SHANGHAI, Dec. 19 /Xinhua-PRNewswire/ -- Xinhua Finance and Milken
Institute released updated values for the Chinese Initial Public Offering and
Renminbi Pressure indicators, both of which increased in line with China’s
robust economic growth.
(Logo: http://www.prnasia.com/sa/200611140926.gif )
The updated indicator charts can be found at
http://www.xinhuafinance.com/en/charts/ipo_rpi.html
The Chinese IPO Indicator for November was 198.8, an 11.2% increase from
October. The performance of new securities strengthened, with the IPO market
continuing its brisk ascent since the Shanghai and Shenzhen markets reopened
to new listings in May. November’s indicator marked a record high for the
IPO Indicator. Although it was first released publicly last month, the IPO
Indicator calculates monthly values back to December 1997, when the value was
set to 100.
The double-digit month-over-month increase is largely due to the fast-
climbing stock of the Industrial and Commercial Bank of China (ICBC), China’
s largest commercial lender. ICBC launched its IPO on October 27 on the
Shanghai and Hong Kong stock exchanges, setting a world record for raising
US$19 billion. During November, ICBC’s A share price increased by 15%, while
its H share price rose 13%.
The IPO Indicator tracks the share price performance of new issues listed
on the Shanghai, Shenzhen and Hong Kong stock exchanges. In November, it
comprised 64 securities, up from 50 in October. However, James Barth, Senior
Fellow of the Milken Institute, remarked that the new ICBC and Bank of China
issuances played a dominant role within the market cap-weighted indicator.
ICBC and Bank of China will remain in the indicator for 12 months before they
are removed, as do all newly listed companies. The performance of those
shares will heavily influence the IPO Indicator’s future path.
Reflecting trends in China’s currency market, the Renminbi Pressure
Indicator (RPI) continued to rise in September. It edged up 0.75%, to 188.3
from 186.9, maintaining an upward trend in spite of the renminbi’s
revaluation in 2005 and continued modest appreciation since then.
Glenn Yago, Director of Capital Studies at the Milken Institute,
stressed, “Pressure on the currency continues to mount with the actual
exchange rate still trading in a fairly narrow band. The intervention in
China’s foreign exchange market has been sharply reflected in the now-
massive foreign exchange reserve, which recently passed the US$1 trillion
milestone. Among its many uses, the RPI gives a qualitative assessment of the
role that China is playing in exporting capital to the rest of the world, and
thus for mainly the United States.”
The RPI indicates upward or downward pressure on the RMB:USD exchange
rate, as determined by changes in three primary factors: the differentials in
nominal exchange and interest rates between the U.S. and China, as well as
China’s foreign exchange reserves. During the month of September, China’s
yuan appreciated by 0.63% against the US dollar, while China accumulated an
additional 1.63% in foreign exchange reserves. Interest rates remained
steady.
Both the IPO Indicator and RPI are calculated monthly and released mid-
month. The next releases of the IPO and Renminbi Pressure indicators will be
in January, 2007.
The two indicators are part of a series of eight economic indicators
designed to increase transparency and data quality in China’s burgeoning
financial markets. The series applies the world-class index calculation
methodologies of Milken Institute, one of the world’s leading economic and
financial research think tanks, and the extensive data resources of Xinhua
Finance, China’s premier financial information and media service provider.
The Xinhua Finance/ Milken Institute China Indicators are used by asset
managers, underwriters, economists, and product developers in assessing
China’s market environment in support of investment decision-making.
To view additional information, visit
http://www.xinhuafinance.com/indicators or
http://www.milkeninstitute.org/chinaindicators .
About Xinhua Finance Limited
Xinhua Finance Limited is China’s unchallenged leader in financial
information and media, and is listed on the Mothers board of the Tokyo Stock
Exchange (symbol: 9399) (OTC ADRs: XHFNY). Bridging China’s financial
markets and the world, Xinhua Finance serves financial institutions,
corporations and re-distributors through four focused and complementary
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Founded in November 1999, the Company is headquartered in Shanghai with 20
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America and Europe. For more information, please visit
http://www.xinhuafinance.com .
About the Milken Institute
The Milken Institute is a nonprofit, independent economic think tank
whose mission is to improve the lives and economic conditions of diverse
populations around the world by helping business and public policy leaders
identify and implement innovative ideas for creating broad-based prosperity.
The Milken Institute has extensive expertise in China and conducts ongoing
research on China’s banking and capital markets. It is based in Santa
Monica, CA. For more information, please visit
http://www.milkeninstitute.org .
