China Economic Review - Daily Briefs

Sinopec unit hit with three-month trading ban

Fri,09 May 2008 10:30:00 CST

The Shanghai Stock Exchange banned trading by a Sinopec Shanghai Oil Products Co, a subsidiary of energy giant Sinopec, for three months after the unit violated a recent share-sale rule, the Wall Street Journal reported. The exchange imposed the lock-up after Sinopec Shanghai Oil Products' retail arm sold 1.6% of recently unlocked shares in Shanghai Kaikai Industry Co, which it says violates a new rule enacted by the China Securities Regulation Commission (CSRC) aimed at preventing recently unlocked state-owned shares from flooding the market. The Shanghai Stock Exchange, which instituted the ban independently of the CSRC, has referred the case to the regulator, noting that the share-sale rule did not outline specific punishments for rule violations.

Ping An puts off share sale plan

Fri,09 May 2008 10:30:00 CST

Ping An Insurance, China's second-largest life insurer, has shelved plans for a large share sale in Shanghai, the Wall Street Journal reported. The company said the plan to sell up to 1.2 billion new yuan-denominated shares would not be carried out within the next six months due to market volatility. "After due consideration, the company is of the view that ... the timing and condition for making the application in relation to the refinancing plan is not yet mature," the company said in a statement. Earlier this week the South China Morning Post reported that Ping An was preparing to apply for approval for the fund-raising plan, citing an unnamed shareholder. The share sale had the potential to be one of the largest in China to date, and was at one point valued at US$22 billion.

Labor contract rules draft released

Fri,09 May 2008 10:30:00 CST

China has released a draft of the implementation rules for the country's labor contract law, state media reported. The Legislative Affairs Office of the State Council issued the draft, which outlines regulations on employee termination and compensation, to solicit opinions from experts and the public. The labor contract law came into effect on January 1, but has encountered some resistance from employers. Vice-Minister of Labor and Social Security Sun Baoshu said in March that objections were due to misinterpretation of the law.

Minister: Grain output will be kept above 500 million tons

Fri,09 May 2008 10:30:00 CST

China said it will keep grain output above 500 million metric tons in 2008, AFP reported, citing state media. In addition to announcing the output goal, Agricultural Minister Sun Zhengcai said the country would control the development of biofuels, which have the potential to impact China's grain supplies. The announcement came as global rice prices rose to 19-year highs. China is the world's largest producer and consumer of rice, and rising food prices have been one of the main factors behind inflationary pressures in China. The government imposed taxes on grain exports earlier this year to ensure stable domestic food supplies.

China Mobile still eyeing Africa

Fri,09 May 2008 10:30:00 CST

China Mobile said it is still interested in the African market despite not bidding for a stake in African telecom operator MTN Group, the South China Morning Post reported. After China Mobile's annual general meeting, the company's chairman, Wang Jianzhou, said that his company was "exploring opportunities to make investments on that continent," while denying that it had made a bid for MTN, which is up for sale. Some analysts have said that a failure to buy a stake in MTN, which has a market capitalization of US$40 billion and operations in 20 African markets, represents a lost opportunity for China Mobile. China Mobile, which has been expanding its operations overseas, recently posted a 37% jump in first-quarter profits over a year earlier.

Huaneng mulling Australia power bid

Fri,09 May 2008 10:30:00 CST

Huaneng Power is considering a bid for power assets to be put up for sale as part of a privatization process in New South Wales, Australia, Reuters reported, citing a report in the Sydney Morning Herald. The Herald quoted a person familiar with the situation as saying, "Besides power generation, coal mining and coal supplies, uranium is another area (Huaneng) are interested in for (their) own nuclear generation." The government of New South Wales hopes to raise US$14.2 billion through the privatization of state power assets. Huaneng, China's largest independent power company, paid US$3 billion for a power plant in Singapore last month, and has stakes in two plants in Queensland, Australia.

NDRC warns against fertilizer price rises

Fri,09 May 2008 10:30:00 CST

The National Development and Reform Commission (NDRC) set a maximum range for mark-ups on imported fertilizer yesterday while warning domestic companies not to raise prices of key fertilizer ingredients, Reuters reported. "In order to curb inappropriate price gains, protect farmers' profits and promote agricultural productivity, we are strengthening control over potassium chloride and compound fertiliser prices," the NDRC said in a statement on its website. Concern over rising prices prompted the move, which restricts mark-ups by importers Sinochem and Sinoagri to domestic fertilizer producers to 5%. Last month, China raised export taxes on fertilizer by up to 100% in an attempt to boost the country's agricultural sector.