HONG KONG (Reuters) – China’s financial regulators have invited some of the world’s biggest investors to a rare symposium next week, three sources said, seeking to encourage foreigners to keep investing in the world’s second-largest economy despite its recent weakness and rising geopolitical tensions.
The meeting in Beijing next Friday will focus on the current conditions of U.S. dollar-denominated investment firms in China and the main challenges facing them, according to the sources who have direct knowledge of the matter and invitation documents reviewed by Reuters.
The gathering comes at a time when global investors and banks are warning that confidence is waning in China’s economic outlook. The country’s post-pandemic recovery is quickly losing steam and Sino-U.S. relations are at a low over national security issues — including Taiwan, U.S. export bans on advanced technologies and China’s state-led industrial policies.
Such a meeting, with a clear agenda to discuss challenges facing global fund managers investing in China, is rare, the three sources said, and reflected Beijing’s keenness to shore up confidence among foreign investors.
Large foreign and domestic fund managers such as private equity (PE) firms, known as general partners (GPs), and their investors or limited partners (LPs) including sovereign wealth funds and pension funds are expected to join the meeting, said the sources.
They also will be encouraged to provide suggestions to help address challenges facing their businesses in China and share their outlook on the economy, according to the sources and documents.
The global funds which will attend will likely send their China-based senior staff, though some senior executives will be flying to China for the talks, the sources added.
All three sources spoke on condition of anonymity as they were not authorized to speak with the media.
Weighed down by strict COVID measures, China’s economy grew just 3% in 2022, one of its worst showings in decades. Activity rebounded early this year after the curbs were abruptly lifted, but momentum has faded sharply since, while policy uncertainty and tensions between China, the U.S. and other Western powers have heightened.
The meeting also comes as some PE firms and their investors have been rethinking their China strategies after a years-long, bruising crackdown on private enterprises such as tech companies, which has cast a long shadow over PE investors’ return prospects and narrowed investment opportunities, separate sources have told Reuters.
Canada’s No. 3 pension fund – Ontario Teachers’ Pension Plan (OTPP) said in January it was pausing future direct investments in private assets in China.
Fang Xinghai, vice chairman of the China Securities Regulatory Commission (CSRC), the country’s securities regulator, will address the attendees, according to two of the sources.
The CSRC did not immediately reply to Reuters’ queries on Friday.
The meeting is organized by China’s fund regulator Asset Management Association of China (AMAC). The AMAC didn’t immediately reply to Reuters’ questions.
Months of disappointing economic data has MSCI’s China share index down 2% on the year, against a 15% gain for world stocks, while the yuan is hovering at 8-month lows, pushing some investors to close up their China strategies.
U.S. dollar-denominated fundraising by China-focused venture capital and PE firms this year also had its weakest first half year in the past decade, data from industry tracker Preqin showed.
China-focused GPs only raised $5.5 billion in U.S. dollar-denominated funding in the first half of the year, Preqin data showed, a far cry from its peak of $27.6 billion raised in the same period in 2021.
China’s policies including security crackdowns, its harsh regulation of the tech industry and close monitoring of foreigners are convincing many global companies to steer clear of the country, said Andrew Collier, managing director at Hong Kong-based Orient Capital Research.
“Now that the economy is drastically slowing there is a new charm offensive to convince foreigners to come back,” he said, adding the measures might come “too little, too late”.
The symposium also follows signals from authorities last week that a crackdown which began in late 2020 on the technology sector had ended with fines on Ant Group and Tencent.
In another strong signal that the crackdown is over, Premier Li Qiang on Wednesday met firms such as Alibaba’s cloud unit and Meituan, and urged them to do more to support China’s economy.
(Reporting by Xie Yu and Julie Zhu; Additional reporting by Selena Li; Editing by Kim Coghill)
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
OTTAWA – Canada’s inflation rate fell to two per cent last month, finally hitting the Bank of Canada’s target after a tumultuous battle with skyrocketing price growth.
The annual inflation rate fell from 2.5 per cent in July to reach the lowest level since February 2021.
Statistics Canada’s consumer price index report on Tuesday attributed the slowdown in part to lower gasoline prices.
Clothing and footwear prices also decreased on a month-over-month basis, marking the first decline in the month of August since 1971 as retailers offered larger discounts to entice shoppers amid slowing demand.
The Bank of Canada’s preferred core measures of inflation, which strip out volatility in prices, also edged down in August.
The marked slowdown in price growth last month was steeper than the 2.1 per cent annual increase forecasters were expecting ahead of Tuesday’s release and will likely spark speculation of a larger interest rate cut next month from the Bank of Canada.
“Inflation remains unthreatening and the Bank of Canada should now focus on trying to stimulate the economy and halting the upward climb in the unemployment rate,” wrote CIBC senior economist Andrew Grantham.
Benjamin Reitzes, managing director of Canadian rates and macro strategist at BMO, said Tuesday’s figures “tilt the scales” slightly in favour of more aggressive cuts, though he noted the Bank of Canada will have one more inflation reading before its October rate announcement.
“If we get another big downside surprise, calls for a 50 basis-point cut will only grow louder,” wrote Reitzes in a client note.
The central bank began rapidly hiking interest rates in March 2022 in response to runaway inflation, which peaked at a whopping 8.1 per cent that summer.
The central bank increased its key lending rate to five per cent and held it at that level until June 2024, when it delivered its first rate cut in four years.
A combination of recovered global supply chains and high interest rates have helped cool price growth in Canada and around the world.
Bank of Canada governor Tiff Macklem recently signalled that the central bank is ready to increase the size of its interest rate cuts, if inflation or the economy slow by more than expected.
Its key lending rate currently stands at 4.25 per cent.
CIBC is forecasting the central bank will cut its key rate by two percentage points between now and the middle of next year.
The U.S. Federal Reserve is also expected on Wednesday to deliver its first interest rate cut in four years.
This report by The Canadian Press was first published Sept. 17, 2024.
FREDERICTON – New Brunswick‘s finance minister says the province recorded a surplus of $500.8 million for the fiscal year that ended in March.
Ernie Steeves says the amount — more than 10 times higher than the province’s original $40.3-million budget projection for the 2023-24 fiscal year — was largely the result of a strong economy and population growth.
The report of a big surplus comes as the province prepares for an election campaign, which will officially start on Thursday and end with a vote on Oct. 21.
Steeves says growth of the surplus was fed by revenue from the Harmonized Sales Tax and federal money, especially for health-care funding.
Progressive Conservative Premier Blaine Higgs has promised to reduce the HST by two percentage points to 13 per cent if the party is elected to govern next month.
Meanwhile, the province’s net debt, according to the audited consolidated financial statements, has dropped from $12.3 billion in 2022-23 to $11.8 billion in the most recent fiscal year.
Liberal critic René Legacy says having a stronger balance sheet does not eliminate issues in health care, housing and education.
This report by The Canadian Press was first published Sept. 16, 2024.
