China Day Ahead: U.S. Says Rare Earth Isn't a Threat; Global Trade Balance
The U.S. Defense Department has concluded that China’s monopoly on rare-earth materials, used in military hardware such as missile guidance and radar systems, poses no threat to national security, according to a person familiar with a year-long study by the Pentagon.
The report notes that rising prices and supply uncertainties are spurring private investment in new mining operations outside of China that will help meet American military needs, which require less than 5 percent of U.S. rare- earth consumption.
China now provides 97 percent of the world’s rare earths, a group of 17 metals that includes neodymium, samarium, and dysprosium.
Global Trade
China needs to take steps to boost domestic demand rather than let the currency appreciate to improve global trade, said Mexican billionaire Carlos Slim.
Slim in an interview in New York also said competitive devaluations “won’t succeed” and could spur inflation should commodity prices remain high.
“If China salaries get increased and people work less they will have more time and more money to spend,” Slim, the world’s richest man according to Forbes magazine, said. “This domestic demand will also help other countries in the world.”
Futures Risks Curbed
China’s move to increase margin limits on agricultural futures including rubber and rice is aimed at curbing trading risks and containing inflation as prices surge, an analyst at Wanda Futures Co. said.
“The moves were aimed at cracking down on speculation, basically their way of discouraging speculative money from flowing into the exchange-traded commodities,” Axl Wang, Beijing research manager, at Wanda said by phone. The Shanghai Futures Exchange increased the margin limits on natural rubber to 11 percent from 8 percent.
China Pledges Rare Earth Supply
China pledged to supply Japan and other countries with rare-earth metals, sales of which were reportedly disrupted last month during a territorial dispute that soured relations between Asia’s two largest economies.
Chinese Premier Wen Jiabao made the vow during a trilateral meeting with counterparts from Japan and South Korea, Kim Hee Jung, a spokeswoman for South Korean President Lee Myung Bak, told reporters in Hanoi Oct. 29. All three are attending meetings in Vietnam hosted by the Association of Southeast Asian Nations.
Construction Bank Earnings
China Construction Bank Corp., the world’s second-largest lender by market value, posted a 31 percent increase in third- quarter profit, fueled by rising demand for credit and a decrease in non-performing loans.
Net income climbed to 39.8 billion yuan ($6 billion), or 0.17 yuan a share, from 30.3 billion yuan, or 0.13 yuan, the Beijing-based bank said in a statement to the Hong Kong stock exchange. That beat the 36.7 billion yuan median estimate of nine analysts surveyed by Bloomberg News.
AIA Greenshoe Exercised
AIA Group Ltd., the insurer sold by American International Group Inc. in a Hong Kong initial public offering, said the overallotment option was exercised in full, boosting the size of the IPO to about $20.5 billion.
AIG, which had sold 7.03 billion shares in Hong Kong’s biggest IPO on record, used the option to boost the sale by 1.05 billion shares, cutting its stake to 33 percent, according to a statement to Hong Kong’s stock exchange.
Alibaba Adds Sohu
Alibaba Group Holding Ltd. said users of its search-engine service may now access technology supplied by Sohu.com Inc., as the two Chinese companies strengthen collaboration to challenge industry leader Baidu Inc.
Users of Alibaba’s Etao.com search service may now opt for the Sogou software, in addition to Microsoft Corp.’s Bing technology, Justine Chao, a spokeswoman at Alibaba, said by phone.
Changan Production
Chongqing Changan Automobile Co. will double its 2012 production by 2020, the Chinese carmaker said.
Chongqing Changan aims to make 6 million cars in 2020, 30 percent of which will be new energy cars, chairman Xu Liuping said at a press conference in Beijing. The 6 million goal would double the company’s production target of 3 million in 2012, according to Xu.
Chongqing Changan is also working with Ford Motor Co. on a 10-year development plan in China, Xu told reporters in Beijing, without giving details.
Barnier Speaks
China needs to follow through on its commitment to help rebalance the global economy, particularly in the context of foreign-exchange policy, European Union Financial Services Commissioner Michel Barnier said Oct. 29.
“If China wants to keep its rank at the table of the big actors, which is its rightful place, they also have a responsibility they must answer to,” Barnier said in a speech at the Atlantic Council, a public policy group in Washington.
Lafite Sets Record
Three bottles of Chateau Lafite’s 1869 vintage each sold for a record price of HK$1.8 million ($230,000) at a sale in Hong Kong Oct. 29, underlining Asia’s dominance of the auction market for trophy label wines.
All three were bought by the same Asian telephone bidder, said Sotheby’s, which offered almost 2,000 bottles of Lafite shipped directly from the cellars of the chateau in Pauillac, near Bordeaux. The 1869s -- the oldest bottles in a range of vintages that spanned 139 years -- were each estimated to sell for between HK$40,000 and HK$60,000, said Sotheby’s.
THE FOLLOWING STOCKS MAY BE ACTIVE TODAY:
Baoshan Iron & Steel Co. (600019 CH): China’s biggest publicly traded steelmaker said it may post its highest profit in at least three years on rising demand from carmakers. Net income this year may surge 110 percent to 130 percent from last year. The stock fell 1.7 percent to HK$7.17.
China Merchants Bank Co. (600036 CH): The bank said its profit rose 53 percent to 7.38 billion yuan in a statement filed to the Shanghai Stock Exchange Oct 29. Shares fell 2.4 percent to 14.57 yuan.
China Minsheng Bank Co. (600016 CH): The bank said its third-quarter profit grew 46 percent to 4.14 billion yuan, according to a statement filed to Shanghai Stock Exchange. Shares fell 1.97 percent to 5.46 yuan.
China Pacific Insurance (Group) Co. (601601 CH): The nation’s third-biggest insurer said third-quarter profit fell 64 percent to 886 million yuan ($133 million) as it set aside greater reserves and claims climbed. The stock fell 1.1 percent to 25.85 yuan.
China Shenhua Energy Co. (601088 CH): The nation’s biggest producer of the fuel said third-quarter net income gained 11 percent to 9.7 billion yuan on increased production to benefit from higher prices. The stock gained 0.4 percent to 28.60 yuan.
China Unicom (Hong Kong) Ltd. (762 HK): the nation’s second-largest mobile-phone company posted third-quarter net income of 742 million yuan, a 73 percent decline, missing the 1.1 billion yuan median estimate of four analyst estimates in a Bloomberg News survey. The stock fell 0.5 percent to HK$11.02
China Yangtze Power Co. (600900 CH): The hydroelectric power generator said its third quarter profit rose 170 percent from a year earlier to 5.18 billion yuan, according to a statement filed to the Shanghai Stock Exchange Oct29. Shares declined 0.61 percent to 8.13 yuan.
Citic Securities Co. (600030 CH): China’s largest brokerage firm by market value said its third-quarter net income fell 43.4 percent from a year ago to 1.4 billion yuan, according to a company statement filed to the Shanghai Stock Exchange Oct29. Shares dropped 4.9 percent to 15.51 yuan.
ESun Holdings Ltd. (571 HK: New Cotai LLC said it filed a petition in Hong Kong to force East Asia Satellite Television (Holdings) Ltd., eSun’s Macau joint venture, to sell its interest in their Macau Studio City joint venture at a price to be set by the court. The stock gained 1 percent to HK$1.
Greater China Holdings Ltd. (431 HK): The real estate developer and fertilizer producer said it signed a letter of intent to dispose of a industrial-property developer focusing on port infrastructure in Taicang, China. The stock gained 7.9 percent to 68 Hong Kong cents.
Lenovo Group Ltd. (992 HK): The computer maker said it plans to invest about $100 million in an operations center in Chengdu together with partners and suppliers. The stock fell 0.6 percent to HK$5.02.
Metallurgical Corporation of China (601618 CH): The metallurgical facilities provider said its net income in the third quarter fell 15.3 percent from a year earlier to 777 million yuan, according to a company statement filed to Shanghai Stock Exchange Oct29 after the market was closed. The shares closed unchanged.
Orange Sky Golden Harvest Entertainment (Holdings) Ltd. (1132 HK): The movie producer, distributor and exhibitor said it received a Hong Kong stock exchange waiver from having to disclose the assets and net income of target Legendary Pictures LLC. The stock was unchanged at 52 Hong Kong cents.
Thinsoft (Holdings) Ltd. (8096 HK): The software and hardware accessories seller will buy Foshan Ruifeng Petroleum & Chemical Fuel Co. for 630 million yuan in cash, the company said in a Hong Kong stock exchange filing. The stock will resume trading.
Tomson Group Ltd. (258 HK): The developer will pay HK$210 million and advance a HK$8.5 million loan for a 70 percent stake in a company that’s developing a 23,600-square-meter luxury residential complex in Macau. The stock gained 0.7 percent to HK$3.01.
Suning Appliance Co. (002024 CH): The household appliance and electronic products retailer said its third-quarter profit rose 21.2 in a statement filed to Shenzhen Stock Exchange Oct29. Shares rose 0.26 percent to 15.33 yuan.
Willie International Holdings Ltd. (273 HK): The developer will raise HK$44.3 million for potential future investments placing of 246 million shares at 18 Hong Kong cents each. The stock fell 0.9 percent to 21.4 Hong Kong cents.
EVENTS HAPPENING TODAY:
10:30am -China October PMI
2:00pm -Cathay Financial, investor conference in Taipei.
Hong Kong trading debuts:
Yashili (1230 HK)
BLOOMBERG TELEVISION GUESTS SCHEDULED FOR TODAY:
8:10 Yonghao Pu, UBS Wealth Management, Chief Investment
Strategist APAC
8:40 Shaun Rein, China Market Research Group, Managing
Director
9:40 Erwin Sanft, BNP Paribas, Head of China and Hong
Kong Research
To contact the editor responsible for this story: Bruce Grant at bruceg@bloomberg.net.
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