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April
4-April-2009
China Economic Scan - Your daily update on the Chinese
economy.
In this edition: China GDP growth forecasts, China corporate bond
market development, Changyou.com IPO on the NASDAQ, Citic/CICC MTN
issuance statistics, Chinese stockmarket performance.
Top 5 headlines
China
GDP Growth May Quicken to 10% by Year End, Nomura Says
- Sun Mingchun, an economist at
Nomura in Hong Kong said the Chinese economy could grow by as much
as 10% by the final quarter of 2009.
- Ha Jiming, Chief economist at
China International Capital Corp. in Hong Kong raised his forecast
for GDP growth to 8% from 7.3% citing strong loan growth, and
other positive indicators such as increased car sales, power
output, etc.
- Both forecasts also factored in
the impact of the government's 4 trillion yuan (US$585 billion)
stimulus package.
TIMELINE-Major
events in China's corporate bond market
- "Chinese firms, spurred by a rallying domestic share
market, are poised to launch a boom in convertible bond issuance
that defies refinancing woes dogging issuers elsewhere in
Asia."
- Among the major events cited in the article, last year the NDRC
relaxed rules for issuance of corporate debt (e.g. allowing
unlisted companies to issue bonds without bank guarantees and the
PBOC allowed firms to issue MTNs).
- In 2008 corporate bond issuance almost doubled to about 900
billion yuan, and analysts expect at least 1 trillion yuan in
corporate bond issuance in 2009.
Chinese
IT company marks Nasdaq's first IPO in 2009
- Chinese online video game maker Changyou.com
(a subsidiary of Sohu.com)
made a successful debut in the U.S. stock market on Thursday as
the Nasdaq's first initial public offering (IPO) of the year. Its
shares last traded at $19.70 (versus the IPO price of $16).
- Changyou had total revenues of 201.8 million
dollars and net income of 108 million dollars in 2008, according
to a company statement.
- Although there are more than 70 Chinese
companies listed with NASDAQ OMX the Changyou IPO was only the 3rd
IPO in the US since August 2008 and the largest Chinese IPO on a
US exchange since December 2007. [see
a previous story]
Citic,
CICC Reap Fee Bonanza in Protected Bond Market
- Citic Securities Co. and China
International Corp. underwrote a combined 33.7 billion yuan ($4.9
billion) of medium-term notes (MTNs) in the first quarter (versus
20.8 billion in total for 2008).
- CICC worked on 21 billion yuan of
deals and Citic did 12.65 billion yuan (neither did any commercial
paper). The typical fee charged by an arranger is 0.3% per year of
maturity for underwriting MTNs.
- Underwriting fees for stock sales
are about 3%, however the Chinese securities regulator hasn't
approved a domestic IPO since September and there have been no
stock sales in 2009.
China
shares fall on profit-taking
- China's shares fell on profit-taking after its key index hit a
seven-month high but still ended the week up 1.9%.
- Zhang Linchang, analyst for Guotai Junan Securities in Shanghai
said "Trading sentiment is still high in the market, but
there's already a tendency to cool off. Many factories in China
are still doing poorly. One single index can't really mean the
economy's already bottomed out,".
- Hebei Taihang Cement Co. and Xinjiang Tianshan Cement Co. both
lost 3%; Jiangxi Copper Ltd. fell 4%, and Aluminum Corp. of China
fell 3%. But banks rose on rumours of regulators cutting interest
on deposits; ICBC rose 2% to 4.07 yuan and CCB rose 2.5% to 4.5
yuan.
Financial Indicators:
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