China - die Wiege des Bösen (für Aktien?)

``I'm not a big believer in the arbitrage story,'' said Kerley, who helps manage $126 billion at London-based Henderson. ``It's people buying into the market on expectations instead of real money flows.''

Almost all of this year's 44 percent gain took place since the government announcement. The Hang Seng advanced 3.6 percent last week and climbed above 29,000 for the first time. The 2007 gain compares with 40 percent for the Morgan Stanley Capital International Emerging Markets Index, 10 percent for the Standard & Poor's 500 Index and 7 percent for the Dow Jones Stoxx 600 Index of European shares.

Chinese companies list in Hong Kong to lure international investors prohibited from buying shares on mainland exchanges. The market value of so-called H shares and red chips accounted for 53 percent of the total for the Hong Kong stock exchange's main board at the end of September, up from 26 percent at the end of 2002, according to the bourse's Web site. In 1997, when the U.K. handed Hong Kong back to China, they accounted for 16 percent.

Cheaper Than China

China Life Insurance Co., the world's largest insurer by market value, China Mobile Ltd., the biggest mobile-phone company by subscribers, and Industrial & Commercial Bank of China Ltd., whose $325 billion market capitalization exceeds that of New York-based Citigroup Inc., are based in Beijing and trade in Hong Kong.

The 10 most expensive Hang Seng stocks include six companies based in Beijing, Shanghai or Shenzhen. Their shares trade between 34.9 times and 62.8 times profit, Bloomberg data show. The same stocks are valued at 42.5 to 70.4 times on China's mainland exchanges.

After more than tripling in the past year, shares in the Shanghai Composite Index traded at an average 50.7 times profit last month, the widest gap with the 40-member Hang Seng since the start of 2002.

``That's going to be the benchmark for the domestic investor,'' said Miller, who helps manage $48 billion at Baring in Boston. ``There will be less and less of a distinction to be made between mainland China and the Hong Kong market. This is kind of a one-off chance.''

Of the 45 Chinese companies with equities traded both at home and in Hong Kong, the so-called H shares are about 34 percent cheaper than their yuan-denominated A shares.

BlackRock Buys

Bank of Communications Ltd., which joined the Hang Seng last month, trades at 34.7 times profit in Hong Kong. That's a 36 percent discount to the Shanghai-based lender's A shares in Shanghai, which are valued at 53.9 times earnings. The Hong Kong-traded shares climbed 48 percent since mid-August, versus 17 percent in mainland shares.

China Life is valued at 39.3 times earnings in Hong Kong and 57.9 times in Shanghai. The Beijing-based insurer's H shares would have to climb 47 percent for its multiple to match the price-earnings ratio of Chinese shares.

The Hang Seng's price to cash flow ratio has helped persuade BlackRock Inc. to keep investing even after the rally, said Robert Doll, the firm's chief investment officer for global equities.

Cash Flow

Hong Kong's benchmark is valued at 5.22 times cash flow, compared with 12.3 times for the S&P 500, 8.31 times for Europe's Stoxx 600 Index and 11.5 times for the MSCI Asia- Pacific Index.

Only five of the 20 largest equity markets -- Japan, China, Canada, India and Taiwan -- are more expensive than Hong Kong on a price-earnings basis, Bloomberg data show. The S&P 500 is valued at 18.1 times profit, compared with 19.2 for the Hang Seng. Europe's Stoxx 600 has a ratio of 14.1, while the MSCI Asia-Pacific Index is valued at 19.7.

``Price to earnings isn't the only thing you look at for valuation,'' said Doll, who oversees $1.23 trillion for BlackRock in Plainsboro, New Jersey. ``The fact that price to cash flow is cheaper does keep us in that market over- weighted.''

Analyst ``buy'' ratings on Hong Kong stocks jumped to 65 percent of recommendations last month, the highest percentage since January 2001, according to data compiled by Bloomberg. The last time they were as bullish was 2001 as the Internet bubble burst, and October 1997, when Asian currencies plummeted.

Catching Up

The optimism over Hong Kong stocks makes Fortis Investment Management's Ronald Chan wary.

``A lot of good news has been priced in, but no one talks about bad news,'' said Chan, who oversees $2 billion as chief investment officer at Fortis in Hong Kong. ``Valuations are catching up. Stocks aren't as cheap as they used to be.''

Keith Wirtz, who oversees $22 billion as chief investment officer at Fifth Third Asset Management in Cincinnati, says shares in Hong Kong deserve to be priced higher because the market is becoming more Chinese and benefiting from an economy the World Bank estimates will grow 11.3 percent this year.

Earnings for mainland companies traded in Hong Kong are expected to jump 40 percent this year, after increasing 14 percent in 2006, according to Zurich-based UBS AG, the world's biggest money manager. That exceeds the 22 percent profit growth forecast for emerging markets by Morgan Stanley and is five times the 7.5 percent gain for companies in the S&P 500.

Gateway to China

Part of the money targeted for Hong Kong comes from China's so-called qualified domestic institutional investor, or QDII, program, which allows individuals to invest internationally through banks, mutual funds and other institutions.

Of the $90 billion in QDII funds, $30 billion will invest in Hong Kong, Jing Ulrich, chairman of China equities at JPMorgan in Hong Kong, wrote in a note last week.

That's in addition to the $30 billion the firm expects mainland investors to channel into Hong Kong next year.

Hong Kong is ``a gateway to invest in China,'' said Fifth Third's Wirtz. ``The opportunities are on the Hong Kong side of the coin because that's the cheap market relative to mainland China.''  

2007-10-16   01:43:00 p.m.
China's Shenzhen Stock Exchange signs cooperation agreement with Nasdaq


The Nasdaq market has signed a memorandum of understanding (MOU) with the Shenzhen Stock Exchange to strengthen ties between the two markets.

Under the MOU, the two sides will cooperate in technology, market structure reform and providing services to small- and mid-sized enterprises.

The two exchanges will also discuss the possibility of dual-listing Chinese companies in both markets.

""It has not been included as a part of MOU, but (dual listings) will be a possible outcome of the tieup,"" Robert Greifeld, president and chief executive officer of the Nasdaq Stock Market Inc, told reporters at the signing ceremony.

There are 49 Chinese companies listed on the Nasdaq so far.

Last month, Nasdaq won approval from the China Securities Regulatory Commission to open a representative office in Beijing.

According to earlier media reports, Shenzhen has filed applications with the State Council, or cabinet, to set up a growth enterprise board, which is expected to officially open in 2008.

""All the preparatory works are ongoing,"" Zhang Yujun, president of the Shenzhen Stock Exchange, told reporters.

China currently has two main stock exchanges in Shanghai and Shenzhen, and there is also a second board in Shenzhen dedicated to small and medium-sized enterprises (SME

..lange vermutet..=

Shares in mainland companies with domestic and Hong Kong listings shot up amid reports that China was studying the possibility of share swaps between Hong Kong- and Shanghai-listed stocks, which should narrow the gap in valuations between the two bourses.


warm anziehen..

A-Share Short Mechanism May Be More Practical-ICEA

"Big technical difficulty" for A-, H-share swap is China's capital account control, says ICEA's Ernie Hon, which makes such radical proposal practically impossible to carry out. Instead, more practical move may be to allow short-selling mechanism in A-shares, at same time give greenlight to individual investor scheme. "In this way, mainland investors can short the A-shares and long the corresponding H-shares for arbitration," Hon says. Though adds even such indirect arbitrage probably won't happen soon given likely destabilizing effect on A-shares. HSI in roller-caster ride, now +0.8% at 12944.77, earlier spiking to spiking to record 30025.07 then falling to 29265.47.

JPMorgan Chase China fund JV's QDII quota raised by 1 bln usd



-

BEIJING (XFN-ASIA) - China International Fund Management Co Ltd, a joint venture with JP Morgan Chase & Co under the qualified domestic institutional investor (QDII) scheme, has had its quota increased by one bln usd, the State Administration of Foreign Exchange (SAFE) said in a statement.

Earlier this month, SAFE granted the venture a QDII quota of four bln usd.

China International Fund Management said last week that subscriptions to its first fund product under the QDII scheme hit its target of 30 bln yuan on the first day of sales.

JPMorgan Fleming Asset Management, part of JPMorgan Chase Group, owns a 49 pct stake in the joint venture and Shanghai International Trust and Investment Co Ltd (SITICO) holds the remaining 51 pct

..Da schau her:
die Allianz hat in D noch vor Wochen über die "unmöglichen" Versicherungsbedingungen in China gewarnt und über die Firmen die in China investieren....und den Leuten empfohlen auf keinen Fall die in Zukunft potentiell angebotenen China Versicherungen anzunehmen...

Ich denke sie werden es besser machen...PS Wer eine Versicherung bei der A..hat sollte nächstes Jahr dann das Schreiben in dem sie bedauern "die Rendite auf Grund der schlechten Marktsituation"eurer LV genauer betrachten..vielleicht ist es in C ..gedruckt..;_)


www.emfis.de/global/global/nachrichten/...lassung_ID64471.html

Peking 23.10.07 (www.emfis.com)
Die chinesische Regulierungsbehörde hat der Allianz CHINA LIFE Insurance Co die Genehmigung erteilt, in Nanjing, Provinz Jiangsu, eine neue Niederlassung zu eröffnen.
Das Unternehmen ist ein Joint Venture zwischen der deutschen Allianz AG mit 51 Prozent und China's CITIC Trust & Investment Co mit 41 Prozent Beteiligung. Der chinesische Partner gehört zur CITIC Group, deren Tochter CITIC Securities über eine Kreuzbeteiligung in das US Investmenthaus Bear Stearns einsteigt, EMFIS berichtete.
Neben Nanjing ist das Unternehmen bereits in Shanghai, Guangdong, Zhejiang, Sichuan und Shenzhen ansässig.
Die Prämieneinnahmen der Allianz CHINA LIFE lagen in 2006 bei 1,2 Mrd. Yuan (160 Mio. USD). In den ersten acht Monaten dieses Jahres konnten bereits 2 Mrd. Yuan (266 Mio. USD) an Prämien eingenommen werden.

Economic growth slows to 11.5% in Q3


CHINA'S economic growth rate slowed in the third quarter after posting its fastest increase in more than a decade during the second quarter.

The gross domestic product grew 11.5 percent in the third quarter from a year earlier, compared with the 11.9-percent growth in the second quarter, National Bureau of Statistics spokesman Li Xiaochao told a news conference this morning.

Combined GDP in the first three quarters grew 11.5 percent to 16.6 trillion yuan (US$2.2 trillion), 0.7 percentage point faster year on year, Li said.

"We have strengthened and improved macro-economic controls, which prevent the economy from overheating," Li said.

In the three quarters, the country's agricultural industry grew 4.3 percent to 1.82 trillion yuan, with the manufacturing sector rising 13.5 percent to 8.35 trillion yuan and the service sector gaining 11 percent to 6.44 trillion yuan.

The Consumer Price Index, the main gauge of inflation, grew 4.1 percent on rising food prices in the period. The CPI in September grew 6.2 percent.

Investment in fixed assets jumped 25.7 percent to 9.15 trillion yuan from January to September, 1.6 percentage points slower than a year earlier.

Retail sales totaled 6.38 trillion yuan in the period, jumping 15.9 percent from a year earlier. It grew 17 percent in September.

People's disposable income in urban areas grew 13.2 percent to 10,346 yuan in the nine months, 3.2 percentage points faster than last year.


China's trade surplus reached US$185.7 billion in the period, up 69 percent from a year earlier after gaining 84 percent in the first half of this year.

Plan to Open Hong Kong Market To China Investors May Be Delayed
By Jonathan Cheng
Word Count: 781
HONG KONG -- A landmark program to allow mainland Chinese investors to trade directly in Hong Kong shares could be delayed further, possibly threatening some of the strong stock market gains that anticipation of the program has helped drive here over the past two months.

Chinese Premier Wen Jiabao, speaking on Saturday during a visit to Uzbekistan, said the Chinese government needed to fully consider the potential negative effects the plan could have on both mainland and Hong Kong stock markets. Mr. Wen said that China needed to more closely regulate any outflow of funds and that discussions with financial ...

• THE FULL WSJ.com ARTICLE IS ONLY AVAILABLE TO SUBSCRIBERS.

online.wsj.com/article/SB119418307671781711.html

..sollten wir mehr Angst vor Allianz, D Bank, dresdner & co haben oder vor China ...mmmhh?

Allianz China Life will in Europa und Nasdaq investieren


Peking 08.11.07 (www.emfis.com)
Wie die Shanghai Securities News  berichtet, beabsichtigt die Allianz China Life Insurance Co die QDII Lizenz zu Erlangen. Das Unternehmen, welches zu 51 Prozent von der Allianz AG und zu 49 Prozent von China's CITIC Trust & Investment Co getragen wird, beabsichtigt seine Investitionen in den europäischen Märkten und an der Nasdaq zutätigen.
Das Joint Venture Aegon-CNOOC Life Insurance Co, hat ebenfalls diese Lizenz beantragt.

www.emfis.de/global/global/nachrichten/...stieren_ID64991.html

Not surprisingly, that boom drives part of Rogers’ bullish stance on commodities.

But in an as-yet-unpublished interview with the Journal of Indexes, Rogers appears to be hedging his bets.

“[The Chinese equity market] is an incipient bubble and will turn into one within a few months unless something causes a significant correction soon,” Rogers says.

When asked if the Chinese stock market will be a strong performer over the next 5-10 years, he adds: “If a full-fledged bubble develops, it will be one of the worst [markets]. If something causes a significant correction, it will be one of the best.”

It’s enough to give you pause: If one of the world’s largest China bulls is worried about a bubble, should other investors be, too? And has Rogers’ “prospective bubble” already arrived?

Bubble-icious

While there’s no formal definition of a “bubble,” a new stock market index developed by Hang Seng Indexes gets pretty close.

Followers of the Chinese equity markets know that different investors access the market through different share classes. Domestic Chinese buy “A Shares,” which are listed locally on stock exchanges in Shanghai and Shenzhen, and are not available to foreign investors.

Foreign investors, meanwhile, primarily access the market through “H Shares,” which are mainland Chinese companies that trade in Hong Kong.

There are about 60 companies, however, that trade both A shares and H shares. These shares are fundamentally similar, offering an equal stake in the same companies. The only difference is that one is offered to domestic investors and one is offered to foreign investors.

The Hang Seng China AH Premium Index measures the difference in valuation between these two share classes. As of November 12, the A Shares were valued at an average 61% premium to the H Shares. In other words, a stock in the domestic market costs about 61% more than the same stock in Hong Kong.

Hello, Tulip-mania.

The Example of PetroChina (PTR)

The recent domestic IPO of PetroChina makes the case loud and clear. Shares of PetroChina have been available to foreign investors for a while, both through the H share market and as ADRs in New York. Warren Buffett even owned shares in the company until this spring, when he sold them because they had become too pricey.

But when PetroChina sold a 2.2% stake to domestic investors, they ignored Buffett’s opinion and drove the price up nearly 300%: Shares rose from about $1.80/share to $5.90/share on the first day of trading. That valuation gave PetroChina a total market capitalization of $1 trillion, making it by far the largest company in the world.

The H Shares, however, stayed relatively stable at just $2.32/share, giving the company a valuation of $424 billion. $424 billion or $1 trillion? It’s the same company.

What’s worse, there are signs that even the $424 billion measure is inflated. For starters, the H Shares trade at a P/E ratio of 20, compared to about 10 for domestic market peers like Exxon-Mobil. Meanwhile, the domestic shares in China trade at a P/E of 50. PetroChina may be well-positioned for growth, but a major oil company trading at a P/E of 50?

"It's very difficult, almost impossible, to predict bubbles. But what we can say is that based on historical examples, this kind of miracle is never sustainable," said Zuo Xiaolei, chief economist for China Galaxy Securities in Beijing, in a recent Wall Street Journal article. "Whether foreign investors believe in this or not is up to them."

There’s no way to arbitrage the difference in value in the shares, as they are not interchangeable, and domestic investors are not allowed to short stocks.

Will It Matter?

With stats like these, it’s hard to argue with the proposition that the domestic Chinese markets are in a bubble. One day, that bubble will probably pop, with possible consequences for the domestic Chinese consumer.

The question is: Will it matter? Will a bursting of the domestic equity bubble harm the Chinese economy enough to slow commodity demand?

Some investors say no. In their opinion, the Chinese economy is driven by exports, and a bursting of the domestic equity bubble will have little impact on global shares or the global economy. A recent and convincing report from UBS argued differently, deconstructing the China boom and saying it was led by domestic consumption.

Regardless of who you believe, it’s certainly a situation that merits attention. China plays a huge role in the commodities market right now, and any serious dip in growth would have consequences for the commodities market.

For now, though, it’s still 10% GDP growth as far as the eye can see. And as long as that remains the case, investors have nothing to worry about.

Bei 5120 lag das Tief im SSE Anfang September. Den längerfristigen Chart zeig ich im nächsten Posting.

Greetings

yes, die Unterstützung fällt, ABER dies schon seit mehr als 3 Monaten "mit Ansagen":
Weltwirtschaft
Balse
&ein bisschen Panik..
Statistik: IMMER in Folge des Kom Partei Kongress fällt der HSI in der Folge 7-12%
......wir sind bei 8%...
2,
in der Sekunde 0812 E Zeit HSI 26051,69 - 2,1% Tendenz +-+
Ziel 25500

viel Glück

Une fois de plus, ces événements ont été connus grâce aux blogueurs chinois, qui ont posté les informations, les photos des manifs (ci-dessus celles de mercredi) et les vidéos dont certaines, selon Global Voices Online qui suit la vie des blogs, ont été aussitôt retirées. La presse officielle s'est ainsi abstenue de parler de la manifestation de 10000 personnes, mercredi, devant le Comité provincial du Parti communiste chinois à Shenyang, abondamment relayée sur les blogs.

Cette affaire serait banale si ce n'était son ampleur, affectant des dizaines de milliers de personnes qui ont cru dans le rêve d'enrichissement à base de fourmi que leur vendait le charismatique Wang Fengyou, le PDG de la société Yilishen, avec son slogan "Ant Power" (voir le logo ci-dessus), le "pouvoir des fourmis"...

C'est également embarrassant pour les autorités chinoises, qui ont laissé faire, et même selon certains blogueurs, encouragé, alors que les avis défavorables existaient depuis longtemps. La Food and Drugs Administration (FDA) américaine avait ainsi publié en 2004 une mise en garde contre les produits aphrodisiaques de la société Yilishen, et contre le risque d'effets secondaires. Son équivalent chinois n'a pas eu la même vigilance. Aujourd'hui, la société Yilishen est en faillitte, ayant accumulé les dettes. Elle est incapable de continuer à acheter les fourmis des paysans-éleveurs, qui se retrouvent donc avec une production devenue inutile. Il y a quelques mois, pourtant, elle se préparait à une introduction en Bourse destinée à lever 1,4 milliard de Yuans (140 millions d'euros)... Un blogueur chinois cité par Global Voices résume ainsi la situation:

   "Beaucoup de gens se plaignent, mais, dans votre ignorance, vous vous êtes infligé tout ça vous-mêmes". Bien sûr, le gouvernement et les médias ont leur part de responsabilité également, mais que pouvez leur faire? C'est seulement en développant votre conscience que vous pourrez cesser de vous faire avoir. Yilishen savait qu'il voulait maintenir en l'état les sentiments du peuple, lui faire croire que rien ne changeait à Yilishen, que tout ça pourrait continuer à long terme. Mais les gens n'ont pas du faire leurs calculs: il aurait fallu que la société ait une croissance exponentielle pour réussir, et ce n'était pas réalisable. Aujourd'hui, tout ça est arrivé à son terme. Je prie pour ceux qui se sont fait avoir".

On retrouve dans cette affaire à la fois le rêve d'enrichissement de nombreux Chinois, les pratiques douteuses de bon nombre d'entrepreneurs, le laisser-faire officiel, mais aussi les fantasmes générés par une médecine naturelle à vocation aphrodisiaque... Le tout dans une région socialement sinistrée. Un cocktail explosif.  

www.aujourdhuilachine.com/article.asp?IdArticle=4942

The Chinese drive has benefited from a void created by what many nations see as a U.S. retreat from much of the world as it focuses on Iraq and the Middle East, according to analysts.

This was on display in August, when President George W. Bush postponed a summit with Asian leaders and Secretary of State Condoleezza Rice canceled a trip to an Asian security summit to focus on the Middle East.

``It is clear that the rise of China's soft power -- at America's expense -- is an issue that needs to be urgently addressed,'' Nye wrote in December 2005. Success in a global information age, he wrote, ``depends not only on whose army wins, but also on whose story wins.''

Edwards Takes Note

Some politicians, such as Democratic presidential candidate John Edwards, are taking note. ``China is capitalizing on the United States' current unpopularity to project its own `soft power,''' Edwards, a former North Carolina senator, wrote in the September/October issue of Foreign Affairs. ``In the coming years, China's influence and importance will only continue to grow.''

And just yesterday, Defense Secretary Robert Gates called for ``a dramatic increase in spending on the civilian instruments of national security,'' including diplomacy, strategic communications, foreign aid, civic action and economic reconstruction.

``I am here to make the case for strengthening our capacity to use soft power and for better integrating it with hard power,'' Gates said in a speech at Kansas State University in Manhattan, Kansas.

``We must focus our energies beyond the guns and steel of the military, beyond just our brave soldiers, sailors, Marines, and airmen. We must also focus our energies on the other elements of national power that will be so crucial in the years to come.''

Gates Trip

Administration officials deny that they are pulling back from Asia or other regions. ``Far from neglecting Asia, we are more engaged than ever before,'' Gates in a Nov. 9 Tokyo speech concluding a week-long trip to the region.

Still, China has made headway, in part because of the unpopularity of American policies, said Arthur Ding, an international affairs analyst at Nanyang Technological University in Singapore.

China has weakened the influence of the Western-dominated World Bank and International Monetary Fund in the developing world by providing loans that aren't conditioned on the adoption of certain policies, as are funds from the bank and IMF.

In 2005, for example, the IMF was on the verge of a deal with the Angolan government for new loans in exchange for commitments to curb corruption and ensure that oil revenue went to social programs, according to Joshua Kurlantzick, an analyst at the Carnegie Endowment for International Peace in Washington.

No Policy Strings

The Angolans broke off the talks at the last minute, and the reason quickly became apparent, said Kurlantzick, author of ``Charm Offensive: How China's Soft Power is Transforming the World.'' China soon offered Angola as much as $5 billion in financing -- with no policy conditions attached.

It is no coincidence that Angola has emerged as one of the biggest sources of oil for China's burgeoning, energy-intensive economy, Kurlantzick said in an interview.

China's no-strings policies have great appeal throughout the developing world, according to Nye. He said governments are rejecting the 1990s-era ``Washington consensus'' of market growth and democratic governance in favor of what he called ``the Beijing consensus'' of a market economy controlled by an authoritarian government.

For all their success, the Chinese have had setbacks. One was the recent spate of safety-related recalls of Chinese-made products, which focused attention on the country's environmental and workplace problems.

Achilles Heel

Another is Chinese human-rights policies, which Nye calls ``their Achilles heel,'' especially in Europe and the U.S.

One means of assuaging suspicions is the Confucius Institutes, which now exist in 51 countries. They promote Chinese language and culture, train language teachers -- and project a Confucian philosophy that meshes with the Chinese government's political priorities: just as a family should respect its elders, a nation should respect its leaders.

Nancy Jervis, who runs the Confucius Institute in New York, said some U.S. educators initially hesitated to join the program for fear that China would impose political or pedagogical requirements. That hasn't happened, she said.

``People call it `soft power,''' Jervis said. ``I don't know what soft power is, but it's better than hard power.''  

million (Note 1). And consumers in these cities are increasingly
attractive to marketers. The complexity of tapping into these
consumers is increased as they are a population on the move -- 20
million rural consumers are becoming urban each year.

-- Don’t ignore the rise of the female consumer -- nearly 80% of adult
women are employed in the workforce. This is one of the highest
rates of female employment in the world and is much higher than most
Asian countries. Therefore the traditional "housewife" marketing
target is much less important than in other markets.

-- Do your research first -- businesses must be aware of entrenched
local competition, the complex marketplace, the cost of business and
the lack of available information. When developing marketing
strategies, companies must ensure that they maintain an acceptable
degree of global consistency but also allow for the flexibility to
deal with local market challenges and opportunities.

-- Do understand the middle classes -- The rapidly expanding ranks of
the middle classes (more than 100 million in China) provide a growing
population with a disposable income and an interest in western
culture and western brands. With the emergence of the middle class,
the last five years have seen a leapfrogging of the consumption of
discretionary items, making China, for instance, the largest mobile
phone market in the world, and the home of the second largest
internet population.

-- Do be aware of local competition -- for example there are more than
1,200 brands of shampoo in China. Market research plays a key role
with helping local clients maintain their competitiveness now that
they are faced with multinational competition.

The two-year-old CSI 300 Index, which tracks shares on both the Shanghai and Shenzhen exchanges, fell 18 percent this month, the most since it started in 2005, and is down 21 percent since its record close on Oct. 16. A 20 percent drop within 12 months is considered by traders as the start of a bear market. The CSI 300 is still the world's best-performing national index of the 90 benchmarks followed by Bloomberg.

``It's far too early to talk about a prolonged bear market as domestic demand is still strong,'' said Leo Gao, who helps manage the equivalent of $2.3 billion at APS Asset Management Ltd. in Shanghai. ``We could see a rebound when banks get their fresh quota of loans in the new year.''

The Bank of New York China ADR Index, tracking the nation's American depositary receipts, gained 4.3 percent to 583.27 as of 12:49 p.m. in New York.

The MSCI Asia Pacific Index, a regional measure, retreated 8.9 percent since reaching a record on Nov. 1. In the U.S., the S&P 500 fell 8.8 percent from its 2007 closing high on Oct. 9 because of the worst housing slowdown in 16 years.

PetroChina, Exxon, GE

Chinese stocks rose as households shifted more of their $2.3 trillion of savings into the equity and property markets in search of returns that beat inflation. The yuan's 6.1 percent appreciation against the dollar in the past year has also increased the appeal of assets denominated in China's currency.

Chinese companies have sold 420 billion yuan ($57 billion) in stock this year, more than in the previous five years combined, according to data compiled by Bloomberg.

PetroChina, the nation's largest oil producer, almost tripled on its first day of trading in Shanghai on Nov. 5. It became the world's first company valued at $1 trillion, more than Exxon Mobil Corp. and General Electric Co. combined. The stock has slumped 34 percent from its high.

The Shanghai Composite Index, developed in December 1990 to track stocks listed on the bigger of China's two exchanges, plunged by more than 50 percent in the last bear market, from June 2001 to July 2005. It has jumped almost fivefold since its low on July 11, 2005.

`Selling Pressure'

``The market is facing more selling pressure, either from the regulatory front or the valuation perspective,'' said Yan Ji, an investment manager in Shanghai for HSBC Jintrust Fund Management Co., which oversees the equivalent of about $517 million. ``What we have seen now is only the start.''

Most overseas investors are prohibited from investing in China's yuan-denominated A shares, which are listed on exchanges in Shanghai and Shenzhen. UBS AG, based in Zurich, and Goldman Sachs Group Inc. in New York are among more than 50 international institutions approved by China's regulators to invest in the mainland markets.

The People's Bank of China ordered banks this month to set aside the highest level of deposits as reserves since at least 1987 to slow the economy's 11.5 percent annualized growth in the third quarter. Consumer prices rose 6.5 percent in October from a year earlier, matching a more than decade-high, compared with the one-year bank deposit rate of 3.87 percent.

The government is also encouraging overseas securities investment to prevent domestic markets from rising too fast. Chinese financial institutions, including brokerages, fund- management firms and banks, have been approved to invest a total of $34.5 billion outside China under the qualified domestic institutional investor, or QDII, program.

29.11.07 14:55
                    §
Shanghai A Share Index 5,257.48 215.66
Shanghai B Share Index 330.40 10.90
Shenzhen A Share Index 1,321.20 40.58
Shenzhen B Share Index 665.58 31.01

If the U.S. believes that China has not met this commitment, it can re-start WTO proceedings in Geneva.

Schwab could not resist making a jab at Congress, where criticism over the White House China policy has been unrelenting.

"Members [of Congress] with whom I have spoken appreciate the value of results over rhetoric," Schwab said.

The agreement comes roughly two weeks before top Bush Administration economic officials will travel to Beijing for the twice-per-year policy dialogue.

The U.S. is pressing the Chinese government to end its historic role controlling the economy, especially quick action from the leadership to relax China's control over the foreign exchange value of its currency.

For its part, Chinese leaders want to end U.S. restrictions over Chinese purchases of high-tech equipment and also want to use some of their huge reserves to invest in American companies without opposition from Congress.

The bilateral talks will take place Dec. 12-13 outside Beijing.

The share price has since fallen 37pc. Shenhua Energy is down 32pc, a fate shared by a long list of resource, industrial, and trading companies deemed sensitive to the credit cycle.

Among the losers yesterday were: Cosco shipping (down 5.5pc on the day); Harbin Pharmaceutical (-5.65pc); Aluminium Corp of China (-4.9pc); Wuhan Iron & Steel (-4.27pc) and Baoshan Iron & Steel (-3.9pc).

The tumbling stock market may be a warning that the Chinese economy is headed for a sharper slowdown than expected after years of torrid growth, reaching an annual rate of 12pc this autumn.www.telegraph.co.uk/money/main.jhtml?xml=/...ILC-mostviewedbox

""The economy has moved to a situation of excess demand with increasing pressure on monetary aggregates from the continued accumulation of officially-owned foreign currency assets. If this situation persists, and global food prices do not moderate as expected, there is a risk of inflation becoming entrenched, as in the mid-1990s,"" it said.

Faster inflation could add momentum to speculative activity in the real estate and equity markets, it added.

Meanwhile the current account surplus is projected to reach 350 bln usd this year, and rise to over 500 bln usd in 2009.

Growing domestic investment in heavy industries such as iron, steel and cars has resulted in a surge of exports while imports only grew slowly, boosting the trade surplus, the OECD said.

""Overall in the first 10 months of 2007, the cumulative trade balance was over 100 bln usd more than the annual figure for 2006. With the service balance likely to increase somewhat, the current account surplus is expected to reach over 350 bln usd in 2007, 11.25 pct of GDP,"" it said.

""Given the assumption of a constant exchange rate, the surplus on the current account is projected to continue expanding,"" it added.

China central bank raises bank reserve ratio by 1 percentage point - UPDATE

China's central bank said it is raising the reserve requirement on bank deposits by one percentage point in a bid to curb credit growth.

The increase, the 10th this year, puts the reserve ratio, or the proportion of deposits that must be held in reserve, at 14.5 pct for most banks, effective December 25.

The People's Bank of China said in a brief statement on its website that the increase is in line with a decision reached at the recent economic work conference, a key gathering to map economic strategy, calling for tighter monetary policy.

The latest move is considerably more aggressive than past reserve requirement hikes. The previous increase, which went into effect on November 26, was 0.5 percentage point.

The central bank, which has also raised interest rates five times this year, has become increasingly concerned that lending growth is too fast and that in turn is fueling inflation.

Goldman Sachs said it expects China's consumer price index (CPI) inflation for November to reach a decade-high 6.7 pct year-on-year. China's CPI growth has topped six pct over the past three months, reaching highs of 6. 5 pct in both August and October.

The banking regulator, the China Banking Regulatory Commission, has already told banks to hold down new lending in the final months of the year, and official sources said it is expected to reduce the target for lending growth for next year by two percentage points to 13 pct.