13-April-2009 - China Economic Scan

13-April-2009 | China Economic Scan

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

In this edition: China central bank pledges sufficient liquidity, Hong Kong yuan settlement plan advances, China-ASEAN $10 billion infrastructure fund, China Vanke sales up in Q1, Pacific Securities profit up in Q1.
Top 5 headlines
China Central Bank Pledges Sufficient Liquidity for Economy
• The People’s Bank of China said it “will implement moderately loose monetary policy and maintain the continuity and stability of policy,”... and “ensure money supply and loan growth meet economic development needs.”
• Statements by the central bank of China indicated that the government is unlikely to try and restrain loan growth after March's record figure of 1.89 trillion yuan in new loans. That figure brought total new loans to 92% of the government's target for the entire year.
• Commercial banks' bad loan ratio was 2.45% at the end of 2008 versus 20% or more in 2003 (before the government completed a $500 billion cleanup of the banking system).
HK's RMB pilot plan covers 400 mainland enterprises
• About 400 mainland enterprises will participate in a Renminbi cross-border trade settlement pilot program, Under Secretary for Financial Services and the Treasury of Hong Kong Julia Leung said.
• Enterprises in Hong Kong will soon be able to settle trades in Renminbi through the banks with those companies in the pilot. The move will create opportunities for Hong Kong banks to expand their Renminbi services from individual clients to enterprises.
• "The Monetary Authority has made full preparation for the program including conducting tests on the Renminbi clearing system," Leung noted, adding: "the system can start operation once the Chinese mainland comes up with the operational details."
China Plans $10 Billion Asean Investment Funding
• China plans to create a $10 billion investment fund and to offer $15 billion in credit to Southeast Asian countries with the aim of promoting infrastructure development linking China with the 10 members of the Association of Southeast Asian Nations (ASEAN)
• Other planned measures include 270 million yuan in aid to Cambodia, Laos, and Myanmar, and a donation of 300,000 tons of rice to an emergency East Asia rice reserve.
• China’s proposals give ASEAN countries “another option” besides going to the International Monetary Fund or the Asian Development Bank for funding, said Huang Jing, a visiting professor at the National University of Singapore’s Lee Kuan Yew School of Public Policy.
China Vanke housing sales value up 21% in Q1
• China's largest property developer by market cap announced Q1 sales of 12.22 billion yuan (US$1.79 billion), up 21%.
• The southern Guangdong-based company said its average sales price of its projects stood at 8,013 yuan per square meter, down 9.2% year on year.
• Wa Jia, an industry analyst with Industrial Securities, said Vanke dished out only one new project this year, showing that domestic property developers were still cautious about new investment. Though Li Shaoming, a senior analyst at China Jianyin Investment Securities said Vanke's peers were also stepping up efforts to sell more apartments.
Pacific Securities rakes in $16.4 mln net profit in 1Q
• The first of 9 listed brokerage firms to report Q1 results; Pacific Securities announced that its Q1 net profit was 112 million yuan ($16.4 million), a vast improvement on its 645 million yuan loss for 2008 (versus profit of 749 million yuan in 2007).
• Pacific Securities benefited from strong equity market performance with the Shanghai Composite up 32% this year, and turnover on the Chinese markets totaling 9.44 trillion yuan in the first quarter (only 3.5% lower year on year).
• Zhang Yunpeng, an analyst with Huarong Securities, said that brokerage companies benefited from a healthy stock market as more economic recovery signs emerged, adding that this sector was still bullish in the long run.

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