CX Daily: China’s Insurers Scale Back High-Yield Investment
TOP STORIES
Insurance?/
China’s long-running real estate crisis and increasing risks in local government debt have forced the insurance industry to scale back a form of high-yield investment: non-bond debt issued by property developers or infrastructure builders.
The risks associated with such investments have shot up amid a wave of defaults by some of the country’s biggest developers and growing financial pressure on local government financing vehicles (LGFVs). Meanwhile, alternatives with the potential to generate similarly high returns are hard to find, posing challenges to insurers’ earnings. ?
Laura M. Cha?/
Laura Cha, 74, stepped down as chair of?Hong Kong Exchanges and Clearing Ltd. (HKEX)?on Wednesday.
Her six years at the Asian financial hub’s stock exchange operator was only a small part of a career packed with changes and challenges that spanned the securities regulatory systems in Hong Kong and the Chinese mainland.
Cha held senior positions in the Hong Kong Securities and Futures Commission (SFC) during the city’s transformational years from the early 1990s to the early 2000s. She played a key role in building a framework for mainland companies to list in Hong Kong. She later helped steer the mainland’s fledgling securities market toward more comprehensive regulatory oversight.
China-EU?/
China and the European Union could strengthen?ties by boosting food trade, the bloc’s agriculture chief told Caixin, as a dispute over subsidies for Chinese exports such as electric vehicles (EVs) has exacerbated tensions between the two.
European Commissioner for Agriculture Janusz Wojciechowski acknowledged in an interview Tuesday in Shanghai that “there are some problems in the relations between the European Union and China,” but said that “food trade should be excluded.” ?
FINANCE & ECONOMY
PE?/
Private equity (PE) firms in China made fewer, smaller deals on average in 2023 as PE activity slumped to a 10-year low due to a global slowdown and macroeconomic uncertainties, according to consulting firm Bain & Co.
The value of PE deals in Greater China — which includes the Hong Kong, Taiwan and Macao markets — fell 37% to $41 billion in 2023, according to Bain’s Greater China Private Equity Report 2024, which was published Wednesday. The decline worsens to 58% when comparing last year’s value figure with?the annual average from 2018 to 2022. ?
Wealth management?/
The number of new Chinese mainland investors participating in the wealth management connect (WMC) program with Hong Kong and Macao surged nearly 13-fold in March from the month before, thanks to relaxed regulations.
The cross-border program saw a record 23,200-plus new mainland investors last month, data released Tuesday by the People’s Bank of China’s Guangdong branch show. ?
Quick hit?/
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BUSINESS & TECH
Facial recognition?/
Hotels in Chinese cities of Beijing, Shanghai, Shenzhen and Hangzhou have been ordered by local authorities to stop scanning guests’ faces for check-ins, Caixin has learned, as the government steps up protection of personal data amid growing use of facial recognition technology.
A majority of the hotels contacted by Caixin said?they received notices in late March or early April from local police departments requiring them to let guests check in without using facial recognition, while some said they had been asked to do so as early as 2023 — after Beijing lifted its “zero-Covid” policy. ?
Plastic?/
Hong Kong government has begun implementing a phased ban on sale and supply of disposable plastic products by restaurants, hotels and retail shops, prompting some caterers in the region to steer away from takeaway services.
The first phase of the new rules, which came into effect on Monday, prohibit catering service providers from selling or providing nine types of tableware made of single-use plastic, including knives, forks, straws and stirrers, to customers. Plastic cups and containers will be banned under the second phase, which has been set tentatively for 2025. ?
LVMH?/
LVMH Moet Hennessy Louis Vuitton SE is not worried about sales pressure on the Chinese mainland as long as its clientele there is growing overall, according to Chief Financial Officer Jean-Jacques Guiony.
The world’s largest luxury goods group is looking to attract more Chinese shoppers amid a broader slowdown in demand for expensive bags, jewelry, and perfume. Many consumers have been making their purchases outside China, especially in Japan, where the yen is weak, the French conglomerate disclosed in its 2024 first-quarter earnings released last week. ?
Quick hits?/
Daily Tech Roundup?/
Long Read?/
GALLERY
Readers around the globe celebrated World Book Day on Tuesday. Established by UNESCO in 1995, the day serves as a reminder of the power of the written word. Photos from disaster zones — from Ukraine and Gaza to Syria and Yemen — show how people, young and old, have found solace in the company of books, even under the most desperate of circumstances.