Chinese largest real estate companies witnessed record-high costs for purchasing auctioned land in the first 11 months of the year, evidence that their profitability might be squeezed in the face of recent tightening moves, an industry report showed.
The combined funds earmarked for purchasing auctioned land for property development by the 40 largest Chinese homebuilders in terms of sales volume stood at 1.01 trillion yuan (147.3 billion U.S. dollars) by the end of November, said Centaline Property, a leading Chinese real estate agency.
This translates into an average price of 6,062 yuan per square meter, surging 50 percent from the previous year, the report said.
The report was released after several measures were introduced to rein in speculative housing purchases, check the risk of asset bubbles and stabilize the market, with dozens of Chinese cities modifying market rules, including the introduction of higher deposits and more purchase restrictions.
"More than 70 percent of these auctioned land plots are located in cities that have rolled out tightening moves, which presages sales and funding difficulties for some homebuilders," said Zhang Dawei, a Centaline Property analyst.
Observers believe that a surge in housing mortgage loans and auctioned land prices contributed to the sweeping increase in home prices across China earlier this year, triggering a string of policies to cool an overheated market.
Some Chinese local governments rely too heavily on land sales for fiscal revenue and deliberately slow supply to push up prices, experts have said.
Shanghai Jiao Tong University Shanghai Advanced Institute of Finance (SAIF) will hold Shanghai Finance Forum (SFF) on Jan 14, 2017, bringing together leading scholars, policy makers and practitioners to a common platform led by a Nobel laureate to discuss challenges and opportunities as China continues to develop its financial markets.
The SFF aims not just to identify the issues but also to come up with possible solutions through rigorous research, in-depth discourse and intimate interaction. Nobel Laureate Robert Merton and former governor of India's Reserve Bank Raghuram Rajan will deliver keynote addresses and participate in the panel discussions.
The SFF will bring together about 350 of the world's experts and leaders as guests, seeking to foster deep discourse, meaningful debate, and the fruitful exchange of ideas and best practices. The discussions will be underpinned by rigorous academic research, and guided by international best practice and experience, to condense actionable insights for policymakers.
It also aims to raise the understanding of international investors on China's policy actions and circumstances as they may be misinformed or ill-informed on the challenges and opportunities of the country.
The sports unit of conglomerate Dalian Wanda Group will "eventually" get listed, Chairman Wang Jianlin said at a forum held in Beijing on Sunday, without giving a specific time.
Wanda will expand cooperation with international sports organizations and continue to seek opportunities in overseas acquisitions, said Wang, China's richest man, according to a report on news.xinhuanet.com on Sunday.
Wanda has been expanding its presence in the sports industry. In January 2015, it announced an investment of 45 million euros ($48 million) to acquire a 20 percent stake in top European soccer club Atletico de Madrid. In February 2015, Wanda acquired Infront Sports & Media AG, a leading sports marketing company based in Switzerland, for 1.05 billion euros. In August 2015, it acquired US-based World Triathlon Corp for $650 million.
Chinese companies have shown increasing interest in overseas sports deals, especially for soccer clubs. For instance, electronics retailer Suning Commerce Group Co in June bought nearly 70 percent of Italian soccer club Inter Milan for 270 million euros.
But Wang said that acquisition of sports clubs is only one aspect of Wanda's plans. The company aims to introduce more international sports events to China, according to the report.
Wang told the forum that he sees great potential in China's sports industry. While the total value of the U.S. sports industry accounts for some 3 percent of the country's GDP, China's sports industry only accounts for some 0.7 percent, according to the report.
Wanda has also made several major foreign acquisitions in the entertainment industry. It bought U.S. Legendary Entertainment for $3.5 billion in January and in November, it bought U.S.-based Dick Clark Productions for $1 billion. That company produces the Golden Globes film awards and the "Miss America" pageant.
China's manufacturing purchasing managers index continued rising in November to the highest level in two years, which indicates the country's economic performance is gradually improving, new data showed on Thursday.
The PMI stood at 51.7 in November, up from 51.2 in October, according to the National Bureau of Statistics.
This is the fourth consecutive month that the manufacturing PMI, a key gauge that monitors the activity of large and medium-sized enterprises in the manufacturing sector, stayed above the 50-point mark that distinguishes expansion from contraction in the sector.
Among the five major subindexes, production and new orders stayed in the expansionary range. In November, the production subindex increased to 53.9 from October's 53.3, while the new orders subindex increased to 53.2 from October's 52.8. Both were at the highest level so far this year.
Zhao Qinghe, senior statistician of the NBS, said that production and market demand both rebounded in November, and enterprises showed stronger desire to purchase.
Zhao said the increased costs of raw materials and transportation, which have reached the highest level in three years, are a major challenge for enterprises.
"Fluctuations of the RMB exchange rate have resulted in the increased cost of imported raw materials, which has a significant impact on electronic equipment manufacturing industries such as computers and telecommunication," Zhao added.
The Caixin/Markit Manufacturing PMI, which mainly monitors the market performance of small and medium-sized enterprises, was at 50.9 in November. Although the index stayed in the expansionary range, it declined from 51.2 in October, which shows a slowing expansion pace in the manufacturing sector.
"Caixin/Markit Index readings for both output and new orders declined, but those tracking input and output prices rose at a faster pace to hit their highest levels in five years, pointing to further intensification of inflationary pressure", said Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group, a subsidiary of Caixin Insight Group.
"The November PMI indicates that China's domestic economic operation is stable and the positive effect of supply side structural reform is gradually appearing," said Zhang Yiping, an economist with China Merchants Securities. "The quality of China's economic growth is gradually improving."
Most Chinese companies are confident about their revenue growth in the next three years, and nearly 70 percent of the interviewed companies are interested in mergers and acquisitions (M&As), according to a study report issued Monday on China's capital market.
The study, named China Capital Market Insight Survey 2016 and jointly developed by PricewaterhouseCoopers, BNY Mellon, ICR Inc. and Skadden, surveyed Chinese executives between July and September, receiving responses from 108 Chinese companies.
A majority of the executives are confident about their company's revenue growth in the next three years, the study showed. The executives were asked to rate their confidence in growth with figures from 0 to 10. Almost a quarter rated themselves 10, the highest confidence level, while three quarters were six or above in confidence.
The study also showed that Chinese companies have a strong appetite for M&As over the next 24 months. Among the public companies surveyed, 40.6 percent are interested in domestic M&As, while 28.1 percent are eyeing overseas deals. Meanwhile, private companies are also eager for M&As.
Chinese companies are accelerating raising capital in the global market, according to the study. While 43.8 percent of the public companies surveyed are planning to issue debt in the next 24 months, private companies rely more on equity investment, with 48.7 of them aiming to raise equity in the next 24 months.
China's housing market is expected to be stable next year although regulatory risks remain high amid rapidly rising home and land prices, international ratings firm Moody's said in its latest forecast.
"We expect the growth in nationwide contracted sales by value to be flat or slightly negative in 2017, against a high base of contracted sales for 2016," said Kaven Tsang, vice president and senior credit officer at Moody's. "We estimate sales growth of around 25 percent year on year for 2016."
Tsang predicted that sales volume to fall by 5-10 percent next year as major cities in September and October imposed tightening measures, turning the sector outlook to negative. But the drop will be partly offset by a modest rise in prices.
If sales volume rises by above 10 percent annually on a sustained basis and in a low regulatory risk environment, the outlook could shift to positive, Moody's said.
A sharp price decline seems unlikely in the next six to 12 months, given the relatively low inventory levels in high-tier cities, Moody's said.
Developers' gross margin will stabilize next year due to reduced destocking pressure and improved selling prices, amid the strong contracted sales registered in the past 12 to 18 months, said Moody's, which rated 50 developers in China.
Late on Monday, Shanghai announced down payment for first-time home buyers would be raised to 35 percent from 30 percent from yesterday. People who now don't own a house but have applied for mortgages from either commercial banks or public housing funds anywhere in the country will have to pay a minimum 50 percent down payment as they are considered second-home buyers in the city from now on.
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