Highlights from the last week of China business news.
A-share IPOs: No longer shooting for the stars
While 2008 may be a good year for sports, it’s apparently a bad year to go public in China. The total value of initial public offerings in China shrank to US$7.85 billion in the first quarter, down from US$9.06 billion in the same period last year. The quarter’s largest offering, in which China Coal Energy raised US3.65 billion, was also the quarter’s worst performing IPO. Sliding stock prices were partly blamed for dampening investor enthusiasm. But who can fault skittish investors in times like these? The Shanghai Composite Index fell by just over 4% on Tuesday to a one-year low, while the Shenzhen Composite Index closed down 7.3% amidst fears that the government would tighten monetary policy to rein in inflation. While the markets in Shanghai staged a small comeback the next day on the back of a Wall Street rally, the Shenzhen Composite Index fell another 4.4%.
Pundits cut back on their China growth forecasts
The World Bank scaled back its forecast for China’s economic growth this year to 9.4% from 9.6% (not to mention the 10.8% they’d predicted earlier). Shortly afterwards, the Asian Development Bank said it expected the economy to grow by 10% this year, though it also outlined a worst-case scenario that might see growth decline to 7%. Both banks cited rising prices as cause for concern. But have no fear. Wen Jiabao said that while rising prices for rice are having an effect on food prices here, China’s supply of rice remains “abundant.” The NDRC had previously announced it would increase payments to farmers for rice and wheat in order to boost supplies and fight inflation. And it’s not just farmers who’ll find a little extra cash in their pockets. The National Bureau of Statistics found the average salary of employees in China’s urban areas rose by 18.7% in 2007 to US$3,561.
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