Posted inChina, Japan, Northeast Asia, Shanghai, World

The Daily Brief for Friday, 20 January 2017

Plenty of economic data came out of China on Friday, but some numbers stood out. Steve Wang reports that Chinese factories unexpectedly throttled back production in key industries. The reduced output in areas ranging from steel, cement and ethylene to sedans in December 2016 nipped a budding uptrend that had only started in October and smacked headline industrial growth back down to a five-month low.

Five of China’s biggest banks will be allowed to temporarily lower the amount of money that they must hold as reserves to relieve pressure in its financial system as demand for cash surges ahead of the Lunar New Year holiday. It is the first reduction in the ratio in a year and comes after the People’s Bank of China pumped a record amount of liquidity into markets this week in a bid to avert a cash crunch heading into the country’s biggest holiday of the year.

And film is still big on China’s radar with Viacom Paramount Pictures getting a whopping US$1 billion cash investment from two Chinese film companies, Shanghai Film Group and Huahua Media. As part of the agreement, Shanghai Film Group and Huahua Media will finance a combined 25% of all Paramount’s films for the next three years, with the option to extend it, says a source.

In Japan, all is not well with Toshiba, writes Peter Langan as bad news crashes down on the giant. Its shares have lost about half their value since the company said last month it may face a writedown at its US nuclear power business, which came on top of a recent accounting scandal. The scale of the writedown has now ballooned to around US$6 billion, forcing Toshiba to ask banks for aid and look at selling stakes in its chip business.

Tsinghua Unigroup Ltd, China’s top state chip manufacturer, revealed plans to build a US$30 billion memory chip factory as the government seeks to boost local production capacity. The firm is targeting a monthly capacity of 100,000 wafers in phase one of the development, which will cost US$10 billion and is located in Nanjing. Tsinghua Unigroup said the project is part of China’s efforts to build a world-leading chip industry.

Posted inChina, Shanghai, World

China Digest for Friday, 20 January 2017

Capital outflow in 2016 down by US$128.2 billion

The deficit of foreign exchange settlements and sales in 2016 stood at US$337.7 billion, contracting by US$128.2 billion from last year, the 21st Century Business Herald reported. The current capital outflow mainly attributed to domestic investors’ overseas investments, said Wang Chunying a spokesman of the State Administration of Foreign Exchange. After domestic investors pay back their foreign debts, foreign capital saw a net inflow to China, he added.

Emerging Industries PMI for January indicates contraction

The Emerging Industries PMI was 51.9% in January, decreasing 7% from last month, showing signs of contraction as companies suspended operations for the Lunar New Year or Spring Festival holidays, reported Shanghai Securities Journal on Friday. The index was coined and released by Chinese Academy of Science and Technology for Development and Zhongcai Consultancy, aiming to create a domestic Purchasing Managers Index by measuring 13 sub-indicators.

China Oceanwide, IDG Capital buy tech magazine publisher IDG

International Data Group (IDG), publisher of the PCWorld magazine, said it was being taken over by China Oceanwide Holdings Group and IDG Capital, a Caixin report said on Thursday evening. China Oceanwide is a private conglomerate with media, technology and real estate interests. IDG Capital is China’s first tech venture firm, independently operated with IDG as one of its limited partners. The value of the deal was not disclosed.

2016 GDP growth rate is 6.8%

The National Bureau of Statistics released its Gross Domestic Product on Friday and economic data for 2016. China’s GDP growth rate for 2016 is 6.7% and fourth quarter growth is 6.8%

Debt-for-equity swaps a financial innovation: CCB

Chen Caihong, the board secretary of China Construction Bank, said on Thursday that the debt-for-equity swaps should be called a “new financial services platform,” reported Caixin on Thursday evening. Chen said the bank excluded zombie enterprises or firms with high levels of bad assets, and companies chosen should have “high development potential,” the report said. The CCB has signed swap deals worth close to 235 billion yuan with 11 firms, the report said.

Shenzhen sets price controls on serviced apartments

The Shenzhen Municipal Planning and Land Resources Commission was strengthening price controls on prices for serviced apartments, reported Caixin on Thursday evening. The purchase price reported to the government cannot be “significantly higher” than similar ones in the surrounding area, the report said.