China Day Ahead: Krugman Says Trade War is Looming; Sinofert Buys Potash

Nobel Prize-winning economist Paul Krugman said China is headed for a “trade conflict” with the U.S. and other western countries as tensions rise about how to rebalance the global economy.

“What China is doing is functionally equivalent to having large export subsidies and large import tariffs,” Krugman, 57, said in a speech in the Free University in Berlin. “If it were doing that in the normal way, it would automatically be subject to large countervailing duties. And I think that’s going to happen at the rate we’re going.”

China is facing mounting pressure from major trading partners for a stronger yuan, with U.S. and European officials arguing that the currency is undervalued. Some executives are also complaining about Chinese trade barriers. U.S. steelmakers, working to block Chinese investments such as a planned venture by Anshan Iron & Steel Group in Mississippi, on Oct. 14 produced a report saying companies in China get illegal subsidies.

Sinofert Buys Potash

Sinofert Holdings Ltd., 22 percent held by Potash Corp. of Saskatchewan, said it signed an agreement for the purchase of Canadian potash from Canpotex Ltd., a venture 33.3 percent owned by its shareholder.

The accord, which must be disclosed because it’s between connected parties, caps annual buying at $600 million next year, $730 million in 2012 and $870 million in 2013, Hong Kong-based Sinofert said in a filing to the city’s stock exchange.

The deal is exclusive; Sinochem Macao will purchase Canadian potash solely from Canpotex, and Canpotex won’t sell to any other buyers in China, Sinofert said. The agreement is subject to shareholder approval.

TAL Soars on Debut

TAL Education Group, which offers after-school tutoring services in China, raised $120 million after pricing its initial public offering at the top of its forecast range. The shares rallied 50 percent.

The Beijing-based company sold 12 million American depositary receipts for $10 each after offering them at $8 to $10 apiece, according to a filing with the Securities and Exchange Commission and a statement. TAL Education climbed $5 to $15 in New York Stock Exchange trading.

Vegetable Oil Sale

China, the world’s biggest soybean buyer, may sell more vegetable oils from stockpiles if prices rise more after yesterday’s auction of 300,000 metric tons rapeseed oil, portal Cnyouzhi.com said.

The sale, which offloaded almost the entire volume on offer, was a display of the government’s “determination and capability” to control the market, the industry watcher said on its website. It may cool the market’s near-term bullishness and also curb gains in soybean oil, it said.

MARKETS:

The dollar slid the most against the euro since July and reached a 15-year low versus the yen amid speculation the Federal Reserve will pump more cash into the economy. Boeing Co. and Yahoo! Inc. helped lead stocks higher after earnings beat estimates, while energy shares and oil rose.

The dollar snapped a three-day rally against the euro, losing 1.6 percent to $1.3950 versus the common currency, and sank to as low as 80.85 yen. The Standard & Poor’s 500 Index increased 1.1 percent to 1,178.17 at 4 p.m. in New York after slumping 1.6 percent the previous day for its biggest drop in two months. Oil rebounded from its largest drop since February, returning above $81 a barrel. The yield on the 30-year Treasury bond slipped three basis points to 3.89 percent.

THE FOLLOWING STOCKS MAY BE ACTIVE TODAY:

Birmingham International Holdings Ltd. (2309 HK): The English soccer-team owner said it delayed publication of earnings because of an issue regarding the working-capital requirements of its “principal subsidiary,” not identified by name. The stock fell 13 percent to 30 Hong Kong cents.

Ching Hing (Holdings) Ltd. (692 HK): The fabric processor said it will raise as much as HK$219.9 million in a rights offer of eight new shares at 5 Hong Kong cents for every existing share held to fund development of its iron and titanium mine in China. The stock gained 1.9 percent to 27.5 Hong Kong cents.

Daqin Railway Co. (601006 CH): The coal transport service provider in northern China said nine-month net income may have risen more than 50 percent from 4.98 billion yuan ($748.6 million) in the same period last year. The shares lost 1.8 percent to 9.07 yuan.

GZI Transport Ltd. (1052 HK): The toll-road operator said it agreed to buy a 90 percent stake in the builder and operator of an expressway linking Wuhan and Xiaogan in China’s Hubei province. The stock gained 1.4 percent to HK$4.31.

Hao Tian Resources Group Ltd. (474 HK): The coking-coal miner said it will raise as much as HK$327.4 million placing as many as 363.7 million shares at 90 Hong Kong cents each, an 11 percent discount, to fund possible future acquisitions. The stock will resume trading today.

Jackin International Holdings Ltd. (630 HK): The storage- media maker said former Chairwoman Helena Ho sold 100 million shares, a 6.7 percent stake, to an independent third party. The stock fell 5.5 percent to 34.5 Hong Kong cents.

Shanghai International Airport Co. (600009 CH): The operator of Shanghai’s Pudong International Airport handled 3.7 million passengers last month, 36 percent more than a year earlier, and 276,300 metric tons of cargo, an 11 percent rise. The stock fell 1.6 percent to 14.51 yuan.

Shanxi Coal International Energy Group Co. (600646 CH): The mining company said it will raise as much as 5.5 billion yuan placing as many as 238.5 million shares at no less than 23.06 yuan each. The stock will resume trading today.

Shenguan Holdings Group Ltd. (829 HK): The maker of sausage casings said China Life Insurance (Overseas) Co. will buy 63.9 million company shares for HK$8.60 each from parent Rich Top Future Ltd. The stock gained 2.5 percent to HK$9.61, the highest since it listed in October 2009.


EVENTS HAPPENING TODAY:

9:50am  IRC (1029 HK), Springland (1700 HK) trading debuts
10am    3Q Real GDP, Sept. Producer Price Index, 3Q GDP, Sept.
        Purchasing Price Index, Sept. Consumer Price Index,
        Sept. Retail Sales, Sept. Industrial Production, Sept.
        Urban Fixed-Asset Investment
4:30pm  IRC (1029 HK) Sept. consumer price index

Maanshan Iron & Steel Co. earnings after 4:30 p.m.

BLOOMBERG TELEVISION GUESTS SCHEDULED FOR TODAY:

8:10   Tomo Kinoshita, Nomura International, Deputy Head of
       Economy Asia
9:40   Tao Wang, UBS, Head of China Econnomic Research
12:10  Rob Subbaraman, Nomura International HK, Chief Economist:
       Non-JP Asia
13:10  Patrick Chovanec, Tsinghua University, Associate
       Professor
14:10  Michael Buchanan, Goldman Sachs, Chief Asia-Pacific
       Economist

To contact the editor responsible for this story: Bruce Grant at bruceg@bloomberg.net.

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