There’s something for everyone in the Chinese PMIs for October:
BEIJING, Nov. 1 (Xinhua) — China’s Purchasing Managers’ Index (PMI) dropped to 50.4 percent in October after rising for two consecutive months, down 0.8 percentage points from September, the China Federation of Logistics and Purchasing (CFLP) said Tuesday. Read more
China’s official purchasing managers’ index for October fell to its lowest since February 2009, Bloomberg reports. The PMI fell to 50.4 in October from 51.2 in September, the first fall in three months. The result was lower than the news agency’s survey of 16 economists, where the median result was 51.8. But analysts said that PMI usually declines by an average of 0.9 percentage points from September to October, the FT says. Meanwhile the HSBC/Markit Economics PMIs for the same month rose to 51 from 49.9 in September, including the first improvement in export orders for five months. The HSBC/Markit index for South Korea rose from 47.5 but remained contractionary at 48, while Taiwan continued to decline, to 43.7 for October compared with 44.5 the previous month.
China intends to suspend some military exchanges with the US, in the first concrete sign of the fallout from Washington’s decision to provide a $5.9bn arms package to Taiwan, reported the FT. “I think they have indicated that they’re going to suspend or to cancel or postpone a series of […] military-to-military engagements,” a senior US administration official told reporters on Monday, according to a briefing transcript on the state department website. Yang Jiechi, China’s foreign minister, met with Hillary Clinton, secretary of state, on the sidelines of the UN General Assembly on Monday. Mr Yang used the meeting to reiterate China’s strong opposition to the Obama administration’s decision to sell Taiwan spare parts, training and weapons to upgrade its ageing fleet of F16 fighter aircraft.
The US is expected to announce within days a new arms deal for Taiwan, carefully timing the release of the long-expected decision to minimise damage to Washington’s delicately balanced ties with Beijing, the FT reports. The administration has briefed Congress that the US will offer to refurbish the F-16 jets sold to Taiwan in 1992 but will not sell the island the latest model of the fighter planes, as some in Washington and Taipei have pushed for. The announcement has been slotted into the busy Sino-US diplomatic calendar, coming after vice-president Joe Biden’s recent trip to China and ahead of the summit of Asia-Pacific leaders in November. The US has also been at pains to cultivate ties with the incoming Chinese leadership, led by Xi Jinping, who is expected to take over as the head of the ruling Communist party late next year.
The Obama administration has warned that a victory by Tsai Ing-wen, the Taiwanese opposition leader, in the island’s January presidential election could raise tensions with China, reports the FT. A senior US official said Ms Tsai, the Democratic Progressive party leader who is visiting Washington, had sparked concerns about stability in the Taiwan Strait, which is “critically important” to the US.
Two Chinese fighter jets crossed an unofficial dividing line in the Taiwan Strait late last month in pursuit of a US spy aircraft, according to defence sources in Taipei and Beijing, reports the FT. The incident marked the first time in more than a decade that Chinese military aircraft have entered Taiwan’s side of the 180km-wide strait. According to Taiwan’s defence ministry, two Chinese Su-27 fighter jets briefly crossed the so-called “middle line” on June 29. News of the incident broke when Secretary of State Hilary Clinton was in China, trying to reassure her hosts that the US would put its fiscal house in order, according to Foreign Policy.
Taiwanese prosecutors have indicted former president Lee Teng-hui, the state’s first democratically elected leader, on corruption charges, reports the FT. Mr Lee is accused of embezzling US$7.8m in government funds during his tenure as president in the 1990s, and faces possible life imprisonment if convicted. His top economic adviser, Liu Tai-ying, was also indicted. Wellington Koo, a lawyer representing Mr Lee, said the former president insisted he was innocent and would fight the charges in court. “He was not in charge of the funds in question and has not pocketed a single cent of it,” Mr Koo said. Mr Liu and his lawyer could not be reached for comment. The former president is a dominating figure in modern Taiwanese history. Aside from pushing through major democratic reforms, Mr Lee was the first native Taiwanese to head the nationalist Kuomintang party and become president of the Republic of China – the official name for the state of Taiwan.
The Taiwanese government has blocked a plan by Kohlberg Kravis Roberts and the chairman of Taiwan’s Yageo Corporation to take the electronic components manufacturer private in what would have been Asia’s biggest private equity deal this year, says the FT. Wednesday’s rejection is a blow to Taiwan’s reputation as a destination for foreign investment, coming after a string of similar rejections or delays imposed by the government on large cross-border mergers and acquisition deals. The most notable example was AIG’s two-year attempt to sell Nan Shan, its Taiwan subsidiary, which is only now nearing completion.
Investors in emerging-market ETFs face an unexpected tax hike if MSCI index-setters upgrade South Korea and Taiwan to developed markets, reports the FT. With both countries taking up a quarter of the MSCI emerging markets index, their departure could expose investors to taxable capital gains as ETF providers will be forced to exchange underlying securities for cash. The Korean and Taiwanese stock markets prohibit transactions of in-kind securities, the usual method used by ETFs to manage rebalancing events. The problem strikes a blow against ETFs’ reputation for tax efficiency, industry figures warned.
Some intriguing movements are afoot on the currency front in Asia, where the Taiwanese dollar, the Indonesian rupiah and the Korean won have lately been the region’s strongest performers.
It’s all part of a steady intensification of regional inflation jitters — and a looming cycle of back-to-back interest rate increases and possibly, more moves towards capital controls. Read more
US insurer AIG reached two milestones on Wednesday in its efforts to repay US bail-out funds, agreeing to sell its Taiwan life unit to a consortium led by domestic industrial groups for $2.16bn and taking the final step before giving the US Treasury a 92% stake in the insurer, reports the FT. The sale of Nan Shan to a group of Taiwanese companies led by Ruentex and Pou Chen was AIG’s second attempt to divest the business. Wednesday’s announcement follows more than a year of uncertainty about Nan Shan, Taiwan’s third-largest life assurer and biggest remaining foreign-owned life assurer. Separately, AIG, which received more than $180bn in US rescue funds during the financial crisis, said it would issue warrants to shareholders – the last step before Treasury can swap its preferred shares in the insurer into common stock.
US insurer AIG has chosen Taiwan’s Ruentex Group as the preferred bidder for its Taiwan life-insurance unit, Nan Shan Life Insurance, reports the WSJ. Ruentex, a conglomerate with interests in textiles and real estate, offered more than $2.15bn, said a person close to the deal, more than if AIG had succeeded last year in selling the Taiwan unit to a consortium of Primus Financial and Hong Kong-listed China Strategic Holdings. Taiwan regulators blocked that deal in August, citing concerns about China Strategic’s financial strength and commitment to Nan Shan. AIG’s second attempt drew bids from Taiwanese firms including Chinatrust Financial, Cathay Financial, Fubon Financial, and a consortium comprising Primus, Taiwan Secom and Goldsun Development & Construction.
At least three financial groups are set to bid for AIG’s Taiwan unit following the completion of due diligence, reports Reuters citing sources close to the matter. Taiwan’s Fubon Financial, Chinatrust and the chairman of conglomerate Ruentexare are all poised to submit bids on Friday, while Cathay Financial is currently deciding whether to bid, the sources said. AIG is trying to sell its Nan Shan unit for a second time as it seeks to repay the US government after its bailout. No estimates of the possible bid prices were available.
Taiwan’s Fubon Financial, Chinatrust and the chairman of conglomerate Ruentexare are to bid for AIG’s Taiwan unit following the completion of due diligence according to sources, Reuters reports. Cathay Financial will make a decision on whether to bid on Friday, a source added. AIG is trying to sell the Nan Shan unit for a second time as it seeks to repay the US government after its bailout. Sources declined to give an estimate of the possible price.
Yet another relatively small share in our global industrial production framework, Taiwan’s PMI New Orders were also very supportive, increasing 5 points after moving sideways for three months. Together with Korea and Japan, its IP momentum is likely to pick up again in the next month or two.
Russia and India come next and so does the BRIC! Read more
AIG has told four local bidders that it has restarted the auction process for its Taiwanese life assurance arm, says the FT. Chinatrust Financial, Fubon Financial and Cathay Financial, three of Taiwan’s biggest banking groups, began due diligence on offers this week after being informed, said people familiar with the process. Ruentex Group, a property conglomerate, has also taken interest, sources said. AIG’s first attempt to offload Nan Shan found itself blocked after regulators cast doubt on an agreed sale to a Hong Kong-based consortium. A second deal for Nan Shan could arrive as early as December, reports Reuters.
Another day, another Chinese IPO: but is it all heading for what you could call an ugly, big “Chipo” bubble?, wonder some observers.
As Bloomberg reports on Monday, China Rongsheng Heavy Industries, the Chinese mainland’s largest shipbuilder outside government control, is seeking $2.3bn in what may be Hong Kong’s third-largest IPO this year. Read more
Emerging markets dealmaking has climbed impressively as an amount of the global total in the third quarter, FT Alphaville reports. A Reuters survey identifies strong merger and acquisition activity throughout Latin America, the Middle East and Asia amid $1.75tn of deals made, with emerging-market share rising to 27.4 per cent in the first nine months of 2010 from 21 per cent in the comparable period of 2009. But China, with $85bn in M&A volume this year, remains the biggest EM target, with a notable uptick in cross-border deals. Even so, not every Asian economy is joining the party. The Taiwanese authorities have binned US-based MetLife’s attempt to sell its Taiwan life insurance unit to a local financial group, the FT’s beyondbrics reports, causing some to complain that Taiwan is becoming hostile to foreign investment, as other deals fall by the wayside.
Every now and then, someone comes along and delivers a neat soundbite that captures the zeitgeist and blitzes both the mainstream media and the blogosphere.
Such is the case of Guido Mantega, economist, politician and Brazil’s finance minister, who, as the FT (and just about everyone else) reports on Tuesday, has warned that an “international currency war” has broken out, as governments around the globe compete to lower their exchange rates to boost competitiveness. Read more
Taiwan’s regulators on Tuesday blocked AIG’s sale of Nan Shan Life, its Taiwan life assurance unit, to a Hong Kong-based consortium for $2.15bn after months of uncertainty, reports the FT. The move is a blow for the US insurer, which hoped to use the sale to help repay loans from its US government rescue in 2008. It follows the collapse in June of AIG’s deal to sell AIA, its main Asian unit, to UK insurer Prudential. Bloomberg says that AIG will consider scaling back Nan Shan’s operations after the rejection, while the NYT cites analysts saying Taipei’s decision was unsurprising and indicated no change in regulatory behaviour.
AIG’s sale of its Taiwan life assurance unit to a Hong Kong-based consortium for $2.15bn was blocked by Taiwanese regulators on Tuesday following months of uncertainty and protracted negotiations, reports the FT. The move is a setback for the American insurer, which had hoped to use the sale of its Taiwan unit Nan Shan to raise funds to pay back loans following a US government rescue in 2008. It follows the collapse in June of AIG’s efforts to sell AIA, its main Asian unit, to Prudential after the UK insurer withdrew its $30bn-plus offer for the business.
The first mainland Chinese company is set to sell shares in Taiwan, highlighting the growing economic benefits for Taiwan of improving political ties with its long-term rival, the FT reports. Yangzijiang Shipbuilding, China’s fourth-biggest shipmaker, plans to raise T$3.72bn ($116m) from a Taiwan Depositary Receipt listing on Sept 8, the Taiwan Stock Exchange said on Wednesday. Bloomberg adds that Yangzijiang shares, which trade in Singapore, have surged 26% this year compared with a 1.1% gain for the Straits Times Index.
The first mainland Chinese company is set to sell shares in Taiwan, a big boost to the island’s stock exchange and a move that highlights how Taiwan is reaping economic benefits from improving political relations with its long-term rival, the FT reports. Yangzijiang Shipbuilding, China’s fourth-biggest shipmaker, is planning to raise T$3.72bn ($116m) from a Taiwan Depositary Receipt listing on September 8, the Taiwan Stock Exchange said on Wednesday.
Japan’s economic snuffles contrast with the health of emerging Asia, where rapid growth has re-established itself since the global economic crisis, reports the FT. Thailand, thought to be one of the region’s weaker economies because of its political problems, surprised economists this week by reporting year on year growth in gross domestic product of 9.1 per cent for the second quarter, in spite of more than two months of highly-disruptive anti-government demonstrations. That followed comparable figures of 8.9 per cent in Malaysia, 12.5 per cent in Taiwan, 6.2 per cent in Indonesia, 7.2 per cent in South Korea and an extraordinary 17.9 per cent in Singapore. China had earlier reported growth of 10.9 per cent. India has not reported but a survey of economists by the central bank forecast growth of 8.7 per cent.
Buy-out groups Bain Capital and Permira Advisers are among investors chosen by MBK Partners – the buy-out group founded by ex-Carlyle Group executives – as final bidders for Taiwan’s second-biggest cable-TV operator, in a deal worth at least $2bn, reports Bloomberg, citing people familiar with the matter. Potential buyers must submit binding offers for closely-held China Network Systems by late September. Macquarie Group has also been shortlisted.
Taiwan achieved a big breakthrough in its attempts at formal integration into the international economy on Thursday as it announced the start of trade negotiations with Singapore, reports the FT. The joint announcement with Singapore, which comes just two months after Taiwan signed a historic trade pact with China amid warming relations, signals a change in Beijing’s policy towards Taiwan’s international presence.
Carlyle Group is in talks to sell Taiwan’s biggest cable TV operator to the Tsai family in a deal that could be worth up to T$70bn ($2.2bn), reports the FT. Under a deal that restructures an earlier agreement by the US buy-out firm to sell Kbro to Taiwan Mobile, controlled by the Tsai family, the family would now pay T$70bn in cash and take on Kbro’s T$20bn of debt, said a person close to the transaction. The earlier deal ran foul of Taiwan’s media ownership regulations.
Carlyle Group is in talks to sell Taiwan’s biggest cable television operator to the Tsai family, one of the island’s wealthiest, in a deal that could be worth up to T$70bn (US$2.2bn), according to the FT. A person close to the transaction said Carlyle had agreed to sell Kbro to the Tsai family for T$70bn in cash. In addition, the Tsai family would take on Kbro’s T$20bn of debt. The deal would restructure an earlier agreement by the US private equity firm to sell Kbro to Taiwan Mobile, which is controlled by the Tsai family.
Taiwan’s banking regulator is considering curbs on private fundraising by local banks and insurers, the FT reports. At a time when western, Japanese and Chinese banks are raising billions of dollars in new capital to meet regulatory demands, any restrictions could test Taiwan’s banks, already squeezed by competition.