Banking

Industrial and Commercial Bank of China (ICBC), the world's biggest lender by market value, said Friday it had agreed to pay $600 million to take a lion's share of assets controlled by Standard Bank Group Ltd in Argentina, to extend its businesses in South America.

The Chinese bank will acquire 80 percent of Standard Bank Argentina and its two affiliates, a fund management company and a business service provider, from Standard Bank London Holdings Plc (SBL), a unit of the Johannesburg-based lender, and two Argentina shareholders, the Werthein Sielecki families.

China’s foreign exchange reserves, already the world’s biggest, soared again in the second quarter, adding to inflationary pressure and highlighting the risks in Beijing’s policy of holding down the value of its currency.

Reserves are a key indicator of central bank intervention in the currency market because they reflect how much foreign exchange it has purchased in order to stabilise the renminbi. After jumping $197bn in the first quarter, reserves were up another $153bn in the second quarter.

That influx of cash compounds China’s inflation troubles. Consumer prices were up 6.4 per cent in the year to June, the highest in three years. Although many analysts expect inflation to slow over the remainder of the year, the accumulation of reserves lays the groundwork for a continuation of fast money growth and so will limit the scope for any easing of price pressures.

“The current intervention of the People’s Bank of China has been piling up more and more foreign exchange reserves. This is not sustainable,” said Li-Gang Liu, head of China economics at ANZ Bank.

The People's Bank of China (PBOC), the central bank, announced on Wednesday that it will raise bank's benchmark one-year borrowing and lending rates by 25 basis points beginning Thursday.

This is the third time for the central bank to raise interest rates this year.

Meanwhile, the central bank has hiked the reserve requirement ratio for banks six times this year.

Inflation data for June will be released on July 15 and many economists forecast it will hit a new high above 6 percent.

The CPI rose by 5.5 percent in May from the previous year, setting a 34-month high and well above the government's yearly inflation ceiling of 4 percent.

The following companies may have significant price changes in Hong Kong trading. Stock symbols are in parentheses. Share prices are as of the last close.

The Hang Seng Index fell 1.2 percent to 21,695.26 on June 17. The Hang Seng China Enterprises Index, which tracks so- called H shares of Chinese companies, declined 1 percent to 12,045.05.

Chinese developers: China's new home prices rose in May from a year earlier in 67 of the 70 cities monitored by the government, the statistics bureau said on its website on June 18.

China Resources Land Ltd. (1109 HK), a state-controlled developer, declined 0.5 percent to HK$12.54. China Overseas Land & Investment Ltd. (688 HK), controlled by the nation's construction ministry, gained 0.8 percent to HK$15.