12-April-2009 - China Economic Scan

12-April-2009 | China Economic Scan

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

In this edition: new loans in March up by record amount, China's FX reserves grow at lowest rate in 8 years, China and Kazakhstan in talks on oil deal, China Pacific Insurance Q4 down, Chongqing to raise 5.8 billion yuan in bond issue.
Top 5 headlines
China March Loans Surge To Record, But Concerns Rising
• New loans in China for the month of March came in at 1.89 trillion yuan, versus 1.07 trillion in February, and 1.62 trillion in January, according to the People's Bank of China. This brings the first quarter to 4.58 trillion yuan; 92% of the official minimum target for 2009.
• Money supply measure, M2, increased 25.51% year on year during March; compared to consensus estimate of 21.8%. M1 increased 17.04% in march year on year, and M0 rose 10.88%.
• The National Bureau of Statistics is scheduled to release Q1 GDP data, Industrial production, Fixed asset investment, retail sales, and CPI on Thursday.
China’s Currency Reserves Rise Least in Eight Years
• China's foreign currency holdings rose about US$7.7 billion in Q1 to $1.9537 trillion, according to the People's Bank of China. This represents the smallest increase since Q2 2001.
• “The trend of slower expansion in reserves will continue throughout the rest of this year because it will be hard for exports to recover,” said Xing Ziqiang, an economist at China International Capital Corp. “Smaller increases in reserves certainly mean less demand for U.S. debt.”
• Accounting, in part, for the smaller increase in reserves is spending by China on international deals, e.g. Chinese companies have announced $21 billion in spending on Australian companies this year.
China, Kazakhstan May Sign $10 Billion Accord for Oil
• China is in talks with Kazhakstan to lend $10 billion in exchange for the right for China National Petroleum Corp to buy a minority stake in oil producer, AO Mangistaumunaigas, from state-run KazMunaiGaz National Co.
• “China has always sought control of its energy businesses because this is an essential commodity,” said Ong Eng Tong, a Singapore-based consultant with Hamburg-based oil trader Mabanaft Gmbh. “It makes sense to acquire assets now because it’s cheaper than when buying during the boom years.”
• In February Russia agreed to supply China with oil for 20 years in return for $25 billion in Credit; and may be in talks to do a deal on natural gas supply. Crude oil in New York traded at $52.24 a barrel yesterday, down from the record $147.27 in July last year.
China Pacific Insurance Q4 net loss 2.54 bln yuan
• China's 3rd largest life insurer, China Pacific Insurance Group Co, posted a 2.54 billion yuan (US$371.7 million) net loss in Q4 2008; driven mostly by poorly performing investments.
• Full year earnings in 2008 at 1.34 billion yuan were down 80.6% from 6.89 billion the year before. The company's stock price rose 3.89% to 18.17 yuan before the earnings were released (after the close); placing the stock up 59% this year.
• The profits of China Life Insurance Co, and Ping An, were also hit by the slump in Chinese equity markets last year as the Shanghai Composite Index falling 65% in 2008.
5.8 bln yuan local bonds of Chongqing Municipality set for sale next week
• China's Ministry of Finance said that it will issue 58 billion yuan (US$850 million) of local government bonds on behalf of Chongqing Municipality on April 13.
• The bonds will be sold to investors between April 13 and 15, and will become tradable as of April 17 on the inter-bank market and securities exchanges, the bonds will pay a fixed coupon of 1.7%.
• Sources at China Government Securities Depository Trust and Clearing Co. Ltd said 3 more local bond issuances will come in the first half of April. China plans to float 200 billion yuan of local government bonds this year.

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