Asian stocks follow China’s slump
Major stock markets across Asia dropped for the first time in three days Wednesday after China shares slumped following the tripling of tax on securities transactions, the Shanghai Securities News reported. Stamp duty on share trading has been raised from 0.1% to 0.3%, effective Thursday, to “promote the healthy development of the securities market”, the Finance Ministry said. The Shanghai Composite Index lost 271 points to close at 4,053. In Hong Kong, China Life – the nation’s biggest insurer – dropped 3.7% to HK$23.60; China Mobile Ltd – the world’s largest mobile-phone company by users – dropped 0.8% to HK$71.15. In a knee-jerk reaction, Tokyo’s Nikkei Average slid 0.5% and Seoul’s Kospi changed a little. China’s brokerage accounts this week topped 100 million as the stock market value reached US$2.4 trillion, according to the China Securities Depository & Clearing Corp.

World Bank raises China growth estimate
The World Bank has raised its estimate for China’s economic growth in 2007 due to its surging exports and its low interest rates, the China Daily reported. The world’s fourth largest economy – or the second largest by purchasing power parity (PPP) – is projected to grow 10.4% this year, up from a previously forecast 9.6% growth. The bank also said China’s asset market valuations strengthened the case for tighter monetary policy and higher interest rates to tie up liquidity in bank deposits. The central bank’s benchmark one-year deposit rate – a ceiling for deposit rates commercial banks can offer – is 3.06%, which is only slightly higher than the 3% inflation rate. A tighter monetary policy may also strengthen the case for more rapid RMB appreciation. The World Bank also raised its estimate for China’s inflation this year to 3.2% - up from its February forecast of 2.5% and China’s central bank target of 3%.

Possibble US$930 million offer for China Eastern
Singapore Airlines and Temasek may pay about US$600 million and US$330 million respectively for a 24% combined stake in China Eastern Airlines, Singapore’s Chinese language Lianhe Zaobao newspaper reported. The deal would give Singapore Airlines – Asia’s most profitable carrier – access to the world’s most populous nation. Shanghai-based China Eastern – China’s only listed carrier – is looking to reduce debt and team up with a partner to compete with Hong Kong-based Cathay Pacific Airways and Air China after posting a net loss last year. The Chinese airline industry has one of the highest growth rates in the world. Chinese carriers flew 160 million passengers last year or a 15% year-on-year increase, according to the General Administration of Civil Aviation. The partnership with China Eastern would help Singapore Airlines, which made a record US$1.4 billion profit last year, look to increase its 104 flights a week to major Chinese cities. It would also complement the carrier’s cargo operations.

ICBC pitches for QDII funds
Industrial and Commercial Bank of China (ICBC) started pooling clients’ RMB assets to directly invest in H-shares, the China Business News reported. The bank started processing clients’ orders to invest in Hong Kong-listed stocks under its Qualified Domestic Institutional Investors (QDII) quota. A minimum amount of US$39,215 (RMB300,000) is required. The offer can help investors benefit from the rising H-shares, whose valuations are lower than equivalent stocks in the soaring RMB-denominated A-share market.

Sinopec discovers a new oil field
Sinopec – China’s second largest oil and gas producer – said it has found a field with as much as 1.5 billion barrels of oil in the northwestern province of Xinjiang, the China Economy reported. The new field covers around 900 square kilometers and holds 200 million tons of oil, or 1.47 billion barrels. If 30% of the deposits are drillable, the field's proven reserves could reach about 500 million barrels. Sinopec said it plans to draw between 11 and 14.6 million barrels a year from between 90 and 120 wells in the new field. Sinopec shares soared 3.29% to RMB13.5 on the Shanghai Stock Exchange yesterday despite a 6.5% drop in the benchmark index. It is also listed in Hong Kong and New York.

Logistics a key focus
Shanghai will put the development of its logistics sector high on the agenda for economic expansion by 2010 as part of efforts to become a logistics terminal in Asia and the world, the China Youth Daily reported. China’s financial capital expects its logistics sector will grow 10% annually over the next five year and make up 13% of Shanghai’s GDP. Each sub-sector of the logistics industry will be developed, including port transfer, manufacturing, cross-city delivery, international transfer, purchasing, distribution, third-party logistics and integration of the Yangtze Delta cities. Shanghai is building more logistics zones including the Yangshan Deep-Water Logistic zone, Waigaoqiao Bonded Logistics Park and Pudong Airport Logistics Park, of which the Yangshan Deep Water Port handled 1.6 million tons of cargo worth US$22.7 billion in the first four months of the year.

Shanghai retailers face 8.8% rental jump
Average rents in Shanghai’s shopping centers climbed 8.8% year-on-year to almost US$121 per square meter per month in the first quarter of 2007, the Shanghai Daily reported. Among the most expensive areas were Luwan, Jing'an and Xuhui districts. THe Luwan district had the highest average rent of US$147 per square meter per month, followed by US$135 in Jing’an district and US$132 in Xuhui district. In terms of occupancy rates, shopping centers in Jing'an and Xuhui districts were almost fully occupied, and those in Luwan, Huangpu and Pudong districts ranged from  97% to 99%. There have been predictions that abundant new supply will push up vacancy rates to 13.5% and 17.8% in 2007 and 2008 respectively. However, the average rent is expected to continue to rise by 13% and 10% in 2007 and 2008 respectively.

Carlsberg continues to expand in northwest
Carlsberg and Lanzhou Huanghe Enterprise Co will jointly invest US$65.4 million (RMB500 million) to set up a brewery in northwestern China, the China Times reported. The move will lay a solid foundation for the Danish brewer to rival Budweiser and other international brewers in the world’s biggest beer market. China’s annual beer consumption increased more than 15% in 2006. Carlsberg will invest RMB200 million to hold a 40% stake in the plant in northwestern Gansu province’s capital Lanzhou. The plant is expected to make 500,000 tons of Huanghe-branded beers per year, bringing up the brewer’s annual capacity to 800,000 tons. Carlsberg’s total investment in western China (Xinjiang, Tibet and Yunnan province) has topped RMB1 billion yuan, accounting for 50% of its total investment in China, according to the 21st Business Herald. Lanzhou Huanghe has dominated the northwest with a 3/4 market share in Gansu province and 4/5 in Qinghai province. Analysts said China’s beer industry will continue to see mergers and acquisitions until all smaller brewers have disappeared.