Dutch insurer to buy stake in a Chinese fund
Dutch insurer Aegon has agreed to buy a 49% stake in Industrial Fund Management Co, a medium-sized Chinese fund manager, according to the Economic Daily. The Chinese fund will be renamed Aegon-Industrial Fund Management Co, 51% of whose stake is still controlled by the Chinese side. Aegon has already established an insurance joint venture with CNOOC (China National Offshore Oil Corporation). Premiums at AEGON-CNOOC Life Insurance Co grew 80% to US$59 million (RMB459 million) in 2006 as China’s demand for financial protection rose sharply.

Stocks keep surging
China’s booming stock market rose to a record for a third straight day as households poured more money into equities, the Shanghai Securities News reported. The CSI 300, which tracks yuan-denominated A shares, gained almost 96 points – or 2.4% - to close at 4,168. The consolidated value of the shares traded at the Shanghai and Shenzhen exchanges totaled US$50.9 billion yesterday, exceeding the US$43.9 billion traded on the NYSE on May 25. Households are shifting funds from bank deposits to the stock market for better returns. The cap of the benchmark one-year deposit rate set by the central bank is 3.06% - only slightly higher than the 3% inflation rate.

Housing prices remain robust
China’s property market remained strong and the number of vacant properties dropped 0.8% in the first four months of 2007, the China Economy said, citing a report released by the National Development and Reform Commission. A vacant property means an apartment or house which has not been sold or rented for one year. Investment in the property market climbed 27.4% year-on-year to US$69 billion (RMB527 billion) in the first four months. The report also said investments in apartments less than 90 square meters accounted for only 17.2% of all residential transactions, far below the government’s targets under the “70%-90” policy. The policy was announced in May 2006, saying that residential units less than 90 square meters should account for 70% of a development’s total. This is aimed at raising the supply of small and medium-sized apartments while restraining large and luxury homes.

Trade surplus expected to reach US$300 billion this year
China’s trade surplus may burgeon to US$300 billion this year compared to US$187 billion last year, the Economic Daily predicted. The widening gap is attributable to a global trade imbalance and the government’s incentives for certain industries. China’s trade surplus almost doubled in the first quarter, bolstering the world’s fastest economy to grow 11.1%. China’s forex reserves grew approximately US$1 million a minute in the first quarter to hit US$1.2 trillion. China had a US$233 billion trade surplus with the US last year, which was allegedly due to the artificially low exchange rate of the RMB. Every percentage point appreciation of the currency could cost RMB8 billion (more than US$1 billion) to the textile industry. More than 80% of China’s trade surplus with the US is generated by foreign companies, the newspaper reported. For instance, Wal-Mart exports labor-intensive products from China like textiles and shoes.

Gold and platinum drop for first time this year
The retail price of gold and platinum jewelry in Shanghai was marked down for the first time after eight markups in a row this year. The retail price of gold was cut to RMB196 yuan a gram from RMB202 and high purity platinum jewelry was cut to RMB389 a gram from RMB399, the Xinmin Evening News reported, citing the Shanghai Gold & Jewelry Trade Association, which sets base prices for gold and platinum. Internationally, the gold price is projected to hit around US$650 an oz this year with a US$150–200 fluctuation. China is the world’s third-largest gold consumer as the Chinese people consider the precious metal a symbol of fortune and a safe haven against inflation.

China wants funds from foreign firms
China welcomes more foreign private equity firms to invest in its real estate, technology and service sectors, Chinese Business said. Foreign buyout firms are stepping up expansion in Asia, where private equity and buyout transactions climbed sevenfold to US$122 billion last year. In China, the government has expressed concern that buyout firms only seek short-term profits, forcing Washington-based Carlyle Group to cut its proposed stake in a state-owned enterprise. Carlyle Group, manager of the No 1 US buyout fund, twice scaled back its planned investment in Chinese machinery maker Xugong Group Construction Machinery Co, after China said the nation’s largest equipment makers should remain under state control. The China Beijing Equity Exchange was set up in February 2004. It serves as a trading platform for assets including shares in state-owned firms, intellectual property and innovative financial products, according to the equity exchange’s website.

Insurance premiums rise 24% in Q1
China’s insurance premiums grew 24% year-on-year to US$33 billion (RMB253 billion) in the first four months of 2007, the 21st Century Business Herald reported. Premiums for life policies rose 19% to RMB164 billion, the China Insurance Regulatory Commission said. Preparations are under way to lift a ban that limits insurer’ direct investment in the stock market to 5% of assets. Insurers’ assets total nearly RMB2.5 trillion. In the first quarter, insurers had RMB759 billion in bank deposits – up from RMB634 billion – and had RMB1.5 trillion in securities – up from RMB1.4 trillion.

Largest wool operator outsources research
Shanghai-based Hengyuanxiang Group – China’s showcase wool and knitting company – has teamed up with Monell Chemical Sense Center to gain a more competitive position, the Shanghai Daily reported. According to the agreement, US-based Monell – the world’s first scientific institute for research on chemical senses – will design a smell and taste to help people recognize the trademark of Hengyuanxiang, who, in turn, will sponsor the research. Hengyuanxiang is the first Chinese company to team up with emotional sense institutes to develop its brand not only in terms of visual and audio perception but in other ways like smell and taste. The company produces more than 10,000 tons of woolen products annually.