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Volume I, Episode 26
July 31, 2007
China Stocks Up Again & Again! | Pussyfooting Around Currency? Democracy in Japan?!
Sinomania.TV

July 25, 2007

Will Barclay's Turn Chinese? 2Q/H1 Macro Report + IPOs!

July 19, 2007

Food Fight! China-USA sling hash / Peak Oil? / Markets Flat Line...

July 10, 2007

Chinese markets confused? Big IPOs - Chery+Chrysler

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


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TRANSCRIPT: Chinese Stocks Break New Records, Pussyfooting Around Currency, and Democracy comes to Japan with implications for US-Japan-China relations:
Sinomania! Volume I Webisode 26, July 31, 2007

Democracy in Japan?!
Chinese stock markets reach new highs again and again!
And is Bush Pussyfooting Around China…

RECORD HIGHS AGAIN AND AGAIN

At the end of last week the Shanghai Composite index broke past 4,300 for a new record high and has been breaking records ever since. Even as we speak, the Shanghai Composite has briefly pierced the 4,500 mark making my prediction that the index will reach 4,600 by 2008 seem modest and in sight. The index closed July 31 at 4,471.032, a new record high.

Performance is the same across the boards with the CSI 300 breaking records every day since July 25 and closed July 31 at 4,460.564. And B Shares have surged as well, Shenzhen B Shares reached new record levels last week and continue up, Shanghai B Shares are advancing well but are still below their May 21 peak.

The current run up in share prices is occurring despite new policy initiatives from Beijing designed to cool down the economy. In the past week alone, there was a half percent increase in banks' reserve requirement and an increase of just over a quarter percent in bank lending and deposit rates.

So are we in a sucker's rally or in the process of creating a new plateau? Only time will tell.

The biggest IPO story of the week is the surprise announcement from Jack Ma, the flamboyant founder and CEO of Alibaba one of China's biggest e-commerce firms (40% owned by Yahoo!) That it will IPO on the Hong Kong exchange in the near future - no timetable or details are available but the sale could raise almost $1 billion US dollars, cash to use for global expansion.

PUSSYFOOTING AROUND

At a conference in the Philippines, Rodrigo Rato, Managing Director of the IMF - the International Monetary Fund - said that China and India will be the new engines for world economic growth in years ahead. Rato further declared that China this year overtook the USA to become the biggest contributor to world economic growth.

Meanwhile US Treasury Secretary Hank Paulson is in China for the fourth time this year to plead once again for more rapid appreciation of the Yuan. Paulson knows that the US Congress has bipartisan support and is moving forward with anti-China trade legislation.

Last week, the fundamentally mis-aligned China currency bill (discussed in an earlier episode) was passed by the Senate Finance Committee with only one vote against. Republican Senator Chuck Grassley of Iowa said the bill will force the White House to stop "pussyfooting around" with China.

In response, Paulson and other Bush cabinet members sent a message to Grassley and the other Senators behind the measures warning them that such action could weaken the United States and "trigger a global cycle of protectionist legislation."

But these words fall on deaf ears with so many politicians focused only on next year's elections. I've warned for some time that this backlash was coming and a Bush veto most likely won't stop it. The repercussions could be profound. This is an another important development to watch.

DEMOCRACY COMES TO JAPAN

With a landslide victory in the upper house of the Japanese parliament, the Democratic Party of Japan or DPJ at long last ended at least partially Japan's one-party rule in the most significant political development in Japan since the end of the United States occupation in 1952.

Already the DPJ is taking Washington head on with a threat to veto any extension of emergency anti-terrorism legislation that allows Japanese assistance to American policing of Middle Eastern sea lanes.

The DPJ, led by Ichiro Ozawa is largely unknown to US officials used to dealing only with their close allies, some might say puppets, in the Liberal Democratic Party or LDP that have controlled Japan for over half a century. Ozawa left the LDP around 14 years ago and brought himself and his center-right Liberal Party into the DPJ in 2003. The DPJ is a curious mix of ex-LDPers, socialists, and conservatives.

Ichiro Ozawa's views are also mixed and his real intentions are subject to debate. In the not so distant past, he was well known for ardent nationalism and a desire for remilitarizing Japan. At the same time, however, Ozawa has a long record of criticizing the honoring of Class-A war criminals at the Yasukuni shrine by Japanese Prime Ministers, which is perhaps the main bone of contention between Japan and China, in particular. The General Secretary of the DPJ, Naoto Kan, has also criticized the Yasukuni shrine and visited Nanjing where he apologized for the Japanese military's massacre and atrocities there in 1937, the infamous Rape of Nanking.

An official apology from Japan for the brutal war and occupation it waged across China from 1932 to the 1940s is the most sought after diplomatic victory desired by the Chinese government.

If Ozawa and the DPJ are successful in forcing an early general election in Japan and they actually unseat the Liberal Democratic Party - certainly no easy feat, one thing will be clear: the direction of Japan's relations with the USA and China would no longer be certain. And that has huge implications for the future.

I'll see you next time!

© Sinomania! 2007 All Rights Reserved.

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