RECORD HIGHS AND HEALTHY CORRECTIONS?
CHINESE STOCKS ON A ROLLER COASTER
By Ben Calmes
© Sinomania! 2007
First aired: February 27, 2007, 21:55 (PST)
[THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE
IN ITS FINAL FORM AND MAY BE UPDATED.]
ANNOUNCER: Hello! And Welcome to Sinomania! For the
the week of February 25, 2007.
Yo-Yo Ma! Record highs and healthy corrections?
Do the Chinese markets have it all or is 2007 shaping
up to be a wild roller coaster ride? Some interesting
IPO developments another big listing for NASDAQ
and the first foreign owned full service brokerage comes
online. And we introduce a new feature chock full of
juicy numbers: the wrap!
Stock exchanges on the Chinese mainland were closed
all last week for the long holiday officially known
as “Spring Festival” but the Hong Kong exchanges reopened
on February 21 and markets were open in the USA.
Some interesting price movements among Chinese companies
listed in America as this week opens: APT Satellite,
Trina Solar, and ASAT Holdings, rose over 10% -- the
first two are listed on the New York Stock Exchange
and ASAT Holdings is listed on the NASDAQ capital market.
All three are technology sector firms with substantial
A minor blowout on the Over The Counter Bulletin Board
caught our eye with Forlink Software sinking over 15%
to about ten cents a share although on small volume.
Forlink is a software firm hoping to cash in on the
Beijing Olympics by developing solutions for a China
Mobile unit. Look for these stocks symbols at the end
of the show.
The biggest news this week is the announced spin off
of Xinhua Finance’s Media group, the aptly named Xinhua
Finance Media. The IPO will debut on NASDAQ with proposed
XFML will offer over 23 million ADR shares in the
$12 to $14 dollar price range which is a p/e ration
in the mid to high 30s based on current earnings. At
that valuation the IPO could raise over $300 million,
the largest American Chinese listing since Suntech Power
at the end of 2005.
There is risk – Xinhua Finance Media is only a year
old but its parent company, Tokyo-listed Xinhua Finance
is well respected for high quality programming and international
standards. Xinhua Finance Media’s properties include
a nationwide TV network, radio stations in Shanghai
and Beijing, and magazines, all aimed at China’s high-income
urban market. The company is essentially an advertising
play with revenue growing at double digits.
After the offering, the parent company will own just
over 1/3 of shares compared to almost half currently
but will still control the bulk of the XFML’s voting
UBS Securities, a joint venture between Swiss powerhouse
UBS and Beijing Securities, has received authorization
from the China Securities Regulatory Commission to underwrite
domestic IPOs and provide investment banking advisory
and other services thus making UBS Securities the first
foreign-owned full service brokerage in China. In addition,
last week the company became a member of the Shenzhen
Tongjitang Chinese Medicines a traditional Chinese
medicine company out of Guizhou province plans an New
York Stock Exchange listing under proposed symbol TCM
according to its filing at the US Securities & Exchange
Tongjitang will offer over 9 million American Depositary
Shares worth about 4 ordinary shares valued between
$15 and $17 US dollars. The company has enlisted an
American drug testing firm to perform FDA level tests
on a Chinese medicine for oestoperosis. So, could be
one to watch.
On Monday Shanghai and Shenzhen posted new record highs
but as we speak, another correction with indexes down
nearly 5% overall and most of the gains from late January
being wiped out. Leading the declines are financials,
particularly Citic Securities and, once again, China
Merchants, China Minsheng, China Vanke, and Baosteel.
The Shanghai Composite is at just above 2,870, down
over 170 points. The Hang Seng China Enterprise is at
9,665 down 224.
DaimlerChrysler’s plans remain secret but talks are
continuing between Chrysler and Chery, expanding their
relationship to include major auto parts such as transmissions
and adding models to their export plan. Neither company
Steel giant BaoSteel is planning a roadshow probably
in April to showcase its plans for a New York Stock
And finally, last night at the Academy Awards here
in southern California, a Chinese documentary about
AIDS orphans in Anhui, won an Oscar for best documentary.
This week’s edition of the esteemed British scientific
journal The Lancet features a report on China’s response
to AIDS that may surprise you: The Lancet says China’s
turnaround on AIDS should be praised and reveal some
stunning successes in dealing with a potentially formidable
Remember – investment decisions are up to the viewer!
Please see the important disclaimers at the Sinomania!
I’ll see you next week!