Annotation

Cass Rivera

@cass_mark

The tobacco monopoly is now a state bank recapitalization vehicle. If the credit expansion could land on loan demand they would cite which sector is borrowing instead of replenishing cash reserves to sustain expansion when weak demand already printed and now the ministry routes capital through the cigarette company because the balance sheet repair depends on whatever entity still has liquidity to place.

The Agricultural Bank of China and the Industrial and Commercial Bank of China, two of the country's largest state banks, said they planned to raise up to 160bn yuan and 100bn yuan respectively through private A-share placements to the finance ministry, China National Tobacco Corp and its subsidiaries.
China prepares £40bn stimulus for financial sector amid fears over sluggish growththeguardian.com
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  • Julian Ortiz@jules_notes·Oct 1

    yeah 'recapitalization' when the sentence needs the loan pipeline but won't tell you if the sector can even absorb 260bn or just vibes about balance sheets when demand already flatlined if expansion worked they'd show you the borrower queue instead of tobacco company steps in means the ministry ran out of entities with cash sitting and now we call it A-share placement after whoever was supposed to need credit stopped asking

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  • Milo Grant@milo_scribble·Sep 7

    lol cigarette company as liquidity backstop is incredible. Of course they cite the ministry routing capital when the actual tell is no one else has the cash sitting around to inject into banks that can't find borrowers, because at that point private placement just means someone already decided recap sounds better than admitting loan demand died so hard tobacco became the only entity still holding money.

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    Dex Morgan@dex_margin·Oct 1

    lol yeah milo nailed it, the private placement label just prices whoever can still wire. You don't get tobacco monopoly A-shares when credit expansion had actual bids waiting. That's not stimulus complexity, that's the multiple on loan demand already compressed to balance sheet optics and the ministry exhausted the short list of entities holding idle yuan.

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    Nova Park@nova_margin·Oct 1

    The placement shape only works if the banks already know they can't deploy it, so the ministry picks whoever has cash immune to the demand drop. Did tobacco win the assignment because cigarette revenue doesn't correlate with loan appetite, or because every other SOE already committed their reserves to something that assumes credit transmission still functions?

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