China Day Ahead: Geithner Seeks Yuan Gains; Industrial Output Is Slowing

U.S. Treasury Secretary Timothy F. Geithner said China needs to continue to allow its currency to gain, adding that the world’s second-largest economy is “very supportive” of the Group of 20 nations’ framework on reducing global imbalances.

Speaking at an event in New Delhi, Geithner said it’s “overwhelmingly” in China’s interest to allow its currency to appreciate. At the same time, he acknowledged that China’s leaders are split on how to proceed.

“They’re in the midst of a constant debate,” Geithner said. “The balance between the forces in favor of moving more quickly and moving more slowly are constantly shifting.”

OECD Says Growth Slows

Industrial output is slowing in China and Brazil, holding back global growth, the Organization for Economic Cooperation and Development’s September leading indicators showed.

The leading indicators “for Brazil and China continue to point strongly downward, edging below the long-term trend and implying that the level of industrial production will fall” further, the Paris-based OECD said in an e-mailed statement.

Diamond Demand

Diamond demand will rise 20 percent annually in India and China with half of global growth coming from the two nations in the next few years, De Beers said.

“China and India are the driving force, and China is the most visible incremental-demand driver,” Stephen Lussier, executive director at Johannesburg-based De Beers, said in an interview at Bloomberg headquarters in New York. “India has been the fastest growing jewelry market.”

CO2 Emissions

China’s rising carbon dioxide emissions must return to today’s level by 2030 if warming since pre-industrial times is to be kept to 2 degrees Celsius (3.6 degrees Fahrenheit), London School of Economics professor Nicholas Stern said.

China, the biggest emitter, has set itself a target of cutting greenhouse gases per unit of gross domestic product by 40 percent to 45 percent from 2005 through 2020. That would still expand its total emissions because of the nation’s economic growth rate, Stern said in an e-mailed paper.

MARKETS

U.S. stocks fell, dragging benchmark gauges down from two- year highs, as a five-week rally left the Standard & Poor’s 500 Index at the highest valuation since May and concerns over Irish debt curbed demand for riskier assets.

Travelers Cos., Boeing Co. and Home Depot Inc. led a drop in the Dow Jones Industrial Average, each sliding at least 1.3 percent. Anadarko Petroleum Corp. lost 4.3 percent after an analyst suggested BHP Billiton Ltd. as a more likely suitor for Woodside Petroleum Ltd. American International Group Inc. slipped 2.1 percent after being removed from UBS AG’s “Short- Term Buy” list.

The S&P 500 decreased 0.2 percent to 1,223.25 at 4 p.m. in New York, after earlier declining as much as 0.7 percent. The Dow slipped 37.24 points, or 0.3 percent, to 11,406.84. U.S. stocks rallied last week as the Federal Reserve announced a $600 billion bond-purchase plan, employment increased more than forecast and midterm elections produced a divided Congress.

THE FOLLOWING STOCKS MAY BE ACTIVE TODAY:

Coal producers: Coal prices at Qinhuangdao port, a benchmark for China, rose 2.6 percent to between 775 yuan ($116) and 795 yuan a metric ton as of yesterday compared with a week earlier, according to data from the China Coal Transport and Distribution Association.

China Shenhua Energy Co. (601088 CH), the nation’s largest coal producer, rose less than 0.1 percent to 29.35 yuan. China Coal Energy Co. (601898 CH), the second-largest, slid 0.5 percent to 12.82 yuan.

Chongqing Changan Automobile Co. (000625 CH): The Chinese partner of Ford Motor Co. and Mazda Motor Corp. said its share sale plan has received approval from the China Securities Regulatory Commission. The stock rose 3.6 percent to 12.91 yuan.

Gemdale Corp. (600383 CH): The country’s fourth-largest developer by market value said October sales jumped 183 percent from a year ago to 4.46 billion yuan and sales from January to October increased 20 percent to 19.8 billion yuan. The stock advanced 0.6 percent to 6.84 yuan on Nov. 5 before suspension.

GF Securities Co. (000776 CH): The company said it will sell a 60 percent stake in its brokerage unit, GF Huafu Securities Co. The stock rose 0.3 percent to 60 yuan.

Guizhou Tyre Co. (000589 CH): The tire maker said it received conditional approval from the China Securities Regulatory Commission for a rights offer. The stock fell 0.9 percent to 14.73 yuan.

Haitong Securities Co. (600837 CH): Shareholder China Orient Group Industry Co. sold 316.4 million shares, or a 3.84 percent stake, in the company between Oct. 20 and Nov. 4. The stock gained 1.1 percent to 12.46 yuan.

Ngai Lik Industrial Holding Ltd. (332 HK): The electronic manufacturer said Frontier Global Group Ltd. has purchased a 71.5 percent stake, 5.67 billion shares, and will offer 3.14 Hong Kong cents for each outstanding share. The shares will resume trading today.

Shenzhen Airport Co. (000089 CH): The company said it handled 69,700 metric tons of cargo in October, an increase of 34 percent from a year earlier. The stock rose 0.8 percent to 6.60 yuan.

Sino Land Co. (83 HK): The developer aims to raise as much as HK$4.14 billion ($534 million) in the private placement of 242 million shares to be priced in the range of HK$16.60 to HK$17.10 each, the Standard said, citing a term sheet. The stock fell 1.7 percent to HK$18.28 in Hong Kong.

Solargiga Energy Holdings Ltd. (757 HK): The solar wafer maker said it has agreed to buy solar-cell maker Jinzhou Huacheng Photovoltaic Technology Co. for HK$835.2 million in convertible bonds. The stock fell 1.1 percent to HK$1.81.

Tack Hsin Holdings Ltd. (611 HK): The restaurant operator said it’s in talks to buy a company that in turn owns stakes in companies in China that make nuclear-power equipment and facilities, and build power and engineering projects. The stock rose 30 percent to HK$2.27, before suspension. It will resume trading today.

Tianjin FAW Xiali Automobile Co. (000927 CH): The company said October vehicle sales were 24,849 units, up from 16,080 a year earlier. The stock jumped by the 10 percent daily limit to 10.19 yuan.

Western Mining Co. (601168 CH): China’s fourth-largest maker of zinc concentrate said its parent has bought an 80 percent stake in a zinc and lead mining company for 2.2 billion yuan. The stock advanced 2.7 percent to 19.31 yuan on Nov. 5 before trading was suspended.


EVENTS HAPPENING TODAY:

8.30am    Deputy Central Bank Governor Yi Gang speaks a forum in
          Beijing

10.30am   Deputy Central Bank Governor Ma Delun speaks at forum
          in Beijing

1.30pm    Vice Premier Wang Qishan and U.K. Chancellor of the
          Exchequer to give statements after meetings

3.30pm    China October Car Sales figures


Earnings:
Sands China (1928 HK)

GUESTS ON BLOOMBERG TV

8:40   Jeff Swartz, Timberland, CEO
11:10  Diana Choyleva, Lombard Street Research Asia Ltd,
       Director
13:10  Christopher Hammerbeck, British Chamber of Commerce in
       HK, Executive Dir.

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

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