Clement Tan

By Clement Tan and Umesh Desai

HONG KONG, July 5 (Reuters) – China Rongsheng Heavy Industries Group, China’s largest private shipbuilder, appealed for financial help from the Chinese government and big shareholders on Friday after cutting its workforce and delaying payments to suppliers.

Analysts said the company could be the biggest casualty of a local shipbuilding industry suffering from overcapacity and shrinking orders amid a global shipping downturn. New ship orders for Chinese builders fell by about half last year.

Hours after China Rongsheng made its appeal in a filing to the Hong Kong stock exchange, where the company is listed, Beijing vowed to bring about the orderly closure of some factories in industries plagued by overcapacity.

The statement by the State Council, or cabinet, laid out broad plans to ensure banks support the kind of economic rebalancing Beijing wants as it looks to focus more on high-end manufacturing. It did not mention any specific industries or companies and there was no suggestion it was referring to Rongsheng.

Continue reading “China Rongsheng, symbol of shipping downturn, seeks govt help”

By Clement Tan

HONG KONG, July 2 (Reuters) — China’s financial system is more “robust” than widely thought and the recent cash crunch does not signal any systemic risk, according to a senior investment executive of one of the largest asset managers in the mainland.

Until Beijing pledged last week to ensure adequate funding, borrowing costs in the mainland spiked to record highs and stocks tanked, raising fears of a banking crisis that could compare with the 2008 one in the United States.

“In a few months time, people are going to look back on this and realize it’s all noise,” said Andrew Tan, chief investment officer at Hong Kong-based Harvest Global Investment, the international arm of Harvest Fund Management. The mainland-based parent manages more than $50 billion across asset classes in Asia.

Continue reading “China cash crunch not sign of a banking crisis, says large Chinese fund”

By Clement Tan

HONG KONG,  May 3 (Reuters) – Improving first-quarter results from some of China’s biggest steel and cement firms suggest that Beijing’s economic recovery plan may be starting to filter through into corporate profits.

That would bring a leavening touch to data released this week indicating that China’s factories are expanding less quickly than expected, more evidence that the pace of recovery is slowing despite a boom in credit supply.

Earnings growth for China-listed companies averaged 10.5 percent for the first quarter, a big improvement from losses in the same period last year of about 10 percent, but still short of the 16.5 percent expected, according to research from CLSA-Fortune Securities.

“Commodities-related companies have all shown some kind of improvement … but it’s still very much a company-specific story at this point,” said Shumin Huang, an investment manager with the Greater China team at JP Morgan Asset Management, who declined to make any specific stock mentions.

Continue reading “In gloom of economic data, hope flickers for China Inc”

By Clement Tan

HONG KONG, March 28 (Reuters) – China industrial stocks offer good, but selective, investment opportunities as steel mills to cement producers consolidate to reduce overcapacity, according to a fund manager at BlackRock.

“We are not bullish, but … taking somewhat of a contrarian view for industrial sectors because we see the inflection point in terms of demand and supply balance,” Jing Ning, director and portfolio manager of BlackRock’s $1.4 billion China Fund, told reporters on Wednesday.

She declined to give specific company names, but said firms with good balance sheets and a track record of controlling costs would benefit the most.

Continue reading “BlackRock positive on China industrial capacity reduction”

By Clement Tan

HONG KONG, March 25 (Reuters) – China National Building Material Co Ltd’s shares fell on Monday after the company’s 2012 net core profit revealed the extent of its reliance on subsidies, raising fears that its aggressive acquisition strategy could prove unsustainable.

Declining demand has spurred consolidation in the Chinese cement sector, led by larger sector players such as CNBM. Three of its subsidiaries acquired 24 cement companies in 2012, according to the company’s 2012 earnings statement.

CNBM shares in Hong Kong were down 6.2 percent at 0400 GMT, nearing its December lows, even after the company reported a 30 percent decline in 2012 net profit on Friday which was better than some analysts had expected.

In contrast, Anhui Conch Cement Co Ltd rose 0.8 percent after posting a 45 percent decline in 2012 net profit, spurred by core net profit, which excluded subsidies, that was 14 times more than CNBM’s 2 yuan per ton, according to Nomura.

Continue reading “CNBM shares fall over fears for aquisition strategy”

By Pete Sweeney and Clement Tan

SHANGHAI/HONG KONG, Jan 7 (Reuters) – China’s biggest ship container maker has revived its moribund B-shares – mainland shares priced in foreign currencies – by relisting them in Hong Kong, sparking new life in other B-shares that may be able to emulate its exit from an obsolete market that regulators want to wind down.

China International Marine Containers (CIMC) delisted its B-shares in late November, abandoning a once-vibrant market for foreign investors that policy changes rendered a little-traded backwater, and on Dec. 19 resurrected them as H-shares , or Hong Kong-traded shares of mainland companies.

Despite a lacklustre start, CIMC’s H-shares have gained 20 percent in their brief two-and-a-half week life, triggering a hunt for other Cinderella B-shares that might follow.

“Investors weren’t too sure what to expect with the first B-to-H relisting, but after what happened with CIMC, I think people are starting to get interested,” said Hong Hao, chief strategist at Bank of Communications International Securities. “The B-to-H concept will likely remain a very strong thematic play this year.”

The firms considered most likely to follow CIMC to Hong Kong are big companies such as China Vanke Co Ltd , China’s largest listed property company, which a Hong Kong newspaper said could make an announcement as soon as this week. Continue reading “Moribund China B-shares find escape hatch in Hong Kong relisting”

By Clement Tan

HONG KONG, Oct 16 (Reuters) – China property stocks offer good investment opportunities as Beijing engineers a soft landing for a sector that is seen crucial for the broader economy, according to a fund manager at JP Morgan Asset Management.

“Beijing cannot afford to let its property sector drop too much,” Emerson Yip, who co-manages the JF Greater China fund, which had assets of $647 million as of end-August, told a media briefing late on Monday.

With prospects of a recovery in its manufacturing sector uncertain due to a weak global demand for its exports, Beijing will need to rely on the real estate sector to maintain growth, Yip said. He declined to mention specific stocks.

Continue reading “JP Morgan Asset Management bullish on China property”

By Clement Tan and Lu Jianxin

HONG KONG/SHANGHAI, July 23 (Reuters) – Reluctance by the People’s Bank of China to expand money supply in the world’s second-largest economy too rapidly could condemn the country’s stock markets to a third straight year of losses in 2012.

A congested initial public offering (IPO) pipeline is likely to aggravate tight liquidity conditions as Beijing, wary of reigniting inflation, sticks to its “prudent” monetary policy.

In addition, around 500 billion yuan ($78.5 billion) worth of share lockups are set to expire later this year, which could further weigh on the market. The total market capitalisation of Chinese A shares is currently around 22 trillion yuan ($3.5 trillion).

Onshore Chinese markets have completely surrendered gains made earlier in the year, retreating in response to Europe’s debt crisis, economic slowdowns at home and abroad and a recent flurry of corporate profit warnings.

Major benchmark indices such as the Shanghai Composite Index and the CSI300 Index of the top Shanghai and Shenzhen listings have already posted two consecutive annual losses, giving up a third of their market value in the process.

Continue reading “Policy reluctance may spell third losing year for China stocks”