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Rebar futures fall on housing-demand fears

Steel reinforcement-bar futures fell in China on Wednesday, snapping a two-day advance on concern government measures to curb housing purchases may sap demand for the construction material.

The January-delivery contract dropped as much as 1 percent to 3,513 yuan ($557) a metric ton and closed the morning trading at 3,514 yuan. Futures have declined 13 percent this quarter.

The Shanghai Stock Exchange Property Index plunged as much as 1.2 percent after the southern Chinese city of Guangzhou limited pre-sales for some home projects.

The Securities Daily also reported Chen Quansheng, an adviser to the State Council, said China should shift its property control policy to curbing the selling of homes instead of imposing a buying limit

"Rebar, a key component of building and public project construction, closely correlates with the property sector" listed on the exchanges, Yi Yaozhong, said an analyst at Yongan Futures Co, by phone from Beijing.

Bonds to rally from first quarter losses

China's biggest banks predict a strengthening yuan, and that reserve ratio cuts will ease a cash crunch helping bonds rally from their first quarter losses in almost two years.

According to study conducted by Bank of America Merrill Lynch indexes, corporate and government notes have lost 0.27 percent since the end of June, the first decline since the last three months of 2010.

Globally, emerging market securities have returned 6.3 percent, according to a separate index from the lender.

Separately, according to other data compiled by Bloomberg, The People's Bank of China will cut reserve requirements at least once more in 2012 as both the benchmark stock index and economic growth slump to the lowest in more than three years.

The central bank pumped a record amount of funds into the financial system with reverse- repurchase agreements on Tuesday, The yuan has risen 0.8 percent this quarter, reviving demand for Chinese assets.

Lenovo counting on China advantage to challenge Apple

Lenovo Group Ltd, set to overtake Hewlett Packard Co as the biggest PC maker this year, has its sights on the smartphone and tablet markets, as it takes on Apple Inc and Samsung Electronics Co in China.

"We want to test the market, see the first steps toward success in China, then roll out to the rest of world," chief executive officer Yang Yuanqing said. "We want to win in the smartphone area and even the TV area."

The maker of Thinkpad laptops, a business it acquired from IBM Corp, has added tablets and phones to lessen its dependence on PCs, taking it into direct competition with the world's most valuable company. Yang said Lenovo's brand name, product development and distribution in China will give it an edge over Apple and other rivals that create devices elsewhere before selling them in the world's largest PC and smartphone market

Logistics costs rise in first eight months of year

Logistics costs increased in the first eight months of the year, according to a report issued by the China Federation of Logistics and Purchasing, China Securities Journal reported on Wednesday.

The total value of goods transported by logistics companies in the first eight months was 113.9 trillion yuan ($18.1 trillion), up 9.7 percent year-on-year. Industrial goods transported totaled 103.9 trillion yuan, accounting for 91.2 percent of that total.

From January to August, total logistics costs amounted to 5.6 trillion yuan, up 11.3 percent year-on-year.

CMGE sees zero trading on Nasdaq debut

China Mobile Games and Entertainment Group Ltd saw no trading on its debut on the Nasdaq due to a huge bid-ask spread.

Data from the stock exchange showed that the minimum selling price was $40 per share, while the buying price reached only $3.9 per share, a huge gap that resulted in zero trading volume at the close on Tuesday.

The bid-ask pricing equation reflects the different valuations that individual market participants ascribe to a certain stock. In more volatile stocks, bid-ask spreads tend to be wider, indicating the greater range of possible share price valuations and the lower likelihood of converting the shares to cash easily.

As a listing by way of introduction - which is the case with CMGE's listing - does not necessarily involve financing in the first place, the company might see a shortage of investment during the initial stage.

Bank of China setting up desk in Turkey's Akbank

Akbank TAS and Bank of China Ltd have set up a joint China desk at the Istanbul-based lender to provide financial services to Chinese firms in Turkey.

"This is the first step towards greater co-operation," Akbank's chief executive officer Hakan Binbasgil said on Tuesday in Istanbul. "The two countries are very similar in terms of their economic growth. Relations are bound to grow."

The China desk will provide services such as foreign trade, yuan transactions, treasury products and structured finance to around 450 Chinese firms already operating in Turkey, as well as those which plan to invest, Binbasgil said.

Akbank, part owned by Citigroup Inc, is open to similar kinds of co-operation with financial institutions from other countries, he said.

BASF focuses R&D investment on China

BASF SE, a chemical company, plans to invest one-fourth of its annual R&D money into the Asia-Pacific region with a priority on the Chinese market.

"Our strategy is to invest more in these markets to meet that fast-growing demand," said Martin Brudermueller, vice-chairman of the board of executive directors at BASF.

BASF spent 1.6 billion euros ($2billion) on R&D in 2011 and is expected to spend more this year, according to sources. One-third of funds will be used to develop technologies aimed at green issues.

"Part of our strategy for the global market is to develop battery materials for electric vehicles," said Brudermueller.

Aircraft carrier to spur 130b yuan investment

After China's first aircraft carrier formally entered service on Tuesday, many are expecting fierce competition between companies to build China's first carrier battle groups.

Sinolink Securities conservatively estimated that the construction of a complete carrier battle group would cost 64 billion yuan ($10.09 billion).

To protect the sovereignty of both the East and South China Sea, China might need two carrier battle groups, representing an investment of about 130 billion yuan, Sinolink Securities said.

Chinese stocks related to the defense industry are on the rise since early this month, after Japan attempted to illegally "purchase" the Diaoyu Islands in the East China Sea.

Analysts said that highly related industries, such as equipment manufacturing, power systems and electronic communications, would benefit a lot from the 130 billion yuan in investments.

China Daily-Agencies

(China Daily 09/27/2012 page14)