Real estate developers that rely on trusts for funds appear to be financially stressed. In the event of a full-blown crisis, the brunt of the losses will be borne mainly by the trust companies.
The volume of money raised via initial public offerings (IPOs) in Hong Kong has been falling since 2010.
Offshore renminbi (CNH) deposits in Hong Kong rose to record high levels during August. This is partly the result of easier liquidity conditions in the mainland. It may well also be due to the People’s Bank of China’s new policy, which seeks strength, or at least stability, in renminbi vis-à-vis the US dollar.
During 1H13, the net interest income (NII) of China’s banks stagnated. Research by China Confidential has found that this was due to a reduction in interest rates applied to loans made to state-owned enterprises (SOEs). The banks’ generosity has supported the financial performance of the SOEs this year and has boosted the resilience of China’s economy.
A sharp increase in write-offs and sales of non-performing loans (NPLs), and strong growth in overdue loans, suggest that asset quality at Chinese banks is a lot worse than official NPL figures imply. The banks need stronger capital bases. This is partly because of the introduction of the Basel III rules and partly because of the banks’ need to grow their businesses in a competitive market place. As a result, a growing number of Chinese banks are looking to raise capital via the Hong Kong stock exchange.
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