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China Nurtures Futures Markets in Bid to Sway Commodity Prices

infoseekchina — Mon, 12 Oct 2009 15:39:00 +0000

Source: The Wall Street Journal by James T. Areddy

ZHENGZHOU, China — Chinese leaders are concerned that their nation’s enormous economic expansion is becoming an excuse for foreign suppliers to inflate commodity costs. So, they hope to use their three futures exchanges to fight back.

Government officials say the country is positioning its futures markets to be major players in setting world prices for metal, energy and farm commodities. By letting the world know how much its companies and investors think goods are worth, China hopes to be less at the mercy of markets elsewhere.

“It is true we have a long-term goal of increasing our influence in terms of pricing, but to do that we have to create conditions and do it step by step,” Jiang Yang, chief futures-industry policy maker and assistant chairman of the China Securities Regulatory Commission, said in an interview. “But as the Westerners say: ‘Rome was not built in a day.”

Now in China’s scopes: the $130 billion it spent importing oil last year.

Globally, crude oil is the biggest and most important traded commodity, and China is the second-largest importer after the U.S. The New York Mercantile Exchange’s contract for light, sweet oil — a grade of crude easily refined into gasoline — is the world’s most actively traded one and is thus the dominant mechanism for setting the global price.

But as early as next year, the Shanghai Futures Exchange may muscle in with its own contract in crude oil, possibly modeled on New York’s global benchmark, according to people familiar with the situation. That would, for the first time, give Chinese traders a direct role in valuing the commodity. “We are actively thinking about crude oil now,” says one of the people involved in the planning.

The emergence of major stock, bond and commodity markets in nominally communist China is one of the starkest examples of the nation’s embrace of capitalism. As China marks the 60th anniversary of the founding of the People’s Republic this month, the nation is celebrating its rise as an economic superpower. Beijing is increasingly eager to assert its clout — challenging international policy makers to rethink the global currency system, how multilateral institutions are run and the direction of global trade talks.

To be sure, China’s fledgling futures markets don’t pose any immediate threat to the giant exchanges in New York, Chicago and London that set benchmark prices for most commodities. For one thing, the Chinese challengers are largely closed to foreigners, and government-owned entities are among the biggest traders — hardly a recipe for a freewheeling global marketplace. At most, the emergence of big futures exchanges in China is giving Chinese companies and speculators a role, but not control, in determining global costs alongside traders in the West.

But Beijing believes hosting big futures markets will enhance the country’s economic security by essentially advertising what the world’s biggest customer for some commodities considers a fair price. For the rest of the world, the exchanges could mean less guesswork about China’s buying habits, possibly reducing volatility in the global market. Already, copper and soybean suppliers shift output toward or away from China depending on how its futures prices are moving. Increasingly, traders say, Chinese futures appear to drive price trends elsewhere, particularly in metals like copper.

An expanding list of 21 commodities traded on China’s exchanges includes many of the goods imported in vast quantities by the world’s fastest-growing major economy. China buys 10% of all crude oil, 30% of copper output and 53% of the world’s soybeans, according to Barclays Capital.

American consumers are already feeling China’s buying power in commodities. In 2007 and 2008, markets were gripped by a belief that surging car ownership in China and other developing countries was destined to drive crude oil ever higher. That thinking helped send oil futures soaring in New York to a peak of $147 a barrel in July 2008. American drivers saw the average price of gasoline rise 85% between late 2006 and July 2008. Then, worries about global recession pushed gasoline prices almost two-thirds lower last year.

Early this year, traders determined that China was stocking up on crude — and oil prices have rebounded 61% so far this year.

Futures are exchange-traded contracts that fix a price to buy or sell sugar, copper or oil a day, month or year in advance. Basic food, energy and raw-material costs are determined on commodity-futures exchanges, affecting everything from the sticker price of automobiles to the cost of gasoline at the pump and a hamburger at a drive-through window.

Chinese historians claim the country originated a version of grain futures contracts some 800 years ago, during the Song Dynasty. Modern-style futures trading began almost 160 years ago in Chicago with corn.

In the early 1990s, China was eager to demonstrate its embrace of market economics and launched stock and commodity-futures trading.

But there wasn’t much planning. More than 50 commodity exchanges sprang up, many of them trading primarily lu dou, or green mung beans, a variety that after soaking stretch into crunchy white sprouts.

Mung-bean prices made little difference to China’s economy but proved wildly popular with speculators, until a 1995 futures scandal prompted regulators to close all but three exchanges.

Beijing overhauled futures trading after it joined the World Trade Organization in 2001. It fused markets onto the real economy with cotton, soybean, copper and rubber trading, but eschewed the exotic financial derivatives tied to stocks, bonds and currencies that were gaining in popularity in the U.S.

For China, it was also a time of soaring commodity imports — which fostered suspicion about foreign merchants.

In 2002, Beijing hit foreign soybean suppliers like Minnesota-based Cargill Inc. with import restrictions. It also modernized the Dalian Commodity Exchange’s soybean-futures platform. The result today: The northeastern China exchange’s soybean prices are tracked almost as closely as the global benchmark in Chicago.

“It’s not a local exchange anymore, it’s a big exchange,” says Robert Horster, a Cargill risk manager. During the weeks Cargill soybean cargos are steaming toward China, Mr. Horster’s Shanghai-based team uses Dalian futures to insure, or hedge, against gyrating prices — and to make money on price differences between Dalian and Chicago, in trades called arbitrage.

Chinese futures are attracting institutional investors like Rockwell Investment & Holdings, a Ningbo-based firm with a dozen analysts and traders.

It is run by Ye Qingjun, who first put money into China’s futures markets in the early 1990s as a copper-company official eager to apply what he was learning about supply and demand. But Mr. Ye says those early days were “messy,” with prices of silk, plywood and other products listed on blackboards and jostled by arbitrary rule changes. During a violent swing in mung beans, Mr. Ye got wiped out.

Today, the 42-year-old says the industry is more professional and complex, driven as much by Chinese import trends as swings in the U.S. dollar. Facing five computer screens that flicker commodity, stock and currency prices from Shanghai to Chicago, Mr. Ye says futures are now tied to the real world and “related to the scale of China’s economy and the pace of development.”
The 165 million contracts in white sugar that changed hands on the Zhengzhou Commodity Exchange last year made it the most-active commodity future anywhere, according to the Washington-based Futures Industry Association. In 2008, Chinese exchanges traded three of the world’s five most-active metals contracts and seven of the 10 biggest agricultural contracts based on volume, the group says.

World financial markets are on constant alert for changing trends in China’s economy. Shanghai’s big stock market is sometimes regarded as an economic barometer for China, though futures may provide deeper insight, since commodities actually change hands when contracts expire.

China has turned to futures markets to augment its sometimes rocky global commodity scramble. Beijing is flexing new diplomatic muscle in the Middle East and sending its navy to patrol strategic shipping lanes. It has locked in supplies with infrastructure-for-oil deals in Angola, copper-mine purchases in Peru and cultivation of farmland in Australia.

In addition to oil, China is developing futures contracts in tin, lead, silver and pork. Another Chinese futures contract could transform global container-shipping rates, which officials believe have gotten so volatile that exports are being held back, says a person involved in the effort.

The regulator, Mr. Jiang, said futures may assure Chinese commodity importers “get fairer deals.” Before the Shanghai Futures Exchange launched fuel-oil futures in 2004, he said, the benchmark Singapore price would soar when empty Chinese ships arrived in the harbor there looking to load up with fuel oil they would transport back home; the price would then drop once they sailed away.

Now, predatory pricing practices don’t work as well, Mr. Jiang said, because China’s fuel oil buyers can insist on terms that reflect Shanghai futures levels. “So that gave them very strong bargaining power,” he said in the interview.

As Chinese futures trading pumps up global volumes, exchanges like CME Group Inc.’s New York Mercantile Exchange and Chicago Board of Trade are tilting eastward. To better reflect trading in soybeans and other agricultural products during Asian hours, CME recently tacked 75 minutes onto its busy overnight session, making it 13 hours and 15 minutes long. Volumes promptly rose 65%.

To offer clients access to China’s markets, J.P. Morgan Chase & Co. has located brokers near Guangzhou. “It’s got such huge pricing power in commodities it is able to influence physical prices, which gets reflected in futures prices,” says Richard Shen, who directs the operation.

Futures exchanges won’t solve key commodity challenges for China, including the government’s charge that steelmakers overpay to import iron ore. That mineral cost China $60.53 billion last year. But it isn’t traded on exchanges and is instead priced in negotiations with major suppliers, which may result in higher profits for suppliers.

Some caution that high volumes on Chinese exchanges overstate their importance. A futures industry joke says China is second only to the weather in driving some commodity prices — but less predictable.

Even Zhengzhou exchange officials concede frenzied sugar trading may signify speculation among the country’s 300,000 active futures investors more than China’s sweet tooth. For every Chinese contract like copper or soybeans that cleanly reflects China’s actual needs, professionals say there is another like sugar or corn with a loose — or “dirty” — relation to on-the-ground fundamentals.

International futures-market benchmarking has been slow to shift to China from long-established exchanges like the New York and Chicago venues. Despite China’s huge volumes, its futures markets allow foreigners limited access. By contrast, the London Metal Exchange says 95% of its business emanates from overseas.

General Motors Co., Ford Motor Co. and Tyson Foods Inc. are some of the companies that use futures in the U.S. to protect themselves from volatility in commodity prices. Despite expanding production in China, and being technically eligible to hedge on China’s exchanges, all three say they haven’t used its futures markets.

Instead, the big footprints in China’s futures markets belong to state-owned groups, primarily commodity trader Cofco Corp. and Beijing’s secretive stockpiling agent, the State Bureau of Material Reserve. That makes the government both player and policy maker.

Source article: http://online.wsj.com/article/SB125529874012778991.html

Regulator vetting suitors as GEB ball finally starts rolling

infoseekchina — Sat, 12 Sep 2009 17:01:00 +0000

Source: By Zhang Ran (China Daily)

The market regulator is vetting applications from 149 companies that intend to raise a combined 33.6 billion yuan ($4.9 billion) via initial public offerings (IPO) on the country’s NASDAQ-like Growth Enterprise Board (GEB), officials from the China Securities Regulatory Commission (CSRC) said on Friday.

Of the 149 companies, nearly 40 are ready to enter the primary IPO review procedures, which could start as early as next week, said CSRC officials.

The regulator said the GEB could now be launched by early October to fund high-growth start-ups. The regulator started receiving IPO applications for the GEB on July 26 and set up an IPO review committee in the middle of August.

CSRC officials said 12 applicants are foreign joint ventures with overseas shareholding of around 10 percent. The regulator did not specify how many foreign venture capitalists are investing in the 149 start-up companies.

The 149 companies are expected to raise 33.6 billion yuan by issuing 3.63 billion new shares. The maximum and minimum amount to be raised by a single company is 825 million yuan and 85 million, according to CSRC figures. The average amount being raised by the prospective GEB suitors is around 227 million yuan.

The new market is expected to cater to the financing needs of companies in innovative industries such as renewable energy, biomedicine, electronic information and environmental protection.

Nearly 37 percent of the applicants are from the telecommunication industry, while 10 percent are from biomedicine and 12 percent from new materials. Another 13 percent of the applicants come from the manufacturing sector. Nearly 70 percent of companies on the existing Shenzhen-based small- and medium-sized enterprises board are from the manufacturing sector.

“For GEB applicants, the regulator may have less requirements with regard to their current earnings compared with companies from the main board. However, it has stricter requirements for realizing high speed growth,” said a CSRC official who declined to be named.

Source article: http://www.chinadaily.com.cn/bizchina/2009-09/12/content_8685043.htm

Red Chips, Overseas Firms to be Regulated Separately

infoseekchina — Thu, 10 Sep 2009 15:04:00 +0000

Source: (Caijing.com.cn) By staff reporter Song Yanhua

China has been preparing for the debut of an international board to allow overseas companies to offer yuan-denominated shares on the A-share market.

The international board of China’s A-share market is likely to feature separate regulation for red chips and “pure” overseas firms, a source close to the China Securities Regulatory Commission told Caijing.

The source added that the CSRC itself could decide on the rules governing red chips and overseas companies, rather than wait for new laws to be enacted.

The source said the departments of the CSRC likely to exercise supervision over the two categories of international board listings are the public offering supervision department for red chips and the international department for “pure” overseas firms.

Red chips refer to mainland-backed companies that are incorporated overseas and listed in Hong Kong, such as China Mobile (HKEX: 0941) and CNOOC (HKEX: 0883).

A declining Chinese stock market is likely to further delay the birth of the international board, the source said, adding that the authorities will still follow the plan to approve the listing of red-chips ahead of pure overseas companies.

China has been preparing for the debut of an international board to allow overseas companies to offer yuan-denominated shares on the A-share market.

The source close to CSRC said drafting the rules are a top priority in the regulator’s preparations for the board.

China’s Company Law and Securities Law do not bar overseas-incorporated companies from offering shares at mainland exchanges, but China lacks detailed rules governing such offers.

The source close to the CSRC said the commission does not intend to pursue revisions to Company Law and Securities Law.

Bao Fangzhou, a lawyer with the Allbright law firm, said a regulatory framework needs to be put in place before the international board can operate.

Rules that do not apply to overseas firms seeking A-share listings also need to be modified – including a provision that requires companies seeking initial public offerings to follow Chinese accounting standards.

“This is obviously not applicable to overseas companies,” Bao said.

The requirements on governance and disclosure are also overly stringent for companies seeking a listing at the international board, the source close to the CSRC said, and may need to be loosened.

The source said regulators will treat red chips differently from other overseas firms because red-chip companies have the bulk of their assets in the mainland.

Although the New York Stock Exchange and HSBC have expressed their intention to be among the first companies to be listed on the international board, most foreign companies that have shown interest are waiting to evaluate the performance of the first batch of listings before making their own decision, said a senior executive at a domestic brokerage, who declined to be identified.

The executive also said that Chinese brokerages such as CICC and Citic Securities now see the international board as a key area for business growth as most major Chinese companies have listed on domestic or overseas markets.

Source article: http://english.caijing.com.cn/2009-09-10/110244887.html

879 listed companies see H1 profits down 18%

infoseekchina — Thu, 20 Aug 2009 15:48:00 +0000

Source: Xinhua

China Securities Journal reported today that 879 listed companies on the Shanghai and Shenzhen stock exchanges had posted their first-half results as of Thursday, reporting 114.3 billion yuan ($16.73 billion) in combined profits, down 18 percent from the 140.6 billion yuan recorded a year earlier.

In the first half of 2009, revenues of the 879 companies reached about 1.54 trillion yuan, compared with 1.64 trillion yuan in the same period last year.

Steelmakers and non-ferrous companies’ first-half profits fell most among listed companies, with Angang Steel Company Ltd reporting a loss of 1.563 billion yuan. Jigang Group, Laigang Group, Yunan Copper Co Ltd posted 100 million yuan in losses each.

In contrast, companies engaged in finance, coal and liquor sectors recorded better performances as Bank of Communications topped the earnings list with first-half profit of 15.5 billion yuan.

China has 1,678 listed companies and they must release their first-half reports by August 31, according to Securities Association of China.

Full article: http://english.cctv.com/20090820/105494.shtml

First Taiwan ETF to debut in Hong Kong stock exchange

infoseekchina — Tue, 18 Aug 2009 16:01:00 +0000

Source: Hong Kong Exchanges and Clearing Limited

First Taiwan ETF to Debut Following Mutual Recognition

Hong Kong Exchanges and Clearing Limited (HKEx) will tomorrow (Wednesday) list the first Taiwan Exchange Traded Fund (ETF) following a recent agreement reached between the Hong Kong and Taiwan regulators on mutual recognition.

The Hong Kong Securities and Futures Commission ( SFC ) and the Taiwan Financial Supervisory Commission (FSC) on 22 May 2009 agreed to facilitate the cross listing of ETFs between the stock exchanges of Hong Kong and Taiwan. Under the arrangement, the SFC and the FSC will mutually recognise the other jurisdiction’s ETFs.

The Polaris Taiwan Top 50 Tracker Fund (H.K.), the first ETF set to debut on Hong Kong’s Main Board pursuant to the said mutual recognition arrangement, is a feeder fund that will invest its assets into a master fund, the Polaris Taiwan Top 50 Tracker which is listed on the Taiwan Stock Exchange. The benchmark of the master fund is the TSEC Taiwan 50 Index. The securities market makers for the ETF are Polaris Securities Hong Kong Limited and UBS Securities Hong Kong Limited.

Two other ETFs tracking Taiwan-related indices were listed in Hong Kong prior to the regulatory agreement. With this latest listing, the number of ETFs on HKEx’s securities market will increase to 36 and the number of ETF managers will increase to nine.

All ETFs listed on HKEx’s securities market are designated for short selling with tick rule exemption.

Investors are advised to read ETF prospectuses in full prior to making any investment decisions. Information on the various risks of ETFs and their structures is available on the HKEx website and on the SFC website.

Full article: http://www.hkex.com.hk/news/hkexnews/090818news.htm

China sets up IPO review committee for Growth Enterprise Market

infoseekchina — Sat, 15 Aug 2009 15:38:00 +0000

Source: Xinhua

China’s securities regulator set up Friday an initial public offering (IPO) review committee for its Growth Enterprise Market (GEM) which is expected to accept IPOs in late October.

The committee, consisting of 35 members, might start reviewing IPO applications in September, said an official with the China Securities Regulatory Commission (CSRC), who declined to be named.

Apart from 23 full-time members, the committee also has 12 part-time members. The experts are from the CSRC, Shanghai Stock Exchange, Shenzhen Stock Exchange, law offices, accountant offices as well as asset evaluation agencies.

The GEM IPO review committee is independent from the main board. That means the committee members are not allowed to take any positions with the main board approval committees.

The CSRC started to accept applications of the GEM July 26 and has accepted 115 applications for IPOs on the GEM. The commission was working hard to speed up the GEM IPO procedures, said the CSRC official.

The securities regulator said earlier the GEM would focus on six sectors this year, such as new energy, new materials, bio-pharmaceuticals, pro-environmental, new service and information technology.

Full article: http://www.chinadaily.com.cn/bizchina/2009-08/15/content_8574034.htm

Launching of board eyed for 'overseas returns'

infoseekchina — Fri, 07 Aug 2009 00:52:00 +0000

China Daily 2009-08-07 08:01 By Zhang Ran

* The international board is expected to be launched next year.

Almost always in the past decade, when the A-share market curved toward a bullish cycle, calls for overseas-listed companies such as China Mobile to return to the A-share market become strong.

No doubt this year, when the Shanghai Composite Index almost doubled since the tough period of late last year, speculation is on the rise that China’s security regulator might take it as an opportunity to build up the fundraising capacity of its A-share market – in the form of setting up an international board to accommodate “overseas returns”.

All signs indicate that, this time, it could be true, because Shanghai Mayor Tu Guangshao, the former vice-chairman of the China Securities Regulatory Commission (CSRC), said in a recent interview that the international board is expected to be launched next year.

Tu reportedly called for the world’s sixth-biggest stock exchange to become a more open market.

The remarks were seen by industry insiders as urging the security regulator to speed up the A-share market’s internationalization connections.

Industry insiders said that this is the first time a top Chinese official has given a schedule for the list of overseas companies since the long-awaited international board was mentioned by the government in its efforts to build Shanghai into an international financial hub.

Caijing Magazine also reported yesterday that China Mobile, the country’s largest overseas-listed company, or the so-called “red chip”, has hired leading brokerage firm China International Capital Corp (CICC) for arranging A-share sales, and that the company could be listed on the Shanghai bourse in 2010.

Others who could join the red chips are a batch of foreign firms, such as HSBC Holdings, the Development Bank of Singapore, NYSE Euronext and the NASDAQ, which have shown interest in being listed on the Shanghai bourse.

HSBC Holdings Plc, Europe’s biggest bank by market value, was said to have hired CICC and CITIC Securities Co to advise it on a share sale in Shanghai, Bloomberg reported on Wednesday, citing two people with knowledge of the matter.

“It is likely for these companies to be listed in 2010, considering the current affluent liquidity in the A-share market. The security regulator has to add supply to the market, which is blowing a growing bubble,” said Li Zhongzhi, an analyst with Ping An Securities.

“The market needs huge companies such as China Mobile to balance it, ” Li said.

Full article: http://www.chinadaily.com.cn/china/2009-08/07/content_8539200.htm

China weighs opening market to foreign stocks

infoseekchina — Thu, 06 Aug 2009 15:36:00 +0000

Agencies 2009-08-06 13:45

Beijing: China’s main stock exchange plans to launch an international board next year that would allow foreign companies to sell shares denominated in Chinese currency for the first time, a news report said.

The Shanghai Stock Exchange is working on the board as part of efforts to promote the city as a regional financial center, the newspaper Shanghai Daily said, citing a Shanghai deputy mayor.

“The board is expected to be launched next year,” the deputy mayor, Tu Guangshao, said in comments published Wednesday.

A listing on a Chinese stock exchange could help foreign companies by allowing them to tap China’s huge pool of savings and by raising their public profile.

China keeps its financial markets isolated from global capital flows and foreign companies are not allowed to trade on its two stock exchanges. Regulators have yet to issue rules on how foreign companies might be allowed to gain a place in its exchanges.

Shanghai is the world’s best-performing stock market this year, with its benchmark index up nearly 90 percent.

British bank HSBC has said it hopes to be among the first foreign companies allowed to sell shares in China and has hired advisers to pursue a listing.

Full article: http://www.chinadaily.com.cn/china/2009-08/06/content_8534836.htm

HK market seen to stay on upward trend

infoseekchina — Sat, 01 Aug 2009 15:50:00 +0000

Shanghai Daily By Parvathy Ullatil 2009-8-1

Hong Kong stocks climbed yesterday, fueled by positive earnings momentum and analyst upgrades.

The Hong Kong market recorded another month of hefty gains in July, its fifth winning month.

In the absence of a major disappointment in United States economic data due next week, or in corporate earnings that will continue to trickle in through August, analysts expect the stock market to continue its upward trajectory.

“A lot of people, including some long funds out there, are still underweight on the market because they didn’t buy the recovery story. But there is only so long you can wait, you have to put that money to work,” said Andrew Sullivan, sales trader with MainFirst Securities.

Power companies, which have lagged the market rally this year, jumped yesterday, after Datang International Power Generation forecast a surge in first-half profit. Datang jumped 5.4 percent to HK$5.09 (66 US cents).

China Resources Power climbed 5.5 percent in Hong Kong. The country’s fourth-largest power producer plans to take a 25 percent stake in a 25 billion yuan (US$3.66 billion) nuclear project in Hunan Province, Chief Financial Officer Wang Xiaobin told Reuters on Thursday.

The benchmark Hang Seng Index finished up 339.25 points at 20,573.33 after scaling an 11-month high of 20,712.66 earlier amid strong corporate earnings forecasts and analyst upgrades.

HSBC led the charge with a 4.6 percent jump even as some analysts predicted a loss for the global banker when it reports its first-half earnings next week on the back of write-offs at its US unit.The gauge gained 11.9 percent in July and 3 percent in its third consecutive weekly rally.

The China Enterprises Index, which represents top locally listed mainland stocks, rose 1.1 percent to 12,123.59.

Local property developers surged after Morgan Stanley forecast a further 20 percent increase in home prices and a 15 percent rise for offices.

“The liquidity rush will continue to drive up Hong Kong asset prices and the performance of property stocks,” said Morgan Stanley analysts.

Henderson Land jumped 5.8 percent, while Hysan Development vaulted 10.1 percent, after both stocks were raised to an overweight rating by the investment house.

Hang Lung Properties rose 6 percent after it posted a forecast-matching 53 percent drop in underlying profit for the year ended June.

Full article: http://www.shanghaidaily.com/article/?id=409296&type=Business

Beijing Policy and Running with the Bulls

infoseekchina — Fri, 31 Jul 2009 15:48:00 +0000

07-31 15:59 Caijing By staff reporters Qiao Xiaohui and Wang Xiaolu

Government regulators used policy initiatives to stimulate this year’s stock market rallies. But what’s the long-term cost?

Regulators turned cautious toward China’s rising A-share stock market in early July, when a new rule from the China Banking Regulatory Commission (CBRC) prohibited banks from tapping wealth management funds for stock investments. Moreover, mutual funds were told to stop dabbling in equities.

Another cautious step came July 9 when the People’s Bank of China announced it would issue one-year notes, signaling a mild adjustment in monetary policy.

And a few days later, CBRC ordered the semi-official China Securities Depository and Clearing Corp. to cease opening securities trade accounts for trust companies, effectively barring the use of trusts to buy stock through initial public offerings.

But Beijing was only tapping the brakes. The government tone changed – and pleased stock market bulls — a few days later when, at an economic conference, Premier Wen Jiabao said the government should stick to “a proactive fiscal policy and a relatively relaxed monetary policy.”

The premier’s message encouraged investor optimism. So after a brief respite while regulators played the caution card in early July, the bull runs resumed on the Shanghai and Shenzhen stock markets.

By mid-July, the market indexes reached their highest levels in a year on rising trading volumes. The Shanghai Composite Index closed at 3188.55 on July 15, while the Shenzhen index finished at 1,307 points.

Once again, government policy had moved the markets.

Institutional investors played the bull market aggressively – and successfully. Lipper, a Reuters fund research company, reported equity fund earnings rose 50.67 percent during the first half of the year. China’s QFII funds for foreign investors soared 62.79 percent.

Private funds scored higher returns than public funds; many posted yields exceeding 100 percent. Some investors turned more cautious after the Shanghai index hit 3,000, a public fund manager said, but few expected the market to fall.

Savings accounts have been tapped for stock purchases by investors trying to stay a step ahead of what many see impending inflation. Deposits in standard bank accounts rose faster than savings account deposits in June.

A CICC strategy report July 6 said the change in savings deposits deserved more attention because, if the trend continues, stock indexes can be expected to soar.

Behind the Numbers

Fundamentals can shed some light on current market behavior, said Yu Jun, executive general manager for research at CITIC Securities. He said producer price indexes were still in negative territory even though macroeconomic conditions turned better in the first half of the year – an indicator that industrial product prices had bottomed out and mid-tier companies were unlikely to post better financials this year.

A report by Wang Tao, chief China economist for the investment bank UBS, said the Chinese government would likely discontinue its economic stimulus programs soon. But she argued Beijing would not overhaul current macroeconomic policy due to concerns that export trade and the global economic outlook are still, by and large, grim.

Indeed, as Wang’s comments indicate, the central government’s policy orientation has become a key focus for market watchers. Some worry the wrong policy could end the current rally.

But so far this year, government policy has encouraged market growth. Regulators recently gave a green light to resuming IPOs but initially chose to allow new stock offerings in three growth sectors, excluding blue chip companies. The amount of money to be raised in each IPO was to be less than 1 billion yuan.

After that market test, regulators opened doors to bigger deals. They approved Chengyu Highway for an IPO on the A-share market to raise 1.7 billion yuan. Later, blue chip giant China Construction Corp. got regulatory approval to raise as much as 42 billion yuan. In addition, regulators lifted a 10-month suspension on corporate bond sales.

An investment banker told Caijing that regulators decided to control the financing pace out of concern that stock prices would start slumping. IPOs, they reasoned, would encourage a secure market.

Guilin Sanjing (SZSE: 002275) opened on its IPO debut July 10 at 32.50 yuan, up 64 percent from the initial offer of 19.80. The stock soon soared to 39 yuan, hitting the daily limit. Likewise, Zhejiang-based Wanma Cable (SZSE: 002277) opened at 22.50 yuan, up 95 percent from its offer, before rising another 20 percent that day.

“Controlling the pace and scale of IPOs results in market demands outstripping supply,” said an investment bank source. “This is a natural outcome.”

Policy Phenomena

Where will the A-share index go next? The answer is tied to monetary policy.

“We don’t worry that market prices will slump in the third quarter,” said a private equity fund manager. “As for the fourth quarter, it will require some observation. But, personally, I am more pessimistic about next year.”

As of July 14, a total 267 out of 769 companies that list on the Shanghai and Shenzhen exchanges reported improved financials for the first half of the year. Another 31 companies said they expected to remain profitable.

Gui Gaoming, chief analyst with Shenyin Wanguo, said upbeat expectations bolstered the stock market during the first six months of 2009. But it’s unclear whether those expectations can be maintained through the second half of the year.

A fundamental question surrounds the future of China’s Main Street economy. For now, as consumer prices fall and exports stagnate, many companies have yet to see bottom line improvements. Economic uncertainties will have a negative impact on the stock market.

Gui argues that if expectations are not matched by real profits, the Shanghai stock index cannot expect investor support to continue. But policymakers are never far behind.

Full article: http://english.caijing.com.cn/2009-07-31/110219135.html

Chinese shares plunge 5% on profit taking

infoseekchina — Wed, 29 Jul 2009 14:16:00 +0000

www.chinaview.cn 2009-07-29 15:35:26 by Xinhua writers Wu Qiong and Jiang Xufeng

Chinese shares ended 5% lower July 29 after rebounding from 7% plummet in the afternoon trade.

The benchmark Shanghai Composite Index closed at 3,266.43 points, down 171.94 points, or 5%.
Anlysists said the plunge was “a normal correction as investors rushed to cash in on hefty profits.”Chinese equities ended 5 percent lower Wednesday after rebounding from plummeting more than 7 percent in the afternoon trade, as investors cashed in on earlier gains during the past five trading days.

The benchmark Shanghai Composite Index closed at 3,266.43 points, down 171.94 points, or 5 percent, ending a five-day upward streak.
The Shenzhen Component Index retreated 5.54 percent to finish at 13,070.6 points, down 766.06 points.

Combined turnover shot up to a record high of 429.1 billion yuan (about 63.1 billion U.S. dollars) from 374.27 billion yuan on the previous trading day.

Losers overwhelmingly outnumbered gainers by 49 to 826 in Shanghai and 45 to 711 in Shenzhen.

Wednesday’s plunge was “a normal correction as investors rushed to cash in on hefty profits, because the stock market had advanced for five consecutive trading days,” Zhang Yunpeng, an analyst with Beijing-based Huarong Securities told Xinhua.

The Shanghai index has gained from 3213.21 points on July 21 to 3438.37 on Tuesday, up 7 percent in five trading days.

The real estate sector led the losses, with more than 20 shares down by the daily limit of 10 percent. The Shenzhen-based Gemdale Corporation lost 10 percent to finish at 18.09 yuan, down 2.01 yuan.

China Vanke, the country’s largest property developer by market value, lost 7.3 percent to end at 13.2 yuan. Poly Real Estate, China’s second largest, plummeted 8.7 percent to 26.56 yuan.

PetroChina, the country’s biggest oil producer, moved down by 5.99 percent to 15.22 yuan, after the Chinese government announced price cuts at the pumps a day earlier.

Other heavyweights on the Shanghai index also fell. China Shenhua, the country’s largest coal producer, retreated 6.48 percent to 36.96 yuan. China Ping An went down 5.33 percent to 59.13 yuan.

Industrial and Commercial Bank of China, the country’s biggest lender, lost 2.64 percent to 5.17 yuan, and China Construction Bank, the country’s largest mortgage lender, edged down 0.49 percent to 6.15 yuan.

Huarong Securities’s Zhang, however, said investor expectation of China’s economic recovery remained unchanged, so it’s possible that the index would bounce back or climb to new highs.

Full article: http://news.xinhuanet.com/english/2009-07/29/content_11792535.htm

China starts accepting GEM application

infoseekchina — Mon, 27 Jul 2009 04:10:00 +0000

China Economic Net 2009-07-27 07:16

China Securities Regulatory Commission (CSRC), the country’s securities regulator, began accepting listing applications for the Growth Enterprise Market (GEM) on Sunday.

A total of 108 enterprises, mainly involved in new energy, new material, electric information and biology medicine, filed applications on Sunday, much more than the regulator’s previous expectation of 50 to 100 companies.

Thirty-eight sponsor institutions also handed over applications to the CSRC.

According to the regulator, companies that apply to list on the GEM should have two sponsor representatives to recommend them to ensure the quality of such companies and reduce risks of the GEM operation.

The CSRC would check companies’ application documents in the following five working days starting from Sunday, and decide whether to give suggestion to sponsor representatives to further improve and revise the documents.

Relevant documents would be handed over to the National Development and Reform Commission, the country’s economic planner for final approval.

Not every company who filed applications would get list on the GEM, the CSRC added.

The regulator said that the first batch of start-up companies were expected to be listed on GEM in late October or early November.

The CSRC said in March that GEM listing candidates must gain net profits for the preceding two years and have a combined earnings of at least 10 million yuan (1.46 million U.S. dollars).

Or the company must post a net profit of at least 5 million yuan and a revenue of at least 50 million yuan for the latest fiscal year, with revenue growth of at least 30 percent in the past two years.

Full article: http://en.ce.cn/subject/chinamarkets/mktstock/200907/27/t20090727_19632853.shtml

China to Allow More Foreign Companies to Issue Panda Bonds

infoseekchina — Mon, 27 Jul 2009 03:41:00 +0000

07-27 11:36 Caijing

The development and promotion of the panda bond market dovetails with China’s effort to internationalize its currency, the yuan, as it seeks a greater say in multilateral financial institutions.

China’s central bank said it will “progressively” allow more foreign companies to issue yuan-denominated bonds on the mainland, as it increasingly opens and internationalizes its capital and financial markets.

The People’s Bank of China made the comment in a statement on July 24 after a meeting in north China’s Changchun City.

Standard Chartered Bank (China), HSBC Holdings Plc and Japan’s Mizuho Corporate Bank said in June they are preparing to offer “panda bonds,” as such issues are known.

The International Finance Corp., an arm of the World Bank, and the Asian Development Bank have issued panda bonds. Both issues were launched in October 2005.

The development and promotion of the panda bond market dovetails with China’s effort to internationalize its currency, the yuan, as it seeks a greater say in multilateral financial institutions.

The central bank published rules governing a trial yuan settlement program on July 2. The program links five mainland cities – Shanghai, Guangzhou, Shenzhen, Zhuhai and Dongguan – to Hong Kong and Macau.

Full article: http://english.caijing.com.cn/2009-07-27/110214371.html

Investors cold shoulder bonds as yields dip

infoseekchina — Fri, 24 Jul 2009 03:15:00 +0000

China Daily 2009-07-24 08:04 By Zhang Ran

With prospects of further interest rate cuts on the anvil, investors seem to be shunning bonds in favor of equities and commodities, according to experts.

Adding more credibility to the view has been the nearly 70-percent rise in the A-share market since the beginning of the year and the anticipation of an ensuing inflation activated commodities trading.

On the supply side, China plans to issue around 1.7 trillion yuan ($248.88 billion) treasury bonds for the whole year. Bonds worth 652 billion yuan have been issued in the first half, leaving some 1.1 trillion yuan worth of bonds to be sold in the second half.

“The supply is huge, but demand is obviously very sluggish,” Xu Jin, analyst, Shanghai Securities said.

Recently, the Ministry of Finance failed to find buyers for debt worth $1.7 billion as not too many investors showed interest in the auctions.

“With bank interest rates likely to go up in the near future, the allure for treasury bonds may fade,” Zhu said.

Investors are growing wary of Chinese debt as the nation’s economy is growing faster than expectations. China’s gross domestic product grew 7.9 percent in the second quarter, beating the median estimate of 7.8 percent in a Bloomberg survey of eight economists.

Chinese policymakers need to “fine-tune” the policy to prevent asset bubbles, loan defaults and faster inflation, Zhang Jianhua, head of the central bank’s research bureau, wrote in China Finance magazine this month.

Wu Xiaoling, former central bank deputy governor, said at a forum recently that the central bank might have to raise banks’ reserve requirements to mop up excess liquidity.

“Under conditions of overcapacity, excessive bank lending in China is flowing into the stock and property markets and could inflate asset bubbles,” Wu said.

The nation’s inflation rate may accelerate to 5 percent in 2010, topping the 1.3 percent outlook for the US, according to China International Capital Corp, a Beijing-based investment bank. Chinese consumer prices fell 1.7 percent in June from a year earlier.

“The interest rate hike could happen at the end of 2009 or the beginning of 2010,” said Li Mingzhong, a bond market analyst with Guoyuan Securities.

“(The interest rate hike) could happen within the year. But overall, it depends on the economic situation in the third quarter,” Zhu from Guangfa Fund Management Co said.

“Bond yields at the current levels are not that attractive. Unless the yield increases, investors won’t be interested in it,” Zhu said.

China’s five-year yields rose on July 21 for the 16th consecutive day, the longest stretch since at least 2006, to 3 percent.

Five-year yields in China will probably climb to 4 percent this year, said Tim Condon, the Singapore-based head of Asia research at ING Group NV, the largest Dutch financial services company. Investors would lose 2.8 percent if his prediction is proven to be correct, according to Bloomberg.

Full article: http://www.chinadaily.com.cn/bizchina/2009-07/24/content_8467275.htm

Chinese shares hit new 13-month high

infoseekchina — Thu, 23 Jul 2009 14:39:00 +0000

Xinhua 2009-07-23 20:22

Beijing: Chinese equities closed higher on Thursday to a new 13-month high, led by financial and property shares.

The benchmark Shanghai Composite Index closed at 3,328.49 points, up 31.88 points, or 0.97 percent. The Shenzhen Component Index closed at 13,521.65 points, up 168.44 points, or 1.26 percent.

Combined turnover shrank to 298.69 billion yuan (US$43.73 billion) from 306.79 billion yuan on the previous trading day.

Gainers outnumbered losers by 565 to 280 in Shanghai and 473 to 260 in Shenzhen.

Real estate shares led the rise by climbing 2.82 percent after a moderate correction of previous trading days on Thursday.

China Vanke Co., Ltd, the country’s largest property developer by market value, rose 3.07 percent to 14.42 yuan. Poly Real Estate, China’s second largest, moved up by 4.27 percent to 30.33 yuan.

Wolong Real Estate Group, Gemdale Co. Ltd, Zhongjiang Real Estate Co.,Ltd, and Guoxinrongda Real Estate rose by the daily limit of 10 percent to 11.89 yuan, 19.51 yuan, 9.33 yuan and 12.6 yuan, respectively.

The upward trend showed that the investors’ focus was still on the sector despite government warning on home price rises, said Huang Xiangbin, analyst with Cinda Securities.

China’s banking regulator urged banks Sunday to stick to rules on mortgages for second-home buyers and step up scrutiny over approvals. Down-payments on second homes are set at a minimum 40 percent.

Rigid demand on housing and inflation expectation would continue to pull up the performance of real estate companies, he said.

Banks also pulled up the index. Bank of Communications, China’s fifth largest lender, surged 5.16 percent to 10.6 yuan, while China Minsheng Banking Corp., the country’s first private bank, rose 4.64 percent to 8.79 yuan.

Full article: http://www.chinadaily.com.cn/china/2009-07/23/content_8465949.htm

Chinese IPO world's biggest

infoseekchina — Wed, 22 Jul 2009 02:33:00 +0000

Shanghai Daily By Winny Wang 2009-7-22

China State Construction Engineering Corp plans to raise as much as 50 billion yuan (US$7.31 billion) in the country’s biggest initial public offering since October 2007.

The country’s largest housing contractor will issue 12 billion shares at between 3.96 yuan and 4.18 yuan each, according to its statement to the Shanghai Stock Exchange yesterday. Online subscription to the IPO will start today.

Analysts expected the new share issuance may suck up 1.6 trillion yuan as investors moved funds toward the new listing.

“The Shanghai Composite Index, which has rallied nearly 80 percent so far this year, may face short-term fluctuation due to the IPO, but the recovery will extend over the middle term,” said Tu Jun, an analyst at Shanghai Securities Co.

He said the new IPO will not fundamentally change the upward trend of the market as investors have already digested the news.

State Construction’s IPO is the biggest on the Chinese mainland after PetroChina raised 66.8 billion yuan in October 2007 and also the world’s biggest since March 2008 when Visa Inc netted more than US$19 billion.

The company plans to use the funds to expand residential construction as a surge in bank lending has boosted the housing market.

State Construction’s profit tumbled 44 percent last year to 4.92 billion yuan because of the slowing property market, rising raw material prices and higher tax payments. It forecast a recovery this year backed by the government’s 4-trillion-yuan stimulus package.

The company is the fifth to launch an IPO after the China Securities Regulatory Commission resumed IPOs after a nine-month hiatus.

Full article: http://www.shanghaidaily.com/sp/article/2009/200907/20090722/article_408177.htm

GEM board to accept applications from Sunday

infoseekchina — Tue, 21 Jul 2009 02:40:00 +0000

CCTV 2009-07-21 08:37 BJT

The official launch of the the country’s long-awaited Nasdaq-style board is one step closer. Chinese companies aiming to list on the Growth Enterprise Market board will be able to apply from Sunday.

The securities watchdog says the GEM board will focus on firms that specialize in fields like new energy, new materials, the bio-medics, I-T, and environmental protection. China first proposed the launch of the GEM board in 1998. Regulators published listing and disclosure rules earlier this year.

The new board is expected to become an important financing channel for small and medium sized enterprises.

Full article: http://www.cctv.com/program/bizchina/20090721/101265.shtml

China's stock market tops Japan by value

infoseekchina — Mon, 20 Jul 2009 02:11:00 +0000

China Daily/Agencies 2009-07-20 07:47

China overtook Japan as the world’s second-largest stock market by value for the first time in 18 months.

This month’s change was attributed to government stimulus spending and record bank lending that boosted share prices this year.

The Shanghai Composite Index rose 1.4 percent this month, sending the value of China’s domestic stock market to $3.21 trillion, compared with Japan’s $3.20 trillion, according to data compiled by Bloomberg.

The Shanghai index has gained 75 percent this year, the best-performing major market, against a 7 percent advance in the Nikkei 225 Stock Average.

The US has the biggest equities market worth $10.8 trillion.

“China is just entering its stride and is still very much in a growth phase, while Japan is already a developed economy,” said Daphne Roth, Singapore-based head of Asian equity research at ABN Amro Private Banking, which oversees about $14 billion.

China last surpassed Japan in stock market capitalization from Jan 4 to Jan 24, 2008, data compiled by Bloomberg show.

The Shanghai Composite tripled in the two years leading to its record on Oct 16, 2007, before tumbling 72 percent to its trough the following November.

A government-led 4 trillion yuan stimulus package and record bank lending have shielded the Chinese economy against a plunge in exports.

Foreign-exchange reserves topped $2 trillion for the first time, while its money supply rose a record 28.5 percent in June, the central bank said on July 15.

“Japan has two main problems. The enormous public debt handicaps the government’s ability to spend additional money to boost the economy, and we are too reliant on exports,” said Takashi Kamiya, chief economist at T&D Asset Management Co in Tokyo, which helps oversee some $16 billion.

Chinese companies account for four of the 10 biggest companies when measured by market value, according to Bloomberg data.

Full article: http://www.chinadaily.com.cn/bizchina/2009-07/20/content_8447558.htm

Chinese shares hit 13-month high, driven by strong optimism

infoseekchina — Tue, 14 Jul 2009 15:56:00 +0000

Xinhua 2009-07-14 22:42

Beijing: Chinese equities gained 2.1 percent to hit a 13-month high Tuesday after losses over three trading days, boosted by investors’ optimism.

The benchmark Shanghai Composite Index on the Shanghai bourse closed at 3,145.16 points, up 64.6 points, or 2.1 percent. The Shenzhen Component Index closed at 12,991.06 points, up 330.51 points, or 2.61 percent.

Total turnover expanded to 280.53 billion yuan (US$41.07 billion) from 268.78 billion yuan on the previous trading day.

Gainers outnumbered losers by 795 to 67 in Shanghai and 667 to 74 in Shenzhen.

“Investors’ strong optimism and a rebound in major markets in the United States and Europe driven by financial shares helped push up the gains in Chinese equities,” said Qin Xiaojun, an analyst with the Galaxy Securities.

Positive signals strengthened investors’ confidence as China posted a 19.6 percent fiscal revenue increase in June on Monday.

China’s central bank also called on Monday the country’s financial institutions to improve financial support for fighting the economic downturn.

Full article: http://www.chinadaily.com.cn/china/2009-07/14/content_8428475.htm

More listed companies aware that internal controls are key

infoseekchina — Mon, 13 Jul 2009 03:49:00 +0000

China Daily 2009-07-13 08:09 By Bi Xiaoning

China’s listed companies have increased their awareness of internal control principles, but more need to put those principles into practice, a new survey by Deloitte reported.

The international accounting firm this month released the results of its May survey of Chinese companies representing eight major industry sectors, including manufacturing, real estate, transportation, energy and finance.

About half of the companies surveyed have established designated departments to implement risk management and internal control policies, the survey found.

However, only 23 percent have advanced from written procedures to practical implementation, Deloitte reported.

And only 18 percent of companies surveyed have conducted reviews of their internal control efforts.

“It shows that companies are taking a ‘fire-fighting’ approach,” said Danny Lau, national managing partner of the Enterprise Risk Services division at Deloitte China.

“They are still at a preliminary stage of establishing and implementing their internal control, which is not yet a routine practice or a long-term mechanism,” Lau said.

The survey, entitled, “Internal Control Survey of China Listed Companies”, is the third conducted by Deloitte. Earlier surveys were conducted in 2007 and 2008.

According to this year’s survey, all enterprises recognize that tightened internal control systems can help guard against risks.

However, only about 30 percent of business representatives surveyed believe that internal control systems can help manage and save costs, Deloitte reported.

Some respondents said implementing internal control systems would increase the workload of their staff and incur other expenses.

Deloitte reported that the implication is that corporate management might not fully understand the functions of internal control systems.

Only 6 percent of the businesses surveyed offer training to their internal control staff.

More than half of the enterprises indicated that internal control measures could not achieve expected results, which Deloitte said could be hampering efforts to implement controls.

Full article: http://www.chinadaily.com.cn/bizchina/2009-07/13/content_8420101.htm

New share offerings sizzle on Shenzhen debut

infoseekchina — Sat, 11 Jul 2009 16:30:00 +0000

China Daily 2009-07-11 07:16 By Zhou Yan

Chinese investors penchant for newly listed stocks reached a feverish pitch on Friday at the debut of the first two companies on the smaller Shenzhen Stock Exchange after a 9-month ban on initial public offerings (IPOs).

Zhejiang Wanma Cable soared 134.3 percent from its issue price to 26.95 yuan before the bourse called for a trading suspension to allow for a cooling off period. The share price of another debutant, Guilin Sanjin Pharmaceutical, also jumped 96.97 percent from its issue price at the opening to 39 yuan when trading in its shares was also halted.

At the end of the day, the Shenzhen Component Index rose 0.54 percent from Thursday to close at 12706.01 points, but the key indicator of the bigger Shanghai Stock Exchange edged down 0.29 percent to 3113.93.

Stock analysts said the pent up speculative interest in IPOs was behind the unusually big jump in the prices of the two newly listed stocks on Friday. Other than that, “I can’t see any fundamental reason for the surge (in those share prices)”, said Zhou Ronghua, analyst, TX Investment Consulting Co.

According to Zheshang Securities, which compiled the trading figures for the latest 26 firms listed on the small- and medium-sized board, the average gains for new stocks on the first day was 81.8 percent.

To avoid over speculation, the Shenzhen Stock Exchange, the smaller of the mainland’s two bourses, issued new rules in early July allowing it to suspend trading in newly listed stocks for 30 minutes if its prices surge 20 percent or more from the opening price. Trading will be halted for another 30 minutes if the prices of those stocks continue to fluctuate beyond the 50 percent band.

Full article: http://www.chinadaily.com.cn/bizchina/2009-07/11/content_8415042.htm

China State Construction gets IPO approval

infoseekchina — Sat, 11 Jul 2009 16:23:00 +0000

Xinhua 2009-07-11 10:55

China State Construction Engineering Corporation (CSCEC), China’s construction and real estate giant, has obtained regulator approval to get listed in Shanghai stock market.

The China Securities Journal reported Saturday that CSCEC would become the fifth company to start initial public offering (IPO) on the Chinese mainland since the China Securities Regulatory Commission (CSRC) resumed IPO last month.

The prospectus would be published on Monday. The company planned to issue 12 billion shares, raising 42.6 billion yuan ($6.26 billion), the largest flotation among the five, said the newspaper.

CSCEC is China’s largest home builder, with business ranging from housing construction, international project contracting, real estate developing, and infrastructure building.

Full article: http://www.chinadaily.com.cn/bizchina/2009-07/11/content_8415308.htm

Chinese equities gain 1.37%, led by car and steel makers

infoseekchina — Thu, 09 Jul 2009 15:20:00 +0000

Xinhua 2009-07-09 16:10

Chinese stocks gained 1.37 percent Thursday after two straight days’ losses, boosted by car makers and steel makers.

The benchmark Shanghai Composite Index on the Shanghai bourse closed at 3,123.03 points, up 42.26 points. The Shenzhen Component Index closed at 12,637.94 points, up 149.36 points, or 1.20 percent.

Total turnover expanded to about 285 billion yuan ($41.71 billion) from 254.4 billion yuan on the previous trading day.

Full article: http://www.chinadaily.com.cn/bizchina/2009-07/09/content_8403278.htm

Booming sales cheer home appliance makers

infoseekchina — Wed, 08 Jul 2009 14:46:00 +0000

China Daily 2009-7-8

If you, like thousands of personal investors in China, are wondering what hot stocks to pick to cash in on the market bull run, take a walk down Shanghai’s busy Huaihai Road and feel the heat.

Indeed, the heat wave that baked nearly half the country for over a month and sent the mercury in many municipalities, provinces and autonomous regions to record highs is also setting off a rush by hundreds of thousands of consumers for air conditioners, refrigerators and other cooling aides. While in the shops, they were also picking up other consumer durables such as washing machines, flat panel television sets and cooking ranges.

The buying spree has been further boosted by the government economic stimulus package that calls for, among other things, generous subsidies to consumers in the rural areas for the purchase of big-ticket electrical appliances.

Not surprisingly, leading consumer electronics manufacturers like Gree, Midea and Haier and their foreign counterparts are laughing all the way to the bank. Sales of air conditioners, for instance, have been growing at double-digit rates since May. Suning, a leading consumer electronics retail chain, reported that sales of all white goods in its Beijing outlets in June jumped more than 200 percent from a year earlier.

The sales bonanza is particularly welcomed at a time when the prospects for consumer electronics makers around the country is clouded by the global economic downturn, resulting in a fall in overseas demand.

To be sure, not all household appliances are flying off the shelves. Retailers said the economic softening hasn’t gone unnoticed by consumers, who have become increasingly concerned not only about the purchase price, but, more importantly, about cost of usage. For that reason, energy-saving products, especially those that contain new materials and technologies, are in demand, retailers said.

The manufacturers best known for their energy-saving products “are most welcomed in the market”, said Hu Yali, analyst, CITIC Securities.

The central government has started providing subsidy to produce 10 kinds of high-efficiency and low-emission household appliances, including air conditioners, refrigerators, washing machines and televisions, since June 1.

Full article: http://www.chinaretail.org/shownews.asp?id=902