IMF's Rato - China currency policy constrains all Asia

(Reuters) - If China let its yuan currency find its value more freely, other Asian nations' currencies could appreciate without fear of losing exports, International Monetary Fund chief Rodrigo de Rato said.

In a speech prepared for delivery on Saturday to a bankers' conference in Bangkok, Thailand, Rato suggested that China's managed currency was helping fuel potentially dangerous protectionist sentiments. The text was released in advance in Washington.


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India, Indonesia, Malaysia, Taiwan, Thailand: Asia Local Bond Preview

(Bloomberg) -- The following events and economic
reports may influence trading in Asian local-currency bonds
today. Yields are from the previous session.

China: The government will further tighten monetary policy
after increasing lending and deposit rates last week, Hong Kong
Monetary Authority Chief Executive Joseph Yam said on Hong Kong
Commercial Broadcasting radio yesterday. Yam urged investors to
be careful as financial markets are growing more turbulent, the
broadcaster reported. The government will sell 28 billion yuan
($3.7 billion) of six-month notes tomorrow.


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Hainan Air Says Profit Probably Rose More Than Eightfold on Cheaper Fuel

(Bloomberg) -- Hainan Airlines Co., a Chinese
carrier backed by U.S. billionaire George Soros, said first-half
profit probably surged more than eightfold on lower jet-fuel
prices and a stronger yuan.

Net income in the six months ended June 30 likely jumped
more than 750 percent, the Haikou, Hainan island-based company
said in a Shanghai stock exchange statement today, without
elaboration. Profit in the first half of 2006 totaled 20.8
million yuan ($2.7 million).


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China Xi'an Aircraft to sell up to $872 mln in shrs

(Reuters) - Proceeds will fund the purchase of 3.07 billion yuan of civil
aviation assets from the parent firm and other aviation projects,
it said.




Xi'an Aircraft International, which like its parent company
is part of state aircraft maker AVIC I, is also a supplier of
parts for the country's first self-developed regional jet, the
ARJ21, due for its maiden test flight next Spring.


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U.S. Senator Grassley Says Henry Paulson Has `Pussyfooted' on China's Yuan

(Bloomberg) -- U.S. Treasury Secretary Henry Paulson
has ``pussyfooted'' on the issue of the yuan, which hasn't risen
``fast enough,'' said Senator Charles Grassley, who's calling for
a bill to counter the benefits Chinese exporters are getting.

The law on determining currency manipulation ``gives the
secretary of Treasury too much leeway,'' Grassley said in an
interview from Washington yesterday. Some U.S. legislators deem
the yuan's 9.4 percent gain since the end of a dollar link in
July 2005 as insufficient to narrow the trade deficit with China.


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China, Indonesia, Philippines, Taiwan, Thailand: Asia Local Bond Preview

(Bloomberg) -- The following events and economic
reports may influence trading in Asian local-currency bonds
today. Yields are from the previous session.

China: The central bank sold 10 billion ($1.3 billion) yuan
of one-year zero-coupon bonds at a yield of 3.0928 percent
yesterday. China Development Bank will auction 20 billion yuan of
10-year floating rate bonds today. The Ministry of Finance will
sell 35 billion yuan of three-year fixed-rate notes on July 13.


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China's Trade Surplus Soars to Record $26.9 Billion, Surpassing Estimates

(Bloomberg) -- China's trade surplus soared to a
record $26.9 billion in June, outpacing economists' estimates
and supplying extra ammunition for U.S. lawmakers threatening
sanctions unless the yuan appreciates faster.

The surplus almost doubled from a year earlier after
exporters rushed to beat cuts to export tax rebates. The median
estimate of 15 economists surveyed by Bloomberg News was for a
$23.8 billion trade gap. The customs bureau released the figures
on its Web site.


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Shanghai copper up 2.4 pct, LME in sight of $8,000

(Reuters) - Shanghai copper rallied more than 2 percent on Tuesday following a 2 percent surge in London futures to a seven-week high as the dollar fell and threats to supply focused attention on limited metal stocks.

The most-active September copper contract on the Shanghai Futures Exchange rose 2.4 percent or 1,540 yuan to 65,810 yuan a tonne at 0212 GMT.


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China Shenhua May Raise $6.3 Billion in Biggest Share Sale by Coal Company

(Bloomberg) -- China Shenhua Energy Co. is planning
the world's biggest share sale by a coalminer to raise as much as
$6.3 billion for expansion as demand for the fuel surges.

The nation's largest coal producer plans to sell as many as
1.8 billion yuan-denominated shares in Shanghai, Shenhua said in
a statement to Hong Kong's stock exchange yesterday. The Beijing-
based company will use the money to expand coal, power and
transport operations and for domestic and overseas acquisitions.


Read more at Bloomberg Energy News

Equity plunge drags Shanghai copper down 1.9 pct

(Reuters) - Shanghai copper shed nearly 2 percent on Monday and dragged London futures lower after China's main equity market tumbled over 4 percent on concerns that the government would do more to curb growth.

The most-active September copper contract on the Shanghai Futures Exchange was down 1,210 yuan, or 1.9 percent, at 63,050 yuan at the close.


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Qinhuangdao Coal Prices Rise to Record on China Summer Electricity Demand

(Bloomberg) -- Prices of coal at Qinhuangdao,
China's largest port for the fuel, rose 8 percent to a record as
the country increased consumption of electricity in summer.

The price climbed 40.38 yuan ($5.30) a metric ton to 560.40,
without shipping cost, for immediate delivery for the week ended
June 15, according to the McCloskey Group. Coal producers
additionally pay as much as 40 yuan for every ton they mine as a
fee toward conserving the country's natural resources.


Read more at Bloomberg Energy News

Malaysian Ringgit Climbs as Yuan May Spur Gains; Government Bonds Advance

(Bloomberg) -- Malaysia's ringgit rose for a third
day on speculation a strengthening yuan will help boost the
nation's exports to China, its fourth-largest export market.

The ringgit extended last week's gain, the biggest in more
than six months, after the yuan posted its largest advance since
a decade-old peg to the dollar was scrapped in July 2005. Bank
Negara Malaysia abandoned its own fixed-exchange rate within an
hour of that announcement. China widened the daily trading limit
of the yuan to 0.5 percent from 0.3 percent last month, allowing
faster gains to help reduce its trade surplus.


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Microsoft to buy stake in China's Sichuan Changhong

(Reuters) - Under a memorandum of understanding, the Chinese company
would place 15 million new shares with Microsoft at a price of
6.27 yuan each, a 37 percent discount to its last traded market
price of 9.93 yuan.




The deal would give Microsoft a stake of nearly 1 percent
in Sichuan Changhong, according to Reuters calculations. The
U.S. software giant would be a long-term, strategic investor,
Sichuan Changhong said.


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Paulson Resists Lawmakers' Demands to Cite China for Currency Manipulation

(Bloomberg) -- U.S. Treasury Secretary Henry Paulson
resisted Congressional demands to accuse China of currency
manipulation, while chiding America's second-largest trading
partner for an ``undervalued'' yuan.

The yuan ``is undervalued and market sentiment clearly
favors appreciation,'' the Treasury said in its semi-annual
review of currency policies released today in Washington. China
didn't meet the technical definition of manipulation because the
U.S. couldn't determine the intent to seek a trade advantage.
China's trade surplus with the U.S. surged to a record in 2006.


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UPDATE 1-U.S. Treasury to issue forex report on Wednesday

(Reuters) - The report to Congress had been due in April but was
delayed until after last month's "strategic economic dialogue"
talks with Chinese officials who visited Washington.




Congressional anger has been rising over what lawmakers
regard as Beijing's refusal to let its yuan currency rise in
value as the United States incurs steadily rising record
deficits on trade with China.


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Shenzhen Development Bank's Shares Surge After Company Raises Stock Offer

(Bloomberg) -- Shares of Shenzhen Development Bank
Co., controlled by buyout firm TPG Inc., surged by the daily
limit as trading resumed after the bank increased an offer to
investors to make all its stock tradable.

The stock gained 1.39 yuan, or 5 percent, to a record 29.24
yuan at 9:30 a.m. in Shenzhen. Shares of Shenzhen Development
have more than doubled this year, making it the best performer
among the nation's 10 publicly traded lenders.


Read more at Bloomberg Emerging Markets News

Yuan Little Changed After Governor Zhou Says Currency Gains `Fast Enough'

(Bloomberg) -- The yuan was little changed after
central bank Governor Zhou Xiaochuan said gains in the currency
are ``already moving fast enough.''

U.S. legislators have pledged to proceed with sanctions on
imports from China unless the yuan rises faster than the 8.2
percent gain since the end of a dollar link in July 2005. Vice
Premier Wu Yi said the U.S. shouldn't resort to threats and trade
sanctions, damping speculation China will agree to demands for
faster currency appreciation to help solve global imbalances.


Read more at Bloomberg Currencies News

India, Malaysia, South Korea, Thailand, Singapore: Asia Local Bond Preview

(Bloomberg) -- The following events and economic
reports may influence trading in Asian local-currency bonds
today. Yields are from the previous session.

China: The government may allow qualified foreign
institutional investors to buy an additional $20 billion of
yuan-denominated stocks and bonds, China Business News reported
yesterday citing unidentified government officials. The
expansion of the so-called QFII program from the current $10
billion quota may be the result of the second Strategic Economic
Dialogue this week between the U.S. and China, the government
newspaper said.


Read more at Bloomberg Bonds News

PC maker Lenovo back in the black

(Reuters) - Lenovo, which in 2005 bought out IBM's PC division for $1.25 billion, will now grapple with a galvanised Acer Inc., which replaced the Chinese firm as the world's third-largest PC maker in the January-March quarter.




And it might have to wage a price war with Dell, which introduced a PC for as little as 2,599 yuan in the world's second-largest PC market, Lenovo's home turf.


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Yuan at post-reval high ahead of US-China talks

(Reuters) - The yuan hit its fourth consecutive post-revaluation high against the dollar on Tuesday as Chinese vice premier Wu Yi prepared for key trade talks in Washington, but dealers held to expectations the currency will appreciate only gradually over the long term.

The central bank set the yuan's mid-point at a much higher 7.6551 before the opening on Tuesday, up from 7.6652 on Monday, when the bank widened the yuan's daily trading band to 0.5 percent on either side of the mid-point, up from 0.3 percent.


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