China Invests More Abroad; Hang Seng Index Falls 1.2%

Chandrasekhar Atreya
18 Oct, 2010
New York City

In the absence of global events and local economic news stocks declined in Shanghai and Hong Kong. China

[R]5:00 PM Hong Kong, China – In the absence of global events and local economic news stocks declined in Shanghai and Hong Kong. China’s direct investments in overseas markets jump 10% for the first nine months of the year. Fiscal revenue of China rose 12% in September from a year ago. Private equity firms invest in more companies in the third quarter of this year.[/R]

Chinese stocks fluctuated several times and closed lower and the index in Hong Kong lost 1.2%.

The CSI 300 Index in mainland China lost 0.65% or 21.52 to close at 3,306.16. The Hang Seng Index in Hong Kong lost 1.21% or 288.25 to close at 23,469.38.

The country’s direct investments overseas jumped 10.4% on the year to $36.27 billion for the first nine months of the year, China’s Commerce Ministry reported Friday. China invested in 2,426 firms in 118 separate economies during that period.

China is acquiring companies and assets abroad, casting a keen eye on resource-rich nations but also showing a voracious appetite for investing in the U.S. and Europe by flexing its muscle using the ample foreign currency reserves it has accumulated through robust exports and near-routine currency interventions.

Foreign direct investment in China expanded in September from the August pace, but analysts feel the inflows could slow by the end of this year as the government moves to curb the influx of speculative money.

September’s foreign investment rose 6.14% from a year earlier to $8.38 billion, expanding for the 14th month in a row, the Ministry of Commerce said Friday. In August the growth rate dropped sharply, increasing just 1.38% from July’s 29.1% and June’s 39.6%.

China’s fiscal revenue for September stood at 628.72 billion yuan, up 12.1% from a year earlier, the Ministry of Finance announced Friday.

For the first nine months to September, fiscal revenues climbed 22.4% from the same period a year ago to 6.3 trillion yuan, the ministry said on its Web site.

Private equity firms invested a total of $1.93 billion in 71 domestic companies in the third quarter of 2010, recording the largest investment in the number of companies in four years, according to an industry report released Friday.

Private equity companies pumped in $1.25 billion in 39 firms in the previous quarter. The third quarter investment in companies was also the highest since the fourth quarter of 2006 when private equity firms invested in 53 domestic companies, Zero2IPO Research Center said in a report.

China’s annual production capacity of electric motor vehicles is expected to reach 1 million units by 2020, a senior official said Saturday.

As the world’s largest auto market, new energy vehicles are key to the development of China’s auto industry, Minister of Science and Technology Wan Gang said Saturday. Wan also said 25 Chinese cities have joined a pilot program co-sponsored in 2009 by his ministry, the Ministry of Finance, the National Development and Reform Commission and the Ministry of Industry and Information to promote energy-efficient and new-energy vehicles.

Kao Corp will expand its network of cosmetic stores in China and sell its leading brand Sofina to drugstores. Cosmetic company companies normally carry their higher-end lines in department stores and their mass market brands in drugstores.

Kao is going against the grain with Sofina to win more business from the middle class in China and edge closer to rival Shiseido Co whose cosmetic sales are eight times that of Kao Group.

U.S. Trade Representative Ron Kirk announced Friday that the United States initiated an investigation into Chinese policies and practices in green technology sector to see whether they are in line with World Trade Organization rules.

The probe was requested by the United Steelworkers in September, and came amid worries that the U.S. protectionist measures against its trade partners maybe on the rise due to its sluggish economic recovery.

The Canton Fair, China’s largest trade fair and a key barometer of its trade and economic development opened Friday in Guangzhou amid growing concerns that a stronger yuan would weigh on the nation’s exports.

Zijin Mining Group Co’s problems continued after 4 people died in September after a dam at its mine collapsed and the Guangdong government started investigating. Tang Tao, a spokesman of the Guangdong government said that 28 people were dead or missing after the accident and an initial investigation showed serious quality problems with Zijin’s tailing dam.

The incident follows the accidental release of acidic waste from its copper mine into the Ting River for which the company was fined 9.6 million yuan.

Citic Pacific Ltd, an arm of China’s largest state-owned investment company, said Monday it ended an agreement with the contractor building the power station at its $5.2 billion Sino Iron project in Western Australia.

Australian Energy and Environment failed to meet the contract terms, the Australian unit of Citic Pacific said in a statement today. Construction is nearing completion and progress of the project will not be affected, the unit said.