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Sinopec reports big increase in first-half net profit

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NEWS - China Finance

Written by MarketWatch Monday, 24 August 2009 16:29

NEW YORK (MarketWatch) -- China Petroleum & Chemical Corp., Asia's biggest refiner, said Sunday that its first-half net profit increased sharply, exceeding analyst expectations.

The company, known as Sinopec, said its net profit for the six months ended June 30 was 33.25 billion Chinese yuan, or about $4.89 billion, compared with 7.68 billion yuan in the same period a year ago.

The result exceeded the average of 26.5 billion yuan expected by analysts surveyed by Dow Jones Newswires.

Sinopec Chairman Su Shulin said that the substantial increase in profit for the first half of 2009 "is primarily a reflection of weaker comparatives" from the same period of last year. China increased government-controlled domestic fuel prices in 2009.

Sinopec also said that its turnover, other operating revenues and other income fell by 30.2% to 534 billion yuan from a year ago.

The company said its board of directors proposed a half year dividend of 0.07 yuan per share with the total dividend amount reaching 6.069 billion yuan.

"Looking into the second half of this year, the state will continue applying the proactive fiscal policy and relatively easy monetary policy, further improving and implementing the integrated economic stimulus package, and increasing domestic demand," Sinopec said in a statement.

"The Chinese economy is expected to maintain relatively fast growth," the company said. International crude oil prices in the second half are expected to be higher than the first half, fluctuating within a narrow range, Sinopec said.

Sinopec also said it expects its net profit for the first three quarters ending Sept. 30 to increase more than 50% from a year earlier, according to a report by Dow Jones Newswires.

The company plans to present its 2009-2011 development plan Monday at a press conference in Hong Kong, the report also said.


Macquarie and Everbright propose ventures in China

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NEWS - China Finance

Written by The New York Times Thursday, 20 August 2009 16:41

The Macquarie Group, the Australian bank, and China Everbright, a financial services group, said Wednesday that they were forming two funds that would seek a total of $1.5 billion for infrastructure projects.

It is the fourth such pairing involving major new plans for mainland China this month.

Macquarie and Everbright said they would contribute $100 million of their own to the funds, but many of the other details remained to be ironed out.

One fund will be open to nonretail investors outside of China, and the other to investors in the country.

Both funds will work together to back projects in transportation and water utilities — industries that Beijing is trying to develop.

In a joint statement, Chen Shuang, Everbright’s chief executive, said that the private sector had a history of investing in infrastructure in the country. “The importance of private capital in Greater China is demonstrated in the nearly 60 listed infrastructure operators with a combined market capitalization of over $150 billion,” he said.

Paul Scanlon, a spokesman for Macquarie, said the structure of the funds would depend upon the parties that contribute to them, because the demands of sovereign wealth funds and private investors often differed.

Only after the money has been raised, Mr. Scanlon said, will the funds begin considering specific projects for investment. In their joint statement, the banks said that they expected to close the funds to new investment next year.

Kevin So, a spokesman for Everbright, which is well connected to Chinese companies and government authorities, said that Beijing was encouraging investments in infrastructure and that Macquarie brought infrastructure expertise to the table.

“Everybody knows they’re a leading investment manager in this area,” he said.

Several other banks are expanding their presence in China, where the government is pursuing an ambitious four trillion yuan ($586 billion) stimulus program that also focuses on infrastructure.

This week, the First Eastern Investment Group said it was planning to raise 6 billion yuan for a private equity fund in the mainland, and the French brokerage firm CLSA said that it planned a 10 billion yuan asset-management fund in China.

Last week, the Blackstone Group and the government of Shanghai announced the creation of a local-currency private equity fund that aims to raise about five billion yuan.


Sinopec completes China's biggest foreign takeover

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NEWS - China Finance

Written by AP Wednesday, 19 August 2009 16:50

BEIJING — Sinopec Group said Tuesday it has completed its $7.5 billion acquisition of Addax Petroleum, obtaining new reserves in Africa and the Middle East in China's biggest foreign corporate takeover to date.

State-owned Sinopec Group is the parent of Sinopec Corp., also known as China Petroleum & Chemical Corp., Asia's biggest refiner by volume. It wants to expand its production capacity to profit from rising crude prices that have cost it billions of dollars in recent years due to government caps on retail fuel prices.

Addax is China's biggest foreign corporate takeover but the deal is half the size of last year's $14.3 billion acquisition by Aluminum Corp. of China, with Alcoa Corp., of a 12 percent stake in global miner Rio Tinto PLC, according to financial information firm Dealogic.

Chinese oil, mining and other resource companies, flush with cash from their country's economic boom, are investing in foreign oilfields, mines and other assets to profit from rising commodities demand.

The previous record for a Chinese corporate takeover abroad also was in the petroleum industry — last year's $2.5 billion purchase by China Oilfield Services of Norway's Awilco Offshore.

Addax, based in Geneva, has oil and gas exploration and production operations mainly in West Africa and the Middle East. It jointly operates the Taq Taq field in Iraq's self-ruled Kurdish region with Turkey's Genel Enerji.

In its announcement, Sinopec said it paid 52.80 Canadian dollars ($47.80) per share for 157.6 million Addax shares.

Addax, which is listed on exchanges in London and Toronto, says Sinopec promised to keep Addax's top management intact.


CIC may invest in US mortgages

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NEWS - China Finance

Written by China Daily Tuesday, 18 August 2009 16:47

China's $200-billion sovereign wealth fund is set to invest up to $2 billion in US mortgages as it eyes a property market recovery, two people with direct knowledge of the matter said yesterday.

China Investment Corp (CIC) plans to invest soon in US taxpayer subsidized investment funds of toxic mortgage-backed securities, which it sees as a safer bet than buying into the $700-billion Troubled Asset Relief Program (TARP), also backed by the US Treasury.

Under the Public-Private Investment Plan (PPIP) launched earlier this year, the US government plans to seed a number of public-private investment funds that would combine taxpayer money with private capital to buy as much as $40 billion in toxic securities from banks.

Compared with TARP, the new and smaller PPIP program focuses on safer toxic securities, which must have so-called "Triple-A" ratings by at least two agencies, and are debts guaranteed by the US Federal Deposit Insurance Corporation (FDIC), sources explained.

"In this case, CIC feels safer to invest and the safer it feels, the more confident it will naturally feel about its investments, as well as in the prospects for the US economy," said one of the sources.

"The Chinese government is always trying to seek a more ideal way to invest in US assets rather than purely buying US government bonds all the time," said the source.

"Some might think $2 billion for a $200-billion sovereign fund is not big money, but it can be regarded as an innovative and positive option for Chinese investment."

CIC is in talks with nine designated PPIP managers, which include Alliance Bernstein LP, with sub-advisers Greenfield Partners LLC and Rialto Capital Management LLC; Angelo Gordon and Co LP, with GE Capital Real Estate; BlackRock Inc; Invesco Ltd; Marathon Asset Management LP; Oaktree Capital Management LP; RLJ Western Asset Management LP; Trust Company of the West; and Wellington Management Co LLP, said the sources who did not want to be identified.

CIC is expected to decide this month which of the nine designated PPIP managers it will mandate for its investments in financial products, said the sources.

The fund is likely to select several, not all, of the firms, said the sources, CIC cannot invest directly in the PPIP.


FDI fell 35.7% in July

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NEWS - China Finance

Written by Bloomberg Monday, 17 August 2009 16:43

Aug. 17 (Bloomberg) -- Foreign direct investment in China fell for a tenth straight month in July as companies stalled expansion plans amid the global financial crisis.

declined 35.7 percent from a year earlier to $5.36 billion, the Commerce Ministry said at a briefing in Beijing today. That compared with a 6.76 percent drop in June.

The situation for foreign direct investment in China remains “severe” even as “positive signs” have emerged in the past two months, Vice Commerce Minister
Fu Ziying said last week. Japan emerged from its worst postwar recession in the second quarter, the Cabinet Office said today in Tokyo, and a Bloomberg survey of users shows confidence in the world economy surged to a 22-month high in August.

“This is a reflection of global overcapacity and the earlier credit squeeze,” said
Ben Simpfendorfer, an economist with Royal Bank of Scotland in Hong Kong. “The monthly data is very volatile.”

The detention of four
Rio Tinto Group staff since July 5 may weigh on business investments in the country, U.S. State Department spokesman Philip J. Crowley said Aug. 13.

The four were formally arrested on charges of trade secrets infringement and bribery, China’s Supreme People’s Procuratorate said Aug. 11, according to a Xinhua report. Australia’s Prime Minister
Kevin Rudd said July 15 that the world was “watching closely” how China handles the case.

‘Still Healthy’

China’s economy will expand 9.4 percent this year, topping the government’s official 8 percent target as a 4 trillion yuan ($585 billion) stimulus and record bank lending spurs growth, Goldman Sachs Group Inc. said last week.

Growth rebounded to 7.9 percent in the second quarter, after slowing to 6.1 percent in the first, the weakest pace in almost a decade.

In Asia, Singapore and Hong Kong emerged from recessions last quarter, as did Germany and France in Europe.

“China’s FDI is still healthy compared to the global slump in investments,” said Commerce Ministry spokesman
Yao Jian at today’s briefing. “We can say that China is one of the most attractive places for investments.”


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