(WSJ) Foreign firms that include some of the biggest names in U.S. private equity are rushing to raise Chinese funds that offer a new route to getting deals done in the world’s fastest-expanding major economy.

In the latest example, Carlyle Group LLC is in advanced discussions to raise a local-currency private-equity fund of several billion yuan, according to people familiar with the situation, after already setting up a previously undisclosed smaller yuan fund earlier this year for growth-capital investments. Kohlberg Kravis Roberts & Co. also is actively studying setting up a yuan-denominated fund, according to people familiar with the situation. Continue (继续)

(Bloomberg) China’s Shanghai Composite Index fell to a two-month low, led by metal stocks, as the gauge approached levels signaling a so-called bear market.

Maanshan Iron & Steel Co. fell 6.2 percent after posting a 795.4 million yuan ($116 million) net loss for the first half. Jiangxi Copper Co., China’s biggest producer of the metal, lost 8.7 percent. China Everbright Securities Co. sank 9.3 percent, paring yesterday’s 30 percent climb on debut. Continue (继续)

(SMPC) The mainland’s key stock index, the world’s worst performer this month, may fall another 10 per cent as bank lending slows, said Andy Xie, a former Morgan Stanley chief Asian economist.

“The current correction is reflecting the tightening in lending,” said Mr Xie, who correctly predicted in April 2007 that China’s equities would tumble. “We’ve seen the peak of this market cycle, although there’s likely to be a bounce as the government seeks to stabilise the market.” Continue (继续)

(WSJ) China’s most-watched share index has tumbled 16% over the past two weeks, but analysts say this doesn’t mean the party is over, largely because Beijing probably doesn’t want it to be.

The stock market is expected to benefit from still-flush liquidity, a likely improvement — albeit at potentially a slower pace — in economic readings, and possible market-supportive moves from Beijing. With the 60th anniversary of the Chinese Communist Party’s rule on Oct. 1, officials will likely want the stock market to be in good shape.

The outlook is less clear beyond Oct. 1, but going by history and the current loose monetary-policy settings, many analysts say Beijing is likely to only gradually let the air out of the market. Continue (继续)

(WSJ) It is the very definition of historical irony. Preparing to celebrate the 60th anniversary of the founding of the People’s Republic of China, the Chinese Communist Party won’t want a plunging stock market to mar the festivities.

This is the latest thinking among traders, who are trying to rationalize an end to the slide in Chinese stocks. It highlights the Shanghai market’s defining characteristic: Successful investing there is achieved by sniffing the winds from Beijing. Continue (继续)

(WSJ) China’s state planning agency submitted a draft of rules governing local-currency private-equity funds to the State Council, according to a government official, a move that comes as Blackstone Group LP announced plans to raise a five-billion-yuan ($732 million) local fund.

Chinese officials have been debating the rules for setting up private-equity funds since at least 2007 and their submission to the State Council, China’s highest administrative body, indicates government officials could be close to reaching consensus on how to oversee the industry. Continue (继续)

(China Daily) The booming Chinese stock market and the quick recovery of the domestic economy have propelled qualified foreign institutional investors (QFII) to book overweight positions in A shares.

Overseas institutions held 338 million shares in 60 listed firms worth 36.6 billion yuan ($5.36 billion) at the end of the first half, according to figures from financial information provider Wind Info.

Belgian Fortis Bank SA/NV bought 9.93 million shares in Jiangsu-based engine manufacturer Jianghuai Engine Co in the second quarter, boosting its total holdings in the company to 22.15 million or 2.62 percent of the total tradable shares.

French firm La Compagnie Financiere Edmond de Rothschild Banque boosted its shareholdings in Shanghai Yimin Commercial Co to around 14 million in the first half, accounting for 1.91 percent of Yimin’s total tradable shares. Continue (继续)