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Business Tianjin Magazine - Business English Magazine in China
ADB: China's economy to grow by 8.2% in 2009
Written by Xinhua Tuesday, 22 September 2009 16:59
MANILA, Sept. 22 (Xinhua) -- China's economy rebounded stronger than expected and is now forecast to expand by 8.2 percent in 2009, the Asian Development Bank (ADB) said in a report released Tuesday.
The Asian Development Outlook 2009 Update forecast that a surge in bank lending and fixed asset investments would push growth 1.2 percentage points higher than ADB's forecast in March.
The expected maintenance of the government's fiscal stimulus and a moderate recovery in the international economy in 2010 would lift China's growth rate to 8.9 percent in 2010, the report added.
"The massive fiscal stimulus announced last year and the aggressive monetary easing in 2009 has softened the blow of the global slump on the economy," said Jong-Wha Lee, ADB's Chief Economist, in a press release.
The ADB report said major drivers of growth in 2010 will be infrastructure investment, construction, and an expansion of consumption. With only a moderate recovery forecast for the international economy, net exports are expected to make only a minor contribution to growth.
The main risks to the outlook, the report said, is a significantly weaker recovery in the international economy than currently foreseen, and, on the domestic front, an earlier than expected exit from the government's fiscal stimulus package, and concerns that the flood of bank lending, if maintained for too long, could trigger another round of severe monetary policy tightening that would pull growth down again.
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Profit at state companies down last year
Written by AP Monday, 21 September 2009 16:46
BEIJING — Profit at China's top state-owned companies fell 30 percent last year, hurt by the global financial crisis, but assets have increased.
The 141 banks, airlines, oil producers and other companies controlled by the central government reported net profit of 696.18 billion yuan ($102 billion) last year, down 30.8 percent from the previous year, the official Xinhua News Agency said Sunday.
The report cited the Cabinet's State-owned Assets Supervision and Administration Commission as saying the assets of the companies grew for the fifth consecutive year since 2004 and were worth 5.56 trillion yuan ($814 billion) at the end of last year, up 8.6 percent from the previous year.
SASAC owns China's biggest, most prominent companies, including China National Petroleum Corp., China Mobile Ltd., Industrial & Commercial Bank of China Ltd., China Life Insurance Ltd. and Air China Ltd.
Beijing's 4 trillion yuan ($586 billion) stimulus helped to accelerate second-quarter economic growth to 7.9 percent over a year earlier, up from the previous quarter's 6.1 percent expansion.
State-owned companies have received a big share of the stimulus, which is meant to reduce reliance on exports by boosting domestic demand through higher spending on construction of highways and other public works.
Metallurgical, Sinopharm to raise 3.5b USD
Written by Bloomberg Friday, 18 September 2009 15:41
Sept. 17 (Bloomberg) -- Initial public offerings in Hong Kong by Metallurgical Corp. of China Ltd. and Sinopharm Group Co. raised a combined $3.5 billion, people with knowledge of the sales said.
Metallurgical Corp., a state-owned construction and engineering company, and an investor sold HK$18.2 billion ($2.3 billion) of stock, two of the people said. Sinopharm Group Co., China’s biggest drug distributor, raised HK$8.73 billion, according to two other people.
The sales collected more than the total value of Hong Kong IPOs in the first half as Chinese companies drive a recovery in offerings in the city. An index of mainland companies traded in Hong Kong has rallied 37 percent since the collapse of Lehman Brothers Holdings Inc. a year ago, the second-best performance among major benchmarks tracked by Bloomberg.
“Investors are counting on the Chinese economy to keep its momentum,” said Francis Lun, general manager of Hong Kong-based Fulbright Securities Ltd. “With the kind of sentiment in the market at the moment, they’ll go after the IPO of any company with a decent track record.”
Sinopharm’s IPO drew about $114 billion of orders as Hong Kong investors sought almost 600 times the amount of stock available to them, the people said. They declined to be identified before an announcement.
The sale values Sinopharm at 25 times estimated 2010 earnings, almost double the ratio for McKesson Corp., the largest U.S. drug seller. It attracted buyers including the Government of Singapore Investment Corp.
Health Overhaul
China, the world’s third-largest economy, plans to spend 850 billion yuan ($124 billion) overhauling its health-care system. The push is part of an effort to spur domestic consumption and reduce the country’s reliance on exports.
“I view this industry as a relatively safe environment where you have a stable growth rate,” said Jinsong Du, a health-care analyst at Credit Suisse AG in Hong Kong. “For the long term, the health-care reforms should help the industry to consolidate.”
Sinopharm sold shares at the top end of a range marketed to investors, while Metallurgical Corp.’s stock fetched HK$6.35 apiece after it tried to get between HK$6.16 and HK$6.81, said the people. Sinopharm will start trading Sept. 23 and Metallurgical Corp. will debut the day after.
Last week in its mainland listing, Metallurgical Corp. raised 18.97 billion yuan in the second-biggest IPO in Shanghai this year. The company sold 3.5 billion shares at 5.42 yuan, the maximum it sought, it said at the time.
Morgan Stanley, Citigroup Inc., China International Capital Corp. and Citic Securities Ltd. arranged Metallurgical’s Hong Kong sale. CICC, UBS AG and Morgan Stanley advised Sinopharm.
China among few to boost holdings in US securities
Written by The Wall Street Journal Thursday, 17 September 2009 17:05
WASHINGTON -- Foreign demand for long-term U.S. financial assets fell in July, but China boosted its holdings, the Treasury Department said Wednesday.
Japan and the U.K. also increased their holdings, but other countries such as Russia, Luxembourg, Switzerland, and Ireland scaled back, as did a group of oil exporters.
Foreigners purchased $15.3 billion more assets than they sold in July. Still, that is a steep decline from June, when they purchased $90.7 billion more than they sold.
The Treasury is auctioning record amounts of debt to cover a budget deficit it estimates will hit $1.58 trillion this year. Some economists worry that if overseas buyers don't keep buying U.S. debt, interest rates could rise.
China, the largest foreign holder of U.S. Treasury securities, boosted its holdings to $800.5 billion, from $776.4 billion in June.
Brown Brothers Harriman & Co. senior currency strategist Win Thin saw good news in the Treasury report. "Bottom line: the big global reserve managers (with the possible exception of Russia) are not dumping USD assets on a sustained basis," he wrote in a research note. "China and Japan holdings are sometimes volatile on a month to month basis, but the upward trend in [U.S. Treasury] holdings is unmistakable, despite China's sporadic warnings about the dollar."
Japan, the second-largest holder of Treasury securities, increased its holdings to $724.5 billion in July from $711.8 billion in June. And the U. K., the third-largest holder of Treasurys, increased its holdings to $220 billion from $214 billion.
Russian holdings fell 1.6%, to $118 billion from $119.9 billion.
Foreign governments purchased $15.8 billion of Treasury bonds and notes, the department said, after buying $22.5 billion in June. Overseas governments sold $7.2 billion in bonds issued by mortgage giants Fannie Mae, Freddie Mac and government agencies. That is more than the $5.9 billion they sold a month earlier.
For U.S. equities, net foreign purchases totaled $28.6 billion in July, compared with purchases of $19.1 billion the previous month.
PBOC sells 135b CNY bills
Written by Dow Jones Tuesday, 15 September 2009 15:51
SHANGHAI (Dow Jones)--China's central bank said it sold CNY135 billion ($19.77 billion) worth of bills and repurchase agreements in Tuesday's open market operation.
The People's Bank of China said in a statement it sold CNY85 billion worth of one-year bills at 1.7605%, unchanged from the rate on the one-year bills it sold in the past five weeks.
The PBOC also sold CNY50 billion worth of 28-day repos at 1.18%, unchanged from the rate on the 28-day repos it last sold Sept. 1.
The PBOC carries out regular open market operations Tuesdays and Thursdays.
This week, CNY285 billion worth of bills and repos mature, up from CNY265 billion last week.
Last week, the central bank injected a net CNY40 billion into the money market through its open-market operations.
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