Chinese companies are getting older: InFinGraphic Daily Finance Atlas


InFinGraphic is a graphic finance column that provides a short, accurate and comprehensive daily overview for professionals focused on global markets and economic conditions.The content of this article does not constitute investment advice.1. The CHINext index has been one of the brightest of China’s stock market rallies since the market bottomed in early 2019, surging 193% from the market trough compared with the Shanghai Composite’s 51% gain.But the trajectory is on the verge of reversal: after being dragged into a technical bear market by stocks such as Ningde Times, the CHINext index is testing multi-year support lines.2. Fund managers at BNP Paribas Asset Management, Mobius Capital Partners LLP and GAM Investment Funds SA remain cautious on mainland stocks, according to bloomberg interviews this week.At 13.4 times forward earnings, China’s CSI 300 index is near its lowest since June 2020, but still above its five-year average of 12.7, according to data compiled by Bloomberg.’I’d rather wait for valuations to fall further to multi-year lows,’ said Jian Shi Cortesi, portfolio manager at GAMInvestment Funds SA.Mark Mobius, a senior fund manager at Mobius Capital Partners LLP, said the effects of China’s monetary easing will be delayed.(Bloomberg) 3. Shares of some smaller Chinese property developers tumbled after the latest sales figures were released Late Friday.China Olympic Garden Fell 9.1 per cent after its January contract sales fell more than 80 per cent from a year earlier.Shimao Group fell 7.5% after its January sales fell 62%.Separately, Moody’s Investors Service cut its credit rating on Sunac, citing the Chinese property developer’s limited access to funding and deteriorating liquidity.The yuan’s three-month range-bound trend may be coming to an end, raising the possibility of depreciation against the dollar.This is due to the slow downtrend trading channel in USDJPY colliding with long-term trend resistance around 6.39.While year-on-year growth in China’s broad money supply improved, growth in the narrow M1 measure fell into negative territory in January.Although there is a seasonal effect, a drop in M1 is historically rare.The second chart shows the difference between M1 and M2 growth rates.In the past, when such spreads were near lows, China would step up policy stimulus.It is well known that China’s population structure is aging.At the same time, Chinese companies are getting older.An interesting new paper from the INTERNATIONAL Monetary Fund finds that the share of revenues generated by businesses founded under the age of 10 has fallen from around 70% in 2003-04 to around 30% in 2017-18.In addition, young Chinese companies are growing more slowly than in the past, mainly because “young companies have invested relatively little in process efficiency and quality improvement”.The non-performing loan ratio of China’s commercial banks was 1.73% at the end of last year, down 0.02 percentage points from the end of the previous quarter, the China Banking and Insurance Regulatory Commission (CBRC) revealed.The Chinese government has banned online education companies from offering subjectivetraining courses for high schools during this year’s winter vacation, in a widening crackdown.Much of the $100bn private education sector has been hit by the overhaul.According to people familiar with the matter, regulators recently told companies that they are not allowed to offer remedial courses during the winter holiday, which this year runs until late February.The ban could last longer and require companies to get approval before they can resume offering such courses, said the people, who asked not to be identified because the discussions were not public.This is the first official indication that high school tutoring will be included in the reform of the private education sector, as part of the government’s campaign against “disorderly expansion of capital”.Tesla will set up a design center in the capital city, according to a list of priorities for this year’s Work report of the Beijing municipal government published online on Jan. 31.Beijing is pushing ahead with the construction of several important facilities related to electric vehicles, according to the document.The information had not previously been widely reported.Tesla has said in the past that it would establish a design and engineering center to develop Chinese-designed vehicles for the global market, but it did not specify where the center would be located.Tesla generated $13.8 billion in revenue in China last year, making it its biggest source of business growth by a wide margin.By location, Tesla’s sales surged 108% in China from a year earlier, 58% in the US and 66% in all other markets.The figures, published in an annual regulatory filing, underscore how important China has become to Tesla since it began producing cars from Shanghai in early 2020.12. Core inflation, which excludes vegetable, fruit and energy costs, rose 2.4 percent in January, the fastest pace since January 2009, according to Taiwan authorities.The composite CPI rose 2.8 per cent, just below its November high.Taiwan authorities have taken a series of unconventional measures to try to control soaring prices, including keeping residential fuel and natural gas prices fixed and temporarily abolishing taxes on sales and imports of key foodstuffs such as corn, wheat and soyabeans.Source: Bloomberg

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