China Day Ahead: Speculation of Deposit Rate Increase; Tighter Trust Rules

China brought forward the release of August economic indicators by two days, spurring speculation the central bank may be preparing to raise a benchmark interest rate before markets open on Monday.

Data including consumer prices and industrial output will be reported tomorrow instead of on Sept. 13 as previously scheduled, the National Bureau of Statistics said in an e-mail yesterday. Central bank and statistics bureau press officials weren’t immediately available to comment last evening.

Investors are speculating that the central bank may raise the deposit rate to combat the erosion of savings by inflation, according to analyst Chen Jianbo. Inflation may have accelerated to 3.5 percent in August, based on the median estimate of 31 economists in a Bloomberg News survey, while the one-year deposit rate is 2.25 percent.

Tighter Trust Rules

China’s banking regulator said it started tougher risk management of net capital of trust firms in China to ensure financial asset safety and liquidity.

Trust firms should have a minimum of 200 million yuan （$29 million） as net capital, which should exceed 40 percent of net assets, the China Banking Regulatory Commission said in a statement on its Web site. Net capital is a company’s net worth minus assets that can’t be sold at full value.

China Airlines Joins Skyteam

China Airlines Ltd., Taiwan’s biggest carrier, agreed to join the SkyTeam alliance led by Air France-KLM Group and Delta Air Lines Inc., two people with knowledge of the matter said. The agreement may be announced as early as Sept. 14, the said.

The expansion reinforces SkyTeam in east Asia, where it recruited Vietnam Airlines Corp. in June. Korean Air Lines Co. is a founding member, and China Eastern Airlines Corp. agreed in April to become the alliance’s second major Chinese carrier, joining China Southern Airlines Co.

Copper Drops on China

Copper fell the most in a week after a report that Chinese regulators are investigating positions in rubber futures spurred speculation that some traders may be forced to sell commodities.

Hong Kong Flu Death

Hong Kong’s Center for Health Protection advised a kindergarten to halt classes for seven days from tomorrow after a three-year-old student who tested positive for human swine flu died last night.

The boy attended the SunKids Kindergarten in the Tuen Mun area in the northwestern part of the city, according to a government statement. He was admitted to hospital in critical condition on Sept. 6.

MARKETS:

U.S. stocks advanced, sending the Standard & Poor’s 500 Index higher for a second day, as a bigger-than-estimated decrease in jobless claims bolstered optimism in the economic recovery.

JPMorgan Chase & Co. rallied 2.5 percent after Morgan Stanley said banks will be able to boost dividends and buy back shares next year. Adobe Systems Inc. jumped 12 percent as Apple Inc. said it will relax developer restrictions on mobile applications. Equities trimmed gains as Bloomberg News reported Deutsche Bank AG is considering a $11.4 billion stock sale, renewing concern that European lenders need to raise capital.

The S&P 500 rose 0.5 percent to 1,104.18 at 4 p.m. in New York and earlier climbed to its highest intraday level since Aug. 11. The Dow Jones Industrial Average advanced 28.23 points, or 0.3 percent, to 10,415.24.

Taiwan Insurers China Property

Taiwan’s Financial Supervisory Commission plans to ease investment rules to allow local insurers to buy real estate in China for their own use.

The proposal would add real estate to the 10 percent of their overseas allocation that the island’s insurers can now invest in Chinese stocks, bonds and government debt, the top financial regulator said in a statement on its website. The public can give feedback for seven days, it said.

THE FOLLOWING STOCKS MAY BE ACTIVE TODAY:

Automakers: China’s passenger-car sales to dealerships grew at a faster pace in August. Wholesale deliveries of passenger cars rose 18.7 percent to 1.02 million units in August, compared with 13.6 percent growth in July, the China Association of Automobile Manufacturers said in an e-mailed statement.

SAIC Motor Corp. （600104 CH）， China’s largest carmaker, fell 3.2 percent to 17.43 yuan. FAW Car Co. （000800 CH）， which makes passenger cars in China with Volkswagen AG, lost 2.6 percent to 19.39 yuan.

China High Speed Transmission Equipment Group Co. （658 HK）： The maker of transmissions for wind-power plants and its management are selling up to $424.7 million shares, according to an e-mail sent to fund managers. China High Speed is offering 130 million new shares at HK$16.65 to HK$17.65 each. Its management shareholders are selling 57 million existing shares at the same price. The stock gained 2.2 percent to HK$18.50.

China Huiyuan Juice Group Ltd. （1886 HK）： The juice producer is seeking to amend the covenant for a $250 million three-year loan after breaching the terms, Reuters said, citing three unidentified bankers involved in the deal. The stock fell 1.2 percent to HK$5.93.

China Life Insurance Co. （601628 CH）： The nation’s biggest life insurer aims to build “very big” banking operations through acquisitions as it seeks to become a financial conglomerate, Chairman Yang Chao said. The stock fell 0.8 percent to 22.15 yuan.

China Natural Investment Company Ltd. （8250 HK）： The drug testing services company agreed to pay HK$21.5 million for a company that makes generic drugs in Hong Kong and distributes health supplements. The stock fell 1.2 percent to 24.5 Hong Kong cents.

China Oriental Group Co. （581 HK）： The steelmaker said that while government restrictions on the use of electricity for high-energy, high-pollution industries may affect its production, they won’t affect profits in the long run. China Oriental was unchanged at HK$2.78.

China Renji Medical Group Ltd. （648 HK）： The medical clinic operator’s board declared its removal of executive directors Guo Bao Ping and Wang Hai enforceable and called invalid an executive committee meeting Guo and Wang convened to block the action. The stock fell 8.5 percent to 5.4 Hong Kong cents.

China State Construction Engineering Corp （601668 CH）： The construction equipment provider said contract value in the first eight months rose 56 percent from a year ago. The stock fell 1.7 percent to 3.54 yuan.

CSC Nanjing Tanker Corp. （600087 CH）： The petroleum- products shipper received regulatory approval to sell 600 million shares in a private placement. The stock gained 1.6 percent to 5.79 yuan.

Xinjiang Joinworld Co. （600888 CH）： The aluminum producer plans to raise as much as 2 billion yuan in a private sale to fund an increase in aluminum-foil capacity. The stock has been suspended since Sept. 6.

Rubber prices plunged the most in three months in Shanghai, with declines spilling over into copper, zinc, soybeans and sugar, after the Securities Times report. The newspaper, affiliated with China’s state-run People’s Daily, cited people it didn’t identify. China is the world’s largest metals user.