Sunday, May 24, 2009

25 May 2009 | China Economic Scan

25-May-2009

China Economic Scan - Your daily update on the Chinese economy.

In this edition: ARC Investment says China's export model is broken, HK regulator says PCCW ruling to stop vote manipulation, Intel Chinese investee eyes Shenzhen GEB listing, China to issue 16.9 bln yuan local bonds and 30 bln yuan t-bonds, CSRC says IPOs to resume after June 5.

Top 5 headlines

China Export Model Is ‘Completely Broken,’ ARC Investment Says

  • China’s export model is “completely broken” and investors should shift out of companies that rely on overseas sales and into those that sell goods domestically, according to private equity firm ARC Investment Partners.
  • “The export economy model is completely broken,” Adam Roseman, the Shanghai-based chief executive officer at ARC Investment, and “They are working as fast as they can to develop their domestic economy.”
  • ARC Investment has invested in 12 Chinese companies focused on the consumer and renewable energy, replacing management in return for taking “large positions” in these companies.

PCCW Ruling to Stop Vote Manipulation, Regulator Says

  • The Court of Appeal last month ruled that a PCCW shareholder ballot that approved the HK$15.93 billion ($2.1 billion) buyout was manipulated, upholding a legal challenge from the commission.
  • The decision that blocked PCCW Ltd. Chairman Richard Li’s buyout offer for the phone company will stop vote manipulation in privatizations, the city’s markets regulator said.
  • The verdict won’t deter “legitimate privatizations,” said Martin Wheatley, chief executive officer of the Securities and Futures Commission.

Intel Chinese Member Eyes Shenzhen Growth Enterprise Board

  • Enjoyor Technology Group is preparing for listing on the to-be-established Growth Enterprise Board (GEB) of the Shenzhen Stock Exchange (SSE), said an executive of the Chinese intelligentization solution provider.
  • In February 2009, Intel Capital, the investment arm of Intel Corporation (NASDAQ: INTC), announced that it injected a certain amount of money into the Chinese company.
  • The company was built in Hangzhou Hi-tech Industry Development Zone (HHTZ), Zhejiang Province in 1992, mainly engaged in building of intelligent traffic, medical, educational, security, financial and office systems.

China to issue 16.9 bln yuan local bonds, 30 bln yuan T-bonds next week

  • China's Ministry of Finance (MOF) said Friday it would issue 16.9 billion yuan (US$2.48 billion) of 3-year local government bonds next week on behalf of 4 provinces and municipalities at a fixed annual coupon rate of 1.67%.
  • The amounts were 3.5 billion yuan for Guangxi Zhuang Autonomous Region, 5.6 billion yuan for Beijing city, 4 billion yuan for Shanghai city and 3.8 billion yuan for Henan Province.
  • The MOF also said it would issue 2 batches of book-entry treasury bonds with a face value of 15 billion yuan (US$2.2 billion) each starting next week.

Regulator: China to resume IPOs after June 5

  • The China Securities Regulatory Commission (CSRC) said it would end a de facto suspension of initial public offerings (IPOs) on the Shanghai and Shenzhen stock exchanges as of June 5.
  • The CSRC effectively suspended all new stock issues last September, as it halted approvals.
  • Under the new rules, stock subscribers need to use either the online or off-line subscription system, but not both, to purchase new stocks. Institutional investors used to enjoy the privilege of subscribing through both systems, while retail investors could use only the off-line system. The new guidelines aim to improve the price discovery function of the stock market, and help retail investors subscribe to newly issued stocks, said the CSRC.

Financial Indicators:

Metric Value Point change % change
Hang Seng Index 17,063

Shanghai Composite 2,598

Shenzhen Component 10,073

TAIEX 6,737

CNY/USD 6.8277

Source: China Economic Scan