HONG KONG (Reuters Breakingviews) - Chinese loan officers are finding themselves torn between conflicting policy goals. Beijing wants the country’s commercial banks to help fund infrastructure spending to support cooling growth, but isn’t relaxing a campaign to cut a $290 billion pile of bad debt. They also need to somehow remain profitable. First-half earnings show the pressure is pushing them headlong into consumer lending.
HONG KONG (Reuters Breakingviews) - A Chinese beauty app just revealed an ugly tech reality. Meitu unveiled dismal first-half results, which lopped nearly a fifth off its $2.9 billion market capitalisation. A strategic makeover designed to focus more on social media offered little solace. Stiffer competition and regulatory crackdowns are taking their toll.
HONG KONG (Reuters Breakingviews) - President Donald Trump may not like Jeff Bezos, but his Department of Defense gets along great with Amazon. Consultants associated with the $927 billion Seattle juggernaut occupied top positions at the Pentagon ahead of the rollout of a massive cloud contract worth some $10 billion that Amazon looks poised to snag. Rivals complain the requirements were written to favor Bezos’s company. Either way, investors should be prepared for its government business to attract greater scrutiny.
HONG KONG (Reuters Breakingviews) - Beijing's sovereign wealth fund could do without the fried chicken. China Investment Corporation may join a bid to take private Yum China, the $14 billion operator of KFC, Pizza Hut and Taco Bell outlets in the People’s Republic, Bloomberg reports. A takeout has merits, but is also a risky distraction for the $940 billion giant. Its mission is to invest the country’s vast foreign exchange holdings abroad – not to dabble in complicated buyouts at home.
HONG KONG (Reuters Breakingviews) - Beijing’s ownership is no longer reliable investor insurance. China Huarong Asset Management said on Sunday that its first-half earnings would fall sharply, the latest stumble in an acute crisis triggered by its chairman’s fall from grace. The government, its top stakeholder, seems content to watch the stock collapse. State backing, it seems, now comes with even more fine print.
HONG KONG (Reuters Breakingviews) - Chinese peer-to-peer protests are setting a political trap for regulators. Beijing police on Monday stopped irate investors from converging on the head office of China’s banking regulator to demand compensation for losses from collapsed P2P lenders. Officials are partly responsible for the mess, yet a rescue would reinforce moral hazard.
HONG KONG (Reuters Breakingviews) - Beijing's squeeze on yuan doubters sends a bearish signal. The People's Bank of China has reinstated a rule making it more expensive to short the currency. Policymakers might slow the slide, but the move also telegraphs where they think the yuan is heading. That will encourage outflows and complicate efforts to support economic growth.
HONG KONG (Reuters Breakingviews) - Baidu's core strengthening exercise has been underappreciated. The Chinese search giant delivered 45 percent earnings growth last quarter, having shed distractions like financial services and food delivery. Founder Robin Li's big artificial intelligence plans will take time to mature, and economic headwinds are looming. But applying machine learning to fine-tune its mainstay content business should pay off sooner.
HONG KONG (Reuters Breakingviews) - Xi Jinping is taking off the trade war gloves. Beijing’s effective veto of chipmaker Qualcomm's $44 billion bid for NXP - by dragging its feet to clear the deal - likely wasn't what President Donald Trump expected when he lifted a ban on China's ZTE earlier this month. But in weaponising monopoly law, President Xi has found a sharp response to U.S. tariffs.
HONG KONG (Reuters Breakingviews) - Pete Sweeney hits the RISE tech conference in Hong Kong and hears pitches on vegan cryptocurrency, fog computing and big data for shrimp farmers. Trade tensions haven’t dented enthusiasm, but venture capitalists expect a correction to flush the dumb money from the market.