California’s automotive insurance sector is now looking at per-per-mile insurance.  This is an interesting approach to the carbon emissions dilemma. http://www.treehugger.com/cars_transportation/?dtc=th_nav_cars

In a nutshell, the further you drive, the more you pay for insurance and vice versa, the less you drive the less you pay.  At face value the fee structure would seem to encourage car pooling, mass transit and other commuting alternatives.  I have to admit that for a person like me, who takes the bus five days a week for work and only drives on the weekend, I tend to like the idea.  Having said that, one must really consider whether the alternatives to driving are both readily available and efficient enough to avoid inconvenience.

Could Vancouverites stomach such an approach if ICBC were to adopt the fee model. If you are living in a suburb on the outskirts of transits support network, are you willing to pay more for car insurance to commute to work and would it make sense for you to alternatively take transit into Vancouver?

I just opened a bank account in China. As complicated as this may sound, it was surprisingly easy. Combined, the American and I have various bad experiences when it comes to dealing with banks in foreign countries. When I moved to England about ten years ago, it was a major struggle to find anyone willing to giva a German student an English bank account. Everyone wanted millions of documents proving that my ancestors (aka parents) are wealthy enough to support me in case of crisis. All I wanted was just a bank account to put in money; I wasn’t asking about any overdraft or other fancy things.

The same story when the American moved to Germany. Even having a job contract with a German company and a valid working and residence visa, the banks in Germany seemed very cautious giving an account to any old foreigner. Once we finally sorted everything out at the bank branch, it took another 4-5 weeks to receive everything from bank card to passwords/pins and internet banking documentation.

But here, everything was done in an hour! We went to ICBC (apparently since the financial crisis, this is the largest bank in the world) and the American translated my needs. The application form was quickly filled out, the bank card including pin number was done at the checkout and another helpful bank clerk set us up with the internet banking. Why can’t it be this easy everywhere else? All I want to do is give my hard earned cash to someone to look after it. I have to point out, that so far I don’t have a residence permit yet, only a business visa. And, without saying, the bank was open on Saturday afternoon.

I don’t know what to call this post, so I’m titling it “?” The recovery is still the process, but I suppose that it will be until Dec. 14th (that’ll be the day I can put weight on my left leg). Meanwhile my right hip is very sore – it’s over-compensating for my other hip which isn’t in use. I’m happy to report that I’m no longer taking any kind of painkillers anymore. That doesn’t mean it doesn’t hurt, I’ve just decided that they don’t really help that much so there’s no real point. Although, I must say, this experience has forced me to reflect and really take a long hard look inside myself. You’d think that I’d have already done that after 2008 – apparently not.

I’m discovering things about myself that I never realized before and above all else, I’m realizing that I’m quite happy being by myself with S. Just when I finally find happiness within again, I also discover all kinds of friends coming out of the woodwork. DW and I have started talking again. I shouldn’t have let AW alienate me from so many people I was once close to. AW had me completely convinced (because I didn’t go to the same school as them) that all of our friends weren’t too fond of me. How ironic that AW and I don’t speak anymore. She’s off  in England doing whatever it is that she’s doing and I’m reconnecting with people I thought I’d lost. Anyway, my point is this, DW is interested in moving in together as roommates. We both live quite far from downtown (where we’d both obviously be happier being) and we get along. Obviously we’ll both think about it for another little while and see what happens at the end of the year. If we’re both still interested we’re thinking sometime in the spring. That would mean I have a lot of stuff to get together before then, but you know what? I’m confident that I’ll be able to do it.

I wrote out a list of my goals :

A recipe for personal growth & happiness: things to accomplish before my 25th & beyond

1.) Find a hussle
2.) Work on my writing
3.) Get into shape again
4.) Find yourself again
5.) Be the person you dreamed you would be
6.) Make new friends
7.) Save enough to live off of (comfortably) for 4 months
8.) File my immigration paperwork
9.) Marry S & find a place of our own
10.) Move to Chicago
11.) Go back to school
12.) Become a physchologist

S is coming next week!!! I can’t believe we’ve gone so long without seeing each other. Shit happens, life goes on, but we’re both committed to the two of us and crossing the finish line. We’re both lucky in that sense – I feel like MS has taken a lot away from me, but it’s given me a lot too. I’m more sure now than ever that S is the one I want to build a life with. I’m excited to see him. I want to laugh with him, argue with him, make up with him and then do it all over again. I can’t say we do much arguing, but I definitely get on his nerves now and then.

The wheelchair company just phoned. The damage to my chair from the car accident isn’t too much!! It’ll cost me less than $150 dollars. I was afraid that it’d be a lot more because the car was written off by ICBC. My mother got a new car though, which is something I suppose. It’s a nice luxury car… different from the old civic we used to own.

October 2009

After I got licensed to become a motorcycle instructor,  I decided to give my first student lessons for free.  I was not yet set up to do this as a business, but Ivan really wanted some guidance.  He was a co-worker and a friend.

Ivan had been a rider many years ago when he lived in Europe, but had not ridden in Canada since his arrival over 12 years ago. 

The rules are very different here.

Ivan bought a large Honda Cruiser but got his friend to ride it home for him. Ivan was trying to obey the ICBC rules for riders with a learner’s permit.

I rode over to his place to meet him.  Although Ivan could handle his new motorcycle, he needed to learn to ride the ICBC way.  His new permit would also not allow him to ride unsupervised. 

We rode together to a parking lot so that I could show Ivan the techniques required to pass the skills test and to stay safe while riding. 

We spent a few sessions together over a few days and then rode to the motor vehicle office so Ivan could take his skills test.

There was no denying that he sure could handle his motorcycle with ease.  However, his nerves got the better of him. 

He failed his skills test because he was not paying attention to the examiner.  Ivan was very disappointed in himself, but I reassured him that a large percentage of learner’s fail the first time.

We went for lunch.  That was our arrangement.  I gave him lessons in exchange for coffee or lunch. 

We got together a couple of more times and then rode together to the motor vehicle office again on another day.  He got warmed up on the lot before going in to the office to get signed in for the test.  

Although he was still a little nervous, he was much more confident than the previous time.  He did well the second time around. Ivan passed his skills test.  He was now allowed to ride unsupervised and we could go over 60kmh now. 

We took advantage of that and left the city for a change of scenery.

I made sure he knew not to take the road test yet. He needs to practice riding the way ICBC wants us to ride.

Coming next….Laurie, my second student.

Well, of course I’m going to start with mine! Thanks to everyone that has posted up a comment so far!  Looks like people are keen on the 100 days to go pin and the Halloween pin (as you should be… they’re cute!).  Missed out so far?  Post a comment answering “What animals is Miga composed of?” and your name will be entered to win two pins!, to be drawn the evening of November 4th!  Check out more info here!

Quatchi and Sumi with speed skater Clara Hughes!

Cold-FX has a new contest on called ‘Stay Healthy to Win‘!  If you win you receive airfare to and from Vancouver, 3 nights hotel stay and tickets to 3 events including Men’s Hockey – Canada vs. USA, Women’s Hockey semi-final and a speed skating event, plus $1000 spending money!  Sweet!  You can sign up here to try to win!  But for this contest you must be a member of Canada.com.  Also, don’t forget to follow them on Twitter @COLDFX2010 or become a fan on their facebook page.  If you answer their daily trivia question correctly you may be entered to win some of their pins, which really are super-sweet!

Do you subscribe to the Vancouver Sun?  If so your name will be entered in their Subscriber Rewards contest.  From November 9th – 13th the Sun will be giving away pairs of tickets to the Games and on November 16th they’ll draw to find out who won tickets to the Opening Ceremonies!  Very nice!  Not a subscriber yet?  Well you still have a few days to sign up and enter the contest!  Good luck!

ICBC still has a contest on too!  If you’re interested in getting a plate you have until December 9th you may get another chance! You can get an Olympic plate until December 6th and you can enter to win a weekly prize of Olympic tickets!  Nice!

*     *     *     *      *

Sadly, I am falling asleep with my laptop on my lap, so I think I’ll go to bed now.  I’ll scour around for more contests to post up tomorrow.  If you know of one that I haven’t got up… let me know!  Either comment or email it to me at 2010vanfan@gmail.com!  Night night!

ゴーン大臣は来年1月にも予定されている、シンエイジア銀行(ACL)の株式の中国工商銀行(ICBC)による一般からの買収ついては1株当たり11.5バーツであれば納得できると語った。また、TMB銀行株式の売却については、いまだにINGからの返答がないが、これでは出口戦略の方針を圧迫すると苦言を呈した。また併せて現在準備している、タイ国銀行関連の第2次金融機関システム改革は首相府に早急に提出できるとした。（ターンセタキット紙　10月28日配信）

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Just look at the numbers: 1,046 aircraft worth $51.9 billion. That’s billion. ILFC is four times bigger than Aviation Capital Group or RBS Aviation Capital – both large lessors.

In the past ILFC has been described as a mega-lessor and although it is an ugly term it is true. It is no surprise that the sale of ILFC has been put on hold. Selling ILFC at the top of the aircraft leasing market in 2006 would have been an achievement. Selling it in one piece now would have been a deal of the century.

The obvious option is to split it into pieces. Sell the significant number of aircraft on lease to Chinese carriers to a local bank (ICBC would be most obvious buyer, but CIC – the state sovereign wealth fund is another). The Middle East leases could be sold to Abu Dhabi, Kuwait or Saudi). 

Hazy and the management team could take the rest and work with Greenbriar and Onex (who were also backed by large amounts of Middle Eastern money) and build a new ILFC.

While this is messier that selling it in one piece the deal risk is much, much lower. 

Ever wonder why your insurance premiums are so high? It could have something to do with the fact that your fellow drivers like to defraud the system by claiming soft tissue injuries and then go rock climbing and sky diving. In Vancouver a number of scammers were busted by the social networking website Facebook, when ICBC, the public insurance corporation in British Columbia, visited the pages of the claimants and found them enjoying their favourite activities. The kind of activities they said they couldn’t enjoy owing to the nature of their car accidents:

Photos of Mirae Mayenburg hiking and cycling were entered as evidence in her court case against the Insurance Corp. of B.C.

Mayenburg, 23, said the 2006 accident left her with soft-tissue injuries that caused her to quit her cashier job at Canadian Tire and interfered with her schooling at Douglas College and Simon Fraser University.

The injuries also prevented her from hiking, cycling and dancing, she said.

But ICBC lawyers disagreed, citing her Facebook photos.

B.C. Supreme Court Justice Elliott Myers, who awarded Mayenburg more than $50,000 in damages, ruled that her injuries had a minimal effect on her lifestyle or her ability to carry on with the activities that she previously enjoyed, but did affect her quality of life.

I find the most amusing part is that she was caught red-handed abusing the system, but the judge still awarded in her favour for “her quality of life”. She couldn’t work as a cashier at Canadian Tire anymore? I wonder whether she could have continued to work at her job if it paid more than $10 an hour.

The article goes on to mention another woman white-water rafting after her car crash gave her a back-injury. Why is it that this whole episode reminds me a lot of this lovable weasel?

11月中の中国工商銀の買収計画の提案を待つことに。

ゴーン財務相は本日中国工商銀行(ICBC)頭取が、アピシット首相および財務相本人を訪問し、シンエイジア銀行(ACL)の株式を取得することによってタイ国内の銀行業務に参入する前向きな意向を伝えた。と語った。

本日の初会合の後、 ICBC側は明日9月30日、取締役会を開いて
タイ国内のACL銀行買収の承認およびICBC株主への承認決議をはかるための決議を行う。中国側の調査承認手続きはおそらく11月中に終了するものと思われる。その後ICBC側は計画および提案をタイ側に戻すことになる。

財務大臣は計画および提案をICBC側より受領後 、ACLは上場企業としての立場で取締役会および株主に承認決議を求める必要があり、ICBCはACL株取得のためのオファーを株主、つまりタイ国財務省、バンコク銀行（現在のACLの民間側大株主）、および一般株主に正式に行わなければならない。

それ以外にもACL銀行はタイ国銀に対してICBC側のACL株式取得についての許可を得、その後財務省が調査承認手続きをとることになる。ICBC側についてはACL銀行の経営を行うため大株主になりたいという明確な意思表示が求められるであろう。

いずれにせよ、懸案であるACL銀行の株式売買について財務大臣は、詳細についてはあまり多くを語らないが、大株主であろうと、小口の株主であろうと、公平に株を売る権利があるわけで、タイ側としてはこの点は強くICBC側に主張すべき点であろう。

「大株主だけが高く売り抜けるわけでも、小口株主だけが安く売らされるわけでもない。どの株主も同じ値段で売却することになる。」とゴーン財務相は語った。（Info Quest 9月29日　午後3時配信）

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ゴーン・チャートクワニット財務大臣は、今朝中に、現在タイに向けて移動中の中国工商銀行(ICBC)の頭取とICBCが財務省およびバンコク銀行が大株主であるシンエイジア銀行(ACL)の買収意向を表明してから初めての会合する機会を持つ。
　しかしながら、ゴーン財務相は今朝の閣議参加前に報道陣に対して、詳細は閣議の後で明らかにするとした。（Info Quest 9月29日9：20分配信）

Beijing-based journalist Andrew Peaple, who pens the “Heard on the Street” column in the Wall Street Journal, published a perceptive and unsettling article yesterday revealing how large losses from prior bad loans have been concealed on the balance sheets of China’s “Big Four” state banks.  Andrew is a friend and we have had many conversations on this topic, trying to puzzle out what’s really going on.  The full article can be found here, but requires a subscription to view.

The basic story is as follows.  In the 1990s, China’s “Big Four” state-run banks — the Bank of China (BOC), Industrial and Commercial Bank of China (ICBC), Construction Bank of China (CCB), and Agricultural Bank of China (ABC) — had the primary responsibility for funding the country’s state-owned enterprises (SOEs), many of which were not commercially viable.  A substantial number of loans – in the 20% range, by official counts – went bad, leaving China’s banking system on the verge of insolvency.  The banks had to write off large parts of their loan portfolios and the Chinese government had to step in and recapitalize them to the tune of US$100 billion.  Today, according to official statistics, the non-performing loan (NPL) ratio at China’s commercial banks has been brought under control and now stands (as of June 2009) at a comfortable 1.8%.

But the write-offs and recapitalizations are only part of the actual story.  The bulk of bad debts were not written off as losses by the banks, but off-loaded onto state-run Asset Management Companies (AMCs).  As Peaple notes, “The AMCs bought about $200 billion of bad debts in 1999 — at face value – and issued [10-year] bonds to the banks as payment.”  On their balance sheets, the banks simply swapped $200 billion of loans for $200 billion of bonds.  The AMCs, whose only assets were the bad debts, would repay these bonds, plus interest, by disposing of these bad debts.

Now if you think about that for just a moment, you’ll realize it makes absolutely no sense.  The $200 billion worth of loans the AMCs purchased were damaged goods, and worth nowhere near that amount.  In fact, as Peaple points out, when the AMCs did sell parts of their bad debt portfolio, they received around 20 cents on the dollar.  Yet from these proceeds, they are expected to repay the banks the full $200 billion plus interest, as though the loans they bought were perfectly healthy.

Now I don’t want to use sensational language too freely, but this ”off balance sheet” arrangement displays some elements of a Ponzi scheme.  Most Ponzi schemes involve the misappropriation of funds from one party to another, and that’s clearly not the case here.  But the basic mechanism of a Ponzi scheme is the hiding of past losses by drawing down principal in order to pay it out as though it were profit.  That is precisely what is happening here.  The AMCs are using the proceeds from selling the impaired principal (the bad loans, at 20 cents on the dollar) to pay the interest on the bonds.  The fact that the AMCs are keeping up interest payments makes the bonds look good, when in reality the principal needed to repay them in full, when they come due, is long gone.

Under normal circumstances, the banks should recognize that the AMCs do not possible have the means to repay the bonds when they reach maturity, and write down the value of the bonds accordingly.  In effect, they should admit that the bad debts they sold the AMCs were worth nothing close to the $200 billion they are still keeping on their books.  The reason the banks have been able to avoid doing this so far — and presumably the reason their auditors have allowed them to — is that the AMC bonds are ostensibly guaranteed by the Chinese government.  If the AMCs default, as they must, the government has promised to pay up. 

Andrew and I have always figured that this is, in one form or another, what would happen when the bonds came due.  Rather than have the banks very publicly write down large and embarrassing losses, China would quietly recapitalize the AMCs so they could pay off the bonds.  In effect, the real bank bailout would end up being much larger than the $100 billion provided directly to the banks, but it would occur in such a backdoor manner that hardly anyone would notice.  And with $2 trillion in foreign currency reserves available to inject as new capital, China could easily foot the bill without even blinking (it wouldn’t even have to sell off its reserve holdings of U.S. Treasuries, just transfer a portion to the AMCs, and thence to the banks as repayment).

The reason for Andrew’s article this week is that the first of the bonds, $36.2 billion issued by Cinda Asset Management to CCB in exchange for its bad debts, came due this Monday.  Of course, Cinda was in no position to pay.  But instead of stepping in to fulfill its guarantee, and pay off the bond, the Chinese government simply extended the bond’s maturity by another 10 years.  In effect, it instructed CCB to roll over the loan.  Cinda can continue to pay interest out of impaired principal, with everyone pretending that the bonds are, in fact, worth their face value.

How serious are the numbers involved?  As Peaple notes, the $36.2 billion owed to CCB by Cinda is worth more than half of the bank’s net assets (assets in excess of liabilities, the margin that keeps a bank solvent).  Other Big Four banks are owed similar sums, by other AMCs:  ICBC holds $46 billion in bonds, while Bank of China holds $23 billion.  Overall, says Peaple, the total sums are roughly equivalent to a quarter of China’s current fiscal stimulus package.  Taken together with new bad debts that many economists think will arise from China’s runaway lending boom this year, the exposure is quite alarming.

These are huge holes in China’s bank balance sheets.  The only reason the banks are not being forced to recognize huge losses is the government’s guarantee to back the bonds when they (inevitably) default.  But the government’s decision to roll over the Cinda bonds this week, and avoid paying up, calls this guarantee into serious question.  Instead, as Peaple concludes, “the problem has been deferred for another decade, letting the government off the hook.  And China Construction Bank can keep recording a $36.2 billion amount on its balance sheet it may never receive.”  What will global investors in CCB, ICBC, and Bank of China, which are all listed on the Hong Kong Stock Exchange, make of that?

Just got home from meeting with a man named Tony Cringle from ICBC, who wanted to get my official witness statement about an accident I saw back in July. I was standing on the 98 B-Line bus at Granville and Broadway at around 10 PM and a motorcycle shot into the intersection and hit a car that was turning left. Motorcyclist flew up into the air. I thought he’d died; apparently he didn’t. Turns out he also had a female passenger riding behind him. She’s in critical condition too. Aiyah.

It took nearly an hour to complete the report and answer all his questions, and it took three full pages of single-spaced writing. T_T And then I had to sign it all and also a statement saying that I completely understand everything in the report and that all of it is true to the best of my knowledge, etc.

I have to admit, it was a fascinating procedure. Watching a lawyer at work is inspiring; now I want even more to work in law.
Supposedly this man’s job was to figure out whether the fault belonged to the driver or the motorcyclist, and then find evidence and primary-source quotations from eyewitnesses to try and PROVE who was at fault.

You could tell he was trying to manipulate some of my words though. Sometimes when I said something, he’d correct me and inform me that it was actually something else, that all the evidence demonstrated otherwise. :S

I’ve also gotten calls from someone named Jeff Slater, also from ICBC. The man who interviewed me today seemed somewhat upset that Slater claimed to have been from ICBC; it appears this was not true. Too bad I deleted the voicemail message long ago, or I could have checked and given proof for or against Slater. Certainly it’s illegal to claim to work for a government-sanctioned organization if you don’t.

I’ve also gotten a few calls from a Constable Augustius, whom I suppose is a police officer from the RCMP. Her last message commented that we were playing a sort of “telephone tag”, which, indeed, we were, since we’ve each called back twice and we still haven’t actually spoken yet. Sigh. Apparently she’s on leave for training at the moment. Oh well. I’m not going to try to contact her again unless she calls me back. By the time she gets back from her training, the investigation might even already be over.
HAH. What am I saying? Legal proceedings could never be resolved in merely a few months.

Well, that was exciting.

Now I have to go study. OH BOY. Huge cumulative history test tomorrow morning on everything I learned last year in IB History 11 HL. That includes:
- fall of the Tsar and Russian Revolution
- Stalinist Era, Five-Year Plans
- early 1900’s European history
- political/social situation leading up to outbreak of WWI
- events, treatises, alliances, and battles during WWI
- political/social/economical situation after the resolution of WWI
- Great Depression
- Weimar Republic in Germany
- Hitler’s rise to power
- propaganda in Germany
- political/social situation leading up to WWII
- anti-Semitic movement leading up to the Holocaust

… wow. I didn’t realize it was that much. D: But on the bright side, I just made myself a nice, concise study guide. Yay? Okay. Now to get to work.

Indicators – Petro output may stagnate for 2009 due to inventory buildup and weak demand. CNPC and Sinochem may cutback on oil production. Coal imports up 130% in H1, due to rising domestic coal prices. Domestic coal was 80 yuan higher per ton than imported. China H1 crude imports from Iraq grew 300% as China diversifies its oil supply. SOEs profits rose 7.7% mom. July coal imports down 24% yoy as downstream demand weakens, domestic inventory increases, and gap narrows btw import and domestic prices. Higher ocean freight rates have also hurt prices. Imported iron ore spot falls below $100 per ton due to high domestic stocks and a slump in steel prices. Trader selloff may further hurt prices. Yuan PE funds raised $23.7B in 2008, 7x yoy; made up 55.4% of PE funds in China. Qinhuangdao port coal prices rise as power plants stockpile for increased winter demand. Big 4 lended only 135B yuan in new loans in Aug. New inflows of cap are still positive. Aug PMI up to 54, 6th mo above 50. Industrial profits fell 17% YTD. Expect to rebound in Q4, leaving 2009 profits unchanged from 2008 profits. Rubber was strongest due to auto industry demand, oil exploration and nonferrous metal smelting were hurt hardest, along with steel and electronics.

Shanghai – Free trade zone approved for Pudong International Airport area, 3rd in Shanghai.

Shanxi – Approves restructuring plan that will reduce the current number (2200) of coal firms to 100. New plan is to reduce production risks in the mining industry through the acquisition of small mines with poor safety standards by large SOEs.

Sichuan, Tibet – Sichuan-Tibet railway construction will begin by Oct, 1629km line will take 8yrs, cost 53B yuan, and will connect the two provinces in 8hours.

Shenzhen – Home RE prices soar again in Aug by 18.6% mom, 6th mo gain. First-time buyers are being priced out of the market, devs are withholding units in anticipation of higher prices in Sept and Oct.

BOCOM – H1 earnings up 0.3%, beating expectations. Net int I was down 9.8%, CAR was down .9pp.

Haitong Securities – H1 earnings rose 21.9% due to strong prop inv ops and narrowing fair value losses. Profit margins rose to 92.2%.

2008 Stimulus – National Audit Office to put in greater scrutiny of banks wrt stimulus loans.

NDRC – Considers raising prices for refined oil products due to new changes in system which permit price hikes if crude fluctuates by more than 4% over 22 consecutive trading days. Refuses to intervene on LPG prices. Revised list of resources, raw mats, techs, and equ eligible for import subsidies. Imports of nickel, chromium, uranium, titanium, tantalum, niobium ore, copper, lead, zinc, cobalt, ferronickel, and polyimide will be subsidized. Raises cap on domestic gas and diesel prices by 300yuan per ton.

SASAC – SOEs may unilaterally terminate commodities contracts as they try to cut massive losses from derivatives. Foreigners will be fucked appropriately.

State Council – Will introduce measures to support SME dev. Restrictions on SMEs entering certain industries will be loosened, govt procurement measures advanced. Subsidies to fin institutions that lend to new businesses, establishment of risk compensation funds for lending to start-ups. Will slow production in steel, cement, wind, and polysilicon industries by strengthening regs on new projects and raising entry reqs. Premier Wen Jiabao assures that proactive fiscal policy and moderately easy monetary policy are still in effect.

People’s Congress – Proposal to improve funding for renewables, establish fund jointly financed by govt fiscal rev and surcharges on renewables consumption. Surcharges would offset higher on-grid tariffs for renewables. Grid operators would need to purchase all power generated by renewables, guaranteeing demand.

PBoC – 3mo bill yields flat at 1.328. 50B yuan in 1yr bills at unchanged yields. 10B yuan in repos at 1.18% also unchanged. Predicts 8% GDP growth as consumer prices stabilize and inv growth accelerates. M2 growth target of 17% as it plans to slow down from the 28.5% expansion in H1. Yuan settlement volume not large as participants still familiarizing themselves with its procedures. Still plans to expand the pilot program beyond the 5 mainland cities so far. Liquidity remains ample. 1T yuan in bills and repos will mature in Sept as CB continues to drain funds from the banking system using OMOs. Sales of 3yrs may resume. Declines in repo yields show that suff funds remain available.

CBRC – New rules restrict bank issues of subordinateds by joint-stock banks, SOE comm banks, CDB; will be required to meet 7% core CAR to issue subordinateds. Will deny core capital supplement, banks will have to seek direct financing instead. Joint-stock banks will not be able to meet the req and will have to do rts issues or issue additional equity to raise core CAR. China Minsheng, Huaxia, and Shenzhen Dev Bank. A period of transition will be allowed before fines are handed out. Fin leasing firms and auto fin companies have been given permission to issue bonds.

CSRC – China CNR IPO approved (locomotives and rolling stock). 3B A shares to be listed in Shanghai, proceeds to fund technological innovations and production upgrading. Will review China Metallurgical Corp’s plan to list 3.5B A-shares in Shanghai, which will be used for natural resource exploitations, equ purchase and production, research, and RE dev.
ANNOUNCES THAT IT WILL SUPPORT MARKET. PANDA PUT!

CIRC – Fines Anhua Agricultural In and Yong An Prop Ins for unauthorized inv in stocks and bonds. Anhua bought shares in an associate via private placement, Yong An for inv in non-guaranteed convertibles.

SAFE – Plans to release international payment stats earlier than usual due to corp and market demand. Will release at end of July instead of Sept.

Yuan – Standard Chartered becomes first foreign bank to settle trade in yuan under the pilot program. Will help dev of cap markets.

Shenzhen SE – Firms trading on the Exchange are not encouraged to trade complex derivatives that exceed operational reqs, requires listed firms to set up risk control mechanisms for derivative inv, monitor changes in value, make timely disclosures. Book losses over 10Myuan and 10% of net A must be reported in the latest audited report. Stop-loss orders will be required.

CIC – Investing as much overseas each mo as it did in all of 2008. May ask the govt in the future to hand it more of the reserves to invest. CIC is constructing a broad portfolio, has gained much on its comm bank stakes, does not expect them to appreciate in the future as NIMs shrink and subordinated or equity issues dilute earnings. Bails out Songbird Estates, a British RE firm that owns Canary Wharf. Part of a consortium to provide 800M pounds in new equity; money will repay debt.

Bank of Beijing – H1 earnings rose 0.75% as weak int I  and higher provisions hurt growth. Bank has maintained 200% coverage, well above 130% reg min. CAR was down 3pp yoy.

Shanghai AJ – appts Yang Dehong as GM and deputy party secretary, formerly of Shanghai’s inv branch.

Shanghai Pudong Bank – H1 profits up 6.4% on growing fee and comm I. Outstanding loans stood at 938B yuan, up 34.6% over 2008. CAR was down 1pp.

Bank of Nanjing – H1 earnings up 1.58% yoy on high returns from bond inv and increased NIM. Op rev was up 18.6%.

Merchants Bank – Plans rts issue of 22B yuan, 4B more than anticipated. Expects NIM to recover in H2.

CDB – Sets up equity inv unit with 35B yuan in cash and fund assets, will engage in PE inv, direct inv, and consulting.

CCB – H1 earnings down 5% due to falling int income and narrowing loan margins. Op rev down 3.15% yoy, NIM DOWN 7.7%. CAR down .19pp.

China Minsheng – Submits app to go public in HK. Expects to be listed by yearend. Expects to raise $3B from IPO.

SDB – H1 earnings up 7.8% for 2.31B yuan. Net I was 6.4B yuan, up 1%, NIM down 0.66pp to 2.51%.  (Shenzhen) will continue high lending through H2 due to steady lending practice.

BoC – Considers issuing shares, subordinates, or convertible to raise capital as its CAR has fallen 1.9pp so far this year. Dumps $6B in US MBS, plans to continue to reduce securities debt holdings when market conds improve. Still holds $1.9B in subprime, $900M in Alt-A, $2.7B in private label MBS.

Insurance – 678B yuan in rev, 186B yuan paid out in claims. Life and prop ins make up the bulk of rev. Inv portfolios expanded 5% in July. 9.8% of H1 inv went into stocks.

China Pac Ins – will delay expansion into fin markets and focus on core ins business over the next 3-5yrs. May have been due to greater regulatory scrutiny over inv products by insurers. H1 earnings down 57% due to falling inv returns. 3rd largest insurer. Inv gains were down 38.9%, returns on equity inv down 45.6%. Equities made up 8.8% of its portfolio. Life ins premium income has declined 1.3%, but may improve in Q4.

China Life – H1 profit grew 29.2% yoy. Premium I should improve in Q4 as underwriting quality has improved in recent months.

PICC – Largest gen ins provider. H1 earnings of 332M yuan as it recovers from a loss. Lost $1.2B in underwriting as it recovers from Sichuan earthquake claims. Rev is up 13.7% yoy. Wins approval to issue 5B yuan in 10yr subordinateds.

CITIC – Guoan Info Indus (network service provider), H1 profits rose 327.8% yoy to 588M yuan due to cable TV restructuring. China Citic Bank reported H1 earnings fell 16.3% due to decline in int I. CAR fell 2.3pp. Expects slow lending growth in H2.

Pacific Securities – H1 earnings up 146% on brokerage business. 206M yuan.

Sinolink Securities – H1 earnings down 60% due to IPO suspension. Op rev fell 33.9%, inv income fell 76%, fee and comm income grew 15.3%.

Changjiang Securities – In Wuhan. H1 earnings were unchanged as decline in inv income was offset by fee and comm gains. Rev fell 0.2%, inv income fell 80%, fee and comm grew 32.2%.

Everbright – H1 profit up 19.2% yoy due to rising brokerage rev and securities inv ops.

ICBC – H1 earnings up 2.9% due to shall fall in NIM. Profit growth is down 12% yoy. Loan transactions rose sharply to bump fee and commission I 13.1%. Increased provisions were balanced by a decline in NPLs. 5.4T in outstanding loans. CAR down .9pp, provision coverage ratio up 8%.

Trade – MinComm investigating US electric steel at request of domestic steelmakers and studying unfair subsidies wrt subsidized electricity, coal, and NG. Reduces auto part duties to 10% in compliance w WTO rules. Trade surplus with EU will decline this year, as trade declines 20.7% yoy btw the 2 regions. Trade surplus fell 36% to $55B.

Xinjiang Guanghui Indus – NDRC approves 49% stake in Kazakh Tarbagatay Munay (oil firm) for $40.5M.

China Shipping – H1 earnings down 80.7% yoy on weak demand for transporting key commodities. Op revs down 54.7%. Rev from coal transport fell 66%, oil transport fell 19.7%.

China Shipping Dev – Buys stake in China Resources Power Shipping Tianjin worth 51% and will buy a 35K ton bulk-cargo carrier.

China Shipping Container Lines – 3.4B yuan loss in H1 as shrinking global trade and overcapacity have hurt freight rates. Cargo volume has remained stable while rev is down 51%.

Tianjin Port – H1 earnings down 41% yoy on shipping industry downturn. Op rev fell 25.7%, throughput down 11.1%, container throughput down 1.4%.

Taobao – 96% growth in H1 online transactions as online retailers maintain their strength. Accounts for 1.4% of China’s retail sales of consumer goods.

Shougang – H1 earnings down 83% yoy, op rev unchanged. On weak demand and falling steel prices. Steel output down 5.4%, steel products output down 11.6% yoy.

TCL – Issues 1B yuan in short notes to supplement working capital. Electronic manufacturer. Hope appliance makers are facing budget constraints as export orders sink. Largest TV maker. Plans to exchange its stake in an oil firm for shares and convertibles in an inv holding company (EPI Holdings). HK$970M.

Gome – Electronics retailer’s H1 profit down by 50% yoy due to falling rev.

CNNC – HK listed arm completes takeover of Western Prospector, a Canadian Uranium miner.

Huanang Power – Signs strategic cooperation agreement with PetroChina on building gas-powered power plants.

Shanghai Chengtou – H1 earnings down 20%. SOE water utility expanding into RE. Inv gains declined, may focus more on RE dev in the future.

Eldorado – Canadian gold producer will acquire China assets of Sino Gold Mining.

Wuhan Iron – Suspends trading pending a planned rts issue announcement. Will use proceeds to purchase assets from parent. Will raise 12B yuan via share offering to fund asset acquisitions.

Hebei Iron & Steel, Shagang Grp – Slash steel product prices for Sept delivery as Aug demand declines and overproduction cut into profits.

Western Mining – H1 profit down 93% due to weak metal prices and lower than expected copper output. Op rev plunged 30%. Lead, zinc, and aluminum output targets were met. Copper output was affected by suspensions over safety and construction.

China Metallurgical – CSRC approves its app to list 3.5B A-shares. Expects to raise 16.85B yuan for engineering, mining, and RE projects.

Chalco – Denies talks with RIO over bauxite. H1 loss of 3B yuan over sluggish downstream demand and drop in product prices, op rev fell 29%, op costs fell10%. Mills are operating at 67% capacity.

Sinopec – H1 earnings grew by 332.8% in H1 on higher fuel prices and market-pricing reforms. Expects to raise oil prices on NDRC approval. Sets up JV with Mitsubishi to manu and sell chemicals used in automotive components and electrical equ. Plant will be finished by 2010.

Petrochina – Rolls-Royce signs 2 contracts worth $120M to install power systems for the West-East Gas Pipeline project. H1 earnings fell 7.2% yoy due to lower oil prices. Rev dropped 24.7%. Acquires stake in Canadian oil sands projects from Athabasca Oil Sands Corp.

CNOOC – H1 profit fell 55% yoy due to lower crude prices. Output grew 15.2% yoy as operating project production remains steady. Firm will focus on reserve additions, starting new production, and cost controls. Signs agreement with Qatar Petro to explore an oil block off the Qatar’s east coast.

China Vanke – Plans to issue 10B yuan in shares as it expects housing starts to grow next year. Projects in Tianjin, Shenzhen, and Chongqing.

Country Garden – H1 profit rose 78.8% yoy on equity swap with ML.

RE – Govt plans to fine prop devs who leave land idle for 12mo at 20% of value, 2yrs will be reclaimed. Trying to prevent hoarding as 9yrs of land are believed to be idle. REITs face new rules in Sept, new products may enter the market by yearend. Bond-based REITs are more likely to be approved by regulators.

Eli Lilly – Markets its diabetes drug Byetta in China as it fights for niche.

Neusoft – Based in Dalian. Software developer. Will purchase 3 units of Finland’s Sesca Grp for 12M euros. New subsidiaries will dev handset and mobile telecom software for clients.

China Telecom – Raises handset subsidies to 37% of rev as it tries to gain market share with the national rollout of 3G services. Plans to introduce Blackberry and Palm handsets to enhance product offering. EBITDA margin fell 8pp yoy for H1, net earnings down 28.7% yoy, op rev up 14.1%.

China Unicom – Signs 3yr deal with AAPL to distribute iPhone handsets in Q4.

BOE Tech – Plans to build first eighth-gen TFT-LCD production line in Beijing, requires 28B yuan much of which will be borne by govt-backed firms in Beijing.

Youngor – Clothing, RE, and inv conglomerate. H1 earnings fell 27% due to lower inv returns.

Suning Appliance – Consumer electronics retailer. Opens 4-5 stores in HK in H2 so that company understands advanced markets while springboarding entry into SE Asia.

Topchoice – Dental care provider. Chairman Lu Jianmng was arrested by the Procuratorate of Zheijiang.

New Hope Agribusiness – Sichuan. H1 earnings up 41% due to inv returns, plans to establish a fin company.

Mengniu Dairy – Appoints exec dir Niu Gensheng as chairman, COFCO pres Yu Xubo as chairman of subsidiary Inner Mongolia Mengniu Dairy. Appoints 4 new non-exec dirs from its new investors COFCO and Hopu Inv Man. 13 board directors (4 exec, 6 nonexec, 3 ind nonexec).

Media – Newspapers and other publications will become corp entities before the end of 2011. Political publications (run by CCP) will not be included.

タナチャート銀行、カナダスコッティア銀行連合のタナチャートキャピタル(TCAP)社はSCIBの株式買い取りについて、国庫簿価の1.6倍、あるいは30バーツ以上の価格を提示し、また競合の中国工商銀行は簿価の1.5倍としているとされるが、ここにきてインドの政府系バロダ銀行(BANK OF BARODA)が第三の候補として登場してきた。いずれにしてもディールは年末にクローズする。SCIBのチャイワット代表取締役頭取は、「活力あるタイ」政府不況対策プロジェクトに下支えられ、本年はローン貸出は6%ほど成長。また有名ファンドであるTempleton Emerging Markets Fundを主催するMark Mobius氏も、タイの銀行魅力ある投資先と触手を伸ばしている。（Info Quset 9月2日）

BC’s Public Safety Minister, Kash Heed, has proposed a ban on cell phone use while operating a vehicle for those in the graduated licensing program (ones who are displaying an L or N).

I support this 100%.

I can’t even count the number of times I’ve see an L or N plate driver doing one or more of the following:

• driving below the speed limit and tapping the brake every time they look down.
• weave out of their lane and quickly correct it in a panic.
• not respond to the change to green light.

When I pass them and glance over at them what are they doing???? FUCKING TEXTING SOMEONE!!!!

I realize that all these L and N drivers are not just teenagers. There are L/N’s of all ages. That said, Mr. Heed will have to be careful if he is focusing on just the “young” new drivers. AND I realize that there are a handful of responsible new drivers.

Now….focusing on just L/N drivers may not be enough. There are SO many bad drivers out there not with the L/N plates. There’s the 20-30 year old hot shots with their sports cars driving far too aggressive while on their phone. There’s the senior citizen that clearly should not be driving anymore talking on a cell phone. Should the ban be extended to them? Probably.

In the article I read it says: One of the issues to be determined is whether any particular groups – such as “professional drivers” – will be granted exemptions from any new cellphone ban. I am a professional driver. I need my cell phone. In fact, I carry two of them. One is a personal phone and the other is supplied by my employer. I use my phones responsibly I think. If I get a call on my personal phone while driving I hit the ignore button and send it to voicemail. My work phone is a ‘MIC’ phone. That means it can be used like a regular phone but is used mostly like a walkie–talkie between me and my dispatch. I do my very best to only use it when I’m stopped at light or on stand-by but admit to using it while driving. Most of the usage is me just listening. My only operation is to key the mic and say “10-4″ most of the time.

Other professional drivers have similar mic devises. There’s the standard CB radio or simple 2-way radio. Either one of these only requires holding the mic to your mouth, keying it, and talking. You don’t have to hold it to the side of your head blocking your peripheral vision.

Taxi drivers….THE WORST DRIVERS IN OUR CITY (read the other entry I made with regards to driving). They all use there cell phones while driving WITH PASSENGERS ON BOARD. They also like to play with their electronic dispatch device. I do not feel safe while in a cab in this city. Focus on your fucking driving and get off the phone.

Cops….they all have a laptop computer mounted in the centre console of their cruiser. I don’t know how many times I’ve seen a cop riding solo with one hand on the wheel and the other hand ALONG WITH HIS EYES on the laptop.

Now another thing mentioned is: motorists not in the graduated licensing program may be permitted to use hands-free phones. Okay, cell phone use is cell phone use. Whether you have hands free or even if your passenger is holding the phone to your head. It is a distraction. However, how much of a distraction is it compared to listening to the news or singing to a favorite song on the radio?

If the government is going to ban cell phones completely they have to consider the 2-ways, walkies, laptops, etc. AND why stop there? Add car stereos to the list. These are ALL distractions.

I don’t know where I am exactly on the complete ban but I do know whatever happens it is going to be way too difficult to enforce. If the government is focusing on getting the bad drivers off the road they should think about not putting them there in the first place. Look at the show Canada’s Worst Driver. I can’t watch it too long because it frustrates me to hell. These people went on the show holding A VALID LICENSE!!! Who the fuck gave it to them in the first place?? Unbelievable. Not only should these people not have a license but the person that road tested them and PASSED them should be reevaluated.

Australia has a ban on cell phone use while driving. I spoke to an Aussie passenger on my bus about this. She told me about a time she was driving home from work with her elbow on the window ledge and her head resting in her hand. She was tired from a long day at work and was sitting in heavy traffic. I policeman saw her from behind and make the conclusion that she was talking on her cell phone. She was pulled over and given a fine despite her explanation and the fact that her phone was tucked away in her purse on the back seat out of her reach.

I will continue to use my cell phone is a responsible manner….but not like this:

http://www.youtube.com/watch?v=YnHvgzXOwNU

I passed with 98%! Hellz yeah.

40/41, time: 9.9 minutes

I forgot money for the testing fee.. so my mom had to come back. Later, when I was about to take the test the lady said I needed parental permission, so mom came back again. I told her it would it 10$ more if I passed, but that escaped her mind so she went to the bank… and I had to phone her back again.

Some people actually use the entire 45 mins? WOW I cannot stand to write any type of test during the entire time. I’d go crazy.

I can’t wait to drive!!! heheheheheehehheehe.

Work friday was terrible because I felt like poop. Saturday was wonderful in comparison. Maybe because B was training so there were 2 of us instead of 1. + a little later it got really busy so I was asked to FR, which I immediately agreed to. I even got a “double awesome” from one of my coworkers HAHA! Today was just tiring. The 3rd consecutive day is always like this for me… especially because my arm starts to hurt. WHAT THE GAY I have to go to this meeting for work on weds…. at ANOTHER location of the same restaurant. Because they have a “meeting room” and we don’t. *Apparently* we get paid if we attend o_O

Friday- went to metro. I got a 8×10 photo of my parents(which they loved!) printed at BLacks’ photography. Got my lululemon pants hemmed. My sis got some things.. I nothing which is the norm. There was a gstar jacket at underground 150 $77 WHICH I forgot to try on I think I’m cmoing back on weds to pick up my pants and buy it heheheh it was 50% off! I totally forgot about it because I tried on some jeans for reference so I can pester my mother into buying them online. I got ALE her bday present! I don’t really like it… but she does… and it was on sale so what the heck why not. Ended up getting nothing from the snooze you lose sale at aritzia. I was hoping for some jeans.. but there were none my size!

WENT TO ICBC EXPRESSWAY to book my knowledge test so I’m having it on the 24th! On the way out I saw TP. He wrote the test and passed. My mom is nagging me to study.

BoC – Will keep expanding credit unless govt tightens. Will generate 10% of new loans in China for 2009. $132B in loans offered in H1. Wen Jiabao has signaled that monetary policy will remain moderately loose. 67.5% govt-owned shares.

ICBC – Bought additional 4.5% in Taiping Ins. 12.5% stake now. Taiping ins deals in prop ins.

CITIC – Will move HQ back to Shenzhen to comply with regs that require broker and head offices to be in the same city where the broker is registered.

State Council – RE industry asks for continued support of the property market. Wants cuts in down payments and lending rates for 1st time buyers, suspension of stamp duty, suspension of land fees, lowered min cap reqs for res projects. Home appliance makers want price caps on items covered by the rural subsidy program to be abolished in order to give rural consumers more access and increase competition.

Min Comm – ITC proposal to impose tire duties is unacceptable.

CNPC – Will provide technical serices to the Iraqi Rumaila oil field. Bid was made with BP for 20yrs, and will help improve yields at Rumaila. Fee will cost $2 a barrel. This fee was low, but will ensure future Chinese access to Iraq and new markets as Chinese oil fields decline. Fee may paid in crude. Developing the field will influence the Iraqi decision on whom to sell the dev’d field to.

E-House, SINA – will merge RE ops into E-House’s subsidiary CRIC, which will be listed on NASDAQ. Sina’s property info and ad biz, E-House’s prop info and consulting biz.

BAIDU – earnings jumped 44.6% yoy Q2 on robust ad sales growth. 74% of online search market.

Trade – BHP settles only 23% of its Chinese iron ore trade at an agreed annual price, with fines priced 33% below contract price of last yr, and lumps at a 44% discount. Will sell 30% of its iron ore output up to Mar 2010 using several pricing methods (quarterly-negotiated, spot, index). Org decides to unify the interim iron ore import price; all steel mills and traders that have iron ore import licenses will pay a price roughly based on the final CISA deal with the furriners. Licensed importers will only be allowed to charge 3-5% commissions on deliveries to small non-licensed mills. Unified price will curb speculators who import ore at fixed-price, long-term contracts and sell at higher spot.

CNOOC – Fuijan Terminal receives first LNG delivery, and hopes to double receiving capacity by 2.6M tons by 2011.

Guangdong – Invests 2B yuan to build 2 NG terminals and a 67km pipeline as part of the West-East pipeline project. GDNG will invest 7.3B yuan by 2020 in an urban pipe network of 3200km across 21 cities.

Guangzhou R&F – July prop sales down 23% yoy on weaker purchases from first-time buyers and investors. Entering slack season for housing sales. High prices beginning to deter first-home buyers.

CNNC – China National Nuclear Corp. Obtains 100B yuan credit line from China Dev Bank to fund nuclear plant construction. State-owned. China wants to increase its share of nuclear power to 20% by 2032 from 2% today.

CIRC – Will not intervene in insurers’ stock inv as long as equity allocations don’t exceed 10% (direct ownership) and another 15% of portfolios for managed funds.

GOOG – Restored its suggest search prompt, though search services for foreign sites are unavailable. Will hurt relationships w advertisers. May still face regulatory action over not suppressing the prompt. “Pornography” (rolls eyes).

Shanghai International Grp – SIG. City’s govt-funded inv firm. Will launch a PE firm that will focus on fin sector investments. Jinpu Industry Inv Fund Man will have 200M yuan in capital. CIC will own a stake. Joins other cities like Beijing, Tianjin in industry inv funds focused on unlisted cos.

Everbright Securities – IPO approved on SSE. 520M A-shares (15% of new capital). Underwritten by Orient Securities. Will be used to expand branch network, allow inv in unlisted firms, finance overseas expansion.

China Railway Group – SOE, signs $7.5B with Venezuela National Railway Agency to build a 471km line. Will be finished in 2012.

China Railway Construction – China Railway 15th Bureau Grp subsidiary won a 3.53B yuan contract to build 200 schools in Saudi Arabia.

Agricultural Bank – 859B yuan worth of new loans in H1 (292% increase). Outstanding loans and deposits stand at 3.9T and 7.7T yuan respectively. Will not set a loan target for the year.

Datang – NDRC will soon approve its coal-based olefin plant in Inner Mongolia, producing polypropylene, gas, liquid petro gas, methanol.

GEM – 200K investors registered to trade shares on the GEM (NASDAQ analog).

PBoC – Will maintain moderately loose monetary policy in H2, believes economic recovery is sound. Will allow securities firms to trade in the interbank bond market on behalf of clients. Will expand inv channels for asset man ops. Will increase loans to SMEs. Will allow more panda bonds by foreign companies. Yields increased on 18B yuan 1yr bills, up 4.13bp to 1.7397. Traders report repo rates going up by 3-5bp each time policy is refined.

Treasuries – 15B yuan drained from market by 1yr bills auction Jul 28. Yield up 5bp to 169. 50B yuan was drained also by 28-day repos, up 3bp.

CBRC – tightens inv lending rules to ensure credit will flow to real economy. Warns about CC operations. 1.9B credit and debit cards issued this year, H1 transactions up 7% so far this yr. Issued draft rules on working cap loans to help loan money go into the real economy. Rule takes effect on Oct 30. For loans greater than 1M yuan and exceeding 30$ of the total lending agreement, or a single loan of more than 10M yuan, banks must give 100% of the funds directly to the final recipients instead of the borrower. Fixed-asset loans and project financing are covered under similar rules. Plans to tighten domestic banks’ derivatives trading and discourage involvement in overseas derivatives products. Considers restricting banks’ options for complementing cap; rejects small and medium banks’ plans for issuing subordinated and plans to suspend freedom of all banks to issue such bonds. Floating subordinateds is an ideal way for banks to supplement cap as subordinated proceeds can be used as supp cap, as IRs stay low and liquidity abounds. 11 out of 14 listed banks have put forth forward plans to float subordinateds worth 43B yuan by 2012. SOEs already have this power, private comm banks do not. Can’t be used to reinforce core cap.

World Bank – Will inv 5M yuan in Renshou Minfu Rural Bank in Meishan, Sichuan to help with microfinancing.

Shanghai – 40% of state-owned assets will be listed within 3-5yrs.

SERC – State Electric Reg Comm. No apps yet for direct power supply pilot program. Market hopes this will open up grid access at a more transparent cost to break the transmission duopoly (State Grid, China Southern Power Grid). Retail electricity prices would be composed of ex-generator prices paid to power plants directly negotiated, taxes, grid access fees. No system yet to calculate transmission costs.

CCB – will cap H2 lending. 2nd largest bank in the world by market cap. 2009 lending will be capped at 900B yuan, 191B expected in H2. Will not cap lending on secondary mortgages. 2ndary market requires 3rd party intermediaries who can influence homebuyers’ choice of bank; banks pay a commission for selling the mortgages.

CDB – Issues 1B yuan worth of bonds in HK. 2.45% coupon, semi-annual. Opens first non-mainland branch in HK. Will focus on infra, energy, and resource projects in HK and the Pearl River, while offering lending, capital settlement, and LoCs.

Poly RE – 2nd largest prop dev by market cap. Bought comm and res site for 1.2B yuan in Chengdu, Sichuan prov. 37% over asking price.

Guotai Junan Securities – sold 19.25M shares of Dazhong Transportation (Shanghai’s largest taxi operator)

Northeast Securities – earnings H1 up 38% yoy due to surging brokerage and inv business.

Min Fin – Extends program of subsidized loans to support purchase of raw milk until end of year. 3.105% discount on financing for coms buying raw milk from farmers.

Huatai Life – raises 150M yuan from csh injection by parent Huatai Ins.

Insurance – agricultural insurers book H1 income of 7B yuan, 59.8% yoy. 96% of premiums were generated from govt-subsidized ins policies.
China Unicom – Offers I-Phone by October. Agreement last 3yrs, 1-2M units, 5B yuan in rev. Will provide handset subsidies and sell software online. (OH GOD)

China Shipbuilding Industry – IPO approved. CSIC is the country’s largest maker of ship equipment and is a major supplier to the navy. 2B A shares will raise 6.4B yuan.

Indicators – Port cargo tonnage rose 17.5% yoy in June (4th rise), container throughput continues to fall. H1 oil consumption down 2.9% yoy. Oil demand is expected to pick up for the rest of the yr. Industrial profits down 21.2$ yoy for H1, buoyed still by oil refining and coking 193.3% rise. H1 per capita urban consumer spending rose 8.9% nominally, 10.3% real yoy. Rural rose 8.1%. SOE banks extended 300B less yuan in July. ICBC intends to loan 500B yuan in H2, despite only lending 33B yuan in July. The other banks recorded similar down lending figures. CB is avoiding hard loan quotas. Core adequacy ratios are down .7pp since end of 2008, curr A to short-term debt down 3.9pp. SMEs’ H1 power use down by 50% yoy. 4.2% increase in July power output yoy, backed by recovering economy; steel regions showed double-digit growth in power output.

CTRP – buys Taiwan’s largest online travel agent ezTravel.

Suning Appliance – Japanese agree to its purchase of a stake in Laox worth 800M yen (27%). Suning hopes to overtake competitor Gome.

Gome – Founder Huang Guangyu bought 816M shares for HK$549M, raising stake .3pp to 34%. Largest shareholder despite being in detention.

SDIC Huajing Power – H1 net profit down 22% as manufacturers reduce power demand due to global slowdown.

NDRC – cuts gas and diesel prices again by 3.3-3.7%. New PE rules due by EOY.

Green – NDRC considers tariff on solar power generated by the national grid. The benchmark will allows devs to budge solar projects around a known price and end bidding wars that have resulted in below-cost tenders. Benchmark will be higher than the thermal power benchmark.

Gemdale – buys Shanghai site for villa dev for 3B yuan. Biggest land deal in Shanghai this yr.

Bright Food – Raised stake in Bright Dairy to 65.5% by buying out Shanghai Industrial Holdings’ stake.

SOHU – rev up 25%, earnings down 23$ as growth in gaming and ad rev failed to compensate for costs of partial divestment of Changyou (gaming unit)

BYD – buys Hunan Midea Coach (alt fuel bus) for 60M yuan. Buffett completes purchase of 9.89% stake for HK$8, totaling HK$1.8B. Already earned HK$7.57B paper profit. BYD plans to sell hybrids in the US by 2010.

GD Midea – Home appliacne maker. Plans to raise 3B yuan via shares issue to finance expansion.

Sichuan Expressway – Transfers 50M state-owned shares (467M yuan) to National Council for SS Fund. Part of new policy in which all state-owned listed firms must transfer 10% of their IPO to the state pension fund.

Opinion – Chen Changhua (UBS): daily turnover has reached 200B yuan (2007 crash level), housing prices in Pudong have risen 30% yoy. Nominal GDP grew 3.8% in H1, compared to 19.8% last yr. Exports plunged, domestic consumption fell slightly. Inv in infra and large industrial ventures by SOEs account for a majority of new lending and inv. M2 has jumped 28.5% yoy, new lending 34.4% yoy in June (14.1% last yr). Overcapacity globally will cause the CPI to stagnate, govts will not tighten their monetary policy. China will not raise IRs while growth is still possible. Private enterprises should be allowed to enter areas monopolized by the SOEs. Manufacturing is top-line (whatever), service sector (banking, securities inv, telecom, aviation, domestic trade) needs improvement. Small investors will speculate on the markets if there are not many inv alternatives. The wealthy invest in RE which is one of the few industries open to private capital; banking, ins, securities, telecom, power, energy are not. Caijing: Savings accts were tapped for stock purchases by investors trying to avoid inflation; deposits in banks rose faster than deposits in savings accts. PPI is still negative despite better macroeconomic growth; mid-tier firms are unlikely to post better earnings for the rest of the yr. Wang Tao at UBS believes the govt will discontinue its stimulus programs w/o changing its exports and currency policy. Regulators have allowed IPOs in growth sectors, excluding blue chips. By controlling the pace and scale of IPOs, market demand exceeds supply. Ci Bing (Caijing): RE dev loans rose 32.6% in the 1st 6mo this yr, retail mortgages 282.9B, up 63% yoy. Sales volumes and prices have risen, residental housing prices have hit 2007 highs. CBRC has demanded stronger mortgage loan risk management and that comm banks conduct strict credit reviews. Lending for second homes has tightened. Yet for comm banks, prop dev loans are safer and more profitable than manu loans. Prop is not a govt priority for industrial adjustment under the stimulus, but local govts and fin institutions have played to it due to the easy credit. Land lease payments to the local govt may be delayed, fin institutions offer loan payment extensions to prop devs. State-owned RE firms have been the major land buyers in recent months. Exporters face excess production space, meaning SOEs aren’t going to build more factories, leaving dev cap to be spent on RE and land purchases. Land purchase volume has slowed; in H1, 136M m^2 were bought, -26.5% yoy. 479M m^2 of new construction in H1, -10.4% yoy. But if supply falls, prop prices will rise. Shen Minggao: 3 scenarios for the future. 1. no inflation. Prices are held within reasonable and tolerable ranges, allowing loose monetary policy to be maintained and growth to accelerate; hello 10% GDP. Could lead to unsustainable loan growth and inflation or GDP growth could exceed growth potential causing inflation. 2. the asset bubble could swell and CPI remain mild. China’s trade surplus declined in Q2 (-40% yoy). Investors and businesses continue putting capital into RE and equities for value preservation; if monetary policy tightens due to asset bubbles, OUCH. 3. High inflation but moderate asset price appreciation. Excess liquidity is likely to push CPI higher and lead to inflation. 2nd scenario is most likely; asset prices often rise ahead of CPI inflation and overcapacity is likely to suppress inflation. China’s recovery needs rising demand as a result of inv growth. But only fast credit growth can ensure inv and demand growth. Main Street can’t bolster inv growth in the private sector. Govt can prevent inflation through targeting. Asset bubbles are easier to control with tools like credit controls and the ability to adjust land and tax policies. Fin markets aren’t well developed or connected; asset adjustments wouldn’t affect Main Street. Chinese households aren’t exposed to stocks and credit like Americans. Asset bubbles would thus hurt the middle class the most since they are the future consumers. A capital market collapse would destroy both the wealth and purchasing power of these future investors. Chinese monetary policymakers should consider a mild adjustment via raising repo rates, issuing more notes, and raising reserve ratios; annual credit ceiling should be instituted. Banks should be allowed to securitize and sell credit assets to institutional investors as a way to reduce their medium and long-term loan portfolios. Number of new dev projects should be controlled, and private inv in govt projects encouraged. When govt investments stabilize, fiscal spending should turn to medical care and encouraging rural migration to cities as a way to encourage consumption. Lin Boqiang (Xiamen U): Conservation and emissions reduction projects need fair and effective energy audits. RE devs try to cut corners. Energy audits check how effective any energy conservation program would be and allows funds to be used efficiently as possible. Energy conservation, lower of production costs, better competitive position are the benefits. Govt had to jumpstart before the firms would voluntarily engage in them. This improved the energy consumption of the OECD members. America needs a better system. Preliminary/simple audits, general audits, inv-grade energy audits. Prelims are the simplest: an on-site walkthrough of the facility with corrections made up on the spot. Gen audits require more detailed info about facility ops and more comprehensive evaluations of conservation measures (comp of energy usage, electric needs of equ). New systems of measurement and interviews with personnel about facility ops are necessary to truly understand energy consumption. Inv-grade audits analyze financially the feasability of conservation measures. Govt control over audits should be lessened, material on methods for corp energy audits published (Hunan). Tse Kwok Leung (BoC): HK hot money being invested into stock markets not directly into China.

Stimulus Package of 2008 – Where did the 7T yuan in H1 bank lending come from? Private banks accounted for 2T yuan, regional comm banks 543B, rural credit union 500B. The majority was done by the Big Four (3.47T yuan). BoC increased its lending by 5x yoy. Banks compete for loan-writing towards the end of the quarter or month to meet bank perf stats. BoC’s primary business, forex, was hurt by the Crash of 2008. BoC was forced to rein in lending and soak up liquidity by buying CB notes. ABC lent 4x yoy. CCB increased lending in Q1, but tightened in Q2. ICBC (largest bank) also followed a similar policy as CCB. Balance of forex loans by all banks was $295.4B H1, up 8%yoy. Forex debt has soared by $37.2B, up $35.8B yoy. Smaller banks, policy banks, and city comm banks joined in the lending frenzy during May and June. Policy banks issued 750B yuan (mostly CDB). BOCOMM and other private banks like China Merchants, Minsheng, and Shanghai Pudong Dev issued $2T in H1, 4x yoy. CITIC issued 2x short-term loans as medium- or long-term loans. Many small banks went into the rural markets, towns, or third-tier cities to meet targets. Syndication rose.

COSCO – H1 profits down 90% yoy due to collapse of international trade.

China Vanke – H1 earnings grew 22.5% yoy on govt support and increased housing inv. Raised housing start forecast by 1.9 square meters as sales continue to grow. Housing inventories could be cleared within 5mo. Dev has beena big spender on land banking and has 3yr reserves (industry avg).

Just 3 days ago (26 July) we discussed expectations for pinpointed measures to prevent over lending.

Two of China’s largest banks have set limits of 2009 lending:

1.Industrial and Commercial Bank of China- ICBC (SEHK: 1398) plans to issue new loans of CNY1 trillion over 2009 – to date the bank is 83% towards that target.

2. China Construction Bank – CCB (SEHK: 0939) has set a CNY900bn limit, and is already 79% of the way there.

I see these as sensible measures towards helping sure up the quality of the banks’ loan books.  From a maco perspective it is one more incremental step towards preventing an asset bubble.