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China SEARCH Engine
Volume I, Episode 32
September 19, 2007
New IPOs Rock Shanghai! But is Resistance Building? A Big Push for Private Equity… More!

September 10, 2007

Report on APEC 2007 - Energy Security - Markets Update - IPOs in Hong Kong

August 30, 2007

Chinese Stocks Stay Up - Big Bond Sale - IPOs - Upcoming Party Congress

August 22, 2007

China Stock Markets Get Higher But For How Much Longer? - Surprise Rate Hike - IPO Update

August 14, 2007

China Toy Recall - Markets & IPOs - Western Banks Catch Asian Flu?

August 6, 2007

Shanghai Composite Busts Past 4,600 - Beijing Bets on Banks - Chinese IPOs in Japan

July 31, 2007

China Stocks Up Again & Again! - Pussyfooting Around Currency? - Democracy in Japan?!

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

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

TRANSCRIPT: A Report on the Chinese stock markets and big new IPOs: New investment funds; Critique of RateFinancials Warn on Chinese ADRs...
Sinomania! Volume I Webisode 32, September 19, 2007

Massive New IPOs Rock Shanghai!
But is Resistance Building?
A Big Push for Private Equity…
And Is It Quantity over Quality with Chinese Stocks?


The Shanghai composite index is still above 5,000 and looks to stay that way for the immediate term. The index hit a record high yesterday at 5,425.208, down slightly today. The CSI 300 index looks much the same with a new record high September 17 at just under 5,500. B shares in Shanghai are way up for the week but still below the level of the end May peak. Shanghai Bs closed September 19 at 359.63. ShenZhen B shares mirror this performance and closed today at 776.

Overall stock markets surged since yesterday's interest rate cuts announced by the American Federal Reserve. Helicopter Ben Bernanke will indeed drop dollars on financial markets that in the words of economics commentator Martin Wolfe have taken the global economy hostage.

But there was no yang from the Chinese central bank but yin as the People's Bank of China took the opposite tactic and increased both the base deposit and lending rates, the fifth rate hike so far this year with more to come according to Morgan Stanley's Qing Wang in Hong Kong. Chinese central bankers are still trying to cool down the economy and most importantly growth of China's money supply.

Resistance may be building in the Shanghai markets according to some observers. Indeed my latest rough support and resistance chart of the Shanghai Composite shows lackluster potential above current levels. Remember my call earlier this year was for the index to be around 4,600 by 2008…

And new investment targets are finally on the horizon giving cash rich Chinese a chance at diversification.

Four new industry investment funds were approved by China's State Council and plan to raise cash valued over $6 billion US dollars. They will operate as a type of private equity fund and will support businesses in four key areas and locations: Shanghai for financial investments, Guangdong for atomic power, Shanxi for coal, and Sichuan for high tech industrial manufactures. And there is a fifth fund, a joint China-Singapore fund also in high tech.

The Chinese corporate bond market will get a slight boost from China Yangtze Power, listed as an A share, which plans to issue $4 billion Yuan worth of 10 year fixed-rate bonds starting next Monday.


The blockbuster IPO of the week is China Construction Bank raising almost $8 billion US dollars (Y58.05 billion or approximately $7.7 billion US dollars) and is now the biggest domestic IPO champ of the year. The A share stock is expected to list in Shanghai early next week and is already listed on the Hong Kong exchange as an H share. Charlotte, North Carolina, based Bank of America is a strategic investor and owns over eight percent of China Construction Bank.

Bank of Beijing also opened today and its share price almost doubled.

Rounding out a very busy morning in Shanghai, China Shenhua began accepting bids for its IPO. China Shenhua is the largest coal company in China accounting for about ten percent of the country's production and the money raised could be used for acquisitions overseas. The company's chairman told the Financial Times he was interested in buying mines in Indonesia and Australia as transportation costs to China's booming southern coastline are cheaper over sea than over land from northwestern China. This is an interesting and potentially important development affecting many areas of investment in the mid to long term.

All three of these IPOs were mentioned in previous episodes of this broadcast.

And the Boeing company has officially hitched its wagon to China announcing with some fanfare that its gravy train focus is the 3,400 new planes Chinese airlines will need to buy over the next 20 years valued at $340 billion US dollars. Boeing is claiming this market as its own despite intense competition from Airbus and China's intent to develop big body airplanes during the same time period. Boeing shares - traded as BA on the New York Stock Exchange - were up considerably on the announcement and closed today at $100 dollars and two cents a share.


Earlier this week a stock rating business called Rate Financials said the major Chinese companies listed on the New York Stock Exchange, such as PetroChina, China Mobile, China Life Insurance, and so on, which are among the top 50 most valuable companies in the world and whose stock is held by thousands including admired investors such as Warren Buffet, have poor earnings quality and poor disclosure and the exchange was criticized for championing Chinese IPOs. Particular emphasis was placed on the amount of shares still owned by the Chinese government.

But there are numerous other big public companies that are partly or even wholly owned by foreign governments such as France and Russia to give only two examples.

RateFinancials' methodology gives plus or minus scores for such things as expensing stock options, overoptimistic assumptions on future earnings, low tax rates, discontinued operations, corporate governance, inventory, free cash flow, and what information is shared with stockholders.

But rating agencies have lost a lot of credibility in the wake of the subprime panic and the rating and ranking of securities remains a subjective process despite all efforts to wrap them up with technical analysis.

I still believe the Chinese companies on the New York Stock Exchange are an exciting chance to ride the Chinese juggernaut.

I'll see you next time!

© Sinomania! 2007 All Rights Reserved.

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