Business

China’s securities companies are on track for rising profits this year with the nation’s economic growth back on track, a renowned financial analyst said Wednesday.

Yi Xianrong, an analyst with the Financial Research Institute of the Chinese Academy of Science, said China’s economic recovery was a major factor leading to the sound performances of securities companies in the first-half.

He was commenting on a report on the performances of the 55 Chinese securities companies that have released their first-half reports.

The companies had net profits totaling 28.6 billion yuan (US$4.2 billion), and none reported losses, according to a report from Shanghai Wind Information Technology Co., Ltd. (SWIT), a financial information service, published Tuesday.

China has 108 securities companies and they must release their first-half reports by the end of August, according to Securities Association of China.

The three most profitable firms were Guotai Jun’an Securities Co. Ltd.with profits of 2.323 billion yuan, GF Securities Co.,Ltd. at 2.137 billion yuan, and Guosen Securities at 1.805 billion yuan, said the report.

The net profit of the 55 securities companies increased 40 percent in the first half from the same period last year, with eight companies turning losses into gains, said SWIT.

Orient Securities, which lost 875 million yuan in the first half of last year, made a net profit of 922 million yuan in the first half, ranking 11th out of the 55 securities companies.

(Xinhua News Agency July 23, 2009)

State-owned PetroChina is negotiating with Ecuador for future oil purchases of 96,000 barrels per day over two years, in a move to diversify its oil import sources.

PetroChina is talking with the South American country for an advance payment of $1 billion for the future oil purchases, Diego Borja, minister of economic policy coordination of Ecuador, told Dow Jones.

As part of the negotiations, Ecuador is asking that China uses the crude oil for final consumption and doesn’t sell it to Peru or Chile as that would distort the market, Borja said.

However, PetroChina could resell it elsewhere, he added.

A PetroChina spokesman yesterday declined to comment on the report, but said the company was currently taking part in some oil and gas projects in Ecuador.

Analysts said the move was in line with China’s continuous efforts to diversify its oil imports to find more sustainable supply.

At present, the Middle East, Africa and Asia-Pacific were the three main oil-exporting regions for China.

“In order to meet rising domestic demand, China should eye other regions such as South America,” said Han Xiaoping, a veteran energy analyst based in Beijing.

PetroChina has been present in Ecuador since 2003 and now operates two projects in the country. It also provides oilfield services.

In 2003 PetroChina took over an oil block in eastern Ecuador from Petroecuador, and started oil and gas exploration and development in this block. In 2005, PetroChina and Sinopec jointly purchased oil and gas assets from Encana in Ecuador, and established Andes Petroleum Ecuador Ltd, with CNPC holding a 55 percent share.

(China Daily July 15, 2009)

China Life Insurance (Group) Company reported on Tuesday that its premium income totaled 186.51 billion yuan (US$27.3 billion) in the first half year.

The figure accounted for 30.7 percent of the total premium income of the industry in China in the first six months, said the company.

In the first half of 2008, the company saw its premium income climb 46.81 percent to about 195.46 yuan.

Total assets of the company hit 1.42 trillion yuan as the end of June, up 10.8 percent from a year ago. Net profits rose 43 percent from a year earlier to 8.734 billion yuan from January to June, the company said.

China Life posted 316.4 billion yuan in premium revenue in 2008, an increase of 46 percent from a year ago.

(Xinhua News Agency July 22, 2009)

The former chairman of the China Petroleum and Chemical Corporation (Sinopec Corp.) Chen Tonghai was sentenced to death with a two-year reprieve for taking huge bribes by the Beijing No. 2 Intermediate People’s Court Wednesday.

All his political rights were deprived for life and all his personal property confiscated, according to the court.

The court said, Chen took about 195.73 million yuan (US$28.66 million) in bribes from 1999 to June 2007 taking advantage of his positions as deputy general manger of the China Petrochemical Corporation (Sinopec Group), general manager of the Sinopec Group, deputy chairman of the Sinopec Corp. and chairman of the Sinopec Corp..

In return, he helped others seek illegal interests in enterprises operation, land transfers and project contracts, according to the court.

Given that Chen had confessed and turned in all the bribes he had taken, admitted his crimes and provided clues on others’ crimes, the court sentenced him to death with a two-year reprieve according to law, according to court sources.

(Xinhua News Agency July 15, 2009)

Bank of East Asia (China) has issued 4 billion yuan (US$586 million) of yuan-backed bonds in Hong Kong, at the upper-end of its allowed quota as sales have been hot.

The bank is the first Chinese mainland-incorporated overseas bank to issue yuan bonds in Hong Kong to both individual and institutional investors.

The bank accepted investors’ bidding between June 30 and July 17. The two-year bond bears an annual interest of 2.8 percent.

About 70 percent of the bonds were sold to retail investors while the remaining 30 percent were allocated to institutional investors.

(Shanghai Daily July 22, 2009)

HSBC Bank (China) Co said yesterday it has further expanded its presence in China’s Bohai Rim region and is strengthening its network in inland cities.

The bank yesterday became the first foreign bank to open a branch in Jinan, the capital of the eastern Shandong Province. It has also obtained approval to establish a branch in Taiyuan, the capital of the northwest Shanxi Province.

The bank said network expansion is pivotal to its China strategy.

The Bohai Rim region, which includes Jinan, offers great potential and is one of its key areas for business development.

(Shanghai Daily July 22, 2009)

Air China has submitted an application to the country’s fuel price controller as it seeks to resume fuel surcharges on domestic flights to offset rising jet fuel costs.

“We have applied to government authorities about the resumption but it’s still unclear which level the fuel surcharges will return to,” said Huang Bin, board secretary of the Beijing-based carrier.

The National Development and Reform Commission, which controls fuel prices, authorized state oil firms to raise factory-gate prices for jet fuel almost 26 percent to 5,050 yuan (US$739) a ton effective on June 30, following a 13 percent jump in May.

The move triggered some domestic carriers, including Guangzhou-based China Southern Airlines, to call for a resumption of fuel surcharges, which were suspended in January due to a fall in kerosene prices as global oil prices dropped.

(Shanghai Daily July 14, 2009)

Though the regulators are talking about the success of the new listing norms, marketmen are of the view that there are still some grey areas in the mechanism that need to be addressed.

“By reviewing the several new shares issued after the A share market resumed initial public offerings, we believe that we are approaching the initial targets. Several indicators have shown the improvement brought about by the reforms,” a senior official with the China Securities Regulatory Committee (CSRC) said in an internal meeting.

The CSRC has set three main targets for the new listing norms viz. giving individual investors more rights to subscribe new shares, freeing up capital for subscription and shrinking the price gap between primary market and secondary market.

So far, three companies have finished new shares issuance. According to China Securities Depository and Clearing Corp, about 98 percent of the new shares for on-line subscription have been allotted to individual investors, three times the ratio before the reforms.

In 2008, for the 71 new shares listed on the small- and medium-sized enterprise (SME) board in Shenzhen, only an average of 29.48 percent of individual subscribers received allotments.

But industry experts feel that some institutional investors are taking advantage of the new allotment system by masquerading as personal investors in their IPO applications.

“Since each account has a limit for subscription, some institutional investors might have used borrowed ID cards to open personal accounts with brokerages.

“Stockbrokers keen on earning commission fees usually turn a blind eye to such irregularities,” said Lu Junlong, analyst, China Finance Online.

The Chinese government has confirmed it granted PetroChina approval in June to take a stake in Nippon Oil Corp’s Osaka refinery, a move to feed growing demand for oil in China.

The National Development and Reform Commission said on its website on Friday that the approval for the purchase in Japan’s largest refiner had been given to PetroChina International Co. in June, without giving details.

The two companies agreed in May last year to establish a joint venture to operate the refinery with a capacity of 115,000 barrels per day.

The Chinese oil giant would acquire a 49 percent stake in the venture and Nippon Oil would own the other 51 percent, they said.

Dai Peng, analyst with the Zheshang Securities, said the deal between the two oil giants will allow PetroChina to use surplus capacity of the Japanese company to refine oil. It is also an important step for PetroChina to expand its operation in Asia, he said.

Yang Wei, analyst with the Guotai Junan Securities, echoed with Dai, adding the deal will help cut refining cost for PetroChina as the company has a large output of oil overseas.

They both agreed the purchase would have little impact on PetroChina’s performance in a short term.

Nippon Oil has provided PetroChina with refining services since 2004.

(Xinhua News Agency July 10, 2009)

China Merchants Bank plans to nearly double its high-end private banking network in China this year on the back of country’s recovering economic growth.

The Shenzhen-based bank plans to open seven centers for rich clients in the second half this year, boosting its total private banking network to 15 in China, said Liu Jianjun, retail banking general manager of the bank.

The bank, the country’s sixth-biggest lender, started its private banking business in August 2007, targeting clients with assets of more than 10 million yuan (US$1.46 million).

The Shanghai-listed lender is the second Chinese bank to venture into private banking to service the country’s increasing super-rich.

China is forecast to have 320,000 people on the mainland with investable assets of more than 10 million yuan by the end of this year, 6 percent more than a year ago, said a report issued by China Merchants Bank and Bain