Stocks plunge to 5 week low
Domestic stock markets continued their fall following the regulator’s decision to triple stamp duties from 0.1% to 0.3% last week, reaching a five-week low Monday, the Shanghai Securities News reported. The benchmark Shanghai Composite Index slid 8.7% to 3,670 points. The total drop to date has been 15%. “Investors – particularly the new comers – are a bit disappointed that the government hasn’t done anything to support the market,” said Fan Dizhao, who helps manage US$1.8 billion at Guotai Asset Management Co in Shanghai. Property stocks also fell on reports the government would introduce new initiatives to rein in the real estate market. The increase in stamp duty was aimed at warding off greater “systemic risks” in the market, the regulator said.

Chongqing to list more companies
Chongqing – China’s largest municipality by population – is planning to list 10 of its local firms in two years, according to the Chongqing Wanbao. The plan will attract more capital to the region, deputy mayor Huang Qifan said. The 10 companies include Southwest Securities Co, Chongqing Steel Group, Chongqing Commercial Bank and Shangshe Group. These companies may list via different methods, such as through an IPO or a backdoor listing. The city now has only 30 listed companies with a combined RMB50 billion (US$6.5 billion) market value. With the central government’s focus on further developing Western China, Chongqing is in a prime position to serve as the “gateway to the west”. Foreign investment in the city is growing at a blistering pace to take advantage of a labor force that is much cheaper than in other major cities like Shanghai, Beijing or Guangzhou.

RMB set to move in narrower range
China's central bank was expected to narrow the range it allowed the yuan to trade in this week to slow its appreciation after weeks of steady climbing against the greenback, Economic Daily reported. However, experts predicted the currency would continue to appreciate for the rest of this year. The currency was buying 7.6465 against the US dollar on Friday – up from 7.6523 a week earlier. The central bank has raised interest rates several times and widened the daily trading range of the yuan to make its exchange rate regime more flexible. The yuan has accumulatively appreciated almost 8% since its pegged rate of 8.28 to the US dollar was scrapped on July 21, 2005. The exchange rate is projected to drop below 7.5 to the US dollar by the end of this year.

Buyout firms take refrigerator stake
Baring Asia and International Finance Corp said they paid US$47.2 million to buy a minority stake in the Chinese refrigerant producer Dongyue Group Ltd, the China Times reported. The buyout firms will own a combined 27.3% stake in the Shandong-based Dongyue, which will use the proceeds from the sale to upgrade productivity. Competition among buyout firms has intensified following the tightening of rules last year regarding sales of stakes to foreign companies, which caused the value of announced foreign acquisitions in China to fall 11% to US$27.5 billion last year. The fall came after the Ministry of Commerce was added to a list of government agencies that must countersign acquisitions by foreign investors to prevent asset sales that could threaten the security of the national economy.

IAG ends China Pacific stake talks
Insurance Australia Group said its planned investment in China Pacific Property Insurance Company was suspended and unlikely to proceed due to the proposed listing of China Pacific’s parent and its complicated stake structure, the China Daily reported. Final execution of the planned A$350 million to A$375 million transaction was delayed by changes and uncertainty within China Pacific Insurance Co as it prepared for an IPO. IAG said in February 2006 that it had signed a memorandum of understanding with China Pacific Insurance to acquire 24.9% of its property insurance arm. In July 2006 draft transaction agreements were confirmed and lodged with the China Insurance Regulatory Commission. China Pacific’s complicated stake structure and its stake in an insurance college are major obstacles to its listing.

More airliners target Chinese market
Two foreign carriers have said they will exploit the Chinese market to take advantage of its economic boom, China Economy reported. “Chinese companies’ proactive business position requires them to travel," the vice-president of Royal Jet said. He expects the United Arab Emirates-headquartered carrier – which currently handles one monthly flight to China – to increase its China contribution to total revenue from 5% of to 15%. The US-based Prime Jet, whose 180 clients in China constitute 15% of its entire customer base, is also eying expansion in China. Both carriers are in contact with potential local partners to set up representative offices.

Luxury fair hits Shanghai
Luxuries like a diamond-encrusted cell phone for US$3.5 million and a musical Swiss watch with a gold dial for US$2 million were on display at a Millionaire Fair in Shanghai last weekend, the Shanghai Daily reported. “The rich people here are still learning about global brands,” one of the organizers said. “We’re helping them to understand the lifestyle and how to live it.” China had 250,000 US-dollar-millionaire households in 2005. Its market for luxury goods was worth US$6 billion in 2004 and it is expected to become the second largest luxury goods consumer market in the world by 2015, ahead of Japan and only trailing the US. Over 150 international brands were on display at the fair, which cost RMB600 (US$80) to attend – the average weekly income for Shanghainese. Not all the visitors were rich; in a sign of the market’s potential for long-term growth, many were still too young to afford the goods on display.