Financial Services Talking Points | 14/03/17

In today’s talking points: Chinese trade data shows increasing trend; Australian banks seek a connection to Wechat, Alipay; Chinese companies are attractive for the overseas IPO market in the eyes of global banks; High rise building boom in Australia’s east comes with its risks.

Chinese trade data shows increasing trend

The most recent trade data for China has exceeded expectations and helped the share market close at a stronger position. Both China’s exports and imports for February rose in terms of RMB, by 4.2 and 44.7 per cent respectively. The increase in imports exceeded a forecasted 23 per cent rise. While some of the growth can be attributed to the Lunar New Year, more broadly the increases are welcome as a sign that China’s growth is on the rise. This is a positive for countries engaged in significant trade with China, particularly Australia. The exceptional data actually provided a boost to the Australia dollar, which reached 76 US cents temporarily before moving back to 75.96 US cents. Australian company stocks also saw increases, as well as three of the four big banks. Growth for China is a good sign for growth in Australia as well.

Read more at Yahoo

Australian banks seek a connection to Wechat, Alipay

Australia’s big 4 banks have all expressed interest in engaging with Chinese online payment companies in order to access a greater market for transactions. A growing number of Chinese small businesses choose to sell their products through channels such as Alibaba and Wechat, and Australian banks have noticed the transition away from traditional payment methods. Millions of Chinese use the online payment options daily, and by engaging with these platforms Australian banks can allow their customers the same seamless access. Demand in China for Australian goods such as infant formula, cereals and infamous Ugg Boots require Australian companies to have a pathway into Chinese consumer markets. A connection between Australian transactional institutions and Chinese payment platforms is the next step in strengthening the business relationship.

Read more at Australian Financial Review

Chinese companies are attractive for the overseas IPO market in the eyes of global banks

Globally, banks have had a slow start to the year for initial public offerings (IPOs), and are looking to China to boost the trend. Chinese tech startups have total valuations that range in the hundreds of billions of dollars. These entreprenurial businesses are expected to meet the public market in the next few years as they seek funding for capital. IPO options range from companies such as Ant Financial Services Group, affiliated with Alibaba, to new-on-the-block companies, to companies outside the finance industry such as Toutiao. If these businesses choose to list outside Mainland China for an IPO, global banks potentially can earn big. The initial deep pool and the sustainable pipeline an IPO of this size provides is extremely attractive to China’s neighbours, and they are keeping positive. A representative for Nasdaq forecasts that if over 60 Chinese companies go public over the next two years in the U.S., there is potential value of over $200 billion. Chinese tech startups and IPO-worthy businesses generally will be spoilt for choice when the time comes to go to market.

Read more at Wall Street Journal

High rise building boom in Australia’s east comes with its risks

Australia’s eastern capitals are seeing a high rise building boom, catalysed by extremely low interest rates, strong price growth, renewed investor activity and burgeoning interest from foreign consumers. Despite the amount of buildings going up, population growth is slowing overall which begs the question of where prices will head next. Earlier this year the China’s State Administration of Foreign Exchange (SAFE) implemented stricter regulations for financial institutions in lending money for overseas property investment and securities. “Recent trends and reports suggest there has been a modest increase in delays in settlement rather than outright non-settlement.” Ivan Colhoun, chief markets economist at the National Australia Bank also suggests. With a surge of foreign buyers looking to invest in property, tighter regulations may spell implications for the market.

Read more at: Business Insider