Malaysia Data Center Market Size to Reach Revenues of USD 1.4 Billion by 2026

Bloomberg
Bitcoin ETF Backers See Canada Fund’s Slump as Reason to Believe
(Bloomberg) -- This month’s cryptocurrency meltdown has at least one bright spot for advocates of a Bitcoin exchange-traded fund in the U.S.As the price of the largest digital asset cratered, the $660 million Purpose Bitcoin ETF (ticker BTCC) in Canada -- North America’s first such fund -- moved in lockstep.That may not sound like a good thing, but it kept the ETF’s price stable relative to the value of assets it holds.The ability to keep trading without huge premiums or discounts appearing in a fund’s price is a key argument in the case for an exchange-traded crypto vehicle. In contrast to BTCC, for example, the $23.9 billion Grayscale Bitcoin Trust (GBTC) at one point traded about 21% below its net-asset value during the turmoil.Regulators have yet to approve a U.S. ETF, in part because of concerns on how a fund would be able to handle the token’s infamous volatility. But if Canada’s ETF is anything to go by, the concern might be misplaced.The reason why BTCC was able to keep its price discount to a minimum during the selloff boils down to the fact that it is an ETF. To keep its price in line with its holdings, specialized traders either create or redeem shares of the ETF to adjust the outstanding supply as demand shifts. That process doesn’t exist for trusts like GBTC, which doesn’t allow for share redemptions -- which can create dramatic dislocations.“While the recent nasty selloff in Bitcoin will likely spook the SEC, it should do the exact opposite and give them maximum confidence to approve, as it showed once again how well the ETF can handle pressure thanks to their fungibility,” said Eric Balchunas, Bloomberg Intelligence ETF analyst. Investors “deserve to get something that tracks the price well -- and ETFs have shown they are the best structure to do that.”Bitcoin has plunged over 33% so far this month, dragged down by renewed regulatory concerns from China and criticism from Tesla Inc.’s Elon Musk about its energy usage. The world’s largest cryptocurrency is hovering near $37,900 per coin, down roughly 40% from a mid-April peak.At least 11 companies are looking to launch a Bitcoin ETF in the U.S., and nine of them have filed since the end of 2020, according to a tally kept by Bloomberg Intelligence. VanEck renewed that push with a filing in late December, but the SEC has delayed a decision on its application until at least June. VanEck also filed for an ETF tracking the second-largest cryptocurrency Ether.Hopes for a Bitcoin ETF approval in 2021 have faded somewhat in the past few weeks. New SEC chairman Gary Gensler told Congress that the crypto market “could benefit from greater investor protection,” and later a letter from the Securities and Exchange Commission staff warned that Bitcoin is “highly speculative” and volatile.But Bitcoin’s turbulence shouldn’t prevent the SEC from giving the green light, according to CFRA Research’s Todd Rosenbluth.“The regulatory approval process for a U.S. Bitcoin ETF appears more focused on whether they have comfort in the risks related to Bitcoin in a fund and whether the fund could become too large to handle the lack of liquidity in the market,” said Rosenbluth, the firm’s head of ETF and mutual fund research. “I don’t think the volatility for Bitcoin impacts the decision-making process, but the fact that demand remains high could add data to support their concerns about the impact of the fund’s potential size and inability to close to new investors.”More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
3h ago
Bloomberg
VW Says It’s Keeping Lamborghini After $9.2 Billion Offer Report
(Bloomberg) -- Volkswagen AG reiterated plans to maintain ownership of Lamborghini after a car magazine said it was offered 7.5 billion euros ($9.2 billion) for the brand.A Volkswagen spokesman said there’s been no change in the group’s position to retain the Lamborghini brand. Autocar reported earlier Tuesday that the company had received the offer from Quantum Group AG, a new Zurich-based holding company that has formed a consortium with London-headquartered investment firm Centricus Asset Management.VW took a step in November toward preparing Lamborghini and its Italian motorcycle brand Ducati for strategic options such as an initial public offering or sale, but announced a month later it was committed to keeping them in the fold. The assurances were made as part of a broader resolution of conflicts between Chief Executive Officer Herbert Diess and key stakeholders including labor leaders.Lamborghini is owned by the VW group through its Audi subsidiary. A spokesperson for Audi also said it is not for sale.More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
2h ago
FX Empire
GBP/USD Daily Forecast – U.S. Dollar Is Under Pressure Against British Pound
GBP/USD settled above the resistance at 1.4150 and is testing the next resistance level at 1.4180.
11h ago
Bloomberg
Obese Pigs in China Are Fueling Relentless Slump in Pork Prices
(Bloomberg) -- Obese pigs in China are being blamed for worsening a sudden rout in the country’s pork prices.Farmers have been fattening hogs since late last year to almost double their normal weight -- roughly the size of a pygmy hippo or a female polar bear -- in the hope the animals will generate higher returns should prices rebound.Cao Tao, a pig trader in the northwestern province of Shaanxi, said many of the swine he’s buying weigh more than 200 kilograms, compared with their usual size of around 125 kilograms. “Some farmers are holding onto their larger pigs on hopes of a price rebound,” he said.Instead, Chinese wholesale pork prices have plunged more than 40% since mid-January amid sluggish demand, increased imports and panic selling by farmers after fresh outbreaks of African swine fever. Muyuan Foods Co., the country’s biggest pig breeder, said this week it’s expecting a continued drop in domestic hog prices, with the slump not bottoming out until next year or even 2023.Many farmers had fattened their pigs in anticipation of a recovery in pork prices, but the rout since February has triggered a sell-off of these large animals that may be delaying a rebound in prices, according to Lin Guofa, a senior analyst at consultancy Bric Agriculture Group.“When these farms sell together, the sell-off causes an explosive price slump,” he said. Farms in the southwest and south are still holding a large number of “cow-sized” pigs, which could be sold as the weather warms and push down prices for a while yet, Lin said.China’s hog herd was devastated by African swine fever in 2018 and, while numbers have recovered since then, a recent resurgence has driven up pork imports. The agriculture ministry said in April that the country’s pig herd may recover to usual levels by June or July, although the number of hogs available for slaughter may take another four months to get back to normal.“Super-sized” pigs are partially to blame for the drop in pork prices, Qiu Huaji, the head of swine infectious diseases at Harbin Veterinary Research Institute, said at a conference last week. A price rebound had been expected in the third quarter due to the resurgence of African swine fever cutting herds by almost half in some areas, he said.See also: China’s Swine Fever Borders to Reshape $300 Billion IndustryThe impact of the obese hogs on pork prices is also being complicated by new rules that prohibit the transport of live pigs across the boundaries of five areas. The regulations -- aimed at combating the spread of African swine fever - are reshaping the market and leading to regional price differences.Qian Xiaoyun, a farmer in the northern city of Tianjin, said her family wouldn’t be breeding larger pigs after the price slump and had sold all of their animals that weighed more than 150 kilograms. “The falling pork prices and high corn prices give poor returns on those larger hogs as they eat more,” she said.More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
13h ago
Bloomberg
Singapore’s Richest Property Family Warns of Cooling Measures
(Bloomberg) -- The Singapore government may step in to introduce property curbs if home prices keep rising, according to the city-state’s richest property family, marking the first time a developer has waded in on the issue.City Developments Ltd. Chairman Kwek Leng Beng “noted that the residential market has been performing well though he cautioned that if property prices continue to rise, there may be a time that further cooling measures could be introduced to control the prices,” records from the company’s annual shareholder meeting show. The gathering was held on April 30, with the notes filed at the Singapore Exchange on Monday.Singapore’s property market has rebounded sharply in recent months, making the sector a bright spot as the economy recovers from the pandemic. Prices of properties ranging from public apartments to private units and luxury bungalows have been rising, with some hitting records.That has prompted growing speculation that authorities may take steps to calm the market and prevent it from running ahead of the economy. But a recent Covid-19 outbreak may test the market’s resilience as the city-state returns to lockdown-like conditions last imposed a year ago.At the shareholder meeting, Chief Executive Officer Sherman Kwek expressed optimism about the prospects of CDL’s residential projects and office properties in Singapore.The number of home units sold in the city-state has recovered to a healthy level despite the pandemic, said Kwek, who is the chairman’s son. Transaction volume last year equaled that of 2019, with close to 10,000 units sold for the entire market. And there’s still pent-up demand, especially among buyers who are upgrading from public to private apartments, he said.“While there is uncertainty surrounding whether the government would implement new cooling measures, the overall residential market remains very stable,” the notes said, citing the CEO’s comments.More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
17h ago
CoinDesk
Of Course China Is Anti-Bitcoin: Look What Happened to Jack Ma
China's assault on Bitcoin is part of a broader struggle to foster innovation while maintaining control, says our columnist.
19h ago
Bloomberg
Erdogan Reshuffles Central Bank Again With New Deputy
(Bloomberg) -- Sign up for the New Economy Daily newsletter, follow us @economics and subscribe to our podcast.Turkey’s President Recep Tayyip Erdogan appointed a new deputy governor at the country’s central bank, tapping an economist and long-serving member of the institution in his latest leadership rejig.While Erdogan’s previous sudden decisions to swap out senior positions at the central bank jolted markets, this time the lira steadied to trade 0.1% stronger against the dollar as of 10:05 a.m. local time, following only a brief drop.Semih Tumen, a labor economist and professor of economics at Ankara-based TED University, was named to the role early on Tuesday, replacing Oguzhan Ozbas, according to a decree published in the Official Gazette.Read more: Erdogan Ousts Central-Bank Head, Installs Interest-Rate AllyThe move comes two months after Erdogan fired Naci Agbal, the bank’s third governor in less than two years, sending Turkish markets into a nosedive. Erdogan, who holds unorthodox theories about monetary policy and its impact on inflation, also replaced deputy governor Murat Cetinkaya in March.Tumen has worked in different roles at the central bank for 16 years until 2018, leaving the monetary authority after serving as a director general in charge of the structural economic research department. Since then, he’s been an adviser at the Turkish presidency’s human resources office.Four of seven members of Turkey’s rate-setting committee now have less than a year of experience at their jobs, including new Governor Sahap Kavcioglu.The decision to fire Agbal, who had sought to restore the central bank’s credibility, had set off a swift reversal of investor enthusiasm. The new governor has pledged policy continuity after his appointment and kept interest rates unchanged for a second month in May.Inflation, LiraStill, annual inflation is near a two-year high and the lira has lost about 14% against the dollar since Agbal was ousted. Public support for Erdogan’s ruling AK Party meanwhile hit a record low last month, according to prominent pollsters, amid disenchantment with the government’s handling of the economy.Ozbas, the most recently ousted deputy governor, was appointed in July 2019, when Erdogan’s son-in-law Berat Albayrak was overseeing the economy as treasury and finance minister.Last November, he criticized the central bank policies under former Governor Murat Uysal after working as his deputy, saying backdoor policy tightening toward the end of last year was “unnecessarily complicating the monetary stance.”(Updates with market reaction in second paragraph)More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
10h ago
Bloomberg
Boom in China Firms Listing in the U.S. Comes to Sudden Halt
(Bloomberg) -- At least three Chinese companies have put their plans to list in the U.S. on hold, heralding a slowdown in what’s been a record start to a year for initial public offerings by mainland and Hong Kong firms.A bike-sharing platform, a podcaster and a cloud computing firm are among popular Chinese corporates holding off plans for a U.S. float, put off by recent market declines, souring investor sentiment toward fast-growth companies and lackluster debuts by peers like Waterdrop Inc.Hello Inc., Ximalaya Inc. and Qiniu Ltd. are postponing plans to take orders from investors, even though the three had filed paperwork with the Securities and Exchange Commission well over two weeks ago. In the U.S., companies can kick off their roadshows two weeks after filing publicly and most typically stick to that timetable.“The recent broad market selloff, combined with the correction of the IPO market since the beginning of last month when some new issuers tanked during their debuts, may make the market conditions less predictable for newcomers who are ‘physically’ ready -- meaning they have cleared all regulatory hurdles for IPO -- to get out of the door,” said Stephanie Tang, head of private equity for Greater China at law firm Hogan Lovells. “Some participants may choose to monitor the market for more stable conditions.”The delays throw a wrench in a listings flood by Chinese and Hong Kong companies in the U.S. that already reached $7.1 billion year-to-date -- the fastest pace on record -- after booming in 2020. Demand for IPOs surged as a wave of global stimulus money, ultra-low interest rates and rallying stock markets lured investors despite Sino-American tensions and the continued risk of mainland stocks being kicked off U.S. exchanges.READ: Stock Market’s Million Little Dramas Come Down to a Supply GlutThe S&P 500 Index capped its biggest two-week slide since February on Friday amid mounting investor concern over inflation and its impact on tech and other growth stocks. China’s CSI 300 Index remains in a technical correction, having fallen 10% from a February peak, while the Nasdaq Golden Dragon China Index, which tracks Chinese companies listed in the U.S., has slumped more than 30% from its high that month.Waiting OnHello, which offers a bike-sharing platform plus electric scooters for sale, has delayed its planned launch and is still undecided on its prospective valuation given rising investor caution about new shares, Bloomberg News has reported. It had been planning to raise between $500 million and $1 billion in the offering, although the final number will depend on valuations, according to one person with knowledge of the matter.Online podcast and radio services startup Ximalaya and enterprise cloud services provider Qiniu have put their listings on hold after beginning to gauge investor interest at the end of April, people with knowledge of the matter said, asking not to be identified as the information isn’t public.The sounding out of investors, or pre-marketing process, generally comes after filing for an IPO and before formal order-taking in a roadshow. Hello declined to comment while Qiniu didn’t immediately respond to an emailed request for comment. Ximalaya’s IPO process is ongoing and the company will seek public listing at an appropriate time depending on market conditions, it said in response to questions.Weak DebutsThe poor performance of recent Chinese debutants has also sapped investor confidence. Insurance tech firm Waterdrop has plunged 38% from its offer price since going public earlier this month. Onion Global Ltd., a lifestyle brand platform, has fallen more than 8% below its IPO price.In fact, almost 59% or specifically 20 of the 34 Chinese firms that have listed in the U.S. this year are under water, data compiled by Bloomberg show, among them the two largest IPOs -- e-cigarette maker RLX Technology Inc. and online Q&A site Zhihu Inc. Of the ones that listed in 2020, just 40% are trading below their IPO prices.The recent volatility in global markets has spooked U.S. companies as well. They have also been delaying floats or facing weak debuts.For some, the current challenges faced by Chinese listing hopefuls are likely to be transitory, with the hotly-anticipated IPO of ride-hailing giant Didi Chuxing Inc., which has filed confidentially for a multibillion-dollar offering, set to prove the real test of investor appetite for the China story.Apart from Hello and the two other firms that are said to delay IPO plans after kicking off their pre-marketing process, Chinese road freight transport platform ForU Worldwide Inc., which filed for a U.S. offering on May 13, and online education company Zhangmen Education Inc., which filed on May 19, are waiting in the wings though they have yet to pass the two-week hallmark.“There is a natural strong growth in China which international investors will still want to invest in over the longer term,” said Gary Dugan, chief executive officer at the Global CIO Office in Singapore.(Updates prices throughout, adds more details in the second-last paragraph.)More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
16h ago
FX Empire
S&P 500 Price Forecast – Stock Markets Testing Major Figure Again
The S&P 500 has rallied quite significantly during the trading session on Monday as we continue to see upward pressure yet again.
1d ago
Bloomberg
PG&E to Sell San Francisco Headquarters for $800 Million
(Bloomberg) -- PG&E Corp. has reached a deal to sell its iconic San Francisco headquarters to real estate joint-venture Hines Atlas for $800 million as the utility giant moves to cut costs after it emerged from bankruptcy last year.PG&E, which plans to move to Oakland next year, needs approval from state regulators to sell the 1.7 million-square-foot (158,000-square-meter) complex, which includes 77 Beale Street and 245 Market Street, according to a statement Monday.The sale comes as office markets around the globe have been battered by the coronavirus pandemic. One broker estimated in 2019 that PG&E’s headquarters could bring in more than $1 billion. The utility giant is one of the most high-profile companies to leave San Francisco for Oakland, a less expensive city located across San Francisco Bay.Nearly a dozen bids were submitted for the property, according to a person familiar with the matter. That level of interest suggests real estate investors are willing to bet on a rebound for office demand in the city.“It’s a fantastic bet on San Francisco,” said J.D. Lumpkin, executive managing director at commercial real estate brokerage Cushman & Wakefield in San Francisco, who wasn’t involved in the deal. “While San Francisco has taken its lumps through Covid, perhaps more than other cities, there’s a lot of evidence that we will rebound over the next two or three years.”PG&E didn’t immediately respond to a request for comment about the bids. The company’s shares rose as much as 2.1% Monday.Unlike some other large property sales in San Francisco since the pandemic, the complex will require a substantial amount of renovation. It also doesn’t have a tenant in place, so the buyers will have to fill it in a few years once the redevelopment is finished.Also See: KKR Said to Buy $1.08 Billion San Francisco Dropbox OfficesSan Francisco’s overall office vacancy rate in the first quarter shattered the previous record high hit during the dot-com bust at the turn of the century, according to CBRE Group Inc. That’s pushed rent down and weighed on the value of buildings.The sale price is about $200 million less than expected, Citigroup Inc. utility analyst Ryan Levine wrote in a research note Monday. That raises the prospect that PG&E may need to raise equity this year, he said.Offset BillsPG&E intends to distribute about $400 million from its gain on the sale to customers over five years to offset bill increases as it invests in safety and operational improvements. In an added benefit, most PG&E workers will have shorter commutes to their new office, the company said.CBRE’s San Francisco Capital Markets team brokered the deal.PG&E filed for bankruptcy in early 2019 after collapsing under liabilities from wildfires sparked by its equipment. Though the company exited Chapter 11 last year, it remains burdened by about $42 billion of debt, raising concerns about its financial durability and ability to make the investments required to fire-proof its grid.Hines is one of the biggest private real estate investors and managers in the world, according to its website. Hines Atlas is a joint venture between Hines and another investor, a Hines spokesman said. He declined to name the other investor.(Adds details of bid beginning in fourth paragraph.)More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
1d ago
Reuters
VW says Lamborghini is not for sale after reported $9.2 billion bid
The non-binding offer sets out terms for the purchase of Automobili Lamborghini by Switzerland's Quantum Group AG, which has formed a consortium with London-based investment firm Centricus Asset Management, Autocar reported. The report, citing offer documents, also said that the consortium would include job assurances for existing Lamborghini employees for up to five years and the creation of 850 new jobs.
4h ago
Bloomberg
Canadian Banks Lean on Capital Markets With Loan Growth Muted
(Bloomberg) -- Canada’s banks are relying on their capital-markets divisions to crank out profit growth while their core lending businesses remain hampered by the country’s delayed reopening.Bank of Montreal kicks off the fiscal second-quarter reporting season on Wednesday, with Canada’s six largest banks projected to post adjusted earnings that more than doubled from a year earlier, according to analysts’ estimates compiled by Bloomberg. That’s mostly because profit in the year-earlier period plunged as the lenders set aside record amounts of capital to absorb defaults they were bracing for. Compared with the fiscal first quarter, the banks’ adjusted earnings are expected to fall 8.4% on average.While a wave of pandemic-related loan losses has largely failed to materialize, the banks haven’t seen much lending growth either. Canada’s hot housing market has bolstered mortgage businesses, but the country’s slower vaccination rollout and prolonged lockdowns have held back business loans as well as spending on high-margin consumer credit cards.“As the economy comes back in the fall and into next year, that’s going to be beneficial in terms of a lot of those business lines, and you’re going to see more business-loan growth over the balance of this year and into next year,” Mike Clare, who helps manage C$1.8 billion ($1.5 billion) as a portfolio manager at Brompton Group in Toronto, said in an interview. Brompton has shares of all of Canada’s Big Six banks. “Mortgages have been strong, but some other areas of consumer loans have been a bit weaker.”The banks’ capital-markets units have helped fill the void, generating record profits as volatile markets kept their trading desks humming and cash-seeking corporations turned to them for equity and debt sales.Canadian merger-and-acquisition activity got off to a record start this year, adding an infusion of advisory fees to continued strong results from trading and capital-raising. Capital markets-related revenue for the Big Six may increase 11% from the first quarter, Paul Holden, an analyst at Canadian Imperial Bank of Commerce, estimated in a note to clients.Also hampering the main lending businesses are persistently low interest rates, which are keeping margins tight. Long-term interest rates have risen this year, and the trend should eventually help the banks’ earnings. But net interest margins -- the difference between what banks make from lending to borrowers and what they pay depositers -- should remain “flattish” this quarter, putting the onus on banks to keep costs in check, Holden said.“This is another quarter where expense management will grab a lot of attention due to challenging net interest income trends,” Holden said in the note. “We expect management teams will tightly control fixed expenses while variable compensation will likely show upward pressure due to strong capital-markets results” and rising share prices.The S&P/TSX Commercial Banks Index gained 21% this year through Monday, with Bank of Montreal up 28% and National Bank of Canada rising 31%.More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
6h ago
Reuters
Singapore clears LSE deal for Refinitiv after FX pledge
Singapore's competition authority has approved the London Stock Exchange Group's $27 billion acquisition of data and analytics company Refinitiv provided the bourse continues to offer certain foreign exchange benchmarks to rivals. The Competition and Consumer Commission of Singapore (CCCS)gave the conditional approval after examining whether the deal, which transforms the 300 year old bourse into a one-stop shop for data, trading and analytics, threatened competition in the currency market. The LSE has committed to making Refinitiv's WM/Reuters foreign exchange benchmarks available to existing and future customers to provide index licencing services or clearing services in Singapore, CCCS said in a statement, adding that the commitment, effective from Monday, was for 10 years.
1d ago
CoinDesk
3 Things You Need to Know About China’s Crypto Crackdown
The crackdown notice from the State Council has sent shockwaves across the crypto industry in China.
20h ago
Barrons.com
4 Little-Known Cryptocurrencies That Beat Bitcoin During the Crash
Polygon, Helium, Celsius, and Maker may not be household names, but they are being explored as potentially useful technologies.
18h ago
Reuters
Fed's Brainard says central bank stepping up exploration of digital dollar
(Reuters) -Growing digital currency options could lead to a "fragmentation" of the payment system that poses financial risks for households and businesses, Federal Reserve Governor Lael Brainard said on Monday in a speech that outlined the major policy questions the Fed will need to address as it explores the potential development of a digital version of the U.S. dollar. As the holder of the world's reserve currency, the United States must be highly involved as digital payments become more common and other countries develop digital currencies that can be used to send money across borders, Brainard said. "The Federal Reserve is stepping up its research and public engagement on a digital version of the U.S. dollar," Brainard said in remarks made during a virtual conference organized by CoinDesk.
1d ago
FX Empire
NVIDIA Split Announcement Raises Red Flag
The systems chip manufacturer announced a four-for-one stock split on Friday morning, effective on July 20th.
1d ago
Bloomberg
China Braces for $1.3 Trillion Maturity Wall as Defaults Surge
(Bloomberg) -- Even by the standards of a record-breaking global credit binge, China’s corporate bond tab stands out: $1.3 trillion of domestic debt payable in the next 12 months.That’s 30% more than what U.S. companies owe, 63% more than in all of Europe and enough money to buy Tesla Inc. twice over. What’s more, it’s all coming due at a time when Chinese borrowers are defaulting on onshore debt at an unprecedented pace.The combination has investors bracing for another turbulent stretch for the world’s second-largest credit market. It’s also underscoring the challenge for Chinese authorities as they work toward two conflicting goals: reducing moral hazard by allowing more defaults, and turning the domestic bond market into a more reliable source of long-term funding.While average corporate bond maturities have increased in the U.S., Europe and Japan in recent years, they’re getting shorter in China as defaults prompt investors to reduce risk. Domestic Chinese bonds issued in the first quarter had an average tenor of 3.02 years, down from 3.22 years for all of last year and on course for the shortest annual average since Fitch Ratings began compiling the data in 2016.“As credit risk increases, everyone wants to limit their exposure by investing in shorter maturities only,” said Iris Pang, chief economist for Greater China at ING Bank NV. “Issuers also want to sell shorter-dated bonds because as defaults rise, longer-dated bonds have even higher borrowing costs.”The move toward shorter maturities has coincided with a Chinese government campaign to instill more discipline in local credit markets, which have long been underpinned by implicit state guarantees. Investors are increasingly rethinking the widely held assumption that authorities will backstop big borrowers amid a string of missed payments by state-owned companies and a selloff in bonds issued by China Huarong Asset Management Co.The country’s onshore defaults have swelled from negligible levels in 2016 to exceed 100 billion yuan ($15.5 billion) for four straight years. That milestone was reached again last month, putting defaults on track for another record annual high.The resulting preference for shorter-dated bonds has exacerbated one of China’s structural challenges: a dearth of long-term institutional money. Even before authorities began allowing more defaults, short-term investments including banks’ wealth management products played an outsized role.Social security funds and insurance firms are the main providers of long-term funding in China, but their presence in the bond market is limited, said Wu Zhaoyin, chief strategist at AVIC Trust Co., a financial firm. “It’s difficult to sell long-dated bonds in China because there is a lack of long-term capital,” Wu said.Chinese authorities have been taking steps to attract long-term investors, including foreign pension funds and university endowments. The government has in recent years scrapped some investment quotas and dismantled foreign ownership limits for life insurers, brokerages and fund managers.But even if those efforts gain traction, it’s not clear Chinese companies will embrace longer maturities. Many prefer selling short-dated bonds because they lack long-term capital management plans, according to Shen Meng, director at Chanson & Co., a Beijing-based boutique investment bank. That applies even for state-owned enterprises, whose senior managers typically get reshuffled by the government every three to five years, Shen said.The upshot is that China’s domestic credit market faces a near constant cycle of refinancing and repayment risk, which threatens to exacerbate volatility as defaults rise. A similar dynamic is also playing out in the offshore market, where maturities total $167 billion over the next 12 months.For ING’s Pang, the cycle is unlikely to change anytime soon. “It may last for another decade in China,” she said.More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
2d ago
The Telegraph
Battered Bitcoin claws back losses as oil rallies on recovery hopes
Consumer-related stocks helped tip London markets into the green, following two weeks of drops, helped by a weekend of Covid restrictions being eased. “It seems investors have had a good weekend and have realised how many other people have also been enjoying newly reinstated opportunities,” said Danni Hewson, financial analyst at AJ Bell. “From cinemas to restaurants, shops to bingo halls, real life has translated into share gains for companies like Primark owner Premier Foods, The Restaurant Group and the Rank Group.” The domestically-focused FTSE 250 index added 84.31 points to close at 22,483. Gambling company Rank Group led the leaderboard, rising 14.2p to 196.2p, followed by Mr Kipling’s parent Premier Foods, which gained 6p to 107.6p. Joining them in the top 10 was Frankie & Benny’s owner The Restaurant Group, which added 6.4p to 128.4p, as well as pub chain Wetherspoon. Similar types of blue-chip companies helped push the FTSE 100 to close in positive territory, though gains were tempered by miners which mostly fell after China’s commodity price warnings. Meanwhile, stocks globally struggled for momentum as investors awaited key US inflation readings for guidance on monetary policy. London’s benchmark FTSE 100 edged up 33.54 points to close at 7,051.59 Catering company Compass Group led the charge, up by 43p at £15.82. Gambling firms Entain and Flutter Entertainment also finished in the top 10, gaining 35.5p to £16.14 and 270p to £13.20 respectively. They were followed by hotel owners Intercontinental Hotels Group and Whitbread, which rose 98p to £49.22 and 59p to £31.50, respectively. Heavyweight oil stocks also performed well as oil prices extended Friday’s rally and climbed higher after Iran said that gaps remain in negotiations aimed at reaching a deal to end US sanctions on its crude. Iran said there are still differences around the timing of when countries will return to compliance with the original 2015 nuclear agreement, allaying some concern about a rapid ramp-up in the Persian Gulf nation’s output. While the market is anticipating the Islamic Republic’s supply will pick up again by late summer, the demand recovery will be strong enough to absorb it, according to Goldman Sachs. The bank expects Brent futures to hit $80 (£57) a barrel in the next few months. Royal Dutch Shell added 10.4p to £13.50, while BP rose 4.2p to 316.4p. Dominating the bottom of the rankings and dragging on the index, however, were miners including Fresnillo, Antofagasta, BHP and Evraz. RBC also cut its price target on Chilean miner Antofagasta. Elsewhere among companies, shares of FTSE 250 software firm Kainos fell 25p to £13.87 despite saying its annual pre-tax profit more than doubled in an eleventh consecutive year of growth, surging 124pc to £57.1m in the year through March. Revenue grew by 31pc to £234.7m while booking rose 6pc.
2d ago
Bloomberg
China’s Largest Listed Property Manager Raises $2 Billion
(Bloomberg) -- Country Garden Services Holdings Co. raised $2 billion, paving the way for more acquisitions as China’s largest listed property services manager seeks to reach an ambitious revenue goal.In the biggest additional fundraising in the sector, the Foshan, Guangdong-based company agreed to sell HK$10.5 billion in new shares and issue HK$5.04 billion of zero-coupon convertible bonds due 2022, exchange filings showed Tuesday. That’s more than earlier offered, according to terms for the deal obtained by Bloomberg News.Click here for more details on the transaction.The proceeds will be used for acquisitions, expansion of new businesses and general purposes. In March, President Li Changjiang said the company aimed to reach 100 billion yuan ($16 billion) in revenue by 2025, up from 15.6 billion yuan last year. Fundraising is expected to drive the target, CMB International Capital Corp. property analyst Jeffrey Zeng said. Real estate service providers, whose businesses range from housekeeping to parcel deliveries, are taking advantage of lofty valuations to raise cash and expand through takeovers, and competition has become fierce. In January， China Evergrande Group’s property services unit bought a rival for 1.5 billion yuan to help meet its ambitions of increasing profit by 50% this year.Country Garden Services announced plans in March to take mid-sized rival Sichuan Languang Justbon Services Group Co. private to expand its business. The deal would use 8.3 billion yuan, more than half of its cash buffer at the end of last year, according to CMB.While many companies are seeking to buy competitors, others are looking to sell. Chicago-based Jones Lang LaSalle Inc. is weighing a plan to offload its property management business in China for at least $500 million, Bloomberg reported last month.At HK$75.25 apiece, the share placement represents a 6% discount to the closing price of Country Garden Services in Hong Kong on Monday. The stock fell 1.8% to HK$78.60 at 11:48 a.m. on Tuesday.Country Garden Services now trades 47 times projected earnings this year, among the highest in the industry, according to data compiled by Bloomberg. Listed in Hong Kong in 2018, it’s the biggest publicly traded property management services firm, with a market value of HK$238 billion.(Updates with analyst comment in the third paragraph)More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
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China’s Largest Listed Property Manager Raises $2 Billion