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Yuan Forwards Look Poised To Jump

Yuan Forwards Look Poised To Jump

June 18, 2010 (Chinavestor) In anticipation of the Group of 20 nations meet on June 26-27 in Toronto, forwards on the Chinese Yuan are touching their highest levels of 2010 on speculation the U.S. will continue to press China on the issue of currency appreciation. China's one-year swap rate rose to the highest level since October 2008 on speculation the central bank will push up borrowing costs in money markets higher to cool the economy, according to Bloomberg News.

The World Bank noted an appreciating Yuan would give China more flexibility in terms of monetary policy, but Beijing has been reluctant to let its currency rise against the U.S. Dollar and other major currencies for fear of hurting Chinese exporters. A stronger Yuan would allow China to ease the specter of rising inflation.

The yuan’s 12-month non-deliverable forwards rose 0.6 percent to 6.7081 per dollar as of 5:31 p.m. in Hong Kong, the biggest increase since Dec. 22, according to data compiled by Bloomberg. The contracts have soared almost 1% this week as traders bet the Yuan will rise nearly 2% from current spot prices.

China halted Yuan appreciation in 2008 in the midst of the global economic crisis. The Yuan had gained 21% from 2005-2007.

 

Bank Of Japan Sees Possible Chinese Bubble

Bank Of Japan Sees Possible Chinese Bubble

June 18, 2010 (Chinavestor) The Bank of Japan, the central bank for the world's second-largest economy, said China's economic recovery is fueling concerns that the economy there is at risk of a bubble.

In May, Chinese exports rose the most in six months while property values soared more than 12% and inflation jumped the to the highest point in 19 months. Bank of Japan Governor Masaaki Shirakawa said Chinese authorities are addressing the risk of overheating, according to Bloomberg News.

Yesterday, Nomura Securities said China's real estate market may its bubble burst quickly with property values declining as much as 20% in next 12 to 18 months. China is toying with the idea of a real estate tax after other measures, including more stringent down payment requirements, have failed to cool property prices.

China ADR Wrap June 17, 2010

China ADR Wrap June 17, 2010

June 17, 2010 (Chinavestor) – It was another day of tepid gains for U.S. stocks and their Chinese counterparts did not follow suit as the PowerShares Golden Dragon Halter USX China ETF (NYSE:PGJ) and the iShares/FTSE Xinhua China 25% Index (NYSE:FXI) both fell more than 1% each. Small-caps offered little refuge with the Claymore/AlphaShares China Small-Cap ETF (NYSE:HAO) retreating after booking decent gains over the past few days.

Among large-caps, solar stocks once again caught a bid with JA Solar (Nasdaq:JASO), LDK Solar (NYSE:LDK) and Suntech Power (NYSE:STP) all advancing on the day. A curious winner was 51job Inc. (Nasdaq:JOBS), a provider of employment services, which advanced more than 7% today on more than quadruple the average daily volume, but there was no news to drive the robust gain and volume.

Commodities names were a mixed bag with Silvercorp Metals (NYSE:SVM) continuing to look bullish, gaining almost 1.3%. Yanzhou Coal (NYSE:YZC) and Aluminum Corp. of China (NYSE:ACH) did not follow suit, losing 2.2% and 3.3%, respectively. The gaming sector remains a tricky one to navigate as Shanda Games (Nasdaq:GAME) tumbled more than 3% and Internet giant Baidu (Nasdaq:BIDU) also shed about 3%.

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People's Bank Of China Among Losers In BP Shares

People's Bank Of China Among Losers In BP Shares

 

June 17, 2010 (Chinavestor) BP's (NYSE:BP) dramatic share decline since the April 20 explosion of the Deepwater Horizon rig has cost the governments of China, Kuwait, Norway and Singapore a combined $5 billion. BP (NYSE:BP) shares have lost almost 40% since the biggest oil spill in U.S. history started in late April.
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China Pension Fund Looks Abroad

China Pension Fund Looks Abroad

June 17, 2010 (Chinavestor) China's national pension fund is looking to boost its international investment portfolio to take advantage of rebounding global equity markets. The fund will evaluate equity and fixed income investments, including holdings in companies based in Taiwan and privately held companies.

The Chinese pension fund’s assets expanded by 38% last year to 776.5 billion yuan ($113.7 billion), according to Bloomberg  News. The pension fund may also look to take advantage of warmer relations with Taiwan by forming joint ventures with Taiwan-based firms.

The Chinese pension fund’s overseas portfolio accounted for about 7% of its total investments as of the end of 2009, which compares to a 20% maximum it’s allowed to spend abroad, according to Bloomberg.

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