Governments and policies
Report: Further scope for monetary easing
China’s central bank should cut banks’ required reserve ratios further to deal with deflation risks, according to an article in the People’s Bank of China’s newspaper on Thursday. “To fend off possible deflation, the central bank should continue to adjust tools, from required reserve ratios and benchmark interest rates, at the appropriate time,” the Financial News article said. Highlighting the scope for possible monetary easing, consumer inflation will moderate to 1.3 percent in the first quarter and 1.7 percent in full-year 2015, the latest Bloomberg News survey of economists said.

UnionPay transactions rise 16% in holidays
Interbank transactions via China UnionPay cards totaled 238.1 billion yuan ($38 billion) during the week-long Chinese New Year holiday, up 16 percent from the previous year. The number of overseas transactions via UnionPay cards also increased during the period by nearly 50 percent, indicating cardholders are using their UnionPay cards more frequently when traveling abroad, the bank card operator said on Wednesday. Transaction volumes rose sharply in overseas markets including South Korea and the US, where UnionPay cards are widely accepted and cardholders can enjoy various discounts.
China loans $22.1b to Latin American nations
Chinese State-owned banks loaned $22.1 billion to Latin American countries last year, helping to keep afloat some struggling economies hit particularly hard by the falling price for oil, minerals and other commodities that they export, according to figures released by the Inter-American Dialogue, a US thinktank. The figure is the second highest in a decade, behind only 2010, and surpassed combined loans to the region from multilateral lenders the World Bank and the Inter-American Development Bank, the data shows. China loaned $8.6 billion to Brazil, $7 billion to Argentina, $5.7 billion to Venezuela and $821 million to Ecuador in 2014.
Shanghai-Hong Kong gold link-up planned
China is set to establish an official link between the gold markets of Shanghai and Hong Kong this year, following last year’s launch of the Stock Connect scheme, in a move aimed at enhancing its pricing power of gold contracts and ultimately challenging its competitors in the West. While China is now the world’s largest consumer of the precious metal, daily trading in Shanghai is small compared with London. The move to develop the country’s gold trading market comes as trade flows to Asia increase, and is in line with China’s efforts to open up its domestic markets to foreign investors.
Companies and markets
Finance house assets rise 13.9 percent
The total assets of China’s financial institutions amounted to 169.68 trillion yuan ($27.13 trillion) at the end of January, up 13.9 percent year-on-year. Their total liabilities increased by 13.4 percent to 157.18 trillion yuan during the same period, the China Banking Regulatory Commission said on Thursday. The assets of large State-owned commercial banks reached 68.04 trillion yuan as of Jan 31, accounting for 40 percent of the total. According to the CBRC, commercial banks recorded nonperforming loans of 842.6 billion yuan by Dec 31 as their NPL ratio hit 1.25 percent, rising 25 basis points from the beginning of 2014.

Bright Food eyes larger stake in Israel’s Tnuva
China’s Bright Food Group Co Ltd has increased the stake it plans to buy in Israeli grocer Tnuva to 70 percent and plans to close the delayed deal by early April, a spokesman for the Chinese firm told Reuters on Thursday. Bright Food agreed to buy 56 percent of Tnuva from British private equity firm Apax Partners in May last year in a deal that valued the Israeli food maker at roughly $2.5 billion. “The delay in the Tnuva transaction is due to changes in the equity structure of the purchase,” Bright Food spokesman Pan Jianjun said, adding the stake would now be over 70 percent but declined to give the total value of the deal.
Stimulus speculation lifts stocks higher
Chinese stocks rose on Thursday, sending the benchmark index to its highest level in four weeks, as industrial and financial companies rallied on speculation the government will do more to cushion the economic slowdown. The Shanghai Composite Index rose 2.2 percent to 3,298.36 at the close, its highest level since Jan 28. The trading coincided with Premier Li Keqiang calling for more active fiscal policy, while a central bank publication also said additional monetary easing is needed. The National People’s Congress convenes its annual meeting in the first two weeks of March, when the government sets its growth target for the year.
HK to wind up China Metal Recycling
Hong Kong’s securities regulator won court approval to liquidate China Metal Recycling Holdings Ltd, once ranked the nation’s biggest scrap metal recycler. The Hong Kong-based company overstated its earnings and sales in its listing documents in 2009 and continued the practice until 2013, the Securities and Futures Commission said on Thursday in a statement. The company’s former management withdrew from the case, the regulator said. “This is an audacious and dishonest scheme,” said SFC executive director of Enforcement Mark Steward. Investors and creditors were deceived “into believing this company had a track record and a performance that it simply did not have.”
Volvo Cars boosts profit on record sales
Volvo Car Group, whose Chinese parent company’s listed arm issued a profit warning in December, said earnings rose 17 percent after record sales last year. Operating profit increased to 2.25 billion kronor ($271 million) in 2014 from 1.92 billion kronor a year earlier, the Gothenburg, Sweden-based carmaker said. Revenue rose 6.3 percent to 130 billion kronor. “We expect continued growth this year in Europe as well as in China,” said Chief Executive Officer Hakan Samuelsson on Thursday. “This year we’ll see the US returning to growth after many challenging years.”
AIA posts 22% rise in full-year profit
AIA Group Ltd, the third-largest Asia-based insurer by market value, posted a larger-than-expected 22 percent increase in full-year profit, led by business growth in China. Net income climbed to $3.45 billion, or 28.73 cents a share, in the 12 months to November, from $2.82 billion, or 23.5 cents a share, a year earlier, the Hong Kong-based insurer said on Thursday. The value of new business, a measure of future profitability of new policies, jumped 24 percent to $1.85 billion. Chief Executive Officer Mark Tucker is credited with boosting the number of agents, improving their productivity and shifting toward more profitable products since taking over months before AIA went public in October 2010.
Around the world
India to invest $137b in railways in next 5 years
India is to increase investment in its overloaded railway network to 8.5 trillion rupees ($137 billion) over the next five years, the government said on Thursday, promising to modernize existing tracks but shying away from raising fares to fund the expansion. Presenting the railway budget just two days before the government delivers its first full annual federal budget, Railway Minister Suresh Prabhu said it would “set the direction of a long and difficult road of reform”.

Samsung to freeze salaries this year
Samsung Electronics will freeze employee salaries this year for the first time since 2009, a spokeswoman for the South Korean company said on Thursday, without elaborating. The move comes after the company’s profit declined last year for the first time in three years as its lead in smartphones was challenged by Apple Inc.
Source: Google merges European divisions
Google Inc has combined its two European regional divisions as it seeks to meet the challenges of tougher regulation across the continent, a source close to the company said on Thursday. The Internet giant is merging its northern and western European division with the unit covering southern and eastern Europe, Middle East and Africa, the source said. The shake-up follows a year of setbacks for the company on political and regulatory fronts on issues ranging from antitrust to privacy to how much tax it pays in different European nations, as well as fraught relations with some European industries including media and telecom groups.
(China Daily 02/27/2015 page14)