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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (75)	2/16/2004 5:42:23 PM
From: Rascal	Read Replies (1) \| Respond to of 116555

Citigroup new chief deflects question on China Life China Life predecessor found to have misused 5.4b yuan of funds By SIOW LI SEN (SINGAPORE) Citigroup's China growth strategy was questioned yesterday following news of accounting problems at the predecessor of China Life, the world's largest IPO last year and which the bank helped to sell. But Charles Prince, chief executive of Citigroup, sidestepped a question on irregularities that state auditors on Tuesday said they had uncovered at the predecessor of China Life which has led to its shares tumbling for the second day in a row. 'I am not aware of any irregularities you refer to in your question,' replied Mr Prince to a question posed at a debt conference held at the Fullerton Hotel. As the keynote speaker at the conference, Mr Prince was also making his maiden appearance in Singapore since he took over the helm of the world's largest financial services company last October. He said Citigroup was very comfortable with the companies it deals with. 'I can't speak for every company in China that wants to go public; I can't speak for every transaction that we've ever done in China but we have very rigorous standards in our business,' he said. 'Our industry has learned a lot over the last couple of years, and I think that the way the regulators are progressing, their measured approach in taking companies to the capital markets, I feel very comfortable with,' said Mr Prince. Citigroup is very proud of the prominent role it played in China Life's US$3.5 billion IPO sale and hopes to get the mandate for the US$5 billion China Construction Bank IPO, he said. China Life yesterday fell another 3.7 per cent to HK$5.20 and was the most active stock traded in Hong Kong. US-traded shares of China's largest insurer fell even more - 7.4 per cent. Listed in both the US and Hong Kong, the company's shares at one point almost doubled from their December IPO price. It now faces a slew of research reports saying it was overpriced, including a 'sell' from Citigroup. A government investigation found that the state-owned company that China Life was created from misused 5.4 billion yuan of funds (S$1.1 billion). China Life's stumble once again highlighted the problems of transparency of Chinese companies. Mr Prince said he wanted to emphasise that China is very important to Citigroup and not just for transactional deals. 'We're more than transactional bankers,' he said. Citigroup has been in China for 102 years and aims to be there another 100 years, doing a range of businesses including credit cards, consumer products, life insurance and securities markets, he added. Citigroup has just launched a dual currency credit card in China, partnering Shanghai Pudong Development Bank. Mr Prince, who has been travelling to Asia just about every month since last year, said Citigroup's growth strategy focuses strongly on growth in the international markets. He is aiming for a 50-50 split in terms of contribution from the United States and the rest of the world. He also reiterated that blockbuster mergers were no longer the way forward for Citigroup. The group will be strongly emphasising organic growth, and slightly less on large transactions, he said. The era of transformational merger which changes the nature of the company fundamentally, including its name, with all its integration risks is over for Citigroup, Mr Prince said. In another development, from Frankfurt, Reuters yesterday said that the head of Deutsche Bank had declined to comment on reports that he had held merger talks with Citigroup. business-times.asia1.com.sg Rascal @MergersonlyBuySomeTime.com

To: mishedlo who wrote (75)	2/16/2004 6:26:54 PM
From: Jim Willie CB	Read Replies (2) \| Respond to of 116555

election will accelerate the US$ decline in 2004 why? reluctance to raise rates on short end strong desire to up the ante in monetary excess & accommodation increase in political bashing for trade protection as a solution lack of interest in any economic re-thinking of policies emphasis on lack of job creation will heighten attention of failed policy / jim

To: mishedlo who wrote (75)	2/16/2004 7:00:27 PM
From: FiveFour	Read Replies (2) \| Respond to of 116555

Thanks Mish for taking the time to respond and I agree with your comments. - US likely wants a weaker currency to help with exports and maybe reduce outsourcing arb. - There seems to be a very low likelyhood that the US will raise rates because of the economic/job situation is not solid in an election year. -It is more likely that EU will lower rates. -Also possible that EU will increase intervention, however these actions may slow, but not stop the dollar's slide. -The US could use a moderate dose of inflation to help its debt problem and that will also suggests holding rates. -EU and Japan and US central banks cant agree on what should be done, if anything. Putting the pieces of the puzzle together, short dollar position or interest rate spread on USD-EURO is looking low risk/high reward. >> That is what is starting to bother me because the risk/reward on this play seems to be out of whack so I am wondering what if anything I am missing.