China Economic Scan - Your daily update on the Chinese economy.
In this edition: Soros says China is recovering fast from the crisis, foreign trade in Guangdong falls in May, Tengzhong communicating with regulator on Hummer deal, Ping An to acquire stake in Shenzhen bank for $3.2bln, Chinese stocks in the US fall the most in a week on share sale concerns.
Top 5 headlines
George Soros: China is recovering fast from crisis
- George Soros, chairman of Soros Fund Management, said Saturday he has confidence in China's economy and believes it is recovering fast from the economic downturn.
- "Its financial institutions are largely unaffected," Soros said, noting that with a good balance sheet, China was poised to balance its external accounts and in position to engage in stimulus investments. But Soros also pointed out that China's exports had been adversely affected. "China is dependent on exports, which have a high proportion in GDP."
- Soros made the remarks in an interview with Xinhua after meeting with Chen Feng, chairman of China's HNA Group. Soros has invested $50 million into Hainan Airlines, a subsidiary of the group.
Trade recovery fragile in Guangdong
- Guangdong province, which ranks first in foreign trade among provincial-level regions, recorded a decline rate in external trade lower than the national average in the first five months of this year.
- According to local customs data released Saturday, Guangdong's foreign trade volume stood at $208.52 billion between January and May, a decline of 21.8% from the same period of last year.
- The total included $125.39 billion in export value, down 18.5%, and $83.13 billion in import value, down 26.3%.
Tengzhong ‘Communicating’ With Regulator on Hummer
- Sichuan Tengzhong Heavy Industrial Machinery Co. is “communicating” with Chinese regulators about plans to buy General Motors Corp.’s Hummer sports utility vehicle brand after reports said the deal may be blocked.
- “It’s up to the government” whether the transaction will be approved, Chief Executive Officer Yang Yi said in an interview in Beijing today, without elaborating. “We respect the regulatory process.”
- Tengzhong said on June 2 that it had agreed to buy Hummer from bankrupt GM in a deal that would save more than 3,000 U.S. jobs. Still, regulators are unlikely to approve the plan as China wants companies to buy overseas parts makers instead of automakers.
Ping An to Acquire Stake in Shenzhen Bank for $3.2 Billion
- Ping An Insurance, shifting its focus to the Chinese market after losing $3.3 billion on an investment in Fortis, plans to buy a 22 billion yuan ($3.2 billion) stake in Shenzhen Development Bank.
- Ping An, China’s second-largest insurer, agreed to purchase as many as 585 million new shares from Shenzhen Development for 10.7 billion yuan, or 18.26 yuan apiece, it said. Ping An will also buy 520.4 million shares from Newbridge Capital LLC, the Asian unit of TPG, for about 11.45 billion yuan.
- “This is a good deal for both parties as they have a lot of resources to share, including customers, products and franchises,” said Xu Shoude of China Jianyin Investment Securities “While Ping An has a great ambition for its banking operation, it knows that the unit can’t grow fast enough without acquisitions.”
China Stocks in U.S. Fall Most in a Week on Share Sale Concerns
- Chinese stocks trading in the U.S. fell the most in a week as the prospect of new share sales in the mainland overshadowed better-than-expected economic reports.
- The Bank of New York Mellon China ADR Index, which tracks American depositary receipts, declined -2% to 361.23, paring a weekly advance to +0.6%. The gauge has rallied 28% this year.
- “You may be seeing some investors take some money off the table because of the prospect of some big IPOs,” said Jeff Papp, senior analyst at Lisle, Illinois-based Oberweis Asset Management Inc., which manages $700 million including China stocks.
Financial Indicators:
| Metric | Value | Point change | % change |
| Hang Seng Index | 18,890 | ||
| Shanghai Composite | 2,744 | ||
| Shenzhen Component | 10,524 | ||
| TAIEX | 6,448 | ||
| CNY/USD | 6.8351 |
Source: China Economic Scan
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