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Swap rate at three-month high, reflecting cash crunch

China's swap rate has climbed to a three-month high, reflecting a worsening cash crunch as the central bank refrains from easing lenders' reserve requirements.

The 14-day repurchase rate, a gauge of interbank funding availability, jumped the most in almost two months even as the central bank injected 90 billion yuan ($14 billion) into the financial system using reverse-repurchase agreements. Reports last week showed banks extended the fewest new loans in July since September, while gains in industrial output, retail sales and exports slowed. The inflation rate fell to a 30-month low and Premier Wen Jiabao said on Wednesday there is scope to adjust monetary policy.

"There is disappointment from the lack of policy action since the weak economic data released last week," said Pin Ru Tan, a Hong Kong-based rates strategist at HSBC Securities Asia Ltd.

Firm eyes Barrick's stake in Tanzania gold miner

China National Gold Group Corp is in talks with Barrick Gold Corp about buying its controlling interest in African Barrick Gold Plc.

China National Gold is studying the 73.9 percent stake in African Barrick, the largest producer of the precious metal in Tanzania, according to a statement on Thursday from Toronto-based Barrick. There's no certainty an offer will be made, it said.

China, with $3.2 trillion in foreign exchange reserves, has urged companies to buy assets overseas, securing energy and commodity resources to feed industries from power generation to construction. Zijin Mining Group Co, its biggest gold miner by market value, said in July it's looking to buy copper projects in Africa, while China's Minmetals Resources Ltd agreed to buy Anvil Mining Ltd in 2011 for $1.3 billion to access the metal.

China Mobile heads for slowest annual profit growth

China Mobile Ltd, the world's biggest phone company by subscribers, is on track for its slowest annual profit growth in at least 13 years after rising costs to lure users led it to post a decline in earnings.

Second-quarter net income fell to 34.40 billion yuan ($5.4 billion) from 34.42 billion yuan a year earlier, according to figures derived from first-half earnings reported to Hong Kong's stock exchange on Thursday. That missed the projection of 35.6 billion yuan, the median of nine analysts' estimates in a Bloomberg News survey.

Its shares made their biggest fall in a year in Hong Kong trading after quarterly profit dropped for the first time since 2009, according to data compiled by Bloomberg. Chief Executive Officer Li Yue is boosting capital spending to invest in a fourth-generation network and invest 20 billion yuan in handset subsidies to maintain its lead in smartphone users over rivals China Unicom (Hong Kong) Ltd and China Telecom Corp.

Goldman's Westerman to run China business

Goldman Sachs Group Inc has appointed Matthew Westerman to run its investment banking business in China, after former head Cai Jinyong left for a top job at the World Bank.

Westerman will remain co-head of investment banking for the Asia-Pacific region excluding Japan while taking additional responsibility for China, according to an internal memo. Connie Ling, a Goldman Sachs spokeswoman based in Hong Kong, confirmed the document's contents.

Westerman will be part of a new investment banking executive committee for China whose members also include Dan Dees, the other regional co-head of investment banking, and three other managing directors in China, according to the memo.

The World Bank on Aug 10 announced the appointment of Cai as chief executive officer of Washington-based International Finance Corporation, effective Oct 1. Cai, 53, becomes the first Chinese national to hold the position.

Sunshine Oilsands favors venture with Sinopec

Sunshine Oilsands Ltd held talks with China Petrochemical Corp, the nation's biggest refiner, to jointly develop the Canadian company's oil sands reserves.

The companies discussed "every aspect" of forming a joint venture to accelerate exploration and production of Sunshine's estimated 71 billion barrels of oil sands reserves, said Chief Executive Officer John Zahary on Thursday in an interview in Hong Kong. He said they may establish a plan for a joint venture within a year.

The Calgary-based oil sands explorer raised HK$4.5 billion ($580 million) in a Hong Kong initial public offering in March, attracting cornerstone investors that include China's sovereign wealth fund China Investment Corp, China Life Insurance Co, and Sinopec Group.

Wind power capacity linked to grid grows 87 percent

China has connected 50.26 gigawatts of wind-generated capacity to the nation's largest electricity grid, according to Xinhua News Agency, citing a statement from China State Grid Corp.

Growth in the on-grid wind power capacity was up 87 percent annually over the last six years, Xinhua reported, citing the larger of China's two transmission operators. Grid-linked capacity will rise to 100 gigawatts by 2015 and 200 gigawatts by 2020, according to the report published on Wednesday.

China plans to have at least 15 percent of its energy mix come from non-fossil fuels by 2020. Wind farms are the second-biggest contributor to renewable-energy capacity in the nation after hydropower dams.

Regional concentrations of wind resources and a lack of links between local electricity networks and the national grid prevent the efficient use of wind power, Xinhua reported, citing State Grid.

COMAC, Boeing open energy conservation tech center

Commercial Aircraft Corp of China and Boeing Co opened the Boeing-COMAC Aviation Energy Conservation and Emission Reduction Technology Center on Thursday.

The center's first research project will be to treat and clean waste cooking oil, often described in China as gutter oil, for use as jet fuel.

Boeing also works on other biofuel materials, like jatropha, with other research institutes in China.

"Different regions have different materials for biofuel and we are looking for the most suitable one for China," said Marc Allen, Boeing China president.

Because of the high cost, all kinds of biofuel have high price now and it will take maybe five to 10 years to promote biofuel in the market, he added.

Both of COMAC and Boeing will invest capital and human resources into the center, which will expand knowledge in area, such as sustainable aviation biofuel and air traffic management.

Online games, advertising lift NetEase profit

Internet services provider NetEase Inc said on Thursday it generated 1.3 billion yuan ($200 million) in gross profit in the second quarter, boosted by robust demand for online games and advertising services.

The increase was primarily attributed to NetEase's online game business, the Nasdaq-listed company said, adding that the year-on-year increase in online game revenue was largely driven by its self-developed games.

"Content innovation, new product development and service integration among mobile platforms continues to attract new advertising customers," said William Ding, director and CEO of NetEase.

Revenue increased 12.7 percent year-on-year, with online games growing 10.8 percent and advertising services up 20.4 percent.

Liquor maker Wuliangye to speed up M&A activities

Chinese liquor maker Wuliangye Group will accelerate its M&A activities, in a move to further deepen its presence in the domestic market.

Chinese media reported that Wuliangye announced in an investors meeting that it will invest nearly 100 billion yuan ($15.80 billion) in M&A projects in the future to expand its market share.

Liu Zhongguo, chairman of Wuliangye, said that the company plans to invest about 10 billion yuan in the projects in a preliminary stage, with the approval of the local government.

The move comes as the liquor maker checks some target companies it has been eyeing since 2009.

Shanghai design show to open next week

Shanghai Design Biennial 2012 will be held at the Shanghai Exhibition Center from Aug 24 to 26.

Industry giants including SAIC Motor and Commercial Aircraft Corporation are expected to show their latest products and designs at the exhibition.

Chinese companies have made considerable progress in innovation, design and manufacturing, and the event is aimed at building a platform for companies to inspire one another and find opportunities for cooperation, said Tao Yonghui, deputy director of the Shanghai Science and Technology Exchange Center, the organizer of the biennial.

Global Logistic seeks growth through Amazon

Global Logistic Properties Ltd, a unit of Singapore's sovereign wealth fund, said its China assets will match those in Japan as its tenants, including online retailers Amazon.com Inc and 360buy.com, add more space.

The company invested $1 billion in China last year. It expects to expand from that base as it attracts tenants with modern warehouses in the world's fastest-growing major economy, Chief Executive Officer Ming Z. Mei said. The net asset value in China will match that in Japan in six to 12 months, he said.

"We are in the very early stage of the industry, so it's going to be a long time before we can satisfy the needs of our customers," Mei said in an interview in Singapore on Wednesday.

"Eighty percent of China's logistics facilities are old and obsolete, so it will be a long time before we can refill all those spaces. We can grow on that $1 billion base."

West China Cement's H1 profit declines 65 percent

West China Cement Ltd, whose corporate governance and financial statements were questioned by a short seller, said on Wednesday first-half profit fell 65 percent because average selling prices were lower and costs increased.

Net income fell to 148.5 million yuan ($23 million), or 0.03 yuan a share, from 419 million yuan, or 0.10 yuan, a year earlier, the cement maker said in a Hong Kong Stock Exchange filing on Wednesday. Sales fell 7.1 percent to 1.59 billion yuan.

The cement market in Shaanxi province will gradually recover this year, with pricing power maintained and possibly improved, said the company, which is based in that province. On Aug 9, the company said its business was "healthy" in response to a report by Glaucus Research Group, which identifies itself on its website as a research group in California that also engages in short-selling.

China Daily-Agencies

(China Daily 08/17/2012 page14)