Geithner Seeks Higher Yuan Gains, RBS Finds Chinese Partner: Day Ahead

Treasury Secretary Timothy F. Geithner said China needs to allow a “significant, sustained” rise in its currency as lawmakers called for the U.S. to toughen its stance on the yuan.

“The pace of appreciation has been too slow and the extent of appreciation too limited,” Geithner said in testimony at a Senate Banking Committee hearing. “We are examining the important question of what mix of tools, those available to the United States and multilateral approaches, might help encourage the Chinese authorities to move more quickly.”

The Treasury chief pledged to take action as Republican and Democratic lawmakers questioned why the U.S. has been reluctant to take a stand on China’s currency tactics. His testimony marks a shift in the Treasury’s efforts to seek a stronger yuan and to oppose other policies that give trade advantages to Chinese companies.

RBS China Partner

Royal Bank of Scotland Group Plc reached an agreement to form a Chinese securities firm, paving the way for the U.K.’s biggest state-owned bank to manage domestic share sales in China, said two people with knowledge of the matter.

RBS, based in Edinburgh, signed a memorandum of understanding with a local partner and applied to the China Securities Regulatory Commission for approval of the venture, said the people, who asked not to be named because the deal isn’t public. They declined to identify RBS’s partner in the transaction, which is subject to a final agreement. RBS would hold 33 percent of the venture.

SouFun IPO

SouFun Holdings Ltd., the operator of China’s biggest real-estate website, is seeking to raise $125 million selling shares at a discount to its rivals in this month’s first U.S. initial public offering.

The company that controls almost half of China’s online real-estate advertising market is selling 2.93 million American depositary receipts at $40.50 to $42.50 each, a Securities and Exchange Commission filing and Bloomberg data show. At the midpoint price, SouFun is valued at 14.3 times earnings, 14 percent less than the average of six Internet portals and property information providers, data compiled by Independent International Investment Research Plc and Bloomberg show.

Huaneng Power Injection

Huaneng Power International Inc., a unit of China’s biggest electricity producer, said its parent will inject energy assets in Shandong and other provinces into the company within five years.

China Huaneng Group promised to use the company as “the sole platform to consolidate the ordinary energy businesses” of the group, Huaneng Power said in a Shanghai stock exchange statement.

Dell in China

Dell Inc. plans to spend more than $100 billion over 10 years to broaden operations in China and capture more sales in the world’s second-largest economy.

The company will open a second China operations center next year in Chengdu, adding production, sales and support in the western part of the country. It will also add an office and as many as 500 workers at its existing Xiamen site, the Round Rock, Texas-based company said in a statement.

Eve Enterprise IPO

Eve Enterprise Group, the Chinese luxury menswear chain, plans to raise about 3 billion yuan ($446 million) selling shares to fund store openings as rising incomes fuel demand for tailored clothing.

The retailer, whose suits sell for as much as 20,000 yuan, plans to seek about 2 billion yuan from a Shanghai initial public offering as early as the end of 2011, founder and Chairman Xia Hua said in an interview. It’s also in talks with two overseas investors to sell a 20 percent stake for about 1 billion yuan, she said, declining to identify them.

BYD Purchase

BYD Co., the Chinese automaker backed by Warren Buffett, said it will buy an 18 percent stake in Tibet Shigatse Zhabuye Lithium High-Tech Co. for 201.2 million yuan ($30 million).

The target is a mining company that produces lithium, boron, inorganic salt, salt-lake organisms and related products, the company said in a Hong Kong stock exchange filing yesterday. BYD is developing cars that use lithium batteries.

Reliance Capital in China

Reliance Capital Ltd., owner of India’s largest mutual fund manager, is seeking a Chinese partner to tap funds in the most-populous nation, said Vikrant Gugnani, chief executive of the firm’s international businesses.

“We want to get China investors access to the India growth story,” Gugnani said in an interview in Hong Kong yesterday. “We’ve had a fair amount of meetings in the past six months: now, we’re really focused.”

MARKETS:

Most U.S. stocks fell as a lower-than-estimated profit forecast from FedEx Corp. overshadowed gains in technology shares ahead of Apple Inc.’s release of the iPad tablet computer in China.

FedEx, the second-biggest U.S. package-shipment company, fell 3.8 percent. Pulte Group Inc. declined 3.9 percent as foreclosures reached a record. Apple gained 2.4 percent to $276.57, a record, and technology shares advanced the most among 10 industries in the Standard & Poor’s 500 Index. Research In Motion Ltd., maker of the BlackBerry, climbed 2.1 percent before reporting earnings after the close.

About two stocks fell for each that rose on U.S. exchanges. The S&P declined less than 0.1 percent to 1,124.66 at 4 p.m. in New York after tumbling as much as 0.6 percent. The Dow Jones Industrial Average advanced 22.10 points, or 0.2 percent, to 10,594.83, the highest since Aug. 10.

THE FOLLOWING STOCKS MAY BE ACTIVE TODAY:

Anhui Jianghuai Automobile Co. (600418 CH): The automaker said it signed an agreement with NC2 Global, a joint venture of Navistar International Corp. and Caterpillar Inc., to develop a 3 billion yuan ($446.1 million) heavy truck venture. Jianghuai also signed an agreement with Navistar for a 1.8 billion yuan venture that will make diesel engines, according to a filing to the Shanghai stock exchange. The stock plunged 5.2 percent to 10.51 yuan.

Bank of Beijing Co. (601169 CH): The bank has received approval from regulators in the Netherlands and China to set up a branch in Amsterdam, according to a filing to the Shanghai stock exchange. The stock shed 2.5 percent to 11.67 yuan.

BBMG Corp. (2009 HK): The building materials maker said it will issue 2 billion yuan of five-year notes as the first tranche of a planned issue of 2.8 billion yuan of bonds. The stock fell 0.9 percent to HK$10.50.

Brilliance China Automotive Holdings Ltd. (1114 HK): The automaker said China Banking Regulatory Commission approved the formation of BMW Automotive Finance (China) Co. The stock fell 2.3 percent to HK$4.30.

China Everbright Bank Co. (601818 CH): The bank’s over-allotment option was exercised, prompting it to issue 900 million additional shares and increasing the size of its Shanghai initial public offering to 21.7 billion yuan, according to a Shanghai stock exchange filing. The shares dropped 2.3 percent to 3.36 yuan.

China Oriental Group Co. (581 HK): The Chinese steelmaker that counts ArcelorMittal as a shareholder will invest about $100 million to set up a scrap recycling business in the northern province of Hebei. The stock gained 1.7 percent to HK$2.95.

Chinasoft International Ltd.(354 HK): The software company said it will sell 200 million yuan of 4.25 percent three-year convertible notes to EJF Capital LLC to finance a possible acquisition. The stock has been suspended since midday Sept. 14.

Hong Long Holdings Ltd. (1383 HK): The developer’s controlling shareholder is in talks to sell some of its stock, in a sale that won’t trigger a general buyout offer. The stock surged 12 percent to HK$1.35.

Huaneng Power International Inc. (600011 CH): The unit of China’s biggest electricity producer said its parent will inject energy assets in Shandong and other provinces into the company within five years, without giving further details. The shares dropped 0.7 percent to 6.05 yuan.

Industrial & Commercial Bank of China Ltd. (601398 CH): The state-owned bank said it completed the sale of 22 billion yuan of subordinated bonds. The stock fell 1.5 percent to HK$3.97.

Interchina Holdings Co. (202 HK): The developer said it will place as much as HK$495 million of two-year, 5 percent notes convertible into as many as 550 million new shares to fund its existing business and possible investments. The stock was unchanged at 89 Hong Kong cents.

Jiangxi Copper Co. (600362 CH): The smelter said 1.28 billion of its yuan-denominated A shares become tradable on Sept. 27. The stock lost 2.6 percent to 31.35 yuan.

Neo Telemedia Ltd. (8167 HK): The film and television producer delayed its board meeting to approve full-year earnings to Sept. 22 from Sept. 17 because the auditor needs more time to gather information and complete the annual report. The stock fell 2.4 percent to 16 Hong Kong cents.

SAIC Motor Corp. (600104 CH): China’s largest domestic automaker plans to produce 50,000 hybrids and electric cars by 2018, up from as many as 20,000 in 2012, Vice President Xiao Guopu said at a conference in Chengdu. The shares dropped 2.2 percent to 16.61 yuan.

Solartech International Holdings Ltd. (1166 HK): The cable and wire maker will raise as much as HK$144 million in a private sale of 7.2 billion new shares at 2 Hong Kong cents each, and will use HK$75 million of the proceeds to fund a copper processing plant at its mine in Mongolia. The stock gained 7.1 percent to 3 Hong Kong cents.

Tiangong International Co. (826 HK): The toolmaker will sell land adjacent to its existing TG Tools plants in China’s Jiangsu province for 38.6 million yuan, and buildings on the land for 39.4 million yuan. The stock fell 2 percent to HK$3.97.

Wah Nam International Holdings Ltd. (159 HK): The mining investor said it acquired 39 million shares in FerrAus Ltd., a 19.2 percent stake, since Feb. 22, at a total consideration of A$33.3 million. The stock fell 1.4 percent to HK$1.43.

Zhuzhou Smelter Group Co. (600961 CH): China’s biggest zinc producer said it will sell as much as 140 tons of indium to an associated company for as much as 480 million yuan. The shares fell 2.6 percent to 10.89 yuan.

EVENTS SCHEDULED FOR TODAY:

Marc Faber Speaks at CLSA investor meeting closing in Hong Kong.
CEIBS annual China Bankers Forum in Shanghai.

BLOOMBERG TELEVISION GUESTS SCHEDULED FOR TODAY:

8:10   Ben Simpfendorfer, RBS, Chief China Economist
9:10   William Hess, China Analytics, Managing Director
9:40   Arnout Van Rijn, Robeco Hong Kong, Chief Investment
       Officer
10:00  Andy Xie, Morgan Stanley, Former Chief Economist/Managing
       Director
12:10  Jing Ulrich, JP Morgan, Managing Director

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