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.

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.

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.

China’s P2P Protesters Hit On Beijing Streets

China’s savers are marching to Beijing for disappearing life savings on the peer-to-peer lending. Beijing has ordered a lockdown of Beijing’s financial district on August 6 to halt victims who lost savings from peer-to-peer (P2P) lending from spreading around protest.

 At least 57 P2P lending platforms have failed in July, adding to 80 cases in June, the biggest monthly tally in two years, wiping hundreds billion from P2P investors.

Shenzhen, Hangzhou – China’s biggest two P2P lending hubs, are piled with people who lost life savings stationed outside government buildings day and night.

 

Mega IPO HK Que

State-owned China Tower ,which operates the telecommunications towers for mainland China telecommunication companies, raised at least HKD54.3 billion (USD6.9 billion) in its IPO today.

MSCI to Add China A Share in Index

Global index publisher MSCI will include 234 Chinese large cap stocks in its global and regional indexes from June 1, 218.

 

The 234 yuan-denominated stocks, or China A-shares, will represent an aggregate weight of 0.39% in the MSCI Emerging Markets Index at a 2.5% partial inclusion factor during the first step of the China entry. The second phase of the entry will take place in September, which will double A-shares’ aggregate weight to 0.78%.

 

In a quarterly review published earlier in the month, MSCI slightly altered the expected weighting that the Chinese stocks will have in MSCI’s emerging market index. It did not explain why some companies were added or removed.

 

China to Merge its Banking and Insurance Regulators

China said it will merge its banking and insurance regulators, according to a parliament document released last Tuesday.

China will transfer some of the banking and insurance regulators’ roles to the central bank, the document showed.

– Reuters

 

The official publication of China’s central bank announced today that Guo Shuqing has been appointed head of the new regulator for the banking and insurance sectors.

Guo had been the head of the China Banking Regulatory Commission, which was merged with the China Insurance Regulatory Commission as part of a broader government reshuffle approved by parliament last week.

Caixin reported the appointment on Wednesday.