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In the News

Blackstone pursuing China deals after exiting Evergrande JV

(Reuters) - Private equity investment house Blackstone Group LP (BX.N) said on Thursday that it is actively pursuing further property investments in China, after a fund it controls turned a profit on the sale of its stake in a real-estate joint venture with Evergrande Real Estate Group Ltd (3333.HK).

"We are strong believers in the long-term growth prospects for the real estate market in China and will be looking for further such investment opportunities for our funds," Senior Managing Director Stuart Grant told Reuters in a statement.

Late on Wednesday, Evergrande said in a filing with the Hong Kong Stock Exchange that one of its subsidiaries had bought back a 40 percent stake in the Royal Scenic Peninsula housing development in Guangzhou for $161.6 million.

The sellers were MB Asia Real Estate Fund, which Blackstone now runs and that owned 69.2 percent of the stake, and hedge fund Elian Properties, which owned 30.8 percent of the stake.

Based on filings, that suggests the investors made close to double their investments in the project.

Blackstone has $38 billion in property holdings around the world, including the Hilton hotel chain and Universal Studios in Florida. It has 70 property investments in Asia, with about $4.5 billion in capital invested in the region.

In September, Blackstone sold its 95 percent holding in the Channel One shopping mall in Shanghai to New World Development Co Ltd (0017.HK). Although local media characterized the sale as a Blackstone retreat from China, the company still rates the country as one of the most attractive markets in Asia.

Private equity funds typically hold property for about five years. MB Asia fund, at the time run by Merrill Lynch, invested in the Guangzhou project in 2007. Blackstone took over running of the fund in November 2010.

Last March, Blackstone paid $9.4 billion for 593 shopping malls in the United States to CNPR Ltd (CNP.AX), an Australian company sagging under its debt burden.

Evergrande is the second-largest developer in China, by sales volume. On Monday it forecast sales of 80 billion yuan ($12.67 billion) for this year, with management expecting a "very weak" first quarter for Chinese developers.

Evergrande shares were up 2.8 percent by the midday trading break, outperforming a 1.1 percent gain in the Hang Seng Index finance/markets/index?symbol=hk%21hsi">.HSI.

New-home prices in China fell 0.3 percent in December, from the previous month, the third straight month of declines.

Web link: http://www.reuters.com/article/2012/01/19/us-blackstone-china-idUSTRE80I09K20120119


China Life Leads Gains in N.Y. Index on Lending: China Overnight

Jan. 19 (Bloomberg) -- Chinese stocks in the U.S. advanced, led by China Life Insurance Co., on the prospect policy makers will allow banks to boost lending to help avert a slowdown in Asia¡¯s fastest growing economy.

The Bloomberg China-US 55 Index of the most-traded Chinese stocks in the U.S. rose 0.5 percent to a two-month high of 101.22 yesterday in New York. China Life, the nation¡¯s biggest insurer, rose to a one-month high as Goldman Sachs Group Inc. named it a ¡°long-term winner.¡± New Oriental Education & Technology Group Inc. rebounded from yesterday¡¯s 11 percent slump on speculation the drop was excessive.

China¡¯s central bank will let the nation¡¯s five biggest banks increase first-quarter lending by as much as 5 percent from a year earlier, according to two people at state banks with knowledge of the matter, declining to be named because the move hasn¡¯t been announced. Economic growth decelerated to the slowest pace in 10 quarters in the three months to Dec. 31 as Europe¡¯s debt crisis curbed export demand.

¡°Even small policy moves in China would be interpreted very positively¡± by investors, said Jeff Papp, a senior analyst in Lisle, Illinois at Oberweis Asset Management Inc., which helps invest $700 million in China. ¡°More and more data this year confirms that they have the ability now to make some moves, so you¡¯ve probably seen some people try to front run those moves.¡±

The People¡¯s Bank of China reduced the amount banks must set aside as reserves by 50 basis points, or 0.5 percentage point, in December to 21 percent and hasn¡¯t moved the nation¡¯s lending rate since July, when it was lifted to 6.56 percent amid quickening inflation.

IMF Plans

The Shanghai Composite Index dropped 1.4 percent to 2,266.38 yesterday, after climbing the most since October 2009 on Jan. 17. The Standard & Poor¡¯s 500 Index gained 1.1 percent to 1,308.04 after the International Monetary Fund said that it plans to raise as much as $500 billion in lending to insulate the global economy against a worsening of Europe¡¯s woes and a worldwide slowdown.

China¡¯s ¡°small easing steps are going to continue,¡± Tian Hou, chief executive officer of T.H. Capital LLC in Beijing, said in an interview with Bloomberg Radio yesterday. ¡°From the trend point of view, the stock market will go up this year.¡±

American depositary receipts of Beijing-based China Life climbed 4.8 percent to $41.51, the highest level since Dec. 7. Goldman Sachs analyst Nick Hartley said the company was one of 33 ¡°long-term winners¡± among global equities that offer attractive entry points. The stock has risen 12 percent this year after a 40 percent slump in 2011.

Chinese ETF Climbs

Three analysts maintained ¡°buy¡± or ¡°hold¡± recommendations on China Life yesterday, while Credit Suisse Group AG downgraded the company to ¡°neutral.¡± The insurer¡¯s income from premiums in 2011 was 318.3 billion yuan ($50.4 billion), according to a regulatory filing on Jan. 17, compared with 318.2 billion yuan in 2010.

The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., advanced 1.9 percent to $38.32, the highest level since Nov. 8. The yuan was little changed at 6.3120 per dollar yesterday, according to the China Foreign Exchange Trade System.

New Oriental, China¡¯s largest private education service provider, jumped 7.7 percent to $24.09. The company¡¯s U.S.- traded stock slid to the lowest level since October on Jan. 17 as a sales forecast for the quarter ended in February 2012 missed analysts¡¯ estimates.

¡®A Bit Overdone¡¯

Four strategists reiterated their ¡°buy¡± or ¡°outperform¡± recommendations on New Oriental stock yesterday while two maintained ¡°hold¡± or ¡°neutral¡± ratings.

The decline in the share price after the earnings report ¡°is a bit overdone,¡± C. Ming Zhao, an equity analyst at Susquehanna International Group LLP in Boston, wrote in a Jan. 17 research note.

ADRs of Aluminum Corp. of China, the nation¡¯s biggest maker of the metal, traded 2.3 percent higher than the share price in Hong Kong, the biggest premium since Dec. 22, according to data compiled by Bloomberg. The stock rose 1.6 percent to $12.52 in New York, taking the advance over the last six trading days to 16 percent.

¡°Further central bank coordination could ultimately alleviate concerns about economic failure in Europe,¡± which is bullish for metals, a report by Bloomberg Industries said yesterday. Additional monetary policy easing in China may also help boost business confidence and visibility, the report said.

Solar Support

Suntech Power Holdings Co., the biggest solar-panel maker, surged 15 percent to a four-month high of $3.70.

Chinese solar-module makers enjoy ¡°offensive, unlimited state financing,¡± Germany¡¯s Environment Minister Norbert Roettgen said yesterday at a conference in Berlin. That support may be designed to ¡°drive out German companies as competitors to reach a technology leadership or even a technology monopoly.¡±

China plans to develop three gigawatts of solar capacity this year, double its existing capacity, the National Energy Administration said on Jan. 11. on its website.

Web link: http://www.businessweek.com/news/2012-01-18/china-life-leads-gains-in-n-y-index-on-lending-china-overnight.html


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