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BREE warns on Chinese coal imports

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Recent moves by China to place tariffs on coal do not necessarily signal a decline in overall coal use, but could reduce growth in coal imports over the remainder of the year, according to a report by Westpac and the Bureau of Resources and Energy Economics (BREE).

The China resources quarterly report found nominal gross domestic product growth in the third quarter has been the slowest since the Asian Financial Crisis, excluding the GFC period.

But China’s electricity use has continued to grow, albeit at a slower rate. 

Several policies targeting coal imports were announced by Beijing during the September quarter, and while some of the policies were designed to reduce coal use and imports in heavily-populated areas, they were mostly implemented to support the struggling domestic coal sector, the report said.

"These announcements do not necessarily signal a decline in coal use, but may reduce the growth in coal imports over the remainder of the year," the report said.

More clarity over how the restrictions will affect Chinese imports will be provided by Beijing towards the end of the year, but the general consensus is that the regulations will have a limited effect on China’s imports and is more likely to affect domestic coal, the report said.

Growth in mining investment had slowed significantly in the year to date, with coal mining and ferrous metals smelting among the weaker segments. 

The principal sources of the economic slowdown have been weakness in real estate and heavy industrial investment, with firm exports and solid infrastructure spending proving partial offsets.

But the report said the Chinese economic growth is still slightly below its potential.

Lower prices for commodities have been driven largely by the increase in supply but have also been dragged lower by falling demand.

Australia’s bulk commodity export volumes have increased significantly, as the big miners bridge the falling price gap by expanding output.

To stem overproduction and halt downward pressure on prices, local Chinese governments plan to punish coal mines operating above approved capacity. Companies that exceed production limits will be fined and have their licence suspended.

Australia’s coal exports to China were up 1.3 per cent in the year to September 30, but the value of those exports declined 17 per cent to $744 million.

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Westpac-BREE reports says Chinese tariffs may reduce coal imports for remainder of year.

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HK lifts yuan conversion limit for locals

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Hong Kong plans to scrap a daily limit on the amount of Chinese yuan that residents can buy, which is aimed at helping a stock-trading link with Shanghai, though analysts say this could add to a potential shortage of the currency.

Residents in Hong Kong have been bound by a 20,000-yuan (US$3,264) conversion limit since 2004, and that cap will be scrapped Monday when a landmark trading program between the Hong Kong and Shanghai stock exchanges kicks off. An 80,000 yuan limit on how much they can send into China will stay in place.

The measure has been long-awaited and is part of a suite of efforts Hong Kong’s de facto central bank has put in place this month to help manage the program.

But with the cap lifted, analysts have warned of a potential shortage of yuan, or a liquidity squeeze, if there is heavy demand for the currency as global investors look to snap up equities in China.

In recent weeks, the cost to borrow yuan in the money markets has moved sharply higher, with the three-month rate hitting a 16-month high this week. It was at 3.36 per cent Wednesday. Analysts say they expect funding costs to remain high as demand for the yuan rises.

“Given Hong Kong’s limited deposit pool, its renminbi market is vulnerable to liquidity squeeze,” analysts from Singapore bank DBS said in a research note Wednesday, referring to the currency’s other name.

The Hong Kong Monetary Authority, though, has been making efforts to make sure there is enough yuan on hand. Last week it appointed seven banks, including Standard Chartered PLC, BNP Paribas, HSBC Holdings PLC and Citibank, as “primary liquidity providers” to manage demand for yuan in Hong Kong and act as lenders to other market participants. It also announced a measure to ensure the adequate supply of the currency during trading sessions.

On Wednesday, Hong Kong Monetary Authority Chief Executive Norman Chan said the offshore yuan liquidity pool now stands at more than 1.1 trillion yuan (US$179 billion), which he says would offer sufficient liquidity for Hong Kong residents’ yuan transactions.

Removing the limit would make it “much more convenient for Hong Kong residents to buy and sell renminbi. It won’t only facilitate the [Shanghai-Hong Kong Stock Connect], but also will help development of other wealth-management products settled in renminbi,” Mr. Chan said.

Yuan-denominated investment products like cross-currency structured deposits and yuan-linked deposits that target local residents betting on an appreciating currency have been popular bets in the city and are expected to rise with the increased yuan limit.

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Move coincides with Nov. 17 launch of Hong Kong-Shanghai stock connect.

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Tencent posts 46% rise in profit

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HONG KONG—Chinese Internet giant Tencent Holdings Ltd. posted a 46 per cent increase in third-quarter net profit, but revenue from mobile games, an important growth engine, fell because of a delay in the rollout of new software updates for the company’s games.

Tencent executives attributed the decline to new requirements from Apple Inc. to let users play its games without requiring them to be members of the Chinese company’s social-media and messaging services. New game content was also delayed for Google Inc. ’s Android operating system as game developers worked to add in this new feature for Apple, Chief Strategy Officer James Mitchell said during a conference call Wednesday.

The 13 per cent decline in mobile-game revenue in the quarter contributed to weaker-than-expected earnings and illustrates how Tencent’s mobile games are still dependent on other platforms such Apple’s iOS despite the company’s efforts to launch games on its own virtual storefronts.

Founded in 1998 and based in Shenzhen, Tencent dominates China’s mobile-games market, with at least six of the country’s 10-highest-grossing games on Apple’s iPhones in September, according to market researcher App Annie. Part of Tencent’s secret is its success with popular online messaging apps, Weixin and QQ, which the company has harnessed to channel users to its games. The company competes with Alibaba Group Holding Ltd. , which in September raised US$25 billion in the world’s biggest initial public offering of stock and overtook Tencent as China’s biggest Internet company by market capitalization. Tencent has market value of close to US$150 billion, above eBay Inc. and Twittter Inc.

Earlier this year, Tencent launched another app store for Google’s Android mobile operating system called Yingyongbao to attract more outside game developers to its platform using revenue-sharing arrangements.

Tencent said revenue from smartphone games integrated with QQ and Weixin—known as WeChat outside China—fell to 2.6 billion yuan (US$424 million) during the third quarter from about three billion yuan in the second quarter.

Mr. Mitchell said the decline in mobile-game revenue was a “temporary blip” because of the issue with Apple. Apple only began to require so-called guest logins in the quarter ended in September and didn’t approve new software updates for Tencent’s games until the feature had been added, said two Tencent-backed game developers familiar with the matter. One developer said they had to launch their game for Apple’s iOS mobile operating system one month later than on Android, while another said a software update for their game was delayed by about a month.

Apple didn’t reply to a request for comment.

“We’re optimistic that there will never be unexpected guidelines in the future that we need to comply with,” Mr. Mitchell said, adding that most of its games added the feature by October.

Net profit at the company, which is listed in Hong Kong, increased to 5.66 billion yuan for the three months ended Sept. 30 from 3.87 billion yuan a year earlier, but missed analysts’ estimates for profit growth of 57 per cent. Revenue rose 28 per cent to 19.8 billion yuan, also missing analysts’ expectations.

Tencent’s bottom line was also dragged down by higher general and administrative expenses, which rose 45 per cent from a year earlier because of an increase in staff and research-and-development costs. Share-based compensation expenses rose 46 per cent.

Tencent’s online-games business, which includes mobile games, continued to be an important driver of revenue growth for the conglomerate, which dominates the sector. Tencent said online-games revenue rose 34 per cent to 11.3 billion yuan from a year earlier, but was flat from the second quarter. Online-advertising revenue rose 76 per cent. Though Tencent is dominant in online personal-computer games, its leadership in mobile games faces more challenges.

“Tencent’s position in the mobile-games sector is leading, but there are a lot of upcoming competitors that are trying to shake its position,” said Chenyu Cui, an analyst at IHS Technology.

Leading up to Tencent’s earnings, investors and analysts had expressed concerns about a slowdown in its mobile-games business, considered crucial to growth as the number of people in China who access the Internet on mobile phones and tablet computers exceeds those who use the Internet on desktop computers. The mobile-games sector in general is pressured by slowing growth in the shipment of smartphones in China, Ms. Cui said. Also, the life cycle of mobile games appears to be much shorter than that of PC games, the best of which can remain popular for a decade.

“It looks like Tencent needs to roll out a lot of games quarter over quarter to keep users addicted to Tencent’s mobile games,” Ms. Cui said.

Tencent’s social-messaging platforms, WeChat and QQ, enjoy a virtual monopoly in China, and growth in the company’s social-networking sites’ user bases is watched closely.

For the third quarter, the company said there were 819 million monthly active users of QQ and 468 million users of Weixin and WeChat, which rivals WhatsApp.

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Earnings came in below analysts’ forecasts.

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China shows off new stealth jet fighter

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China's new stealth jet fighter rockets skywards as Beijing puts on an unprecedented display of openness and military force at the country's premier airshow.

The black J-31 rose in a nearly vertical climb on take-off in Zhuhai before circling back and rolling twice in its first announced public appearance.

The plane's existence has been the subject of rumour and speculation for years, with photographs appearing increasingly frequently on military websites in recent months.

Defence analysts say the J-31 is China's answer to the United States' F-35, though the Chinese jet lags behind the American one technologically.

The fighter's Chinese name is Falcon Eagle and it is manufactured by a unit of Aviation Industry Corp of China (AVIC), whose defence arm uses the slogan: "We are making the best weapons for guardians of the peace."

The plane's debut comes amid tensions between China and its neighbours over territorial disputes, particularly Japan which has feuded with Beijing over a group of islands in the East China Sea.

China's air force said the display of military might at the airshow showed the intention to build a strong country.

China has steadily increased its defence budget for years, with funding projected to rise more than 12 per cent to $US132 billion ($A142.82 billion) in 2014.

But the US has accused Beijing of under-reporting its spending by as much as 20 per cent in the past.

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Defence analysts say the J-31 is China's answer to the United States' F-35.

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PM hones his Chinese takeaway message

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Politics is a game of managing expectations.

The cold water being poured on the hype over the impending free trade deal with China is a classic example.

Prime Minister Tony Abbott is widely expected to sign an historic deal with China on Monday, when President Xi Jinping addresses federal parliament.

In Beijing for the APEC summit earlier this week, Abbott warned that he could not guarantee that any agreement would cover all subjects in "exactly the way we might like".

"Let's build the first storey and then in a year or two we can build the second storey and maybe even a third storey," the PM said.

Nationals leader Warren Truss, who will have the unenviable job of soothing the pain of farmers who miss out, has also joined the game this week.

"It won't be absolutely free in every regard and no other free trade agreement is," the deputy PM said.

Agriculture is always a difficult issue, he says, conceding that Australia didn't get all it wanted in the FTA with the USA a decade ago.

Farmers would expect there to be benefits for agriculture in any new free trade agreement.

"I think we are realistic enough to know that no one ever gets absolutely everything they want."

The Nationals constituents know that past FTAs have not all lived up to expectations.

Merchandise exports to the US were just over $9.6 billion in 2013, while Australia imported almost $27 billion from the US.

A Productivity Commission study in 2010 found the increase in national income from such agreements was likely to be modest.

The commission received little evidence from business to indicate that bilateral agreements to date have provided substantial commercial benefits.

Instead, the commission said that domestic economic reform offered much larger economic benefits.

The lower price China is paying for Australian resources such as coal, gas and iron ore could also undermine the benefits of the new FTA.

However, it's not all doom and gloom.

Analysts say consumers could benefit from as much as $1 billion being shorn from tariffs on imported Chinese clothes, shoes, cars and electronics.

Making it easier for Chinese state-owned investors to pump money into agriculture, tourism, infrastructure and mining will bring new capital.

Chinese Premier Li Keqiang earlier this week said Beijing was keen to invest especially in constructing and upgrading Australian rail lines, highways and airports as well as food processing.

The issue of more Chinese investment is a sensitive political issue that will need to be carefully managed by the Abbott government.

The figures to date are modest - capital from China accounts for about 3.4 per cent of all foreign investment in Australia.

Also welcome will be cuts to tariffs on dairy, beef, wine and horticulture.

Australian service industries such as banks, legal advisers, engineers, insurers and fund managers are expected to gain from more consistent licensing and cuts to red tape.

Students and young people looking for work will have easier access to visas.

"It's certainly a big deal," says HSBC economist Paul Bloxham.

But the specific details of how it will benefit Australian businesses and consumers remain unclear.

There's a lot at stake.

Two-way trade between China and Australia was nudging $150 billion in 2013, with more than a third of our exports heading there.

Abbott won't be resting on his laurels after sealing the China deal.

As Indian Prime Minister Narendra Modi visits Brisbane for the G20 summit, addresses parliament and wows the crowds over several days, behind the scenes talks are well in train for an FTA with his country.

Senior government figures believe that could be achieved within 12 months.

Having struck deals with Japan, Korea, China and India, the prime minister's task will be to translate them into jobs, a balanced budget and a second term.

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Government begin to lower expectations on FTA outcome.

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US Republicans slam China climate deal

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House Speaker John Boehner has warned that President Barack Obama is waging a "crusade" against affordable energy, after the United States and China reached agreement on curbing greenhouse gas emissions.

"This announcement is yet another sign that the president intends to double down on his job-crushing policies no matter how devastating the impact for America's heartland and the country as a whole," Boehner said after Obama and his Chinese counterpart Xi Jinping signed a landmark agreement at a summit in Beijing.

"It is the latest example of the president's crusade against affordable, reliable energy that is already hurting jobs and squeezing middle-class families."

Boehner was quickly joined by the Senate Republican leader Mitch McConnell, who said he was "particularly distressed" by the deal, which sees the two global powers achieve breakthrough cooperation in the fight against climate change.

"I read the agreement requires the Chinese to do nothing at all for 16 years, while these carbon emission regulations are creating havoc in my state and other states around the country," McConnell told reporters as he met with newly elected Republican senators.

The assessments mark the sharpened tip of the Republican Party spear in the battle over climate change in the US Congress, where Republicans will control both chambers from January 3 after Obama's Democrats suffered humiliation at last week's midterm polls.

Outgoing Senate Majority Leader Harry Reid hailed the US-China pact as one that could spur other countries to join in the climate change fight.

"The historic announcement... is exactly what is needed to ensure that America's efforts to clean up our energy supply are replicated around the world," Reid said.

Boehner noted how the House of Representatives passed several bills to "rein in" the Environmental Protection Agency's regulations on carbon emissions and other energy issues.

The legislation stalled in the Democratic-held Senate, but with Republicans taking over, Obama may be confronted with energy legislation that reaches his desk next year.

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House Speaker John Boehner warns that President Barack Obama is waging a "crusade" against affordable energy.

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Aust on wrong climate tram, Keating says

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The historic climate agreement between China and the US shows what a "complete nonsense policy" the Abbott government's Direct Action policy is, former Labor prime minister Paul Keating says.

China, the world's biggest greenhouse gas emitter, has set a goal for its emissions to peak at 2030, or earlier if possible.

The country will also look to increase the non-fossil fuel share of all energy to around 20 per cent by 2030, while the US set a goal to cut its own emissions of the gases blamed for climate change by 26-28 per cent from 2005 levels by 2025.

In comparison, Australia has an emissions reduction target of five per cent by 2020 under the government's Direct Action policy.

Mr Keating described the China and US targets as "very ambitious", and criticised the Abbott government's decision to scrap the carbon tax.

"It shows what a complete nonsense policy the government has," he told ABC Television.

"The carbon tax was there to ... price pollution. When you stop pricing pollution (and) you start gifting money to polluters, you know you're on the wrong tram."

Labor and the Greens took aim at the government after the historic agreement was announced on Wednesday, accusing Tony Abbott of sticking his head in the sand when it came to tackling climate change.

Environment Minister Greg Hunt says Australia will take the China-US deal into account when it considers its post-2020 emissions reduction targets.

It would do so after next month's UN climate talks in Lima, he said.

"We've always said that this is something that we'll consider during the first half of the coming year after the Lima conference," he told ABC Radio.

"Our position on that remains exactly the same."

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US-China climate agreement shows up Direct Action as a "complete nonsense policy" says former PM.

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China industrial output up 7.7%

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China's industrial production, which measures output at factories, workshops and mines in the world's second-largest economy, rose 7.7 per cent in October from a year earlier, the government says.

Retail sales, a key indicator of consumer spending, increased 11.5 per cent in the same month, the National Bureau of Statistics said on Thursday.

Fixed asset investment, a measure of government spending on infrastructure, expanded 15.9 per cent year-on-year in the first 10 months.

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Government says key indicator of economy up 7.7%, while retail spending rose 11.5%.

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Chinese housing sales slide moderates in October

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China's housing-sales slide moderated in October as some buyers returned to showrooms, after Beijing announced a loosening of mortgage rules to support the market.

For the first 10 months of the year, housing sales fell 9.9 per cent to 4.64 trillion yuan ($US757 billion), according to data released by the National Bureau of Statistics on Thursday. Sales were 4.05 trillion yuan in the first three quarters -- down 10.8 per cent from a year earlier.

In October, housing sales totaled 585.9 million yuan, down 3.1 per cent from a year earlier, which was slower than the 10.3 per cent decline recorded in September, according to calculations by The Wall Street Journal. On a month-to-month basis, sales in October were down 5.5 per cent from September's 620.2 million yuan.

The statistics bureau doesn't give data for individual months.

Weaker sales momentum this year has also dried up developers' appetite for land purchases and other real estate-related investment. Property investment in the first ten months of the year rose 12.4 per cent to 7.72 trillion yuan, slowing from 12.5 per cent growth in the first nine months.

New construction starts in the January-October period measured by area fell 5.5 per cent to 1.48 billion square meters. This compared with a decline of 9.3 per cent to 1.31 billion square meters in the first nine months.

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Shift follows Beijing's loosening of mortgage rules to support the market.

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Chinese industrial output growth slows

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China's economy showed fresh signs of sluggishness in October, as industrial output growth posted surprising weakness.

Analysts said the manufacturing sector, an important driver of the world's second-largest economy, continued to face economic headwinds -- though they added that accelerated government spending could still give production a boost before the end of the year.

Data on retail sales and fixed-asset investment also released on Thursday offered further indications of a slowdown, though they were largely in line with expectations, said Haibin Zhu, economist at JP Morgan.

"The industrial output was the biggest disappointment today," Mr Zhu said.

Industrial output in China rose 7.7 per cent in October from a year earlier, slowing from an 8 per cent on year increase in September, the National Bureau of Statistics said. October's increase undershot the median 8 per cent gain forecast by 11 economists in a Wall Street Journal survey and reversed an uptick recorded in September after a slow August reading.

On a month-to-month basis, industrial production increased 0.52 per cent in October from September. In September, it climbed 0.91 per cent from the preceding month.

China's economic growth has been sluggish this year, pulled down by a weak property sector and tight credit conditions. Some analysts have questioned whether growth will reach the government's target of about 7.5 per cent this year, though Beijing officials in recent months have stressed that they see the target as a rough range. Growth slipped to 7.3 per cent on year in the third quarter from 7.5 per cent in the second quarter and 7.7 per cent for all of last year. The third-quarter pace was the slowest since the first quarter of 2009, as the global economy was grappling with the financial crisis.

China has tried to speed up approvals for investment in railways and other infrastructure projects and it has eased some of the curbs on the property sector, another key part of economic growth. Mr Zhu said these policies could start to show some impact in the coming months. Still, it has fallen short of the massive lending binge it unleashed during the financial crisis, which rekindled growth but saddled parts of the economy with debt.

In October, heavy industry continued to show weakness, largely reflecting overcapacity in the steel sector. Crude-steel output in the month was down 0.3 per cent from a year ago while cement was also down and average electricity production was up a weak 1.9 per cent.

Data released earlier this month hinted at slower industrial output in October, when the official manufacturing Purchasing Managers' Index, a gauge of factory activity, fell to a five-month low.

Fixed-asset investment in non-rural areas rose 15.9 per cent in the January-October period compared with the same period a year earlier, slower than the 16.1 per cent increase recorded in the January-September period. The rise in the closely watched indicator of construction activity undershot economists' median forecast of a 16 per cent gain.

For the first 10 months of the year, housing sales were down 9.9 per cent, according to official data released on Thursday. But Fan Zhang, an economist at CIMB in Shanghai said the worst may be over for the property sector. In October alone housing sales fell 3.1 per cent from a year earlier, according to Wall Street Journal calculations based on the data. Construction spending, as captured in the official fixed-asset investment figures released Thursday, already showed an improvement in October.

"We should see a mild improvement in property investment" in November and December, Mr Zhang said.

Meanwhile retail sales rose 11.5 per cent in September from a year earlier, slowing slightly from an increase of 11.6 per cent on year in September. Economists were expecting a rise of 11.6 per cent in October.

 

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October print shows 7.7 per cent lift in output, disappointing expectations.

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Banks wrap up preparation for HK-Shanghai trade link

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When staffers at Goldman Sachs Group assemble in their Hong Kong offices here on Saturday at 7.30am, the gathering will mark the final trial run of a new stock trading link with Shanghai, which is billed as a key component of Beijing's efforts to open up its economy.

The early morning gathering, where traders will be fed doughnuts and jian-bing, or Chinese pancakes, will bring to an end months of preparation by banks and brokerages in Hong Kong and Shanghai. The program begins Monday and will allow as much as $US49 billion in fresh investment into China, from thousands of new investors. It was unveiled by Chinese Premier Li Keqiang in April this year.

Goldman Sachs conservatively estimates that it alone has spent about 30,000 man-hours preparing for the launch. The bank has had at least 150 people working on the project, spanning several departments including compliance, sales, technology and legal, in addition to other areas.

"From the moment it was announced, it became the number one priority for Goldman in Asia," said Christina Ma, managing director of equities for Asia Pacific, excluding Japan. Ms Ma said she had to cancel two vacations in the run-up to the launch.

Goldman Sachs is just one of the many large global and Chinese banks operating in Hong Kong that have been bulking up on infrastructure and resources in preparation for the program. And larger brokerages have been snapping up smaller rivals in an effort to capture the expected growth in trading volume.

Under the new link, known as Shanghai-Hong Kong Stock Connect, China will allow investors much greater access to its stock market. The program will allow global investors to invest in companies that had been largely cut off from foreign money.

"We will have orders day one from every corner of the world," said Kevin Rideout, the Asia Pacific head of wholesale execution services at Citigroup Inc.

China has been gradually opening up its economy by liberalising its capital markets and allowing its currency, the yuan, to be traded outside of the country.

The Shanghai-Hong Kong Stock Connect program will allow all investors to buy shares on the Shanghai Stock Exchange, while also permitting wealthy investors in mainland China to buy Hong Kong-listed stocks. The move allows investors access to companies with an overall market value of about $US2 trillion.

For global banks, the new link will open up a new source of brokerage and trading fees.

"This is a huge game-changer," said Nicole Yuen, head of Greater China equities at Credit Suisse AG. "We will be intermediating investments into a far bigger universe," she said. The Swiss bank has expanded its research coverage of listed Chinese stocks by adding more than 300 companies to its list, bringing the total to 800.

The new program has a daily limit of $US2.1 billion for investment into Shanghai-listed shares, with an overall cap of $US49 billion. The overall amount mainland Chinese investors can invest in Hong Kong stocks is $US40.8 billion, which will be capped at $US1.7 billion a day.

"I can't think of anything quite as large in its objectives as this," said Ian Cohen, HSBC Group Holdings PLC's chief operating officer for equities in Asia Pacific.

And Western firms won't be the only beneficiaries. Moody's Investors Service said the new trading link will generate additional annual trading volume and revenue of 5 billion yuan ($US820 million) for Chinese brokerages, the equivalent of 6.6 per cent of the industry's 2013 income.

"Among China's securities firms, Citic Securities Company Limited, Haitong Securities and China Merchants Securities will benefit the most, owing to their established operations in Hong Kong," Moody's said in a statement.

Still, some concerns remain. Even though banks say their trading infrastructure is in place, investors are seeking clarity from China on the tax treatment of their investments and on some controls placed on trading, among other issues. The Asia Securities Industry & Financial Markets Association has said it expects quiet trading on the first day of the program.

For the banks though, it is all systems go, Goldman's Ms Ma said.

"We told everyone, no night out on Sunday. We want everyone bright eyed and bushy tailed," Ms Ma said.

 

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Investment firms hail new source of brokerage, trading fees ahead of Monday's launch.

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Rinehart in China dairy JV

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Mining magnate Gina Rinehart plans to join forces with a Chinese industrial giant in a $500 million joint venture to export infant milk powder from Queensland to China.

It is believed Mrs Rinehart’s flagship company Hancock Prospecting will be the majority stakeholder in the Hope Dairies partnership, which will own farmland and build a processing facility in southeast Queensland.

The Chinese partner is believed to be the China National Machinery Industry Corporation, a state-owned enterprise that has been looking to invest in Australian dairy operations for some time.

The Beijing-based group is a sprawling conglomerate with more than 100,000 employees.

It has interests in manufacturing farm machinery and has been ramping up its investments overseas.

The move, expected to be announced by Queensland Premier Campbell Newman tomorrow, comes just days ahead of the ­expected announcement of a free-trade agreement between Australia and China that will potentially lower tariffs on dairy exports from Australia.

Much of China’s imported ­infant formula now comes from New Zealand, which has a free-trade pact with Beijing.

Demand for imported milk powder in China has soared since a poisoning scandal in 2008 turned consumers off the local product.

The Australian understands the Hope Dairies joint venture has ­recently invested in a number of farms in southeast Queensland to supply the proposed plant.

While mining remains Mrs Rinehart’s main game, it is ­believed her move is motivated by her belief in Australia as a food bowl supplying produce to rapidly growing Asian markets, and her desire to ensure the sector remains Australian owned.

She has recently moved to buy a 50 per cent stake in two large ­cattle properties in Western Australia’s Kimberley for $40m as she steps up her financial interests in the sector.

A spokesman for Hancock Prospecting said: “Mrs Rinehart has had a life-long association with agriculture in Australia and this export project will be a great boost for the Queensland dairy industry and the country.”

Chinese investors have been circling Australia’s agricultural sector for years and last year ­famously bought Cubbie Station, the largest irrigated property in the southern hemisphere.

Recent interest from China has been in milk production. The Australian recently revealed that the Chinese-government-owned Beijing Agricultural Investment Fund had committed to spending $3 billion on Australian dairy, beef, lamb and aquaculture assets.

Details of the Hope Dairies venture are expected to be ­revealed tomorrow, when Mr Newman presides over the signing of a memorandum of understanding between Mrs Rinehart and the Sinomach group.

Mrs Rinehart, Australia’s richest person, recently bought a $14m property in Brisbane, setting a new record for a house sale in the Queensland capital.

This article first appeared in The Australian Business Review.

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Mining magnate agrees $500m deal to export infant milk powder from Queensland.

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Why China is torpedoing the G20’s corruption initiative

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Global anti-corruption efforts have been dealt a blow, as an agreement Australia hoped to unveil at this weekend’s G20 summit looks set to be torpedoed by China.

The proposal sought to create a public ownership register to prevent people from hiding their financial affairs through shell companies and other opaque practices.

China’s last-minute disruption of the anti-corruption scheme is peculiar given the enthusiasm with which it pursued the issue just days ago at the APEC summit in Beijing.

China’s graft-busters have been applying pressure to countries such as the US, Canada, New Zealand and Australia to help them repatriate corrupt officials and their ill-gotten loot.

According to China’s central bank, over 18,000 officials have made off with more than $US123 billion since the mid-1990s -- and that’s a conservative estimate.

Given that Global Financial Integrity, a non-profit organisation based in the US, estimates that about $US2.8 trillion was siphoned out of the middle kingdom between 2005 and 2011, it’s not hard to see why the Chinese government would like to claw some of that back.

Beijing is now even offering to share up to 80 per cent of forfeited assets with countries that help recover funds that have been illegally transferred out of the country.

At the APEC summit in Beijing this week, China managed to corral member states to sign up to an “ACT-NET” initiative aimed at facilitating information sharing on corruption.

Under the agreement, the network will be headquartered with the CCDI, the widely feared discipline watchdog of the Chinese Communist Party.

The highly secretive extra-legal body answers only to the Communist party leadership and has no formal right to arrest or press charges. The CDDI’s internal disciplinary processes, known as ‘shuang gui’ are notorious for involving torture and abuse.

To get APEC member countries to sign up to the network was quite the coup for China’s authoritarian leaders. By obtaining the imprimatur of APEC member states, the CDDI was given a whole new level of legitimacy on the world stage.

But much to the chagrin of the CDDI, the most-favoured destinations for corrupt officials -- the US, Canada and Australia -- don’t have extradition treaties with China due to their distrust of the country’s legal system.

In Beijing this week, Foreign Minister Julie Bishop says Australia is now considering signing up.

Kerry Brown, the head of the University of Sydney's China Studies Centre, told China Spectator that agreements like these are fine as long as there is a common understanding of corruption between the two countries.

“Corruption corrodes Australian interests in China, and we should cooperate where legitimate,” he said.

“But Australia better have a pretty clear sense of the division between an anti-graft campaign and a political purge, and most experience in China shows the line between these is feint and shifting.”

The fact is that the anti-corruption campaign Xi Jinping has been waging since late 2012 has been as much about preserving Leninist single-party rule as it has been about genuinely rooting out corruption (China’s anti-corruption drive is a party tactic to preserve power, 31 October).

According to a Voice of America report, as at September 2014, all of the 48 most senior ‘tigers’ caught in the corruption campaign hail from humble backgrounds and none are princelings or offspring of senior party leaders.

In other words, Xi Jinping’s own faction has been spared, while their rivals have been vanquished.

And therein lies the reason Beijing was so keen to push its own anti-corruption agenda at APEC, but is shying away from alternative proposals at the G20.

Maggie Murphy, a senior advocate with the global corruption watchdog Transparency International, and who heads the organisation’s advocacy work at the G20, told China Spectator that the G20 proposal would actually help the Chinese international anti-corruption crusade dubbed ‘Operation Fox Hunt’.

“If G20 Leaders adopted enhanced transparency measures on the issue of company ownership, it would contribute towards Operation Fox Hunt since it would be easier to track down and identify the source of illicit funds leaving the country,” she said.

But as an investigation by the International Consortium of Journalists found at the beginning of this year, relatives of China’s political elite have been stashing huge amounts of cash in offshore accounts (Chinese leaders linked to secret offshore haven, 22 January).

Among those implicated in the leak were the brother-in-law of President Xi Jinping, the son and son-in-law of former premier Wen Jiabao, a cousin of former president Hu Jintao and the son-in-law of China’s late ‘paramount leader’ Deng Xiaoping.

According to estimates reported by ICIJ, between $US1 trillion and $US4 trillion in untraced assets have left China since 2000 -- much of that via opaque corporate methods.

Simply put, a rigorous corporate transparency regime would mean that China’s top leaders would be exposed themselves.

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While China is engaged in a determined push to root out corruption at home, it has wavered on addressing the issue at the G20.

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US–China emissions deal will put pressure on Australian growth

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While most of the world is celebrating the US–China pact on climate change, the deal puts pressure on the Australian government and resources companies to rethink relations with China.

The deal, signed at the APEC summit in Beijing this week, includes agreement to cut emissions and work together to mitigate the impact of climate change. For the first time China has set 2030 as the year in which its emissions are expected to peak. The deal creates a common framework with the United States, the other largest greenhouse gas producer in the world, to take action.

Chinese President Xi Jinping started the APEC summit hoping for blue skies in the capital. With this deal, he is showing he is prepared to take action to achieve this.

For Australia this means that environmental compliance costs in China will rise. Australian companies will have additional costs of doing business there. Meanwhile Chinese companies will drive a harder bargain as their cost base lowers.

Australian resource companies, which are already suffering a dip in their relations with their largest clients, will experience more of a squeeze on their profits. This will impact Australia’s overall growth rate.

News of the agreement comes as India announces plans to stop thermal coal imports in three years. Australian coal companies will not even have a significant alternative export market to China.

This means the Australian government needs to rethink our economic engagement with China. This is not just about refocusing our export emphasis from resources to services. It is about truly partnering with China in its environmental challenges, rather than adding to them.

The Australian government’s stance on climate change is therefore even more important. It is in the unfortunate position of being totally at odds with China about a crucial economic sector and a major issue that impacts on it. It is a bad position to be in and some intellectual realignment needs to take place.

However, Australia still seems intent on taking the most parochial, least enlightened position of all G20 attendees on climate change. Abbott continues to allow vested interests and narrow definitions of Australia’s business priorities to control the agenda. These priorities emphasise protecting mining and resource companies, no matter what the long-term costs, even when they are becoming less successful with their largest client.

However, it is becoming more difficult for Abbott to defend his reluctance to be proactive on the use of renewable energy on the grounds of protecting Australian business. If the leaders of the world’s largest economies can do this, then Australia should be comfortable following them.

This weekend’s G20 meeting places pressure on Abbott to step up. It will be interesting to see how he words the G20 final communique. It may be way ahead of any previous stance on the environment that Abbott has shown a willingness to support. Will this G20 be the first time a final statement is made that all but the host nation can stand by?

There is also irony that China berates Australia for being a slavish follower of the US. The Australian government did not sign up to the Asian Infrastructure Investment Bank proposed last month because of pressure from Washington. This was despite there being many reasons why Australia should join.

On other security and economic issues, it often seems that Australian foreign policy is made in the US, not at home. Yet on climate change, where there is now a wonderful confluence between Chinese and American views, the Australian government position makes it impossible for us to support both countries.

Such diplomatic gifts rarely happen. This is a chance for Abbott to show leadership at the right place and time.

Yet there is every possibility that because of political calculations the chance will be passed up. This would frankly be a sign of staggering incompetence and short-sightedness. This generation may not hold Abbott accountable but future generations almost certainly will.

The Conversation

Kerry Brown does not work for, consult to, own shares in or receive funding from any company or organisation that would benefit from this article, and has no relevant affiliations.

This article was originally published on The Conversation. Read the original article.

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What next for China after historic climate deal?

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The Conversation

The joint US-China announcement on tackling climate change has been described as “historic”, a “turning point” and a “positive signal”. It has also been written off as insubstantive or even “hype”. The reality, perhaps unsurprisingly, lies somewhere in between. What it might represent, however, is a future that pairs economic growth with environmental concerns.

The announcement doesn’t yet represent a diplomatic success – there is no formal agreement in place – let alone a climate success. But it was an important step towards a global deal at UN-led climate talks in Paris in 2015, and it comes sooner than expected. As such, it can form a basis for further ambition: what Greenpeace China’s Li Shuo has called “a floor”– as opposed to a ceiling – for further climate action.

Li Junfeng, from Chinese government think-tank the National Centre for Climate Change Strategy, has described the pledges' significance as “more symbolic than practical”, though Zou Ji, from the same body, noted these were politically realistic targets that could reinvigorate US-China relations and deepen cooperation on climate.

Fears of a slow down?

But China, which will need to clarify not only when a peak will arrive but also how high it will be, also faces fears about the economic impact of slowing growth and the potential for consequent social unrest. China’s position on the environment is conflicted. While embracing sustainable development as a core state policy, for example in targets and investments under the latest Five Year Plan – it has long resisted internationally binding targets, emphasising the principle of “common but differentiated responsibilities”, which places the burden of climate-change mitigation on developed countries.

Though much of the government’s legitimacy rests on ensuring continued economic growth, the days of 10% growth are long over for China. The government is increasingly coming to terms with a future of slower growth. It appears to be embracing the so-called “new normal”, a model of growth characterised by economic upgrading and innovation, which state news agency Xinhua said President Xi Jinping is making his hallmark – “to be engraved in history”, no less.

Implementing reform

Central government targets will still face implementation problems. There are embedded vested interests in China’s state-owned enterprises, the vast industries responsible for much of the country’s emissions, as well as in the energy sector and local and provincial governments. Indeed, environmental governance in China is weak. It is often hampered by an official culture of secrecy and poorly aligned administrative structures that evaluate officials according to unsustainable growth metrics.

China’s rapid growth over the past 30 years was achieved in large part through devolution to powerful regional chiefs. The distance between central government and how the regions are governed is such that the difference between what is planned centrally and what takes place across provinces can have significant variance. This means that prominent green projects launched from the centre often turn out to be less impressive than the rhetoric accompanying them.

And – despite widespread public concern about environmental issues – there is a lack of institutionally supported citizen oversight to keep such tendencies in check. For example, China has open information regulations that, on paper, are in line with international norms. But the country is regrettably ill-prepared to answer inevitable questions about its record of transparency on emissions. It is a disappointing portent that during the APEC Summit in Beijing – the very meeting at which this announcement was made – the US Embassy’s air quality readings in the capital were censored.

Clean growth future

Still, the announcement may also indicate an understanding not only of the risks of inaction, but also of the opportunities of moving towards low-carbon development. These include greater efficiency and lower costs, and the opportunity to benefit strategically and economically from innovation in low-carbon technologies.

There is also growing recognition that cleaner growth is needed for sustainable development. Air pollution is an inescapable fact of daily urban life in China. And studies are beginning to indicate the health toll of pollution on the Chinese populace. One recent report found that the health and mortality burden of air pollution in China accounts for more than 10% of GDP. Yet another, by Chinese scientists, found that smog caused by coal consumption killed an estimated 670,000 people in China in 2012.

China may also see persuasive economic arguments for cleaner growth. Today China not only leads the world in renewable energy investment, but also sees innovation that’s driven by demand. For example, “disruptive” technology is being developed in the form of electric bicycles (more efficient and environmentally friendly than cars) and the world’s largest installation of solar water heaters.

Perhaps then, we are seeing a turning point that, in the words of the World Resources Institute’s Jennifer Morgan, can spur a new “race to the top” as the world approaches UN climate talks in Paris and both China and the US get serious about tackling their emissions.

The Conversation

Sam Geall receives funding from the Economics and Social Science Research Council (ESRC) via its UK-China research project "Low-Carbon Innovation in China: Prospects, Politics and Practice".

This article was originally published on The Conversation. Read the original article.

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The joint US-China announcement on tackling climate change might represent a future that pairs economic growth with environmental concerns.

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China’s CGN plans $US3bn IPO in HK

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HONG KONG -- China’s CGN Power Co plans to launch a $US3 billion initial public offering next week in Hong Kong, where it would be among the first companies to gauge investor appetite after the start of a stock-trading link between Shanghai and Hong Kong.

The so-called Stock Connect program, set to begin Monday, will allow global investors greater access to the Shanghai market and permit mainland Chinese investors to buy Hong Kong-listed stocks.

CGN Power, the country’s largest nuclear-plant operator by installed capacity, plans to take orders from investors on November 24 and to price the deal December 3 before listing on December 10, according to people familiar with the situation said Friday, adding the timetable is preliminary and is subject to changes depending on market conditions.

Investor demand for CGN shares is quite high due to the company’s unique position in China’s electricity sector, the people said.

CGN declined to comment.

At the planned size, CGN’s IPO would be the city’s largest since HK Electric Investments Ltd’s $US3.1 billion offering in January. So far this year, Hong Kong, a fundraising hub for IPOs in the Asia-Pacific region, ranks the fourth in term of fundraising amount after the New York Stock Exchange, Nadsaq and London Stock Exchange , according to Dealogic.

CGN is planning to sell about 40 per cent of IPO to cornerstone investors. In Hong Kong, bankers can sell part of the shares to be floated in an offering to cornerstone investors, which commit to buying and holding stakes for a certain period once a company has listed.

The power producer, based in Guangdong, China’s wealthiest province, is benefiting from a mandate by Beijing to cut the country’s reliance on coal. Coal generates around 70 per cent of China’s power, and its use contributes significantly to the country’s high level of pollution.

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Listing to be among first to gauge investor appetite after start of Shanghai-Hong Kong stock connect.

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Sina posts lower adjusted profit

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Chinese Internet firm Sina Corp posted a decline in third-quarter earnings excluding items as operating expenses increased, but the company said Thursday that its popular Weibo social media platform made progress in revenue and user growth.

For the fourth quarter, Sina projects revenue of US$204 million to US$210 million, excluding US$2.6 million of deferred license revenue, while analysts polled by Thomson Reuters forecast US$215 million.

Sina was an early pioneer of the Chinese Internet, providing web portals, news aggregation and fee-based information services. But the company has been overshadowed by such other giants as Alibaba Group Holding Ltd. And Tencent Holdings Ltd., and is now diversifying into such areas as online financial services.

The Twitter-like Weibo service partnered with Alibaba at the beginning of the year to launch Weibo Payment to compete with Tencent’s widely used WeChat payment services.

In April, the Chinese government revoked two Sina online-publication and distribution licenses, citing concerns over lewd content.

For the period ended Sept. 30, net income was US$133.6 million, or US$1.91 a share, up from US$25.4 million, or 37 cents a share, a year earlier. Results in the latest quarter including a US$109.2 million gain related to the sale of part of the company’s investment in Alibaba, and other items.

Earnings excluding items fell to US$13.1 million, or 19 cents a share, down from $28.5 million, or 42 cents a share, a year earlier. Analysts had expected earnings of 17 cents a share.

Revenue rose 8 per cent to US$198.6 million. Non-GAAP revenue was US$196 million, compared with the company’s projection of US$193 million to US$199 million.

Operating expenses rose to US$135.7 million from US$94.9 million, reflecting higher personnel and marketing costs and bad-debt expenses.

Weibo’s monthly active users at Sept. 30 rose 36 per cent from a year ago to 167 million.

Weibo Corp. became a separate public company in April. In its own earnings statement, the company said revenue increased 58 per cent to US$84.1 million, above the company’s guidance of US$79 million to US$82 million. It expects fourth-quarter revenue of US$102 million to US$105 million.

Weibo posted a loss of US$5.2 million, or three cents a share, compared with a loss of US$5.3 million, or four cents a share, a year earlier. Its loss excluding items was one cent a share.

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Weibo social media platform made progress in revenue, user growth.

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Global demand for gold falls

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China’s demand for gold plunged in the third quarter, the latest setback for a market already suffering from waning investor appetite.

The 37 per cent slide in China acted as a drag on global demand, which fell 2 per cent from the year-earlier period to 929.3 tons, industry group World Gold Council said in a report released Thursday.

The price of gold is 39 per cent below the record hit in August 2011, with the latest leg of the selloff tied to expectations that the U.S. economy will continue to pick up speed in coming months. Many money managers believe that could prompt the Federal Reserve to raise short-term interest rates next year. Higher rates are likely to further dim the allure of the precious metal, which yields nothing and costs money to hold.

Expectations for higher rates in the U.S. also weigh on gold in another way. Investors anticipating a rate increase have snapped up dollar-denominated assets, causing the dollar to strengthen against major currencies. That has lessened the need for gold as protection against a declining dollar, one of the reasons U.S. investors piled into gold after the financial crisis.

Some fund managers had looked to Chinese demand for gold jewelry and bullion as a potential support for prices. The world’s second-largest economy liberalized gold ownership in 2002, and gold has become a popular gift for weddings and during the Lunar New Year.

But that support has failed to materialize. A buying binge last year, when an abrupt drop in prices spurred Chinese consumers to snap up gold, has proved short-lived.

In the year ended Sept. 30, Chinese gold demand has declined 27 per cent, according to the council’s report.

The industry group in April projected that Chinese gold demand would be flat this year.

“After extraordinary growth, we have to go back to a steady market,” said Albert Cheng, managing director for the Far East for the World Gold Council. “I would say it is the new normal.”

Subdued consumer prices are a factor behind gold’s flagging popularity with Chinese buyers, said Jack Ablin, chief investment officer at BMO Private Bank, which has US$68 billion under management.

In recent years, some investors flocked to gold to protect against inflation amid worries that extraordinary stimulus programs by the world’s biggest central banks would stoke a rise in consumer prices. But the pace of consumer-price growth in China is near five-year lows.

“There really isn’t much reason to protect yourself from inflation, because there isn’t much inflation out there,” Mr. Ablin said. “As a store of value, gold is really not needed.”

Mr. Ablin has avoided gold over the past several years, believing prices for the metal have more room to fall as the Fed moves toward raising interest rates in 2015.

Still, some investors have sought gold as a haven this year after geopolitical flare-ups in Ukraine and the Middle East. That has helped stabilize gold prices, which are down 3.4 per cent this year so far.

The gold contract for November delivery settled 0.2 per cent higher at US$1,161.10 a troy ounce on Thursday on the Comex division of the New York Mercantile Exchange.

In India, gold demand surged in the third quarter, as sliding prices of gold in August and September spurred jewelry buying ahead of the festivals of Dhanteras and Diwali, occasions many Hindus consider auspicious to buy the metal.

Indian jewelry demand rose 60 per cent to 182.9 tons during the quarter from the year-earlier period, when the government imposed import curbs that drove up local prices. Jewelry demand in India also was propped up by the removal of some import restrictions on the metal earlier this year.

Combined, India and China account for half of the world’s gold demand.

U.S. consumers also bought more gold jewelry as many were more confident of an economic recovery, according to the World Gold Council.

Overall investment demand globally for gold, including bars, coins and exchange-traded funds, was up 6 per cent to 204 tons, as a selloff in exchange-traded funds slowed from the year-earlier period.

The fourth quarter may see slightly better results in China, according to the council. October’s National Day holidays could have briefly lifted demand, and the year-end holiday period also typically boosts sales, it said.

The demand for bars and coins in China is also expected to pick up heading into the Lunar New Year in February, although a government crackdown on corruption is likely to contain any exuberance, Mr. Cheng of the gold council said.

“It is being reflected in the gold market in terms of gift giving such as gold bars, which was reduced,” he said.

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A 37 per cent tumble in China acted as a drag in third quarter; ‘It is the new normal’.

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The Week Ahead

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Reserve Bank dominates domestic calendar

If it wasn’t for the Reserve Bank, the coming week would be dull on the domestic economic front. In contrast, in the US, a bevy of top shelf economic releases are expected. And in China, the focus will be on the flash manufacturing gauge, to be released on Thursday.

In Australia, the week kicks off on Monday with the Australian Bureau of Statistics recasting industry data on new car sales in seasonally adjusted and trend terms. The industry data revealed that 91,236 vehicles were sold in October, down 1.5 per cent on a year ago.

On Tuesday Roy Morgan and ANZ release the weekly consumer confidence reading alongside October data on imports of goods. This is one of the timeliest economic indicators, providing insights into business and personal spending.

Also on Tuesday the minutes of the last Reserve Bank board meeting are released. Given that the statement following the no change decision was virtually a carbon copy of the prior month, and the Statement on Monetary Policy was released last Friday, there probably isn’t any more to be gleaned on Reserve Bank thinking. But investors and analysts will still pore over the Board minutes in an attempt to uncover new insights.

On Tuesday evening the Reserve Bank Governor Glenn Stevens delivers a speech at the Committee for Economic Development of Australia Annual Dinner in Melbourne.

On Friday the ABS issues the annual State Accounts for 2013/14, detailing “official” economic growth figures for states and territories over the financial year.

Also on Friday the Reserve Bank Head of Economic Analysis Alex Heath delivers a speech at the NSW Mining Industry and Suppliers Conference in Sydney.

Overseas: US data & global flash manufacturing in focus

In the US, the week begins on Monday with data on industrial production and the influential Empire State manufacturing survey. Both indicators should show an ongoing improvement with industrial production expected to lift by 0.2 per cent in October after the 1 per cent lift in September.

On Tuesday capital flows data, the National Association of Home Builders index and the main measure of business inflation (the producer price index (PPI)) are released. A modest lift in the builders’ activity index is expected. Economists expect that the PPI fell by 0.1 per cent in October with annual inflation of just 1.2 per cent. If volatile items like food and energy are excluded, prices are likely to have risen by just 0.1 per cent in October.

On Wednesday, the focus will shift to the US Federal Reserve with the release of the minutes of the last FOMC meeting. Investors and analysts will be looking to gain any insights into the timing of future interest rate hikes.

Also the housing sector will be of focus with housing starts and building permits released. Starts are expected to have lifted by 0.8 per cent in October after a sizeable 6.3 per cent increase in September. Similarly a 0.9 per cent lift in building permits is tipped.

On Thursday no fewer than five indicators are expected. The indicators include existing home sales, consumer prices, the influential Philadelphia Federal Reserve survey, the leading index and flash manufacturing gauge. The usual data on claims for unemployment insurance is also issued.

The core reading of consumer prices (excludes food and energy) is tipped to lift just 0.2 per cent in October to be up 1.8 per cent over the year, giving the Federal Reserve ample time before needing to lift interest rates. Existing home sales are expected to have fallen by 0.3 per cent in October to a 5.15 million annual rate. And the leading index is believed to have recorded a solid 0.5 per cent lift in October.

Also on Thursday, the Markit organisation will release mid-month or 'flash' manufacturing indexes for China, European countries and the US.

Global share markets

Rewind seven years to late October/early November 2007 and sharemarkets across the globe were at or near record highs. Then came the global financial crisis, the European debt crisis and hesitant economic recoveries across the globe. Predictably sharemarkets spectacularly slumped in response to the GFC. On March 9 2009, the US Dow Jones was at 6,547, down 54 per cent from the October 9 2007 high of 14,164.

But just as spectacularly as it slumped, the Dow Jones spectacularly recovered, lifting to fresh record highs and up 170 per cent in the past 5½ years since hitting the March 2009 lows.

Similarly European markets have hit fresh record highs this year with the German Dax lifting by 160 per cent since its 2009 lows, while the UK FTSE has lifted by 90 per cent since its 2009 lows.

And while the gains have also been spectacular across Asia, markets have more work to do to return to levels of late 2007. The Japanese Nikkei remains around 8 per cent shy of the peaks in 2007 while the Australian market remains 20 per cent away from the 2007 record highs, having risen too far in the China boom. But importantly, given the significance of dividends, total returns on the Australian market are just below record highs, having risen by 120 per cent since its 2009 lows.

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Local investors and analysts will be keeping a close eye on the RBA's board minutes, while manufacturing data will hog the spotlight abroad.

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Significant investor visa scheme pulls in $2.36bn

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The government’s significant investment visa scheme is booming, with $2.36 billion invested into the Australian economy since the Coalition came into government in September last year.

The latest figure comes as the scheme sees its 500th successful applicant, Assistant Minister for Immigration and Border Protection Senator Michaelia Cash said today.

Senator Cash said the visa grant was an historic milestone for the program that has given the Australian economy a “massive boost”.

Prior to the last federal election, the scheme had received only 15 approvals in first eight months of 2013, under the Labor government.

“The SIV program is now realising its potential since the Coalition won government and we fully expect it to grow even further,” Minister Cash said.

The 500th visa was granted to an investor from China who was nominated by the Victorian government.

The Victorian government has been especially proactive in approaching Chinese investors and has an office in Beijing focussed on reeling in high net worth individuals.

Investments from the scheme range from state or territory government bonds, to managed funds and direct investment into Australian companies.

The recipient of the milestone visa says he will be bringing his family to join him in Australia.

“My wife and daughter will join me in Australia and I look forward to them integrating into the Australian culture,” he said.

The latest figures follow an announcement by the federal government that a new premium investor visa, or PIV, would offers a faster one-year pathway to permanent residency for people investing $15 million or more into Australia. 

Senator Cash also announced the government will introduce a 180-day per year residency requirement for secondary SIV applicants that aims to “encourage investment migrants and their families to settle in Australia, bringing with them their wealth and business acumen."

The Chinese government has raised concerns that the visas could provide a way for corrupt officials and business people to escape China with ill-gotten wealth.

China's Foreign Ministry spokesman Hong Lei said during a news conference in early October that the visas should not allow "corrupt elements to have shelter overseas."

Meanwhile, Australian Federal Police recently announced an unprecedented co-operation effort with the Chinese law enforcement authorities to track down economic fugitives as well as seizing ill-­gotten goods and property in ­Australia.

The Chinese government has launched a global campaign dubbed “Operation Fox Hunt” that aims to repatriate corrupt officials and their ill-gotten loot.

According to China’s central bank, over 18,000 officials have made off with more than $US123 billion since the mid-1990s.

In Beijing this week, Foreign Minister Julie Bishop said Australia is now considering signing an extradition treaty with China.

Trade and Investment Minister Andrew Robb told China Spectator this month that there had not been a problem with the SIV scheme to his knowledge.

“There is co-operation between our two police authorities to try to flush out some of these corrupt officials,” he said.

“If there is any suggestion that a person has accumulated wealth through illegitimate means, all materials are referred to local authorities in the source countries and in the case of China, to the Chinese police,” he said.

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Program ramps up rapidly under Coalition government, reaches 500th participant.

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