First Chinese firm to list in Taiwan soars on debut

China buys 6.9 billion dollars of Japan bonds in July
Tokyo (AFP) Sept 8, 2010 - China bought 6.9 billion dollars worth of Japanese bonds in July, Japan's finance ministry said Wednesday, as the Asian giant continues to ramp up purchases of Japanese debt. China bought a net 583.1 billion yen of Japanese bonds in July, a finance ministry official said. The figure counts long-term government bonds as well as medium- and short term bonds issued by the public and private sectors. The figure was higher than the 456.7 billion yen worth of securities purchased in June. The news came after the yen marked a fresh 15-year high against the dollar Wednesday. Currency traders say China's buying of yen-denominated assets, while too small on its own to sharply push up the yen, could be bolstering the currency indirectly.

For the first half of the year, China bought 1.73 trillion yen worth of debt, nearly seven times the full-year record of 253.8 billion yen in 2005. In May alone Chinese investors bought a net 735.2 billion yen in Japanese government bonds (JGBs). China has sought to diversify its vast investments away from the dollar and Europe since the onset of the financial crisis. Most of the bonds bought by China are thought to be used by the government to manage its foreign reserves.

The increase coincides with renewed doubts about the pace of recovery in the United States and Europe and indicates China is putting more of its ballooning foreign exchange reserves into relatively stable Japanese bonds as a result, say analysts. With around 95 percent held by domestic investors, Japan's risk of default is perceived to be much lower than other countries, even though its public debt is nearing 200 percent of gross domestic product, the highest among developed countries. However, "China appears to be using JGBs as a temporary shelter and it does not appear to be settling down for a long stay," given the predominance of the short-dated JGB buying, Shuji Tonouchi, a senior fixed income strategist at Mitsubishi UFJ Morgan Stanley, told Dow Jones Newswires.

Echoing that view, last week's China Securities Journal report said that China was unlikely to continue buying Japanese government debt in the coming months due to the yen's volatility. China's foreign exchange reserves have ballooned in recent years, surging to a record 2.454 trillion dollars at the end of June. The reserves, already the world's largest, grew 15.1 percent from a year ago, the People's Bank of China said on its website. One way Beijing has diversified its investments is through sovereign wealth fund China Investment Corp, which manages around 300 billion dollars and has been investing heavily in resources companies.

by Staff Writers
Taipei (AFP) Sept 8, 2010
Yangzijiang Shipbuilding (Holdings) Ltd, began trading on the Taiwan Stock Exchange Wednesday, making it the first Chinese-controlled firm to raise capital on the island, officials said.

Local investors responded eagerly as the firm, based in China's eastern Jiangsu province, surged by its seven percent daily limit to 20.1 Taiwan dollars.

The company, which is also listed in Singapore, raised around 4.5 billion Taiwan dollars (140 million US) with its offering and plans to use the proceeds to boost its manufacturing capacity, the Taipei-based Economic Daily News said.

"The market reaction was not surprising at all, given its status as the most profitable private shipbuilder in China," said Mars Hsu at the Grand Cathay Securities.

The company, which builds commercial vessels and containerships, saw its net profit rise 27 percent from a year ago to 6.5 billion Taiwan dollars in the six months to June.

earlier related report
Two major Chinese banks seek offices in Taiwan: report
Taipei (AFP) Sept 8, 2010 - Two state-controlled Chinese banks have applied to Taiwan authorities to set up representative offices on the island, the first mainland lenders to do so, reports said Wednesday.

The Bank of China, the mainland's third-largest lender by assets, and Bank of Communications, the fifth-largest, filed their applications to the Financial Supervisory Commission on Tuesday, according to the Commercial Times.

Lin Tung-liang, the deputy chief of the commission's Banking Bureau, told the newspaper that screening of the applications would take up to two months.

Officials from the Banking Bureau could not be reached for comment on Wednesday.

The applications, the latest sign of fast-warming ties between the island and its giant neighbour, came after six Taiwanese banks applied to set up branches in China.

Chinese banks will be allowed to open branches one year after their representative offices have become operational, according to an economic agreement signed by Taiwan and China in late June.

China still considers Taiwan part of its territory, even though the island has governed itself since 1949 at the end of a civil war.

But ties between the two sides have improved markedly since Ma Ying-jeou of the China-friendly Kuomintang came to power in 2008, pledging to beef up trade links and allow in more Chinese tourists.

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