TRANSCRIPT: A Report on the APEC 2007 Summit
on Cooperation in Asia-Pacific; Chinese Stocks
Continue Rise; New Chinese IPOs on Hong Kong...
Sinomania! Volume I Webisode 31, September 10,
2007
Energy Security: My Report on APEC 2007;
Markets Stay Up;
And IPO Rush on Hong Kong!
APEC 2007
The 15th annual Asia-Pacific Economic Cooperation
or APEC leaders' meeting ended yesterday in Sydney,
Australia, to mixed reviews. The meeting lacked
its usually informal candor and was almost completely
ignored by world media, particularly television
news.
APEC 2007 concluded with three joint statements
by the leaders of the USA, Russia, Canada, China,
Japan, Australia, Mexico, and many others, pledging
to "promote open, efficient, and flexible economies"
and further integrate the Asia-Pacific region.
There is agreement to explore the creation of
a free trade area for Asia-Pacific and cooperation
on many hot button topics such as strengthening
intellectual property protection, preparedness
for natural disasters and epidemics, and increased
food and consumer product safety.
The biggest breakthrough if there is any potential
real impact from the vague statements put forth
was an agreement on climate change and energy
security that saw China and the USA, the world's
biggest energy eaters, agree in principle to a
25% cut in "energy intensity" per unit of gross
domestic product.
The accomplishment may be simply getting the
USA and China to agree in an international forum
that global climate change was something their
governments should at least acknowledge.
The declaration on energy security also embraces
atomic energy, including collaborations in research
and technology sharing, and also green initiatives
such as increasing forest cover in the region.
In a final statement, the APEC leaders emphasized
their desire to conclude the Doha round of global
trade negotiations this year at WTO headquarters
in Geneva. APEC nations currently account for
almost half of all global trade.
During the summit Australian oil and gas major
Woodside signed a deal with PetroChina to sell
$45 billion Australian dollars worth of liquefied
natural gas from the Browse field off West Australia
over the next 15 to 20 years. Partners in the
Browse field include BHP Billiton, Royal Dutch
Shell, and Chevron.
Such deals are drawing Australia and China closer
together and prove difficult for Australian politicians
still mired in support of President Bush's "coalition
of the willing."
MARKETS - INFLATION WORRIES?
The Shanghai Composite Index hit a new record
September 6 at 5,394 but closed today at 5,355.287.
The CSI 300 continues up and closed September
10 at 5,377.222. Shanghai B shares rose today
to 337.332, the highest level since the end of
May. ShenZhen B's slid last week but were back
up September 10 to close at 746.212.
Where Chinese markets go from here may be impacted
by whether there will be a fifth Chinese interest
rate hike given that August inflation was running
at six and a half percent - the highest in over
ten years and now a real concern to the national
government.
SAFE MOVE ON HONG KONG
The decision by China's State Administration
of Foreign Exchange (SAFE) to allow direct investment
in the Hong Kong market that I discussed in my
last broadcast was delayed by the State Council
after securities and banking regulators objected
- this news from officials who wish to remain
anonymous at the China Banking Regulatory Commission.
The regulators fear a flood of capital will trigger
declines in the Shanghai and ShenZhen stock markets.
The program will now be tried experimentally but
so far only large account holders at the Bank
of China in Tianjin are allowed to invest directly
in Hong Kong securities.
This will be an interesting change to watch as
the influx of Chinese liquidity into Hong Kong
could have a major impact on the Hang Seng and
China Enterprise indexes in particular.
NYSE IN BEIJING
Last week the New York Stock Exchange got approval
from Chinese regulators to open a representative
office in Beijing. New York remains a prestige
location for Chinese overseas IPOs but NASDAQ
is still the champ in terms of new listings having
debuted 12 so far this year twice the number in
2006.
IPO REPORT
A flurry of IPOs are expected over the next week
or so in Hong Kong potentially worth billions.
Here are some stand outs:
Sino-Ocean Land Holdings hopes to raise over
a billion US dollars in an IPO that could be the
year's third biggest. The road show started today.
Qunxing Paper Holdings, a paper manufacturer,
is looking to raise over $200 million US dollars.
Sportswear maker China Dongxiang produces clothing
under the Kappa brand and hopes to raise up to
$700 million US dollars in its IPO.
Soho China, property developer out of Beijing,
is raising up to $1 billion US dollars.
Another clothing maker, Bosideng, hopes to attract
$500 to $800 million US dollars.
Hidili, a privately owned coal producer out of
Sichuan province, has an IPO valued at over $500
million US dollars.
Another big energy play, Xinjiang Xin Xin Mining
Industry, a copper and nickel miner out of far
western Xinjiang looks to raise $400 million US
dollars.
