-Alexander Molyneux, Citigroup's head of metals and mining in Asia, expects that China’s growing appetite for natural resources will likely drive a wave of offshore acquisition by Chinese companies looking to increase their access to and supply of commodities. In particular he thinks that nickel, copper and zinc will be the areas of greatest interest. After CNOOC’s failed acquisition in Unocal he believes that Chinese companies will focus their sights on mineral rich companies in Africa, South America and Australia, all of which have friendlier regulatory environments in comparison to North America.

-More from the energy front: ShenHua Energy Co, China’s largest producer of coal, went public yesterday, offering 1.8 billion shares at RMB36.99 and raising a total of RMB66.6 billion. According to Bloomberg this is bigger than China Construction Bank’s IPO and the biggest listing to date this year on the Shanghai Exchange. Shares were up over 91% during intraday trading as the Shanghai Index marched to all time highs.

What is amazing is how over subscribed the IPO was; investors applied for a record US$354 billion (RMB2.66 trillion) worth of ShenHua’s stock. This only goes to show that there is still an enormous amount of excess liquidity sloshing around the market and that until that disappears, the market is likely to go higher despite already stretched valuations.

-Bird, one of China’s leading homegrown manufacturers of mobile phones, posted a net loss of RMB237 million for the first half of fiscal year 2007, which is an 859% decrease in profits from the same period last year. They attributed the loss to intense market competition and price wars, which seem to us to basically be the same thing. They are also projecting further losses for the second half of the year.

-China Minsheng Bank, China’s seventh largest bank, is acquiring a 9.9% stake in United Commercial Bank for US$317 million. On the surface it seems like a smart move because United Commercial’s customer base is primarily focused on overseas Chinese in the US market, but now doesn’t seem like a good time to be buying a stake in a bank which is heavily dependent on the US real estate market. 77.16 % of UCB's loans are related to real estate.

Interestingly, UCB will use the proceeds of the deal to buy the Shanghai-based Business Development Bank Ltd. Kind of funny how these things work.  China Minsheng Bank wants access to the US market, buys a stake in a US bank which then promptly turns around and uses the cash to buy a Chinese bank to gain access to the Chinese market. I guess that is globalization for you.