Business
The Belt and Road Initiative reaches now 115 countries from 64 in 2013
Moody’s Investors Service says that against the background of China’s rising tensions with the US, China is increasingly looking to countries that participate in its Belt and Road Initiative (BRI) as an important source of export demand as well as a source of vital raw materials.
Moody’s Investors Service has published the following report: China’s Belt and Road Initiative Report Card: Deeper linkages, greater caution
“However, there are indications that China is becoming more selective in which BRI projects that it will pursue, as seen by the value of new Chinese-led BRI contracts and direct investment falling significantly for the first time in 2017,”
Michael Taylor, a Moody’s Managing Director and Chief Credit Officer for Asia Pacific.
Key findings
Moody’s points out that the number of countries forming part of the BRI has almost doubled to 115 from 64 when the BRI was first initiated in 2013.
The Belt and Road Initiative (BRI) continues to expand, It now encompasses 115 countries, from 64 in 2013.
There are indications that China is becoming more selective in which BRI projects it pursues as the value of new contracts in the BRI has significantly declined since 2016.
The change could be due to several factors, including tighter funding conditions in China and domestic political reactions in several BRI countries.
We expect the economic linkages formed through BRI projects to become more important to China as its relationship with the US sours.
The BRI provides China with a mechanism to develop relationships with recipient countries on trade, investment, regulatory standards, and through forging closer political alliances. An example is the Digital Silk Road, which represents China’s vision of global internet expansion through building telecom infrastructure, promoting internet services, cross boarder e-commerce and trading in tech goods.
Increasingly, China appears to look to Belt and Road (BR) countries as an important source of export demand as well as a source of vital raw materials.
Over time, we expect BR countries to grow in importance in global supply chains as processing and transportation centers. Improved manufacturing capabilities could foster their export of final value-added goods. Rising costs in China could drive a gradual shift of production from China to some BR countries in Southeast Asia.
BRI remains predominately debt-financed, with Chinese entities, particularly policy banks and state-owned enterprises (SOEs), the largest source of funding.
While many BRI countries are comparatively high credit risk, being either speculative grade or unrated, about 40% of the total value of these Chinese direct investments and projects is concentrated in top 10th percentile BR countries, with external debt levels around or below 50% of GDP.
Large reliance on Chinese funding could worsen some BR host countries’ debt affordability, leading to weaker sovereign creditworthiness.
If invested wisely, BRI funds have the potential to promote productivity and economic growth of BR countries through infrastructure improvement. However, external vulnerabilities, balance of payment pressure and high leverage have been challenging the credit quality of some BRI host sovereigns. Several have a larger than average reliance on Chinese funding. Most Chinese lending in BRI is likely to be on less concessional terms than offered by multinational institutions on average. Maturity of these loans is still long, varying from 12 to 20 years.
Data transparency remains a challenge
in calculating debt levels of some BR countries and understanding the real cost of Chinese funding. Unlike those of multilateral official creditors, Chinese lending terms lack conditionality on economic and governance reforms, which may limit the long-term economic benefits to BR countries
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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