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Learn Chinese - Shanghai index rises to new record

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BIZCHINA / Index & Statistics

Shanghai index rises to new record

By Li Zengxin (chinadaily.com.cn)
Updated: 2007-09-20 16:57

The Chinese market dropped a little yesterday but started surging today.
However, industrial experts said the positive effect of the interest rate
cut of US might be offset by the injection of a slew of large cap stocks
aiming to address excessive liquidity in the market.

China Oilfield Service Ltd began online subscription for its 500 million
A shares, priced at 12.88 yuan to 13.48 yuan today. The number of shares
is lower than the originally expected 820 million. Individual investors
may apply for the online portion as of today, with maximum bidding price
of 13.48 yuan. The online portion has 325 million shares, accounting for
65 percent of the total.

China Construction Bank announced yesterday that its share price was set
at 6.45 yuan, the upper band of the indicative price range. The country's
second-largest commercial bank has attracted a record 2.26 trillion yuan
of subscription funds in a Shanghai IPO. The price represents a price to
earnings ratio of 32.9.

It also means the bank could raise up to 58.05 billion yuan in its IPO
and become the largest domestic offering, exceeding Industrial and
Commercial Bank of China's 46.64 billion yuan last October in the
domestic market in a simultaneous listing in Shanghai and Hong Kong.

China Shenhua Energy Co Ltd, China's largest and world's second-largest
coal miner, has kicked off a road-show for its 1.8 billion A-share
issuance in Beijing, Shanghai, Guangzhou and Shenzhen yesterday. Hong
Kong-listed Shenhua may raise 76 billion yuan from the IPO, calculated by
its HK$44 closing price today.

In the meantime, the country is stepping up efforts for its corporate
bond market. In its latest move, the Shenzhen Stock Exchange yesterday
released a set of detailed rules governing corporate bond issuance. It
also set the fee rates for the issuance.

The Shanghai Stock Exchange revised its corporate bond trading rules on
Tuesday and lowered the entry limits for companies wishing to issue
bonds. The new rules also stipulate the responsibilities of bond credit
rating agencies and specify rules for information disclosure.

The China Securities Regulatory Commission (CSRC) has approved China
Yangtze Power's application for issuing 8 billion yuan corporate bonds.

China Yangtze, the first listed company to issue corporate bonds after
CSRC released a rule governing corporate bond issuance last month,?will
issue its first batch of five- or 10-year bonds, amounting to 4 billion
yuan, as early as this month. The bonds are expected to carry a coupon
rate of around 6.2 percent. At the non-discounted issue price, the yield
of the proposed China Yangtze bonds would be about 170 basis points above
that of treasury bonds, investment analysts said.

In less than one month, twenty firms, including China Vanke, Huaneng
Power International, Poly Real Estate Group and Gemdale, have filed
applications for corporate bond issuance, the Securities Times reported.
These companies may target raising as much as 36 billion yuan for the
bond sales, which may further drain the floating capital from the market,
analysts said.

(For more biz stories, please visit Industry Updates)

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Learn Chinese online - Trade and investment boom

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BIZCHINA / Center

Trade and investment boom

By Jiang Wei (China Daily)
Updated: 2007-09-20 09:26

Between 2003 and 2006, US$29.3 billion of foreign capital poured into
manufacturing in the sectors of communications equipment, computers and
electronics. But foreign IT giants are looking beyond China as a
manufacturing base and setting up research and development centers in the
country.

Foreign-invested companies have become part of the Chinese economy, and
play the most active part in the country as it faces up to global
competition, said Wang Zhile, director of the Multinational Enterprise
Research Center under the Ministry of Commerce.

Foreign-invested companies contribute a third of China's industrial
output, a fifth of the tax revenue and 20 million jobs.

With new regulations on mergers and acquisitions of Chinese businesses by
foreign investors, the practice has become an important way to attract
foreign investment and help domestic firms access advanced technologies
and management expertise.

Branching out

Chinese companies have made remarkable progress over the past four years
in overseas investment since the government began encouraging qualified
firms to do so.

China's outward investment is a "win-win" strategy, as the capital flow
not only creates jobs at the investment destination and boosts the local
economy, but also helps Chinese firms to diversify the origin of their
products and thus avoid trade conflicts, the NBS said.

By the end of 2006 there were 30,000 Chinese-funded companies in 160
countries and regions with an accumulated foreign investment of $75
billion.

Chen Lin, deputy director of the commerce ministry's foreign economic
cooperation department, predicted China's outward investment will speed
up as the country's economic growth remains steady and foreign investment
is high.

"We expected the country's outward investment to reach $60 billion during
the 11th Five-Year Plan period (2006-10). Now we believe the actual
figure will be much higher than that," he said.

(For more biz stories, please visit Industry Updates)

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Chinesepod - Yangtze Power to issue nation's first corporate bond

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BIZCHINA / Center

Yangtze Power to issue nation's first corporate bond

By Shangguan Zhoudong (chinadaily.com.cn)
Updated: 2007-09-19 13:52

China Yangtze Power Co Ltd, which owns and operates the 160-billion-yuan
Three Gorges Dam Project power plant, will issue the nation's first
corporate bond as early as tomorrow, the China Securities News reported
today.

The power giant will sell four billion yuan (US$533.33 million) 10-year
bonds with a fixed interest rate, a source said.

Ten percent of the corporate bond, or 400 million yuan, will target
personal investors, the source said.

China Construction Bank is offering an unlimited and irrevocable
guarantee for the issuance.

Yangtze Power said the raised money will be used for refunding 3.5
billion yuan in borrowing, and the rest will be added to the company's
circulating capital.

Meanwhile, more than 10 listed companies, including Gemdale Corporation
and Offshore Oil Engineering Co Ltd, have announced their corporate bond
issuance plans.

In addition, China Chengxin Securities Appraisal Co Ltd has obtained
approval from the China Securities Regulatory Commission (CSRC) to act as
China's first corporate bond rating institution.

Tu Guangshao, vice chairman of the CSRC, said last week that time is ripe
for the launch of corporate bonds and furthermore, the interest rate hike
expectations won't affect the trial issuance of bonds.

According to a rule released by the CSRC to guide the issuance of
corporate bonds last month, only companies listed overseas and on the
Shanghai and Shenzhen exchanges are allowed to issue corporate bonds.

Currently, only a handful of large State-owned enterprises approved by
the National Development and Reform Commission can issue such bonds. The
price and amount of bonds issued are decided by the commission, and the
State commercial banks are also required to underwrite the bonds.

Just 283.1 billion yuan of corporate bonds had been issued by the end of
last year, accounting for only 1.35 percent of gross domestic product,
far lower than the 40 percent in the United States and 17 percent in the
Republic of Korea.

(For more biz stories, please visit Industry Updates)

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