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Bumi Resources shares fall on UBS downgrade

PT Bumi Resources, Asia's biggest power-station coal exporter, saw its shares fall by their greatest percentage in seven weeks in Jakarta trading after the financial services company UBS AG downgraded the stock's rating from "buy" to "sell" in response to lower prices and weakening demand from China.

Shares of the Indonesian company sank 6.2 percent to close at 1,060 rupiah ($0.10), their steepest drop since June 25. The Jakarta Composite index, meanwhile, slid by 0.9 percent.

UBS cut its share-price estimate by 70 percent to 800 rupiah and lowered its coal output estimates for 2012 through 2014, UBS analysts wrote in a report.

Swap rate rises as reserve ratio cuts unlikely

China's interest-rate swaps climbed by their largest amount in a week on speculation the central bank will avoid easing lenders' reserve requirements as it uses open-market operations to add capital to the financial system.

On Monday, the People's Bank of China gauged how much demand exists for seven-day reverse-repurchase contract auctions this week, according to a trader required to bid at the sales. The monetary authority has decided to postpone lowering reserve ratios, seeing that reverse repurchases are helping to ensure there is an adequate supply of cash, according to a commentary published on Monday by the Financial News, which is controlled by the central bank.

Nation may have 1 million tons in copper inventory

China may end up with 1 million metric tons of copper in its inventory as a result of both high rates of production and import of the metal, according to a note from Deutsche Bank AG.

Without more restocking, any rally in copper prices that results merely from higher expectations probably won't last, Laura Zhai, an analyst at the bank, said in a report dated on Monday. While total copper cathode consumption may rise 5 percent this year to 7.7 million metric tons, that isn't likely to happen without greater increases in the second half of the year, since the demand for the metal was up only 3.6 percent in the first half, according to the report. From 550,000 to 575,000 tons of copper is probably held in bonded warehouses in China.

Baosteel cuts main steel product prices

China's biggest listed steelmaker Baoshan Iron & Steel Co Ltd will slash the prices of its main products for September bookings by up to 3.4 percent, the third reduction in a row since June, indicating a lack of market confidence in the short run.

The Shanghai-based manufacturer will cut hot-rolled coil prices by 100 yuan ($15.7) per ton and cold-rolled coil prices by 150 yuan per ton. It will cut most of the prices by 80 to 180 yuan, according to a price adjustment notice published by the company on Friday.?

Cumulative cuts have amounted to up to 12.5 percent compared with quotes in June.

Car-buying satisfaction drops due to pressure sales

Chinese car buyers are becoming less satisfied as dealerships adopt high-pressure sales techniques to meet their delivery targets amid a slowdown in demand for vehicles and as job-hopping leads to a dearth of experienced staff.

Volkswagen AG's luxury brand Audi topped the J.D. Power & Associates satisfaction survey for a third year, followed by Chinese joint ventures involving Nissan Motor Co and Hyundai Motor Co. The difference in the scores received by domestic and foreign brands widened, according to the report, which polled 13,769 new vehicle owners in 43 Chinese cities.

"Nearly 80 percent of dealers indicate that high inventories are their greatest challenge, which means dealers are under immense pressure to sell more vehicles at a faster pace," Liza Wang, Shanghai-based senior automotive analyst at industry researcher J.D. Power, said in a statement on Monday.

China 'contributes most to French trade deficit'

France's trade deficit with China in the first half of 2012 was 13.4 billion euros ($16.46 billion), down 1 percent from a year earlier, and accounted for 38.5 percent of France's total trade deficit, the French government said.

China remained France's second-largest source of imports in the first half but the biggest contributor to the French trade deficit. Chinese exports to France increased by 5.5 percent year-on-year to 21.15 billion euros in the first half, while Chinese imports from France surged by 19 percent year-on-year to 7.71 billion euros in the same period, according to data from the French customs.

But China's General Administration of Customs said that Chinese exports to France dropped by 5.3 percent year-on-year to $13.56 billion in the first half of this year while its imports from France rose by 9.7 percent to $11.61 billion, yielding a trade surplus of just $1.95 billion.

Daily steel output falls as prices at 33-month low

China's daily steel production in July fell from the previous month as some mills started to cut output as prices fell to the lowest in 33 months.

Output was 1.99 million metric tons a day last month, compared with 2 million tons in June, the second highest on record, based on monthly data from the National Bureau of Statistics.

Total crude steel production was 61.69 million tons in July, the bureau said on Monday, and 60.2 million tons in June.

Domestic steel prices in China have dropped 17 percent from April to the lowest level since November 2009, overwhelmed by rising capacity and sluggish demand from builders and makers of machinery and appliances.

Sinopec revives dollar bond sales as yields tumble

China Petrochemical Corp led the busiest week for dollar-denominated bond sales by Chinese issuers since May as yields dropped to a 21-month low on signs the government will prop up a slowing economy.

China Petrochemical, known as Sinopec Group, and Sound Global Ltd sold $650 million of debt on Aug 6, according to data compiled by Bloomberg. Average yields on Chinese company notes fell 60 basis points this quarter to 5.53 percent, the lowest level since November 2010, according to JPMorgan Chase & Co indexes. Corporate borrowing costs globally declined 38 basis points to 2.97 percent in the same period, Bank of America Merrill Lynch indexes show.

Yuan strengthens on bets Europe will tackle debt crisis

China's yuan gained on speculation the European Central Bank will soon act to ease the region's debt crisis, spurring demand for emerging-market assets.

The nation's overseas sales climbed 1 percent in July from a year earlier, following an 11.3 percent increase in June, data showed last week. German Chancellor Angela Merkel ends her summer vacation and travels to Canada this week for talks with Prime Minister Stephen Harper, while a report on Tuesday may show the euro region's economy contracted in the second quarter.

"Risk appetite is improving on hopes that the ECB will eventually take some actions," said Tommy Ong, a Hong Kong-based senior vice-president of treasury and markets at DBS Bank (Hong Kong) Ltd. "That helped revive investment demand for the yuan. However, trade-related demand will remain weak as export growth is slowing."

NZ bonds seen as safe haven by Chinese investors

New Zealand's bond market is attractive to investors from China and other nations as the economy shows signs of stability and moderate growth, Finance Minister Bill English said.

"New Zealand is seen as a relatively safe haven in these difficult times and Chinese authorities want to diversify their international bond holdings," English said in a speech to a conference on China in Wellington on Monday. "China is also investing in New Zealand government bonds, contributing to the record-low borrowing rates New Zealand currently enjoys."

New Zealand's dollar has gained 4.3 percent this year, the best-performing Group of 10 currencies, and reached a three-month high of 82.24 US cents on Aug 6.

Bank of Communications offering approved

The Bank of Communications has been given approval by the China Securities Regulatory Commission to go ahead with a non-public offering of shares totaling up to 56.6 billion yuan ($8.84 billion), including 29.8 billion yuan of A shares, a move that will boost the development of China's financial market and banking sector, the People's Daily reported on Monday.

The report said the main investors will be the Ministry of Finance, a social security fund, and HSBC and the institutions will be long-term investors, reducing the risk of a share price correction in the short term.

IPOs from companies in western China prioritized

The China Securities Regulatory Commission will prioritize the review of initial public offering applications filed by companies in western China starting from August, the China Securities Journal reported on Monday. The commission will aim to keep a balanced pace for the review process for the Shanghai and Shenzhen stock exchanges.

The purpose is to uphold the economic and social development of the region and balance resource allocation between eastern and western regions, the newspaper quoted an unnamed official of the commission as saying. The plan will also make full use of the two stock exchanges for fundraising in order to boost the development of the real economy, the source said.

A total of 129 companies plan to be listed in Shanghai, while 629 companies plan to be listed in the Shenzhen bourse, according to the CSRC.

China Daily - Agencies

(China Daily 08/14/2012 page14)