David Fuller and Eoin Treacy's Comment of the Day
Category - China

    Mass. General in talks to build hospital in China

    This article by Liz Kowalczyk for the Boston Globe may be of interest to subscribers. Here is a section: 

    “China has a real serious problem in regard to availability of beds,’’ said Benjamin Shobert, managing director of Seattle-based Rubicon Strategy Group, which advises health care companies entering China. The shortage led the Chinese government two years ago to allow outsiders to invest in and provide expertise for the country’s health care system.

    Since then, Mass. General, which is the largest hospital in New England, has developed a relationship with China. A Chinese medical tourism firm, Beijing Saint Lucia Consulting, refers patients to the hospital. The firm opened a Boston office last year to provide translators, chauffeurs, and other services for wealthy Chinese coming to Mass. General and other Boston hospitals for cancer treatment, orthopedic procedures, and other medical care.

    “There is still a large gap between China and America when it comes to medical technology and service,’’ said Joseph Zhao, the company’s deputy general manager in China. With doctors in high demand there, “physician-patient communication only lasts 5 to 10 minutes,’’ he said.

     

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    PBOC First Rate Cut Since 2012 Signaled in Swaps

    This article by Justina Lee for Bloomberg may be of interest to subscribers. Here is a section: 

    Asia’s largest economy is forecast to report third-quarter growth of 7.2 percent next week, the least since 2009, after data for September showed overall financing missed estimates and inflation eased to the slowest since 2010. While the central bank lowered the rate on 14-day repurchase agreements this week, a cut in the benchmark is the most direct way to shrink financing costs, the China Securities Journal said in a commentary yesterday. Credit Agricole CIB says there’s a 40 percent likelihood of a reduction.

    “The chances are significant because you have a simultaneous growth slowdown and a decline in inflation, which opens the door for policy makers to address slower growth,” said Dariusz Kowalczyk, a strategist at Credit Agricole in Hong Kong. “Most lending is benchmarked off the PBOC’s rate rather than that of the market. It’s precisely because they’ve kept the benchmark lending rate steady that credit growth isn’t that strong.”

     

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    Rationing of China ETFs Hits U.S. Market as Demand Soars

    This article by Boris Korby for Bloomberg may be of interest to subscribers. Here is a section: 

    Surging demand has been fueled in part by the biggest quarterly gain for mainland stocks since 2009. The Shanghai Composite gauge rallied 15 percent in the three months through Sept. 30, even as the MSCI Emerging Markets Index fell 4.3 percent. The Shanghai gauge slid 0.4 percent today while the X-trackers Harvest CSI 300 China A-Shares ETF climbed 0.5 percent to $25.77 at 3:05 p.m. in New York.

    To deal with the influx of new money, Frankfurt-based Deutsche Asset & Wealth Management said Sept. 11 that the ETF would accept just one creation unit per day. A unit represents 50,000 shares or about $1.3 million at current valuation. The fund provider is increasing the cap to 10 creation units per day, according to a statement today.

    “We wanted to maintain a valve of liquidity, increasing the fund size but doing so in a measured way, in anticipation of getting a higher quota,” Kittsley said.

    A Qualified Foreign Institutional Investor license, known as a QFII, or Renminbi Qualified Foreign Institutional Investor license, known as an RQFII, is needed for foreign asset managers to buy A-shares. Once the license is obtained, the investor also needs to submit an application to China’s State Administration of Foreign Exchange for a specific dollar amount of investment quota that they can use to buy mainland stocks.

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    Chinese Stocks Rise to 19-Month High on Property Easing Measures

    This article from Bloomberg may be of interest to subscribers. Here is a section: 

    Vanke, the nation’s biggest listed property developer, gained the most since July 24 while Poly Real Estate’s advance was the biggest since Aug. 4. China Merchants Property Development Co. added 2 percent.

    People applying for a loan to buy a second home may get lower down payments and mortgage rates that were previously only available to first-time home buyers so long as they have paid off their initial mortgage, the People’s Bank of China said in a statement on Sept. 30 after the market closed. The central bank also eased a ban on mortgages for people buying a third home.

    The action marks a reversal in a four-year tightening campaign, as slowing property investment and industrial production raise risks that 2014 economic growth will drift too far below Premier Li Keqiang’s target of about 7.5 percent.

     

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    Hong Kong Protest Ranks Thin as Negotiations Bring Calm to City

    This article by Alfred Liu, Weiyi Lim and Clement Tan for Bloomberg may be of interest to subscribers. Here is a section: 

    “I’m sure people will thin out because people get worn out,” Next Media Ltd. Chairman Jimmy Lai, publisher of the Hong Kong newspaper that’s most-critical of Chinese rule and an advocate of the protesters, said in an interview. “I’m sure the government in the talks will promise something that will appease people temporarily. But when promises are broken, people will come back.”

    Student leaders met with government officials yesterday to map out further talks with the city’s second-highest ranking official, Carrie Lam.

    The protests were triggered by China’s decision that candidates for chief executive in the 2017 elections be vetted by a committee. Pro-democracy groups say that will guarantee the candidates’ obedience to China. They are seeking a more open system, as well as the resignation of Chief Executive Leung Chun-ying.

     

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    China property hard sell intensifies in bid to lift sagging sector

    This article from Reuters may be of interest to subscribers. Here is a section: 

    Lu Yanzeng, a property agent, said he had not sold a single home in two months. Business this year "is very so-so, it's not as good as last year," he said. "Sales of second-hand homes are slow, but new home sales are brisk."

    China's property market, where prices surged to all-time highs for five consecutive years, is experiencing its sharpest slowdown in around two years.

    Average new home prices fell for a fourth consecutive month in August by 1.1 percent, meaning the market is now close to wiping out gains seen over the last year. Compared to a year ago, sales as measured by floor space were down 12.4 percent.

    While the slowdown in a heated market has benefited millions of Chinese, for whom soaring house prices have made home ownership a distant dream, slackening activity has also raised concerns about the health of China's economy.

    It is straining already softening domestic demand and pushing overall fixed-asset investment to lows not seen in nearly 14 years on a cumulative basis between January to August.

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    China Clamps Down on Web, Pinching Companies Like Google

    This article by Keith Bradsher and Paul Mozur for the New York Times may be of interest to subscribers. Here is a section: 

    Frustrated users have often resorted to “virtual private network,” or V.P.N., services to evade China’s Internet filters. But those services, too, have come under concerted attack from the authorities, who have interrupted service to them with increasing frequency. Many ordinary citizens cannot afford or obtain access to V.P.N.s to begin with.

    In the meantime, Google’s business continues to erode. Its share of the Chinese search engine market fell to 10.9 percent in the second quarter of this year, as the stepped-up blocking began to take effect — compared with one-third in 2009, when it still had servers there.

    Google’s problems extend far beyond search. Its application store, called Google Play, is only partly accessible in China.

    That has led to the rise of a number of locally run application stores, which analysts say will sometimes market pirated copies of software or charge extra to promote a new application. Companies are often forced to create versions of their apps for China that are slightly different from the versions distributed to the rest of the world on Google’s app store.

    “Because Google Play has low market share” in the Chinese market, “app publishers who have applications worldwide on Google Play don’t receive the proportionate share of users in China without publishing to local Android stores, even if they have localized Chinese versions,” said Bertrand Schmitt, chief executive of App Annie, a company that tracks global app distribution.

    Google also hosts publicly available libraries of coding scripts and fonts on its servers, but China now blocks these libraries. The chief technology officer at the start-up said his company had resorted to creating its own libraries and hosting them on its own servers, wasting costly computing power and space.

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    Despite the Excitement, There is Reason to Think Twice on Alibaba

    This article from the New York Times may be of interest to subscribers. Here is a section: 

    At $68 a share, Alibaba’s market capitalization is about $168 billion. It’s hard to find a United States company that’s directly comparable, but Professor Greenwald said eBay comes the closest. Like Alibaba, it has an auction site that benefits from a powerful network effect, it offers a vast e-commerce site and it has a pay system, PayPal. (While Alibaba spun off its payment system, Alipay, Alibaba will get a share of the proceeds from any sale or public offering of Alipay.) EBay’s market capitalization is about $65 billion.

    Of course, eBay doesn’t dominate e-commerce in the United States to the degree that Alibaba does in China. But is it reasonable to assume such dominance will persist as the Chinese market matures? No one company dominates e-commerce in the United States or in Europe, and none are as large as old-economy Walmart. China may now be underserved by national brick-and-mortar chains, but that could change. Professor Greenwald said he believed that Alibaba deserved a premium to eBay — perhaps twice eBay’s market capitalization. “But three times? That’s really pushing it,” he said.

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    Towards an Asian century of prosperity

    This article from The Hindu newspaper by China’s Premier Xi Jinping may be of interest to subscribers. Here is a section: 

    Both China and India are now in a crucial stage of reform and development. The Chinese people are committed to realising the Chinese dream of great national renewal. We are deepening reform in all sectors. The goal has been set to improve and develop the socialist system with Chinese characteristics and advance the modernisation of national governance system and capability. A total of over 330 major reform measures covering 15 areas have been announced and their implementation is well underway.

    Under Prime Minister Narendra Modi’s leadership, the new Indian government has identified ten priority areas including providing a clean and efficient administration and improving infrastructure. It is committed to building a united, strong and modern India — Shreshtha Bharat. The Indian people are endeavouring to achieve their development targets for the new era. China and India are both faced with historic opportunities, and our respective dreams of national renewal are very much aligned with each other. We need to connect our development strategies more closely and jointly pursue our common dream of national strength and prosperity.

    As emerging markets, each with its own strengths, we need to become closer development partners who draw upon each other’s strengths and work together for common development. With rich experience in infrastructure building and manufacturing, China is ready to contribute to India’s development in these areas. India is advanced in IT and pharmaceutical industries, and Indian companies are welcome to seek business opportunities in the Chinese market. The combination of the “world’s factory” and the “world’s back office” will produce the most competitive production base and the most attractive consumer market.

    As the two engines of the Asian economy, we need to become cooperation partners spearheading growth. I believe that the combination of China’s energy plus India’s wisdom will release massive potential. We need to jointly develop the BCIM Economic Corridor, discuss the initiatives of the Silk Road Economic Belt and the 21st Century Maritime Silk Road, and lead the sustainable growth of the Asian economy.

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