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Volume II, Episode 59
June 30, 2008
How Low Will China Stocks Go? - Time to Cry or Buy? - Alternative Energy Buzzing - News Roundup

June 2, 2008

China Telecoms Merge At Last - Shanghai Talks Foreign Listings - Forex - Taiwan - Iron Ore - Sichuan Quake Update

May 12, 2008

Sichuan Earthquake Effects on Economy - Chinese 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: Shanghai back to pre boom levels, Beijing's big new push for alternative energy, news of Kellogg, Caterpillar, Condoleezza Rice, Jim Rogers, more...
Sinomania! Volume II Webisode 59, June 30, 2008

Crying Time or Buying Time?
How Low Will Chinese Shares Go?
A New Wind Blows for Energy;
and a News Roundup!


The Shanghai Composite Index slipped below 3,000 on June 12 and there it remains closing today at 2,736. The last time the index was this low was around the very first Sinomania! Show in January 2007. The CSI 300 index, Shanghai and ShenZhen B shares, all major Chinese indices are down dramatically. Some analysts now believe the Shanghai Composite won’t hit bottom until it falls to between 1,000 to 2,000 and might not recover for decades. After all, both NASDAQ and Nikkei are still below their peaks and it took a quarter century for the Dow Jones Industrial Average to build back from the crash of 1929.

Last May, in episode 15, I pondered if the Shanghai Composite would end up like the NASDAQ or Nikkei bubbles. I argued then that Shanghai was less meteoric and unlike the and Tokyo property bubbles Chinese companies had real earnings and long prospects. My prediction was a top at 4,700 at the start of this year. I was surprised as many others to see Shanghai go up all the way past 6,000 late last year.

Values are down around 50% for the major indexes. But I think comparison to the far more mature American and Japanese stock markets is simplistic. There are too many variables with Shanghai and this latest incarnation goes back only to 1990 the year Tokyo crashed. Will foreign buyers be allowed into the A market? Will A and B shares finally merge? Will outflows by Chinese retail investors be extended to all investors? I think it is entirely too premature to dismiss Chinese stocks as important and long position investments, particularly in cleantech and green energy sectors.

One investor who agrees with me is Jim Rogers most famous as co-founder with George Soros of the Quantum Fund. At investment forums in Nanjing and Shanghai this past week Singapore resident Rogers said he’s not sold any shares in Chinese companies. “I’m starting to think about buying again,” he said adding “there is much money to be made” from investing in China.

Warren Buffet accurately foresaw Shanghai’s decline and sold his huge holdings of PetroChina shares last summer though he did miss out on PetroChina’s big price boom. A Chinese investment manager, Zhao Danyang of the Pureheart China Growth Investment Fund in Shenzhen, won an auction today for lunch with Buffett with a bid of $2.1 million US dollars to Buffet’s Glide Foundation charity.

It is said that the most recent decline in Chinese stocks is fear of interest rate hikes from China’s central bank. Speaking today from Switzerland at the Bank for International Settlements meeting People’s Bank of China governor Zhou Xiaochuan said he can’t rule out interest rate increases. Morgan Stanley had been advising investors that interest rate increases were off the table this year.

There are now serious material effects on the Chinese economy from the rise in oil prices. It is impacting trade with China’s Asian suppliers and its target markets, specifically the USA and the EU. Pundits and politicians talk of a “rounder” world soon with the pace of globalization slowing if not receding.

Many observers say a hard landing imposed by Beijing is coming after the Summer Olympics. I think this chattering is wrong but the pace of money growth and inflation in China is dangerous. Cash continues to pour into China, some of it due to US Federal Reserve action, some from trade surpluses, much more from investment inflows. Chinese foreign exchange reserves are on pace to reach $2 trillion US dollars this year.


Given the negative impact of the oil price spike on China so far, Beijing is moving quickly to reduce exposure to oil. At the start of 2006 China’s renewable energy law went into effect and big new state directed investment is now underway in atomic power including the latest technologies from the USA and France, and in renewable energy, particularly wind and solar power. I will have a lot more to say about investment opportunities in wind and solar in the months ahead.

On June 19 in London, China’s Renewable Energy Development Project, part of Beijing’s powerful National Development and Reform Commission, won the Ashden Award for Sustainable Energy – the most prestigious green energy prize in the world. The prize was for work in photovoltaic or PV solar power technologies.

Some projects of note involving foreign collaboration: the Norwegian Renewable Energy Corporation or REC just signed an almost half billion US dollar deal with China Sunergy (listed on NASDAQ under symbol CSUN) to supply solar wafers over the next seven years. REC has plants in Washington state and Montana.

REpower North China Company, a joint venture with the German REpower Systems, will supply Guangdong Baolihua New Energy with 24 wind turbines of 2 Megawatt size for an offshore wind farm off Guangdong Province to be operational next summer.


US Secretary of State Condoleezza Rice left China today after a brief visit during which she met with President Hu Jintao and traveled to the Sichuan earthquake area where she praised the local recovery efforts and gave a Chinese teenager a book about America’s national parks.

Meanwhile in Beijing, envoys of the Dalai Lama resume talks with the encouragement of the Dalai Lama himself and Secretary Rice.

Despite talk about the world “decoupling” and globalization in jeopardy China and the US continue their strange convergence: famous cereal maker Kellogg announced today it acquired Shandong based Zhenghang Food Company, China’s leading cookie and cracker maker. Kellogg will use Zhenghang to expand its product line to Chinese consumers.

And Caterpillar will soon break ground on a factory outside Nanjing in Jiangsu Province to produce smaller (under 20 ton) extractors. Caterpillar will wholly own and operate the factory its 17th plant in China where the company employs over 7,000 people.

I hope your summer is off to a great start. See you next time on the Sinomania! Show!

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