Business

Shanghai’s key stock index rose above 2,000 points yesterday, led by airlines, following a newspaper report that China Southern and China Eastern would receive financial aid from the government.

The benchmark Shanghai Composite Index grew 2.22 percent, or 44.05 points, to close at 2,030.49 points.

Gainers outnumbered losers 839 to 21. Two remained unchanged. Turnover in the local market rose to 92.4 billion yuan (US$13.59 billion), compared with 87.9 billion yuan on Friday.

“The government’s attempt to bolster the market has helped to restore market confidence,” Qilu Securities Co wrote in a research note. “There is still room for more of a rebound. The rising turnover shows that investors have refound their interest.”

The firm predicted the government would also repurchase shares of state-owned enterprises as a further effort to strengthen the market.

China Southern, the country’s largest airline by fleet size, rose 9.88 percent to 3.67 yuan. China Eastern, the nation’s third-biggest carrier by fleet size, jumped the 10 percent daily limit to 3.85 yuan. Air China, the largest by market value, climbed 9.93 percent to 4.65 yuan, while Shanghai Airlines advanced 10 percent to close at 4.29 yuan.

Two newspapers reported yesterday that the government will inject 3 billion yuan each into China Eastern and China Southern this year.

President Hu Jintao said in Washington over the weekend that the government must adopt fiscal and currency policies to promote growth.

“A string of the government’s investment plans will continue to come out in the future,” Tang Xiaosheng, an analyst from Guosen Securities Co said. “A stronger rebound is expected.”

On the losing side, real estate developers fell after the National Bureau of Statistics said on its Website that home sales fell in the first 10 months of the year.

China Vanke Co, the nation’s largest property developer, lost 1.3 percent to close at 6.83 yuan.

(Shanghai Daily November 18, 2008)

China’s quality watchdog said Monday the latest sampling tests found newly-produced liquid milk in domestic market met the requirement in the new interim restrictions on melamine.

It is the 25th test of liquid milk since the scandal of the tainted baby formula that sickened more than 50,000 babies broke in September.

China’s milk powder is also tested safe in the latest 18th sampling, said the General Administration of Quality Supervision, Inspection and Quarantine (GAQSIQ).

Melamine, often used in the manufacturing of plastics, was added to substandard or diluted milk to make the protein levels appear higher.

The new tests covered 773 batches of liquid milk products from 87 brands in 33 major cities, 68 batches of baby milk powder from 14 brands and 106 batches of ordinary milk powder from 27 brands.

The country set temporary limits on melamine content in dairy products last month. The limits were a maximum of 1 mg of melamine per kg of infant formula and a maximum 2.5 mg per kg for liquid milk, milk powder and food products containing at least 15 percent of milk.

(Xinhua News Agency November 18, 2008)

Pork exports by the Chinese mainland declined in the first eight months, due largely to high pig-raising cost, numerous raisers quitting and lingering impact from the May 12 earthquake in Sichuan Province, a major pork producer.

Between January and August, China sold abroad 50,000 tonnes of pork for 170 million U.S. dollars, a decrease of 52.4 percent and 15.6 percent, respectively, from the same period of last year, sources with the General Administration of Customs said on Saturday.

But the average price of pork soared 77.4 percent to 3,400 U.S. dollars per ton.

Of the total exports, 78 percent, or 39,000 tonnes, went to Hong Kong, down 33 percent, 4,868 tonnes to Kirghizia, down 20 percent, and 2,220 tonnes to Macao, down 31.3 percent.

Approximately 72 percent of the total, or 36,000 tonnes were sold by private businesses, down 53.7 percent, 7,172 tonnes by foreign-funded companies, down 15.7 percent, and 4,141 tonnes by state-owned enterprises, down 76.7 percent.

(Xinhua News Agency November 15, 2008)

While the opening day of the Zhuhai Air Show on November 4 witnessed China’s first major overseas deal selling 25 home-grown ARJ 21 regional jets, the country’s general aviation industry also made a small, but important step forward.

The EC175 helicopter, jointly developed by China Aviation Industry Corp (AVIC) and Eurocopter, received five orders from Longken General Purpose Aviation. Longken, based in Heilongjiang province, became EC175’s first commercial customer in China.

Also on the same day, Eurocopter announced the sale of 10 EC155 helicopters to Citic Offshore Helicopter (COHC), a leading Chinese offshore operator based in Shenzhen.

“Once the (Chinese) government relaxes low altitude airspace controls, the Chinese (helicopter) market should reach a size at least similar to the US market today,” says Lutz Bertling, CEO of Eurocopter.

“The Chinese market might reach around 200 (helicopter) deliveries a year in the second half of next decade,” says Bertling, adding that China could become the largest market in Asia given the relaxation in regulations.

China’s civil and semi-public sector promises great potential for using choppers for offshore oil and gas exploration, homeland security, search and rescue, power line surveillance, medical service and fire fighting.

General aviation refers to all flights other than military and scheduled airline flights. It includes civilian flights and other purposes such as rescue, offshore exploration and aerial photography.

There are only 124 civilian helicopters in China, while the United States has more than 10,000 helicopters and Brazil has nearly 500, according to statistics from China Aviation Industry Corp (AVIC), a major Chinese aviation manufacturer.

A major constraint is airspace inconvenience and the resultant lack of air and ground services. Except for designated commercial air routes, the airspace of the Chinese mainland is currently under the administration of the air force. Another constraint is insufficient pilot and maintenance crews in China.

The Chinese government is reportedly working on a plan to gradually open airspace below 600 meters to facilitate growth in general aviation. That proposal is part of the country’s 11th Five-Year Plan (2006-10).

French chemical maker Rhodia SA opened its new research and development facility in Shanghai yesterday, adding to an existing one.

This allows the research center, in Minhang District, to triple its staff to host 150 scientists, of which 90 percent will be recruited locally.

(Shanghai Daily November 20, 2008)

China Petroleum and Chemical Corp., Asia’s biggest oil refiner, had delayed the restart of a plant in the northern city of Tianjin until today after more than a month of planned maintenance, a company official said.

Sinopec, as China Petroleum is known, delayed the plant’s restart because of high fuel stockpiles and technical problems encountered during the maintenance, Liu Caixin, a spokeswoman at the Tianjin plant said yesterday.

The plant was scheduled to resume operations in the middle of October, she said.

Sinopec shut the plant that can process 5 million metric tons a year, or 100,000 barrels a day, of crude oil on September 5.

(Shanghai Daily November 6, 2008)

Editor: Eve Wen
21 Nov 2008 10:27:43 GMT

* Pursuing five to six deals each worth $50-$200 million

* Pricing stable, could get impacted if situation worsens

* Weaker rupee helps, not seen need to revise FY09 forecast (Adds details, background, share price, byline)

BANGALORE, Nov 21 - India’s Infosys Technologies Ltd <INFY.BO> is pursuing five to six outsourcing deals each worth $50 million to $200 million but the global economic downturn has slowed deals, its chief financial officer said.

“Even now we are pursuing some of the large deals,” V. Balakrishnan told Reuters in a phone interview on Friday. “The problem is the velocity of business is getting hurt because of the environment.”

Nasdaq-listed Infosys <INFY.O>, India’s second-largest software services exporter, designs supply chains, develops applications and offers back-office services.

It gets more than half its revenue from the United States but is expanding to Europe and elsewhere.

“Customers are more cautious now. They want to conserve cash,” Balakrishnan said, adding the company has, however, not seen existing outsourcing projects getting cancelled.

He said companies that were doing 10 projects earlier were now doing only three or four, while some were postponing plans.

India’s large pool of English-speaking engineering workers and cheaper wages have helped to attract outsourcing from western firms such as Citigroup <C.N>, ABN AMRO, Nortel <NT.N>, Goldman Sachs <G.S> and Airbus <EAD.PA>.

But the economic slowdown in the United States, which accounts for more than half of the sector’s export revenue, and turmoil in the global financial sector have halted its scorching pace of growth and battered stocks.

Citigroup said in a note on Thursday the business environment for Indian software services companies had worsened amid growing profit warnings by global corporations and turmoil in the financial sector, a key market. Although analysts say Indian outsourcers are under pressure to cut prices to win new deals, Balakrishnan said the pricing environment for Infosys was stable but it could be impacted if the global economic situation deteriorated.

“People thought it’s only a financial services issue, but I think it’s an overall economic issue and it is not an U.S. issue. It is a global issue because even Europe has got its problems,” he said.

CURRENCY HEADWINDS

A weak rupee, which hit a record low on Thursday and is down more than 21 percent in 2008, is likely to help the profit margins of Infosys in the year to March 2009, but the gains will be offset by the dollar’s rise against the euro and British pound.

Infosys gets about 40 percent of its revenue from non-U.S. markets.

“We have given guidance in constant currency. Any movement in the cross-currency could impact our numbers. That is also one of the things we have to monitor now and manage,” Balakrishnan said.

Last month, Infosys, which competes with majors like IBM <IBM.N> and Accenture <ACN.N> as well as local rival for deals, cut its forecast for full-year dollar revenue growth to 13.1-15.2 percent, down from July’s forecast of 19-21 percent.

Balakrishnan said he did not see any need for revising the forecast again despite the economic and currency headwinds.

Brokerage Motilal Oswal said last week the weakening of the British pound and the euro against the dollar would put pressure on the third quarter dollar revenues of exporters such as Infosys, unless there is a sharp reversal later in the period.

Shares in Infosys, which trades about 11 times its one-year forward earnings as against 8 times by its bigger rival Tata Consultancy Services <TCS.BO>, ended up 5.1 percent at 1,184.75 rupees in a Mumbai market <.BSESN> that rose 5.5 percent.

The Infosys stock has fallen a third so far this year, compared with a 56 percent drop in the main market and 46 percent fall in the technology sector index <.BSEIT>.

Editor: Eve Wen
21 Nov 2008 09:37:59 GMT

BANGALORE, Nov 21 - India’s Infosys Technologies Ltd <INFY.BO> is pursuing five to six outsourcing deals each worth $50 million to $200 million but the global economic downturn has slowed deals, its chief financial officer said.

“Even now we are pursuing some of the large deals,” V. Balakrishnan told Reuters in a phone interview on Friday. “The problem is the velocity of business is getting hurt because of the environment.”

Nasdaq-listed Infosys <INFY.O>, India’s second-largest software services exporter, designs supply chains, develops applications and offers back-office services.

It gets more than half its revenue from the United States but is expanding to Europe and elsewhere.

“Customers are more cautious now. They want to conserve cash,” Balakrishnan said.

He said companies that were doing 10 projects earlier were now doing only three or four, while some were postponing plans.

India’s large pool of English-speaking engineering workers and cheaper wages have helped to attract outsourcing from western firms such as Citigroup <C.N>, ABN AMRO, Nortel <NT.N>, Goldman Sachs <G.S> and Airbus <EAD.PA>.

But the economic slowdown in the United States, which accounts for more than half of the sector’s export revenue, and turmoil in the global financial sector have halted its scorching pace of growth and battered stocks.

Editor: Zoe Zhang
18 Nov 2008 05:05:11 GMT

A senior Chinese planning official told reporters in Beijing on Friday that the new 4 trillion yuan ($586 billion) economic stimulus package includes 1.18 trillion yuan from the central government through 2010.

Mu Hong, vice director of the National Development and Reform Commission (NDRC), said the agency would add 100 billion yuan of new investment during the fourth quarter.

The central government’s investment, combined with that of businesses and local governments, would bring the total spending to 4 trillion yuan by the end of 2010, he said.

“The 4 trillion yuan is only part of the country’s total investment. It is not the total,” Mu said.

Officials have said that a “large part” of the total package was new money, but they have not provided specific figures.

The stimulus package was announced on Sunday amid rising concern about a sharp slowdown in the world’s fourth-largest economy. China’s gross domestic product grew 9 percent annually in the third quarter, down from 10.1 percent in the second quarter and 10.6 percent in the first quarter.

“To boost domestic demand has become the priority of current economic work,” Mu told reporters. He added the package would stimulate both short- and long-term demand, as it would spur economic growth while transforming the type of growth.

Editor: evewen
21 Nov 2008 08:33:39 GMT

SINGAPORE, Nov 21 - Singapore’s economy shrank at a worse-than-expected rate of 6.8 percent on an annualised and seasonally adjusted basis in the third quarter, final government data showed on Friday, confirming the export-dependent country’s first recession since 2002.

The government forecast full year 2008 growth at around 2.5 percent, from a previous estimate of 3 percent.

Economists had expected the data to confirm a previous government flash estimate of a 6.3 percent contraction on an annualised seasonally adjusted basis. The median of forecasts by eight economists was for full-year GDP growth of 2.3 percent.

Singapore was the first country in Asia to fall into a recession, usually defined as two consecutive quarters of economic contraction, with Japan and Hong Kong having followed.

SINGAPORE GDP Q/Q* Y/Y

AT 2000 PRICES

Q3 2008 - 6.8 -0.6

Q2 2008 - 5.3 2.1

Q1 2008 14.6 6.7

Q4 2007 -4.8 5.4

Q3 2007 5.1 9.5

Q2 2007 13.4 9.1

* seasonally adjusted, annualised growth rate