Search for:

The WTO is talking about its public enemy no. 1, RTAs, again. If TPP dies, then the WTO might still have some hope.



27 June 2016


Several members back talks on impact of regional trade deals on global system

A discussion on the proliferation of regional trade agreements (RTAs) and their impact on the broader global trading system has drawn support from most WTO members, the chair of the Committee on RTAs said in a meeting on 27 June. He noted that some WTO members have suggested taking note of these deals’ provisions on e-commerce, rules of origin, technical barriers to trade, sanitary and phytosanitary standards, fisheries, and more.

Ministers had instructed the committee in the Nairobi ministerial declarationlast December to discuss the systemic implication of RTAs for the multilateral trading system and their relationship to WTO rules. Besides instructions for holding these discussions, the ministerial declaration also called on members to work towards the transformation of the provisional Transparency Mechanism, which is used to review RTAs, into a permanent one without prejudice to questions related to notification requirements.

Discussions on systemic implications of RTAs are more of a priority for most members than transforming the Transparency Mechanism into a permanent one, committee chair Ambassador Daniel Blockert (Sweden) said at the meeting, reporting on his previous consultations with around 25 members.

“This systemic discussion is high on the agenda for members with possibly one or two exceptions,” the chair said.

“In terms of substance, there are different suggestions with some based on specific themes: e-commerce, rules of origin, technical barriers to trade, and fisheries. The idea would be to exchange experiences,” Ambassador Blockert said. “One way is to have a few delegations provide information on their own free trade agreements and the Secretariat will supply background information,” he said.

The chair clarified that there are few  concrete ideas on how to hold the discussions. He called for written proposals and encouraged members to discuss ideas in groups ahead of the next committee meeting on 27-28 September, where he plans to take the matter up again.

Several delegations then took the floor. Australia reiterated its long-standing support for a discussion of the effects of RTAs on the multilateral system, encouraging the chair to start a process for interested members to construct a framework for the discussion. The US said if members wanted to discuss RTAs’ systemic effects, it was necessary to have transparency on all RTAs, including non-notified RTAs. The US added that it could not agree to a standing item on systemic issues on the committee’s agenda; if members wanted to submit a paper on any issue dealing with RTAs, they could request an agenda item. Japan, Chinese Taipei, Canada, China, and the European Union were supportive of such a discussion, with some drawing attention to the need to address transparency issues too. The EU said it would support presentations by members on specific topics backed by input from the Secretariat. Brazil and India repeated their view that the committee did not have sole competence to discuss RTAs as the Committee on Trade & Development also had a role. South Africa supported a systemic discussion as long as it did not lead to new rules or benchmarks.

The chair said he will continue consultations with delegations before September.

Consideration of three RTAs

Members also discussed three RTAs as part of the regular work of the committee:

  • Free Trade Agreement between the Republic of Korea and Australia, goods and services WT/REG359/1
  • Free Trade Agreement between Canada and Honduras, goods and servicesWT/REG364/1
  • Free Trade Agreement between the Russian Federation and Serbia, goodsWT/REG326/1

The EU said that the Korea-Australia FTA was one of the most comprehensive RTAs in Asia Pacific and contained several commitments beyond WTO agreements. Some questions were raised on all three RTAs and the parties agreed to provide responses in writing.

Consideration of such agreements is based on a factual presentation prepared by the WTO Secretariat as well as written questions and responses exchanged among WTO members in advance of the meeting.

Backlog in RTA notifications

Seventy-two RTAs that are currently in force have not been notified to the WTO, members were informed at the meeting WT/REG/W/104. Many of these RTAs involve members of the Latin American Integration Association (LAIA). LAIA members are of the view that the LAIA agreement itself has been notified to the WTO, and subsequent LAIA agreement notifications had been made in biennial/annual reports, thus such deals should thus be removed from the Secretariat’s list of non-notified RTAs. The US disagreed and reiterated that the LAIA as an entity was not a WTO member and that notification obligations rested with individual WTO members. The US also indicated it could not support the consensus to invite the LAIA to the next meeting of the committee as an ad hoc observer. Uruguay on behalf of LAIA had issued a communication ahead of the meeting, which the EU said was a good start to addressing the backlog and on which it requested a number of clarifications. The chair encouraged more consultations among members to find a way forward.

The Chairman also said he had continued consultations with those delegations for which the RTA factual consideration was delayed due to lack of comments from parties involved WT/REG/W/106. The chair further reported that end of implementation reports were due for 129 RTAs. A further 11 RTAs will see the end of their implementation this year, thus adding to the backlog. Only six implementation reports had been received to date.

Next meeting

The next committee meeting has been scheduled for September 27-28.

A rare takeover battle that is full of inside trading and irregularities

Somebody must be doing something illegal.

万科否认泄密 恒大称不存在同盟者

2016年08月10日01:31 上海证券报

⊙记者 覃秘 ○编辑 孙放

万科A(21.570, -0.40, -1.82%)今日披露了对深交所关注函的回复,称公司不存在提前私下向特定对象单独披露、透露或泄露中国恒大持股比例的情况。中国恒大也表示,其未接受过任何媒体采访,从未发布过否认购买万科股份的消息;此外,中国恒大称,与万科一季报中列示的前十大股东及其一致行动人之间不存在协议及其他安排,也不构成一致行动人。







Vanke by Baoneng: Rare Takeover Battle in China?

July 10, 2016 12:07 pm

Rare governance and takeover battle breaks out in China

Insurer Baoneng takes aim at residential developer China Vanke
A woman walks past a Vanke Service Center in Beijing on July 6, 2016.
Shares in China's biggest property company, China Vanke, plunged this week as it returned to trading after a six-month suspension engineered by bosses trying to fight off what would be the country's first hostile blue-chip takeover. / AFP PHOTO / STR / China OUT / TO GO WITH China-economy-stocks-property-Vanke,FOCUS by Fran WangSTR/AFP/Getty Images©AFP

The truce is over. Last week a privately held insurance group bought additional shares in one of China’s largest property developers after a six-month hiatus, setting the stage for a final showdown that is ostensibly a simple morality tale about shareholder rights.

Baoneng Group started buying shares and battling the leadership of China Vanke last December. Its first approach provoked an angry reaction from Wang Shi, the residential developer’s founding chairman, who called the group a “barbarian” that would wreck Vanke’s corporate culture.

Now the fight has been rejoined. After a six-month suspension, Vanke’s Shenzhen-listed shares started trading again last Monday. Baoneng dove in and raised its stake from 24 to 25 per cent, touching a regulatory threshold. It will test whether there are limits to the ruling Communist party’s pledge to allow market forces a “decisive” role in the world’s second-largest economy. And Baoneng’s aggressive use of leverage is raising questions about the role the country’s credit bubble may be playing in an unprecedented Chinese corporate showdown.

Hong Hao, head of research at Bocom International, says the battle for Vanke heralds the arrival of investor activism in China. “It also shows how leverage can level the playing field, although with significant risks,” Mr Hong adds. “In this regard it’s similar to the “Barbarians at the Gate” era in the US, when companies with good and stable cash flows were bought with junk bonds.”

Financial conglomerate Baoneng, founded as a property developer by entrepreneur Yao Zhenhua, first emerged as Vanke’s largest shareholder in early December. Its presence raised concerns for a group built by an independent management team that has never had to answer to a controlling shareholder.

“We’ve never seen a hostile takeover like this in China,” says Rupert Hoogewerf at the Hurun Report, which tracks the fortunes of the country’s billionaires. “One of the reasons it’s such a big deal is that you’re talking about one of the highest profile, most respected entrepreneurs in Wang Shi. To try to take him out of a company that has performed well for many years is unprecedented.”

Before Mr Yao’s raid, which sent Vanke’s share price soaring, the group’s largest shareholder had been China Resources, one of country’s biggest state-owned enterprises.

China Resources is controlled by the central government. But when Mr Wang started looking for a white knight, he turned instead to Shenzhen Metro Group, a rail developer owned by the Shenzhen municipal government. So private enterprise, the central government and a prominent local government are now all represented in the unusual takeover battle.

Baoneng raises stake in Vanke with $223m sneak attack

China Vanke President Yu Liang attends a news conference following the company's annual results in Hong Kong, China March 14, 2016. REUTERS/Bobby Yip/File Photo

Group seizes opportunity to raise holding as Vanke’s Shenzhen shares fall following six-month halt

Vanke proposed making Shenzhen Metro its largest shareholder, diluting Baoneng, China Resources and minority shareholders in the process. Not surprisingly, Baoneng and China Resources both expressed their opposition to the deal.

Vanke, Baoneng and China Resources all declined interview requests.

On June 26, however, it emerged that Baoneng had increased the pressure by demanding a shareholder vote to sack Vanke’s board, which it argued overpaid Mr Wang during years in which he took long sabbaticals to study overseas. Mr Wang denied that he had shirked his responsibilities.

“Baoneng has only been a major shareholder for a few months, and now they want to recall the entire board of directors and expel the entire management team. Do they really have the ability to manage this company?” Mr Wang told the official Xinhua news agency in an interview published on Friday.

In taking on Mr Wang and the entire Vanke board, on which China Resources has three seats, Baoneng appears to have underestimated the counter-reaction. With Vanke’s “stability” under threat, wagons began to circle around Mr Wang and his management team.

China Resources said it did not support Baoneng’s demand. Fu Chengyu, head of one of China’s largest state energy companies, praised Vanke as “a rare example of a well-managed and transparent listed company in China” and urged regulators to protect it.

Echoing Mr Fu’s concerns, Standard & Poor’s said the dismissal of Vanke’s board could lead to financial instability and affect the developer’s credit rating.

Then Huang Qifan, mayor of China’s most populous city, entered the fray. Speaking at a government meeting in Chongqing, Mr Huang suggested that Baoneng’s funding sources for its share purchases should be examined. He added that if the private sector was left to its own devices in such situations, the result would be “a pot of mixed-up soup”.

Wang Shi, President of Vanke, one of Chinas largest property developers, at China Vanke Co. Ltd head office in Shenzhen Southern China.

Vanke founder Wang Shi reacted angrily to Baoneng’s stakebuilding, calling the group a ‘barbarian’

After Mr Huang’s comments appeared in local media, some of the reports were expunged by censors. But his intervention was significant. Mr Huang played a key role in Shanghai’s development in the 1990s and has long been tipped for greater things in Beijing, giving him a national profile that most Chinese mayors lack.

He also appeared to be echoing earlier concerns that Baoneng was relying on costly borrowing to fund its financial investments. Baoneng’s life insurance unit, Foresea, has sold high-yielding wealth management products to drive premium growth.

Founded just four years ago, Foresea quickly scaled the rankings of Chinese life insurers at a time when the industry was already booming. It rose from 53rd by premiums in 2012 to 11th in 2015. Most of its growth has come from the sale of “universal life” products, which combine a death benefit with an investment component that guarantees a payout after a fixed maturity. For many such products, the protection element comprises only a small fraction of their value.

“I’ve been joking recently about how the insurance sector is typically quite boring, but in China it’s one of the most electrifying sectors to watch,” says analyst Mr Hoogewerf.

Foresea’s premiums soared exponentially, from Rmb272m in 2012 to Rmb78bn in 2015. It collected another Rmb56bn through the first five months of this year alone. Sam Radwan at Enhance, a consultancy that advises several Chinese midsized insurers, says 98 per cent of Foresea’s sales are through banks, which typically only market high-yielding products.

“If you truly wanted to sell traditional insurance protection products, you’d have to make a huge investment in building and training an agency force as well as call centres,” says Mr Radwan. “That takes time and a lot of upfront investment — something they have not done.

“Regulators hate these type of companies that are running themselves more like private equity firms,” he adds. “That is why they are under scrutiny.”

In addition to sales of wealth products, Baoneng Group companies, often referred to as the “Baoneng clique”, have funded purchases by borrowing in China’s shadow banking system. In December, Baoneng affiliate Shenzhen Jushenghua was asked by the Shenzhen Stock Exchange to explain how it had funded almost Rmb10bn in Vanke share purchases. The affiliate said sales of asset management plans, which promise fixed returns, accounted for about two-thirds of its investment capital.

Baoneng affiliates have also applied for — or received approval to — issue Rmb28bn in bonds on the Shenzhen stock exchange, according to recent filings. That would provide the group further ammunition. Yet the recent tumble in Vanke’s share price, in line with a broader decline in mainland property stocks, highlights the risk of this investment strategy. Much of Baoneng’s investment in Vanke is underwater.

For his part, Mr Yao has tried to frame his raid on Vanke as in line with government policy promoting investment, citing last year’s stock market collapse.

“Our investment in Vanke is both a response to the country’s appeal for help during last year’s stock disaster as well as the ‘10 national provisions’ calling for insurance funds to meet the needs of the real economy,” he told Xinhua.

Additional reporting by Luna Lin and Ma Nan

Twitter: @gabewildau

Baoneng: a history
Baoneng began as a property developer in the freewheeling Pearl River Delta in the 1990s, when founder Yao Zhenhua and his younger brother made their way to Shenzhen from the nearby Chaoshan region.

Like Wenzhou in eastern Zhejiang province, Chaoshan is famous for its hyper-aggressive business culture and being the ancestral home of many ethnic Chinese who settled in Hong Kong, Singapore, Malaysia and Thailand. Native sons include Li Ka-shing, Hong Kong’s most accomplished tycoon.

Chaoshan natives are also over-represented among the real estate tycoons that built Shenzhen from a fishing village into a sprawling metropolis beginning in the 1980s. The Chaoshan dialect, unintelligible to outsiders, is considered a passport into powerful Shenzhen business circles.

Mr Yao has a much lower profile than his current nemesis, China Vanke chairman Wang Shi. But his aggressiveness was on full display last Tuesday, when Baoneng launched a sneak attack on Vanke shares, spending Rmb1.5bn in a matter of minutes just before market close.

According to local media, Mr Yao started as a humble vegetable seller. In 1996, at the age of 25, he executed his first big real estate project, a 140,000 sq m vegetable market in Shenzhen.

“The property market in the Pearl River Delta region caught fire [in the early 1990s],” says Qin Shuo, a Chinese journalist who covered Shenzhen’s tycoons when Yao was just getting started. “At that time, the government didn’t sell land at open auction like today. There were a lot of ways to get land, which allowed a lot of people to get involved in property development.”

By 2015 Mr Yao had amassed a personal fortune of Rmb12.5bn, according to the Hurun Report.

Baoneng’s website boasts of residential and commercial projects in 13 cities. But as the golden age of China’s property boom winds down, Mr Yao is following the lead of other tycoons, such as Dalian Wanda Group’s Wang Jianlin, and diversifying into finance, logistics, tourism and other service industries.

His move into insurance puts him in the company of another tycoon, Wu Xiaohui of Beijing-based Anbang Insurance Group, who hails from Wenzhou and is related by marriage to the family of Deng Xiaoping, the architect of China’s economic miracle.

Anbang, one of China’s most acquisitive companies, was also briefly a player in the Vanke drama. In December it increased its stake in the developer from 4.5 per cent to 7 per cent in a move welcomed by Mr Wang. Mr Wu, however, has since stayed on the sidelines.

Copyright The Financial Times Limited 2016. You may share using our article tools.
Please don’t cut articles from and redistribute by email or post to the web.

Vanke Takeover Case: Baoneng raises stake

July 6, 2016 8:18 am

Baoneng raises stake in Vanke with $223m sneak attack

China Vanke President Yu Liang attends a news conference following the company's annual results in Hong Kong, China March 14, 2016. REUTERS/Bobby Yip/File Photo©Reuters

Baoneng Group, the once-obscure property and insurance conglomerate, executed a daring raid on China Vanke in the final minutes of trading on Tuesday in the latest twist in the battle for control of China’s largest residential developer.

Continuing to nudge the group’s stake higher, Baoneng affiliates bought Shenzhen-listed shares in Vanke worth 0.682 per cent of the company, Vanke said in a stock exchange filing. Intraday trading records show a cluster of buying in the final minutes of trade, with the day’s final transaction a single order worth Rmb911m ($136m).


On Wednesday, Vanke’s Hong Kong-traded shares rose as much as 5.7 per cent in response to the developer’s disclosure that affiliates of privately owned Baoneng had aggressively raised their holdings.

Baoneng’s purchases on Tuesday raised the group’s total stake in Vanke to 24.972 per cent. Once Baoneng hits the 25 per cent threshold, regulations require it to file a disclosure and halt buying or selling of Vanke shares for at least two days.

Baoneng’s latest move showcased the company’s financial muscle: based on the closing price in Shenzhen, the group’s stakebuilding on Tuesday implies a total one-day investment of Rmb1.5bn ($223m).

The timing also showed considerable savvy. Baoneng made its purchases on a day when Vanke’s Shenzhen shares fell by the maximum 10 per cent daily limit for a second consecutive day. By waiting until the end of the trading session, Baoneng was able to take advantage of a deep pool of sell orders accumulated over the previous two days, ensuring its sudden buying would not push up the price, traders said.

China Vanke chief Wang Shi raises the stakes

Wang Shi - Chinese Banker (holding the flag) for Property

High drama in developer’s boardroom puts Beijing’s embrace of market forces to the test

“From a technical trading standpoint, It isn’t all that impressive. The main thing is they’ve got so much money,” said a hedge fund manager in China who previously worked at a major brokerage.

Before Monday, trading in Vanke’s Shenzhen shares had been halted since December 18 as chairman Wang Shi plotted a restructuring deal aimed at fending off Baoneng’s bid for control. Analysts said this week’s tumble was largely a catch-up move. An index of mainland-listed property developers has fallen 19 per cent over the same timeframe.

Vanke’s Shenzhen shares were down another 2 per cent on Wednesday afternoon.

Its Hong Kong-listed shares were up 0.5 per cent by midday, extending a combined 8 per cent gain over Monday and Tuesday.

Even after the recent decline, Vanke’s Shenzhen shares are still priced at a 36 per cent premium to those in Hong Kong. More than 90 per cent of Vanke’s outstanding shares trade in Shenzhen.

In addition, Baoneng affiliates are planning to sell up to Rmb28bn in fresh capital by selling bonds on the Shenzhen Stock Exchange, according to recent filings. Market observers suspect the group may use the money for further Vanke share purchases.

Twitter: @gabewildau

Copyright The Financial Times Limited 2016. You may share using our article tools.
Please don’t cut articles from and redistribute by email or post to the web.