Highlights from last week’s China business news: Typhoon Wipha misses Shanghai despite dire predictions, gets pooh-poohed; China Construction Bank leads the way for banking stocks.
What’s that persistent rumbling sound?
It isn’t Typhoon Wipha, which missed Shanghai after dire warnings from the meteorologists in Xujiahui. It’s hungry hungry China, which has an apparently unlimited appetite for commodities. This week, Beijing struck a massive US$5 billion deal with the Democratic Republic of Congo for mineral resources in exchange for infrastructure projects and loans, China Shenhua said it was eyeing coal mines in Indonesia and Australia and the first phase of Russia’s electricity transfer program began. And let’s not forget the record agreement PetroChina made with Woodside during the APEC summit last week. You can be sure that China will be returning to the commodities buffet table – much to the delight of shady regimes, mining and oil executives and traders everywhere.
The banking stocks boom
China Construction Bank set a new A-share record with its US$7.72 billion IPO in Shanghai this week, making it the third of China’s "big four" banks to list on a mainland exchange. It smashed Industrial and Commercial Bank of China’s previous record of US$6.2 billion (although it can still proudly lay claim to the world’s largest IPO with its US$20 billion dual listing last year). CCB’s listing leaves the Agricultural Bank of China as the only major bank that remains unlisted, although a restructuring is planned to be completed this year that will enable it to go public soon after. China’s city banks, meanwhile, have been getting in on the A-share frenzy as well. After successful IPOs from Bank of Nanjing and others in July, the country’s largest city bank, Bank of Beijing (just call it BOB), surged in its stock market debut this week. BOB prices rose 81% on its first day of trading in Shanghai. Just days before that, however, the central bank vice governor warned against reckless lending, noting that loans for the first eight months of the year had almost equaled last year’s total amount of US$423 billion. The banking stock boom, however, will likely drown out the voice of reason.
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