3/25/2021 Financial News: Surge Of Non-Performing Loan Disposals, Hot Money Outflows From Communist China

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1.Surge of Non-Performing Loan Disposals in Communist China in 2021

Industry experts pointed out that although the overall asset quality of the Chinese banking sector is good, the number of non-performing loans may rise, and disposals of these loans may reach another peak this year. According to data from the China Banking and Insurance Regulatory Commission at the end of 2020, financial institutions’ non-performing loan amount is 3.47 trillion yuan, with a non-performing loan ratio of 1.9%.

However, due to the pandemic and regional economic development factors, as of the end of 2020, the non-performing loan ratio of the banking sector in Jilin, Heilongjiang, Tianjin, Dalian and other northern regions and cities has exceeded the national average. Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, recently stated that the efforts in disposing non-performing loans this year will be greater than in 2020, and the problem of non-performing loans is likely to continue into next year.

2.Communist China Faces Risk of Hot Money Outflows

(Bloomberg) – According to Li Daokui, a former adviser to Communist China’s central bank, the country faces the threat of a reversal in capital inflows and a possible wave of bond defaults this year. The U.S. stimulus is boosting the outlook for growth and inflation, leading to greater bond yields and prompting investors to sell riskier, emerging market assets. When nominal interest rates rise in the U.S., “it’s likely for the second half of this year to see a capital outflow” from Communist China. Li also pointed out that the central bank will need to watch out for risks of increasing bond defaults, which can cause market panic. He further suggested Chinese banks be cautious about lending to developing countries after a wave of debt restructuring in emerging markets due to the pandemic.

3.Wanda Intends to Issue 1 Billion Yuan of Medium-Term Notes

The Shanghai Clearing House announced on March 22 that Dalian Wanda Commercial Management Group Co., Ltd. (“Wanda Commercial Management”) plans to issue the first phase of no more than 1 billion yuan (about US$153.3 million) of medium-term notes in 2021, which will be used to repay the first phase of 2016 medium-term notes of Dalian Wanda Commercial Real Estate Co., Ltd.

As of the date of signing the prospectus, Wanda Commercial Management and its subsidiaries have 62.245 billion yuan of outstanding debts, which consist of 30 billion yuan of medium-term notes, 29.666 billion yuan of corporate bonds, and 2.579 billion yuan of asset-backed securities. The maturity date for medium-term notes and corporate bonds are 2020-2025. If the external financing environment changes adversely, the company’s liquidity may be impacted.

4.Kuaishou’s 2020 Annual Net Loss Exceeds 100 Billion Yuan

On March 23, Kuaishou released its 2020 fourth quarter and first annual report since its listing. It reported revenue of 18.1 billion yuan (US$2.8 billion) last quarter, exceeding the 10.9 billion yuan market estimate. The revenue in 2020 reached 58.8 billion yuan. The report also shows that the net loss in the last quarter of 2020 went up from 18 billion yuan in the same period in 2019 to 19.3 billion yuan. It is said that such a significant rise is due to increased marketing expenses and administrative, research and development costs. The loss in 2020 is 116.6 billion yuan compared with 19.6 billion yuan in 2019.

5.Communist China Considers Selling 500,000 Tons of Aluminum Reserves

According to people familiar with the matter, Communist China is considering selling about 500,000 tons of aluminum reserves in order to suppress the recent surge in prices and meet the Asian nation’s emission targets. The source said that the government intends to prevent the surging aluminum prices from triggering inflation since aluminum is widely used in a range of products such as home appliances, window frames and auto parts. The detailed plan including the volume of aluminum to be released is subject to change.

Earlier this month, aluminum prices in the Shanghai futures market climbed to the highest level in 10 years. Last year, Communist China’s aluminum output totaled 37 million tons. In the first two months of this year, the output of primary aluminum was 6.452 million tons, a year-on-year increase of 8.4%.

6.U.S. Senators Request Detail on Solar Firms’ Links to Forced Labor in Xinjiang

Washington (Reuters) – Republican Senator Marco Rubio and Democrat Senator Jeff Merkley sent a letter to the Solar Energy Industry Association (SEIA) on March 23, requesting the association or its members to detail the measures taken to ensure that solar products from Xinjiang are not made using forced labor. They asked SEIA to provide information on “the extent the U.S. solar supply chain is currently dependent” on polysilicon and solar ingots/wafers from Xinjiang. Polysilicon is the key raw material for the production of solar panels.

SEIA vice president of public affairs Dan Whitten said that the association has called on American solar companies to completely leave the Xinjiang region by June and that it is developing a supply chain traceability protocol to ensure the products used are free of forced labor.

By 【Financial Team – Kate】

News Collection: Wendy、Lingken、Kate

Proofreading: Tracy

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19 days ago

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