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Sinomania! the truth about china
China SEARCH Engine
Volume II, Episode 49
February 21, 2008
Private Equity Buys Chinese - Macro Update - Sovereign Wealth Fund IPOs - more!

February 13, 2008

General Motors Turns Chinese - New China Funds - Coal Boom?

February 6, 2008

Macro Effects of Winter Storms - IPOs - Happy Year of the Rat! - more

January 29, 2008

Chinese Stocks: Correction or Bear? Davos 2008 - IPOs!

January 20, 2008

Four predictions for where Chinese stocks will be in 2008 - plus more!

December 31, 2007

A brief look back at some of the images of 2007

December 20, 2007

Markets Sag - Chevron Gas Deal - Aging Time Bomb? - Property ETF - IPOs - more!

December 10, 2007

US-China Summits in Beijing - QFII Up to $30 Billion (US) - IPOs losing steam?

November 27, 2007

Chinese Stock Prices Melt - Sarkozy Up to Beijing - IPO Updates - Will Trent Lott Lobby for Taiwan?

November 20, 2007

Currency Crisis! Dollars Drained by China, OPEC Continue Down - Inflation

November 14, 2007

Time to Short China's Yo-Yo Market? - Mining In or Out? IPOs - more

November 2, 2007

Oil Shock! Price Problems At the Chinese Pump - Stocks: Where's the Correction?

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: Chinese markets continue down, private equity firms plan billion$ in China investments, business news on macro conditions, autos, and more, and upcoming IPOs...
Sinomania! Volume II Webisode 49, February 21, 2008

Buying Time Is Here!
Private Equity Buys Chinese;
A Business News Roundup;
And This Week’s Alpha Bet!


Chinese shares have lost up to a third of their value since the highs of fourth quarter 2007. Is the slump over? Are markets corrected yet? Sentiment at large remains flat. The Shanghai Composite sank to 4,453 during the day February 21 but closed down at 4,527, still struggling around my 4,600 baseline. The CSI 300 Index pierced 5,000 for a day but is back down again at 4,876 and is down about fifteen percent since the year began. Shanghai B shares remain down at 318.98 so far this week, well below the start of the year. And ShenZhen Bs continue to slide and closed down again February 21 at 646.66.

Reports are that investor enthusiasm in China is waning but private equity firms are raising money all over the world and eyeing China once again, this time hunting for bargains.

Black Rock, the giant New York based and New York Stock Exchange listed (BLK) investment company with over one and a third trillion dollars under management, opened its Beijing office this week. With Bank of China Black Rock will launch a $10 billion Yuan (around one and a half billion US dollars) stock fund. The company is asking to manage new investments valued up to $30 billion US dollars for China Investment Corporation, China ’s Sovereign Wealth Fund. Black Rock’s global fund manager Larry Fink believes there are a number of Chinese stocks today that “represent some very strong value” although he believes the market has yet to hit bottom.

Private equity firm Blue Ridge China, a Beijing based affiliate of America’s Blue Ridge Capital, has raised almost one and a half billion US dollars from retail investors in the USA and the Middle East to fund new Chinese startups. The investment period is five years and the focus is retail, real estate, agricultural processing and other areas.

Also in China, the People’s Insurance Company Group or PICC, a leading property insurer, is planning a private equity venture of unknown value. The company is also eyeing an IPO on Shanghai ’s domestic market.

And JP Morgan anticipates private equity investment of three quarters of a billion US dollars this year in Asia most likely China. That is double the exposure from last year.


News of China ’s Sovereign Wealth Fund, something we watch closely here at Sinomania!, is that the China Investment Corp. will begin hiring money managers for its overseas equity investing soon. The plan is not yet public so there few details but the intent is to hire two to three companies for each of the fund’s four mandated areas: investment in natural resources particularly in developing countries, acquiring foreign technology, research and development ventures, and brand name businesses of the most advanced economies.

Signs are back of a restructuring of China ’s giant state aerospace conglomerates, AVIC I and AVIC II. The head of China ’s Commission of Science, Technology, and Industry for National Defense, Huang Qiang, said a leader and designer for a new venture to build large capacity wide bodied jet aircraft to satisfy domestic demand for big passenger jets and compete directly with Airbus and Boeing will be decided by March. This will be an interesting one to watch as it will involve a lot of mergers and possibly the listing of some Chinese aerospace assets.

In macro news, inflation rose over seven percent year-on-year January, China ’s trade surplus was bigger than forecast, and money supply grew the fastest in almost two years. The Chinese central bank responded saying that Beijing will use “innovation” in monetary policy this year but gave no other clues.

The Yuan reacted by appreciating faster to close at Shanghai this week at 7.1436 per US dollar. The Yuan has gained over two percent so far this year. It gained seven percent in 2007. The majority of analysts believe the Yuan will reach 6.70 to the dollar by the end of this year.

China’s automotive sector continues to heat up. China bull Donald Straszheim of Roth Capital Partners predicts Americans will be buying two million cars a year from China by 2018. The list of Chinese companies and foreign joint ventures planning car exports to the USA is long and growing. So far, though, none is yet on track.

Chery Automobile, I believe, is still the front-runner to make a major impact on car sales in the United States. Chery said this week that the joint production agreement with Chrysler is still on but not to expect any major development soon. A Chrysler spokesman said they want to export small cars from China as soon as possible to North America and Latin America but not until all global standards are met. The new target date is 2009 for exports. Chery already exports to 50 countries accounting for 25 percent of sales in 2007. I have no update on the possible Chery IPO.


This week’s Alpha Bet starts with a number: one, that’s the number of China IPOs so far this year on Hong Kong. The IPO market appears to have dried up but there are signs of new opportunities coming.

Two are expected soon: HongHua, a Chengdu-based oil rig manufacturer, for an exciting energy security play, and the anticipated IPO of China Railway Construction.

China Railway Construction received approval late last week for a dual A+H or Shanghai and Hong Kong listing soon estimated at $4 billion US dollars, the biggest IPO so far this year in global markets. The company will benefit from an expected $173 billion US dollars worth of government investment in Chinese railways over the next few years. The company’s rival, China Railway Group, has appreciated over 60% since its IPO in December 2007. It trades in Hong Kong under symbol 0390.HK.

Shanghai Pudong Development Bank, which is part-owned by Citigroup, is planning to sell up to a billion new A shares very soon, an announcement that caused the bank’s shares to drop the maximum ten percent on the Shanghai exchange. Rumours continue to plague Chinese financials about hidden exposure to the growing non-performing loan crisis in the United States.

I’ll see you next time!


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