China Economic Scan - Daily Update 9-April-2009

9-April-2009
China Economic Scan - Your daily update on the Chinese economy.

In this edition: China's export engine shows signs of life, China to start yuan trade settlements, shipyards defer IPO plans, venture capital and private equity fund raising stats, Chinese stocks fall 3%.
Top 5 headlines
China's export engine shows signs of life
• Over the past year the global financial crisis has had a significant impact on China's Pearl River Delta (Guangdong), with estimates that a drop-off in orders from US/EU have wiped out 20-40% of businesses there in the heavily manufacturing focused area.
• Liang Yaowen, head of Guangdong's Foreign Trade Department, said 271 foreign-invested companies had shut down or relocated in the first two months of the year. Danny Lau, chairman of Hong Kong's Small and Medium Enterprises Association, said overseas buyers are wary of making major commitments; "Sometimes they'll only sign orders for one or two months to see how things go, rather than the full year like before,"
• However surveys and data point to a potential bottoming out of the fall in activity. Ha Jiming, chief economist at China International Capital Corp in Beijing, noted that property and car sales had picked up, power consumption had stopped sliding and bank credit was expanding strongly, complementing Beijing's fiscal stimulus.
China to Start Yuan Trade Settlements in Shanghai
• China will begin allowing yuan settlement for international trade in Shanghai and four cities in Guangdong province to promote global use of the currency and lower risk related to the US dollar.
• The State Council said the measures will "help avoid exchange rate risks, improve the trade environment and ensure steady growth in overseas trade,"
• China aims to boost the profile of the yuan as an international currency and has signed swap agreements with Argentina, Indonesia, South Korea, Hong Kong, Malaysia and Belarus in the past four months, worth 650 billion yuan (US$95 billion).
Economy slows shipyards' IPO plans
• "The possibility of (China Shipbuilding Industry Corp) CSIC to get listed in 2009 is quite low due to the industrial downturn,"said Zhang Guangqin, president of China Association of the National Shipbuilding Industry.
• Zhang said that CSIC had done all the groundwork last year with a view to launch it's IPO at the end of 08 or early 09, however now it is on standby, waiting for the right time.
• Jiangsu Rongsheng Heavy Industries Group, China's largest private shipyard, also suspended its IPO plans this year due to the global financial crisis.
8 Chinese investment firms raised RMB 7.77 bln in new funds in March
• 8 Chinese investment companies launched new funds in march, raising 7.77 billion yuan, according to a venture capital report by EZCapital.
• The report said 28 companies obtained about 4.94 billion yuan from the new funds; 16 companies received 298miilion yuan of venture capital funding; 3 companies received 578 million yuan in private equity investments; and 9 companies received 4.07 billion yuan in strategic investments.
• EZCapital said 7 enterprises went public in the domestic market in March, raising 253.5 million yuan.
China shares fall on worries about economy
• The benchmark Shanghai Composite Index fell 3.8% to 2,347.39, The Shenzhen Composite Index fell 3.3% to 780.46. Shanghai is still up 29% for the year. Zhang Gang, an analyst for Central China Securities in Shanghai, noted concerns about data releases next week as a driver.
• Industrial & Commercial Bank of China Ltd., -3.4% (3.97 yuan), Bank of China Ltd -3.9% (3.44 yuan), China Construction Bank Ltd. -3.8% (4.36 yuan).
• Nonferrous metal retreated following big jumps in previous sessions. Aluminum Corp. of China -5% (10.32 yuan), Jiangxi Copper Ltd., -5.7% (22.83 yuan). Oil stocks also fell on falls in crude prices; PetroChina Co., -3.8% (11.22 yuan), China Petroleum & Chemical Corp., -4.2% (8.78 yuan).

Financial Indicators:
USD/CNY 6.84
Hang Seng Index 14,474.86 (-3.04%)
Shanghai Composite 2,347.39 (-3.76%)
Shenzhen Component 9,232.26 (-3.63%)

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