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Karen Yeung

Articles by Karen Yeung

Coronavirus: China to open US$1.5 trillion distressed debt market as it braces for bad loan blowout

7 days ago

[unable to retrieve full-text content]Ever since the coronavirus outbreak began eating away at his business, Zhu Bo has been making plans about how to keep his small financial information and social media company afloat.He stopped paying rent for the office space his firm occupies in one in one of Shanghai’s oldest commercial districts about two months ago, and, as losses began piling up, he halted projects for the foreseeable future and asked staff to take a month’s unpaid leave.Now, with news that prominent customers plan to…

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China eases US dollar debt rules, but dollar squeeze presents new challenge for firms facing cash crunch

11 days ago

[unable to retrieve full-text content]China’s efforts to free up US dollar borrowing for private firms and small and medium-sized enterprises (SMEs) hit by the coronavirus pandemic are being hampered by a squeeze in the dollar market and concerns about the credit quality of Chinese businesses.The limit for cross-border financing has been raised from 2 to 2.5 times the value of net assets based on the risk-weighted ratios for these firms in China, Xuan Changneng, deputy administrator of the State Administration of Foreign Exchange …

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Coronavirus: US-China decoupling may diminish Beijing’s role in G20 economic response

17 days ago

[unable to retrieve full-text content]US-China decoupling and rising nationalism around the globe may prevent Beijing from taking a leading role in the international economic response to the coronavirus crisis at next week’s G20 summit, analysts said.Coordination among major powers, especially between the United States and China, has been fading since US President Donald Trump initiated his “American first” policy and the subsequent trade war with China two years ago, said Alex He Xingqiang, a research fellow at the Centre for…

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Coronavirus: global recession fears triggered by failure to contain Covid-19 spread

20 days ago

[unable to retrieve full-text content]A failure by governments in major western countries to contain the coronavirus outbreak is fuelling the perception in financial markets worldwide that the global economy is headed for a deep recession because of the severe, and in many cases, permanent damage being done to businesses.Financial markets had initially expected the economic trajectory of the current outbreak to mirror that of the severe acute respiratory syndrome (Sars) epidemic in 2002-2003, which sharply declined before enjoying…

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Coronavirus: China consumers, small firms shy away from borrowing even as Beijing readies more support

25 days ago

[unable to retrieve full-text content]Surprisingly low new lending by Chinese banks in February suggested that fears about the economic impact of the coronavirus on an already weak economy had caused households and small and microenterprises to avoid new borrowing despite the strong efforts by the central bank.China’s cabinet, the State Council, on Wednesday called for a further reduction in the reserve requirement ratio (RRR) – the amount of money banks are required to set aside at the central bank – to free up cash to lend to…

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Coronavirus: how epidemic could hurt China’s US dollar debt payments

26 days ago

[unable to retrieve full-text content]The recent plunge of global financial markets in response to the rapid spread of the coronavirus has heaped pressure on the US dollar bond market, making it difficult for non-American companies – including those in China – to raise funds to rollover their US dollar debt repayments, analysts said.The inability of Chinese companies to get their hands on new US dollar loans could add to China’s vulnerability if the yuan’s exchange rate comes under pressure due to a deterioration of the country’s…

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Coronavirus: China could become new investment safe haven as stocks, yuan rally while global markets suffer

March 5, 2020

[unable to retrieve full-text content]An ongoing Chinese stock market rally and a yuan exchange rate rebound over the last week have fanned speculation that, as the coronavirus appears to be coming under control, China could become a new safe-haven for investors with other major economies now the ones reeling from the outbreak.China’s equity benchmark, the Shanghai Composite Index, has risen around 10 per cent in the last month despite new data that showed the manufacturing and services sectors activity contracted sharply in…

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Coronavirus: first Chinese province that declared top-level emergency downgrades alert status

March 2, 2020

[unable to retrieve full-text content]China’s key export and manufacturing base of Zhejiang province, which was the first to declare the highest level of emergency in response to the coronavirus outbreak, downgraded its alert status on Monday.The coastal province of 57 million residents declared a Grade I emergency on January 23, a day before the epicentre of Hubei province, but is the latest in a number of provinces to ease restrictions in a bid to ramp up economic activities.According to the Zhejiang Health Commission, there have…

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Coronavirus: China offers under pressure small, medium-sized businesses lifeline by delaying loan payments

March 2, 2020

[unable to retrieve full-text content]China will offer temporary relief to small and medium-sized businesses under pressure from the coronavirus outbreak by allowing firms to delay loan or interest payments until the end of June, with many in danger of bankruptcy.Banks across China have been told to grant the extensions to eligible small and medium-sized enterprises (SMEs), as well as micro and self-employed businesses, who have payments or interest due between January 25 and June 30.The move, announced on Sunday by the People’s…

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Coronavirus adds new hurdle for Hong Kong’s integration into China’s Greater Bay Area plan

March 1, 2020

[unable to retrieve full-text content]The novel coronavirus outbreak has added a fresh obstacle for Hong Kong’s integration into China’s Greater Bay Area plan, as the epidemic is discouraging workers from taking jobs across the border.China on February 18 last year laid out a blueprint to transform Hong Kong, Macau and nine cities in southern China into a centre of innovation and technology that rivalled the San Francisco and Tokyo Bay areas.The ambitious plan was set back when anti-government protests erupted in Hong Kong last…

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Coronavirus: can Hong Kong firm regain trade war losses by turning Covid-19 crisis into an opportunity?

February 26, 2020

[unable to retrieve full-text content]“If you manage a crisis well, you can get market share from your competitors” may be seen as a blunt assessment, but one Hong Kong-headquartered manufacturer is hoping that its rapid response to the coronavirus outbreak will help it make up ground lost as a result of China’s trade war with the United States.Computime, which has a manufacturing centre in Dongguan, in southern Guangdong province, took advantage of the shorter four-day Lunar New year holiday in Hong Kong to make advance purchases…

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Coronavirus is a ‘human tragedy’ that poses sharp risks to global economic recovery, IMF says

February 19, 2020

[unable to retrieve full-text content]Further spread of the coronavirus could pose sharp downside risks and derail the recovery of global growth, according to a new report by the International Monetary Fund.The Washington-based institution labelled the outbreak a “human tragedy” that is disrupting economic activity in China, halting production and limiting mobility around affected regions.China’s outlook in the near term will largely depend on a successful containment of the coronavirus, with the current scenario, which is broadly…

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Coronavirus: China’s yuan set to fall as millions return to work amid Covid-19 crisis

February 19, 2020

[unable to retrieve full-text content]China’s yuan exchange rate is set to weaken after a period of stability as the country gradually returns to work amid economic activity that has been severely dented by the coronavirus epidemic, analysts said.The yuan has eased by 0.6 per cent against the US dollar this year, much less than the South Korean won’s decline of 2 per cent and the Singapore dollar’s drop of 3 per cent. The euro has tumbled by as much as 3.6 per cent.While the Chinese currency was buoyed by the signing of a phase one…

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China clamps down on coronavirus rumours, Beijing doctors warned over ‘misleading the public’

February 17, 2020

[unable to retrieve full-text content]Three state-backed doctor associations in Beijing published a joint letter last week telling doctors in China’s capital city “not to disseminate information that is still in the research stage or views that are controversial” in relation to the novel coronavirus, reflecting the authorities’ intent to tighten control over details relating to the outbreak.The letter by the Beijing Medical Association, Beijing Medical Doctor Association, and the Beijing Association of Preventive Medicine was dated…

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China central bank branch to destroy banknotes from coronavirus-hit sectors

February 16, 2020

[unable to retrieve full-text content]The Guangzhou branch of China’s central bank says it will destroy all banknotes collected by hospitals, wet markets and buses to ensure the safety of cash transactions as the country battles a coronavirus outbreak.Financial news outlet Caixin reported on Saturday that officials at the People’s Bank of China’s (PBOC) branch in the southern city ordered that all paper currency from sectors with high exposure to the coronavirus be withdrawn for destruction.Commercial banks in the province should…

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Coronavirus: Zhejiang province orders relaxation of excessive controls to allow life to return to normal

February 10, 2020

[unable to retrieve full-text content]Local authorities in eastern Zhejiang province have been ordered not to overreact to the outbreak of coronavirus, with the provincial government urging its cities and counties to “balance the relationship between controlling the coronavirus and resuming production”.The coastal province of 57 million residents, which is a key export and manufacturing base, was the first province to request that lower levels of government avoid excessive disruptions to daily life as well as unnecessary delays to…

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Coronavirus outbreak likely to hit Hong Kong, Thailand economies the hardest in Asia

February 7, 2020

[unable to retrieve full-text content]Hong Kong and Thailand are likely to be the hardest hit Asian economies outside mainland China from the deadly coronavirus outbreak, according to analysts.The 2019-nCoV, which had claimed the lives of nearly 640 people and infected more than 31,000 in mainland China by Friday, is viewed as even more damaging than the severe acute respiratory syndrome (Sars) epidemic in 2002-2003 because of prolonged factory closures and transport restrictions that have locked down many Chinese cities.China has…

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Coronavirus: China unlikely to defend falling yuan, despite US trade deal pressure, analysts say

February 5, 2020

[unable to retrieve full-text content]China is unlikely to take forceful measures to defend a decline in the yuan’s exchange rate in response to the novel coronavirus, in the hope that that the US will refrain from labelling Beijing a currency manipulator, analysts said.The US-China phase one trade deal, the terms of which are slated to take effect no later than February 14, included commitments by China not to engage in competitive currency devaluation. In return, the US Treasury removed the “currency manipulator” label it had…

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China warned not to rush into creating digital currency to rival Facebook’s Libra, instead join global debate

January 26, 2020

[unable to retrieve full-text content]A new theory appears to be emerging in China with regards how it should cope with the potential challenges from Facebook’s blockchain digital currency Libra, with suggestions it should shift towards working with other nations to regulate the sector rather than fast-track its own alternative medium of exchange.Debate continues over whether and how China’s central banks should issue its own digital currency, with concerns mounting that popularity of Libra may further enhance the dominant role of…

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Hong Kong dollar no longer ‘safe haven’ for investors as protests cast doubt, ‘father of dollar peg’ says

January 15, 2020

[unable to retrieve full-text content]Hong Kong is no longer the “safe haven” financial centre it once was, according to the economist credited as the architect of the Hong Kong dollar peg.John Greenwood, who is known in financial circles as the “father of the Hong Kong dollar peg”, said the current political instability in the city would curb the amount of capital inflows even though there is no threat to the Hong Kong dollar peg system.And with the anti-government demonstrations playing on the minds of investors, he said, US…

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China-backed Asian Infrastructure Investment Bank won’t create ‘debt trap’ for borrowers, chief says

January 14, 2020

[unable to retrieve full-text content]Lending by the China-led Asian Infrastructure Investment Bank will not create a “debt trap” for its borrowers, the bank’s president said, rejecting concerns that Beijing could use similar institutions to advance its geopolitical agenda.Asian Infrastructure Investment Bank (AIIB) president Jin Liqun told the Asian Financial Forum in Hong Kong this week that the bank’s efforts to support infrastructure investment in Asia are made with the best of intentions.“A debt trap will not emerge in the…

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Trade war deal will not fix US-China tensions as ex-Fed chair Yellen warns of long-term global impact

January 13, 2020

[unable to retrieve full-text content]China and the United States will not fix long-term issues that have the potential to significantly effect the global economy by signing their phase one trade deal this week, said former US Federal Reserve chair Janet Yellen.Disputes over the subsidies offered to state-owned enterprises, competition in artificial intelligence and 5G technologies that have spillovers into national defence and security concerns are included on a long list of issues that are “quite difficult to deal with”, Yellen…

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China seen to be complying with US trade war deal by allowing market forces to dictate yuan exchange rate

January 9, 2020

[unable to retrieve full-text content]China’s central bank has stood back from intervention so far this year and let market forces push up the yuan’s exchange rate ahead of the anticipated signing of the phase one trade agreement with the United States next week that is expected to include a clause prohibiting currency manipulation.

The yuan started the year with a 0.26 per cent gain against the US dollar, becoming the second best performer among Asia’s 11 most traded currencies, according to Bloomberg data.

On Wednesday, the…

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China pledges ‘prudence’ in diversifying its foreign exchange reserves in 2020 as global risks rise

January 6, 2020

[unable to retrieve full-text content]China will “steadily and prudently” diversify its US$3.1 trillion foreign exchange reserve holdings, the government agency managing the assets pledged in its 2020 work plan, suggesting a subtle policy change in the way Beijing uses its hard currency holdings.The careful approach would “promote the diversified use … and ensure the safety, flow, and preservation and appreciation of foreign exchange reserve assets,” China’s State Administration of Foreign Exchange (SAFE) said in a statement…

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China’s richest tycoons hit by debt defaults, arrests and suicides in 2019 amid tightening regulation

January 4, 2020

[unable to retrieve full-text content]The year 2019 will be remembered as one of the toughest for China’s rich, with a long list of business owners falling into disgrace amid debt defaults, arrests and suicides, a development that has dampened private investment confidence and prompted comforting messages from Beijing.Following a tumultuous 2017 and 2018, which saw super tycoons like Xiao Jianhua disappear from a luxurious Hong Kong hotel, Anbang Insurance Group chairman Wu Xiaohui arrested, and the death of HNA Group chairman Wang…

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Macau’s yuan remittance limit raised to same level as Hong Kong as Beijing starts to shift financial focus

December 19, 2019

[unable to retrieve full-text content]China has increased the daily limit of yuan remittance from Macau to the same level as Hong Kong, a move that suggests Beijing is keen to spread the financial risks away from the troubled city.The policy, announced by the People’s Bank of China on Wednesday to mark the 20th anniversary of Macau’s return to Chinese rule, will raise the daily limit on yuan remittance to 80,000 yuan (US$11,400) from 50,000 yuan (US$7,100).The daily yuan remittance quota for Macau residents had been kept lower than…

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China’s fintech industry needs regulation to avoid risk build-up, central bank says

December 18, 2019

[unable to retrieve full-text content]China’s central bank has again warned that the country must avoid building up risks in the technology-driven development of its domestic financial sector, given the headwinds of a slowing economy and the continued trade war with the United States.Pan Gongsheng, deputy governor of the People’s Bank of China (PBOC), said on Tuesday that financial technology (fintech) should be regulated in accordance with the law and in line with policy initiatives intended to prevent financial risks, according…

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Hong Kong dollar peg: could the financial hub’s stable exchange rate keep Shenzhen and Macau at bay?

December 16, 2019

[unable to retrieve full-text content]This is the final instalment of a three-part series looking at the outlook for Hong Kong’s dollar peg system under the city’s current political turmoil.China will continue to value the stable US dollar peg system that underpins Hong Kong’s status as an international financial hub, despite six months of anti-government protests that have been strongly criticised by Beijing, analysts said.The Chinese leadership has widely condemned the civil unrest in Hong Kong, pledging to strengthen supervision…

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