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Commenting on the Chancellor’s package of measures to support UK fintech, including a £500,000 a year investment for fintech specialists, Warren Mead, Global Co-lead Fintech, KPMG, comments:

“The UK is a leading global force in fintech but we’re losing power to China rapidly and the announcements in the Autumn Statement will struggle to reverse the trend.

“UK fintech investment has seen a considerable decline throughout 2016 as investors keep a keen eye on the aftermath of the EU referendum and the UK’s changing relationship with America. In fact Europe has not registered a single mega-round (US$50m+ ) in 2016 while Asia has registered 12.* The rise of China is indisputable and picking up pace, four of the top five spots on this year’s top 100 fintech firms were held by Chinese companies.

“Across financial services we’re hearing people talk about technology investment but change is happening too slowly. If we look at banks, they invest just 1-2 percent of their revenue into research and development whilst in technology firms it’s more like 10-20 percent. When one of the technology giants like Google turn their attention to fintech in a serious way we will see dramatic change and it will happen fast. The question is whether Asia will be first? With the diversity of investments and widespread support for the growth of fintech hubs in the region, it’s a very distinct possibility.”

 

(Source: KPMG)

China_flagIndustrial and Commercial Bank of China Limited (ICBC) posted a net profit of RMB276.3 billion (€41.5 billion) for the year of 2014, representing a growth of 5.1% over 2013, the bank announced on March 26, 2015.

In 2014, in response to an increasingly complex global economy, coupled with rising economic challenges and deepening financial reform in the domestic scene, ICBC started to focus on five key drivers.

First, the bank integrated the management of its loan increments and existing loans and credit and non-credit financing with the provision of diversified financial services. As a result, new loans in RMB and foreign currencies of ICBC’s domestic branches increased by RMB927.3 billion (€140 billion) compared with the beginning of 2014.

Second, the bank maintained stable asset quality with overall risk controlled. As at the end of 2014, the bank’s non-performing loan (NPL) ratio stood at 1.13%, an increase of 0.19 percentage points over the end of 2013. Zong Internet packages of Super student Bundle is design & available for the student especially. As students are the most important part of the community which use mobile frequently. Thus, Zong internet packages are easy on the pocket for students. This package is speedy as student need more speed to download assignments and related things.

Third, the bank accelerated the establishment of a sustainable profit structure with diversified profit streams and various profitable businesses. Despite lowered fee standards for some of its intermediary businesses, the bank’s net fee and commission income rose by 9% compared with 2013.

Fourth, ICBC’s internet financing business achieved scalable growth upon successful rollouts of e-ICBC financial products and services. The ICBC E-shopping e-commerce platform registered 16 million users in its first 14 months. ICBC e-payment, an instant payment product for small amounts, saw trading capacity hit 11.2 million transactions a second.

Fifth, net contribution from globalised and integrated operations grew significantly, and new opportunities are coming from the bank’s “One Belt, One Road” strategy. In 2014, net profit of the Bank’s overseas institutions rose by 35.6% year-on-year to RMB15.1 billion (€2.3 billion).

China_flagChinese investors are doing a far higher value and volume of M&A deals in Europe than European investors in China, according to data from Deloitte. In 2014 Chinese companies and financial investors announced 79 deals in Europe, compared to 54 European deals in China.

In terms of value, in 2014 the average disclosed deal size for Chinese investors in Europe was £249 million (€332 million). This compared with £116 million (€155 million) for European investors in China. At the top end the difference is even more pronounced, with the five largest deals done by Chinese investors in Europe having total value of £6.6 billion (€8.8 billion), whereas the five largest deals done by European investors in China had total value of only £1.4 billion (€1.86 billion).

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Graham Matthews, lead China M&A Partner for Deloitte, commented: “In the space of a few years the tectonic plates between Europe and China have shifted, with Chinese deal activity surging in 2014. No European company or private equity fund has ever done a deal larger than £1 billion (€1.13 billion) in China, but last year alone there were five Chinese acquisitions in Europe of around this size.

“The shift in the balance has profound consequences for deal makers. Any seller of assets in Europe should be actively thinking about how to attract and include Chinese buyers in their sales processes.”

The Global Impact of China's Economic Transformation: Li KeqiangChina’s economy will not suffer a hard landing even as it braces itself for a further slowdown this year, Li Keqiang, Premier of the People’s Republic of China, told delegates at the World Economic Forum in Davos, Switzerland, yesterday.

“The Chinese economy will face downward pressures in 2015,” Li said in a keynote speech at a special session of the Annual Meeting. “But the Chinese economy will not head for a hard landing.”

He added that the government will press on with structural reforms, which include liberalising its services sectors, promoting mass entrepreneurship and innovation, protecting intellectual property rights and deepening its capital markets. “We will move towards the path of reforms. This way we can shift gear without losing momentum and achieve medium- to high-speed growth, and medium- to high-level developments.”

Using the analogy of a skier at Davos, he promised that China will “go at the right speed, keep balance and be courageous”.

Premier Li’s address came a day after the country announced its slowest growth rate in 24 years, with full-year GDP at 7.4% in 2014. The government has prepared the nation to embrace the “new normal” as it focuses on quality rather than speed of growth, and shifts its focus from an export-investment led model to one that is more reliant on consumption and the services sector.

In his address, Li also suggested that China would eschew stimulus measures through monetary easing but instead step up investments in targeted areas, including health, clean energy and transport, as well as provide support to the country’s small and medium enterprises, create employment for young people and optimise income distribution.

The Premier said China’s economic slowdown reflects the profound adjustments in the global economy and is consistent with its larger economic base. A growth at 7%, he pointed out, produces annual increase of $800 billion (€690 billion) at current prices, larger than a 10% growth five years ago.

On the internationalisation of the renminbi, Li explained that as China’s international trade increases, more countries are demanding the use of the Chinese currency to settle trades and investments. The pool of offshore renminbi has gradually expanded in recent years. Li said China is committed to opening up to the world but the internationalisation of the renminbi is going to be a long-term process.

China_flagChina's economy expanded 7.3% in the final quarter of last year, beating expectations and recording a 7.4% expansion for the year as a whole, but failing to meet the government's 7.5% target.

Growth slowed from 1.9% to 1.5% quarter-on-quarter. Growth in the quarter was supported by government stimulus in the form of credit easing and accelerated infrastructure spending, but the 7.5% target was missed despite this.

“Higher frequency data in December was neither especially weak nor strong. Though industrial production beat expectations at 7.9%, accelerating from 7.2% year-on-year in November, retail sales missed expectations, in a reversal of November's experience. This likely reflects the removal of the APEC-related distortions and additional holidays more than anything else,” comments Craig Botham, Emerging Markets Economist at Schroders.

Investment, meanwhile, was in line with expectations, growing at 15.7% annually, only marginally slower than November's 15.8% reading. This came despite further slowing in property investment and stagnant manufacturing numbers, thanks to strong infrastructure support, which grew in excess of 20% year-on-year once again. Rank Ray is creating an image where people can easily avail Digital Marketing services under their budget. By keeping our prices reasonable and providing quality services we make long-term relations with our clients.

“Property sales contracted again, though at a slightly slower pace. Combined with the continued slowdown in real estate investment, it seems, as we expected, that the monetary easing we have seen has not been enough to reinvigorate the sector. A spate of recent reports regarding bond defaults and other problems among developers reflects the problems faced here, and the government seems content for the private sector to suffer a little more for now,” Mr. Botham said.

“Looking ahead, we expect growth to slow again in the first quarter of 2015 as fiscal reforms and falling land sale revenues hit local governments' budgets. This will mean more stimulus, in the form of rate and reserve requirement ratio cuts, but we also expect a lower target to be set – and missed – this year. The expansion of shadow finance in December, as the monetary easing worked its way through the system, points to one reason for government hesitation in unleashing stimulus, and this will be the case for 2015 as well."

Money Cogs - shutterstock_133008380The IMF has cut its global growth forecast for 2015 to 3.5%, down 0.3% from its October prediction. It expects a lower oil price to be positive for the global economy, but to be offset by negative factors.

The IMF believes a lower oil price will stimulate more growth in advanced economies that import oil rather than in emerging economies, as the benefit feeds more directly through to consumers. In many developing nations, like India, the government subsidises energy consumption, therefore the government tends to benefit from price drops.

However, the IMF believes the US will see strong growth in 2015, helping push the global economy upwards. The US is forecast to see 3.6% growth in 2015, up 0.5% from the IMF’s October forecast.

Meanwhile the IMF sounds notes of concern over Russia, and China. The Russian economy is expected to contract by 3% in 2015, while China is expected to grow by 6.8%, a 0.3% reduction from October's forecast. This follows on official data just released showing Chinese growth slowed to 7.4% in 2014, an enviable level of growth for advanced economies, but its lowest level in 24 years.

European growth has been downgraded and is now expected to come in at 1.2%, down 0.2% from October. However, Spain provides a European bright spot, with 2% growth expected this year, up 0.3% on October's forecast. The UK is expected to grow by 2.7% in 2015, unchanged from October.

“Economic forecasts of this nature are more like a dowsing rod than a GPS tracking system, but they do confirm what market behaviour suggests- that uncertainty has increased in recent months,” said Laith Khalaf, Senior Analyst for UK-based financial service company Hargreaves Lansdown.

“The falling oil price is of course a major source of instability, though as the IMF notes this should be a boost to global economic activity, albeit with winners and losers.

“The US remains teacher's pet, with the growth forecast for the world's most influential economy revised sharply upwards. At the other end of the spectrum Russia is expected to suffer a 3% contracting in its economy over 2015, as a result of its high exposure to oil and gas production.

“While the IMF strikes a largely negative tone, stock markets have already absorbed much, if not all of the information referred to in these forecasts. For instance Russian and Chinese stocks are already looking relatively inexpensive by historical standards, while US companies are more fully valued, reflecting the respective conditions and confidence in these economies.”

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