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Earnings Dip Forecast For China's Largest Companies


A leading credit rating agency has forecast an earnings dip for China's largest companies and Malaysia's state-owned investment company has issued the world's first convertible Islamic bonds.

The rating agency Standard and Poor's says China's largest companies are having another good year in 2006. But the company says earnings growth is likely to slow next year.

John Bailey is Standard and Poor's managing director for corporate ratings in Asia. He says the Chinese government's market-cooling measures, too much expansion and high raw material costs have started to bite.

"We are seeing a slowdown, a slowdown of momentum, a slowdown of growth rate, and we are seeing also from the survey very much a concentration," he said. "The top 10 companies, listed companies, account for 70 percent of the earnings out of the top 200 companies."

The Malaysian government's investment company Khazanah has raised $750 million from the sale of the world's first convertible Islamic bonds. This type of bond does not earn interest. Investors gain by converting the bond into company shares. The bonds Khazanah has issued can be converted into shares of Telekom Malaysia, the country's leading telephone company, which Khazanah controls.

About 60 percent of Malaysia's population is Muslim and the country is Asia's leader in Islamic banking. Islamic banking bans the collection and payment of interest as well as transactions with businesses associated with gambling, alcoholic beverages or pig products.

Central Japan Railway Corporation will spend more than $3 billion over the next decade to develop high-speed magnetic-levitation trains. The company will extend its maglev test line in central Yamanashi prefecture from 18 to more than 42 kilometers and build new trains.

Maglev trains skim over a guide rail on magnetic fields without touching the track and can reach a speed of up to 580 kilometers an hour. The world's only commercially operating maglev trains are in the central Japanese city of Nagoya and in Shanghai in China.

Business leaders from Japan and India have signed an agreement in New Delhi to boost trade cooperation. India's trade minister Kamal Nath has pledged to set up a special unit to help Japanese investment projects in his country. Nath also said negotiations on a formal Economic Partnership Agreement between the two countries could start next year.

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