Wednesday December 9 Housing and Economic stories

TOP STORIES:

China's Bond Stresses Mount as Two More Companies Flag Concerns - (www.bloomberg.com) A Chinese fertilizer maker and a pig iron producer have flagged bond payment difficulties, adding to signs of stress in the nation’s corporate note market after at least six defaults this year. Jiangsu Lvling Runfa Chemical Co., based in the eastern city of Suqian, is asking its guarantor to repay 53.1 million yuan ($8.3 million) in bond principal and interest due Dec. 4, according to a statement posted on Chinamoney’s website. Sichuan Shengda Group Ltd., based in the southwestern province of Sichuan, is uncertain it can repay notes due in 2018 that holders can opt to sell back early on Dec. 5, it said in a statement on the same website Thursday. More companies in China are struggling to repay bonds amid the worst economic slowdown in a quarter century. China Shanshui Cement Group Ltd. this month became at least the sixth company in 2015 to default on yuan-denominated domestic notes. 

China’s ‘national team’ owns 6% of stock market - (www.ft.com) China's "national team" owns at least 6 per cent of the mainland stock market as a result of the massive state-sponsored rescue effort this year to prop up share prices following the summer equity market crash. One member of the team, China Securities Finance Corp, the main conduit for the injection of government funds, owned 742 different stocks at the end of September, up from only two at the end of June. CSF was one of a number of government rescue funds that were corralled into buying shares when stock markets went into meltdown over the summer. The intervention succeeded in shoring up prices, with the Shanghai Composite index now up 28 per cent from its low point in late August. The two state financial institutions that led the bailout increased their ownership of the Shanghai and Shenzhen exchanges from 4.6 per cent of total tradeable A-share market capitalisation at the end of June to 5.6 per cent three months later, according to Wind, a financial database.

BTG CEO's Arrest Triggers Big Question: How Much Cash Will Flee? - (www.bloomberg.com) Within hours of the arrest of BTG Pactual Chairman and Chief Executive Officer Andre Esteves on Wednesday, the bank’s stock was down as much as 39 percent and the bonds 20 percent. The rationale behind that initial panic was this: Without Esteves, the billionaire executive who’s widely considered to be one of Brazil’s most-talented bankers, BTG’s creditors could bail. And with only 23 percent of its funding coming from equity or long-term debt, some investors worry that a big chunk of money could vanish fast and sink the firm into a paralyzing liquidity crunch. “What kills banks are runs and people moving their money very quickly,” said Ray Zucaro, chief investment officer of RVX Asset Management. “Liquidity can dry up overnight, so yes, it’s a real concern.”

Half of Gold Output May Not Be ‘Viable’ as Price Sags: Randgold - (www.bloomberg.com) Half of the gold coming from mines may not be viable at current prices, underscoring the industry’s need for consolidation and output cuts, according to the best-performing producer of the metal in the past decade. “The more we continue to produce unprofitable gold, the more pressure we put on the gold price,” Randgold Resources Ltd. Chief Executive Officer Mark Bristow said in an interview in Toronto on Friday. “In the medium term, it’s a very bullish outlook for the gold industry. The question is, how long are we going to supply it with unprofitable gold?” Gold fell to a five-year low on Friday as a rising dollar and speculation that U.S. policy makers will boost interest rates next month curbed the appeal of bullion as a store of value. While industrial metal producers have promised output cuts, “we don’t have that psyche in the gold industry, we just send it off our mine and somebody buys it,” Bristow said.

China Brokerages Lead Drop as Haitong Securities Halts Trading - (www.bloomberg.com) China’s stocks tumbled the most since the depths of a $5 trillion plunge in August as some of the nation’s largest brokerages disclosed regulatory probes, industrial profits fell and two more companies said they’re struggling to repay bonds. The Shanghai Composite Index sank 5.5 percent, with a gauge of volatility surging from the lowest level since March. Citic Securities Co. and Guosen Securities Co. plunged by the daily limit in Shanghai after saying they were under investigation for alleged rule violations. Haitong Securities Co., whose shares were suspended from trading, is also being probed. Industrial profits slid 4.6 percent last month, data showed Friday, compared with a 0.1 percent drop in September.

OTHER STORIES:

Bad Saudi PR fuels riyal devaluation talk - (www.reuters.com)
China to Probe Largest Brokerage for Alleged Rule Violations - (www.bloomberg.com)
Italy, France, Belgium Vulnerable to Shocks Because of High Debt, Low Growth-EU - (www.reuters.com)
Germany’s isolation within Europe is growing - (www.ft.com)

American and Russian militaries don’t agree about much in Syria - (www.washingtonpost.com)
China Announces Military Overhaul to Make Army More Combat Ready - (www.bloomberg.com)
Russia Takes Aim at Turkish Economy Amid Fighter-Jet Spat - (online.wsj.com)
Turkey won't apologize for downing Russian warplane, Erdogan says - (www.cnn.com)