Shanghai, HK Rally; Everbright Bank IPO

Chandrasekhar Atreya
23 Jul, 2010
New York City

Stocks in China rallied and gained 6% for the week. PBOC wants to peg yuan to a basket of currencies. China Everbright Bank is planning a large IPO in Shanghai. China makes a three year currency swap agreement with Singapore. Real Estate online firm SouFun is planning a large U.S float.

[R]5:00 PM Hong Kong, China – Stocks in China rallied and gained 6% for the week. PBOC wants to peg yuan to a basket of currencies. China Everbright Bank is planning a large IPO in Shanghai. China makes a three year currency swap agreement with Singapore. Real Estate online firm SouFun is planning a large U.S float.[/R]

The benchmark indexes in China region closed higher for the day and soared 6.1% in the week, the largest weekly increase since December 4, 2009.

Asian markets closed higher for the week on a global markets rally after the U.S. corporations reported better than expected earnings. Stocks in Hong Kong gained buoyed by earning reports from the U.S. The CSI index in Shanghai closed above 2,500 for the third day in a row.

The CSI 300 Index in China gained 0.4% to 2,793.08. The Hang Seng Index gained 1.1% or 225.63 to close at 20,815.33.

In comments posted to the People''s Bank of China Web site, the central bank''s Deputy Governor Hu Xiaolian said using a basket of currencies from the nation''s top trading partners would allow the Chinese yuan to better reflect trading fundamentals.

""Compared with pegging to a single currency, the exchange-rate regime with reference to a basket of currencies will help adjust exports and imports, current account, and balance of payment in a more effective manner,"" she said.

China''s central bank currently sets a ""central parity rate"" against the U.S. dollar each day, with that day''s trading range confined to 0.5% above or below that level. But Hu said focusing on the dollar-yuan rate ignored China''s bigger trade picture.

""A floating exchange rate has impact on total imports and exports of an economy,"" she said. ""Therefore, the floating cannot be aimed to adjust only the bilateral trade balance, and it is not advisable to just look at the dollar-yuan exchange rate.""

China Everbright Bank Co plans to sell as many as 6.1 billion shares in Shanghai in an IPO that the market estimates may raise as much as 18 billion yuan. The China Securities Regulatory Commission will review the IPO prospectus on July 26, according to a statement posted on its Web site yesterday.

China has agreed to a three-year currency swap with Singapore valued at 150 billion yuan, according to a posting on People’s Bank of China’s Web site today. The swap, which maybe extended, aims to facilitate trade and investment between the two countries, the statement said.

The central bank in an effort to reduce the reliance on the greenback has signed at least 650 billion yuan of swap agreements with Argentina, Indonesia, Belarus, Malaysia, Hong Kong and Korea since December of 2008.

Vehicle prices may decline in China in the second half of the year as inventories rise and wholesalers struggle to meet sales targets, the nation’s planning ministry has said.

“Automakers may join dealers in offering discounts and freebies in the fourth quarter,” said Cheng Xiaodong, an official with the National Development and Reform Commission, in a statement today. China’s car prices have fallen 1.18% in the first half from a year earlier according to the agency.

China’s No 2 online real estate Web site SouFun, 51% owned by Australia’s Telstra Corp, is preparing for a U.S float worth up to $300 million, in what could be the largest such listing by a Chinese web company this year.

Shanghai Stock Movers

Agricultural Bank of China, the world’s biggest IPO this year, rose 2.9% to 2.81 yuan.

ICBC, China’s biggest listed lender, rose 1.4% to 4.32 yuan.

Bank of China added 0.6% to 3.57 yuan.

Shanghai Shimao Co, a developer, climbed 1% to 13.76 yuan after forecasting 700% increase in first half net income.

Shenzhen Kingdom Sci-Tech dropped 2.1% to 10.39 yuan after the company said first half net profit may fall 70% from a year ago due to rising wages.

Yaboo Pharmaceutical Group Co gained 4.3% to 8.55 yuan after being upgraded by Citic Securities to “outperform.”