China Economic Scan - Your daily update on the Chinese economy.
In this edition: Chinese investment rises in Lat-Am, Northeast Electric goes into trading halt following Buffett rumours, Shenzhen Stock Exchange to promote construction of multi-level capital market, SOHO plans $359m bond float, Shanghai stocks are up 45% YTD.
Top 5 headlines
Chinese investment rises in Latin America: ECLAC
- Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC) Alicia Barcena said Chinese investment in Latin America is showing substantial increases.
- In the report, ECLAC also cited the deals that the Aluminium Corporation of China reached with Anglo-Australian mining giant Rio Tinto to invest US$19.5 billion in its Peruvian mines, and China Metals agreed with Australia's Oz Minerals to invest US$17 billion in its mines in Latin America.
- Regional foreign direct investment was around US$128.3 billion in 2008, a record figure despite the world's financial crisis. However, the figure is estimated to drop as much as 45% this year, due to the prolonged financial crisis, said the report.
Northeast Electric Halts Trading On Talk Of Buffett Invest
- Shenzhen listed Northeast Electric Development suspended the trading of its shares in both Shenzhen and Hong Kong Wednesday, saying it plans to clarify a local media report on speculation that Warren Buffett may invest in the company.
- Without citing a source, the Shanghai newspaper reported Wednesday that there is talk the U.S. billionaire is negotiating with Northeast Electric's major shareholders over a stake transfer. The paper didn't give other details.
- Its H shares were up 59% at HK$2.26 before trading was halted in Hong Kong at 0250 GMT.
Shenzhen Stock Exchange: To Promote the Construction of the Multi-level Capital Market
- Song Liping said the Shenzhen Stock Exchange shall continue promoting the reform of the systems of IPO and refinancing, enhancing financing efficiency and improving supervision system and means.
- Chen Dongzheng, general-director of Shenzhen Stock Exchange said SME board has made great contribution to the forthcoming launching of the new market and the construction of multi-level capital market.
- Chen stressed that the risks of new market shall be considered and undertaken due to the significance of the new market.
- SOHO China, the biggest property developer in Beijing's Central Business District, is filling up its war chest for future acquisitions with a $359 million bond issue.
- The Hong Kong-listed developer said the proceeds from the five-year convertible bonds, with a coupon rate of 3.75% a year, would be earmarked for general corporate purposes and strategic acquisitions.
- The bonds will be convertible into 476.2 million ordinary shares, accounting for 8.4% of SOHO's enlarged share capital. The bond will be issued at HK$5.88 each, representing a 20% premium over the stock closing price of HK$4.90 on Tuesday.
Index shows 5th straight monthly gain
- Chinese markets were closed on Thursday (and will be on Fri) for Dragon boat festival after completing a fifth monthly gain, as raw-material producers and shipping companies climbed on higher commodity prices and increased transportation rates.
- "Ample liquidity and optimism about economic recovery have contributed to the monthly rally," said Wang Peng, Shanghai-based chief investment officer at First Trust Fund Management Co. "The gains may not last if we fail to see more good economic and corporate data."
- The Shanghai index has posted gains every month this year for a 45% rally on optimism a 4-trillion-yuan stimulus package and record lending would revive growth.
Financial Indicators:
| Metric | Value | Point change | % change |
| Hang Seng Index | 17,885 | ||
| Shanghai Composite | 2,633 | ||
| Shenzhen Component | 10,128 | ||
| TAIEX | 6,890 | ||
| CNY/USD | 6.8310 |
Source: China Economic Scan
