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TODAY'S BRIEFS
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Banking
& Finance
China raises
bank reserve requirements
The People's Bank of China
(PBoC) raised banks' required
reserve ratio (RRR) on Sunday
in a further effort to tighten
monetary policy, the Financial
Times reported.
The 50 basis point rise to
20.5% will take effect on
April 21, and is the fourth
time this year the PBoC has
hiked RRR. China's leaders
have repeatedly expressed
their concern about rising
inflation - which reached an
almost three-year high of 5.4%
in March - and have used a
combination of interest rates,
RRR, price caps and other
tools to combat price rises. A
further option for Chinese
policymakers would be to allow
a faster appreciation of the
renminbi, thus making imports
cheaper and reducing foreign
capital inflows. But recent
comments made to the IMF's
governing body indicate that
the country will resist
international pressure to more
freely float its currency.
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Tech,
Media & Telecom
Huawei to
disclose board members
Chinese technology firm
Huawei publicly disclosed
members of its board on Monday
in a bid to calm US nerves
about its links to the
country's military, the Financial
Times reported.
The names, pictures and
biographies of members are
published in the company's
annual report for 2010. The
move is widely seen as a
response to the firm's
multiple failures to enter the
US market. American
policymakers have repeatedly
blocked expansion attempts
because the company's founder
and CEO, Ren Zhengfei, once
served in the Chinese
military. The firm announced
a 30% profit rise for 2010.
Growth was led by its overseas
expansions into Asia, Africa
and Europe, sales in which
expanded by 34%. The China
market's share of Huawei's
sales dropped to 35% in 2010
from 40% in 2009.
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Consumer
Yuanda seeks
$536m IPO
Yuanda China expects to raise
US$536.2 million in an initial
public offering (IPO) by
listing on the Hong Kong Stock
Exchange, the Wall
Street Journal
reported. The company makes
curtain walls - the outer
covering of some buildings -
as well as metal roofs,
shading systems and glass
skylights. It says it will use
capital raised in the IPO to
expand production and sales
capacity, R&D and repay
outstanding debt. Sales to
institutional investors will
begin on April 18, with retail
investors in Hong Kong
following suit on April 20.
The company says it will sell
1.5 billion shares at a price
range of US$0.25 - $0.36, with
the starting price to be
announced on April 29.
Yuanda's announcement makes it
one of about a dozen companies
looking to garner a total of
US$16 billion in IPOs on the
HKSE in the second quarter.
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Banking
& Finance
Citic's PE
branch to complete $900
million fund
Citic Private Equity Funds
Management is set to complete
fundraising for a US$900
million fund, the Wall
Street Journal
reported. The newspaper said
that sources familiar with the
situation claim that
fundraising for the US
dollar-denominated fund will
close within days, making the
private equity (PE) branch of
the financial conglomerate
Citic one of China's largest
PE firms. The firm indicated
that it chose to raise capital
via a dollar-denominated fund
- bucking a recent trend
towards renminbi-denominated
funds - in order to tap demand
from international investors,
whose scope of action within
China is tightly regulated.
While Citic's top brass is
somewhat new to PE, the
conglomerate can take
advantage of local regulatory
leeway and holds significant
sway with China's banking
authorities.
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Economics
& Trade
Hu: Economy to
shift towards consumption
Chinese president Hu Jintao
said that the country will
increase consumption and
imports to re-balance the
structure of its economy, the
Wall
Street Journal
reported. Hu, speaking at the
annual Boao Forum on China's
Hainan island, said that it
"will let imports play a key
role in balancing China's
macroeconomy and adjusting our
economic structure to promote
trade balance." Hu's remarks
are the latest in a series by
government officials stressing
the need to re-balance China's
economy towards imports and
consumption. In late January,
Chen Deming, the commerce
minister, said that China is
looking to double its imports
within five years. China
recorded its first quarterly
trade deficit since 2004 this
year, but many economists and
pundits argue that major
shifts cannot occur without a
more rapid appreciation of the
renminbi.
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Economics
& Trade
CIC to invest
in Europe
China Investment Corporation
(CIC), the country's sovereign
wealth fund, is looking to
invest in the troubled
European economy, Reuters
reported. CIC's chairman, Lou
Jiwei, told the Boao Forum
that even while "[t]he
domestic market in Europe is
not recovering very fast," the
fund is "seeking concentrated
investment opportunities" on
the continent. Lou praised
some features of the European
economic structure, saying
that the European
public-private partnership
(PPP) model for infrastructure
deals is more attractive than
in the US. However, he
cautioned that 2012 could see
the overall global economy
slow significantly as
countries withdraw fiscal
stimulus and tighten monetary
policies. CIC has assets under
management of around US$300
billion, and is charged with
finding higher-yielding
returns for part of China's
US$3 trillion foreign exchange
reserves. It generated 12%
profit in 2009, after a 2%
loss the year before.
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