China's airline industry sees profit following four challenging years

After four financially draining years due to the pandemic, China's civil aviation industry bounced back into the green in 2024, marking the sector's initial profitable return.

In 2024, the sector decreased its deficits by 20.6 billion yuan (approximately US$2.8 billion) compared to the previous year, while also experiencing a 25% surge in overall traffic. This was revealed by Song Zhiyong, the Administrator of the Civil Aviation Administration of China (CAAC), during an industry work meeting on Thursday.

He stated that this decrease was sufficient to pull the industry out of the red.

The primary objectives for civil aviation in 2025 include enhancing profit margins and ferrying 780 million passengers.

According to an article from the previous year, the state news service Xinhua reported that the industry would shift from a rapid rebound following the pandemic to consistent expansion in 2024. The main indicator of success would be a return to profit-making.

Song revealed that the sector surpassed expectations by ferrying a staggering 730 million passengers in the previous year. This was significantly higher than the prediction of 690 million, which was made during an industry meeting at the beginning of 2024.

Apple establishes a data-processing enterprise in Shanghai as their AI initiative in China remains uncertain. Apple's Shanghai division will concentrate on software development, extensive data services, storage services and data handling.

Tejas Kirit Gala, the leader of several Apple divisions in the nation, acts as the legal delegate for the new company. This new firm is fully owned by Apple South Asia, as per information from Tianyancha.

Apple did not provide a prompt response to a comment request on Friday.

Shares of Hong Kong-based developer NWD have taken a hit due to sluggish efforts towards reducing debt. The company's stock has seen a 7 percent dip this year, following a substantial 50 percent decrease in value the previous year.

The firm's stocks have seen a 7 per cent decline since the start of the year, following a loss of over half their worth in the previous year. On Wednesday, the stocks closed at a 2.65 per cent lower rate, at HK$4.78.

NWD, overseen by a wealthy Hong Kong family, has been actively selling off assets in the previous year and asking for leniency from creditors in a bid to recover from the crisis.

HSBC has recognized that leadership has prioritized restoring cash flow, however, significant progress is still not evident, according to a report released on Monday. It is predicted that NWD's stock value will continue to experience instability as investor worries regarding its liquidity haven't been adequately resolved.

The bank stated that NWD's net gearing ratio, which indicates the company's level of debt, has increased to 89 per cent, up from 55 per cent in June.

Indonesia is a prime location for Chinese firms in the logistics and supply chain sectors, according to SF Group. The nation's expanding economy, diverse language skills, and large geographic area make it an attractive option for growth, says the SF division.

The expanding economy of Indonesia, combined with a workforce fluent in multiple languages and an array of business possibilities across a chain of 15,000 islands, is attracting Chinese logistics companies, says a prominent Chinese delivery firm.

"Indonesia holds significant promise in the supply chain sector which could greatly aid its economic development," stated Michael Tung, the Managing Director for Hong Kong and Macau at SF Supply Chain, a company specializing in comprehensive supply-chain solutions for businesses. "Indonesia is a major focus for us. I plan to dedicate significantly more resources to Indonesia than to any other Asian nations."

Tung, who belongs to a division of the SF Holding group, mentioned that Hong Kong has the capacity to assist Indonesia's expansion in various areas such as finance and supply chain management. He further stated that intense domestic rivalry in numerous sectors such as e-commerce has led Chinese companies to explore fresh opportunities for growth in Southeast Asia.

He delivered a speech at the "Think Business: Think Hong Kong" conference in Jakarta, an event coordinated by the Hong Kong Trade and Development Council.

With the "Golden Indonesia 2045 Vision", Indonesia is targeting to increase its GDP twofold in two decades. The objective is to bolster its standing as the largest economy in Southeast Asia. The population is projected to hit 324 million by 2040, which could make it the world's fourth or fifth largest consumer market.

Bridgewater extends its dominance in China with a 40% increase in assets. Its All Weather Plus domestic fund saw returns exceeding 35% in 2024, while lesser local competitors achieved returns ranging from 38.8% to 76.5%.

Bridgewater Associates extended its dominance over worldwide competitors in China last year, as its multi-asset approach's consistent profits drew in more affluent local customers amid a turbulent market.

The Shanghai branch of the company, which focuses on private fund management, has seen its managed assets grow to over 55 billion yuan (US$7.5 billion) as of December 31. This growth is attributed to returns on investments and new capital coming in, as stated by knowledgeable sources who wished to remain anonymous due to the confidential nature of the information. This indicates an approximately 40% increase from the total which was under 40 billion yuan at the beginning of 2024.

The company's All Weather Plus domestic fund yielded returns exceeding 35 per cent for the entire year, as stated by insiders. This was over triple the typical return of 11 per cent from local diversified asset funds, based on data gathered by Shenzhen PaiPaiWang Investment & Management.

Bridgewater chose not to provide a statement.

Bridgewater's strategy of spreading investments across different types of assets is enabling it to defy the pattern in China's hedge fund industry worth 5.2 trillion yuan, which experienced a reduction in total assets up until November due to stricter regulations and volatile stock market fluctuations. Despite many local competitors feeling the need to reduce their fees to retain clients, the local branch of Bridgewater managed to increase their performance fees.

Shares in Hong Kong relinquish increase due to Chinese deflation threat while Tencent breaks 6-day losing streak. Tencent increased its stock repurchases following a HK$477 billion market sell-out over the last six trading days.

On Thursday, the Hang Seng Index experienced a slight dip of 0.2 per cent, falling to 19,240.89, a figure not seen since November 26. This decrease nullified a previous increase of up to 0.7 per cent. In contrast, the Tech Index saw a minor rise of 0.1 per cent, while the Shanghai Composite Index pulled back by 0.6 per cent.

Athletic apparel manufacturer Li Ning plummeted by 5 per cent, landing at HK$15.56, while electric vehicle producer Li Auto saw a 4.4 per cent decrease, falling to HK$87.50. Meanwhile, e-commerce giant Alibaba Group saw a slight drop of 0.4 per cent, settling at HK$80.60.

Tencent managed to curb its losses, improving by 1.1 per cent to reach HK$373.40, thus ending a series of losses partially instigated by the US move to categorize the WeChat proprietor as a Chinese military firm. Similarly, Anta Sports saw a 4.5 per cent increase to HK$78.60, following UOB Kay Hian's announcement of a rise in its retail sales during the previous quarter.

Tencent, ranked third among firms listed in Hong Kong, has invested HK$3.7 billion (equivalent to US$475.6 million) in repurchasing its shares this week, as per exchange filings. This move comes after a six-day plummet that wiped off HK$477 billion from the company's market capitalization.

12:40 PM

What strategies can Hong Kong employ to recover from its almost HK$100 billion shortfall?

Allan Zeman's Lan Kwai Fong Group is set to establish a significant entertainment center in Xian. According to Zeman, the proposed project is gigantic, and it will be the biggest Lan Kwai Fong they've ever built.

The initiative is set to span across 148,000 square metres (equivalent to 1.6 million square feet) located in the Xian High-Tech Industries Development Zone, situated in the city's southwest region.

"The Lan Kwai Fong we envision isn't simply a location with food and drink establishments, clubs and bars," he stated. "We aim to progress, adapting with the times, and we want to spearhead the transformation of entertainment."

The LKF Group reported that the city's advanced technology district was responsible for roughly one-third of its total GDP. It was also noted that this area had an estimated population of around 13 million by the close of 2023.

Charles Li suggests that sovereign funds and family offices consider small business investments as an option. In 2023, Micro Connect consolidated over 11,000 stores and 688 brands in China, distributing a revenue of US$113.2 million amongst investors.

Charles Li Xiaojia, the brains behind Hong Kong's US$24 trillion Stock Connect collaboration with mainland China, expressed a valuable investment suggestion for family offices and sovereign wealth funds: small-scale family businesses across the globe.

The past chief executive of Hong Kong Exchanges and Clearing (HKEX), a stock exchange operator, is considering involving government-controlled funds and family-run businesses in investing in small enterprises through Micro Connect Macau Financial Assets Exchange (MCEX). This platform provides alternative financing options for small businesses in China.

In 2023, Li along with his partner Gary Zhang, initiated MCEX targeted at institutional investors, offering them an opportunity to trade daily revenue obligations, also known as DROs. These obligations provide investors with a portion of the revenue in return for growth capital. The platform has since broadened its reach beyond China, linking up small businesses from areas like Southeast Asia, the Middle East, and North America.

"The forthcoming phase of growth involves broadening our pool of investors, which is why Micro Connect has planned numerous roadshows this year," Li stated during a break at a market forecast seminar hosted by the Bank of East Asia. "A lot of these businesses may be small, however, they boast steady earnings and promising growth opportunities."

MCEX is targeting large sovereign wealth funds interested in diversifying their asset classes by investing a minor portion of their portfolio capital into small enterprises. Additionally, they are focusing on family offices capable of making prompt decisions on such investments, Li mentioned.

Efforts are underway to draw in additional foreign investors to the Tracker Fund of Hong Kong. This exchange-traded fund, which mirrors the performance of the Hang Seng Index, has seen a 46% increase in managed assets over the last two years.

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Four industry experts debate the success of the Tracker Fund of Hong Kong.

Ever since its inception a quarter of a century ago, the Tracker Fund of Hong Kong (TraHK), the first locally listed exchange-traded fund (ETF), has consistently pioneered new paths.

The launch of it reinstated market steadiness and trust following the Asian economic downturn. By gaining popularity among investors, it effectively laid the groundwork for additional ETFs and boosted the city's reputation as a global finance hub.

After proving its enduring robustness, the goal now is to enhance the fund's strength and improve its quality. In pursuit of this, several strategies are being implemented to draw in more foreign investors, simplify internet-based trading, and investigate unexplored prospects in Hong Kong, the wider China region and further afield.

In basic terms, TraHK is a collection of individual stocks from the Hang Seng Index, reflecting the general performance of the Hong Kong stock market. It's readily accessible for purchase and sale by corporate, institutional, and individual investors, allowing them to invest in a variety of sectors while facilitating diversification via more than 80 constituents.

"The fund has consistently improved," states Rosita Lee, who is the director and CEO of Hang Seng Investment, the company responsible for managing the daily workings of TraHK since September 2022. "It's a dependable and effective investment instrument and it has garnered a unique significance for the local community, somewhat embodying the essence of Hong Kong."

Partially, this is due to the fund's genesis. It was created in immediate response to the Asian market crisis in 1998, when the Hong Kong government chose to intervene and purchase constituent stocks of the Hang Seng Index.

Developers supported by the Chinese government are returning land they bought during the real estate boom. Experts predict that more companies will do the same to alleviate their cash flow problems.

The Guangzhou municipal government-supported Yuexiu Property, based in Guangdong province's capital, has given back land valued at 12 billion yuan (US$1.6 billion) to local administrations since August. Concurrently, China Resources Land, a state-owned company, in July, returned a piece of land in Fuzhou, a city in the southern province of Fujian. This parcel, purchased for 920 million yuan in 2014, was bought back by the developer three months later for 947 million yuan once the city government provided more favorable conditions.

"From the mid of the previous year, developers in China have been trading or giving back land they bought to local authorities," stated Shi Lulu, the head of corporate ratings for the Asia-Pacific region at Fitch Ratings. "Most of these developers are state-owned, giving them a superior bargaining position in comparison to those owned privately."

"She suggested that it's likely we'll see more businesses adopting comparable strategies to rejuvenate their unused land assets, following policy advice. Local authorities are being urged to participate in these discussions to bring unutilized land back into use, preferably without dipping into their own resources. This implies they're prepared to propose more advantageous conditions for land use, such as modifying floor area ratios, reducing the percentage of properties they own themselves, and transforming commercial developments into residential ones."

Consequently, Vanke, with onshore bonds valued at 33 billion yuan due this year, repurchased three land parcels in Guangzhou for 2.9 billion yuan in December.

UBS analyst predicts that China's electric vehicles will experience a widespread adoption of autonomous driving by 2025. China has quickly transformed from a destination for auto manufacturers to a pioneering centre for tech advancements like electrification and intelligence.

Autonomous driving capabilities are set to become widespread in China's cars this year, fueled by intense rivalry among Chinese electric vehicle manufacturers, which encourages innovation, a UBS analyst suggests.

Autonomous driving technology forms the core of numerous electric vehicles. Tesla is yet to receive the green light from Beijing to incorporate complete autonomous driving in its cars sold in mainland China. Concurrently, Chinese electric vehicle manufacturers are viewing autonomous driving capabilities as major selling points for their latest models.

The expansion of autonomous driving technology in China will occur due to the nation's supply chain structure. In this framework, certain firms focus on hardware and others on software, according to Gong.

China has swiftly evolved from a marketplace for domestic and international automakers into a worldwide "innovation center" for emerging technologies like electric power and AI. This shift is aiding in the rapid uptake of autonomous vehicles, as per the analyst's assessment.

Are China's shoppers overloaded with counterfeit Russian merchandise?

Boosted by improved commercial ties, outlets offering Russian goods have emerged in China – but their legitimacy is being questioned by many.

It seems as though Russian goods markets have magically appeared in various Chinese cities over the recent months, as if they were directly replicated and placed there. They are easily recognized by their distinct features such as blue signs written in Cyrillic, the presence of matryoshka dolls, and the constant playing of traditional songs such as "Kalinka" and "Katyusha".

However, the prosperous period might be nearing its conclusion as consumer skepticism about genuineness escalates. Their worries are well-founded: China does not allow the importation of Russian sausage, and the severe Eurasian tundra is hardly an appropriate environment for the tropical durian fruit.

A market situated in a tourist location in the southeastern region of Fujian came under scrutiny from local officials last week. As per the information from China Consumer News, the authorities stated that the establishment had falsely advertised health advantages for its honey and incorrectly labeled locally made food as imported goods.

The same situation was also observed in the country's capital, as reported by Beijing Business Today in late December. A comparable store across the road from a newly opened Russian market, which had been in operation for roughly a week, had shut down, leaving behind a significant amount of merchandise.

According to the regional trade news, the store only commenced operations in April, but recently closed down following an assessment by local authorities. The officials required the store owner to verify that its products were legitimate imports from Russia.

This was not an isolated incident. According to the report, a minimum of two other establishments in the city's west side have recently closed, each having been in business for approximately a month.