Archive for the ‘China’ Category

Nokia launches first handset on China Mobile 3G standard

nokia logoHere at Emerging Voice, we have been following the the whole Nokia / China Mobile / 3G story for a good while, you can pick up on some of those previous posts here : Nokia in China

Today, Nokia has finally launched it’s first TD-SCDMA compliant handsets the Nokia 6788, which was built from the ground up for China Mobile.


Nokia (NYSE: NOK) today announced the Nokia 6788, its first device for TD-SCDMA – China’s domestic 3G standard, at an event in Beijing. The Nokia 6788 is the result of close collaboration between Nokia and the world’s largest mobile phone operator, China Mobile.

Speaking at the event, said Olli-Pekka Kallasvuo, CEO of Nokia: “Nokia sees TD-SCDMA as being central to the successful evolution of 3G in China, and so is fully committed to this 3G standard. With a wide range of integrated China Mobile applications, the Nokia 6788 marks a new level of collaboration with China Mobile and offers enriched experiences to China’s 3G users. Nokia plans to introduce more TD-SCDMA phones in the near future, further boosting the development of this 3G standard in China.”

“We are excited to see the launch of Nokia 6788,” said Mr. Lu Xiangdong, Vice President of China Mobile Communications Corporation. “With extensive experience in the China market, Nokia will provide Chinese consumers with TD-SCDMA solutions that are perfectly catered to their needs. Such cooperation between the world’s largest operator and the world’s leading mobile phone manufacturer will provide an important boost to the development of TD-SCDMA in China.”

The Nokia 6788 is specifically designed for China Mobile’s (NYSE: CHL) network and offers rich data services. It is an all-in-one device that provides its users with faster Internet speeds and download times. Featuring a 5-megapixel (2592 x1944) camera with a dual-LED flash, a 2.8″ QVGA display, and the hugely-successful Symbian S60 platform, the Nokia 6788 allows people to instantly share the things that matter to them most.

& here’s some pics

Nokia 6788

we apologise for the Engadget style of this post, but it’s been a long time coming !!

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ChiNext launch poses problems as well as opportunities

MARKETS-CHINA-STOCKS-RECORDThis week, China will be launching a ground breaking new secondary market & trading platform that hopes to help smaller technology companies attract investment in domestic IPOs.

Small & Medium Sized Enterprises (SME’s), are the mainstay of the Chinese economy, as they provide the largest employment base as China moves towards a more enterprise based economy. However, smaller companies have found it difficult to raise funding, as the large commercial banks concentrate on state owned enterprises.

Shenzen based ChiNext, which is being hailed as a Nasdaq style trading board will begin trading on Friday 30th October in the hope that traded entities will be able to take advantage of excessive liquidity, expecially in retail investment markets. It is believed that investors will be attracted to new opportunities to stake a claim in up & coming tech startups, but also by the more relaxed trading environment, as companies listed on ChiNext will not face the Byzantine rules that are applied to A & B class share issues in Shanghai.

“The launch of ChiNext represents a milestone in the development of China’s financial markets and is an important part of the government’s plans to boost support for small and medium-sized firms,” said Jing Ulrich, Managing Director of China equities at JP Morgan, Hong Kong. “The board will provide an additional source of financing for younger companies while broadening the options available to investors.”

More importantly, it is expected that ChiNext will also draw in private equity & venture capital firms, which are critical to helping startups gain a foothold in global markets. According to Jackson Wong from Tanrich Securities, these investment vehicles will be more likely to take part, since they have more routes to cash out on their investments, with an avid pool of retail investors ready to speculate.

“The launch of the growth enterprise board is an important step towards implementing the national strategy on promoting innovation,” Shang Fulin, chairman of the China Securities Regulatory Commission, said last week. The first 28 companies to list on the board, ranging from software to medical equipment makers, have raised 16 billion yuan (US$2.3 billion) in their initial public offerings — more than double initial forecasts.

Well known China investor Jim Rogers (he of the dickie bow) according to this report from CCTV is watching the new bourse with great interest, although he hasn’t invested in any of the companies that will IPO this week, any move he makes in the near future is bound to be followed by Sinophile investors

So far, more than 9 million people have opened  trading accounts with the ChiNext platform, fuelling fears that there may be some price fluctuations in the offing. According to CCTV.com, the average price-earnings ratio for 28 companies  due to list on Friday is 56, which is a hefty premium on the average 25 encountered on comparable listings on the Shanghai A list.

Wang Yiwen, GM of Shanghai Deding Investment Management  said, “The IPO prices for those firms have been set very high. This will cause pricing and trading issues for the secondary market. Take the SME board at the A-share market as an example. When the SME board starting trading in June 2004, 8 firms got listed. Their share prices all opened and ended higher on that day. But prices soon started declining after 5 to 10 trading days, with some losing nearly half their values.”

So it would seem that we will see some initial decay, but all in all, this is an exciting move for China’s retail investors individually & global investors as a whole. Hopefully ChiNext will give some small domestic companies a financial springboard which will allow thenm to accelerate growth before performing secondaries in Hong Kong & on the NASDAQ & NYSE in the future.

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Negative signals for Chinese economy, will they take heed

CHINA STOCKS FALLWhile the Chinese economy expanded 8.9% in Q3, propped up by easy credit & continued government spending programmes, Europe, US & Japan continue to flounder. The world’s 3rd largest economy has recorded 7.7% overall growth in the first 9 months of 2009, with officials saying they are confident that the much talked about annual growth target of 8% will be acheived.

Last November, as it became clear that the global economy was heading into a recessionary period, central government implemented a 4 Trillion yuan/$586 Bn stimulus package, aimed at cushioning the blow of decreasing exports on the economy whilst also improving industrial efficiency at all levels. Via this stimulus package, China has implemented a number of schemes that impact practically all sectors in the economy;  real estate/construction, transportation infrastructure, agriculture, social services, industry, earthquake reconstruction, technology advancement & rural development being amongst those receiving special focus.

The strategy has paid off, with growth rising to 7.9% in Q2 from 6.1% in Q1 2009. Figures show that industrial output has risen 8.7% in the first three quarters of the year, and 12.4% in July-September, which would seem to signal accelerated demand from domestic purchasers, keen to take advantage of low cost loans to invest in the expected turranround for China in 2010.

However, while surging purchases of coal, iron ore & other raw materials have helped mining majors such as Vale & BHP Billiton the impact of China’s comeback has mainly been one of improving global sentiment than of actually driving growth, according to Stephen Green, economist for Standard Chartered Bank in Shanghai.

“Exports remain the key weakness for the Chinese economy,” Moody’s Economy.com economist Alaistair Chan said in a report yesterday.

Our view is that it is time for those investing in China to pay attention to people like Chan, as investment via the stimulus package has accounted for nearly 88% of GDP growth this year. Central government  investment in factories, construction & national infrastructure has risen by one third in the first three quarters of this year to a record 15.5 trillion yuan (US$2.27 trillion).

As the economy “flourishes”, this heavy reliance on public works & other investments could be masking long term issues for the Chinese economy. Impressive as China’s ability to ride out the storm has been, companies desperately need to restart exports to offset the economies depenfdance on fiscal hand outs.

This week China’s leaders have also  signalled concern over these obvious imbalances in the economy, with the State Council saying policy must shift to dealing with waste and other associated problems of high growth.

“In the first three quarters, the pace of economic growth quickened,” the State Council said “At the same time, we also are clearly aware that there are still difficulties and problems in the economic and social development of our country.”

So it looks as though there are a number of challenges ahead for China in the near future. The stimulus package has obviously been deployed in a much more effective manner than in Europe & the US, however China has not had the crippling effects of masssive credit & huge write downs in it’s nascent financial sector. Although the Chinese have made a number of efforts to open new markets through bilateral trade agreements & an accelerated FTA programme with neighbouring countries in Asia & it’s BRIC partners, it cannot fully offset the real factor of dependancy on Western markets indefinitely.

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Baidu clinches mobile search for China Unicom

baidu9Baidu, Inc., the leading Chinese language Internet search provider, today announced it has entered into a strategic partnership with China Unicom (Hong Kong) Limited to provide wireless search for China Unicom’s 3G mobile subscribers.

Under the agreement, Baidu’s wireless search service will be embedded in China Unicom’s 3G mobile phone modules. China Unicom’s mobile subscribers will be able to use preinstalled applications to access Baidu products including web search, Baidu Knows, Baidu Post Bar, image search, news search, MP3 search and other useful services. Baidu (Nasdaq:BIDU)will also provide search functions within China Unicom’s wireless Internet sites to service the carrier’s users.

”We are very excited to join hands with China Unicom (NYSE:CHU) today following our partnership agreement with China Telecom (NYSE:CHA) in May,” said Xuyang Ren, Baidu’s Vice President of Marketing and Business Development. ”As the leader in Chinese language search, we hope that Baidu’s cooperation with major telecom providers in China will accelerate the development of 3G services and allow us to provide the rapidly growing population of mobile search users better access to information.”

This can be seen as a major coup for Baidu, as it has once again managed to pip it’s major competitor Google at the post. For China Unicom this is also a boon, with the upcoming launch of Apple‘s iPhone on their 3G network.

Original editorial : MyStockVoice.com

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Bullish future for Chalco

chalcoA number of new reports coming out of China & other industry & economic factors point to the Aluminum Corporation of China Limited (CHALCO) entering into a new growth phase, which has me looking at the ADR from a fairly bullish stance.

Chalco (NYSE:ACH), which is by far the largest domestic producer of finished aluminium & holds a national monopoly on alumina. It runs a national network of 34 subsidiary operations & has a 26.6% stake in Yunnan Copper, the second largest copper producer in China.

Abroad, Chalco has been very active on the acquisition front, in 2007, it acquired development rights in the Aurukun project in Australia, which will be coming online in 2011, which is slated to provide 6.4 mtpa of bauxite & 2.1 mtpa of refined alumina. 2008 saw it acquiring the Peru Copper Company for a snip at $860 million & along with it the development rights for Toromocho which is estimated to hold more than 15 billion tonnes of high grade ore.

Not all has been complete plain sailing, however,  as the company bought into 12% of Australia’s Rio Tinto last year in partnership with Alcoa. But failed this year to acquire a further 18% for a chunky $20Bn after a shareholder revolt & Australian fears that Chinese companies were getting their hands on mineral assets at knock down prices.

To cap off the supply side, as we reported yesterday, it looks as though China has managed to secure access to vast bauxite resources in Guinea, the majority of which will go to supply Chalco refining & smelting operations.

Looking at the Chinese economy as a whole & at one or two of the sectors in more detail, I can see a building demand for aluminium starting in the short term.

China National News has reported trade figures for September that show a marked slowdown in exports, down only by 15.2% from September 2008. Considering that overall, Chinese exports have been on a decrease of around 31% for the year, this is a strong signal that Chinese manufacturing is back on the rise.

Figures released by the China Association of Automobile Manufacturers today, show that the auto sector is still enjoying sustained growth, with more than 1.3 million units being sold in February, as 78% increase on a year ago. So far 9.66 million units have been sold in China in 2009, a jump of 34% on the same period in 2008. With this continued growth in the sector, aluminium demand will also continue to grow in line.

In aviation, China has made some great advances in the last 10 years, moving from maintenance & repair, to engine manufacture & now construction of airliners. We have seen Airbus centre it’s Asian operations for A320 assembly in Tianjin, alongside Eurocopter, whilst Beijing is investing over 10 billion yuan in an “aviation city” that will support aircraft manufacturers. Domestic useage of commercial aircraft has seen astonishing growth this  year, with a 43% rise in passenger air traffic being registered. Now China is looking to build it’s own flagship airline brand to take on incumbents Boeing & Airbus. State-owned Aviation Industry Corp. of China, (Avic) which is producing the ARJ21, recently predicted the country will need 3,796 new passenger planes by 2028 to keep up with domestic demand for air travel, adding to its present fleet of 1,191.

Need I say more ?

Courtesy of Peter Medved at MyStockVoice

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China in “Scramble for Africa”

Guinea

Guinea

Chinese interest in acquiring “strategic assets” continues unabated, with recent acquisitions & investments in a number of companies in Australia & South America.

As we saw in last weeks bullish approach regarding Nigerian oil, China is looking a little further afield & it’s all seeing eye has settled upon Africa. The latest country to be courted is the Republic of Guinea as China seeks to gain access to the West African nation’s large mineral deposits.

The impoverished nation possesses more than 25 billion tonnes of bauxite ore, with more than 150 mineable deposits having been prospected to date. Additionally, Guinea’s mineral wealth includes more than 4 billion tonnes of high-grade iron ore, significant diamond and gold deposits & as yet undetermined quantities of uranium. Bauxite exports account for more than 75% of GDP, according to Wiki sources.

Guinea’s Minister for mines was quoted in the Financial Times as saying that the Guinean government is in talks with the China International Fund (CIF) regards a $7Bn investment into a number of projects including infrastructure, minerals & oil.

“Instead of just giving natural resources… in exchange for promises of developing our infrastructure, we decided to take the joint venture approach and co-own not only the infrastructure development companies and projects, but also whatever natural resource companies or projects are developed jointly.” said Mohamed Thiam “All the government’s stakes in various mining projects will be put in that mining company. Future mining permits or concessions that the government decided to develop on its own will be put in that company,”

China still doesn’t seem to be too picky regarding who it does business with, as the present Guinean government is a military dictatorship that has recently put down a bloody coup last month. 150 people were killed on September 28, when troops opened fire on a crowd  gathered in  the capital Conakry, in order to protest at ongoing corruption in Captain Moussa Dadis Camara‘s rule.

Sidya Toure, who leads the only effective opposition & is a former prime minister was quoted “I do not understand how you can believe that we can inject this kind of money into the economy of Guinea where the total gross domestic product is only three billion dollars.”

CIF is also planning to form a consortium with the Guinean government & near neighbour Angola’s state oil company Sonangol to look at prospecting for oil off Guinea’s coast. As we reported previously, West Africa has become a hotbed of speculation & investment, as new oil fields are coming under development in Ghana, Angola, & Senegal. It is considered likely that offshore Guinea will also provide new hydrocarbon deposits that can be exploited.

What is interesting is that CIF on the face of things, does not seem to be an officially backed government company, whereas all the recent deals have been undertaken either by the Chinese Development Bank or via large state owned enterprises such as CNOOC or Chalco. CIF is registered in Hong Kong & an inspection of the website gives very little information on the structure of the entity.

Last November, as it became clear that the global economy was heading into a recessionary period, central government in Beijing implemented a 4 Trillion yuan/$586 Bn stimulus package, aimed at cushioning the blow of decreasing exports on the economy whilst also improving industrial efficiency at all levels, with energy receiving a special focus.

Adopting various measures such as tax reductions, rebates, fiscal subsidies, improved access to credit & direct government expenditure, central government has been encouraging state owned oil companies such as Petrochina & CNOOC to expand foreign investment in upstream opportunities, whilst increasing domestic refining capacity & oil product stockpiles.

We have seen a number of examples of this with Russia signing a 20 year $25Bn oil supply contract in February, which will see Rosneft supplying up to 300,000 bpd of oil via it’s East Siberia-Pacific Ocean (ESPO) oil pipeline to China. This was closely followed by the China Development Bank extending a $10Bn loan to Brazil’s state owned company Petrobras in return for securing strategic oil supply contracts & this month CNOOC has made a bid to acquire more than 16% of Nigeria‘s stated oil reserves.

It would appear that sentiment is currently running against Western based IOC’s & countries in emerging markets that have currently untapped or underdeveloped  hydrocarbon deposits are enjoying the ability to play interested parties off against one another. What is interesting to me is the fact that China seems to be playing Guinea at arms length via what is in effecr a shell company, allowing them to hold up a clean pair of hands on an international basis.

This desire to secure resources at what would seem “any cost” should, in our opinion, receive close attention from both a geo-political & investment point of view. IOCs will not be able to compete in areas where there are no rules, particularly in Africa, whilst it looks like China will circumvent accepted norms using any available route to acheive their aims.

Original article published at MyStockVoice

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Olympic Dam upgrades & expansion crucial to BHPs future operations


bhp logo

Mining giant BHP Billiton has announced revised figures that significantly upgrade the reclaimable reserves for its flagship Olympic Dam operation in southern Australia.

New figures released by BHP (NYSE:BHP) point to a 22% increase from 284 thousand tonnes to 347.5 thousand tonnes of of U3O8, due to mineral re-classification as operational drilling taps into larger sources. BHP has correspondingly upgraded the operational lifetime of Olympic Dam from 43 to 54 years.

Olympic Dam is arguably BHP’s most valuable asset, as it is a multi-mineral source combining the world’s 4th largest copper deposit, 5th largest gold deposit & significant amounts of silver. It is also currently the world’s largest single uranium ore deposit.

With a production level of 3344tU last year, Olypic Dam is placed 4th in extraction levels for uranium, BHP are now looking to expand the size of their operations on this site. At present, all mining activities are conducted underground, however, BHP has submitted an expansion plan to local government that would see open pit miningf being introduced to the site. With government expected to make a preliminary decion on the expansion project next year, this is a critical time for BHP, as the following chart illustrates.

Olypic_Dam

In an earlier post, we discussed the impact of Sino energy requirements on Australian miners, as the Chinese are heavily commited to reducing pollution & are searching for cleaner energy sources to power their expanding economic requirements. In April this year, Chinese officials announced they would start building five extra power plants this year on top of the 24 already under construction & 11 already in operation.

“There are not enough uranium resources in China to support the aggressive nuclear power development plan for the next 20-30 years,” said Professor Liu Deshun, of China’s Institute of Nuclear and New Energy Technology. “Australia has the uranium resources that could be exported and in China we have the demand”

Earlier this year, BHP managed to successfully expand into the Yeelirrie deposit in Western Australia, which is estimated to  have a 10 to 12-year lifespan and a resource of 35,000 tonnes of uranium,  as a result of the Western Australian government lifting a six year old ban on uranium extraction in the state. With this prescedent & also the ability to secure long term supply contracts to China, Australian Minister for Resources, Martin Ferguson, has indicated the Federal Government was unlikely to stand in the way, subject to environmental and investment tests.

In the short term, this could also have a large knock on effect on the share price of some of it’s key competitors, namely Freeport McMoRan & Rio Tinto. Rio is also a top producer of uranium ore, with it’s Ranger Mine in Kakadu, which currently supplies 10% of global requirements, any uplift in BHP’s production capacity is sure to impact that figure.

More interestingly for me, there has been much speculation that BHP could be looking to acquire Freeport McMoRan (NYSE:FCX)  in order to bolster their gold & copper production, however, referring to the anticipated production uplift in both of these commodities if the expansion plan is successful, why would BHP Billiton look at dishing out more than $27 Bn, when they could integrate on an existing site?

The Australian government is also more likely to sponsor the expansion project in my point of view, as it will keep the majority of that cash pile invested in the country & help to secure more than 15,000 jobs directly & indirectly for the lifetime of Olypic Dam. Perhaps readers of the WSJ should think a little more on geo-political terms when voting on nonsensical polls.

Original editorial at MyStockVoice.com

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