterprises, the capital situation will be more severe, and the possibility of capital chain breakage should be prevented.
Corporate finance plummeted by 50% in May

After a slight decline in April, the amount of financing continued to fall sharply in May. According to the data provided by the same policy research institute, in May 2019, the total financing of 40 typical listed real estate enterprises totaled 36.799 billion yuan. Compared with April, the total financing decreased by 52.07%, setting a new low since 2019.

The good days that the housing companies are expecting have not yet had time to start, they have been annihilated by the small flames they are expecting. Zhu Lili, a researcher at the same policy institute, believes that with the introduction of the regulatory policies of the regulatory authorities in May, the policy tightening trend is obvious, which in turn affects the difficulty of overseas financing of housing enterprises.

Corporate bonds and other debt financing have always been the two most important channels for housing financing. In May, these two “life-saving pills” failed at the same time. Specifically, in terms of trust loans, a total of 4 trust loan financings were monitored in May, with a total financing of 10 billion yuan, up 32.76% from the 7.537 billion yuan in April. The largest one was China Merchants Shekou to China Resources. Shen Guotou Trust Co., Ltd. applied for a renewable trust loan of 7 billion yuan; in terms of corporate bonds, only 6 corporate bonds occurred in May, a total of 9.585 billion yuan, a significant drop of 79.74% from April's 47.313 billion yuan. Two of the six corporate bonds were issued US dollar bonds, totaling 450 million US dollars, equivalent to RMB 3.105 billion; in terms of domestic bank loans, the financing amount in May was 7.769 billion yuan, a sharp increase from the 3.221 billion yuan in April. %; In other debt financing, the total financing amount in May was 5.313 billion yuan, a sharp drop of 50.54% compared with April 10.743 billion yuan; in terms of equity financing, the financing amount in May was 4.132 billion yuan, accounting for 11.23% of the total financing amount, which was down from the previous month. 36.96%; In addition, no mid-term notes, overseas syndicated loans, and entrusted loans occurred in May.

In contrast, the financing cost in May was lower, and the basic control was within 6.5%. Among the disclosed data, the lowest financing cost is Guangzhou City Construction Development Co., Ltd. 2019 public housing lease special corporate bonds (the first phase), the issuance scale of 1.5 billion yuan, the coupon rate of 3.83%; followed by its issuance Guangzhou Urban Construction and Development Co., Ltd. publicly issued corporate bonds (first phase) for qualified investors in 2019, with a scale of 1.95 billion yuan and a coupon rate of 3.85%. The highest financing cost is that Xincheng Global, an overseas subsidiary of Metro Holdings, has completed the issuance of unsecured fixed-rate bonds with a total amount of US$300 million overseas, with a coupon rate of 6.5%.

For the performance of housing financing in May, Zhang Hongwei, chief analyst of Tongce Group, believes that the source of the suspension of bond issuance comes from the “abnormality” of recent housing and land markets. In March and April, the land market was too hot. If there is no supervision, there is risk in the market. It is expected that the housing financing will be slightly tightened later.

Duan Yutong, an analyst at Zhuge Fangfang Data Research Center, told the China Times reporter that the intensive financing of the past period has led to a marked acceleration in the acquisition of land. The resulting land price rises and the upward trend of house prices reappears, and the tightening of financing supervision is obvious. At present, the overall real estate policy regulation direction is still based on "stable". In order to stabilize market expectations and achieve the goal of "stable price, stable price, stable expectations" and avoid excessive market temperature, the overall financing trend is declining.
Zhang Dawei, chief analyst of Zhongyuan Real Estate, believes that from the perspective of the property market regulation policy, the overall real estate policy regulation direction is still “small spring”, but “in summer” will inevitably be suppressed, and the policy will insist on “patching and playing the hamster." Financing supervision has begun to appear, and it is expected that financing will continue to tighten and decrease in June compared to May.
iFeng: 五月楼市数据透视: 销售继续筑底,房企过“紧日子”
The indicators may continue to fall back

The decline in sales has also affected the financial situation of housing companies. In the first five months of this year, the real estate development enterprises had a capital of 66.689 billion yuan, a year-on-year increase of 7.6%, and the growth rate dropped by 1.3 percentage points from January to April. Among them, the growth rate of deposits and pre-sales and personal mortgage loans decreased compared with the previous April.

In the financing market, housing companies have also encountered certain difficulties, which has made the company's capital chain worse.

According to the data of the same policy research institute, in May, the financing amount of 40 typical listed real estate enterprises was 36.799 billion yuan, a decrease of 52.07% from the previous month, a record low of nearly one year. Among them, corporate bonds totaled 9.585 billion yuan, a significant drop of 79.74% from the previous year's 47.313 billion yuan. Foreign currency financing also plummeted 93.82%.

A housing company in Beijing told the 21st Century Business Herald that the tightening of financing policies is a continuation of the property market regulation policy triggered by Xiaoyangchun in March. He said that since April, the funds of both real estate and homebuyers have been tightened, and the National Banking and Insurance Bureau has issued penalties for illegal lending to real estate. At the end of May, the regulatory authorities also revealed that some housing companies will be tightened to open market financing, including bonds and ABS products.

The person said that due to the bad environment, various housing companies have generally passed the "tight days." For example, at the beginning of the year, the headquarters gave local companies the authorization to get a relatively rich budget, but it is still strictly controlled for high-priced land, and will give up decisively once the authorized price is exceeded.

Since mid-May, many housing companies including China Merchants Shekou, Jianye, Jinmao, etc. have released project transfer information due to excessive prices or insufficient project profitability.

For the future market trend, most of the respondents believe that “regulation will be due to urban policies and the market will fall back smoothly” will be the main trend.

The aforementioned housing enterprises said that some areas have been loosened and regulated in the near future. However, in general, whether the Suzhou regulation and control plan or the long-term mechanism such as market warning has begun to operate, both the central and local governments have left behind. Once the market changes again, the regulatory policy will move by the camera, thus stabilizing the market.

Yan Yuejin pointed out that under the background of housing and non-speculation, it is expected that the national regulation and control policy will not be relaxed in the short term, and the growth rate of commercial housing transaction area will continue to remain flat or decline in the next few months. Affected by this, the capital pressure of real estate enterprises is still relatively large, and the enthusiasm for starting the land is difficult to rebound rapidly. Therefore, the growth rate of real estate development investment in the country will continue to fall.

Zhongtai Securities believes that the key first- and second-tier property markets will continue to remain stable in the future, while the third- and fourth-tier property markets will tend to fall, resulting in a decline in national sales data. Under the current tightening of the financing environment, the heat of the land market is expected to decline, and the growth rate of real estate investment will also decline.
iFeng: 楼市拐点来了?这三大“风向标”城市5月集体降温
"Red May" is not red?

In May, the overall turnover of the national property market was not strong enough, and there was no rebound in March and April. It is roughly due to the following two reasons:

1, the intensity of regulation is not reduced

According to the statistics of the Central Plains Real Estate Research Center, in May, the local authorities, including the ministries and commissions, have adjusted 41 measures for real estate. Although less than 60 times in April, real estate control policies for two consecutive months are in a period of policy-intensive release. The precise regulation of various places has effectively stabilized the property market.

2, inventory pressure is not small

At present, among the 100 large and medium-sized cities in China, the property market inventories have increased year-on-year, especially in the third- and fourth-tier cities.

Among them, the supply of new discs in first-tier cities increased, and the inventory rebounded significantly. Inventories in third- and fourth-tier cities have been in the process of climbing. According to statistics, since November 2018, the inventory of third- and fourth-tier cities has shown a continuous ring and positive growth year-on-year. The situation of oversupply has increased the pressure on third- and fourth-tier cities to destock.

It is undeniable that although “Red May” has failed, the market expectation has also changed, and the property market has also developed in a more stable direction, and house prices have become more rational.

With the fact that “households are not speculated”, the characteristics of “different city policy” are clear. I believe that in the future, more refined property market regulation policies will become mainstream, and house prices will be based on market changes and regulatory targets in a reasonable range. Internal fluctuations.

SOEs Taking Over Private Economy

Private companies are selling out to SOEs and becoming the second-largest shareholder. Some companies have immediate pressure such as debt troubles, but others are hoping to tap the power of the state.

21st Century: “控制权”转让乍热的秘密:纾困第二季国资角色悄然转变
Sogou: The Secret of "Control Right" Transfer: The Role of State-owned Assets Changed Quietly in the Second Season of Relief
Since the fourth quarter of last year, more and more listed companies led by local governments have been acquired, which indeed shows cross-regional characteristics. Through the data, the secret of off-site acquisition is gradually revealed.

For example, state-owned assets in central and western cities have acquired listed companies along the southeast coast. On the one hand, the purpose of bailing out listed companies is clear. On the other hand, it is a better way to revitalize and integrate local resources than relying solely on local platforms to revitalize assets by holding hands with listed platforms in active investment and financing areas.

Not to mention, many cities do not even have A-share companies, which are greatly hampered in the process of industrial integration.

The new trend is becoming clearer in another round of transfer of control rights of listed companies.

According to our reporter's understanding, in this wave of transfer of control rights, agreement transfer, agreement transfer+voting right entrustment and voting right entrustment have become the main methods, and new methods such as agreement transfer+voting right abandonment have emerged. In addition, judging from the nature of the transferee, compared with the fourth quarter of last year, the proportion of private enterprises selling is also increasing.

"The current market situation is different from last year. Many major shareholders of listed companies are not in such a hurry to resolve the risk of stock pledge, but they hope to introduce a powerful controlling shareholder with industrial synergy for the sake of the future of listed companies. The founders are willing to be second shareholders. " On June 14, an investment banker from a securities firm in Shenzhen told reporters in 21st century business herald.
In some cases a smaller, local govt backed SOE sells out to a larger SOE, but private companies are also giving up control:
Statistics from reporters in 21st century business herald show that in the past month, about 15 listed companies have issued suggestive announcements on the change of control rights, announcing the change of ownership of the largest shareholder. Among them, 9 listed companies are state-owned and 6 are private enterprises. Compared with the fourth quarter of last year, the proportion of private enterprises accepting control of listed companies has increased, and powerful parties such as Liu Yonghao and East China Medicine have also begun to make moves.
Typically, on June 14, Saifutian announced that the actual controller Cui Zhiqiang intends to transfer 16.73% of the controlling shareholder Wuxi Saifutian Steel Rope Co., Ltd. to Suzhou Tiankai Huirun Industrial Investment Partnership (hereinafter referred to as "Tiankai Huirun"), and entrust the voting rights corresponding to the remaining 50.19% of Wuxi Saifutian held by it to Tiankai Huirun. After the transfer is completed, Saifutian's actual controller will be changed from Cui Zhiqiang to no actual controller.

"At present, the company only knows that the other party takes control first. There is no clear plan. The company's management team is relatively stable." On June 14, Saifutian Securities Department told reporters in 21st century business herald that the new shareholders have a background in state-owned assets and are relatively strong.


Chinese Industrial Production Slumps

The slowdown in autos intensified, the slowdown in industrial robots slowed slightly. Real estate investment, fixed asset investment and retail sales are all consistent with a slowdown.
NBS releases


Smashing Trump in China

The new Cold War is not a self-propelled cycle yet, but it is slowly getting there.

ZH: Watch Chinese People Bash Trump Bobblehead With Hammer As A “Stress-Relief”

Social Mood Says Bear Market

Belief in witchcraft/superstition is a sign of negative mood.
LA Times: The working witches of Los Angeles just want you to be your best self
A 2017 survey from the Pew Research Center that examined New Age beliefs in America found that 40% of respondents believe in psychics and another 40% believe that inanimate objects like mountains and trees are imbued with spiritual energy.

It also found that 33% of Americans believe in reincarnation, 29% believe in astrology, and 60% say they hold at least one of these New Age beliefs.

Anecdotal evidence seems to indicate the number of people who call themselves witches is growing.

“Interest in witchcraft waxes and wanes, but it is waxing, again, particularly among young women,” says Helen Berger, a professor at Brandeis University who has been studying witches and pagans for 30 years.
When going through the list of trends including transgenderism, it is screaming negative mood. Many parallels with he 1970s and even Weimar Germany. Stocks and social mood will eventually converge at much lower levels, but stocks have a lot of decline ahead (in real terms) just to catch up with mood.

Socionomics Alert: China Gets Triggered Over Pig Comment

China had 5-minutes of hate after UBS' chief economist made a cheeky comment about African Swine Flu. Chinese then intentionally misinterpreted the comment and blew it up into an international incident.

This is the type of thing that occurs almost weekly on Twitter in the United States and also on Weibo/WeChat in China, where comments are taken out of context and blown up into 5-minutes of hate. Yet this wasn't a bunch of emotionally unstable Twitterati, it triggered financial professionals. The trade war is heating up and you can expect any minor incident, including throwaway comments on social media, to be blown out of proportion as global social mood begins its long descent.
A flippant reference to pigs in an inflation analysis by UBS Group AG's global chief economist has caused a furore in China, with some in the financial community rejecting UBS's apology and calling for a boycott.

Paul Donovan, global chief economist of the Swiss bank's wealth management department since 2016, said in a podcast that higher consumer prices due to sickness among pigs would matter to a Chinese pig.

"Does it matter? It matters if you are a Chinese pig. It matters if you like eating pork in China," he said in the podcast on Wednesday, the transcript of which was posted on UBS's official website and later taken down.

His comments caused a stir among Chinese finance professionals, who said they were "distasteful and racist".

It even drew the attention of an influential state tabloid, the Global Times, which said Chinese internet users were outraged by the language used in the analysis of consumer prices.

"We apologise unreservedly for any misunderstanding caused by these innocently intended comments by Paul Donovan," UBS said in a statement emailed to Reuters.
Global Times: Chinese netizens reject UBS apology after issuing a 'racist' report on China’s inflation

Logic of Strategy: Tourism Edition

AFR: Chinese tourism slowdown surprises Australia
Chinese tourists spend more in Australia too, as the cliché of tour groups chasing after a guide with a flag has given way to cashed-up young couples travelling independently.

However, the narrative that the boom is going to last forever is no longer accurate. China's economy is slowing and its middle-class consumers are becoming increasingly cautious when it comes to spending.

Many are rethinking expensive family holidays to long-haul destinations in favor of cheaper options closer to home such as Thailand and Japan, and popular new destinations in Cambodia and Indonesia. Fewer are visiting Australia to buy property.

But there are other dangers to Australia's reliance on Chinese tourists that go beyond economics. Beijing's decision last week to issue a travel warning to travelers visiting the United States shows it will not hesitate to use its tourists and students against countries it falls out with politically.
Nations should strive for independence, from Beijing and from Washington.


China Credit Growth Not Stimulative

Chinese credit growth ticked up slightly in May if looking at year-on-year single-month change. May 2018 saw 0.31 percent increase in M2, May 2019 0.34 percent. But the bump didn't offset April's larger drop. If credit stimulus is coming, it will be in June. That month is usually has the second fastest credit growth for the year after January as 2H investment plans get financed. A baseline growth rate would be about 1.6 percent increase in M2, so it will have to be something blowout to change the rolling 3-month trajectory.
Lending is going to increasingly unproductive uses. Caixin: China’s Credit Growth Edges Up in May
In May, banks made 1.18 trillion yuan in net new yuan loans, up from 1.02 trillion yuan in the previous month, according to the data. Of the 1.18 trillion yuan, 56.1%, or 662.5 billion yuan, went to the household sector, up from April’s 51.5%.
Also from Caixin: Sluggish Business Credit Demand Signals Need for Further Easing
With local governments likely to be constrained in their borrowing for the rest of this year, additional monetary easing will be needed to sustain credit growth and shore up economic growth, Palmas said in the note.
Interesting. Earlier today it was More Debt for Infrastructure in China

Local governments are constrained by debt levels and weakening real estate in third- and fourth-tier cities (See: Enshi, Hubei Bans Price Cuts), which hits land finance. Businesses aren't borrowing. Banks can't profitably lend to small business. Stimulus hope is rapidly running out of road.

CCI Says Sell

Last sell signal was May 1, buy was June 4. S&P 500, Dow, Nasdaq and Russell 2000 all same signal.
Energy bounce or collapse?

Enshi, Hubei Bans Price Cuts

As China loosens borrowing rules on local government borrowing, expect local governments to boost home prices in a bid to finance their borrowing with land sales.

iFeng: 罕见房价"止跌令"!已有城市管理断崖式降价
Sogou: Rare house price "stop falling order"! There is already a cliff-cutting price cut for city management
Although property transactions in some hot second-tier cities have been booming recently, transactions in some third-and fourth-tier cities have been sluggish and the pattern of property market differentiation has become more obvious. Under the pressure of decentralization, some buildings in some third-and fourth-tier cities have adopted price reduction and promotion measures, and some even upset market expectations due to excessive price reduction.

A few days ago, the Enshi Real Estate Association released the "Red Head" document of "Notice on Stabilizing the Price Warning of Enshi Real Estate Market", which investigated and verified the cliff-like price reduction problem that has been strongly reflected by the society, put forward early warning and corresponding rectification measures for 10 price reduction phenomena, and the HS also said that it would assist the competent authorities to carry out systematic restriction on the lower floor price of the record price and determine a benign price reduction range.

In response, a Chinese reporter from a securities firm called Enshi Housing and Construction Bureau to verify the case. The relevant person in charge said: "The housing price warning document of the City Housing Society is true. I have seen it. This was issued by the City Housing Society according to the market situation."

Industry insiders believe that Enshi City's current document reflects the guidance of stabilizing house prices, stabilizing expectations and stabilizing the market. The overall property market policy is mainly based on stability. Stability is actually a two-way adjustment. Excessive rise and fall in house prices are not allowed and should fluctuate within a reasonable range based on market planning and control objectives.

In addition, Enshi is located in the western part of Hubei Province and belongs to a typical third-and fourth-tier city. This restriction on price reduction is also considered to reflect the thinking of government departments to "support the market". Official data show that Enshi's GDP totaled 87.1 billion yuan in 2018, making it the only city and state in Hubei Province with less than 100 billion yuan. Last year, Enshi's GDP grew by 6.2%, also the lowest level in the province. Enshi City is one of the eight counties and cities under Enshi Prefecture and is also the seat of Enshi Prefecture government.

Enshi City in Hubei Releases House Price Stopping Order

A few days ago, the Enshi City Real Estate Association of Hubei Province released the "Red Head" document of "Notice on Stabilizing the Early Warning of Enshi Real Estate Market Price". The document pointed out that recently, with the gradual increase in the number of listed real estate projects, the gradual decrease in sales degeneracy, and the increase in sales pressure faced by various housing enterprises, various projects have adopted different sales methods and means. Among them, some real estate projects have taken drastic price reduction measures to promote sales. These measures have aroused widespread concern in society and have brought adverse effects to Enshi real estate market.

Recently, Enshi Housing Society organized relevant personnel to investigate and verify some real estate projects, reported relevant problems and put forward early warning in response to the problem of steep price cuts strongly reflected by the society.

Enshi Real Estate Association has listed 10 main manifestations of price reduction in some real estate projects:

1, high price filing, low price opening, a decrease of 800-1200 yuan per square meter

2. Pre-selling and selling by stages, with a price difference of 300-500 yuan per square meter

3. Failure to follow market rules for no reason resulted in a 200-500 yuan per square meter decline in the opening price.

4. Marking a low price to attract customers is actually a sales gimmick, which causes large fluctuations in the market and changes in purchase expectations.

5. Not pricing according to the law of cost and price, the comprehensive cost forms a huge contrast with the actual selling price, leaving an unsustainable development space for itself and going astray in development and sales.

6. Release low-price information in advance on the grounds of customer storage, or even charge deposit and card in disguised form without pre-sale certificate.

7. Cooperate with third parties to reduce prices by means of distribution, electricity sales, etc. Disrupt the market by reducing prices in disguised form in the form of project payment deduction room, internal welfare special price room, etc.

8. Selling at a sale price of 4,000-4,500 yuan per square meter, which has a negative impact on the whole market expectation.

9. improper sales means are adopted to arrange sales personnel to solicit customers outside other sales departments, which has extremely bad influence.

10. In violation of relevant regulations, the involved height of the floor was reduced to about 2.7 meters, laying hidden dangers of contradictions for late-stage home buyers.

In response, Enshi Real Estate Association issued warnings to enterprises with the above problems and phenomena, and requested relevant enterprises to take corrective measures to correct the current market disorder of malicious competition.

Specific measures include four:

1. Require all enterprises on sale to conduct self-examination and rectification

2. The HS will conduct special investigations and investigations on the invoiced buildings in the city and report the results of the investigations.

3. The HS will request the competent department of business to take relevant measures to curb the real estate that has caused serious market impact due to ineffective self-examination and correction.

4. The HS will assist the competent authorities to systematically restrict the lower limit of the filing price by dividing the land price and the location of each district, and determine a benign range of price reduction rates.

In addition, according to the surging news report, Zhou xing, president of Enshi real estate association, told reporters on the afternoon of the 10th that the notice was a self-discipline requirement within the association, calling on real estate development enterprises to consciously abide by relevant regulations and not to suddenly reduce the house price too low.

In response to the "Notice on Stabilizing Enshi Real Estate Market Price Warning" released by Enshi Housing Society via the Internet, the Chinese reporter of the securities firm called Enshi Housing and Construction Bureau to verify it. The relevant person in charge said: "The housing price warning document issued by Enshi Housing Society is true. I have read it. This was issued by Enshi Housing Society according to the market situation."

It is understood that Enshi City is the seat of the state government of Enshi Tujia and Miao Autonomous Prefecture (Enshi Prefecture for short), the political, economic, cultural center and transportation hub of the whole state. Enshi Prefecture is the only ethnic autonomous prefecture in Hubei Province. It is located in the southwest of Hubei Province. Enshi and Lichuan are two county-level cities and Jianshi, Badong, Xuanen, Xianfeng, Laifeng and Hefeng are six counties in the state. According to statistics of Guosheng Securities, Enshi Prefecture had 3.361 million permanent residents in 2017, with an average annual growth rate of 0.4% in the past three years. GDP in 2018 was 87.1 billion yuan, with a growth rate of only 6.2%, the lowest in the province.

Enshi's Order to Stop Falling Reflects the Signal of Stabilizing House Prices

Zhang Dawei, chief analyst of Centaline Real Estate, pointed out that Enshi is only a representative of an underdeveloped city in the country. Enshi belongs to a relatively backward region in the third and fourth tier cities and has a certain degree of dependence on real estate. However, Enshi is not the first city to issue a stop-fall order. Previously, the Ganxian District Housing and Construction Bureau of Ganzhou City, Jiangxi Province also issued a notice to the housing enterprises to "stop the sale of special-rate housing" and asked them to stop the sale of "special-rate housing" below the declared price. Anhui Hefei, Wuhu, Dangshan and other places of individual property prices have also been required by local authorities not to reduce prices or give penalties. "The core reason behind these phenomena is that the price reduction of real estate brings local land finance problems." Zhang Dawei said.

Yan Yuejin, research director of the think tank center of Yi Ju Research Institute, believes that the order issued by the Housing Society of Enshi City in Hubei Province reflects the guidance of stabilizing house prices, stabilizing expectations and stabilizing the market. Looking at the original policy alone, it seems to be an intervention in price reduction. However, judging from the 10 price reduction actions summarized in the document (large price difference for filing opening, large price difference for existing auction houses, large price difference last year, large price difference for publicity expectations, large price difference for actual sales of costs, low-price sales without license, misleading price reduction for special housing, improper sales, price reduction and fall in price, etc.), some of these price reduction actions violate the rules for housing sales and stabilizing the market, and obviously need to be controlled by the government.

In Yan yuejin's view, Enshi city's document further embodies the concept of "stabilizing house prices", that is, house prices are not allowed to rise or fall too fast, and house prices should fluctuate within a reasonable range based on market planning and regulatory objectives.

Prior to this, the Ministry of Housing and Construction gave early warning to 10 cities where house prices had risen too fast. Some cities have already increased their regulatory policies. Suzhou has been included in the "70+1" house price monitoring scope of the National Bureau of Statistics due to large fluctuations in house prices and land prices, and the annual increase shall not exceed 5%. Suzhou also said that during the two-month transition period, several major indicators of the real estate market could not be controlled, and the regulation would be increased immediately after July, including expanding the scope of sales restriction and raising the social security threshold for foreigners to purchase houses. In addition, Suzhou real estate long-term control mechanism has been reported to the Ministry of Housing and Construction.

"The overall property market policy is based on stability. Stability is actually a two-way adjustment. A sharp rise is definitely not stable, but a sharp fall is also not stable." Zhang Dawei said.

More Debt for Infrastructure in China

Keep cutting those yuan targets.

Caixin: China Relaxes Funding Restriction on Key Projects
Local governments will be allowed to use proceeds from special-purpose bond issuance as project capital for certain infrastructure investments, according to a document issued Monday by the central government. The document also encourages local authorities and financial institutions to expand funding sources for major projects through market-based financing methods as long as they follow the rules.

China previously prohibited local governments from using any borrowed money as project capital put up by investors for initial investment in infrastructure to curb local debt surges.


Enshi, Hubei Says Will "Correct" Developer Price Cuts

While some in-demand cities are heating up, others are worried about 30 percent price cuts.

iFeng: 湖北恩施房协发文“纠正”房价猛降 三四线楼市开始扛不住了?
Sogou: Hubei Enshi Housing Society issued a document to "correct" the sharp drop in housing prices. The 3rd and 4th line housing market began to fail?
After two years of skyrocketing, the "wolf" of the price reduction in the third and fourth-tier property market has finally come.

A few days ago, there was a circular on the Internet issued by Enshi Real Estate Association of Enshi City, Enshi Prefecture, Hubei Province, on the early warning of stabilizing Enshi real estate market prices. The red tape sent to Enshi real estate enterprises, copied to Enshi Municipal People's Government, Housing and Construction Bureau, Natural Resources and Planning Bureau, points out that some real estate projects have taken drastic price reduction measures to promote sales, including 10 kinds of price reduction actions such as the opening price is lower than the record price of 800 yuan -1200 yuan/square meter, and the remaining 4,000 yuan-4,500 yuan/square meter sales, which have brought adverse effects on Enshi real estate market. Enshi City Housing Society requires companies that are opening for sale to correct their bad practices and will assist the competent authorities to systematically restrict the lower limit of the filing price.

Yan yuejin, director of research at the think tank center of yi ju research institute, told the Huaxia times that Enshi's document further embodies the concept of "stabilizing house prices", i.e. neither too fast rising nor too fast falling house prices are allowed. The cooling trend of the third and fourth-tier cities' real estate market is a market behavior, and is itself a reasonable way to squeeze the bubble in real estate prices. However, judging from the actual situation, some price reductions have obviously interfered with the market, and have also led to blind price reductions for various buildings, thus interfering with the market. This is obviously something the government needs to control.

Ten counts, 30% reduction

According to this document, there are currently ten main manifestations of the real estate price reduction in Enshi City, four of which have clarified the survey data: some real estate prices are high for the record price, while others are low for the opening price. The price reduction range is reduced by 800 yuan -1200 yuan/m2 on the basis of the record price; Some buildings are pre-sold and sold in stages, with the price drop in 300 yuan -500 yuan/m2 before and after the sale. Some buildings did not follow the market price rules for no reason, and the overall price of buildings dropped significantly from the same period last year-200 yuan -500 yuan/m2. Some of the remaining orders were sold at sales prices ranging from 4,000 yuan to 4,500 yuan per square meter.

The other six include attracting customers at low prices, causing great market fluctuations; Comprehensive costs and actual sales prices form a huge contrast, leaving room for unsustainable development of real estate. Low-cost storage of customers, even without pre-sale permits, that is, in disguised form to collect deposits and cards; Cooperate with the third party to reduce prices by means of distribution and electricity sales. Disrupt the market by reducing prices in disguised forms such as construction fund deduction houses and internal welfare houses. Sales staff to other sales department soliciting, bad influence; In violation of relevant regulations, the floor design height was lowered to about 2.7 meters, laying hidden troubles for homebuyers to settle down.