PRC acts on property prices
China’s banking regulator says lenders should tighten lending to property developers as it responds to a Cabinet directive to rein in property-price increases. Commercial banks must “significantly" raise required down payments for luxury properties, and assign higher risks to real-estate loans, the China Banking Regulatory Commission said in a statement on its Web site yesterday. China’s authorities are under increasing pressure after taxes and higher mortgage rates imposed last year failed to prevent prices rebounding, prompting complaints that property has become unaffordable for many people. Surging real-estate prices may fuel social unrest and raise the risk of a collapse that could cause a sudden slowdown in the world’s fastest-growing major economy and derail the restructuring of its US$4.7 trillion banking system. Requiring higher down payments “will probably slow down property transactions," said Jing Ulrich, chairman of China equities at JPMorgan Chase & Co. “In some segments of the property market, the prices are out of whack, especially for the luxury end.”
Japanese firms take lead
Toyota Motor Corp, Nissan Motor Co, Honda Motor Co and other Japanese carmakers overtook Volkswagen AG and other European automakers in combined market share in China last year, Fitch Ratings Ltd said yesterday. Japanese automakers had about 27 percent of the Chinese automobile market last year while the share of European automakers fell to about 22 percent, Matthew Kwong, associate director of Fitch Ratings said in an interview in Beijing yesterday. Japanese automakers, which entered the Chinese market more than a decade after Volkswagen, are accelerating expansion in the world’s third largest vehicle market as they introduce more models and raise production capacity. Toyota, which currently has annual production capacity of 340,000 units, is investing 215 billion yen (US$1.9 billion) in China and aims to boost capacity to 690,000 units. European automakers had about half of China’s vehicle market in 2002. They may regain some share as PSA Peugeot Citroen and Volkswagen introduce new models in China, though they may not regain their leading position, Kwong said. Chery Automobile Co, Geely Automobile Holdings Ltd and other Chinese automakers had about 25 percent of their domestic market, Fitch said.
BMG blocks IPO
Bertelsmann AG, Europe’s biggest media company, will buy the 25 percent stake held by Groupe Bruxelles Lambert SA for 4.5 billion euros (US$5.74 billion) to prevent the investor from seeking an initial public offering. Bertelsmann, controlled by the Mohn family, will finance the acquisition with a bridge loan and put its BMG Music Publishing division up for sale. The Guetersloh, Germany-based company anticipates “many" potential BMG investors, Chief Financial Officer Thomas Rabe said on a conference call yesterday. The Mohn family will regain full control of a company that has been closely held since starting up in 1835 as a publisher of hymn books and religious material. Belgian billionaire Albert Frere’s Groupe Bruxelles gained the stake in 2001, and said in January it might seek an IPO to profit from the holding. The stake purchase is the second successful attempt within four years by the Mohns to prevent a share sale.