Category Banking & Finance

Shanghai Overtakes Tokyo as Busiest Asia Stock Market

Shares worth $5.01 trillion changed hands on the Shanghai Stock Exchange in 2009, compared with $4.07 trillion on the Tokyo Stock Exchange

By Zhang Shidong and Shiyin Chen

(Bloomberg) — Shanghai overtook Tokyo as Asia’s biggest stock market by trading value last year, as an 80 percent jump in China’s benchmark index boosted equities demand.

Shares worth $5.01 trillion changed hands on the Shanghai Stock Exchange in 2009, compared with $4.07 trillion on the Tokyo Stock Exchange, according to data compiled by Bloomberg. The Shanghai and Tokyo exchanges were ranked third and fourth globally, the Nikkei newspaper reported, citing the World Federation of Exchanges. Only the Nasdaq stock market and the New York Stock Exchange had higher trading volumes than Shanghai.

“As an emerging market, China has a very high ratio of stocks changing hands,” said Li Jun, a strategist at Central China Securities Holdings Co. in Shanghai. “Increased new share sales are also one reason behind the high turnover. It’ll probably take one year or two for China to catch up with the world’s biggest.”

The Securities Regulatory Commission on Jan. 8 approved short sales, stock index futures and margin trading. Morgan Stanley said the reforms may boost transaction volume by 50 percent, helping to usher China’s market into a “new era.”

The Shanghai Composite Index rebounded last year from a 65 percent loss in 2008 after the government introduced a 4 trillion-yuan ($585.9 billion) stimulus package, encouraged banks to advance record loans and subsidized individual purchases of cars and home appliances. Japan’s Nikkei 225 Stock Average rose 19 percent.

Shanghai has the world’s third largest stock market by market capitalization, briefly overtaking Tokyo in July 2009. New York is the biggest by market cap.

Mainland companies raised 207.6 billion yuan from initial public offerings in 2009, double from the previous year, according to Bloomberg data.

IBM Providing Credit and Financing to Businesses in China

AMD and distributors to pilot IBM’s new financing capabilities in the region

TIANJIN, China, Jan. 8 /PRNewswire-FirstCall/ — IBM ( IBM) today announced that its lending unit has signed a financing deal with Advanced Micro Devices, Inc. (NYSE: AMD) and its distributor network that will begin the flow of cash and credit in an important economic development zone in China.

Late last year, the Tianjin Government provided IBM Global Financing, the lending and leasing business segment of IBM an exclusive license to provide accounts-receivable lending (commonly referred to as ‘factoring’) in the Tianjin Binhai New Area, a key economic development zone, designed by the government to provide support for innovative business initiatives.

“One of the keys to economic recovery is the successful partnering of private and public sectors,” said Mario Bernardis, general manager for worldwide commercial financing, IBM Global Financing. “This new partnership with IBM Global Financing and the Tianjin Government will bring great benefits to businesses looking to speed up the conversion of their invoices to cash. We are grateful to the Tianjin Administrative Bureau of Industry and Commerce for granting IBM this factoring license – a first of its kind in China.”

Credit is a key concern for businesses all over the world trying to keep their balance sheets healthy. As goods and services pass through their vendor supply network, companies must sometimes wait from 90 to 120 days to get paid. With this new factoring license, IBM recently established a new operating entity called IBM Factoring (China) Company Limited. This new IBM entity will help businesses operating in the country smooth out the time lag between invoice and payment.

IBM Factoring (China) Company Limited has entered into an agreement with Advanced Micro Devices (NYSE: AMD) to factor AMD sales receivables in China. IBM Factoring (China) Company Limited will purchase receivables resulting from sales by AMD to its main technology distributors. IBM Factoring (China) Company Limited will pay AMD up front for inventory delivered to its distributor network and extend payment terms to these distributors on a flexible schedule.

“This customer-focused financing arrangement can facilitate the flow of AMD’s market-leading solutions throughout the China marketplace,” said Devinder Kumar, AMD senior vice president, corporate controller and treasurer. “Working with IBM Global Financing, our customers in the region can focus on leveraging our technology towards greater profitability and resilience, and let the payment cycle run smoothly in the background.”

IBM Global Financing has been operating in China for more than 10 years. It provides IT leasing and financing to clients across many industries in China, helping them to acquire the IT solutions they need to be successful and competitive. IBM Global Financing also supports the sales and distribution of IBM hardware and software to IBM’s Resellers. IBM’s financing operations drive channel growth through innovative programs such as payment extension programs, and through solutions to reduce collection disputes. In addition, IBM China Leasing Co offers leasing for IBM products.

A 4-trillion-yuan (585.7 billion U.S. dollars) stimulus package, backed by proactive fiscal policy and moderately easy monetary policy, has encouraged consistent gross domestic product growth in China. Economic development zones, like the China’s Tianjin Binhai New Area provide new opportunities for business — foreign and domestic — to help improve profitability and stimulate the economy.

About Tianjin Binhai New Area

Tianjin Binhai New Area (TBNA) is an economic development zone within the jurisdiction of Tianjin municipality in China. The TBNA is located at the intersection of the Beijing-Tianjin-Hebei economic zone and the Bohai Bay Rim Zone, which accounts for 17% of China’s population and 21% of its GNP.
The region serves as a major hub linking both north and south China, and connects China with northeast Asia. The Area is also one of China’s largest education and high-tech centers, with 25 universities and more than 140 research institutes.
The Tianjin Binhai New Area includes a comprehensive overland transportation network, along with highly-developed sea freight links to over 300 harbors in 170 countries and regions. Tianjin Binhai International Airport is considered one of northern China’s most important aviation freight centers.

More than 70 of the world’s leading 500 corporations, such as Motorola, Toyota and Samsung have opened offices in the Area.

For more information, please visit: http://english.enorth.com.cn.

About IBM Global Financing

IBM Global Financing (IGF), the financing business segment of IBM and the world’s premier single-source provider for multi-vendor IT financing solutions, serves commercial clients ranging from small businesses to the majority of the Global Fortune 100. With assets of $34 billion worldwide, IGF provides project financing, commercial financing and asset-recovery services to 125,000 clients in more than 50 countries.

Additional information can be found at www.ibm.com/financing/cn/zh/.

Private equity helps boost China jobs, R&D-survey

Private equity investments in China lead to the creation of more jobs and spending on research and development than their publicly listed counterparts, a survey showed on Thursday.

Private equity has sometimes been viewed with apprehension in China, particularly when large state firms have been the targets of investments.

In a survey dating from 2002 to 2008, the European Union Chamber of Commerce in China said that the economic and social impact of private equity investments was quite positive.

Total employment at firms backed by private equity grew by 16 percent over that period, twice as much as at publicly listed companies, the EU Chamber said in a report. Salaries also grew more quickly, it said.

“Private equity’s qualitative impact on hiring and compensation is helping to move China’s economy toward greater domestic consumption and more secure social stability,” it said in a report.

Research and development spending as a percentage of revenue in PE-financed firms was more than 2.5 times that of their publicly listed peers, it added.

PE-backed firms saw a 39 percent average increase in profits over that period when compounded annually, compared with 25 percent among publicly listed companies, the Chamber said. (Reporting by Jason Subler; editing by Simon Jessop)

40% in poll interested in financial industry jobs

TAIPEI, Taiwan — Nearly 40 percent of people in a new poll conducted by 1111 Jobs Bank expressed an interest in working in the financial industry, due to higher pay and better prospects for the industry in the wake of the signing of a cross-strait financial memorandum of understanding (MOU).

The jobs bank released its survey in a news conference yesterday.

The poll found nearly 40 percent of respondents thinking about entering the financial industry. Their top three reasons were: having an expertise in the area, having an interest in the area and good pay.

By market segment, over 50 percent wanted to work in banks, while 17 percent wanted to work in securities or futures trading.

At the same time, 43.59 percent wanted to work with foreign firms, 37.18 percent wanted to work with local firms, and 9.83 percent wanted to work with state-run businesses.

Some 64 percent of respondents said their interest in the financial industry increased because of the MOU, which was signed in November and will take effect in January next year. The MOU will allow Taiwan and Chinese financial operators to invest in each other’s market.

Eighty-five percent of respondents said they would like to work in China as a result of the MOU.

The top three reasons for their interest in doing so were: more challenging work, prospects for good earnings for mainland Chinese firms operating in Taiwan and a more international environment.

The top three reasons for a non-interest in working in China were: unwillingness to go to China, unwillingness to work with the Chinese people and the ever-changing nature of China’s work environment.

The survey was conducted by 1111 Jobs Bank from Dec. 2 to 15 on salary workers. A total of 1,239 eligible surveys were returned. The margin of error was plus-or-minus 2.41 percent.

Beijing on global hunt for forex reserves managers

BEIJING, CHINA: China has kicked off its first global hiring campaign for money managers to help invest its US$2.3 trillion (S$3.2 trillion) of foreign exchange reserves, the world’s largest stockpile, an official said.

The State Administration of Foreign Exchange (Safe) is seeking to improve returns on its bulging reserves and it recognises that the tumult in global financial markets has left many bankers looking for new jobs, a Safe official told Reuters.

‘It is time for us to hunt talent from overseas financial markets, as the post-crisis economic outlook becomes clear to financial professionals and their institutions,’ said the official, who declined to be named.

The administration posted job advertisements on its website in October for positions ranging from portfolio managers to research staff, though the hiring campaign has remained low-key so far. The official declined to say how many foreigners Safe hopes to bring on board.

Analysts said the global hiring campaign was part of the agency’s drive to diversify China’s currency reserves, a long-standing official goal. ‘With our foreign exchange reserves growing, the team of staff that manages the reserve assets should also be strengthened,’ said Professor Ding Zhijie at the University of International Business and Economics.

China Investment Corp, the country’s US$300 billion sovereign wealth fund, has staged two rounds of global hiring since its inception in 2007.

Safe employs about 200 reserve managers, 80 per cent of whom hold master’s degrees or higher and 40 per cent of whom hold internationally recognised professional certificates.

1,000 vie for 100 top financial jobs at China career fair

SINGAPORE: About 1,000 Singaporeans vied for 100 top financial jobs at the “Career in China Job Fair” held at Suntec Singapore on Sunday.

Jobs search website JobsDB said it is the first time high-level financial institutions from China have come together to attract talent from Singapore.

18 Chinese banks and institutions were at the fair, including Bank of Shanghai and the Shanghai Stock Exchange.

The salary ranges for the top jobs on offer were between S$100,000 and S$400,000 per year.

HSBC pledges no job cuts in Hong Kong

HSBC (0005) says it has no plans to lay off staff in Hong Kong. The assurance comes one day after the lender said it was axing 1,700 employees in Britain.
“It’s really the British side’s affair,” said Vincent Cheng Hoi-chuen, chairman of local arm Hongkong and Shanghai Banking Corp. “The European economy is not faring well, so it’s not surprising to have positions reduced or natural wastage to compete better.”

Cheng said in Hong Kong the bank has been recruiting staff, especially for frontline jobs.

HSBC sacked some 650 workers late last year and early 2009 when the global financial crisis began to bite hard, but hired 100 people in August.

And its insurance business said earlier this week it is hiring more financial services officers. HSBC will continue its Asian expansion while maintaining its present scale of its business in Britain, Cheng said.

UK rivals Royal Bank of Scotland and Lloyds Banking Group received bailouts totaling 46.5 billion (HK$595.11 billion) from the British government, but Cheng said HSBC is not facing any financial pressure.

He added the US$18 billion (HK$140.4 billion) raised from a rights issue earlier this year has yet to be used.

Cheng refuted claims that a 508 million yuan (HK$576.63 million) premium HSBC paid for its joint venture with the Bank of Communications (3328) is unfair, saying the local lender is very positive about its partner’s credit card business development in the mainland.

Cheng believes recent moderate property price adjustments have not affected HSBC’s mortgage business, adding more affordable homes may even give it a boost.

Investment banks in Asia hiring push

Investment banks are moving to increase headcount in China and India in anticipation of rising deal flows fuelled by strong growth rates in Asia’s largest developing economies.

Banks had scaled back staffing across Asia amid a dearth of merger and acquisition activity, and stagnant capital markets.

But investment banks and headhunters report renewed interest in recruiting for senior positions as confidence mounts of inc-reasing demand for services in main regional markets.

The Chinese economy is expected to grow by about 8 per cent in 2009, while India said this week its economy grew 6.1 per cent in the June quarter from a year earlier.

The strengthening econ-omic backdrop has prompted a flurry of capital raisings to help fund expansion plans. Bankers in Shanghai and Hong Kong predict a further $30bn of equity issuance this year.

According to Dealogic, corporate equity and debt issuance in India has confounded expectations, topping $26.6bn – more than in the same period last year.

Vikram Malhotra, Credit Suisse co-head of Asia investment banking, said that the bank had moved to boost headcount in such areas as financial institutions and energy. “As the momentum in the markets has continued, we have increased capacity to meet increasing demand from clients and investors, adding more execution strength as deal flow builds,” he said.

Among the bank’s recent hires are Simon Yuan, who quit Merrill Lynch to co-head its greater China financial institutions coverage. Goldman Sachs is expected soon to announce senior hires in Mumbai and Beijing.

Gokul Laroia, co-head of investment banking for Morgan Stanley in Asia, said the bank had made selective senior hires on the back of rising deal activity.

Other banks have moved to reallocate senior staff from other regions to Asia, given the relative opportunities, while some are reassigning executives to new positions in China as they seek to expand their mainland platform. JPMorgan recently moved Frank Gong, chief China economist, to an investment banking role.

Another feature is the move to create senior positions in Hong Kong, to oversee China and India from banks’ regional headquarters.

Morgan Stanley last month hired Ronan McCullough from Goldman Sachs to head its bond and loan syndicate for Asia Pacific.

Shanghai Surprise

There has been buzz lately in Asia that Hong Kong may become a has-been. As the global financial crisis gathered speed last year, Hong Kong looked relatively well insulated from the crashing markets because its banks were not heavily exposed to credit default swaps and all those other funky instruments. But the buzz is about changing politics, not markets. In April, Chinese officials announced firmly that they would like to see Shanghai become a global financial center by 2020; in the same month, Premier Wen Jiabao warned that Hong Kong must raise its game or face decline. The news was chilling for many in Hong Kong, which serves as a gateway to China for investors and is almost entirely dependent on financial services. Some 60 percent of the market capitalization of the Hong Kong Stock Exchange and more than 70 percent of its daily trading is in shares of Chinese mainland firms. Many of these are large state-run enterprises—the sort that leaders in Beijing could very easily order to trade in Shanghai instead.

Beijing pushed for Shanghai to play a bigger role as a financial center back in the early 1990s. But it didn’t take off then because Chinese financial capitalism was still relatively immature. Now the mainland markets in Shanghai as well as Shenzhen are more developed, major Shanghai banks having learned a lot from the experience of Hong Kong.

Shares in state-owned firms can be more freely traded, and the government is looking to create new kinds of securities. In the coming years, Beijing is expected to allow the yuan to trade more freely, which could give it a major role in international currency trading. But to allow markets to mature without completely losing control over them, Beijing needs traders that are competent, but also compliant—the sort it can reach and influence more easily in Shanghai than in Hong Kong, where market rules are still based on foreign law.

Chinese officials are also beefing up banking in Beijing, but given Shanghai’s historic position as a trading center and its broader reach in finance, it will likely remain the country’s key city of commerce. What’s more, the fact that the Shanghai faction in government lost power a few years back when a number of politicians were taken down for corruption means that Beijing can now better police and direct the city’s future development.

Finally, like most financial centers at the moment, Hong Kong is in a drastically weakened state. Amid the global crash, Hong Kong’s economy contracted by 7.8 percent in the first quarter of 2009, even as China’s GDP as a whole continued to grow. Now that the entire world is tipping toward Beijing’s model of state regulation, China may feel emboldened to sideline this eastern redoubt of British free-market capitalism.

So Hong Kong is searching for a new role once again. The city has adapted before—it went from selling plastic flowers 50 years ago to higher levels of manufacturing to being a global financial capital. It still has the advantage of a fully convertible currency, as well as rule of law, which remains unreliable on the mainland. And last week’s announcement that Charles Li, a JPMorgan banker with strong ties to the mainland, would take charge of the exchange in January was a sign that Hong Kong is trying hard to bolster its position. But with at least some of its old business likely to move to Shanghai and Beijing, the city needs to move beyond trading, and leaders know it. Speaking to the American Chamber of Commerce in Hong Kong recently, the city’s current stock-exchange chief, Paul Chow, acknowledged the challenge. ÒLook back over the past five years, and compare the state of [the] mainland China market in 2003 to the current state. Substantial improvements. And what will happen in the next five years? Ten years?Ó

If Beijing has its way, the answer is clear. Yet there are still opportunities for Hong Kong to rebrand itself, perhaps as a provider of consulting services to Chinese businesses—helping less-sophisticated enterprises from the mainland figure out how to sell themselves to an international audience as they expand abroad, or as an education hub, churning out M.B.A.s to work in top Chinese and Asian businesses. Either way, it will need to deal with some of the governance problems and issues of vested interests that have plagued it in recent years. Critics say Asian tycoons are able to bend market regulations to suit their whims here, and the city has yet to deal properly with its recent minibond scandal, in which many individual investors lost their life savings after unwittingly buying Lehman Brothers’ bonds through intermediaries. One of the last remaining advantages Hong Kong holds is the perception that it’s still a fairer, better-governed financial capital than Shanghai. If it can’t hold on to that, it will surely become, as former Chinese premier Zhu Rongji predicted a few years back, Toronto to Shanghai’s New York.

Deloitte To Hire 2,400 Staff for HK, China Next Year – Report

HONG KONG (Dow Jones)–Accounting firm Deloitte Touche Tohmatsu plans to hire as many as 2,400 new staff for its mainland China and Hong Kong operations, the South China Morning Post reported Monday citing a senior executive.

The hiring campaign “reflected the firm’s belief that (China’s) economy would rebound to strong growth despite the recent poor market environment around the world,” Kester Yuen, regional managing partner for southern China at Deloitte, was cited as saying.

Around 400 of the jobs will be in Hong Kong, while the rest will be based in mainland China, the report said.

It said the new recruitment will represent an increase of 18% in the headcount of the Hong Kong division and a 25% increase in the mainland China division.

Newspaper Web site: http://www.scmp.com