Monday, December 03, 2007

China Dolls' Whspers

Following up on how China Mobile surged on corporate developments, players of Chinese H-shares covereds would be disadvantaged for failing to keep in tune with the latest whispers. Here are some of the latest whispers with respect to those H-shares covereds on KLSE.

ICBC & Bank of China - The company is rumoured to be making a bid for a stake in Swiss investment banking giant UBS. This is similar to the troubles Citigroup and Bear Stearns found themselves to be in. Looks like UBS would also be needing some form of capital injection. While the two banks are the rumoured aggressors, a deal with ICBC is more likely than with Bank of China.

Shenhua - The company had been invited to take a small stake in Adaro prior to its listing in Jakarta next year to raise US$750m but Shenhua declined to take that up. Apparently Shenhua is very interested but would like a bigger stake. Shenhua is rumoured to be persuading Adaro to shelve their listing plan and instead allow Shenhua to take up a bigger stake. Adaro is controlled by several investors including Edwin Soeryadjaya, son of the founder of the Indonesian car firm Astra International, and entrepreneur Sandiaga Uno. Indonesian laws encouraging corporate transparency provide a tax break on capital gains earned when a stake is sold through a stock offering. Regulations limiting foreign ownership in the country's coal firms to 49 per cent are also waived if the acquisition takes place through a share sale. Shenhua is cashed up and looking for acquisitions after raising US$9 billion from an initial offering in Shanghai in September and has long had Indonesia in its sights. Shenhua, which listed in Hong Kong two years ago, has also indicated it was looking at acquisition targets in Australia and Mongolia. To control Adaro, Shenhua may have to fork up US$4 billion.

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