Property Investment Rebounding

Even though the government has tightened policies surrounding the industry, prices continue to rise in the Chinese real estate market. According to statistics from the National Development and Reform Commission, Shenzhen, Changsha, Beijing and Guangzhou saw the largest price hikes in March.

The cost of new housing soared an average of 10.7 percent in Shenzhen, 10.1 percent in Changsha, and 9.9 percent in Beijing, according to the report.

Property investment shows no signs of tailing off. On the contrary, it is actually picking up speed. The National Bureau of Statistics reported that total real estate investment in the first quarter grew 26.9 percent over what it was last year, with a growth rate of 6.7 percentage points higher than last year in the same period.

“It was quite out of our expectations that real estate investments grew so quickly in the first quarter amid the various restrictive measures,” said Yang Hongxu, senior analyst with the Shanghai-based Yiju Real Estate Research Institute (China).

Even though restrictions were meant to dampen it, money from abroad is flooding into property investment. Paid-in foreign direct investment in the first quarter amounted to an astonishing 10.26 billion yuan ($1=7.73 yuan), or 192.5 percent more than the same period last year.

China Life, Growing Stronger

What a year it was for China’s largest life insurer, China Life Insurance Co. Ltd. Company profits more than doubled in 2006, shored up by premium growth and higher investment returns from the thriving stock market.

China Life’s net income, applying international accounting standards, increased from 9.31 billion yuan in 2005, to 19.96 billion last year, according to its statement to the Hong Kong Stock Exchange.

“Improved operating performance has contributed to the growing sales of policies and higher investment returns,” said Yang Chao, Chairman of China Life.

After launching into the yuan-denominated A-share market, shares in China Life nearly quadrupled last year, outperforming those of its rival Ping An Insurance. China Life took up 45.27 percent of 2006 market share.

China Life is one of the largest institutional investors in China’s capital market.

“We are going to focus our equity investment on the infrastructure and financial sectors this year,” said Liu Lefei, Chief Investment Officer of China Life, in China Daily.

Sharing the Market

The Bank of Communications, China’s fifth largest lender, stated it would invite investors to subscribe to its mega dollar Shanghai yuan-denominated A-share initial public offering starting from April 13.

The Hong Kong-listed bank plans to list at the Shanghai Stock Exchange on May 15, China Securities Journal reported, citing two unnamed sources, and is expected to issue 3.19 billion A-shares and raise $3.5 billion.

Attracted by the flourishing Chinese stock market, the bank joins a growing number of Chinese mainland banks already listed on either the Hong Kong or the New York stock exchanges, such as the Industrial and Commercial Bank of China.

According to the bank’s statement, institutional investors would comprise about 25 percent, retail investors 45 percent, while the remaining 30 percent would be for strategic investors.