Flightless fowl revived bird flu fears, as the H5 avian influenza virus (a cousin of the deadly H5N1 virus) killed 200 chickens at a farm in Hong Kong. That prompted a swift response from the government, which closed down all poultry farms in Hong Kong and culled 80,000 birds. Airlines got their wings clipped, as China’s civil aviation regulator told domestic carriers to stop ordering so many new aircraft while demand for air travel continues to flag. That’s going to be bad news for Airbus and Boeing, who are increasingly reliant on Chinese orders, and for China’s domestically produced ARJ-21 which just completed its maiden flight in November.
In the stock market, as with airplanes (and airplane sales), what goes up must come down. The Shanghai Composite Index ended a six-day streak of positive finishes yesterday, closing down 2.5% at 2,037.74 points. Developers China Vanke, Poly Real Estate and Shanghai New Huangpu Real Estate were among the day’s losers. While Vanke posted a 16% drop in earnings in November, the entire property sector in China seems to be running into a wall: Prices in 70 mainland cities rose just 0.2% year-on-year in November, the slowest pace since the NDRC began keeping track over three years ago.
Merger and acquisition deal flow has dropped significantly since the heady days of 2006 and 2007, but it appears that Beijing will allow fledgling Chinese companies to spread their wings a little wider. The China Banking Regulatory Commission introduced new rules under which domestic commercial banks can lend money for domestic M&A deals – though leveraged buyouts are still out. Elsewhere in the venture capital world, Carlyle filed a lawsuit against Chinese VC icon Neil Shen of Sequoia Capital China Growth Fund for allegedly blocking its attempts to invest in a domestic medical research firm. And in the strategic buyout sphere, rumors have surfaced that ailing American carmaker Ford is discussing the possibility of selling the Volvo brand to its Chinese joint venture partner, Changan.