China Day Ahead: IMF Voting Rights Shift; Foxconn Technology Worker Death
China is set to become the third- strongest member of the International Monetary Fund under a “historical” plan approved by the institution’s board, a position allowing the country to take more “responsibility” in the global economy, the fund’s chief said.
The plan “may have an influence on the behavior of the Chinese authorities,” Managing Director Dominique Strauss-Kahn told reporters in Washington. “They were willing to be better represented in the IMF, which shows that they care about multilateral institutions, and I expect that they will behave having in mind the importance of their role.”
Acting on an Oct. 23 deal by finance chiefs of the Group of 20 nations, the IMF agreed to shift more than 6 percent of voting rights to what officials called “dynamic” developing countries. That would give more say to nations such as Brazil and South Korea, while weakening the clout of European members including Belgium and Germany. “Advanced” European countries are also set to give up two seats on the board under the package.
Foxconn Worker Death
Foxconn Technology Group, the world’s largest contract maker of electronics, said a worker was found dead outside a company dormitory on Nov. 5, the first reported death at the manufacturer since 100,000 employees staged a “Treasure your life” rally in August.
The body of the 23-year old male worker was found around 1:20 a.m. at Foxconn’s Guanlan campus in the southern Chinese city of Shenzhen, the company said in an e-mailed statement sent through its public relations agency Burson-Marsteller. Louis Woo, a spokesman for Foxconn, said in the evening of Nov. 5 that the cause of death hadn’t been determined.
Hu, Sarkozy on Currencies
Chinese President Hu Jintao and French President Nicolas Sarkozy discussed reforming the international monetary system, with a French official saying they agreed that Group of 20 nations should avoid “looking for guilty parties.”
France takes over the presidency of the G-20 later this month and has said one of its objectives is reforming international rules on currencies, which are still largely based on agreements and institutions created at the 1944 Bretton Woods conference.
“It was very important to be able to discuss with the Chinese Presidency the major issues, including the very necessary reform of the international monetary system,” Sarkozy told reporters after their meeting. “It hasn’t changed since 1944, when there was one large economy, the U.S., and one major currency, the dollar.”
ReneSola Ltd., the Chinese maker of solar wafers and modules that’s more than doubled in New York trading this year, said it returned to profit in the third quarter as sales leaped.
Net income was a record $60.1 million compared with a loss of $10.2 million in the year-earlier period, the Jiashan-based company said in a statement. Earnings per share totaled $0.70 vs a loss of $0.14.
AIG Taiwan Unit
American International Group Inc., the firm divesting assets to repay a U.S. bailout, said it expects to complete the sale of a Taiwan life-insurance unit within 12 months.
AIG previously said it would consider scaling back operations at Nan Shan Life Insurance Co. after a $2.15 billion deal to divest the business to Primus Financial Holdings Ltd. and China Strategic Holdings Ltd. was terminated in September. Taiwan regulators opposed the transaction on concern over the buyer’s financial capability and commitment to operate the unit.
Consumption in New Plan
China’s new five-year development plan makes consumption a priority ahead of investment or exports for the first time, said Yao Jingyuan, chief economist for the country’s National Bureau of Statistics.
The nation’s worsening income inequality has a negative effect on consumption, and the key to stimulating consumption is to ensure that urban and rural household incomes grow as fast as gross domestic product, Yao said.
China Rongsheng Heavy Industries, the nation’s second- biggest shipbuilder, said domestic economic growth and government support will boost profit.
“The future of shipbuilding is upbeat as the global economy is recovering stably,” Chief Executive Officer Chen Qiang said in Hong Kong via a video conference. “The overall development of China’s economy has brought the industry a lot of opportunities.”
Rongsheng is seeking to raise as much as $2.3 billion selling 1.75 billion shares at HK$7.30 to HK$10.10 in an initial public offering this year. The shipbuilder intends to use the proceeds for projects including a fourth drydock , as a rebound in world trade following last year’s global recession revives demand for ships.
Malaysian Exchange Takes Yuan
Bursa Malaysia Derivatives Berhad, which sets the global benchmark for crude palm oil, will start accepting the yuan as margin collateral for trading in the Malaysian derivatives market, Chief Executive Officer Yusli Mohamed Yusoff said.
“This move signifies the importance of China traders participating in our market,” Yusli said at a contract-signing ceremony with the Dalian Commodity Exchange in Guangzhou. “we have made the Malaysian futures market appealing and accessible, via accepting the Chinese currency as margin deposit.”
China, the world’s biggest soybean buyer, will face increasing difficulty meeting its surging demand for imports as global competition for the oilseed grows, a Cofco Ltd. official said.
The “oilseed processing industry will face a big problem: raw material supply,” Chang Muping, Cofco’s deputy general manager of oilseed processing, said at a conference in Guangzhou. “Crushers inside and outside China are competing for raw material.”
China’s soybean imports have jumped this year as crushers, spurred by good margins, raced to secure supply. Processors increased purchases of new-crop South American soybeans by 25 percent from a year earlier, the China National Grain & Oils Information Center said on Oct. 25.
EU May Scrap Duty
The European Union may scrap a 14-year-old tariff on imports from China of a chemical used in cosmetics and perfumes because France’s Rhodia SA, the EU’s only producer, stopped making it there.
The European Commission opened a review into whether to remove the duty on coumarin of 3,479 euros ($4,923) a metric ton, a step that would aid importers and users such as Germany’s Henkel AG. The probe will last as long as 15 months.
THE FOLLOWING STOCKS MAY BE ACTIVE TODAY:
Baoshan Iron & Steel Co. (600019 CH): Parent Baosteel Group Corp. plans to build a medium and high-end magnetic material processing plant in Haimen city of Jiangsu Province, the China Business News reported, citing the company. Baosteel plans to invest 310 million yuan ($47 million) it the initial stage of the construction, according to the report.
Baoshan Iron, the listed unit of China’s second-biggest steelmaker, rose 0.3 percent to 7.34 yuan on Nov. 5.
China CAMC Engineering Co. (002051 CH): Sudan’s White Nile Sugar Co. signed deals for an ethanol factory and animal-feed plant with CAMC, said Hassan Satti, managing director of the African company, who didn’t disclose the value of the deals. CAMC fell 0.7 percent to 60.79 yuan.
China Infrastructure Investment Ltd. (600 HK): The company said it has an option to pay HK$698 million for a 47 percent stake in a supplier of piped natural gas to Beijing’s Beiqijia area. It also has an option to sell a real estate development in Shenyang to the gas-project stake vendors for HK$594 million. The stock gained 1.3 percent to 40 Hong Kong cents.
China Merchants Holdings International Co. (144 HK) will form a venture that will buy a 47.5 percent of a container- terminal operator in Nigeria for $154 million. China Merchants will initially hold 100 percent, with the China-Africa Development Fund taking 40 percent after obtaining Chinese government approval. The stock gained 4.8 percent to HK$30.75.
First China Financial Network Holdings Ltd. (8123 HK): The brokerage said it will buy a floor of a building in Hong Kong’s Central district for HK$39.8 million for use as its own offices. The stock gained 7 percent to 30.5 Hong Kong cents.
Franshion Properties China Ltd. (817 HK): The developer said it will inject 1 billion yuan in capital and lend 1.24 billion yuan to unit Qingdao Lanhai Xingang City Properties Co., which is developing a mixed-use project in Qingdao in China’s Shandong province. The stock fell 0.4 percent to HK$2.60.
Frasers Property (China) Ltd. (535 HK): The developer said full-year net income rose to HK$194 million from HK$3.17 million the previous year, and it will “continue to push for” the start of construction of the second phase of its Shanghai Shanshui Four Seasons project as soon as possible. The stock was unchanged at 19.9 Hong Kong cents.
Guangzhou Automobile Group Co. (2238 HK): The automaker said it plans to delist GAC Changfeng Motor Co. (600991 CH) and restructure the unit into a venture equally held by Guangzhou Automobile and Mitsubishi Motors Corp. Guangzhou Auto gained 1.3 percent to HK$12.46. GAC Changfeng was suspended.
Industrial & Commercial Bank of China Ltd. (601398 HK): The nation’s largest lender received approval from the securities regulator to sell as much as 45 billion yuan in a rights offer, according to a statement posted on the regulator’s website. The stock gained 4.3 percent to 4.82 yuan.
KWG Property Holding Ltd. (1813 HK); Guangzhou R&F Properties Co. (2777 HK): The developers said they will jointly pay $353.5 million for 70 percent stakes in mixed-use Shanghai complexes California Place and California Square. KWG gained 3.7 percent to HK$6.74. R&F advanced 0.7 percent to HK$11.82.
Qunxing Paper Holdings Co. (3868 HK): The papermaker said it will raise HK$349 million for working capital through a rights offer of 528.8 million new shares at 66 Hong Kong cents each. The stock gained 0.7 percent to HK$3.35.
Rare earth producers: China will maintain its export volume of rare earths next year, the official Xinhua News Agency said, citing Minister of Commerce Chen Deming.
Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co. (600111 CH), the nation’s largest producer of the raw materials, fell 1.9 percent to 83.23 yuan. Ningbo Yunsheng Group Co. (600366 CH) dropped 4 percent to 28.67 yuan.
SAIC Motor Corp. (600104 CH): Volkswagen AG will produce an electric car model at local ventures with SAIC Motor, China’s largest carmaker, and FAW Group Corp. as early as 2013 and add a battery-powered model specifically designed for the nation in 2018, said Karl-Thomas Neumann, president of Volkswagen Group China, said. SAIC shares fell 1.3 percent to 20.19 yuan.
Wuliangye Yibin Co. (000858 CH): China’s second-biggest maker of white liquor by market value won’t raise the price of its liquor this year, Xinhua News Agency reported, citing Chairman Tang Qiao. The shares fell 1.1 percent to 37.2 yuan.
ZTE Corp. (000063 CH): Sprint Nextel Corp. won’t consider products from ZTE Corp., the nation’s second-biggest phone- equipment maker, and Huawei Technologies Ltd. for a multi- billion contract because of U.S. government security concerns, the Wall Street Journal reported, citing unidentified people. ZTE shares fell 1.9 percent to 28.80 yuan.
EVENTS HAPPENING TODAY: 4pm Taiwan October exports 4pm Taiwan October oil imports Earnings: SJM (880 HK)
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