SOE reform remains a confusion given the apparent contrasts between those pushing market-oriented reform and mixed ownership, and those stressing the role of the Communist Party.

Oliver Barron

Categorized in : Industrials

In the medium to long-term, it's clear we will see more M&A activity so China can make good on its goal of becoming more globally relevant, some Chinese companies have been restricted in the purchase of (foreign exchange) FX ... Against such a backdrop, it's clear the Syngenta acquisition is a strategic priority with support from the very top.

mergers-acquisitions

(The crash) is evidence of a failure of intervention, but it is mainly evidence that the government didn't do what it said it would do.

Given that CBRC (China Banking Regulatory Commission) has already said that the key task for 2016 will be risk control, it's quite telling that they're now telling banks to reduce these WMP yields, many trust loans, for instance, were issued two years ago when commodity prices were still sky high, and any products that sent funds to those parts of the industrial sector may have repayment difficulties at the old high rates.

Avoiding a crisis and the spread of systemic risk is always the number one priority of the government, this means that some companies that shouldn't be bailed out will be, perpetuating the current moral hazard and leading to wasted capital.

The GDP beat is surprising, given that the monthly FAI and industrial production figures slowed considerably, and much faster than expected, the data would suggest that retail sales is holding up the data and there are other areas that the government is factoring in consumption and services data that are not picked up in the monthly figures.

With current market volatility and weak retail investor sentiment, these hedge fund strategies would naturally lead them to sell the market ... which is against the government's intention of propping up the market.

After the market continued to fall despite myriad support measures, the government reached peak panic mode and must have worried that investors would not only lose confidence in the markets, but in the government itself.