What should a Wall Street firm do when it loses billions on risky bets in the mortgage securities market? Have its CEO call the Chinese government for a capital infusion of course. Bear Stearns did it back in October. Yesterday, Morgan Stanley announced a USD $5 billion equity investment from China Investment Corp. after writing down USD $9.4 billion of its mortgage securities portfolio, ouch! China Investment Corp. is the USD $200 billion sovereign wealth fund that the Chinese government has setup to invest its massive foreign currency hoard, estimated at roughly USD $1.4 trillion. more ›

Those sounding the death knell for an Apple, China Mobile iPhone partnership maybe a bit premature. On Friday, a China Mobile spokesperson in Hong Kong confirmed(in Chinese) that discussion between the two sides is still ongoing, but didn’t elaborate on any details. China Mobile has bluntly stated that it has no intention of sharing subscription revenue with handset manufacturers, the core of Apple’s business model. And as the overwhelmingly dominant carrier in China, it is... more ›

The Xinhua News Agency is reporting that China may allow foreign multinationals to list on the Shanghai Stock Exchange(SSE). SSE officials are conducting feasibility studies and companies names mentioned include HSBC Holdings Plc, Coca-Cola Co., and Siemens AG. China is under renewed international pressure to speed up its currency reform and open its financial market. Letting foreign firms trade on domestic bourses may just be the first of many steps toward integrating China into the... more ›

Maybe. China Mobile’s CEO Wang Jianzhou confirmed that his company has been in discussion with Apple to bring the wildly popular handset to China, “because our customers like this kind of fashionable product,” said Wang. But, negotiations have stalled over Apple’s subscription revenue sharing business model. In Europe and the US, Apple receives a portion of iPhone users’ data/voice revenue from their wireless carriers. China Mobile, with its 350 million user base and de facto... more ›

Question: “Who are three people who’ve never been in my kitchen?” Or lately: "Name three people hating on the once mighty US dollar." On Tuesday, Cheng Siwei, the vice chairman of China’s National People’s Congress suggested that China’s foreign exchange regulators ought to consider shifting the country’s massive USD $1.4 trillion reserve into “stronger” currencies. The greenback has been on a downward spiral since 2003. Little did Cheng know that his remarks would trigger a... more ›

And in a class all by itself, the US$1 trillion(1,000,000,000,000) club. On Monday, the 4 billion A-share offering, priced at 16.7 yuan per share, finished its first day of trading on the Shanghai Stock Exchange at 43.96 yuan, rising as high as 48 yuan intraday. At US$1.005 trillion, PetroChina’s market cap is more than twice that of its US peer, Exxon Mobil (USD $486 billion), even though Exxon Mobil generated four times as much revenue... more ›

For the first time in 17 months, China will raise wholesale price cap of gasoline, diesel and jet fuel, “to guarantee domestic supply of refined oil and promote energy conservation/为保证国内成品油供应，促进能源节约,” or so says the National Development and Reform Council. Per metric ton of all three refined products will go up 500 yuan, or roughly 10 percent, starting November 1. more ›

Industrial and Commercial Bank of China(ICBC), the world’s largest bank by market capitalization, is buying 20 percent of South Africa’s Standard Bank Group Ltd. Standard Bank is based in Johannesburg and has branches in 18 African nations. The USD $5.5 billion price tag marks the most expensive overseas investment by a Chinese firm to date. Earlier in the week, CITIC Securities, also a state owned company, swapped USD $1 billion worth of equities with Bear Stearns. Both tie-ups are just the latest examples of corporate China’s aggressive international merger and acquisition binge, started back in 2004 when Lenovo bought IBM’s PC business. more ›

For those keeping scores at home, and we know you are, this is now the third installment on the on-again, off again love affair between Bear Stearns and the Chinese government sponsored investment firm, CITIC. At this point, we don't know what or whom to believe. more ›

Earlier this week, we told you that a Chinese state owned bank is in talks to buy a stake in US investment bank, Bear Stearns. Apparently, we got some bad info, well actually Dow Jones Newswires got some bad info. See what happens when Rupert Murdoch gets involved? Anyway, today, we learned from a much more reputable publication, Shanghai Daily, that the deal is off, or something like that, here is the quote more ›

According to Bloomberg News, finance ministers of the G7 nations, currently meeting in Washington are once again expected to issue a strongly worded statement prodding China to do more with an undervalued yuan. The traditionally US championed trade tussle is getting some very vocal support from the Europeans and the Canadians this time around. more ›

Bear Stearns, the troubled US investment bank may soon find the People’s Republic of China among its key shareholders. According to Dow Jones Newswires, Jiang Dingzhi, vice chairman China Banking Regulatory Commission confirmed reports of China Citic Bank holding preliminary discussion with Bear Stearns for a stake in the Wall Street firm. China Citic Bank is a division of China Citic Group, an investment arm of the Chinese government. Bear Stearns’s Tokyo spokesperson refused to comment on the story. more ›

Alibaba.com, China’s largest B2B commerce site is going public in Hong Kong in a few weeks. With the current frenzied market back drop, and Alibaba’s tremendous earning power (Goldman Sachs’ analyst pegs the site will earn a net profit of USD $83.8 million this year, up 186 percent from last year), the IPO will no doubt be a roaring success. more ›

Chinese investors came off of the October golden week in a buying mood. The A share market gapped higher and never looked back. At mid day break, the Shanghai Composite Index is up 3 percent, or 166 points at 5718, yet another record high. more ›

Yup, that’s the guy, the face representing millions of Chinese retail investors chasing a red hot market. more ›

On Friday, the People’s Bank of China raised mortgage interest rate and hiked minimum down payment needed for purchasing investment and commercial properties. In a joint announcement with China Banking Regulatory Commission, the PBoC said more ›

China Construction Bank’s A share began trading yesterday. The ￥6.45 IPO closed at ￥8.53 , a whopping 32 percent gain, eye popping in any Western markets, but here in China, a big yawn. Two other smaller companies went public on the same day, both advanced 200 percent plus, cha-ching! CCB was the largest China IPO to date(￥58 billion), but that title will soon belong to Shenhua Energy, the nation’s largest coal miner. The offering attracted a record ￥2.6 trillion(USD $355 billion) of funds looking to buy shares. The actual amount raised, based on projected ￥37/share and 1.8 billion shares offered would fall somewhere in the neighborhood of ￥66.6 billion, still a lot of zeros. more ›

How should a government combat runaway inflation? Most sensible economists would suggest a series of tightening monetary and fiscal policies to realign the aggregate supply demand picture. Well, China has raised interest rate four times this year, twice last month, to no avail. Prices, at both the producer and retail levels continue to bubble up, as do asset prices, such as the real estate and the equity market. more ›

China Construction Bank, the second largest state owned bank, priced its highly anticipated A share offering last night, at 6.45 yuan a piece, hitting the upper range of the forecast. The nine billion share sale will raise 58.05 billion yuan(USD $7.72 billion), the largest offering ever in the domestic market. Shares were 40 times oversubscribed by retail investors and 32 times by institutional investors. Analysts estimate CCB shares will fetch between 7.8 to 9.6 yuan a share in the secondary market. Its Hong Kong traded H share, which confers an equal portion of ownership, closed yesterday at HKD $6.84. (1 HKD= 0.97 yuan) In related news, Bank of Beijing, which we profiled a few day ago began trading today. The 12.50 yuan IPO shares closed at 22.68 yuan, an 80 percent pop to whoever lucky enough to get in on the offering. more ›

Perhaps to no one’s surprise, after a hot CPI reading on Tuesday, China’s central bank lifted the benchmark lending and deposit rates on Friday. The 27 basis points move is the fifth such increase this year by the People’s Bank of China, second in less than 30 days. The PBoC last hiked rates on August 22. One year deposit rate now stands at 3.87 percent from 3.6 percent previously; and one year lending rate is also 27 basis points higher, at 7.29 percent. PBoC governor Zhou Xiaochuan is targeting a positive real interest rate. Real interest is nominal interest rate less inflation. With annual CPI around 4 percent, most economists believe that China will raise interest rate at least once more this year. more ›

The Aluminum Company of America, better known as ALCOA sold its entire 7 percent stake in its largest Chinese counterpart, Aluminum Company of China, or CHALCO for short (ALCOC just doesn’t quite have the same pizzazz, not to mention potentially misleading). ALCOA acquired the Chalco stake for roughly USD $200 million back in 2001 when the Chinese firm went public in Hong Kong. And six years later, the same stake just exchanged hands for 10 times the value, USD$2 billion. 25 major institutions were reported buyers, and just to be nice, ALCOA priced the shares at 15 percent below market, how very generous! more ›

China’s August Consumer Price Index is out: a whopping 6.5 percent higher over comparable period last year, much higher than the 5.8 to 6 range economists were forecasting. The number, which measures inflation at the retail level, further breaks down to a 6.2 year over year price hike in major metro regions; but out in poverty stricken rural areas, goods and services are 7.2 percent more expensive than they were 12 months ago. In other words, poor people, who are always disproportionately hurt by rising inflation, are hit with the double whammy of even faster price escalation. While there is no golden standard for the CPI, most central bankers and economists are uncomfortable with a number above 2.5 percent. China has been trending between 3 to 4 percent for the past several months. The latest reading is a ten year high. more ›

Yesterday evening, China’s central bank hiked deposit reserve requirement another 50 basis points (1 basis point=0.01%) to 12.5 percent, the seventh such maneuver this year, and ten dating back to June 2006. “Deposit reserve” is a balance all retail banking institutions must maintain at the nation’s central bank, often expressed as a percentage of its total deposit. A higher reserve requirement means banks have less funds for lending or other investment projects. This latest move is a part of Beijing’s continuing effort to rein in excess liquidity (and the attending inflation) and slow down what appears to be an overheating economy. The People’s Bank of China has also raised interest rates four times this year for a total of 108 basis points. Currently, a one year savings account will net you somewhere around 3.6 percent. So far, China has favored a gradual approach in tightening its monetary policy, with frequent but modest tinkering along the way. But with inflation still soaring at 4 percent (or more, have you been to Carrefour lately), one has to wonder if the PBoC dropped the ball somewhere. Was there ever a time (or perhaps even now), a more drastic measure would have been more appropriate? There doesn’t appear to be any sense of urgency in fighting inflation coming out of the PBoC and a general lack of concern/appreciation for risk in China, very troubling indeed. more ›