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CHINA'S military enterprises are encouraged to conduct group listings and are expected to raise between 50 billion yuan (US$6.75 billion) and 60 billion yuan from public share sales by the end of 2010, a senior official said. The majority of these enterprises will complete their reform to turn into shareholding companies in five years, which paves the way to trade shares publicly, said Wu Fenglai, head of the Reform Department under China's Commission of Science Technology and Industry for National Defense. In his article published yesterday in the China Securities Journal, Wu noted that military enterprises, except wholly state-owned ones, welcome foreign investment. Depending on their influence in national security, the country's military enterprises are divided into wholly state-owned, state-controlled and state-invested. "Most of China's military enterprises are allowed to source funds from the capital market and foreign investors," said Wu. China issued a new

CHINA Investment Corp, the US$200 billion fund that last week invested US$5 billion in Morgan Stanley, has denied it bought a stake in the Australia & New Zealand Banking Group, Bloomberg News reported today. "We didn't buy any stake," Lou Jiwei, chairman of Beijing-based China Investment, said at a press event without elaborating. He also denied buying a stake in China Petroleum & Chemical Corp. The central government is loosening restrictions on overseas investment to counter inflows from a record trade surplus that has driven up local stock and property prices. Investing more money abroad will help cool the world's fastest-growing major economy and diversify risk for China's more than US$1.4 trillion of foreign-exchange reserves, the world's largest. Lou said on November 29 that CIC "wants to be a stabilizing force in the international capital markets." He cited a "recent example" in which a similar fund invested in a financial firm that had

CHINA Pacific Insurance (Group) Co Ltd shares fell back slightly in afternoon trade on the Shanghai Stock Exchange after this morning's stellar debut. The shares opened at a premium of 70 percent to their IPO price and sold as high as 51.97 yuan (US$7.09) before settling back to finish the day at 48.17 yuan -- 60.57 percent above the issue price of 30 yuan. The company issued one billion A shares on the Shanghai Stock Exchange, making it the third insurer listed on the Chinese mainland after its larger rivals China Life and Ping An Insurance. China has urged its largest financial firms to sell stock domestically to give mainland investors more choices. The A shares account for 12.99 percent of China Pacific's expanded share capital and the money raised through the domestic listing will be used to replenish capital to help expand the business, its prospectus said. Shenzhen-based Ping An, the nation's second-biggest insurer, raised US$5 billion in February in the world's

UNITED States 10-year Treasury note yields have risen to a three-day high on signs that central banks were adding enough funds to the financial system to spur bank lending. Ten-year notes fell on Friday by the most since December 12, paring a weekly advance, as central bank auctions of short-term loans totaling US$64 billion brought down bank-lending rates, fueling optimism the US economy will avoid a recession. Reports this week may show a slide in home prices is deepening. "As we move through 2008, we expect rates to move higher because consumers will prove resilient despite declines in housing, and growth will not fall off a cliff as the market is implying," Michael Pond, an interest-rate strategist in New York at Barclays Capital Inc, one of the 20 primary securities dealers that trade with the Federal Reserve, told Bloomberg News. Ten-year yields rose 12 basis points on Friday, or 0.12 percentage point, to 4.17 percent, according to bond broker Cantor Fitzgerald

PROLOGIS, the world's biggest publicly traded warehouse developer, will invest US$600 million in South Korea as rising trade boosts demand for logistics and storage facilities, the country's government said. The developer will build two distribution centers in Gyeonggi province, which surrounds the capital Seoul, by the end of 2012, South Korea's Ministry of Commerce, Industry and Energy said in a statement, Bloomberg News reported. ProLogis already has seven facilities in operation or under construction in the province, company Vice President Kang Woo Young said. ProLogis aims to double investments in Asia excluding Japan to US$2.5 billion this year to benefit from the region's manufacturing and trade growth. Booming exports of goods including mobile phones and ships helped South Korea, Asia's fourth-largest economy, expand 5.2 percent in the third quarter. "We're seeing growing opportunities in South Korea as more companies are seeking to outsource," Kang said.

NEW YORK (Reuters) - The credit crisis deepened on Friday as Wachovia Corp (WB.N) reported a potential $1.7 billion loss on mortgage-related debt, while credit card company Capital One Financial Corp (COF.N) said more customers are missing payments.

CHINA'S listed state-owned enterprises should play a key role to guarantee a well-developed capital market and combat securities crime, China's stock watchdog said yesterday. "Listed SOEs should be pillars of China's capital market. They must be independent, disciplined and competitive, serving as role models for other publicly trade companies," said the Website statement, citing Fan Fuchun, deputy chairman of China Securities Regulatory Commission. By October, a total of 279 companies controlled by state-owned enterprises had been listed on the market. Their combined value of assets reached 4.01 trillion yuan (US$534.6 billion) with net earnings of 273 billion yuan in the first ten months. The listed SOEs have collected a total of 570 billion yuan from trading their shares on the market. Fan stressed that listed companies should be responsible for the interests of all shareholders, instead of only the biggest shareholder. Companies should safeguard their

THE United States trade deficit unexpectedly narrowed in September on record exports, giving the economy a lift as the housing recession deepened. The gap shrank 0.6 percent to US$56.5 billion, the smallest since May 2005, from a revised US$56.8 billion in August, the Commerce Department said yesterday in Washington. The report will probably prompt economists to boost estimates for growth in the third quarter. Exports reached new highs for a seventh consecutive month as a weaker US dollar and growing economies overseas bolstered demand for American products from cotton to semiconductors. Trade will continue to contribute to economic growth and help manufacturers weather a housing-related slump in demand. "For the first time in recent memory, the US is now the net beneficiary of robust global growth, which is providing a powerful offset to housing-related weakness in the domestic economy," said Stephen Stanley, chief economist at Greenwich Capital in Greenwich,

WASHINGTON (MarketWatch) - A surge in exports in September helped push the U.S. trade deficit down to $56.5 billion, the lowest in more than two years, the Commerce Department reported Friday. U.S. exports rose 1.1% to a record $140.1 billion on record shipments of capital goods, industrial materials and foods. Boosted by record imports of capital goods and an increase in the value of petroleum shipments, imports into the United States increased 0.6% to $196.6 billion, the second highest ever. Compared with a year ago, the trade deficit has fallen by about 14%, with exports up 14% and imports rising 4.9%. The figures are not adjusted for price changes. Economists surveyed by MarketWatch expected the trade deficit to widen to $59.3 billion.

CITIGROUP Inc has named Richard Stuckey to manage most of its US$43 billion of subprime mortgage assets. In doing so, they chose the same experienced executive who nine years ago helped unwind Long-Term Capital Management LP's bad bets. Stuckey, 51, will run the Sub-Prime Portfolio Group, created after the largest US bank by assets said on November 4 that it will write down as much as $11 billion of subprime debt. Chief Executive Officer Charles "Chuck" Prince III resigned, Bloomberg News said. Stuckey will oversee most of the bank's securities linked to homeowners with poor credit, according to a memo sent to employees and confirmed by Citigroup spokesman Dan Noonan. Rescuing the bank's subprime holdings may be a harder challenge than Long-Term Capital, said Lawrence White, professor of economics at New York University's Stern School of Business. New York-based Citigroup owns subprime mortgage securities that rarely trade and are hard to value. The Long-Term

LONDON (MarketWatch) -- Shares of Millcom International Cellular rose 9.9% in pre-open trade after the African, Latin American amd Asian telecom reported third-quarter net profit from continuing operations rose to $138 million from $52 million and revenue jumped 77% to $686 million from $388 million. Analysts polled by Dow Jones Newswires estimated net profit at $102.8 million. Millicom said the growth was due to capital expenditure, and it upped its capex forecast for 2007 to over $1 billion from a previous forecast of $800 million.

CHINA'S State Council has approved plans to set up the country's fourth free trade port in Hainan Province, Xinhua news agency reported today. The Yangpu Free Trade Port, covering an area of 9.21 square kilometers in the Yangpu Economic Development Zone, will be built in three phases, the report said. Fixed-asset investment will reach 50 billion yuan (US$6.66 billion) in the port by 2012 and the annual industrial output will hit 100 billion yuan with annual freight handling capacity reaching 70 million tons, the report said. Jiang Sixian, vice governor of the province, said today that the port will be built into a logistics center for oil, natural gas, chemical materials and paper pulp, as well as a key processing base for chemical products in the country. China currently has three free trade ports in Shanghai, Tianjin and Dalian, and the Hainan port will be the first one in South China. The Yangpu Economic Development Zone is located inside the 150-square-kilometer Yangpu Peninsula on the northwestern coast of Hainan and covers an area of 30 square kilometers. The zone is about 140 kilometers from Haikou, capital of Hainan.

Bain Capital's $2.2 billion agreement to buy networking equipment maker 3Com Corp. of Marlborough is shaping up to be a political showdown over free trade and national security due to the involvement of a major Chinese telecom company, Huawei Technologies.

THE biggest quarterly rally for US government securities in five years is getting an extraordinary boost from the burgeoning reinvestment of petrodollars by the Organization of Petroleum Exporting Countries. OPEC members increased their holdings of Treasuries 12 percent this year through July to US$123.8 billion, Treasury Department data show. The prospect that OPEC's share of US debt is growing is based on the 31 percent rise in oil since December, which will raise OPEC revenue four percent to US$630 billion this year and nine percent to US$688 billion in 2008, according to estimates by the US Department of Energy. Petroleum exporters are adding to holdings of US debt three times faster than other foreign investors, the Treasury data show. Yields on 10-year notes are 21 basis points lower because of the additional petrodollar reinvestment, New York-based consulting company McKinsey & Co said last week. "Oil revenues are up; they're still in dollars, and they have to be put to work," said David Ader, head of US government bond strategy in Greenwich, Connecticut, at RBS Greenwich Capital, one of the 21 primary dealers that underwrite US government debt. "It bodes well for US debt." Demand from oil exporters may help drive yields lower even as signs that the US economy is weathering the worst housing market in 16 years reduce investor expectations for lower interest rates. The chances that the Federal Reserve will lower its target rate for overnight loans between banks this month fell to 48 percent from 74 percent a week ago, based on prices at the Chicago Board of Trade. The yield on the benchmark 4 3/4 percent note due in August 2017 rose four basis points last week to 4.64 percent, according to New York-based bond broker Cantor Fitzgerald LP. The price, which moves inversely to the yield, fell 10/32, or US$3.13 per US$1,000 face amount, to 100 7/8. A basis point is 0.01 percentage point. The note was little changed at 4.63 percent yesterday. OPEC's windfall suggests there will be demand for US debt from international investors even as the dollar falls to a record low versus the euro, Michael Pond, a debt strategist at Barclays Capital Inc, told Bloomberg News. Among foreign holders only Japan, China and the United Kingdom own more Treasuries than the 12 members of OPEC, which supplies more than 40 percent of the world's crude. Oil exporters eclipsed Asian nations last year as the biggest source of global capital for t

SOHO China Ltd, the largest developer in central Beijing, rose yesterday after starting trade in Hong Kong on its initial public offering. The company's stock rose 17 percent to HK$9.74 at the noon break in Hong Kong after climbing as much as 23 percent earlier. Soho China raised HK$12.9 billion (US$1.7 billion) in its initial share sale. Individual investors ordered HK$220 billion worth, or 169 times the shares set aside for them, the company said. "I won't expect them to gain too much from the IPO price," said Francis Lun, general manager at Hong Kong-based Fulbright Securities Ltd. "Compared with competitors, their land bank isn't as attractive. The oversubscription probably reflected the amount of excessive liquidity in the market more than anything." Sino-Ocean Land, the city's largest builder by area sold, surged 43 percent on its September 28 Hong Kong trading debut, according to Bloomberg News. Share sales provide an alternate source of funding after China raised interest rates to a nine-year high on September 14, seeking to damp speculation in property and equities. Soho is one of two Beijing builders debuting in Hong Kong this month, the other being China Aoyuan Property Group Ltd. Land prices in 70 Chinese cities surged 13.5 percent in the second quarter, according to the National Development and Reform Commission. Property price increases reached a two-year high of 8.2 percent in August, the state planner said. Soho China and stockholders have sold a combined 1.55 billion shares, a 31-percent stake, at HK$8.30 each. The price, set at the top end of the range, helped rank the share sale as the third-largest Hong Kong property IPO since the beginning of 1999, when Bloomberg began to track such data. The developer in 2003 called off its first attempt to go public, when it sought to raise US$250 million in the United States. That offer faltered when banks helping sell the stock disagreed on the profit outlook, bankers involved said at the time. Soho China, founded by Pan Shiyi and his wife, former Goldman Sachs analyst Marita Zhang Xin, has built 1.2 million square meters of properties, according to a sale document distributed to investors before the share sale. It's raising capital to finance construction, acquisitions and repay debt. It has built or is building six Soho-branded developments in the Beijing and also built the Commune by the Great Wall boutique hotel.

TREASURY Secretary Henry Paulson, whose signature appears on every new dollar bill, may find the weak currency with his name on it helps the United States economy more than the strong one he publicly endorses. The greenback's eight percent slide during Paulson's 15 months in office is good news on the docks of Long Beach, California, Bloomberg News reported. There, shipping containers are making their return trip to Asia filled with US-made computer, auto and aircraft parts whose prices have become more competitive abroad. What's more, economists don't foresee the weaker currency generating higher import prices and accelerating inflation. "The dollar is in a quasi-sweet spot," says Joseph Quinlan, chief market strategist at Bank of America Corp in Charlotte, North Carolina. "It's dropped enough that it's creating an earnings upside for US multinationals, while I expect many foreign companies to hold the line on prices they charge US consumers." Exports by General Motors Corp, Boeing Co and other US companies were up 11 percent in the second quarter from a year earlier, shrinking the nation's trade deficit in goods for the first half by US$14 billion, to US$405 billion, and helping the economy weather the housing bust. According to estimates by Goldman Sachs Group Inc, that's the biggest improvement in 20 years; exports of goods grew more than twice as fast as imports in the first half of 2007. The government will report August trade figures on Thursday, and a Bloomberg News survey of economists says they will show a further narrowing of the gap. Asked how Paulson, 61, views the dollar's recent slide, his spokeswoman, Brookly McLaughlin, refers to recent statements from him that reiterate the official US policy since Robert Rubin ran the Treasury under President Bill Clinton: "I feel very strongly that a strong dollar is in our nation's interest." As Treasury Secretary, he can't be expected to say anything else, says Tom Fitzpatrick, global head of currency strategy at Citigroup Inc in New York. "The US needs external capital to fund its deficits," he said. "So you have to say a strong currency is in your interest, because if you go the other way, why the hell would anyone want to invest here?" At the same time, Paulson has good reason to be privately pleased with the dollar's decline, says Sophia Drossos, currency strategist at Morgan Stanley in New York and a former Federal Reserve econom

CHINA Investment Corp, the nation's US$200 billion sovereign wealth fund, started operations on Saturday as the government seeks to boost returns on the world's biggest foreign-exchange reserves. The investment agency is under the direct supervision of the nation's Cabinet, the State Council. Lou Jiwei, former vice finance minister, serves as director, and Gao Xiqing, former deputy chairman at the National Council for Social Security Fund, is general manager, according to information disclosed at an opening ceremony in Beijing. China set up Asia's biggest state-owned investment company after surging trade surpluses helped push the nation's currency reserves to a record US$1.33 trillion. The agency's creation has spurred speculation of a flood of Chinese investments into overseas companies and resources such as oil and metals. "Such a company is very necessary in the context of China's increasing trade surplus and trade frictions with other countries," Li Yang, who heads financial research at the Chinese Academy of Social Science in Beijing, told Bloomberg News. "China needs to shift its exports from manufactured goods to capital and also from the old model of relying on foreign investments for growth." The new fund made its first investment with the US$3 billion purchase of a stake in Blackstone Group LP in May, suffering a loss as the New York-based private equity firm's stock dropped 19 percent since listing on June 22. China's government hasn't disclosed in detail an investment strategy for the agency, to be funded by the sale of 1.55 trillion yuan (US$205 billion) in special government bonds that will be used to buy foreign-exchange reserves from the central bank. By Friday, 700 billion yuan has been raised by 10-year and 15-year bonds issues. The finance ministry will sell more long-term bonds by the year's end to meet the budget. The company "will be prudent in its foreign exchange business, keeping in mind tolerable risks while also aiming to maximize investment returns in the longer term," it said in a statement handed out before the opening ceremony. Fred Hu, a managing director at Goldman Sachs Group Inc in Hong Kong, said the company should hold a global portfolio, including stocks, bonds, commodities and special assets in private equity, real estate and hedge funds, according to a report in the official China Securities Journal.

CITIGROUP Inc and Merrill Lynch & Co yesterday bought five percent stakes in the Multi Commodity Exchange of India Ltd to tap the threefold growth in trade last year on the world's third-largest gold bourse. The exchange, known as MCX, sold smaller stakes to Passport Capital and GLG Partners LP, Joseph Massey, deputy managing director of the Mumbai-based company, said yesterday. The total sale is worth about 6.45 billion rupees (US$162 million), according to Bloomberg News. Overseas investors including Goldman Sachs Group Inc and Fidelity International Ltd have invested in Indian markets as the fastest pace of economic growth since independence in 1947 spurs demand for commodities in the world's second-largest sugar and rice producer. "The foreign companies will bring in their expertise from overseas and help enhance the Indian commodity market," Amol Tilak, an analyst at Kotak Commodity Services Ltd, said by phone from Mumbai. "It's a good time to be in." The value of trading on MCX, which also trades commodities such as mentha oil, jute and turmeric, surged to 20.25 trillion rupees in the year ending 2006 from 6.3 trillion rupees in 2005. Domestic traders and companies are the main participants on Indian commodity exchanges, compared with the 13 million individual investors - three times the population of Singapore - who invest in stocks. The South Asian nation opened up its stock markets to foreigners in 1993. MCX was inaugurated in November 2003, according to its Website. Jignesh Shah, managing director of MCX, said in January that overseas capital was essential for Indian commodity markets to become globally competitive. "Overseas participants are exuberant over the prospects for commodity exchanges in India," said Avinash Raheja, senior vice president at Mumbai-based Commtrendz Risk Management Services Pvt. "The market has done well in a very short period and for the next phase of growth we need the market to open up." Passport Capital bought a three percent stake in MCX and GLG Partners LP purchased three percent. Goldman acquired a seven percent holding in the National Commodities & Derivatives Exchange Ltd last year and Fidelity owns nine percent of MCX. Fidelity, a unit of Boston-based Fidelity Investments, the world's largest mutual-fund company, paid US$49 million for its stake in MCX and Goldman paid US$21 million for its holding.

CHINA Oilfield Services Ltd shares tripled in their Shanghai stock market debut yesterday, as investors rushed to buy into a company with near-monopoly status. Shares in the oil drilling services and equipment provider soared 196 percent to close at 39.90 yuan (US$5.32), up sharply from the initial public offering price of 13.48 yuan. Some analysts had forecast only a 50-percent rise. "COSL sits in an absolute leading position in its industry in China," CITIC Securities analyst Yin Xiaodong said. "We didn't have a firm of its kind on the mainland market before, so it's no surprise the stock enjoys high valuation." COSL, leveraging an oil services spending boom that's sustained by rising energy demand and prices, raised 6.74 billion yuan in a Shanghai initial public offering that was oversubscribed 320 times. Given China's massive untapped offshore oil and gas resources, COSL has huge growth potential, said Orient Securities analyst Wang Jing. COSL's revenue comes mainly from sister firm CNOOC Ltd, China's top offshore oil producer. Yesterday's action put COSL's A shares at a 130-percent premium to the company's Hong Kong-traded H shares. The figure is well above the average A-share premium of 55 percent among dual-listed firms, according to Reuters' calculations. Analysts said COSL is overvalued and will soon suffer profit taking. Guosen Securities said COSL should trade between 28.47 yuan and 31.11 yuan, while CITIC Securities values the stock at 20.11 yuan to 25.72 yuan. Lower crude prices could challenge COSL as they would lead to lower capital expenditures by oil producers. The appreciation of the Chinese currency could also be a negative factor as COSL settles 40 percent of its revenue in US dollars. COSL is the world's only integrated oil services firm. Its businesses include drilling, well services, marine transport and geophysical services, according to brokerage CLSA.

The trade deficit narrowed slightly in July to $59.25 billion, as exports of high-value capital goods offset the impact of higher oil prices on imports.