China News: $73bln Bonds to be Issued, E-commerce size $4trl, PE funds hurt
The below are highlights from local Chinese news outlets, as gathered by the Asia times.
Local governments to issue over $73 billion in special bonds.
Local Chinese governments have accelerated the supply of special bonds lately, with 428 billion yuan (US$62.52 billion) issued in August, the Economic Information Daily reported.
It is also expected that the scale of new special bonds will exceed 500 billion yuan (US$73.16 billion) in September. Among these, the issuance of special bonds for land reserves remains relatively large, as the main destination is the infrastructure sector.
Yuan Haixia, the chief macroeconomic analyst at China Chengxin Credit Rating Group, said over the first eight months of 2018, a total of 990.4 billion yuan of special bonds were issued. Furthermore, from September to December, there are still 771.7 billion yuan of new special bonds to be issued. It is roughly expected that more than 200 billion yuan of new special bonds will be injected into the infrastructure industry.
Chinese e-commerce market worth US$4 trillion in 2017
China’s e-commerce market continues to expand, with the total amount of transactions reaching 29.16 trillion yuan (US$4.26 trillion) in 2017, growing 11.7% year on year, according to China Times.
Despite increased global trade friction, cross-border e-commerce is still growing rapidly. In 2017, China’s cross-border e-commerce transaction volume reached 8.2 trillion yuan, a year-on-year increase of 22.3%. The top destinations of Chinese e-commerce goods in 2017 were Hong Kong, the US, Russia, South Korea and the UK. While the top sources of imported good via e-commerce were Japan, the US, South Korea, Australia and Germany.
Some popular US products such as American nuts and ginseng, have been included in the Chinese restricted list of US goods via e-commerce. Despite increased trade war rhetoric, it’s estimated China’s cross-border e-commerce transactions will exceed 9 trillion yuan in 2018, or over 40% of global transactions.
Private equity dragged down by A-share underperformance
Led by the sluggish A-share market this year, China’s private equity fund sector has recorded a negative average income of -7.18%, The Paper reported. Due to the continued depreciation of the yuan and the fact that some listed companies have reported poor performance in mid-term reports, private equity funds investing in stocks recorded an average loss of 4.17% in August, expanding to a total loss of 10.38%.
As the stock market bottoms out, private equity institutions are carrying out investigations to find suitable investment targets. In August alone, 342 private equity institutions performed 1,68 investigations on 236 listed companies. That’s a 93.1% increase compared to July.
Electronic components, industrial machinery, basic chemicals, communications equipment, information technology information and food processing are the top industries appealing to private equity firms.