Asia-Latin America Round Up — 7 Jul 2017

Highlights

China lashes out at US as Trump-Xi honeymoon ends — FT
Trump phones Xi as US-China friction grows — FT
1 big thing: Honeymoon over with China — Axios
Trump Considers Hard Line on Chinese Steel in Advance of G20 Summit — Time
Trump overrules cabinet, plots global trade war — Axios
The White House is now saying it is going to be tougher on China, a change in the approach seen in the visit of Chinese President Xi Jinping to Mar-a-lago in April. The two drivers of the change are North Korea’s bellicosity (which Trump sees as enabled by China, who he thinks can effectively take a stronger hand), and the need to deliver a win for his electoral base (that Trump thinks would benefit from slapping tariffs on the 26% of steel that is imported from China). Needless to say, a 20% on steel and other imports (including: aluminum, semiconductors, paper, and appliances like washing machines) would be devastating to bilateral relations and the global economy. While Trump’s advisors are nearly unanimous in arguing against, reports are that Trump is "hell-bent on imposing tariffs."

Alibaba-Backed Logistic Company Best Inc. Files for U.S. IPO — Bloomberg
Chinese delivery firm Best Inc. has filed for an initial public offering through American depository shares with an initial offering size of $750m. Alibaba, Best’s biggest existing shareholder with a 23% stake, accounted for about 70% of the firm's express deliveries in the three months through March.

Leveraging Big Data, Mercado Libre Offers Loans in Brazil and Mexico — US News & World Report
Online marketplace Mercado Libre plans to provide working-capital loans to entrepreneurs in Brazil and Mexico this year, expanding on a program the company launched in Argentina last month. Sellers using Mercado Libre and its Mercado Pago payment platform will be eligible for loans equivalent to as much as two months of their monthly sales. Brazil and Mexico accounted for about 60 percent of Mercado Libre's revenues last year.

South Florida by the numbers: Chinatown(s) in Miami? — The Real Deal
A profile of some of the numbers behind the two proposed Miami-area Chinatowns: North Miami (along Northwest Seventh Avenue between 119th Street and 135th Street) and North Miami Beach (on Northeast 163rd Street from Northwest Second Avenue to Northeast 15th Avenue). It’s a pretty thin gruel, with the highlight being 47 Asian and Chinese-owned business in North Miami Beach, and a 2.2% Asian population in North Miami.

Where’s the Chinese money? — The Real Deal
A piece about what the driving factors are behind the lack of Chinese investors in the Miami. China-Miami commentator Seth Gordon suggests that South Florida lacks signature commercial buildings that attract high-net-worth Chinese investors and companies. “Chinese investors with real money don’t want to be in the business of being a landlord and collecting rent,” Gordon says. “They are buying for the prestige of owning a trophy property.” The article goes on to discuss how most Chinese investment in South Florida has been driven by the EB-5 visa program, which grants permanent U.S. residency to foreign nationals and their immediate family members for investments of  $500k to $1m in development projects that produce at least 10 direct or indirect jobs.

 

China-Latin America

Brazil, China open $20 bln fund for infrastructure, tech projects — Business Insider
The $20 billion Brazil-China bilateral infrastructure investment fund is ready to receive investment pitches, according to the Brazilian Planning Ministry.

Rising Chinese FDI in Latin America and the Implications for the United States — Atlantic Council
Chinese FDI in Latin America — Atlantic Council
The Atlantic Council has a new report and panel about Chinese Foreign Direct Investment (FDI) in Latin America. In addition to the increase in flows, as discussed before, the report notes that Chinese investment has diversified into the service sector, industries like automotive and IT, and electricity generation and transmission, in addition to more traditional investments in oil and mining. The recovery in Latin American economies, concerns by policy-makers in Europe and the US about Chinese investment in those economies, and the interest by Chinese firms to diversify away from China will all contribute to Chinese FDI in Latin America remaining buoyant in the coming years.

China key recipient of expanding Mexican avocado market — Fresh Plaza
According to the Mexican National Bureau of Statistics (INEGI), consumer prices for avocado in the country grew by 95% in the twelve months ending May 2017. Rapid growth of the international market demand and falling crop yield drove the price increase. In 2016 more than a half of Mexican avocado was exported. United States, Japan and China have became major markets for Mexican avocado.

Brazil's Cemig says China's State Power Investment bids for stake in dam — Reuters
Brazil's Centrais Energeticas de Minas Gerais received a proposal from China's State Power Investment Overseas Co. for its stake in Santo Antonio dam, the company said in a securities filing. Cemig has been selling assets to reduce its debt.

 

China Econ/Policy

Funding Tap Runs Dry for Property Developers — Caixin Global
Article discussing how debt funding for Chinese property developers is being constrained by government curbs on bank lending and efforts to get the financial sector to deleverage. While it is unclear how real the slowdown will be, one sign that property developers are being squeezed by government restrictions on borrowing is that equity financing is accounting for an increasing percentage of the money they raise.

Wanda Agrees to Buy London Site for $595M — Mingtiandi
Dalian Wanda continues to expand it’s holdings around it's Nine Elms project. It has agreed to purchase the 10.2 acre Nine Elms Square project for £470m ($595m) from a joint venture of UK builder St. Modwen Properties and France’s Vinci. The project has received initial approval for three towers of between 32 and 54 stories and 1,821 apartments.

China's CBRC Targets Wanda, HNA and Fosun in Crackdown — Mingtiandi
China warns its banks about four of its most global companies — The Economist
The China Banking Regulatory Commission (CBRC) has asked financial institutions to review borrowing by the four conglomerates and report to the regulator on any potential dangers. The companies targeted include Dalian Wanda, Fosun, Anbang, and HNA - as well as Zhejiang Rossoneri, an investment company that bought AC Milan earlier this year. Some observers speculate that this may be related to factional struggles, or that it might signal an attempt by Xi Jinping to tighten his grip on the economy. Others suggest that this is part of a broader “regulatory storm” over the past six months to clean up the financial system.

CIC, China Life Join TIAA in $1.1B US Parking Deal — Mingtiandi
A unit of China Investment Corporation (CIC) and insurance giant China Life are teaming up with a group led by Fortune 500 financial services firm TIAA Private Investments and Antarctica Capital to buy Chicago-based InterPark for $1.1b. The deal gives the partners ownership over 57 parking garages and surface lots containing 49,000 parking spaces across the US. Parking assets offer the potential for high returns. According to one expert cited by Mingtiandi, active investors in parking lots can earn yields in the range of 12-18%.

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