China Day Ahead: AIA Rises in Grey Market; Fuel Prices Rise by 3 Percent

AIA Group Ltd. traded 9.2 percent higher than its initial public offering price in unofficial over-the-counter trading yesterday after raising $17.8 billion in its Hong Kong IPO, according to three people with knowledge of the transactions.

AIA’s shares last traded at HK$21.50 ($2.77) each yesterday according to “gray market” transactions brokered by Cantor Fitzgerald LP, said the people, who declined to be identified because the information isn’t public. New York-based American International Group Inc.’s main Asia unit priced its IPO at HK$19.68 a share last week and the stock is scheduled to start official trading on the Hong Kong Stock Exchange on Oct. 29.

Fuel Prices Rise

China, the world’s biggest energy consumer, increased retail gasoline and diesel prices by 3 percent today as part of government measures to cool the economy and to meet energy- saving targets.

The ceiling for gasoline prices will rise by 230 yuan ($34.50) a metric ton and diesel prices will gain 220 yuan a ton, the National Development and Reform Commission, the top economic planner, said in a statement on its website yesterday.

China Railway Saudi Loss

China Railway Construction Corp. builder of more than half the nation’s railroads, will book a loss of 4.15 billion yuan on its Mecca light-rail project, pending compensation talks with the client.

The construction contractor will book a charge of 3.605 billion yuan in the third quarter of 2010, causing “material” damage to earnings for the three-month period and the year, the company said in a Hong Kong stock exchange filing yesterday.

Chalco Sees FY Profit

Aluminum Corp. of China Ltd., the nation’s biggest producer of the metal, forecast a full-year profit even as it reported a consecutive quarterly loss after government power controls curbed aluminum output.

Chalco, as the Beijing-based company is known, had a loss of 117.8 million yuan for the three months ended Sept. 30, according to a statement to the Shanghai stock exchange. The loss compared with a profit of 21 million yuan a year earlier.

ZTE U.S. Orders

ZTE Corp., China’s second-biggest maker of telephone equipment, said it plans to buy $3 billion in semiconductor parts from Qualcomm Inc., Texas Instruments Inc., Freescale Semiconductor Inc., Altera Corp. and Broadcom Corp.

The purchases will happen over three years and are aimed at helping ZTE improve sales to telecommunications customers in the U.S., according to an e-mail from the Shenzhen, southern China- based company. The U.S. has become the focus of ZTE’s efforts to boost business, including agreements to sell two devices through Verizon Wireless.

China Home Prices

Singapore and China led the world in home-price appreciation in the second quarter amid accelerating economic growth in both countries, according to real estate consultant Knight Frank LLP.

Home prices in Singapore gained 37 percent from a year earlier, according to a statement by TJE London-based company. In mainland China, based on the cities of Beijing and Shanghai, prices rose 36.8 percent, Knight Frank said.

Japan-China Ties

Foreign Minister Seiji Maehara said Japan is working to mend frayed ties with China while at the same time looking for alternative sources of rare earth metals.

“It’s certainly not good for our own resource security to rely on a single country,” Maehara said yesterday in an interview in Tokyo. With China controlling 97 percent of the rare earth market, “we’re in the process of diversifying our supply sources.”

Ghana China Loans

Ghana will start work on projects funded with $9 billion of loans from Chinese banks next year, Trade Minister Hannah Tetteh said.

The projects, agreed upon during President John Atta Mills’s visit to China last month, will be preceded by technical preparations that will have to be approved by parliament, Tetteh told reporters in the capital, Accra.

MARKETS:

U.S. stocks rose, sending the Standard & Poor’s 500 Index to a fourth straight gain, after the Group of 20 nations pledged to avoid “competitive devaluation” of currencies and investors bet the Federal Reserve will announce further bond purchases next week.

DuPont Co., Kraft Foods Inc. and Walt Disney Co. climbed more than 1.4 percent to lead gains in the largest U.S. companies. Citigroup Inc. rallied 2.4 percent as Goldman Sachs Group Inc. added the shares to its “conviction buy” list. CommScope Inc. surged 30 percent as a private equity firm considered a takeover. Office Depot Inc. gained 3.5 percent after saying earnings will beat estimates.

The S&P 500 advanced 0.2 percent to 1,185.62 at 4 p.m. in New York, adding to three weeks of gains and climbing above its highest close since May 3. The Dow Jones Industrial Average rose 31.49 points, or 0.3 percent, to 11,164.05.

THE FOLLOWING STOCKS MAY BE ACTIVE TODAY:

Coal producers: Coal prices at China’s Qinhuangdao port, a domestic benchmark, increased 1 percent to between 735 yuan and 755 yuan a metric ton as of yesterday, from a week earlier, according to data from China Coal Transport and Distribution Association.

China Shenhua Energy Co. (601088 CH): The nation’s largest coal producer advanced 3.9 percent to 30.04 yuan. China Coal Energy Co. (601898 CH), the second largest, rose 2.5 percent to 13.14 yuan.

Aluminum Corporation of China (601600 CH): China’s biggest producer of the metal forecast a full-year profit, even as it reported a consecutive quarterly loss after government power controls curbed aluminum output. The shares rose 4.4 percent to 12.86 yuan.

Anhui Conch Cement Co. (600585 CH): China’s biggest maker of the building material said third-quarter profit rose 45 percent to 1.36 billion yuan ($204.3 million). The shares climbed3.7 percent to 27.26 yuan.

Anhui Jingcheng Copper (002171 CH): The copper plate strip producer’s third-quarter net income rose 43.4 percent from a year earlier to 21.8 million yuan. The shares jumped 10 percent to 22.37 yuan.

Beijing Capital Tourism Co. (600258 CH): The company’s third-quarter net income increased 9.7 percent from a year earlier to 41.2 million yuan. The stock rose 1.3 percent to 22.96 yuan.

Beijing Enterprises Water Group Ltd. (371 HK): The water- supply provider said it will buy a 45 percent stake in Guiyang Water Co. for 721 million yuan. The stock fell 2.9 percent to HK$2.67.

Galaxy Entertainment Group Ltd. (27 HK): The Macau casino operator said Steve Wolstenholme, chief operating officer of Galaxy Macau, resigned, and Michael Mecca, COO of the parent, will take the job temporarily. Jeffrey King, senior vice president of marketing at Galaxy Macau, also resigned. The stock fell 1.5 percent to HK$7.05.

Ming Fung Jewellery Group Ltd. (860 HK): The jeweler and and watch distributor Hengdeli Holdings Ltd. (3389 HK) said they signed a binding agreement for a retailing venture in China. Ming Fung gained 9.5 percent to 81 Hong Kong cents. Hengdeli was unchanged at HK$4.30.

NewOcean Energy Holdings Ltd. (342 HK): The gas distributor signed an agreement to acquire Lianxin Energy Development Co., which operates 17 filling stations in Guangzhou for buses and taxis. The stock will resume trading in Hong Kong tomorrow.

Sinofert Holdings Ltd. (297 HK): The fertilizer producer said it signed an agreement to buy potash fertilizers from Canpotex Ltd. for as much as $52 million. The stock fell 1.4 percent to HK$4.38.

Wing Hing International Holdings Ltd. (621 hk): The Hong Kong-based construction contractor said it’s in talks to invest in gold mines overseas and to dispose of certain assets. The stock surged 9.6 percent to 57 Hong Kong cents.

Xinyi Glass Holdings Ltd. (868 HK): The float-glass maker said it signed a letter of intent with Wuhu city in Anhui province to set up a plant that will make ultra-thin electronic glass products. The company also plans to invest HK$250 million to generate electricity from the residual heat from its float- glass furnaces. The stock gained 7.5 percent to HK$6.33.


EVENTS HAPPENING TODAY:

9:25-10:05am   Motech CEO P.H. Chang to speak at PV Taiwan
               forum
11:00-11:40am  Gintech President Wen-whe Pan to speak at PV
               Taiwan forum
4:30pm         Hong Kong September trade data

Earnings:
East Communications
Guangzhou Baiyun Airport
COSCO Shipping
Shandong Gold
Huadian Power
China Coal
Zhongjin Gold


BLOOMBERG TELEVISION GUESTS SCHEDULED FOR TODAY:

7:40am    Klaus Paur, China Auto Market Consultant
9:40am    Bill Majcher, Baron International, Managing Director
10:40am   Andrew Freris, BNP Paribas, Sr. Investment Strategist:
          Asia

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

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