Enterprises Enter The RMB Crazy Lending Cycle

RMB is indebted and assets internationalized.

This is a symbolic move to see empty Renminbi and see more international assets.

Ampang is the most typical company. The speed of asset expansion is amazing.

From Waldorf to Belgian FIDEA insurance company, to the 100% stake of Belgian Centennial bank, Delta Lloyd bank and Holland VIVAT insurance company...

Annexe insurance assets have been rapidly upgraded, only 700 billion yuan in 2014, and more than 1 trillion and 900 billion yuan a year.

Other businesses followed.

Thomson Reuters released the latest data showed that in the first quarter of this year, the scale of global trading activities was $682 billion, of which 101 billion US dollars accounted for 15% of Chinese buyers.

China's first cross-border cross-border M & A pactions totaled $95 billion 100 million, an increase of 136% over the same period last year. Overseas pactions totaled more than 2014, and Chinese enterprises (and individuals) accounted for the highest share of overseas mergers and acquisitions in a single quarter.

All of the 10 largest Asian pactions in the quarter have the shadow of Chinese enterprises.

Because of the sluggish real economy, the central bank is unlikely to reduce the volume of money issuance on a large scale. The expected growth rate of M2 this year is still 13%. It is known that the base of 2015 has reached 139 trillion yuan, which further boosted the currency.

Devaluation expectations.

In the April 6th report, Liang Hong of CICC pointed out that in 2015, China's trade surplus grew by 55% to a record 594 billion US dollars, while foreign exchange reserves declined by 512 billion 700 million US dollars over the same period. Where did the capital outflow on account account for at least 52.4% of the difference between last year's surplus and net settlement? Net errors and omissions (NEO) could explain 29.8% of the last year's outstanding foreign exchange surplus, and the other 17.8% was a mystery.

The exporter will borrow money from the country even paying wages, water and electricity and production inputs. The renminbi is still in the crazy lending cycle. Therefore, there is no denying that the government and enterprises will continue to leverage in the future.

The Ministry of Finance believes that there is still room for borrowing between the government and enterprises.

The amount of overseas mergers and acquisitions announced by China in 2015 amounted to US $123 billion 900 million, which is nearly double that in 2014, and the overseas M & A pactions in 2016 may double again.

PWC Trading Service Supervisor

It is also predicted that "China's overseas M & A pactions will maintain a 50% growth in the next few years".

At present, asset mergers and acquisitions, especially overseas asset mergers and acquisitions, are close to frenzied.

The ultimate consequence is low to the extreme.

On the other hand, this is a typical asset internationalization configuration.

China's well-known large enterprises have become international enterprises. In the era of super currency, mergers and acquisitions become assets.

Although Europe and Japan are also issuing money on a large scale, mergers and acquisitions clearly feel that the technology, brand and market of these countries will not depreciate.

On the other hand, it is the RMB end of the debt side. We are not optimistic about the future value of the renminbi.

The relevant departments do not think so. China News Network reported that the head of the financial division of China's Ministry of Finance said in a media interview 30 that the current assets and liabilities ratio of China's real economy enterprises is about 60%, which is only 5 percentage points higher than that of 2009.

"Compared with the internationally recognized warning line 70%, the debt level of Chinese enterprises is still at a reasonable level."

Debt to equity swap is under study.

According to the Chinese Academy of Social Sciences, as early as 2011, Chinese enterprises accounted for 107% of GDP debt.

The actual situation may be even worse.

The economic reference Daily quoted WIND statistical data to calculate earnings per share (excluding net profit / weighted average total capital stock of the parent company after non recurring gains and losses) as measured by the earnings per share of enterprises. From 2012 to 2014, 265 listed companies in A share were negative for three consecutive years.

Many listed companies continued to be negative in the first three quarters of 2015.

Data show that from 2012 to 2014, the 265 listed companies lost 45 billion 383 million yuan, 22 billion 77 million yuan and 42 billion 10 million yuan respectively.

Behind this profit statement, its annual non recurring gains and losses bring about 26 billion 7 million yuan, 45 billion 305 million yuan and 32 billion 592 million yuan for listed companies respectively.

If the situation of large enterprises is controllable, the bad debts and debt to equity swap of banks will not be put on the agenda.

These companies are continuing to raise funds. Since 2012, 133 of the 265 listed companies have received additional capital raising, raising a total of 328 billion 135 million yuan.

Among them, there were 75 more than 1 billion yuan raising funds, and 15 more than 5 billion yuan, and four over 10 billion yuan.

The purchasing power of RMB is decreasing and the trend of depreciation is obvious.

In March, the average export price of hog in China was 18.62 yuan /kg, up 52.8% compared to the same period last year, hitting the historical high point of 19.6 yuan /kg in 2011. The pig grain price ratio is 9.13:1, has entered the yellow warning area, and the wholesale price of fresh garlic has increased by over 160% compared with that of the previous year.