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Air traffic at an airport in China was restricted for about an hour after a UFO was spotted over it, media reports said Thursday.
The UFO was seen over the runway at Chongqing Municipality's Jiangbei International Airport, following which flights were disrupted, Shanghai Daily reported.
Air traffic was restricted for about an h
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our from 12.30 pm. The restriction was lifted after the UFO left, the news daily said.
Authorities in Chongqing have not offered an explanation for the unusual phenomenon.
Airport officials, however, were of the opinion that it could be a sky lantern or a large balloon. A sky lantern is used by Chinese when they pray for good luck.
July 13 (Reuters) – Japan’s Nikkei edged lower on Tuesday, weighed down as Shanghai shares fell after China said it had no plans to relax tougher property measures anytime soon, though falls were checked by hopes for U.S. earnings later in the day.
China’s key stock index .SSEC fell 1.6 percent after the government said it would continue to rein in speculation in the country’s red-hot property sector, weighing on shares throughout Asia. [ID:nTST000264]
The benchmark Nikkei .N225 shed 0.1 percent or 10.88 points to 9,537.23 after earlier rising nearly 1 percent. The broader Topix fell 0.4 percent to 854.39.
July 12 (Reuters) – Core capital adequacy ratio of Agricultural Bank of China [ABC.UL] is expected to rise beyond 10 percent after collecting more than $22 billion via a dual listing later this week, Moody’s said in a report on Monday.
Funds raised via its potential record-breaking initial public offering will boost the bank’s balance sheet, which had a core capital adequacy ratio of 7.74 at the end of 2009, said Yi Zhang, vice president and senior analyst at Moody’s.
The rating agency last week upgraded AgBank’s stand-alone bank financial strength rating to D- from E+, citing pressure on the bank to improve its disclosure and increase its accountability after becoming public.
“AgBank is uniquely positioned to benefit from China’s efforts to urbanise the country and increase the income level of the rural population, because its traditional strength is a vast and unparalleled branch network in China,” Zhang said.
After the massive fundraising, Beijing-based AgBank, which has more than 320 million customers, still faces challenges in how to bank on its vast network and concerns about its non-performing loans.
“AgBank has yet to formulate and execute effective strategies to capitalise on the macro-trend toward higher rural incomes,” she said.
AgBank is scheduled to start share trade in a Shanghai debut on Thursday and a day later in Hong Kong. (Reporting by Michael Wei and Jacqueline Wong)
(Reuters) – Bank of China (3988.HK) (601988.SS) said its bid to raise up to $8.9 billion should give it enough capital for the next three years, seeking to assure markets its second major fund-raising this year will mend its stretched balance sheet for the foreseeable future.
Bank of China’s move caught many off guard in part because it comes just as Agricultural Bank of China ABC.UL, the nation’s No.3 lender, is preparing to launch an IPO in Shanghai and Hong Kong, expected to raise $20 billion or more later this week.
Most of China’s top banks have announced plans to tap capital markets — aiming to raise more than $70 billion combined — to replenish their capital levels that were depleted after the record, government-directed lending of last year and to meet tighter capital adequacy ratios demanded by regulators.
Bank of China, the country’s fourth-largest bank, said late on Friday it planned to raise up to 60 billion yuan ($8.9 billion) through a rights offer in Shanghai and Hong Kong, which would see shareholders get up to 1.1 rights shares for every 10 shares held.
“Bank of China’s fundraising plan caught me by surprise as they previously ruled out the possibility of additional sales of A-shares, and the market is apparently frightened,” said Ye Yunyan, an analyst at Galaxy Securities.
The unexpected announcement also comes amid mounting talk that China could take steps to support its stock market, which is down 28 percent year to date, making it the world’s second-worst performer after Greece.
One such step, which China has resorted to several times in the past, could be a freeze on new fundraising in Shanghai by locally listed companies.
In an investor call on Monday, the bank said it aimed to complete the rights offer by year end, and that it expected no further need for additional fundraising in the next three years, according to several analysts on the call.
A Bank of China spokeswoman could not immediately confirm details from the call.
Bank of China’s Hong Kong-listed shares were down 1.5 percent on Monday, and its Shanghai-listed shares were down 0.9 percent in afternoon trade following a suspension on Friday.
Even as Bank of China pushed forward with its plan, AgBank held its own online roadshow on Monday, telling investors that big insurance firms and agricultural companies are among those buying strategic stakes for its Shanghai listing.
AgBank, the last of China’s “big four” banks to go public, is selling shares in Shanghai and Hong Kong to raise as much as $23 billion in what could be the world’s biggest IPO, as the lender seeks to replenish capital and drive growth.
“Many institutional investors have or will book rights issues of Bank of China and AgBank’s IPO,” said Vincent Ho, manager of the new BRICs 5 Fund at JPMorgan in Taiwan.
“It’s a good timing to invest in Bank of China and other Chinese banking shares, because valuation-wise, they are very attractive,” he said of China banks, whose shares have dropped sharply this year on fund-raising concerns.
TIME GAP
Despite the close timing, analysts said the two fundraising plans were not likely to fall too close together, as Bank of China’s plan still required shareholder approval and was likely to be at least a month before it could proceed.
And the two largest, Industrial and Commercial Bank of China (1398.HK)(601398.SS) and China Construction Bank (0939.HK)600939.SS, whose capital positions are stronger than Bank of China’s and AgBank’s, have indicated they could put off their massive cash raising plans to as late as next year if necessary, according to executives and media reports.
In its investor call, Bank of China said it expected its capital adequacy ratio to be stable at about 12 percent for the next three years after collecting new funds from the rights issue, analysts said.
Combined with a $5.9 billion convertible bond issue in Shanghai last month, the new rights issue could bring Bank of China’s fundraising activities this year to nearly $15 billion.
“The total amount of the fund-raising is within our expectations, the surprise is mainly on the timing and the amount targeted for the A-share market,” said Victor Feng, an analyst with Everbright Securities.
“Assuming the placement was fully implemented, the bank’s … capital adequacy ratio will be raised by 1 percentage point, which is enough to sustain the bank’s operations for the next three years,” he said, adding CAR now stands at 11.09 percent versus a government-mandated minimum of 11.5 percent.”
Despite its large size, the fundraising should also have less market impact than its large numbers imply because many of the new shares would presumably be purchased by the bank’s largest shareholder, Central Huijin Investment Co, a government entity that holds about 68 percent of the bank.
“If Huijin fully participates in the share placement, the amount that goes to the market will actually be much smaller than the targeted 60 billion yuan,” said Everbright’s Feng.
In its Friday announcement, Bank of China did not specify prices for the rights offering. Analysts said that based on past experience with other Chinese banks, the rights should be priced at a discount of 30-40 percent to the bank’s current share price.
(Additional reporting by Samuel Shen and Aipeng Soo in Shanghai; Michael Wei in Beijing; Kelvin Soh and Clare Jim in Hong Kong; and Faith Hung in Taipei; Editing by Chris Lewis and Muralikumar Anantharaman)
July 5 (Reuters) – Agricultural Bank of China [ABC.UL] has narrowed the price range for its Hong Kong initial public offering to HK$3.18-3.38 per share, sources said on Monday.
The book for Hong Kong-based institutional investors would be closed at 5 p.m. (0900 GMT) on Monday, ahead of schedule, prompting the bank to narrow the price range from HK$2.88-3.48 to give investors a better idea of the final pricing, said two sources, one at an investment bank and the other an investor in the IPO.
The bank, which is dual-listing in Shanghai and Hong Kong, is scheduled to price its Hong Kong IPO after books close on Tuesday. (Reporting by Fiona Lau; Editing by Chris Lewis)
July 5 (Reuters) – Chinese companies may raise a record 500 billion yuan ($73.86 billion) via IPOs this year after a record first half as companies race to tap the stock market for funds, PricewaterhouseCoopers (PwC) said on Monday.
The first-half saw 176 IPOs raising as much as 212.7 billion yuan as compared to no listings in the year-ago period, PwC said.
PwC, which raised its full-year projection from 320 billion yuan previously, expected the number of new listings in China to reach 300 this year, including 25 listings in Shanghai and 275 on the Shenzhen exchange.
Chinese companies raised a total 187.9 billion yuan from the IPO market for the whole of 2009, it said.
“China’s economic growth is expected to continue in the second half of the year. Unless some negative factors emerge, IPOs in Shanghai and Shenzhen will maintain the momentum and are likely to reach historical heights this year,” Charles Feng, PwC Beijing lead partner, told reporters.
China will likely see the world’s second biggest IPO this month when Agricultural Bank of China [ABC.UL], the country’s third-biggest lender by assets, completes its giant dual-lising in Shanghai and Hong Kong.
AgBank’s IPO could raise up to $20.2 billion, excluding a greenshoe, or overallotment option, just a tad smaller than Industrial and Commercial Bank’s (1398.HK) (601398.SS) record $21.9 billion offering in 2006. [ID:nTOE66102S]
AgBank is scheduled to price its IPO later this week.
Other sizeable IPOs expected this year include Industrial Securities’ planned Shanghai listing which will raise roughly $500 million, and Ningbo Port’s planned $1.9 billion offering.
($1=6.770 Yuan)
(Reporting by Soo Ai Peng; Editing by Jonathan Hopfner)
July 5 (Reuters) – Agricultural Bank of China, which is conducting a roughly $20 billion initial public offering, said on Monday that big insurance firms and leading agricultural companies are among the investors that have bought into its A-share strategic share placement.
AgBank President Zhang Yun told Chinese retail investors during an online roadshow that AgBank has not introduced strategic investors for the Shanghai portion of its dual Hong Kong-Shanghai IPO, but that some companies had participated in a strategic share placement.
“These companies have leading positions in their industries, such as major insurance companies, leading enterprises, and leading agriculture-related companies,” Zhang said.
He did not name the firms.
AgBank, [ABC.UL] (AgBank), the last of China’s “big four” banks to go public, is selling shares in Shanghai and Hong Kong to raise as much as $23 billion in what could be the world’s biggest IPO, as the lender seeks to replenish capital and drive growth. ($1=6.7743 Yuan) (Reporting by Samuel Shen and Jason Subler; Editing by Jacqueline Wong)
June 29 (Reuters) – Oil fell to $77 on Tuesday as forecasts indicated tropical storm Alex would skirt the main production region in the U.S. Gulf of Mexico, limiting disruption there to a few precautionary shutdowns.
The price drop accelerated with slumping Asian stock markets. Shanghai’s main index fell to a 14-month low, while Japan’s Nikkei was poised for its worst quarter since October-December 2008 as European debt worries curbed investors’ risk appetite.
U.S. crude for August CLc1 dropped $1.21 to $77.04 a barrel by 0612 GMT, after falling 0.77 percent on Monday and rising 21 percent from a May 20 trough below $65. ICE Brent LCOc1 declined $1.09 on Tuesday to $76.50. (Reporting by Alejandro Barbajosa; Editing by Clarence Fernandez)
SHANGHAI, June 25 (Reuters) – The yuan CNY=CFXS climbed on Friday to its highest since its July 2005 revaluation after the central bank set the daily reference rate at a post-revaluation high in an apparent goodwill gesture ahead of the G20 summit.
But trade was sluggish with market players cautious over how much the yuan could appreciate in the near term, despite a gain so far of 0.5 percent in the first week after China’s weekend announcement of a depegging from the dollar, marking the biggest weekly gain since December 2008.
Weekly volatility in the spot yuan rate versus the dollar hit its highest since mid-2008, when China repegged the yuan to the dollar to help ease the impact of the global financial crisis on its economy.
Spot yuan’s range for the week ran to 416 pips and averaged more than 200 pips per day, compared with moves of only a few pips per day during the two-year dollar peg. [ID:nTOE65M062]
Many dealers expect two-way volatility to remain the norm after China’s weekend currency policy reform, although the yuan’s rise will not likely be enough to satisfy U.S. lawmakers and other critics who want the yuan to rise as much as 40 percent. China is not expected to accept such a demand.
“Beijing told us that any appreciation would be gradual, and that is what is happening, with the reference rate for the yuan against the dollar today set little more than half a percent stronger than where it was last Friday,” said Brian Jackson, strategist with Royal Bank of Canada in Hong Kong.
“But the rest of the G20 was not born yesterday, and there may be some suspicion that the move over the last week was just window-dressing to take the exchange rate issue off the top of the agenda at this weekend’s summit,” he said.
“To reduce the risk of trade tensions, we will need to see further yuan gains in the days and weeks ahead.”
A Reuters poll of 33 economists projected that China would be true to its word and prevent a sharp rise in the newly unshackled yuan, with a median forecast of a 2.4 percent rise over the next year from the level before depegging. [ID:nSGE65L01H]
The yuan gave up some early gains to trade at 6.7926 to the dollar at midday, still up from Thursday’s close of 6.7997 but lower than Friday’s central bank mid-point of 6.7896, which was up sharply from Thursday’s mid-point of 6.8100. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Full coverage [ID:nCHINATAKE] PDF on yuan: r.reuters.com/fuk43m Yuan microsite: china.thomsonreuters.com/yuan/ Yuan graphics: r.reuters.com/byq23m Insider TV
-- Yuan to rise before G20 link.reuters.com/jes92m
-- Yuan shows confidence link.reuters.com/hyc33m
-- Some see delay tactic link.reuters.com/xad33m ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
MIXED SIGNALS
U.S. administration officials and some lawmakers appear to have differing views over the initial rise in the yuan.
U.S. President Barack Obama said in Washington on Thursday that China had made progress by announcing greater currency flexibility, but it was too early to tell if the yuan’s rise would be enough to help rebalance world growth.
“We did not expect a complete 20 percent appreciation overnight, for example, simply because that would be extremely disruptive to world currency markets and to the Chinese economy,” Obama said. [ID:nN24164984]
A U.S. lawmaker said on Thursday, however, that the United States should keep open a bill that would pressure China to raise the value of its currency.
“I think we need to keep that legislation on the burner. I think whether we act on it will be affected by what China does,” House of Representatives Ways and Means Committee Chairman Sander Levin told reporters. [ID:nN24134208]
China announced over the weekend that it would allow the yuan’s exchange rate to move more freely but it has made it clear that its currency reform would be gradual and controllable.
It is widely believed in the domestic market that China will not make any further concessions and that fresh pressure from U.S. lawmakers would very likely backfire due to more volatile market and economic conditions since the global financial crisis.
The euro zone’s debt woes have cast doubt on the pace of China’s economic recovery, reminding Beijing how vulnerable the world’s third-largest economy is to a global slowdown.
Chinese economists often argue that Western critics underestimate that vulnerability, especially given how far China’s per capita income lags developed countries.
They say it may be inappropriate to apply Western standards to the currency of a country whose per capita GDP is only one-20th that of the United States.
Caution about Beijing’s stance was reflected in the offshore forwards markets. Benchmark dollar/yuan one-year non-deliverable forwards (NDFs) rose to 6.6750 bid by midday from Thursday’s close of 6.6670, with implied yuan appreciation over that period falling to 1.72 percent from 2.14 percent the previous day. (Editing by Edmund Klamann)
SHANGHAI, June 24 (Reuters) – Dollar/yuan offshore forwards edged lower on Thursday, implying slightly higher yuan appreciation that dealers said was now settling at reasonable levels after the weekend’s official depegging from the dollar, although political risks resurfaced.
Political concerns intensified overnight when several U.S. lawmakers renewed calls for legislation to press China on yuan appreciation, casting uncertainty over how willing the People’s Bank of China will be to allow the yuan to move in the short term and making even a slight yuan rise implied in NDFs appear potentially risky.
Spot yuan CNY=CFXS drifted lower against the dollar as some banks and their clients now have too few dollars on hand, after the PBOC’s weekend announcement it would depeg the yuan from the the U.S. currency spurred them to aggressively sell dollars on Monday, to bet on yuan appreciation.
Trading was sluggish on Thursday, after China’s state-owned banks bought dollars heavily on behalf of the PBOC in the spot market on Tuesday and continued sporadic buying on Wednesday, dealers said, effectively helping the Chinese central bank to take back control of the yuan’s value by draining dollar supply.
“After a flood of dollars into the (spot) market, those who sold them too cheaply early in the week must buy them back at higher prices if they need them,” said a dealer at a major Chinese commercial bank in Shanghai.
“The market has had to learn that the central bank is still in firm control of the yuan’s value. With speculation dying down, real demand is pushing the dollar slightly higher.”
The yuan was quoted at 6.8134 to the dollar at midday, slightly weaker than Wednesday’s close of 6.8124 and Thursday’s central bank mid-point of 6.8100, which was little changed from Wednesday’s mid-point of 6.8102.
The yuan moved in a 57-pip range on Thursday, shrinking from the daily ranges of 300 pips or more early in the week but still much wider than the moves of only a few pips per day seen during most of the two-year dollar peg. <^^ ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Full coverage [ID:nCHINATAKE] PDF on yuan: r.reuters.com/fuk43m Yuan microsite: china.thomsonreuters.com/yuan/ Yuan graphics: r.reuters.com/byq23m Insider TV
-- Yuan to rise before G20 link.reuters.com/jes92m
-- Yuan shows confidence link.reuters.com/hyc33m
-- Some see delay tactic link.reuters.com/xad33m ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
POLITICAL RISKS
U.S. senators said on Wednesday they were unmoved by China’s steps to partially free the yuan since the weekend and vowed to push forward legislation to punish a yuan misalignment they say distorts trade and steals U.S. jobs. [ID:nN23216546]
China announced over the weekend that it would allow the yuan’s exchange rate to move more freely but it has made it clear that its currency reform would be gradual and controllable.
It is widely believed in the domestic market that China will not concede any more from its present stance and fresh pressures from U.S. lawmakers are very likely to backfire.
“Market and economic conditions have changed so much since the global financial crisis that it is unrealistic to think China still has firm plans to allow the yuan to appreciate to a certain degree in a certain period of time,” said a senior trader at a major European bank in Shanghai.
“The best China can do is to show that it is friendly, it is cooperative and it is willing to change in line with market and economic conditions.”
The latest euro zone debt crisis has cast doubt on the pace of China’s economic recovery, giving a warning to Beijing once again how vulnerable the world’s third-largest economy is to a global slowdown.
Chinese economists often argue that Western critics underestimate that vulnerability, especially given how far China’s per capita income lags developed countries.
They say it may be inappropriate to apply Western standards to the currency of a country whose per capita GDP is only one-20th that of the United States.
Caution about Beijing’s stance was reflected in the offshore forwards markets, where speculators were wary about shorting dollars and suspected that Beijing’s currency moves after the weekend were aimed primarily at appeasing critics before the G20 summit late this week.
Benchmark one-year dollar/yuan NDFs CNY1YNDFOR= eased to 6.6670 bid by midday from Wednesday’s close of 6.6700, with implied yuan appreciation over that period rising to 2.14 percent from 2.10 percent the previous day.
Three-month NDFs’ implied yuan appreciation rose to 0.62 percent from Wednesday’s 0.56 percent, as measured from the central bank’s spot mid-point. (Editing by Edmund Klamann)
SHANGHAI, June 22 (Reuters) – The Chinese yuan slipped on Tuesday as big state-owned banks heavily bought dollars, a move that suggests the central bank has adopted a new strategy to control the pace of yuan gains.
The yuan jumped initially after the People’s Bank of China set the mid-point start to trade at a surprisingly strong 6.7980 CNY=SAEC, little changed from Monday’s close and catching market players off guard who had thought it would try to nudge the currency lower after the previous day’s surge.
The heavy dollar buying quickly drove the yuan well off a low of 6.7900 — the lowest since the 2005 revaluation — and up as high as 6.8229 on the day, a drop of 0.37 percent. The yuan last traded at 6.8189 CNY=CFXS.
On Monday, the currency posted its biggest one-day rise since the revaluation, rising nearly half a percent and almost touching the upper it of its daily trading band on either side of the mid-point.
Some traders believe the buying by state-owned banks was on behalf of the PBOC to avoid direct market intervention, as it had often done in the post-revaluation appreciation phase and de facto dollar peg of the past two years.
By letting state-owned banks buy dollars, the PBOC is effectively limiting the market’s ability to short dollar/yuan — especially because banks are not allowed to hold short positions overnight in the spot currency market.
“It appears a new strategy,” said a senior dealer at a European bank in Shanghai. “The central bank needn’t intervene in the market, but it can still keep the pace of yuan appreciation under control via a control of supply and demand.”
Because the state-owned banks were scooping up dollars at a wide variety of levels, it suggested that they were not trying to defend the yuan at a certain level, traders said.
But since the peg to the dollar was ditched over the weekend, the PBOC appears to be trying to foster much more two-way trade within the daily trading band, seeking to get banks and companies used greater volatility and hedging currency risks.
During the 2005-2008 managed float against a trade-weighted currency basket and subsequent peg to the dollar, the PBOC often squashed intraday volatility via direct intervention, guidance through the mid-point and dollar purchases by state-owned banks.
Now it appears to be backing away from direct intervention unless the extremes of the daily trading band are tested.
The PBOC has made clear that it would not allow the yuan to appreciate sharply in its statements over the weekend announcing the latest reforms of the yuan, ruling out a one-off revaluation. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Full coverage [ID:nCHINATAKE] PDF on yuan: r.reuters.com/pys23m Yuan microsite: china.thomsonreuters.com/yuan/ Yuan graphics: r.reuters.com/byq23m Insider TV
-- Yuan to rise before G20 link.reuters.com/jes92m
-- Yuan shows confidence link.reuters.com/hyc33m
-- Some see delay tactic link.reuters.com/xad33m ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
BASKET
Despite the announced intention of controlling the pace of yuan appreciation against the dollar, the PBOC showed it was backing its words with deeds by allowing the yuan to rise against European currencies on Tuesday.
The PBOC set the yuan’s mid-point higher against the euro EURCNY=SAEC, at 8.3816, and against sterling GBPCNY=SAEC after the currencies weakened overnight. That set the tone for the yuan to trade higher against the euro EURCNY=CFXS at 8.3764 at midday on Tuesday from a close of 8.4325 the previous day.
The yuan can rise up to 3 percent against currencies besides the dollar.
“The question is how far the yuan can go,” said a senior dealer at a North American bank in Shanghai. “We believe the central bank must have some limits, which may gradually become clear over time after the G20 summit.”
Offshore dollar/yuan forwards rose back up after initial falls that had implied more yuan appreciation, buoyed by the dollar/yuan mid-point setting.
Some players in the NDF market have turned cautious about shorting dollar/yuan, worried that this week’s yuan move was done primarily to appease critics before the G20 summit late this week, and later moves may be more subdued.
Three-month dollar-yuan non-deliverable forwards (NDFs) CNY3MNDFOR= were quoted at 6.7380, implying a yuan rise of 0.89 percent after they fell to a low of 6.7080 in early trade.
One-year NDFs CNY1YNDFOR= rose back to 6.6300 after hitting an initial low of 6.5970, trimming implied appreciation to 2.53 percent from 3.05 percent the previous day. (Editing by Eric Burroughs & Jan Dahinten)
June 20 (Reuters) – Abu Dhabi’s National Petroleum Construction Co (NPCC) has ordered a pipe-laying vessel from Shanghai Zhenhua Heavy Industry Co (600320.SS) (900947.SS), the UAE oil services firm said on Sunday.
Industrials
The vessel is expected to be built by the third quarter of 2012, an NPCC statement said. It did not give the value of the contract.
NPCC plans to spend $400 million to expand its fleet, it added.
Abu Dhabi holds the bulk of the crude reserves and oil revenue of the United Arab Emirates, the world’s third largest oil exporter. (Reporting by Amena Bakr; Editing by Jon Loades-Carter)
HONG KONG, June 20 (Reuters) – The Agricultural Bank of China has chosen the banks to lead its more than $23 billion initial public offering, sources involved with the process said on Sunday, a move that finally sorts out the key roles for the deal.
AgBank’s selection of its top banks came as key investors swooped in on the offering while its underwriters market the dual listing to institutional investors. Qatar has agreed to invest $2.8 billion into AgBank’s IPO, according to a report on Sunday.
AgBank, China’s third largest lender, has selected its internal securities unit, as well as CICC, Goldman Sachs (GS.N) and Morgan Stanley (MS.N) as joint global coordinators for the offering, granting these banks top status for the IPO’s handling among the 11 banks picked to underwrite the Shanghai-Hong Kong deal.
The joint global coordinators take on the most responsibility for an IPO and also stand to earn the biggest fee, which in the case of AgBank could be one of the largest fee pools ever for an IPO. Should the offering exceed $21.9 billion, it would be the largest IPO in history, shedding around $450 million in fees to the banks at an estimated 2 percent charge.
AgBank had taken the rare approach of waiting until well into the process to select it’s joint coordinators, a move that some people involved said was beginning to cause frustration [ID:nLDE65G0LH].
The appointing of the coordinators is a key step for the deal as it enters a critical phase, with underwriters and executives reaching out to institutional investors in Asia and worldwide to convince them to invest in the company ahead of a planned July 6 pricing date, and July 15 debut.
One way to convince institutions to invest is by revealing a list of funds or corporations that have agreed to back the IPO at the start of the process.
Reuters reported on Friday that of the seven cornerstone investors so far, two Middle East sovereign wealth funds, Kuwait and Qatar, were among those that agreed to invest in AgBank, with each expected to invest around $1 billion each [ID:nTOE65H034].
Bloomberg reported on Sunday that Qatar has agreed to invest $2.8 billion, which would make up a significant portion of the roughly 40 percent of the Hong Kong offering that the company is granting to cornerstone investors.
AgBank hopes to raise up to $14.4 billion through its Hong Kong offering, according to a term sheet previously reported by Reuters, an amount that includes an over-allotment of shares to be used after the stock trades. Excluding that, AgBank plans to raise around $12 billion for its H-share offering.
The IPO is a key step for the bank to raise capital and become the last of China’s Big Four banks to go public. AgBank, which at 320 million has more customers than the population of the United States, has suffered in the past from a large book of loans that went bed.
The bank has since cleaned up that book, and will use the capital from the IPO to secure its balance sheet.
AgBank and the Qatar Investment Authority were not available for comment. The banks mentioned either declined to comment or were not immediately available. (Reporting by Michael Flaherty and Kennix Chim; Additional reporting by Dinesh Nair in Dubai; Editing by Jon Loades-Carter)
June 20 (Reuters) – China Railway Group (0390.HK) (601390.SS), the country’s largest construction and engineering firm, proposes to sell new A-shares for up to 6.24 billion yuan ($914.1 million) to fund infrastructure projects.
Industrials
The company said it planned to issue about 1.52 billion A-shares listed in Shanghai at not less than 4.11 yuan each. The shares will be sold to no more than 10 target investors, including its parent China Railway Engineering Corp.
China Railway will use the money to fund its Shenzhen Subway Line 5 project and a bridge and road project in China’s Liuzhou, it said in a statement late on Friday.
Its state-owned parent had agreed to subscribe 851.58 million new shares for about 3.5 billion yuan.
China Railway said the parent’s subscription shares will have a lock-up period of 36 months and other investors in the deal were not allowed to sell the shares in the 12 months after the placement.
For a company statement please click here 0618469.pdf Trading in the stock is expected to resume on Monday after being suspended last Thursday.
Shares of China Railway have fallen about 14 percent this year in Hong Kong, while its Shanghai traded stock fell 27.5 percent this year to 4.57 yuan on Wednesday. ($1=6.826 yuan) (Reporting by Alison Leung; Editing by Ron Popeski)
June 17 (Reuters) – Standard Chartered Bank Plc (STAN.L)(2888.HK) and soon-to-be-listed Agricultural Bank of China [ABC.UL] have agreed to a strategic partnership, Standard Chartered said in a statement on Thursday.
Financials
The two banks had signed an agreement to explore joint development of business opportunities, the statement said.
AgBank is seeking to raise more than $23 billion in the world’s biggest initial public offering and will launch the Shanghai portion of its IPO this week. (Reporting by Denny Thomas; Editing by Chris Lewis)
June 4 (Reuters) – Agricultural Bank of China [ABC.UL], preparing for the world’s largest-ever initial public share offering, said on Friday it plans to issue up to 47.6 billion shares, and said that its non-performing loan ratio was 2.46 percent in the first quarter.
The bank, which hopes to raise around $30 billion, said its Shanghai A shares would account for 7 percent of its enlarged capital, while its Hong Kong H shares would account for 8 percent, according to a preliminary prospectus released by Chinese regulators on Friday.
The bank plans to sell 25.4 billion H shares.
AgBank said it set a target for core capital adequacy ratio of 8.5 percent for 2010 to 2012.
The bank plans to list in Hong Kong and Shanghai in mid July.
(Reporting by Michael Flaherty, Kennix Chim and Denny Thomas in HONG KONG; Jason Subler and Samuel Shen in SHANGHAI; Michael Wei and Simon Rabinovitch in BEIJING)
June 1 (Reuters) – China will start a pilot programme in 5 cities to provide subsidies of up to 50,000 yuan ($7,320) to buyers of hybrid cars, China’s Ministry of Finance said on Tuesday.
The cities included in the programme are Shanghai, Shenzhen, Changchun, Hangzhou and Hefei, according to a statement on the ministry’s website, www.mof.gov.cn.
It did not say when the programme would begin.
For purely electric-powered cars, the subsidy could be as high as 60,000 yuan, the ministry said. (Reporting by Zhou Xin and Alan Wheatley; Editing by Ken Wills)
May 31 (Reuters) – Industrial and Commercial Bank of China (ICBC) (1398.HK), the world’s biggest lender by market value, is studying the feasibility of setting up operations in Kuwait and Saudi Arabia, a senior official said on Monday.
ICBC (601398.SS) is also looking into potentially acquiring assets in other Middle Eastern countries, Tian Zhiping, head of ICBC’s Middle-East operations, told reporters on the sidelines of a conference in Shanghai. ($1=6.83 Yuan) (Reporting by Qu Weizhi and Jason Subler; Editing by Jacqueline Wong)
May 31 (Reuters) – Several Middle Eastern sovereign wealth funds are holding talks with the Agricultural Bank of China [ABC.UL] about investing in its IPO in Shanghai and Hong Kong this year, the China Business News reported on Monday.
The Kuwait Investment Authority intends to invest about $1 billion to become a cornerstone investor in the Chinese bank’s $30 billion initial public offering, which would be the world’s largest IPO, the newspaper reported, citing a source at one of the underwriters.
The newspaper also said an institutional investor from the United Arab Emerates was holding talks but it did not name the other sovereign wealth funds involved in the discussions. (Reporting by Langi Chiang; Editing by Ken Wills)
New Delhi, May 19 (ANI): President Pratibha Patil will embark on a five-day official visit to China from May 26-31 to commemorate the 60th anniversary of the establishment of diplomatic relation between the two countries.
A press release from the Ministry of External Affairs said President Patil would visit Beijing, Luoyang and Shanghai.
During the delegation level talks with Chinese President Hu Jintao, the two sides will discuss bilateral, regional and global issues.
President Patil will also meet other Chinese leaders, including Premier Wen Jiabao and Chairman of the National People”s Congress Wu Bangguo.
In Luoyang, she will dedicate to the Chinese people an Indian-style Buddhist temple, which was inspired by the Sanchi Stupa in Madhya Pradesh. (ANI)
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