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Volume I, Episode 37
October 24, 2007
SPECIAL REPORT: 17th Party Congress - Shanghai Bubbles? - Market Numbers

October 15, 2007

China Bull Run Gets New Highs - PetroChina - IPOs - Money - more

October 9, 2007

Chinese Stocks Up & Up - IPOs - Iron & Steel - Pacific Pipeline - more

October 4, 2007

Hong Kong Booms - Commodities, Inflation, Oil at $100 a barrel? - more

September 25, 2007

UAW Tells GM No Jobs For China - Markets Hit 5,500 - China's Auto Industry - IPOs

September 19, 2007

New IPOs Rock Shanghai! But is Resistance Building? A Big Push for Private Equity…

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: Heavyweight investors debate whether Chinese equities are overvalued; markets summary for the week past; and a Special Report on the 17th Party Congress - Hu picks for whom..?
Sinomania! Volume I Webisode 37, October 24, 2007

The Race Is On: Will It Be Xi or Li For China's Future?
My Report on the 17th Party Congress;
And Two Famous Investors Weigh In On Whether Shanghai Bubbles…


The fourth quarter is well underway and the 'B' word is once again in the news with the big wigs inside and outside China warning that the Shanghai bubble could pop at anytime.

Warran Buffet tells investors to be 'cautious' of Chinese stocks reminding reporters in China that the venerable Berkshire Hathaway buys stocks that have growth potential over price rises. In an interview last week on the new Fox Business Channel, Buffet said he sold his remaining holdings of PetroChina - as recently as three weeks ago Berkshire Hathaway owned more than three percent of the company's shares. Given the pace of deals and new projects underway at PetroChina and the growth potential of its markets worldwide one has to wonder whether Warren Buffet sees something in the anticipated IPO of PetroChina on the Shanghai A share market to avoid. Does PetroChina's meteoric rise signal a hard fall in the future? Or are the dynamics of the 21st Century oil and gas sector too hot for Warren Buffet to handle?

Buffet's views were seconded by Wang Zheng a manager at the Chinese brokerage Everbright Securities who told a Bloomberg reporter it was about time to "pull out" of Shanghai.

For an alternate view, Jim Rogers, co-founder of the Quantum Fund along with George Soros, told the British Daily Telegraph that Chinese equities are not a bubble yet. Rogers said the Shanghai Composite could see 9,000 before he'd quit. "I do not want to sell Chinese stocks," he said. "I want to own them forever and I want my daughter to own them." Rogers' daughter is four years old.

Meanwhile yet more foreign investors may soon get action in Shanghai. Regulators on Taiwan have given approval for native mutual funds to buy stocks in Hong Kong and in mainland China. Taiwan funds can put up around half a percent of their assets in China proper, most likely Shanghai where many Taiwan-based businesses have returned or set up shop, but they may spend as much as ten percent of assets on Chinese companies listed in Hong Kong. Both figures add up to billions in new cash seeking opportunities in China. Another sign that prices will continue to rise.


The Shanghai Composite Index dropped back below 6,000 late last week and there it stays closing October 23 at 5,843. The CSI 300 Index plunged since our last show and is now hovering just above 5,500. Shanghai B shares are back just above levels from the start of the month, they closed October 23 a hair above 370. ShenZhen Bs are far above their August troff but down as well on October 23 closing at 763.138.


The 17th Party Congress of the Chinese Communist Party last week in Beijing by all appearances affirmed President Hu Jintao's hold on national level political power. Former President Jiang Zemin's senior allies did not move forward. This is interpreted to mean his influence is waning. But in the process of consolidating power Hu has surrounded himself with eight rivals and or potential successors at least one of them still connected to Jiang Zemin.

The selection of Xi Jinping and Li Keqiang as new members to the standing committee - the politburo - the top decision making body of the party has generated the most buzz.

The media outside China have already declared Xi China's next leader after Hu is most likely reelected to a second and final five year term as President by next year's National People's Congress.

But is it so certain?

Xi Jinping, is said to be a protégé of Jiang Zemin, admittedly one only very recently elevated to national office. Xi was elected to be the Chief of the Party Secretariat in charge of the day-to-day running of the party.

But Li Keqiang has yet to be given a clear role. Indications are he will be a new chief Vice Premier. Li is from the Communist Youth League, said to be Hu Jintao's base.

What is missing from most reports is awareness of how the party's composition is changing and where power is most likely to come from now and in the future.

Party delegates were selected during a nine-month period that began last October. The selection of delegates takes place within electoral blocks of party members. The most significant block growing in power is the Communist Youth League where Hu it is believed has most influence. Communist Youth League members are obviously younger but also more educated and more likely to be an independent professional.

Overall, the composition and number of party delegates is growing. Unlike the National People's Congress that attempts a form of proportional representation based on population, the number of Chinese communist party delegates increases with the number of party members and thus growing the influence of the party in the country. Ten years ago 58 million party members selected a little over 2,000 delegates to the party congress. This year more than 73 million party members selected over 2,200 delegates to the 17th Party Congress.

Delegates are getting younger and more representative of the population. For example, in the 2007 Congress 20% of delegates are women, over 10% are ethnic minorities, such as muslims, and almost a third are younger grass roots members. Over 70% are under 55 and 416 delegates are under 45.

The base of the party is no longer 'gong, nong, bing' - workers, peasants, and soldiers - as it was under Chairman Mao. Today, the base of the party is made of 50 million professionals from self-employed entrepreneurs to engineers in state-owned corporations to managers in every capacity, this group has assets valued at almost one and half trillion US dollars. They are probably the largest single political class in the world. They are the new face of the party in China.

I'll be back next week with a full IPO Report.

I'll see you next time!

© Sinomania! 2007 All Rights Reserved.

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