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Volume II, Episode 57
May 12, 2008
Sichuan Earthquake Effects on Economy - Chinese Passenger Jet Planes Coming - China-Japan Summit

April 21, 2008

The Price of Rice - 1Q Macro Report - IPOs - CCP and KMT Together Again at Boao Forum

April 8, 2008

Chinese Stock Market Doldrums - China Wants Africa's Oil - Boycott Beijing 2008 Olympic Games?

April 2, 2008

Chinese 3G Wireless Testing - Bear Market Blues - GSM Mekong Summit

March 24, 2008

Kuomintang Wins Taiwan - Business Gains on Gradual Reunification - Chinese Markets Bearish

March 17, 2008

Shanghai Bubble Burst? Beijing Election - A Special Comment on Tibet

March 12, 2008

Beijing Plays Musical Chairs: Report on the National People’s Congress - Chinese Stocks Tank!

March 5, 2008

Markets Plunge - Sovereign Wealth Fund - IPOs - National People's Congress convenes

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: The economic effects of the big Sichuan earthquake disaster; Bear market rally but Chinese stocks still down overall; China to challenge world market for jet planes; Japan and China to agree on joint oil and gas development in East China sea... Sinomania! Volume II Webisode 57, May 12, 2008

Will The Sichuan Earthquake Impact China's Economy?
Is the Bear Market Rally Over?
And a News Roundup


For the past two weeks I traveled with the Sinomania! Show crew to one of the most undeveloped and poorest regions of the word – the southern edge of the Caribbean basin, specifically the islands known as the Lesser Antilles. Whereas in ages past, Britain and France vied for remnants of Spain’s faded empire, today the islands trade flags between China and Taiwan as American influence wanes. From what I saw, right now Taiwan seems to have the upper hand. I’ll have a full report in my next broadcast!


To superstition loving Chinese, an earthquake is an omen of spectacular change. Earlier today in the mountains northwest of Chengdu, the capital of Sichuan Province, a 7.9 magnitude earthquake shook the region with a quake wave so severe it caused moderate earthquakes all over central and north China including Beijing. The death toll is huge and climbing and the damage has yet to be assessed.

The quake is the strongest since the massive TangShan earthquake in 1976 that preceded by weeks the death of Chairman Mao. Then hundreds of thousands perished and a middle sized Chinese city was shaken to complete ruin. The damage today in areas close to the epicenter is extreme but the absence of widespread building collapse in Chengdu is a testament to the improved quality of Chinese building since the TangShan disaster.

Here are some details on the impact of the quake on China’s economy:

Communications and transport in southwest China are impacted – China Mobile says around 2,000 mobile base stations were affected and cell phone communications all but died for much of today. PetroChina is assessing damage to gas fields and pipelines – over 20% of China’s gas is produced in Sichuan Province. China Eastern cut air service to the region and Chinese state railways were suspended with reports of bridges destroyed. Toyota temporarily shut its plant in Chengdu that manufactures Prada SUVs and minibuses. China’s State Grid corp. says five power plants were disconnected. And trading of shares in Sichuan based companies may be temporarily suspended in Shanghai.

Overall, however, the biggest impact will be on inflation due to supply disruptions. And with inflation running very high – eight and half percent in April – that could be the worst aftershock for Beijing.


After months of hints and vague promises, Beijing rescued Chinese shares at the end of last month by reducing the duty on stock trading back to levels before last May's increase to curb short term speculation and reduce volatility.

The action was enough to spark a bear market rally that brought the major indexes back up to what some observers claim are sustainable levels given current earnings and performance.

The Shanghai Composite Index closed today at 3,626.98 up a fraction. The CSI 300 Index closed May 12 at 3,904.92 but remains down 34% from its peak last October. B shares were down, Shanghai Bs closed at 257.83 and ShenZhen B shares are at 560.

Major indexes on Taiwan and in Hong Kong also rallied back to healthy levels but are down moderately at the start of the week.

To date the Chinese domestic stockmarket has lost almost one and a quarter trillion US dollars in value since the start of the year.


In Shanghai today the China Commercial Aircraft Company opened its doors. Anticipated since last year the company is a big step in the development of China’s aerospace industry with plans to build large passenger and cargo jet planes, entirely Chinese made, by 2020.

The company is initially capitalized at almost $4 billion US dollars to fund its development effort. The shareholders are the State-owned Assets Supervision and Administration Commission, holding the biggest stake, and a new conglomerate formed by Shanghai’s Municipal Government and aerospace heavyweights AVIC I and AVIC II. The possibility of a future share offering was not discussed.

This is a major potential blow to Airbus and Boeing the current market leaders. Boeing in particular will be affected in the long term as its business model for years is based on sales to China. Shares of Boeing (BA) were down sharply in the morning but recovered by late afternoon.

Perhaps coincidentally, the new president of the American Institute of Aeronautics and Astronautics George Muellner released today a report calling for a repeal of the restrictions imposed a decade ago on aerospace exporters after the Cox Committee alleged but never found evidence that US sensitive technology had been sold to China. The association says the export restrictions have eroded market share for American companies.

The Chinese made jets are intended for domestic sale but there is speculation China may market them in Africa.


The first state visit by a Chinese President in a decade to Tokyo led to a joint agreement for "Cooperation Between Japan and China" including a possible end to disputes over the gas and oil riches under the East China Sea. Discussions between Hu Jintao and Japanese Prime Minister Fukuda revealed the two sides may agree to jointly develop the gas and oil of the Shirikaba gas field and other disrupted areas.

Finally, Microsoft announced last week it will invest over a quarter billion US dollars on a research and development center in Beijing with a staff of 3,000 within three to five years.

Thanks for watching and I’ll see you next time on the Sinomania! Show.

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