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Volume I, Episode 22
June 27, 2007
COSCO - China Mobile - IPOs - Telecom Mergers & Acquisitions

June 21, 2007

New Record Highs in Hong Kong, Shanghai: Will Beijing Put On the Squeeze? - IPOs & more

June 15, 2007

Fundamental Misalignment: US-China currency war - stock markets up & IPOs

June 7, 2007

China Stock Pop - Hot News items - climate change, tainted food...

May 31, 2007

Chinese stock markets hiccup - IPOs - USA-China Trade Gap

May 25, 2007

Report on the 2nd USA/China Strategic Economic Dialogue: Win-Win or When-When? - Market numbers - New IPOs

May 18, 2007

New life for Hong Kong? IPO Update - USA/China summit

May 11, 2007

Will Shanghai end up like NASDAQ or Nikkei? - IPOs

April 30, 2007

Tulips to Dotcom - is Sino Mania the next big bubble?

April 20, 2007

The Heat is on! - IPO Report - Air Pollution in China

April 15, 2007

China markets, IPO update, Beijing Ready for Olympics?

March 30, 2007

China markets up, up, up! Sinomania! goes to China

March 23, 2007

Focus on National People's Congress... Hi-Tech, IPOs

March 17, 2007

China's new investment strategy, IPOs, the Wrap...

March 7, 2007

China syndrome or hong bao bounce? New IPOs... more!

February 27, 2007

China Stock Market Yo-Yo, new IPO issues, the wrap

February 17, 2007

Chinese New Year edition! Will China buy Chrysler & more!

February 9, 2007

The USA-China WTO trade dispute and New IPOs

February 1, 2007

IPOs: New Red Chip — Bubble Burst? — USA-China

January 26, 2007

BUBBLE TROUBLE? — IPOs on NASDAQ — Renminbi Yuan

January 20, 2007

IPOs in 3 hot sectors — BAOSteel — Macro Report

HKEX Hang Seng Shanghai
SSE Shanghai Hong Kong
SZEX Shenzhen Beijing
MUSIC in China: Listen!

Hot Summer for Shanghai! Big New IPOs and Changes in the Telecom Industry:
Sinomania! Volume I Episode 22, June 27, 2007

A $10 billion dollar IPO? Looks to be a hot summer in Shanghai!
Mergers and acquisitions in China’s telecom industry: Is the long anticipated consolidation here?

Market Recap

The Shanghai Composite inched its way back up past 4,000 after dipping below that mark at the beginning of the week. The same applies for the CSI 300 index which is again above 4,000 and closed June 28 at 4,040.484. Foreign investors remain jittery on B shares as both Shanghai and Shenzhen B share indexes are down to levels last seen at the start of May.

Big news of the week was the blockbuster IPO of COSCO (China Ocean Shipping Company) holdings domestic listing on Shanghai. COSCO is a state-controlled giant that is the fifth largest container shipping line in the world and is listed already on Hong Kong as an H share. COSCO’s Shanghai IPO was over subscribed 106 times and its shares have doubled in value since trading began on June 26 showing the bullish sentiment of Chinese investors for the high-profile state asset. The company plans to use its new funds to buy a fleet of dry bulk carriers and eventually expand into oil tankers. Already the biggest container cargo fleet in Asia, COSCO is one to watch as it could someday challenge the European majors.


Speaking of big IPOs, it looks to be a long hot summer in Shanghai as Chinese regulators are encouraging the big Hong Kong Red Chip firms to list locally and Chinese companies are still going overseas as well, despite persistent rumors to the contrary.

One such Red Chip, Hong Kong listed China Mobile, the world’s biggest mobile phone company on pace to have half a billion subscribers by 2008, is on for a giant IPO listing on the Shanghai exchange as soon as July although there is no firm timetable. Interest is so high for investing in China Mobile that expectations are the IPO could rake in $10 billion US dollars. I’ve got more on the telecom industry later in the show.

Fosun International, a Shanghai based conglomerate with investments in steel, retail, property, and other areas, has been called the Chinese “Blackstone Group,” and is planning an IPO on Hong Kong to raise up to one and a half billion US dollars. The money raised will be used to fund acquisitions in its core investment segments and repay debt. Core investors already include Li Kai-shing, Hong Kong’s richest man, and the Government of Singapore investment company. Fosun is majority owned by Chinese billionaire Guo Guangchang who co-founded the company.

And here’s a chance to invest in China’s movie business -- the Huayi Brothers Group, a media company with operations in television, music, advertising, and film, is planning an IPO outside China sometime next year. The company produced four of the top 10 grossing domestic movies in China last year. Wang Zhongjun, the elder brother that co-founded the company will remain in control of 70 percent of the company’s shares. Huayi Brothers already received around $32 million in series b and c venture capital funding. The IPO is planned for 2008 on an as yet unnamed overseas exchange. No other details at this time.

The Huayi Brothers films range from historical epics to action flicks (with Jackie Chan, of course) but also smaller pics relevant to modern Chinese society today. The movies have little exposure outside China which, I’m told, is a pity as they are among the best movies coming out of China now. For most Americans, in particular, Chinese movies still mean the films of the Xi’An school, such as Farewell My Concubine, Raise the Red Lantern, To Live, and others, all beautiful films in the grand tradition of early cinema but the Huayi Brothers productions are a new step toward a style of more popular but still profound movies. It will be interesting to see if their IPO next year helps them gain a wider audience.


After two years of speculation, China Unicom will indeed be split with its CDMA mobile network going to China Telecom and its GSM mobile network going to China Netcom, the two heretofore fixed-line only telecommunications companies in China’s southern and northern regions respectively.

China Unicom is the smaller of China’s two mobile companies, dwarfed by industry giant China Mobile. With the addition of mobile phones, China Telecom and China Netcom should open up the mobile phone business in China and eventually lead to the emergence of a true global competitor.

At the last National People’s Congress, Prime Minister Wen Jiabao accused the telecom sector of “monopolistic tendencies” and many insiders say that the restructuring needed in the industry is delaying the adoption of 3 G technologies in China.

How the consolidation of the telecom industry plays out will be important to watch as it will give clues to future restructuring in other Chinese industries, notably steel and automobiles.

I’ll see you next time!

© Sinomania! 2007 All Rights Reserved.

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