DHL, UPS & Fedex, New Region Hubs in China
Express delivery giant DHL will invest several hundreds of millions of US dollars in its seventh regional hub in the Asia-Pacific region and make a decision between Shanghai and a South Korean city for the hub in two months.
Jerry Hsu, president of DHL Greater China and South Korea, told China Daily yesterday in Beijing that his company will announce the Northeast Asia regional hub within two months, and Shanghai and a South Korean city are in the running for the status.
“We are still evaluating factors like landing rights, oil prices and local infrastructure, and will make a decision soon,” said Hsu.
If Shanghai is chosen, the investment to build the facility may double the German logistics giant’s total investment on the mainland in the past five years. DHL has committed to invest $325 million on the mainland from 2003 to 2007.
China has been one of the fastest-growing markets for the logistics firm under Deutsche Post, growing by about 35 percent a year.
Hsu said DHL has a 30 percent market share in the Chinese express delivery segment, far ahead of its competitors such as Fedex, UPS or local rivals like China Post and private firms.
UPS, a major competitor of DHL, also announced last month that it will establish an air delivery hub in Shanghai, the fourth such facility in the Asia-Pacific region, with an initial investment of $20 million.
Fedex said in March that it would open a China regional hub in Hangzhou, with a first-stage investment of $2 million. It also bought out its Chinese partner DTW in their joint venture.
DHL, the first foreign delivery firm to launch domestic services in China, also announced yesterday that it will partner the National Basketball Association (NBA) to promote its brand among the Chinese.
The firm will be the official express and logistics provider for NBA in China and Asia for at least three years to ship equipment like professional floors and backboards for NBA games in the region.
DHL, following the other 18 marketing partners of NBA in China, including Adidas and Lenovo Group, will ship the NBA trophy for a tour in Asia in 2007 and 2008 and participate in the “Basketball without Borders” campaign in the region.
QDII news sparks rally, Hong Kong stocks come to new high
(From Chinadaily) Shares on the Hong Kong exchange surged 2.5 percent yesterday to close at 20,979, after the mainland announced on Friday it would allow qualified domestic institutional investors (QDII) to invest in overseas stocks.
The rally brought the daily turnover value to a record of HK$95 billion.
The Hang Seng Index jumped 597 points in the morning session to 21,066 points, before closing at 20,979, a 511 point increase from the last trading day.
The market’s two biggest movers, HSBC and China Mobile, gained 1.31 percent and 3.95 percent respectively to close at HK$146.9 and HK$73.75.
State-owned shares stole the limelight yesterday, with the mainland company indicator China Enterprises Index (CEI) peaking at an all-time high of 10,964 points. The index closed at 10,948 points, up 556 points or 5.36 percent.
The CEI’s spark pushed all of the index’s members upward, with seven out of 40 members jumping by more than 10 percent. Copper producer Jiangxi Copper surged 18.9 percent of HK13.44.
A report from Taifook Securities pointed out that the A- and H-share dual listed stocks would benefit most from the QDII news.
“Given the large discount in price of the H shares comparing with the A shares, it seems more capital will flux to Hong Kong to narrow the discrepancy,” the report said.
Joseph Yam, the Hong Kong Monetary Authority’s chief executive, said the increase in spectrum of QDII products will boost the mainland’s capital investing in Hong Kong equities. He expected the measure to boost the flow of liquidity between the two markets.
However, Ricky Tam, chairman of Hong Kong Institution of Investors, expects the effect of QDII to fade in the short term. “But we believe the index is able to climb to 21,500 points in the future in the light of the strong daily turnover,” Tam added.
The China Banking Regulatory Commission last Friday announced it would allow QDII domestic commercial banks to invest in overseas equities on behalf of clients invested in wealth investment products.
The banking regulator launched QDII products last April in hopes of reducing excessive foreign exchange reserve pressure. The measure has experienced lukewarm response so far: just 3 percent of the $13 billion worth of quotas have been used.
Shanghai Composite Index also rose 0.61 percent yesterday to 4,046.
RMB remains high
Beijing stands firm on its currency
From (Asia Times) BEIJING - The central parity rate of the yuan broke the 7.70 barrier against the US dollar on Tuesday - even as the US Congress was due on Wednesday to start a hearing on China’s alleged exchange-rate manipulation.
This also occurred just days before Vice Premier Wu Yi’s arrival in Washington to attend the second round of the semi-annual Sino-US Strategic Economic dialogue with US Secretary of the
Treasury Henry Paulson.
The mid-point rate stood at 7.6951 yuan to one greenback on Tuesday, the first trading day after the week-long May Day “golden week” holiday, according to the Chinese Foreign Exchange Trading System.
It was a gain of 104 basis points from the reference rate of 7.7055 on the last trading day before the holiday and the highest since it was de-pegged from the US dollar in July 2005.
This was the yuan’s 27th new high against the dollar this year.
Although it breached the psychological barrier of 7.70, it only shows that the currency is strengthening vis-a-vis the US dollar and does not have any special significance, said Yan Qifa, an economist with the Export-Import Bank of China.
The yuan’s revaluation has been faster recently, gaining 287 basis points in April, but “the process has remained largely stable in recent months”, Yan told the China Daily.
Zhao Xijun, finance professor at Renmin University of China, said the new rate indicates that “the yuan is becoming more flexible” after its revaluation in 2005. “The process has gone to a stage where market forces play an important role in determining the rate,” he said.
Market traders attribute the stronger mid-point rate to expected pressure ahead of the US congressional hearing on foreign-exchange “manipulation” by China and Japan.
While acknowledging that the event will have some short-term effect on the upward movement of the yuan, Zhao said the process has its intrinsic causes. “The impact [from the US hearing] is insignificant,” he said.
China’s economy - which grew by 11.1% in the first quarter - its trade surplus and swelling foreign-exchange reserves as well as speculative capital inflows are behind the rise of the yuan, Zhao explained. “We want to, for example, resort to exchange-rate adjustment to reduce the trade surplus.”
Washington has consistently demanded that Beijing speed up the revaluation process and has threatened punitive measures if China refuses. “Such measures will jeopardize the interests of both,” Yan said.
Zhao said the demands from China’s trade partners to revalue the yuan are often because of their domestic political and industrial interests.
China has set the direction of the yuan revaluation, but must move in line with its own situation, Zhao said.
The yuan has appreciated 5.4% since July 2005 and many economists expect it to rise another 4% against the US dollar this year.