China is halting private equity funds raising money to invest in residential property developments, turning off the spigot on one of the last stable funding resorts for the struggling sector.
The government-endorsed Asset Management Association of China (AMAC) has verbally informed private equity firms it would no longer be accepting the required registrations to set up funds to invest in projects, people familiar with the decision said, requesting not to be named because the matter is private.
Applications that have already been made would also be denied, while existing funds would not be affected, the people said.
The suspension adds to the challenges for Chinese property developers after regulators tightened funding channels, including bank loans and trust funding, as part of a campaign over the past years to reduce risks.
Some of the nation’s largest developers, such as China Evergrande Group (恒大集團), are struggling under massive debt loads built up during boom years in China’s property market and the sector is now driving a record surge in defaults in China’s bond market.
Yuzhou Group Holdings Co (禹洲集團) fell as much as 6.2 percent, the most in more than two weeks.
Evergrande has been one of the companies that have been battered by tightening funding in recent months, losing 61 percent of its value this year.
As traditional avenues of funding were choked off, real-estate companies turned to private equity funds backed by high net worth individuals and institutions to raise money, often using land or cash flow income from the project sales as guarantee. Most of the issuers of property funds are local companies.
Investment into equity funds focused on real estate stood at 843 billion yuan (US$130 billion) by 2020, 13.5 percent of the total sector, according to a report by AMAC.
AMAC did not respond to requests for comment.
US SANCTIONS: The Taiwan tech giant has ended all shipments to China-based Sophgo Technologies after one of their chips was discovered in a Huawei phone Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) suspended shipments to China-based chip designer Sophgo Technologies Ltd (算能科技) after a chip it made was found on a Huawei Technologies Co (華為) artificial intelligence (AI) processor, according to two people familiar with the matter. Sophgo had ordered chips from TSMC that matched the one found on Huawei’s Ascend 910B, the people said. Huawei is restricted from buying the technology to protect US national security. Reuters could not determine how the chip ended up on the Huawei product. Sophgo said in a statement on its Web site yesterday that it was in compliance with all laws
SPEED OF LIGHT: US lawmakers urged the commerce department to examine the national security threats from China’s development of silicon photonics technology US President Joe Biden’s administration on Monday said it is finalizing rules that would limit US investments in artificial intelligence (AI) and other technology sectors in China that could threaten US national security. The rules, which were proposed in June by the US Department of the Treasury, were directed by an executive order signed by Biden in August last year covering three key sectors: semiconductors and microelectronics, quantum information technologies and certain AI systems. The rules are to take effect on Jan. 2 next year and would be overseen by the Treasury’s newly created Office of Global Transactions. The Treasury said the “narrow
TECH TITANS: Nvidia briefly overtook Apple again on Friday after becoming the world’s largest company for a short period in June, as Microsoft fell to third place Nvidia Corp dethroned Apple Inc as the world’s most valuable company on Friday following a record-setting rally in the stock, powered by insatiable demand for its specialized artificial intelligence (AI) chips. Nvidia’s stock market value briefly touched US$3.53 trillion, slightly above Apple’s US$3.52 trillion, London Stock Exchange Group data showed. Nvidia ended the day up 0.8 percent, with a market value of US$3.47 trillion, while Apple’s shares rose 0.4 percent, valuing the iPhone maker at US$3.52 trillion. In June, Nvidia briefly became the world’s most valuable company before it was overtaken by Microsoft Corp and Apple. The tech trio’s market capitalizations have been
Two scoops of pistachio, one of corruption. For years holidaymakers have guzzled Sicilian gelato at famous parlors in Palermo, unaware that the booming businesses were controlled by organized crime. The fraud was a textbook case for detectives trained to sniff out dirty money, but even with three mobster classics — a suspicious bankruptcy, a front man and a scheming “Godfather” — it took years for investigators to shut the operation down. The Brioscia brand, made up of two ice cream parlors, was thriving at the end of the 2010s, attracting locals and foreign visitors alike with its glittering gold stars on travel