In light of China’s recent political moves (its assertiveness over Taiwan, tighter controls over Hong Kong and alleged mistreatment of Muslim Uyghurs) many European nations have either joined with the Biden Administration to further sanction China, or continued to back China through trade support. (Bloomberg)
Italy is trying to encourage major banks to acquire loss-making banks by allowing them to transform tax assets from purchased banks into tax credits. (Bloomberg)
Singaporean company Hyflux Ltd. has had six bids for the company and/or its assets in the wake of approaching bankruptcy. One major bid entailed a restructuring of the entire company, while the other five are bids for particular assets of Hyflux. (Bloomberg)
Australian companies are rushing into the public sphere, with several IPOs being launched at record prices. The new IPOs bring hope that the pandemic’s effects on the Australian economy may be lessening. (Bloomberg)
Mexican shadow banks, or non-bank lenders, have been worrying investors after several major companies announced large revisions to their financial statements. One company, Credito Real, revised its portfolio to show that its list of non-performing loans was 82% higher than the previous report. With uncertainty remaining over what else regulators may have missed, some investors are pulling their bonds. (Bloomberg)
A small Chinese trading firm, Honors Commodity Singapore Pte. Ltd., made waves by purchasing roughly 61,000 metric tons of sugar from the New York Stock Exchange. It is largely thought to be a move by parent company, Hangzhou CIEC Group Co., to grow a commodities trading business. (Bloomberg)
Hong Kong is looking to cut tax on carried interest in the hope of drawing in private equity firms, but the proposal faces opposition from some who say more is needed to counter factors that threaten Hong Kong’s appeal as a financial center. (Bloomberg Opinions)
China Tensions Spill Over as Europe Moves Toward Biden’s Side
A major investment deal reached in December between the European Union and China — after seven years of painful negotiations — may end up being the high-water mark for ties that are quickly deteriorating again.
Since then, the EU’s executive branch and Germany have each formulated legislation that would make life harder for Chinese entities to invest, while joining the U.S. in swapping tit-for-tat sanctions with Beijing. Italy’s government has turned from an enthusiastic backer of President Xi Jinping’s Belt and Road Initiative to blocking planned acquisitions by Chinese companies. And in France, China’s ambassador didn’t even show up when summoned in March, citing “agenda reasons.”
Italy Considers Boosting Tax Benefits for Buying Loss-Making Banks
Chiara Albanese and Sonia Sirletti – Bloomberg
Draft decree would extend duration, size of the fiscal relief; Measure was introduced to entice buyers for Monte dei Paschi
Italy is mulling extending the fiscal benefits for banking mergers and acquisitions it introduced at the end of last year, according to a draft decree seen by Bloomberg. The move could further entice potential buyers of state-owned Banca Monte Paschi di Siena SpA, which Italy must sell before the end of 2021 as part of an agreement with the European Union.
Hyflux Gets Six Final Offers With One Covering Retail Investors
Ameya Karve – Bloomberg
Five offers are for specific assets, person familiar said; Bid to restructure entire firm has deal for retail investors
Crisis-hit Singaporean water-treatment company Hyflux Ltd. has six final offers including one to restructure the entire firm, after an April 30 target for finalizing binding term sheets, a person familiar with the matter said.
IPOs Boom at the Fastest Pace Since 2007 in Australia
Harry Brumpton – Bloomberg
Firms in a range of sectors going for IPOs as Covid-19 recedes; IPOs kicking off in recent weeks include pub chain, hospitals
From hospitals to pubs, Australian companies are rushing into public markets to raise funds via first-time share sales at the fastest pace in 14 years. Australian companies have priced nearly $2.3 billion of initial public offerings so far in 2021, the most year-to-date since the $3.6 billion raised in 2007, according to data compiled by Bloomberg. More than half of this year’s haul came from four IPOs, which fixed the prices of their respective offerings in the past two weeks.
Why Mexico’s Shadow Banks Are Raising Investor Fears
Justin Villamil – Bloomberg
Spooky things can come out of the shadows, and shadow banks, as non-bank lenders are called, have been a source of unpleasant surprises for markets across the globe over the years. Now shadow banks in Mexico, where they have boomed recently, are giving investors the willies after two of the largest of them announced sharp revisions to their financial statements. Bonds for a range of lenders plummeted on fears of what else might be lurking in the sector — fears compounded by the deep cuts made to Mexico’s financial regulator last year amid the stresses created by the pandemic.
Little-Known Chinese Trader Buys New York Sugar in Surprise Move
Isis Almeida and Alfred Cang. – Bloomberg
Honors Commodity bought 61,000 tons via the New York exchange; This is the first time trader took part in exchange deliveries
A little-known Chinese trader bought a cargo of raw sugar through the New York exchange for the first time, a move that surprised the industry dominated by a few large players.
Private Equity Doesn’t Live by Tax Breaks Alone
Rule of law, free flow of information and political stability also matter. On all these, Hong Kong has been going backward.
Matthew Brooker – Bloomberg
Hong Kong’s government says cutting the tax on carried interest to zero will make the city a more attractive base for private equity firms and boost the economy. In normal times, there would be no debate. The change gives the Chinese city an edge over its regional rival Singapore and is opportunely timed, coming just as President Joe Biden proposes to eliminate tax breaks for carried interest (essentially the profits that partners accrue on a fund’s investments) in the U.S. The question is whether the enticement is sufficient to outweigh an expanding list of factors that threaten to dim Hong Kong’s appeal as an international financial center.