Tuesday, September 7, 2010

China urging the M&A season to start early, Bank raising debt to only reinvest the capital in shares of another Bank(Polish Economics 101)

  • China Strategic Holdings Limited share price plunges 40% — China Strategic’s share price was fell by 40 per cent after trading resumed yesterday. Market value evaporated almost HK$780 million in half a day. China Strategic announced yesterday it has received formal notice from the Ministry of Economic Affairs of Taiwan that the application for the acquisition of Nan Shan Life Insurance was rejected. (SingTao Daily)
  • State Council urges for mergers and acquisitions in some industries — The State Council said in a statement on its website that the central government has worked out the plans to promote industrial mergers and acquisitions in a bid to accelerate economic restructuring and increase industrial competitiveness. The problem with the state urging M&A activity in publicly traded companies is that its not done in the best interest of its shareholders but in the best interest of the state. According to the statement, the sectors involved include automobiles, steel, cement, machinery, rare earths and aluminum. The State Council pointed out that there are some industries facing replicated construction, low concentration, weak self-innovation and competitiveness and local governments and commercial banks were encouraged to give financial support for such mergers and acquisitions. (Xinhua)
  • CSRS drafts new guidelines for guarantee funds — The China Securities Regulatory Commission (CSRC) released the new guidelines for capital guarantee funds, requiring the minimum investment in fixed income products to be above 70% of the total net asset value. Meanwhile, CSRC will allow the funds to be invested in stock index futures to enlarge their investment universe. According to the guidelines, CSRC also set the guarantee requirements for the funds, stating that the guarantees must record three consecutive years of profit and net asset value must exceed RMB 2bn. (Shanghai Securities’ News)
  • Central Huijin Plans More Bond Sales This Month — Central Huijin plans to sell as much as Rmb55bn worth of bonds in mid-September, ****the second tranche of its planned Rmb187.5bn bond offering to fund its plan to buy additional shares in three of China's biggest banks**** (Banks in China are not raising debt for the purpose of retiring more expensive debt and no not to lend \ into the small business community but to speculate in another bank. Which I am sure they will be doing the same thing raising debt to buy shares in there comapny two months down the road. the newspaper boy said this morning that Huijin plans to sell Rmb20bn worth of five-year bonds and Rmb15bn worth of 30-year bonds in mid-September, said the person, adding that the company could increase the total offering by as much as Rmb20bn if there is sufficient demand. "The company has set a tentative date for the issue of Sept. 16," he said.(WSJ)
  • ICBC to sell CNY22bn subordinated bonds — ICBC is planning to sell Rmb22bn worth of subordinated bonds to resupply its capital base, said a person familiar with the matter. The issuance will be the second tranche of ICBC’s planned sale of Rmb100bn subordinated bonds in the 2009-2011 period, after it sold Rmb40bn worth of sub-debt last year. ICBC will sell the Rmb22bn bonds in two - unspecified size - tranches: a 10-year portion and a 15-year portion, the person said. (DJ News)

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