U.S. stock indexes plummet as Lehman goes under
Stocks tanked on Monday, with the Dow Jones Industrial Average plunging 500 points -- the
most since September 2001 -- after Lehman Brothers Holdings Inc. filed for bankruptcy and
insurance giant American International Group Inc. scurried to raise capital even as its market
value was cut in half by distraught investors.
Macro economy
China interest-rate cut proves surprise
From today, the benchmark one-year lending rate will scale back by 0.27 percentage point to 7.2
percent, the People's Bank of China said.The move is the first interest-rate prune since China
started a run of increases on October 29, 2004. During the period, the central bank has raised
rates nine times. The interest rates on deposits will not change.
The reserve-requirement ratio will drop by 1 percentage point to 16.5 percent from September 25
except for the country's big-five banks and the Postal Savings Bank. The requirement will drop
by 2 percentage points to 14 percent for financial institutions in the areas hit by the May 12
earthquake. It is the first time the central bank has lowered the proportion that banks set aside
from lending since November 1999. The bank raised the requirement 18 times between July
2006 and June this year.
Sectors:
Revamp of Hebei Iron and Steel heralds a new round of
consolidation
Restructuring of Hebei Iron & Steel Group has started and analysts viewed the move as a signal
that the consolidation of China's steel industry may accelerate. Tangshan Iron & Steel Co,
Handan Iron & Steel Co and Chengde Xinxin Vanadium & Titanium Co, three listed units of the
newly-launched group, suspended their trading from September 5, pending a restructuring plan.
This indicates restructuring is underway within Hebei Steel. If true, the revamp has started much
earlier than the market has expected and is very likely to trigger a new round of consolidation
among other steel groups in similar situation, analysts said. A number of other Chinese steel
groups are in a similar situation, with several listed arms that could become takeover targets
amid the restructuring, providing investment opportunities in the stock market, analysts said.
Shanghai-based Baosteel Group Corp, parent of Baoshan Iron & Steel Co, also controls Xinjiang
Ba Yi Iron & Steel Co, Guangzhou Iron & Steel Co and SGIS Songshan Co. Wuhan Iron & Steel
Group and Anben Iron & Steel Group also own several listed units

Seven domestic coke producers set up an e-business
unit for pricing power
Seven Chinese mainland coke producers have jointly set up an e-business venture to specialize
in online trading of coke in an apparent attempt to strive for the pricing power of the raw material.
The seven mid-sized companies including Shenzhen-listed Shanxi Meijin Energy Co hoped the
new online platform can help protect their interest as they don’t feature capacity big enough to
influence the coke price. The platform will allow clients to trade coke by paying a certain amount
of money as margins. Elsewhere, the establishment of the China Coal Futures Exchange in
Taiyuan is now pending the financial approval from the State Council. (Moneyweek)
China appeals WTO car parts ruling
China has appealed at the World Trade Organization against a ruling that its tariffs on car part
imports were "inconsistent" with established rules, a WTO spokeswoman said yesterday. "China
has appealed," a WTO spokeswoman said just hours before the organization’s Dispute
Settlement Body (DSB) was due to meet to formally adopt the ruling on its car imports. Beijing
had already signaled its intention to appeal in July, saying that it "does not completely agree with
the content and conclusion of the dispute settlement panel's report. "According to the dispute
resolution procedures of the WTO, the Chinese side reserves the right to appeal." "The affair is
now in the hands of the DSB," the spokeswoman said, adding that the body will have between 60
and 90 days to come up with a new report. The DSB ruled in July that China's policies were
inconsistent with WTO rules, a decision that was welcomed by the United States which brought
the complaint along with Canada and the European Union. (AFP)