June 30, 2008

How Low Will Chinese Stocks Go? Renewable Energy Push and a News Roundup

visit www.sinomania.com for full transcript

Sinomania! Show episode 59 for June 30, 2008, looks at the Shanghai Stock Market crash, differing views on Chinese stocks, Beijing's new push for renewable energy--wind, solar, and more, plus new items of interest.

June 27, 2008

Curtains for Shanghai?

Investment advisors and analysts -- Howard Gold and Nicholas Vardy are but two examples -- are warning not to "put a dime into Chinese stocks" at least until the bottom is reached in Chinese stock markets. Since 2008 began, Shanghai A and B shares have lost 40% or more and are down even further compared to Shanghai's peak in October 2007. The Shanghai Composite was down over 5% today alone.

Last May I pondered if the Shanghai Composite would end up like the NASDAQ or Nikkei bubbles -- watch my video on YouTube. I was surprised to see Shanghai go up all the way past 6,000 later in the year. Many analysts now believe the index will need to sink all the way to between 1,000-2,000 to hit bottom.

But I think comparison to the far more mature NASDAQ and Nikkei markets is simplistic. There are too many variables with Shanghai and its latest incarnation goes back only to 1990. Will foreign buyers be allowed into the A market? Will A and B shares finally merge? Will outflows by individual Chinese retain investors be extended to every investor? I think it is entirely too premature to dismiss Chinese stocks as important and long position investments, particulary in new technology (green & alternative energy) sectors.

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China Drill Grill

The first China bash talking point in the US presidential election cycle is circulating and it's a particulary goofy one relating to the renewed interest in drilling for oil on the continental shelf off the eastern seaboard. China, according to Republican Congressmen, is already drilling there off Cuba! None other than Vice President Dick Cheney has refuted this claim but it is widespread on talk radio and TV - Sinomania! first heard it on CNN a few days ago. Unfortunately, like Obama's Muslim past, it is a fabrication that repeated enough is taking hold in minds willing - and wanting - to believe it.

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June 19, 2008

China Spoke, Oil Markets Listened

Beijing will allow key price increases in the energy sector giving oil and gas majors approval for close to 18% price hikes, the second double digit increase in less than a year. Fuel remains subsidized in China and undervalued to world markets.

The announcement brought down the spot price for a barrel of oil more than $4 today.

Electric utilities will also get a rate hike - something sought after before last Winter's devastating snow storms -- to increase kilowatt hour charges just under 5%.

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June 17, 2008

Paulson: China and USA to Maintain "Global Economic System"

The 4th Strategic Economic Dialogue bilateral talks between China and the United States are underway in Annapolis, Maryland.

The Chinese delegation is emphasizing joint cooperation on energy and the environment stressing that the world's number 1 and 2 oil importers have much to gain by working together.

Treasury Secretary Hank Paulson said that both nations are responsible for "maintaining a stable, secure and prosperous global economic system."

It is only a matter of time before China becomes an issue in the Presidential elections. Will the strategic dialogue fall victim to politics by year's end?

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June 10, 2008

Sichuan Quake Impacts Oil Supply

Heroic efforts to drain the dangerous Tangjiashan 'quake lake' are jeopardizing the sole oil pipeline to Sichuan Province and giant Chongqing municipality. State-owned conglomerate China National Petroleum Corp. (CNPC) suspended operation of the Lanzhou - Chengdu - Chongqing pipeline for an unknown length of time.

A CNPC manager in Sichuan told Xinhua it had 20 days of reserves to offset the disruption. The pipeline has capacity t0 transport 6 million tons of oil annually and supplies almost three fourths of the oil needed for the region and downstream to Yunnan and Guizhou Provinces.

There is a potential impact for short-term shortages and price inflation in the area.

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China Shares Nosedive

Chinese stock prices collapsed June 10 with the worst showing since the February 2007 pop of the bull run. Chinese financials, banks specifically, were hard hit and the spin on the crash is that markets are nervous about inflation and Beijing's action to raise, for the 5th time in a year, the reserve ratio requirement for banks. But the reserve hike was expected and only the timing could be a surprise. So was the recent improvement just a bear market rally?

Some numbers: benchmark Shanghai Composite closed June 10 just above 3,000 at 3,072.33 down 7.73% back to the level of last spring - CSI 300 Index sank over 8% - and B shares are down almost 7.5% in Shanghai losing almost all of their recent gain - ShenZhen Bs mirror Shanghai's bad performance.

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June 04, 2008

Iran China Ties Build Despite Pressure

At a press conference today Iranian ambassador to China Javad Mansouri said the two countries are increasing ties particularly in energy development.

China is buying more oil from Iran and imports of petrochemicals have grown from under $100 million (US dollars) a decade ago to an expected $1 billion this year. China accounts for around ten and a half percent of Iran's petrochemicals exports.

Last month Shanghai hosted an "Investment Opportunities in Iran" conference. Trade with the "Dragon's Head region (Shanghai, Jiangsu, Anhui, & Zhejiang) was in the billion$ in 2007.

Chinese oil majors are developing big oil and gas fields in China and Chinese auto manufacturers will soon supply Iran with passenger cars. Iran is one of many emerging markets for autos with sales over 1 million/year already. Chery will be rolling out the popular QQ sometime this year. And Chang'An Auto, partner to Ford Motors in China, just started a joint venture with the Iranian PIDF enterprise to assemble Chang'An's 1.3 liter mini, Benben, with production of 250,000 a year expected around 2012.

Meanwhile, geopolitical pressures of the EU and USA will leave this huge emerging market to China unless wiser heads soon prevail.

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June 03, 2008

China Telecom Mergers - Shanghai Talks Foreign Listings - FOREX - Taiwan - Sichuan Quake Update

full transcript at www.sinomania.com
Sinomania Episode 58 for June 2, 2008, looks at mergers and consolidation in Chinese telecom sector, major changes in Shanghai could see foreign firms listing share offers in China, business news, and an update on the economic impact of the Sichuan earthquake disaster.

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