China Day Ahead: Citigroup Plans China Hiring; U.S. Aluminum Tariff Rules

Citigroup Inc. plans to almost triple its workforce in China to as many as 12,000 people in the next three years, intensifying its rivalry with HSBC Holdings Plc in the world’s fastest-growing major economy.

The New York-based bank will hire more in China than in any other market in Asia-Pacific, Stephen Bird, Citigroup’s co-chief executive officer for the region, said in an interview. Citigroup has 4,500 employees in China and 50,000 in Asia, according to spokesman James Griffiths.

Citigroup CEO Vikram Pandit is raising his bet on China, where banks extended a record $1.4 trillion of new loans last year. Unlike HSBC and Standard Chartered Plc, Citigroup has no plans to sell shares in China and will instead fund expansion with money generated in Asia, Bird said on Aug. 25.

U.S. Rules on Yuan, Aluminum

Chinese exporters won’t face stiffer U.S. tariffs to compensate for the advantage they may get from an undervalued currency, the U.S. Commerce Department ruled.

Manufacturers of aluminum and glossy paper said a weak yuan acts as a subsidy for Chinese producers, letting them undercut their American competitors. The Commerce Department rejected those arguments in a decision released yesterday.

The department also imposed preliminary duties of as much as 137.65 percent on the import of aluminum products from China. The goods are used in door and window frames.

IPO Fees Drop

Hong Kong bankers are charging the lowest fees on record to arrange initial public offerings as firms vie for deals in a market where IPOs are raising more than in the U.S. and U.K. combined.

Initial sales by 37 companies in Hong Kong have paid average fees of 2.2 percent in 2010, the lowest level since Bloomberg began tracking the data in 1999. While companies going public raised $18.7 billion, 64 percent more than American IPOs, banks earned about 43 percent less underwriting in the territory, the data show.

Goldman Sachs Group Inc., JPMorgan Chase & Co. and Deutsche Bank AG are leading Wall Street in reducing fees and winning sales where Chinese companies go public to help finance the fastest growth among the world’s biggest economies. The firms are facing more competition from mainland banks that have boosted their share by 50 percent since the start of the financial crisis.

CIC Morgan Stanley Stake

The Federal Reserve approved China Investment Corp.’s application to take as much as a 10 percent stake in Morgan Stanley through the conversion of premium equity units that it purchased in 2007.

The sovereign wealth fund converted its units into common shares earlier this month, the Fed said. Any shares that would have given it more than a 4.99 percent stake in the U.S. firm were placed in a custody account pending Fed approval, the order said.

AIG in Taiwan

American International Group Inc., the insurer selling assets to repay a bailout, will consider scaling back operations at its Taiwan unit after a planned $2.15 billion sale of the business was rejected by local regulators.

AIG had agreed in October to sell its almost 98 percent stake in Nan Shan Life Insurance Co. to Primus Financial Holdings Ltd. and China Strategic Holdings Ltd. The group failed to convince the Financial Supervisory Commission it has the financial capability and long-term commitment to operate the business, Wu Tang-chieh, vice chairman of the regulator, said at a briefing in Taipei.

Coolpoint Li Ning

Coolpoint Energy Ltd. said it will issue new shares to buy a 30.9 percent stake in Li Ning Co. from the Chinese sportswear maker’s founder, an Olympic gold-medal winner, and his family.

Coolpoint, to rename itself Viva China Holdings Ltd., signed an accord to provide services for endorsements, sponsorship and event management to Li Ning, according to a Hong Kong stock-exchange filing last night. Li Ning acknowledged the deals in a separate statement. Coolpoint supplies custom energy- saving equipment to companies in Hong Kong and China.

China Cereals

China is expected to harvest a record cereals crop this year as most harvests escaped damage from the worst flooding in a decade, the United Nations’ Food and Agriculture Organization said.

The country’s overall output of grains will rise to 486.1 million metric tons from 483.4 million tons in 2009, boosted by higher corn and rice production, the Rome-based UN agency said in a report dated Aug. 28 and published on its website yesterday.

Hong Kong Home Sales

Sales of existing homes in Hong Kong fell 49 percent this month from July, after government measures to cool the property market took effect, Centaline Property Agency Ltd. said in a report.

The number of existing homes sold at 10 of Hong Kong’s biggest housing estates reached 699 in August, the city’s real- estate broker, said in an e-mailed report.

New Stock Accounts

Investors opened 1.5 percent more accounts to trade Chinese stocks during the week ended Aug. 2 as compared with a week earlier, according to the China Securities Depository and Clearing Corp. Investors opened 266,805 accounts during the week.

Bond Sale

China’s finance ministry will sell 28 billion yuan ($4.1 billion) of 20-year bonds at 3.83 percent today, according to the median estimate in a Bloomberg News survey.

MARKETS:

U.S. stocks rose, trimming the biggest August slump since 2001, as regulators approved a Chinese investment in Morgan Stanley and gains in home prices and consumer confidence tempered concern the economy is faltering.

Morgan Stanley jumped 1.1 percent as the Federal Reserve approved China Investment Corp.’s plan to buy as much as 10 percent of the company. AT&T Inc., JPMorgan Chase & Co. and Merck & Co. gained at least 1.2 percent to lead the Dow Jones Industrial Average higher. Benchmark indexes recovered after an hour-long afternoon slump triggered when the Fed signaled it doesn’t plan large-scale asset purchases to bolster the economy.

The Standard & Poor’s 500 Index rose less than 0.1 percent to 1,049.33 as of 4 p.m. in New York, reversing a 0.8 percent loss. The Dow Jones Industrial Average gained 4.99 points, or 0.1 percent, to 10,014.72.

THE FOLLOWING COMPANIES MAY BE ACTIVE TODAY:

Air China Ltd. (753 HK): The world’s largest carrier by market value entered into a supplementary agreement with The Boeing Company to buy 15 787-9 aircraft. The company in 2005 was approved to buy 15 787-8 aircraft. Air China fell 1.8 percent to HK$8.30.

Allied Group Ltd. (373 HK): The financial services company has purchased 435.9 million additional shares in Allied Properties (H.K.) Ltd. (56 HK), a 6.3 percent stake, for HK$636.4 million ($82 million), or HK$1.46 each. Allied Group gained 3.6 percent to HK$27.70. Allied Properties gained 2 percent to HK$1.51.

China Gezhouba Group Co. (600068 CH): The hydropower contractor won a $672 million order to build a hydroelectric station in Ecuador. The order won’t have a significant impact on 2010 earnings, the company said. The stock fell 0.9 percent to 9.75 yuan.

China Mobile Ltd. (941 HK): The company’s Guangdong unit, which is seeking regulatory approval to buy a 20 percent stake in Shanghai Pudong Development Bank, won’t sell the shares within five years of completing the purchase. China Mobile fell 1.9 percent to HK$79.15.

China Railway Construction Corp. (601186 CH): The engineering and construction contractor won 39.1 billion yuan of contracts for work on a rail line linking the country’s cities of Changsha and Kunming. The stock fell 1.2 percent to 7.45 yuan.

Citic Pacific Ltd. (267 HK): The Hong Kong-based investor in steel, iron ore and property increased a five-year loan to HK$4.8 billion from a planned HK$4 billion, according to a person familiar with the matter. The stock fell 1.5 percent to HK$15.90.

Galaxy Entertainment Group Ltd. (27 HK): The casino operator part-owned by Permira Advisers LLP plans to invest an additional HK$800 million to speed up construction of a Macau casino resort to tap a gambling boom. The stock fell 3.2 percent to HK$6.

GCL-Poly Energy Holdings Ltd. (3800 HK): Wang Weizhong, China’s minister of science and technology, visited company unit Jiangsu Zhongneng Polysilicon Technology Development Co. on Aug. 28, GCL-Poly said in a release posted on its website yesterday. The stock fell 2.2 percent to HK$1.80.

Hainan Airlines Co. (600221 CH): Airline stockholder Hainan Industrial Holdings Co. sold 90 million shares, cutting its stake to 181,000 shares. The stock fell 3.3 percent to 5.78 yuan.

Huadian Power International Corp. (600027 CH): The listed unit of China’s fourth-largest power producer will buy a 35 percent stake in Quanhui Co. for 938.8 million yuan. The stock fell 1 percent to 3.95 yuan.

Huayi Electric Co. (600290 CH): The Chinese maker of wind turbines and power transmission gear said it will revise a private placement plan to raise 1.2 billion yuan for wind and smart grid projects. The stock fell 1.9 percent to 13.29 yuan.

Lippo China Resources Ltd. (156 HK): The real estate developer won bidding for land in Huai’an in China’s eastern province of Jiangsu at 192 million yuan. The stock fell 2.3 percent to 21.1 Hong Kong cents.

Yuexiu Property Co. (123 HK): The real estate developer has purchased two building sites in the southern district of Panyu in China’s southern province of Guangdong for 2.88 billion yuan. The stock fell 1.1 percent to HK$1.75.

BLOOMBERG TELEVISION GUESTS:

7:30 Richard Thomas, HK4A, Chairman 10:30 Jianguang Shen, Mizuho Securities, Chief Economist for

Greater China 12:10 Robin Bew, EIU, Chief Economist & Editorial Director

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