Business

AMMAN — Specialised Investment Compounds Company (SPIC) seems adamant on grabbing Jordan Ceramic Industries through a "difficult" merger.

SPIC told the Jordan Securities Commission (JSC) in a disclosure dated August 30, 2015 that its shareholders asked the board of directors, during an extraordinary general assembly, to go ahead and follow up on the procedures for a merger with Jordan Ceramic Industries.

The shareholders also approved lowering SPIC's capital to JD12.9 million and, later, increasing it to JD27.9 million through a public or private offering.

In a previous disclosure, the company told the JSC that the board of directors weighed up the merger's progress and difficulties and recommended that the general assembly of shareholders review and decide on the matter. 

"Should the merger process prove unattainable, it would be suitable to reduce the company's capital by JD12.9 million, write off the accumulated losses by the same amount and, later, propose increasing the capital by JD15 million through a public or private offering to SPIC's shareholders or others," the disclosure, dated August 16, 2015, said. 

At the end of last year, SPIC's accumulated losses reached JD17.7 million.

In the disclosure, the company mentioned that the approach to the merger began in late 2014 and described the decision of the board of directors in that direction as, in essence, "significant in format and substance".

The company indicated that because Jordan Ceramic Industries stopped production and manufacturing activities, SPIC was interested in developing its sizeable industrial
plot of land.

"Because SPIC is a developer of industrial real estate, it was seeking to develop this terrain and create an integrated project," it said.

Besides augmenting the value for the shareholders of both entities, it added that the merger would enrich SPIC with new assets and earnings.

SPIC currently owns Al Tajamouat Industrial City, located in Amman's Sahab neighbourhood, offering investors developed land and buildings serviced with the necessary infrastructure besides support services such as catering, housing, maintenance, security and operational solid waste removal.

These supplementary functions are provided by subsidiaries and affiliates such as Al Tajamouat for Catering and Housing, and Pluto for Housing Projects.

The merger process entailed the formation of a committee that was tasked with carrying out the required procedures as stipulated in the companies' law and accounting standards.

Moreover, the Companies Control Department appointed accredited real estate appraisers and industrial experts to professionally and fairly evaluate the assets of both firms.

According to the final merger report, submitted by them to the Companies Control Department on June 9, 2015 after detailed and precise evaluation, the estimated net equity for SPIC's shareholders at fair value amounted to JD34 million.

"Since then, we awaited the official response to execute the merger report but procedural issues beyond the scope of the company's business stalled that until this date [August 16, 2015]," the executive board chairman wrote to JSC.

Executive Chairman Imad Al Madaha told the bourse a few days  later that the decline in SPIC's share price was due to supply and demand mechanism.

"Other than the merger process and substitute plans that include reducing the capital and raising it should the acquisition do not materialise, there are no core developments behind the drop in the share price," he indicated.

He noted that the bourse relegated the SPIC's share listing from the second to the third market as of August 13, 2015.

SPIC's 20th annual report covering 2014 indicated that the company was able to sign up new investments and rent 21,481 square metres of vacant areas, accounting for 13 per cent of the ready made buildings.

The company was also able to renew previous rent contracts covering 78,442 square metres, representing 48 per cent of the buildings.

The report described last year's performance as the best during the past years despite all the surrounding conditions, mentioned competition with other industrial estates, whether governmental or private, as a principal risk, noting that private developers do not benefit from many privileges and advantages like public industrial estates.

It indicated that foreign investors are bowing out because of higher production costs, such as the increase in minimum wages and energy bills, and pointed to risks arising from austerity policies that directly affect the investment climate.  

"Although a number of local investors came to Al Tajamouat Industrial City, they were unable until now to substitute the foreign investors in terms of space or number of hired staff," the report said.

An analysis of the consolidated financial statement as of December 31, 2014 showed JD4.7 million in total earnings, JD0.7 million lower than the JD5.4 million generated during 2013.

Income from rent and housing amounted to JD2.3 million, and from catering the proceeds were JD1.8 million, followed by JD0.6 million from servicing the compounds.

In 2013, the earnings were higher, mainly as a result of JD1 million income from real estate sales.

According to the analysis, the company fell back into a JD5.1 million loss last year after posting a JD1.2 million profit in 2013. In previous years, SPIC was recording losses the highest of which was nearly JD6 million  in 2011.

The 2014 loss was calculated after taking into account administrative and general expenses as well as selling and marketing costs, besides financial payments.

Further deductions or additions covered issues related to affiliates and subsidiaries, realised and unrealised losses arising from sales of investments, in addition to provisions.

Financial expenses dropped from JD1.8 million in 2013 to JD1.5 million last year as the debts fell from JD21 million to JD15.6 million.

The annual report mentioned that on February 17, 2015 SPIC paid JD0.7 million and rescheduled the remaining JD11.25 million in bonds over the coming five-and-a-half years on the same terms, guarantees and interest rate, giving the company more flexibility and capability to operate and meet obligations.

Capitalised at JD25.8 million, SPIC's shareholders equity stood at JD16 million at the end of last year, liabilities totaled JD26.4 million and fixed assets added up to JD35.1 million, an amount that included JD18.7 million net value of buildings leased to investors, JD5.3 million of land investments, JD1.1 million of projects under implementation, and JD2.3 million of property and equipment.

39 employees worked at SPIC as of December 31, 2015, when major shareholders were: Mueen Mohammad Qadadeh (7 per cent), Rudain Tawfiq Kawar (5.6 per cent), Tawfiq Amin Kamel Kawar (4.1 per cent), Lujain Ali Khalaf Al Nawayseh (3.7 per cent) and Majed Ahmad Ghosheh (3.6 per cent).

AMMAN — Capital Bank announced Sunday in a press statement that  it signed a partnership agreement with the European Bank for Reconstruction and Development (EBRD) to support and enhance the contribution of small- and medium-sized enterprises (SMEs) to economic growth and employment.

In the presence of Capital Bank Chairman Bassem Khalil Al Salem, the agreement was signed by General Manager Haytham Kamhiyah, and Heike Harmgart, head of the EBRD resident office in Jordan.

"Under the agreement, Capital Bank was granted a $10 million credit line to promote SME activities by providing a wide range of financing products in addition to developing new products to reach a vast array of companies in this sector," the press release said. Kamhiyah highlighted the vital role EBRD plays in aiding various economic sectors through agreements with banking institutions.

This is the second agreement between Capital Bank and the EBRD which aims to support various economic sectors. The first agreement was signed in April 2015 to promote international trade in Jordan. 

AMMAN — The  Amman Chamber of Commerce (ACC) issued 36,226 certificates of origin during the first eight months of 2015 totalling JD817 million, according to an ACC statement issued Sunday. Iraq topped the list with JD256 million (1,809 certificates), followed by JD181 million (7,728 certificates) for the United Arab Emirates, and Saudi Arabia with a value of JD74 million (7,108 certificates), the ACC data showed.

Regarding the types of the certificates during the first half of 2015, re-exports ranked first with 4,799 certificates valued at JD465 million, according to the data. Agricultural products, whose value stood at JD165 million, came second during the January-June period with a total of 29,222 certificates, followed by JD94-million-worth of industrial products with 510 certificates, while Arab products accounted for 546 certificates with a value of JD51 million.

ANKARA — Financial leaders from the world's 20 biggest economies agreed on Saturday to step up reform efforts to boost disappointingly slow growth, saying reliance on ultra-low interest rates would not be enough to accelerate economic expansion.

But they also said they were confident growth would pick up and, as a result, interest rates in "some advanced economies", code for the United States, would have to rise.

"Monetary policies will continue to support economic activity consistent with central banks' mandates, but monetary policy alone cannot lead to balanced growth," the communique of the Group of 20 (G-20) finance ministers and central bankers indicated.

"We note that in line with the improving economic outlook, monetary policy tightening is more likely in some advanced economies," it said.

The wording defied pressure from emerging markets to brand an expected US rate rise as a risk to growth.

"We heard different opinions on the possible decision of the US Federal Reserve. Some think the Federal Reserve needs to make a decision sooner rather than later, while others think it should delay," Turkish Deputy Prime Minister Cevdet Yilmaz told a news conference.

To limit the volatility of capital flows from emerging economies into dollars, the reason for concern about a future Federal Reserve hike, G-20 financial leaders said they would avoid any surprise or excessive moves.

"We will carefully calibrate and clearly communicate our actions, especially against the backdrop of major monetary and other policy decisions, to minimise negative spillovers, mitigate uncertainty and promote transparency," they said.

Concern about the turbulence that might be caused by a possible Federal reserve rate hike was amplified by investor worries over an economic slowdown in China, the world's second biggest economy.

G-20 officials said they discussed the devaluation by China of its renminbi currency in August, a move some may see as a realignment to market rates rather than a move to help exports.

"Many supported the measures that China took... the ministers were very tolerant," Russian deputy finance minister Sergei Storchak told a news briefing.

The Chinese devaluation as well as the stock market plunge on growth jitters were all part of a difficult path to a more liberal economy, officials said.

"It's an unbelievably difficult transformation and it's not surprising that there are bumps, that it's not a perfectly smooth process, and I think we had plenty of explanations, opportunity to ask questions, and it was a dialogue, and a very open one," International Monetary Fund (IMF) head Christine Lagarde said after the meeting.

But some were less impressed.

"Their explanations weren't very good. They should have been much clearer," said Japanese Finance Minister Taro Aso.

Low rates alone ‘won't cut it’

G-20 officials welcomed strengthening activity in some economies but said that growth fell short of expectations because reforms were not being implemented quickly enough.

Last year, G-20 leaders agreed to boost global output over the next five years by 2 per cent above what was already expected at the time through coordinated reforms and investment.

But they were behind schedule, the G-20 communique remarked.

"We are making progress towards our commitments [but]... more effort is needed for implementation," the statement said.

Lagarde was even more explicit, making clear governments had for too long relied on the supply of cheap cash from central banks that have been running ultra-loose monetary policy.

"Monetary policy alone will not cut it. It is necessary. It is recommended from our perspective, particularly in Europe and in Japan still, but it will not cut it on its own," she stressed.

"Clearly in the fiscal sphere as well as in the structural reforms sphere, more needs to be done, and it needs to accompany and eventually take the baton from the central bank governors," Lagarde said.

But, in what appeared to be a vicious circle, the reforms were made more difficult by the weaker global growth, Canadian Finance Minister Joe Oliver told reporters.

"We're making progress, but the base that we hoped we would have, we haven't arrived at, because the growth has been disappointing and the projections have been downgraded," Oliver said, adding that one-third of the G-20's extra growth commitments have been implemented.

Boosting investment was key, the G-20 financial leaders agreed. Governments will prepare their final investment strategies by November, when G-20 leaders are to meet to discuss them in Antalya in Turkey.

AMMAN — Amman Chamber of Commerce (ACC) President Issa Murad proposed several mega-projects to Gulf Arab investors on Saturday.

During a working session at the Gulf-Jordanian Economic Communication Forum, Murad detailed investment opportunities in the education, health, agriculture, construction, telecommunications and tourism sectors, according to an ACC statement.

He suggested establishing a JD81 million glass dappen dish factory, the Aqaba University for Technology at a total cost of around JD10 million, a JD51 million hospital, a tractor assembly plant, a garment factory in addition to other chemical industries ventures, the statement said.

Murad said the forum provided a platform to brainstorm ways to enhance the existing economic cooperation between Jordan and the Gulf Cooperation Council's (GCC) member states. 

He added that businesspeople from Jordan and the GCC are working on increasing trade, expertise exchange and implementing joint economic ventures. 

Prime Minister Abdullah Ensour inaugurated the forum on Thursday, underlying  Jordan's "brotherly and deep-rooted" relations with GCC countries and expressing hope that the forum will help expand bilateral economic ties.

"As a result of these distinctive and brotherly relations, the volume of GCC member states' investments in Jordan amounted to $40 billion by the end of last year, distributed among all... sectors," Ensour said.

He also said that the volume of trade exchange between the GCC countries and Jordan reached around $5.7 billion in 2014, commending the preferential treatment given to Jordanian expatriates in the Gulf States who channel around $3 billion a year into Jordan's economy, Petra reported.

Expressing appreciation for the Gulf countries' endless support to Jordan, Ensour said the GCC's grant to the Kingdom has contributed immensely to improving the infrastructure and basic services, Petra said.

Calling for more cooperation between Jordan and the Gulf countries, Ensour said that Jordan's population has increased dramatically over the past few years from 7 to 11 million, of which 1.4 million are Syrians, in addition to 500,000 Iraqis, 45,000 Yemenis and 35,000 Libyans, apart from more than 2 million Palestinian refugees.

AMMAN — Oxford Business Group (OBG) announced in a press statement this week that it will be publishing a wide-ranging interview with Planning and International Cooperation Minister Imad Fakhoury in its forthcoming “The Report: Jordan 2015”, on the country’s economy.

It indicated that the report will contain a detailed, sector-by-sector guide for investors, alongside contributions from leading personalities, including Prime Minister Abdullah Ensour, Finance Minister Umayya Toukan, Jordan Investment Commission President Montaser Oqlah and Central Bank of Jordan Governor Ziad Fariz.

"A raft of reforms that includes new legislation covering investment, tax and public-private partnerships (PPPs) will support Jordan’s bid to galvanise economic growth," Fakhoury told the global publishing, research and consultancy firm. 

According to the statement, Fakhoury said the government was seeking investment for a broad range of projects worth almost $20 billion, in line with its 10-year development plan for the country, Jordan 2025, which was launched in May. 

“Our message to international investors is that despite the regional circumstances, Jordan has succeeded in turning challenges into opportunities,” he said, “and the economy has shown resilience evidenced by the positive momentum in growth and a strong external position.” 

Fakhoury added that most projects would take the form of PPPs. Areas earmarked for investment, he indicated, included energy, transport, water, infrastructure, urban development, tourism and ICT.

The Syrian refugee crisis in Jordan was another topic given extensive coverage in the interview. Fakhoury described the economic and social impact of the refugee influx as “a fundamental source of concern in the Kingdom”. 

He went on to say that it has  had put a major strain on finances, services, infrastructure and host communities because donor support, which is much appreciated, is neither covering the annual burden nor keeping up with expanding needs.

“Today, the Jordan Response Plan 2015 is only 34 per cent funded,” he added.

Even allowing for additional pledges, he warned, two-thirds of the funding needed will not be met. “Given the critical importance of mobilising additional financial resources, all options to support hosting refugees on behalf of the international community should be employed,” Fakhoury told OBG.

FRANKFURT — The European Central Bank (ECB) cut its growth and inflation forecasts on Thursday, warning of possible further trouble from China and paving the way for an expansion of its already massive 1 trillion-euro plus asset-buying programme

The ECB, which left interest rates unchanged in a widely expected decision, said growth would suffer from fading momentum in emerging markets, particularly China, and falling oil prices could drag the 19-member eurozone back into deflation in coming months.

The new projections are a stark admission that Europe's recovery, described by the bank as disappointing, is hardly gaining momentum. Consequently, the ECB may have to roll out new measures, just six months after it began quantitative easing (QE), considered a policy "bazooka" when it was introduced in January.

For the first time, ECB President Mario Draghi said explicitly the bond-buying programme may run beyond September 2016 and the bank may adjust its size and composition. As it stands, the ECB is buying 60 billion euros ($66.68 billion) per month asset buys, mostly government bonds.

"There aren't special limits to the possibilities that the ECB has in gearing up monetary policy," Draghi told a news conference. "The risks to the euro area growth outlook remain on the downside, reflecting in particular the heightened uncertainties related to the external environment."

The euro fell 1 per cent against the dollar on Draghi's comments, European stocks rallied and bond yields fell as investors started to price in new policy steps from the bank.

"The words chosen by the ECB suggest that it would not hesitate to raise the size of its asset purchases and prolong them beyond September 2016 if the outlook for growth and inflation weakens further," Holger Schmieding, an economist at Berenberg said.

"As far as such conditional statements go, the ECB was rather clear: It would not take much further turbulence to trigger an ECB response. We can count this as a clear verbal intervention," he added.

In one small change to the QE scheme, a possible precursor for further moves, the bank increased the share of any sovereign bond issue it could buy to 33 per cent from 25 per cent, provided that did not give it a blocking minority among bondholders.

"September 2016 is still a long way off, and the market would probably not be much impressed by the announcement of a mere continuation of the purchases beyond this date," Commerzbank economist Joerg Kraemer said.

"We think the ECB is more likely to announce a higher monthly purchase volume, fuelling expectations that it will extend its bond purchases well beyond September 2016," Kraemer added.

China

The ECB expects eurozone headline inflation, now running at 0.2 per cent, to average just 0.1 per cent this year, down from previous expectations of 0.3 per cent.

Even for 2017, the bank lowered its forecasts to 1.7 per cent from 1.8 per cent. That suggests hitting its inflation target of just under 2 per cent may be difficult even years from now.

Adding to uncertainty, Draghi said the forecasts were made in the first half of August. The worst of China's market volatility and the drop in oil prices came later, so the figures may still be too optimistic.

However, the domestic outlook is relatively healthy. Lending is increasing, unemployment falling and the latest composite purchasing managers' index rose unexpectedly.

Meanwhile, the external outlook changed for the worse. Growth in China, the world's biggest economy, is expected to reach a two-decade low, hurt by soft demand, over-capacity and falling investment.

Its economy has been further buffeted by plunging shares and a surprise devaluation of the yuan, a combination of factors that is rattling global markets and could strain relations with China's major trading partners.

Draghi said China's faltering growth would also weaken other emerging markets, with ramifications for the rest of the world.

"It is never an easy task to engineer an orderly de-leveraging process, especially as the country also faces other structural problems," Royal Bank of scotland indicated. "A less well-controlled credit crunch in China can have contagion effects into other countries."

The ECB now sees GDP in the euro zone growing 1.4 per cent this year, below its previous 1.5 per cent projection. The forecast for 2017 was cut to 1.8 per cent from 2 per cent. Draghi said the cuts were caused by weaker external demand.

A majority of analysts polled by Reuters before Thursday's meeting expect the ECB to extend or increase its asset purchases. Three quarters said the bank has simply run out of tools and that adjusting QE was its only viable option left.

AMMAN — US Embassy Economic Counsellor Susannah Cooper told a gathering organised this week by  the American Chamber of Commerce in Jordan (AmCham-Jordan) that there is room for further expanding the presence of American firms in Jordan’s marketplace, in addition to strengthening the business community.

According to an (AmCham-Jordan) press statement, she expressed her belief that through closer collaboration with AmCham-Jordan, including private sector leaders, the challenges faced both today and tomorrow could be overcome.

AmCham-Jordan Chairman Mohammed Bataineh said in the statement that there is still much potential for further economic growth new ways to promote bilateral trade. US Ambassador to Jordan Alice G.

Wells highlighted the US embassy’s partnership with AmCham-Jordan to advance many joint projects to encourage economic growth indicating that Jordanian exports to the US grew by approximately 7 per cent during the first half of 2015.

Before taking the post in Jordan, Cooper’s prior positions included economic counsellor at the US embassy in Abu Dhabi, and political/economic officer for the US embassy in Tunis. She later worked in Washington DC as director of the Office of Maghreb Affairs for the Bureau of Near Eastern Affairs with the US Department of State.

AMMAN — An Italian delegation of investors on Wednesday expressed interest to invest in industrial estates, due to the characteristics and investment incentives they offer.

The Jordan Industrial Estates Corporation (JIEC) said the delegates praised the Kingdom's effort in promoting the investment environment in different international events.

During their visit to the corporation, the delegates listened to a briefing from JIEC Chief Executive Ali Madadha on the Jordanian "successful" experiment in designing, executing and promoting the Kingdom's industrial estates.

Madadha reviewed the new projects JIEC is willing to implement, financed by the Saudi Development Fund, in the governorates of Jerash, Balqa and Madaba, stressing that Italian investors are welcome to run their schemes in the Kingdom's industrial estates.

The delegates included high-profile Italian investors in the fields of kitchens, real estates, constructions and experts in the Euro-Mediterranean economic relations, and were accompanied with Jordanian businessman Adnan Rousan who is expert in the Italian market for more than 30 years.

Rousan announced that arrangements are undergoing to organise a visit by a delegation of tens of Italian investors who might be accompanied with Italian officials to have a firsthand look on Jordan's industrial estates and invest in the Kingdom.

SHANGHAI — Investigations by Chinese authorities into wild stock market swings are spreading fear among China-based investors, with some unsure if they are simply helping with inquiries or actually under suspicion, executives in the financial community said.

Chinese fund managers say they have come under increasing pressure from Beijing as authorities’ attempts to revive the country’s stock markets hit headwinds, with some investors now being called in to explain trading strategies to regulators every two weeks.

One manager at a major fund, part of the “national team” of investors and brokerages charged with buying stocks to revive prices, said a friend, also an executive at a large fund, was recently summoned for a meeting with regulators, along with all other mutual funds that had engaged in short-selling activity.

“If I don’t come back, look after my wife,” his friend told him, handing the manager his home telephone number.

China has unleashed a volley of measures to try to prop up its stock markets  that have fallen around 40 per cent since mid-June, pushing domestic brokerages and fund managers to buy up shares and banning investors with large stakes from selling their holdings for six months.

The authorities’ meddling has unnerved many investors, leaving them questioning China’s commitment to liberalising its capital markets and the long-term future of the country’s stock markets themselves.

Adding to those concerns is the fact that authorities have also been probing investment funds’ trading strategies, looking into whether they have been engaging in alleged “malicious” short-selling or market manipulation.

On Monday, Bloomberg reported that Li Yifei, the China chairwoman of Man Group Plc., one of the world’s largest hedge funds, had been taken into custody to help with inquiries.

Reuters has not independently confirmed the report, while Li’s husband has said she is having “normal” discussions with regulators. Man Group shares fell as much as 6 per cent on Tuesday following Bloomberg’s story.

Foreign fund fears

Sources told Reuters that the increased tempo of meetings with regulators has become intimidating, especially for foreign funds used to relying on their Chinese brokers to represent them when dealing with Beijing.

While foreign investors are unlikely to be a major factor behind stock market swings, given their relatively low participation in the market compared with domestic players, they are seen as more politically vulnerable to investigations.

“The foreign fund community definitely feels like it is being monitored more carefully than it’s been in a very long time,” said one foreign fund manager.

“Nobody is pointing at you and saying you are doing anything illegal. But it’s enough to ask people to walk through all their trades, and ‘why is this account trading so much?’ That ramps up the pressure,” he added.

Some Chinese believe the collapse in Chinese stocks was engineered by foreigners, and there has been speculation that it was caused by the US government to embarrass China as the International Monetary Fund (IMF) considered, including the yuan in its currency basket.

There are no signs yet the pressure has caused foreign funds to withdraw from the market altogether or pull out staff from the country.

But fund experts say there is a risk that if foreign investors feel intimidated enough that they can no longer employ trading strategies to allow them to profit from volatility, they may eventually have little choice but to leave, for the short term at least.

“This crisis has highlighted the need for a China-specific investment model. Simply porting strategies that worked in the US is not feasible,” said Daniel Celeghin, a consultant to hedge funds as Hhad of Asia Pacific for Casey Quirk based in Hong Kong.

For Chinese funds though, the option to pack up and leave isn’t there, and if the volatility continues, the pressure on them is likely to intensify.

The “national team” fund manager said that as well as meetings with regulators, they are now calling him every day to ask how much he is selling and buying.

On Monday, Chinese state media announced a slew of confessions following investigations into dramatic stock market fluctuations, including from a reporter who said he had spread false information that had caused “panic and disorder”.

An official from China’s securities regulator, and four senior executives from China’s largest brokerage, CITIC Securities, confessed to insider dealing, the official Xinhua news agency reported.

Authorities have announced crackdowns on fabricated trading information, alleged malicious short selling and other strategies seen as weakening confidence in the stock market.

Wang Xiaolu, a reporter at the respected Caijing business magazine, read a confession about his reporting on the stock market on a national state television broadcast on Monday.

“I shouldn’t have sought to make a big splash just for the sake of sensationalism,” he said on China Central Television, adding that his actions had “brought great harm upon the country and investors”.

It was not possible to verify whether Wang was forced to make the confession or did so of his own free will.

Chinese state media often publish confessions of those detained in high-profile cases before they are tried in court, a practice that rule of law advocates say violates the rights of the accused to due process.

Xinhua said Wang had confessed to writing about the Chinese stock market “based on hearsay and his own subjective guesses”.

Xinhua also said Liu Shufan, an official with the China Securities Regulatory Commission (CSRC), had confessed to insider trading, forging official seals and using his position to boost a company’s share price in return for several million yuan of bribes. 

Xinhua added that Xu Gang, Liu Wei, Fang Qingli and Chen Rongjie, whom it described as senior executives at CITIC Securities, had confessed to insider trading, although it gave few details.

A CITIC Securities spokesman declined to comment. On Sunday, the brokerage said several senior managers had been asked to assist with a public security investigation and that the company was actively cooperating with the request.

Eight CITIC employees were being investigated for suspected illegal securities trading, Xinhua has previously said.

Separately, China is urging listed companies to merge and restructure, according to an official statement, as the government seeks to avert a stock rout and encourage investors to return to the market.

China will strongly encourage mergers and acquisitions involving listed firms to help push reform of state companies and inject vitality into the economy, said a joint statement released by four government agencies late Monday.

The notice also stressed measures to boost the stock market, including encouraging firms to pay cash dividends to optimise investor returns and encourage investors to hold stock for the long-term, and urging companies to buy back their own stock — which should see prices rise.

China last year announced a combination of its top two train makers, state-owned China CNR Corp. and CSR Corp., into a single huge conglomerate — sending their shares soaring.

Market speculation about possible mergers between state giants has since focussed on energy, shipping and telecommunications.

But energy giant Sinopec has denied reports that the government was planning to merge the firm with another domestic energy behemoth, China National Petroleum Corp.

Bloomberg News reported last month that Beijing may merge two of its largest shipping companies, and there was recent speculation that top telecom firms China Unicom and China Telecom would merge as the government swapped the two companies’ chairmen.

China will simplify mergers and acquisition approvals, expand ways for companies to fund deals, and push banks to finance cross-border mergers, the government agencies’ statement said.

State media reported in April that the official Assets Supervision and Administration Commission, which manages state firms under the direct supervision of the central government, was considering merging scores of the biggest such enterprises to create around 40 national champions from the existing 111.