Daily News Update - 5 May, 2009

TODAY'S BRIEFS

SCI rises to 9-month high on economic optimismThe benchmark Shanghai Composite Index rose by 3.3% on Monday to 2,559.91, its highest close since early August, Bloomberg reported. Investors were cheered by reports that manufacturing on the mainland expanded in April for the first time in nine months, suggesting that the country's stimulus package was taking effect and reviving the economy. The CLSA Purchasing Managers Index for April rose to 50.1 from 44.8 the previous month. A score above 50 indicates expansion. Earlier, the China Purchasing Managers Index put out by the China Federation of Logistics and Purchasing had also registered improvement in manufacturing activity. Baoshan Iron & Steel rose by 4.5% and refiner China Petroleum & Chemical Corp gained 3.6% after the government said it would attempt to address overcapacity in the steelmaking and oil refining industries. Hong Kong's Hang Seng Index rose by 5.54% on Monday to close at 16,381.05. It was the first time the index had broken through the 16,000-point ceiling in half a year, and was the largest one-day gain in a month.

Think tank predicts 7% 2Q GDP growthA government-affiliated think tank said that rising investment on the back of China's economic stimulus package will likely lift the country's second-quarter economic growth to 7%, AP reported, citing state media. This growth would represent a rebound from the 6.1% GDP growth recorded in the first quarter of the year, the slowest rate in more than a decade. The State Information Center said that fixed-asset investment is forecast to rise 27.6% year-on-year in the second quarter, a figure only slightly lower than the 28.8% growth seen in the same period one year ago. The think tank's report, published on Monday in the state-run newspaper the China Securities Journal, predicted that exports would continue to decline in the second quarter, falling by 20.2% year-on-year to US$287.7 billion. Meanwhile, imports are expected to drop by 25.5% to US$225.6 billion.

China Mobile begins third round of 3G tenderChina Mobile on Monday called for a third round of tenders for third generation (3G) telecom equipment worth US$1.3 billion, the South China Morning Post reported. The third round of bids calls for 39,000 base stations operating on homegrown 3G technology TD-SCDMA in about 290 prefecture-level cities. This construction could bring TD-SCDMA, widely seen as the least mature of the three licensed 3G standards, to 70% of the mainland population by December, the paper said. Domestic equipment vendors ZTE Corp, Huawei Technologies, Datang Mobile and China Putian are expected to receive the lion's share of the orders, though foreign providers Nokia Siemens Networks and Ericsson are also allowed to submit bids. Analysts said the latest round of bids came sooner than expected, suggesting that China Mobile is accelerating its network buildout.

China boosts wind power capacity targetChina has more than tripled its target for wind power capacity to 100 gigawatts by 2020 from 30 gigawatts, AFP reported, citing state media. An official with the National Energy Administration told a Beijing conference that the country is aiming for an annual growth rate for wind power capacity of 20% for the foreseeable future, making China the world's fastest growing market for wind energy technology. China is the world's fourth-largest wind power producer after the US, Germany and Spain. Separately, Reuters reported that Morgan Stanley is selling around US$110 million in shares of China's largest wind power transmission gear maker, China High Speed Transmission. Morgan Stanley was one of the underwriters of Nanjing-based China High Speed's 2007 Hong Kong listing.

HSBC eyes eventual Shanghai listingHSBC Holdings hopes to be among the first foreign firms to list on the Shanghai stock exchange within two to three years, the South China Morning Post reported, citing comments by the firm's executive director. Peter Wong Tung-shun said HSBC had been in talks with mainland authorities but that no definite timeline for a Shanghai listing had been set. China's government said last week it would permit foreign firms to list in Shanghai and to use the renminbi for trade settlements on a trial basis. Details of the government plan have yet to be revealed, making it difficult to know whether foreign firms could list in Shanghai this year, Wong said. He added that HSBC still had ambitions to tap the mainland securities market and had applied to issue renminbi-denominated bonds in Hong Kong.

China to repatriate Mexicans affected by swine fluChina will use special charter flights to airlift from China dozens of Mexican nationals said to be affected by swine flu, the Wall Street Journal reported. According to a statement released on the Ministry of Foreign Affairs' website on Monday, the two countries were working out the details of the charter flights to Mexico. More than 70 Mexican citizens have been quarantined in China over suspected exposure to the H1N1 virus. However, only one 25-year-old Mexican man, currently in Hong Kong, has become ill with the disease in China thus far. Mexican officials have claimed that Mexican citizens were being held in China under "unacceptable conditions." Chinese officials have said that the quarantine is "non-discriminative" and not targeted at Mexican citizens.

US admiral Mullen questions China military buildupThe chairman of the US Joint Chiefs of Staff said on Monday that China's buildup of sea and air power appears to be aimed at the US, Reuters reported. Speaking in Washington, Admiral Michael Mullen said that while China had the right to meet its security needs, the US would have to work with its Pacific allies to respond to China's increased military strength in the region. He said that China's maritime and air expansion was "very focused on the United States Navy and our bases that are in that part of the world." China in March revealed an official military budget of US$70.2 billion for 2008, a continuation of nearly two decades of double-digit increases in military spending.