TRANSCRIPT: Mergers and consolidation
in Chinese telecom sector, major changes in Shanghai
could see foreign firms listing share offers in
China, business news, and an update on the economic
impact of the Sichuan earthquake disaster ...
Sinomania! Volume II Webisode 58, June 2, 2008
American businesses may soon be
able to list on Shanghai in a stunning change
anticipated by NYSE Euronext Inc. CEO Duncan Niederauer
and Business Development VP David Shuler are working
closely with the China Securities Regulatory Commission
on a project to offer shares in the exchange company
as a test and example of foreign listings in China.
If successful, many American companies could be
interested in a Shanghai listing. That could led
to a massive shake up between the world’s big
stock exchanges. Something to watch closely!
The long anticipated restructuring
of China’s telecom giants is underway. China Unicom
will buy the shares of China Netcom at a 3% premium
over the last share price prior to halt of trading
May 23. As combined the new firm, which will probably
use the China Unicom brand, will have a market
capitalization around $63 billion US dollars and
a range of services from mobile phones, fixed
line, and broadband delivery. It will sell its
CDMA business to China Telecom.
Meanwhile China Mobile, the world’s
biggest mobile phone provider, will buy China
Tietong or Railway Telecommunications, the smallest
of China’s fixed-line operators.
Part of the restructuring will require
use of China’s home grown standard, TD-SCDMA,
that being rolled out but still being refined.
There will be much more activity in this sector
over the short term with the potential for more
mergers and share price volatility.
According to Zhang Xiaogang, head
of the China Iron & Steel Association, talks with
Australia may conclude with an agreement on prices
by the end of June. Chinese steel-makers, led
by giant Baosteel group, want an annual term contract
and are playing Australia against Brazil. Australian
producers such as BHP Billiton want more than
an 80% increase due to freight costs. But earlier
China along with Japan and (South) Korea got Brazil
to agree to a price increase of 65% to no more
TAIWAN REUNIFICATION WATCH
A further sign of the growing links
between Taiwan and the mainland, Chinese and Taiwan
officials are in talks to allow UnionPay, the
dominant national ATM network of China, to place
ATMs in Taiwan as early as July when the first
wave of Chinese visitors to the island may begin.
The UnionPay ATMs would introduce Renminbi currency
into Taiwan and could some day lead to its acceptance
or even circulation on the island.
FOREX NEARS $2 TRILLION
As of the end of April China’s forex
reserves swelled to over one and three quarters
trillion US dollars ($1.76 trillion) by far the
largest foreign reserves in the world. As Chinese
exports have slowed the increases are coming largely
from investment inflows and some analysts believe
as much as $50 billion “hot” or speculative money
may be circulating.
Three weeks in and devastation is
still being assessed from the earthquake disaster
in Sichuan Province. Over 69,000 are confirmed
dead and damages are valued at over $10 billion
US dollars. Around five million people may be
homeless. Almost $6 billion US dollars in donations
has been raised so far much of it from Chinese
donors in a massive national outpouring of sympathy
The relief effort is enormous and
Beijing’s willingness to allow outsiders and their
support into the region is doing more to bring
Chinese closer to the world outside than the Summer
Olympics could ever hope to.
Stay tuned for my trip report on
China, Taiwan, and the eastern Caribbean next!