China Economic Scan - Your daily update on the Chinese economy.
In this edition: China doubles new lending and increases industrial output, China investors expect a correction, Sanyuan sales surge after absorption of Sanlu, Minmetals snaps up Aussie miner, Chinese mainland stocks fall on Friday.
Top 5 headlines
China New Lending Doubles, Industrial Output Quickens
- New loans jumped to 664.5 billion yuan ($97 billion) from 318.5 billion yuan a year earlier, the central bank said today.
- Industrial-output growth accelerated to 8.9 percent and sales rose 15.2%, the statistics bureau said.
- M2, the broadest measure of money supply, rose 25.7% in May from a year earlier, the central bank said today, after a record 26% gain in April.
China Investors Expect ‘Correction,’ CLSA’s Wood Says
- China’s investors expect a “correction” in the stock market, which will “tread water” in coming months as companies resume initial share sales, CLSA Ltd.’s Christopher Wood said.
- The brokerage reduced the portion of Chinese shares in its model portfolio because it expects “considerable resistance” to further gains in the Shanghai Composite Index, Wood said in his “Greed & Fear” research note dated yesterday, recommending that investors move money into Malaysia.
- “Local investors expect considerable resistance and a correction sooner or later” as the gauge reaches the 2,800 to 3,000 range, said Wood, the top-ranked Asian strategist in the 2008 Institutional Investor survey.
Sanyuan reports sales surge after takeover of Sanlu
- Hebei Sanyuan, the dairy firm that bought most of the assets of the Sanlu Group, China's largest milk powder producer before its bankruptcy in the melamine contamination scandal, on Friday reported sales in May equal to total of the first four months.
- Gao Qingshan, general manager of Hebei Sanyuan, said the firm's revenue in May hit 70 million yuan ($10.26 million).
- "Our daily milk powder output reached 24 tons, or 80% of the total production ability of Sanlu's former factories, and the daily output of liquid milk amounted to 300 tons, 65% of production ability. Production will be further expanded based on market response," he said.
Nimble-footed Minmetals snaps up Aussie miner
- A leading Chinese non-ferrous metal company yesterday won approval for its acquisition of a top Australian miner - only days after China's dominant aluminum company was thwarted in its bid for a bigger stake in another Australian miner.
- China Minmetals Non-ferrous Metals Co Ltd (Minmetals) was dexterous in its dealing with OZ Minerals Ltd, setting an example for Chinese enterprises investing in overseas resources, experts said.
- Minmetals acted quickly to raise its offer for OZ's assets from $1.21 billion to $1.39 billion, responding to increasing domestic and international metal prices in recent months, showing more flexibility than seen in the aborted deal between Aluminum Corp of China (Chinalco) and Rio Tinto.
Hong Kong Stocks Climb as China Data Outweighs IPO Concerns
- Mainland stocks continued their fall on Friday with Shanghai down -1.91% to 2,744, Shenzhen down -1.64% 10,524, and Taiwan down -1.81% to 6,448; Hong Kong gained up +0.52% at 18,890.
- Aluminum Corp. of China Ltd., the publicly traded unit of the nation’s biggest producer of the metal, surged +3.5%, while China Construction Bank Co. rose +2.9% after industrial production, bank lending and retail sales all climbed.
- China Mobile dropped -1.9%, leading declines among some of the largest listed companies after 21st Century Business Herald, a newspaper, said the securities regulator will approve restarting initial public offerings as early as this weekend.
Financial Indicators:
| Metric | Value | Point change | % change |
| Hang Seng Index | 18,890 | 98.65 | 0.52% |
| Shanghai Composite | 2,744 | -53.56 | -1.91% |
| Shenzhen Component | 10,524 | -175.78 | -1.64% |
| TAIEX | 6,448 | -119.14 | -1.81% |
| CNY/USD | 6.8351 | -0.001 | -0.01% |
Source: China Economic Scan
