15 June 2009 | China Economic Scan

15-June-2009

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

21 May 2009 | China Economic Scan

21-May-2009

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

In this edition: World Bank says China recovery hopes may be premature, BoC says China-Brazil yuan trade settlement not yet practical, Chinese overseas assets rose 23% to $2.92 trln in 2008, Shenzhen Development Bank to issue RMB 1.5 bln bonds, Chinese stocks close down slightly on Wednesday.

Top 5 headlines

World Bank Says China Recovery Hopes May Be Premature

• “Until we see a recovery in private investment, it’s hard to get too excited about the future,” David Dollar, country director for China, said at a forum in Beijing.
• Private investment, the main driver of growth, was “way down” in Q1, Dollar said, without citing a figure. Manufacturers have excess capacity and “a lot of the real-estate sector is over-built,” he said.
• Private investment is “the main source of job creation,” Dollar said. “It’s very important for private investment to come back if China’s going to be able to continue to grow at a high rate that is sustainable.”

China, Brazil Yuan Trade Will Take Years, Bank of China Says

• China and Brazil’s plans to conduct bilateral trade in yuan and reais will be limited because the Chinese currency is still not fully convertible, Bank of China Ltd. said.
• China is seeking to promote the yuan as an international currency after signing 650 billion yuan ($95 billion) in swap agreements with Argentina, Indonesia, South Korea, Hong Kong, Malaysia and Belarus in recent months.
• “It may take a couple of years for China and Brazil to really start using yuan in trade because the currency is of limited use outside China,” said Shi Lei, an analyst in Beijing at the nation’s largest foreign-currency trader.

Overseas assets in 2008 soar to $2.92t

• China's foreign financial assets rose 23% last year to reach a total of $2.92 trillion, the State Administration of Foreign Exchange (SAFE) said yesterday.
• Of that amount, nearly $2 trillion, or 67%, were foreign exchange and gold reserves, the foreign exchange regulator said.
• The outbound direct investment, however, was just $169.4 billion, accounting for 6% of the total foreign financial assets.

Shenzhen Development Bank to issue up to RMB 1.5 bln in bonds

• Shenzhen Development Bank is planning to issue up to RMB 1.5 billion in 15-year bonds on May 26, sources reported.
• Dagong Global Credit Rating Co has rated the bonds AA-. Haitong Securities and UBS Securities Co have been assigned as major underwriters for the issuance.
• In the first quarter of this year, the bank's net profit jumped 12% year on year to RMB 1.12 billion, with basic earnings per share at RMB 0.36, up 6% from a year earlier.

Chinese stocks down 0.94% on Wed

• Chinese stocks slipped on Wednesday - the Hang Seng fell -0.39% to 17476, and the Shanghai Composite fell -0.94% to 2651; however the Shenzhen Component rose slightly +0.28% to 10453, and the TAIEX was up +0.72% at 6704.
• Coal stocks ended higher; Shanxi Coking, the biggest publicly traded coke producer in China, swelled +5.68% to RMB 7.82. Guizhou Panjiang Refined Coal jumped +8.15% to close at RMB 26.82. China Coal Energy, the country's second-largest coal miner by revenue, grew +2.10% to RMB 12.64.
• Gold firms were also gainers; Zhongjin Gold jumped +7.89% to close at RMB 66.88. Shandong Gold Mining, China's second-largest listed gold miner, grew +2.44% to RMB 40.67. Zijin Mining Group increased +1.02% to RMB 8.88.

Financial Indicators:

Metric

Value

Point change

% change

Hang Seng Index	17,476	-68.19	-0.39%
Shanghai Composite	2,651	-25.27	-0.94%
Shenzhen Component	10,453	29.04	0.28%
TAIEX	6,704	48.03	0.72%
CNY/USD	6.8299	0.0007	0.01%

Source: China Economic Scan