Japan GDP Unexpectedly Expanded in Q1

Japan’s economic growth unexpectedly accelerated in January- March, driven by net contributions from exports. The economy grew at an annualized 2.1% in the first quarter, gross domestic product (GDP) data showed on Monday, beating market expectations for a contraction. It followed a revised 1.6% expansion in October-December.

 

Private consumption and capital expenditure readings, which both fell in the first quarter, while exports suffered the biggest fall since 2015.

 

The surprise expansion was mostly caused by imports declining faster than exports, likely reflecting weak domestic demand, a point of concern for policymakers with a planned sales tax hike scheduled to take effect in October.

 

OUE Commercial Reit to Merge with Hospitality Reit

OUE Commercial Real Estate Investment Trust (OUE C-Reit) and OUE Hospitality Trust (OUE H-Trust) are proposing to merge in a cash and stock deal that will create one of Singapore’s largest Reits with total assets of about SGD 6.8 billion.

 

Under the proposed scheme, OUE C-Reit will acquire OUE H-Trust by paying OUE H-Trust holders, for every OUE H-Trust stapled security held, SGD0.04075 in cash plus 1.3583 new OUE C-Reit units. OUE C-Reit will pay a total of about SGD74.6 million in cash, and issue about 2.5 billion new units to OUE H-Trust holders. Based on OUE C-Reit’s closing price of SGD0.52 on Friday, the 2.5 billion units would be worth about SGD 1.3 billion.

 

Parent company OUE Group will continue to retain a 48.3% stake in the enlarged Reit. OUE shares closed at SGD 1.77 on Friday.

 

The merged entity will be one of Singapore’s largest Reits by assets.

Japan Hotel Reit Acquired Hilton Tokyo

Japan Hotel REIT Investment Corporation  acquired Hilton Tokyo Odaiba for JPY 62.4 Billion as of today.

Hilton Tokyo Odaiba is a large-scale full-service hotel located in Odaiba, one of the most popular tourist destinations in Tokyo.

Upon acquisition of Hilton Tokyo Odaiba, JHR’s portfolio consists of 43 hotels throughout Japan and its asset size is JPY374.5 billion in total in terms of acquisition price.

 

(TOKYO: 8985)

China Property Developer Reports on Good 2018 Among Jumping-up Debt Ratio

Hong Kong — China developers reporting on good 2018 among jumping-up debt ratio as some exceeds 100% level.

Over the past two weeks, major China developers were busy with annual results reporting. March 28th, Hong Kong-listed China’s second biggest home builder Evergrande, reported core profit jump 93.3% to 78.32 billion yuan (USD11.88 billion) for the year. Net gearing ratio, a measure of equity to debt, hit 151.9% at the end of 2018, up 24 percentage points from six months earlier

Country Garden Holdings, China’s biggest home builder, reported core profit for 2018 rose 38% to a record. Country Garden said in a statement on Monday its core profit, which is net profit excluding non-recurring income and revaluation gains, grew to 34.13 billion yuan last year. (Debt ratio)

State-owned China Overseas Land, reported on March 20th net profit during 2018 rose 10.1% to HKD44.9 billion, core profit rose 8.3% from a year ago, boosted by higher margins, core profit of the country’s seventh-biggest property developer by sales, which excludes revaluation gains and non-recurring items, came in at HKD37.1 billion

Phillipines President Ordered Goverments to Review All Private Contracts

President Rodrigo Duterte has ordered all government agencies to review their contracts with private companies and foreign entities and “remove” provisions that could harm Filipinos.

He gave this directive during the 36th Cabinet meeting on Monday, April 1. “The Chief Executive then instructed all agencies to check and review all contracts entered into and remove onerous provisions that might be detrimental to the lives of the Filipinos,” Presidential Spokesman Salvador Panelo said in a statement sent on Tuesday.

Hong Kong Issues Virtual Banking License

Hong Kong’s monetary authority issued three virtual bank licenses to companies backed by mainland tech giants and financial institutions.

The Hong Kong Monetary Authority, the special administrative region’s de facto central bank, said Wednesday the licenses would take effect March 27, and services will be officially launched within the next six to nine months.

The issuance of virtual bank licenses is a key step for Hong Kong to move toward a new era of smart banking to enhance the city’s position as an international financial hub, said HKMA CEO Norman Chan Tak-lam. Winners of the first licenses are Livi VB Ltd., SC Digital Solutions Ltd. and Zhongan Virtual Finance Ltd.

Zhongan Virtual Finance was set up by Sinolink Group and ZhongAn Online P&C Insurance Co. Ltd., which is backed by Alibaba Group Holding and Tencent. The company said it is set to roll out its first batch of financial products by the end of the year.

Livi is a joint venture formed by Bank of China (Hong Kong) Ltd., Beijing Jingdong Financial Technology Holding Co. — the financial technology arm of e-commerce giant JD.com — and British conglomerate Jardine Matheson Holdings Ltd.. Livi is expected to start online banking services in the next six months.

SC Digital is funded by Standard Chartered Bank, PCCW Ltd., Hong Kong Telecommunications Ltd. and Ctrip Finance, the fintech unit of Ctrip.com International Ltd. Standard Chartered said the virtual bank will be integrated with other services of PCCW, HKT and Ctrip, providing a wide range of retail financial services and products.

China Railway’s Debt Reaches New High

The debt of State-run China Railway Corporation reached 300 billion yuan ($44.68 billion) in 2018, far exceeding the planned 240 billion yuan in 2018, an increase of 25 percent.

The report added that national railway investment in 2019 is expected to exceed 800 billion yuan, a record high. According to the NDRC, China plans to start construction of 26 railway projects and another 19 reserve projects this year.

The total amount of railway bonds issued in 2018 was 240 billion yuan, accounting for about 30% of the annual railway investment, according to report. The national railway fixed asset investment stood at 802.8 billion yuan in 2018, higher than the 732 billion yuan planned, Shanghai Securities News said on Friday, citing sources. It was the fourth consecutive year since 2015 in which fixed asset investment breached 800 billion yuan.

The report said that aside from railway construction investment, the NDRC has approved a series of projects such as urban rail and airport construction with total investment of more than 1.2 trillion yuan since the fourth quarter of 2018. Moreover, local governments are accelerating the pace of investment in infrastructure construction, and their funds are also partly derived from bonds.

Japan GDP contracted in Q3

The Japanese economy contracted the most in over four years in the third quarter as companies slashed spending to chill the investment outlook in 2019 as the nation grapples with slowing global growth and trade frictions.

Japan’s gross domestic product shrank at an annualized rate of 2.5% in the July-September quarter – the worst downturn since the second quarter of 2014 – from 2.8% growth in the second quarter, revised data from the Cabinet Office showed.

The slide, in part driven by a series of natural disasters that forced factories to cut production, was deeper than an initial estimate of a 1.2 percent contraction and against economists’ median forecast for a 1.9 percent decline.

The capital expenditure component of GDP fell a sharp 2.8% from the second quarter, worse than the expected 1.6% decline and the preliminary reading of a 0.2% drop. That was the biggest decrease since the third quarter of 2009, as wholesalers, retailers, and information and communications machinery cut spending, the Cabinet Office data showed.

Private consumption, which accounts for roughly 60% of GDP, fell 0.2% in July-September from the previous three months, versus 0.1% drop seen in the initial estimate. Domestic demand shaved 0.5 percentage points off the revised GDP figure, while net exports – or exports minus imports – contributed minus 0.1 percentage point.

Hong Kong Debt Surpass 9T

Hong Kong’s total loans and advances grew by 0.9% in June to HKD 9.8 trillion, the monetary authority said on August 1.

 

The Hong Kong-dollar loan-to-deposit ratio went up to 85.4% at the end of June from 83.9% at the end of May, the Hong Kong Monetary Authority revealed. Loans for IPOs jumped up in the month.