Business
Report warns contagion risk grows among Chinese banks as capital levels weaken
Connectivity within the Chinese banking system is growing, a new report has warned, increasing financial contagion risk across the sector as a whole, if any companies were to suffer serious distress.
The study, by top Chinese securities company Everbright Securities, released on Wednesday, highlighted national joint-stock commercial banks, as well as some city commercial banks, as accounting for 40 per cent of such “interrelated assets”, which grew at a compound annualised pace of 23 per cent through 2014-16 to reach a value of 40 trillion yuan (US$5.88 trillion).
At the same time, many of these banks are operating from a weak capital base and have high leverage, the report said.
Industry observers have long been concerned about the true level of capital buffers at many of China’s smaller banks.
Everbright now suggests that including interbank and off-balance-sheet lending, the tier 1 capital adequacy ratio dropped to 9.33 per cent, by the end of 2016, down from the official 11.25 per cent and that banks now need about 2.3 trillion yuan of additional funding to cement their capital bases.
It names particularly national banks such as Industrial Bank, China Minsheng Bank, SPDB, Citic Bank, and city commercial banks such as Shanghai Bank, Nanjing Bank, Hangzhou Bank, Ningbo Bank and Beijing Bank.
The Tier 1 capital ratio – the comparison between a bank’s core equity capital and its total risk-weighted assets – at some of these banks has now hit the type of levels “reached by western institutions, in the run-up to global financial crisis”, the report says.
China’s banking sector is facing new headwinds as asset growth cools
“The ratio rose before 2014 due to implementation of Basel III accord. But since then it declined to 5.31 per cent by the end of 2016.
“Factoring in sizable off-balance-sheet assets, the ratio was 4.59 per cent, below the recommendable level of 5 per cent,” the report noted.
The findings echo a working paper published by the People’s Bank of China a month ago, which, which said national joint-stock banks now play a bigger role than the country’s “Big…
Business
China’s New Home Prices Stabilize After 17-Month Decline Following Support Measures
China’s new home prices fell for the 17th month in October, declining 0.5% from September, but slowing, indicating potential market stabilization amid supportive measures. Second-hand home prices showed mixed trends.
Decline in China’s Home Prices Stabilizes
China’s new home prices continued to decline in October for the 17th consecutive month, although the drop showed signs of slowing. Recent support measures from Beijing appear to be inching the market toward stabilization, as evidenced by a lighter decline compared to earlier months.
Monthly and Yearly Comparisons
According to the latest data from the National Bureau of Statistics, new home prices across 70 mainland cities fell by 0.5% from September, marking the smallest decrease in seven months. Year-on-year, prices dropped by 6.2%, slightly worse than the September decline of 6.1%. In tier-1 cities like Beijing and Shanghai, prices decreased by 0.2%, a smaller fall than 0.5% in the previous month.
Second-Hand Home Market Trends
Second-hand home prices in tier-1 cities experienced a 0.4% increase in October, reversing a 13-month downward trend. Conversely, tier-2 cities observed a 0.4% drop in second-hand prices, while tier-3 cities faced a similar 0.5% decline. Overall, recent trends indicate a potential stabilization in China’s property market.
Source : China’s new home prices slow 17-month decline after support measures kick in
Business
Business Update: Southern Sun Reports Earnings Growth; China Stimulates Property Market – News24
Southern Sun reports increased earnings, attributed to growth in the hospitality sector, while China’s property market receives a boost, reflecting economic recovery and renewed investor confidence.
Southern Sun Earnings Surge
Southern Sun has reported a significant increase in its earnings, showcasing solid financial performance amid evolving market conditions. This growth highlights the company’s resilience and adaptability to changing consumer demands, positioning it well for future opportunities in the hospitality industry.
China’s Property Market Recovery
In a bid to rejuvenate its economy, China has introduced measures to boost its property market. These initiatives aim to stabilize real estate prices and encourage investment, which is crucial for maintaining economic momentum. The government’s commitment to supporting the sector reflects its understanding of the industry’s importance in overall economic health.
Broader Economic Implications
The rise in Southern Sun’s earnings and China’s proactive approach to revitalizing its property market indicate broader economic trends. Investors and stakeholders are keenly observing these developments, as they may signal recovery and growth opportunities in both the hospitality and real estate sectors. The collaboration between local businesses and governmental actions will be pivotal in shaping future economic landscapes.
Source : Business brief | Southern Sun sees earnings rise; China boosts its property market – News24
Business
News Update: China’s Stimulus Falls Short; Sensex and Nifty Decline; Bitcoin Surges Over $82,000
Asian markets showed mixed trends amid China’s stimulus measures and disappointing inflation data. Meanwhile, Indian equities remained stable, with mutual fund inflows rising. Bitcoin surged following Trump’s presidential win.
Business Hook Daily News Podcast
Good evening! Welcome to Business Hook’s daily news podcast. I’m Avni Raja, and today is November 11, 2024. Let’s dive into the day’s top business stories.
Market Reactions and Economic Data
Asian markets experienced a mixed session as investors digested new economic data and stimulus measures from China. The Chinese government announced a $1.4 trillion package targeting local government debt, although analysts deemed it underwhelming. October’s inflation rate of 0.3% fell short of estimates and declined for the second month in a row. As a result, the CSI 300 saw a slight gain, while Hong Kong’s Hang Seng dropped over 1.5%. In India, the Sensex closed below 74,500, and the Nifty ended above 24,100, with a majority of Nifty stocks declining.
Mutual Fund Inflows and Upcoming IPOs
There’s encouraging news in the mutual fund sector, with October seeing net inflows of 2.4 lakh crore rupees, reversing the previous month’s outflows. Record equity inflows have risen to nearly 42,000 crore rupees, reflecting robust domestic investor confidence. In the IPO space, LG Electronics prepares to raise $1.5 billion by listing its Indian arm, with banks like Axis Capital involved in the process, potentially leading to an IPO as early as 2025.
Cryptocurrency Surge
In cryptocurrency news, Bitcoin has achieved new highs, surpassing $82,000. This surge is attributed to Donald Trump’s recent presidential victory, which has favored cryptocurrencies compared to more cautious Democratic approaches. Experts speculate that Bitcoin could surpass $90,000 soon. That’s all for today’s wrap-up. Join us again tomorrow, and check out the Business Hook YouTube channel for more updates.
Source : News Wrap | China Stimulus Disappoints; Sensex & Nifty Slip; Bitcoin Soars Past $82,000
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- China’s New Home Prices Stabilize After 17-Month Decline Following Support Measures
- U.S. national debt is its Achilles’ heel, but China sees it as an opportunity
- Business Update: Southern Sun Reports Earnings Growth; China Stimulates Property Market – News24
- Vietnam’s Approach to China: A Balance of Cooperation and Struggle
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