Business

Mitsubishi Corporation is not hit by the subprime mortgage crisis in the United States and is eying investment opportunities in Shanghai’s modern services industry, its president and chief executive officer told Shanghai Mayor Han Zheng yesterday in the city.

The Japanese company is hoping to tap the environmental protection, energy saving and logistics industries in Shanghai and ride on the city’s economy, said Yorihiko Kojima, president and CEO of Mitsubishi Corp yesterday in Shanghai.

Han said he welcomes companies - state-owned, private and overseas - to invest in the environmental protection and energy saving industries in the city. Building up the sectors is also in line with China’s policy to improve energy efficiency and cut emission.

The company’s Shanghai base is one of the biggest among its global bases and has witnessed strong growth.

The Japanese company is also seeking development opportunities in the financial industry, Kojima said.

It set up two new departments to deal with business for innovation and new industry finance last year.

Mitsubishi Corp is Japan’s largest general trading company operating in nearly 80 countries. Together with over 500 companies in the group, Mitsubishi Corp employs a multinational workforce of about 60,000 people.

The company is represented in virtually every industry, including energy, metals, machinery, chemicals, food and general merchandise.

(Shanghai Daily September 27, 2008)

Bank of East Asia Ltd, Hong Kong’s third-largest lender, said operations are “quickly returning to normal” after the bank rejected rumors questioning the company’s stability, prompting some customers to withdraw deposits.

BEA shares rose as much as 0.58 percent after rebounding 3.4 percent on Thursday and lines that had formed on Wednesday outside bank branches dried up, suggesting the effort to soothe depositors was succeeding, according to Bloomberg News.

“The Hong Kong Monetary Authority has joined us in unequivocally rejecting these rumors as false and unfounded,” Chairman David Li said in an advertisement in the South China Morning Post and Standard newspapers yesterday.

Hong Kong Financial Secretary John Tsang said on Thursday the rumors were “unfounded.”

HKMA head Joseph Yam urged depositors to stay calm and pumped liquidity into the city’s banking system.

Hong Kong’s richest man Li Ka-shing also bought shares in the bank.

(Shanghai Daily September 27, 2008)

Related:

·Depositors calm after HK bank run

The run on Bank of East Asia (BEA) eased yesterday after reassurance from officials and a high-profile tycoon’s stock purchase helped soothe panicked depositors.

Fewer people were seen lining up outside the bank’s branches on the news that the Hong Kong Monetary Authority (HKMA) injected HK$3.88 billion to the inter-bank market and that Li Ka-shing, the city’s richest person, had bought BEA shares.[Full story]

·No panic in BEA’s mainland branches

Mainland depositors seemed to have shrugged off the “malicious rumor” that Bank of East Asia is in trouble, but analysts say the turmoil is a reminder to local lenders that a perceived lack of communication can trigger chaos at a time of financial uncertainties.

“There is no sign of irregular cash withdrawal in our mainland branches,” said Sun Minjie, executive vice-president of the bank’s mainland subsidiary, at a news conference in Shanghai yesterday. “Still, we have increased temporary liquidity just in case.”[Full story]

Shenzhen Development Bank said yesterday it had terminated a planned private placement to sell 120 million shares to Shanghai Baosteel Group in light of a flagging stock market.

The Shenzhen-based bank will issue bonds worth a total of 28 billion yuan (US$4.1 billion) instead to supplement capital, it announced yesterday in a statement to the Shenzhen Stock Exchange.

“The preconditions for the bank to sell a stake to Baosteel have not been satisfied,” the bank said. “After friendly talks with Baosteel, we agree to terminate the placement.”

Baosteel yesterday declined to comment on the issue.

The bank on November 30 signed a contract with Baosteel, China’s biggest steel maker, which agreed to buy 120 million shares of the lender at 35.15 yuan each.

The domestic stock market started to nosedive late last year and has lost nearly two-thirds of its value so far from its peak in October.

Shares of the bank ended 2.09 percent lower at 14.99 yuan yesterday while the key Shenzhen Component Index gained 2.47 percent to 7,559.27.

The bank plans to issue 10 billion yuan subordinated bonds, 10 billion yuan financial bonds and 8 billion yuan hybrid bonds either on domestic or overseas markets over the next three years, pending shareholders’ approval, the lender said yesterday.

The bank also plans to auction non-performing assets worth 2.68 billion yuan, it said.

The bank, about 18 percent held by US private equity firm Newbridge Capital, said it would offer interim returns to investors with a package of three-for-10 bonus shares and a 0.0335 yuan per share pre-tax cash dividend based on its first-half earnings.

(Shanghai Daily September 27, 2008)

Chinese shares fell 2.71 percent on Tuesday despite early morning gains.

The benchmark Shanghai Composite Index gained 1.21 percent in the morning session, but dropped 56.25 points to end at 2,017.32 despite growth in surrounding markets. The Shenzhen Component Index closed at 6,473.12 points, down 1.5 percent.

The poor performance of the domestic market against global stock increases greatly damaged investor confidence, analysts said.

Japanese Nikkei index soared 14.2 percent to 7,447.57 points, stimulated by a series of recent actions by governments and central banks worldwide to ease the global credit crunch. Hong Kong Hang Seng index also rose 3.33 percent.

Financial shares dropped in the afternoon on profit taking, after they made major gains Monday and Tuesday morning, said analysts. Citic Securities and Haitong Securities plunged by the daily limit of 10 percent to 20.41 yuan (about 3 US dollars) and 19.91 yuan respectively.

Other blue chips also suffered, which helped pulled down the overall market. PetroChina weakened 1.65 percent to 11.9 yuan, and China Merchants Bank dropped 1.91 percent to 14.93 yuan.

Dairy-related shares bucked the trend. Yili and Bright made second day surges by the daily limit of 10 percent after making clarifications on losses over melamine-tainted products.

Aggregate turnover edged up to 76.8 billion yuan (11.3 billion US dollars) from the previous day’s 57.6 billion yuan. The two bourses saw 217 gains and 1,373 losses, with 120 unchanged.  

(Xinhua News Agency October 14, 2008)

Wall Street saw its biggest one- day-surge Monday after eight days of deep losses that took the Dow down nearly 2,400 points as the West governments’ plans to support the global banking system.

The Dow Jones average rose 936.42, or 11.08 percent, to 9,387. 61. The Dow’s previous record for a one-day point gain was 499.19, or 4.93 percent, on March 16, 2000.

The S&P 500 index advanced 104.13, or 11.58 percent, to 1,003. 35. It was the biggest point gain ever for the S&P 500 and was the biggest percentage gain for the index since March 15, 1933, when it surged 16.6 percent.

The Nasdaq rose 194.74, or 11.81 percent, to 1,844.25, its 10th biggest point gain; during the dot-com boom, the index soared as much as 324.83 in one day. Its percentage gain Monday was second to the 14.2 percent logged Jan. 3, 2001, the same day that the Nasdaq set its record for a one-day point gain.

About 3,030 stocks advanced on the New York Stock Exchange, while only about 160 declined. But the trading volume of 1.82 billion shares was lighter than it had been last week.

(Xinhua News Agency October 14, 2008)

A senior Chinese official said on Monday that China will continue to cooperate with other countries to cope with the current financial crisis.

“For the international community, the most urgent task is to join efforts to stem further deterioration and spread of the crisis — the major threat to global growth — and restore global economic and financial stability,” said Yi Gang, vice governor of the People’s Bank of China

“China will continue to strengthen its cooperation with concerned countries and hopes that all governments will work together to overcome the current difficulties and restore international financial stability,” he said in a statement at the annual meeting of the International Monetary Fund and World Bank.

He urged the two Bretton Woods Institutions to “fulfill their mandates to maintain global monetary and financial stability and facilitate sustainable, balanced growth.”

The fund should give the surveillance priority to the ongoing financial turmoil, deepen its analysis, learn lessons, and listen to the opinions of member countries, said the senior official of China’s central bank.

“From the medium- and long-term perspective, the fund must address the inherent deficiencies of the current international monetary system and foster an international financial architecture adaptive to the evolving global economy and financial markets,” he noted.

As the largest multilateral development institution, the World Bank should re-assess the challenges confronting the developing countries — soaring food and fuel prices, higher financing costs, deteriorating balance of payments positions, and mounting inflationary pressures, said Yi Gang.

“With the advantages of its financing capacity and expertise, the World Bank should urge the developed countries to shoulder their due responsibilities in stabilizing the global economy through targeted measures, carried out in an even-handed and professional fashion,” he said.

Yi Gang also stressed the fundamentals of the Chinese economy are “solid and resilient.”

“We are confident we can weather the financial turmoil,” he said. “With the global economic slowdown, it is important that China maintains its stable and relatively rapid growth.”

(Xinhua News Agency October 14, 2008)

Crude prices rebounded above US$80 a barrel on Monday as global markets rallied after the West governments launched bailout schemes to shore up banks.

U.S. Treasury Secretary Henry Paulson said Washington was developing plans to buy equity in financial institutions. Meanwhile Britain, Germany, France, Italy and other European governments all announced rescue packages.

Also on Monday, Goldman Sachs said that global financial turmoil would take a far bigger toll on demand and cut its year-end U.S. crude oil target to US$70 a barrel.

Light, sweet crude for November delivery rose US$3.49 to US$81.19 a barrel on the New York Mercantile Exchange.

(Xinhua News Agency October 14, 2008)

AXA-Minmetals Assurance views the ongoing global financial crisis as a “once in a lifetime” golden opportunity to expand its wealth management activities in China, especially as none of its businesses have been hit by the turmoil, the company said yesterday in Shanghai.

The financial turbulence creates a “once in a lifetime” opportunity for the company to get closer to clients to pitch its financial planning advisory services, said Jamie McCarry, president and chief executive officer of the joint venture insurer, yesterday.

One of AXA-Minmetals’s parents, France-based AXA, is very solid and has no strategic or financial issues related to the ongoing financial fallout, according to McCarry.

He said AXA-Minmetals is poised to better leverage AXA’s global practices in strong financial protection and wealth management in the China market.

Through several surveys, the joint venture insurer found that China’s affluent, senior management and entrepreneurs are the group which advocates strong financial planning. This is the group that creates opportunities for professional wealth management expertise to tap into.

(Shanghai Daily October 14, 2008)

Shenzhen Development Bank Co, controlled by United States buyout firm TPG Inc, yesterday rose after saying profit may have risen as much as 80 percent in the first nine months on improved margins, higher fee income and lower taxes.

Net income may climb to between 3.28 billion yuan (US$480 million) and 3.37 billion yuan, from 1.87 billion yuan a year earlier, according to a statement to the Shenzhen Stock Exchange yesterday.

Chinese banks, which posted a combined 67-percent jump in first half profit, are expected to report slower earnings growth from the third quarter on borrower defaults and narrower loan margins, Everbright Securities Co said last month.

China’s government has cut interest rates twice over the past months as it tries to revive an economy that grew at the slowest pace since 2005 in the second quarter as the property market contracted, the outlook for exports dimmed and the global credit crisis worsened, Bloomberg News said.

Shenzhen Development posted a 91-percent gain in net income in the first half. The bank said last month it will raise as much 28 billion yuan selling bonds to bolster capital after scrapping a planned share sale to Baosteel Group Corp.

Shares of Shenzhen Development have dropped 68 percent this year.

(Shanghai Daily October 14, 2008)

China has asked its insurance companies to control business expenses to cope with the spreading global financial crisis.

Insurers should “strictly control operating expenses, reduce business costs, boost earning ability and actively study and proactively cope with possible impact on insurance industry by the international financial turmoil,” the China Insurance Regulatory Commission said in a statement on its Website yesterday.

(Shanghai Daily October 14, 2008)