First it was SGX, then US exchanges, now London’s AIM the target for Chinese IPO scammers?
Archive for the ‘China’ Category
The Philippines is not just ahead of other new casino markets [like South Korea, Japan and Taiwan]; it also has several key benefits over the more established ones, according to Gustino De Marco, vice-president at the Hong Kong-based brokerage BTIG and a specialist in this area.
Firstly, it has a strong domestic demand and the type of games Filipinos like to play are the high risk-high reward games such as slot machines, which give better returns to the casino operator than card tables.
Another attraction is geography, with the Philippines only a few hours flight from China, Japan and South Korea, where most high-rolling Asian gamers come from.
And while it is near China, it is not under any kind of Chinese jurisdiction. So, unlike Macau, which in recent years has had to ramp up its gambling tax and impose certain visa restrictions on Chinese gamers, the Philippines is free to offer all the incentives it can.http://www.bbc.co.uk/news/business-16753960
But is it realistic for the Filipinos to expect the Chinese authorities* and patriotic Chinese to co-operate when the Filipino government is the most hawkish of all the ASEAN nations when it comes to territotial disputes with China? The Institute of Southeast Asian Studies (a S’pore government statutory board thhin-tank) says in its inaugral ASEAN Monitor dated February 2012: Despite the weakness of its armed forces, the Philippines has assumed the role as the most outspoken of four Southeast Asian claimants against China’s assertiveness in the South China Sea. President Benigno Aquino has taken the lead in trying to rally ASEAN behind a common policy on the South China Sea, mainly to present a united front in negotiations with Beijing over acode of conduct. Defying threats from official Chinese media, Manila has encouraged the US to increase its military presence in the Philippines and supply the country with additional resources to patrol its waters … Will the Philippinegovernment maintain its hard line over the South China Sea, or prove as susceptible to China’s entreaties as some of its predecessors?
*They could make travelling to the Philippines inconvenient.
One reason why Wilmar had such a bad set of results was because it’s Jing Long YU (China’s biigest cooking oil brand) could not raise prices because of administrative measures imposed by the government to control inflation. Pre-tax margins in this segment more than halved.
Now that Chinese inflation has fallen to a 20-month low in February, Wilmar should be able to raise prices for this brand?
The fraud at Puda Coal, a Chinese company traded in the United States, was spelled out in documents that were publicly available months before the company raised $100 million from investors, but it appears no one bothered to look, writes Floyd Norris of The New York Times.
More chillingly is that the the Chinese authorities are making it more difficult to inspect publicly-filed documents, often informing the filers who are asking for filings.
So play, play in China at yr own risk. Like having unprotected sex.
This is another of an occassional series on why Chinese chauvinists and Cina Tua Kee lovers should be careful about crowing of the coming hegemony of China, and the fall of the US.
A US company is a major beneficiary of the Chinese love of eating fried chicken.
The US-based company that owns the KFC fast food chain has again reported solid growth figures fuelled by demand in China despite increasing food and labour costs in China. Revenue from Yum’s restaurants in China fell 2.4% to 19.7% in the last quarter from the year before, due to wage inflation of 20% and an 8% rise in commodity prices. The company says the Chinese market is crucial to its success.
“We opened a record 656 new restaurants and delivered extraordinary same-store sales growth of 19%,” said David C. Novak, chairman and CEO of Yum! Brands.
“Clearly our KFC and Pizza Hut brands in China continued to strengthen their category-leading positions.”
Yum! Brands has reported better-than-expected profits for the fourth quarter of 2011, jumping 30% from the same period last year. Net income for the three months ending in December was US$356m.
FBI investigating adviser on Chinese reverse mergers following a spate of problems with these listcos. No such luck here for investors here in S-Chips, despite the well documented problems. Investors only got SIAS and SGX.
I mean even HK securities authority seems to be more active in taking action against Chinese listcos (see bit towards end of article).
DMG & Partners Securities on 27 December 2011, issued a “Buy” call on Metro Holdings. As the price remains unchanged at 0.695 (despite a strong market); and given that less the net cash, the stock is only trading at 0.335; and a yield of almost 3% (historical), it’s something worth exploring despite it being a China play, and a property one at that.
(Background: Metro was founded in 1957 as a department store operator and became a household name. It diversified into property development in the 1990s and was one of the early investors in China’s real estate market, thereby missing the bullet of being a retailer here.)
It has since built up a portfolio of prime commercial properties in Tier-1 cities in Shanghai, Beijing and Guangzhou, as well as several property projects and joint ventures in Tier-2 and Tier-3 cities. Key properties that the group owns include Metro City and EC Mall in Beijing, Metro City and Metro Tower in Shanghai and GIE Tower in Guangzhou.
Leveraging on the group’s retail experience, Metro has chalked up an impressive track record as a mall operator and investor in China. To date, all its property ventures have been profitable, with past divestments making gains of 5-25 per cent premium over book value.
Over the past five years, shareholders’ equity compounded at a CAGR of 9 per cent. This was achieved without the use of excessive leverage given management’s conservative style. Its strong balance sheet (net cash of 36 cents) allows it to deploy capital opportunistically. The ability to recycle capital and profits into new projects has been a hallmark of Metro’s management.
The company is in the midst of selling its 50 per cent stake in Metro City Beijing for 1.25 billion yuan (S$247.5 million), a 50 per cent premium over its latest valuation. Should the deal go through, Metro will be able to book a pretax profit of $87.4 million. We estimate this will lift book NAV by nine cents/share.
On our estimates, the stock has an RNAV of $1.02 billion, or $1.23/share, after netting out liabilities. At current price, the stock is trading at a steep discount of 45 per cent to RNAV. Our target price for the stock is $0.86, based on a 30 per cent discount to RNAV.
It was SGX managers that were keen on China listings in the late 1990s and early noughties. They got their mult—million bonuses, but minority shareholders in many S-Chips got the worms. Now SGX has all kind of rules to try to ensure good corporate governance. But as this shows, the mgt of a Chinese co listed on NASDAQ, doesn’t care a damned abt US laws, confirming the experience of investors here on the attitude of the management of S-Chips to S’pore laws and SGX’s rules.
If ChinaCast again loses in the Delaware courts, the question is, what will it do afterward? The Chinese company could simply refuse to honor the court’s order. It has no assets in the United States, so it could easily ignore any monetary fine. However, it is listed in the United States and is subject to S.E.C. supervision; such an act is likely to crater its stock price. The likelihood of such a response is low, but it appears that ChinaCast’s current management is going to fight this coup to the bitter end. Expect more maneuvering by all parties involved.
There is a wider lesson here. It is hard to know the real facts in this case given the murky nature and distance of the events, but whatever the truth is, investing in companies based in a foreign country is risky not only because the rule of law is weaker, but also because of cultural differences.
Foreign companies are not as familiar with United States practices and laws governing domestic corporations. They are sometimes more willing to push the envelope, either out of cultural inexperience or simple ignorance. ChinaCast itself appears to have been a bit behind the ball in getting good advice.
Sigh. Taz the scandal, not PM and ministers earning millions. But SGX listing cos that are difficult for S’pore-based investors to monitor, and police.
But it’s sunshine from 2013 onwards, if you still got the money.
A looming hard landing in China will bring the financial and economic crisis of the past five years to a climax in 2012, one of the City of London’s leading analysts has warned.
Albert Edwards, head of strategy at Société Générale and one of the UK’s leading “bears”, said the next 12 months would be the “final year of pain and disappointment”.
SDP, KennethJ and the usual grumblers will have a field day if this guy is right (he has a good track record, this last few yrs) what with Temasek’s and its TLCs’ (Think DBS, CapitaLand, KepLand), and other GLCs’ (Ascendas for example) big bets on China.
Predicting a sharp slowdown in activity in the world’s fastest-growing emerging economy, Edwards said: “There is a likelihood of a China hard landing this year. It is hard to think 2013 and onwards will be any worse than this year if China hard-lands.”
In a note dated 25 November 2011, DBS is bullish on MIIF. Interesting as there is current net cash of about S$115 m and prospective yield of about 10.5% assuming mgt is correct. My previous post in January this year http://atans1.wordpress.com/2011/01/11/miif-unnoticed-china-play/ reflects my concerns about this stock. But it could be I’m wrong, and DBS is correct. Anyway, nearly a year has passed.
International Infrastructure Fund (MIIF) is now leaner, fitter and wholly Asia-focused … MIIF has divested its non-Asian assets, and repaid corporate level loans with the sale proceeds … a cleaner balance sheet with current net cash of about $115 million.
The sale of stakes in other funds also eliminated the black-box problem (assets with limited financial visibility) and the fund now focuses purely on key Asian infrastructure assets.
MIIF’s three key investments
– Taiwan Broadband Communications (TBC), the third largest cable TV network in Taiwan;
– Hua Nan Expressway (HNE), a 31 km urban toll road in Guangzhou, China; and
– Changshu Xinghua Port (CXP), a multipurpose port in the Yangtze River Delta region of China.
We visited these … impressed by the management and operations … fairly confident of steady organic dividend growth from CXP and TBC, though traffic growth at HNE could face some near-term roadblocks. MIIF [has] used its surplus cash (from the sale of prior investments) to increase its stake in TBC from 20 per cent to 47.5 per cent … higher dividend receipts from TBC.
MIIF paid out a three-cent dividend for FY2010. After restructuring its portfolio, MIIF is now guiding for a dividend per share of 5.5 cents for FY2011, based on expected cash flow generation plus existing cash reserves (2.75 cents already declared for H1 2011). We expect this is achievable and given the healthy implied yield of close to 10.5 per cent at current prices, we are reinstating coverage with a ‘buy’ call and TP of S$0.64, based on a discounted cash flow valuation of underlying assets. The share buyback programme … provides further support …
Credit Suisse analyst Sanjay Jain said in a report last week that he thinks that up to 12% of all of China’s outstanding loans may go bad and non-performing loans may likely account for all of the banks’ equity. Current NPL ratios hover at around 1% or the top Chinese banks.
Ops a daisy. As Temasek has major (and so far very profitable) stakes in two of China’s top four bank, Bank of China (4%) and Construction Bank of China (7%), predictions such as this (and Credit Suisse is not alone, just the latest and most pessimistic) should worry S’poreans.
As Temasek got the initial substantial stakes at bargain prices (courtesy of the Chinese government), selling part or all these stakes requires Chinese approval. At a time when the Chinese government is supporting the shares of the major four banks, such approval is unlikely.
Not another debacle like Shin, ABC Learning, Merrill Lynch or Barclays in the making?
A consortium that includes Temasek and its wholly owned hedge fund Seatown Holdings has acquired a 5% stake in China Construction Bank it was reported on 30 August 2011
It had unloaded a portion of its own stake in the Chinese lender about a month ago, when, by my calculations, the price of CCB shares was abt 10% higher. And given that it bought the latest batch of shares at a discount, Temask could have made 20% on the sale and repurchase.
Description of trades
China, the world’s biggest exporter and second biggest economy, is still booming. Its GDP is expanding at about 9% a year and since the 2008 financial crisis, China has helped keep the global economyfrom falling in a recession. But, as the BBC’s Damian Grammaticas reports, China may not be immune if there is a new slowdown in the US and Europe.
S’poreans have two reasons to be interest in the issue. We depend on global growth and Temasek itself, TLCs, other GLCs (like Ascendas) and GIC have big bets on China.
The shareholders of dud China plays are increasingly filing class-action lawsuits against the companies, auditors and even the investment banks. The auditors and banks have deep pockets. http://dealbook.nytimes.com/2011/07/26/chinese-reverse-merger-companies-draw-lawsuits/
Too bad for investors in S-Chips that class-action law suits are difficult to undertake here. So the banks are auditors are safe from law suits.
In an image entitled Live At The High Place, the photographer and performance artist Li Wei stands at the base of an inverted human pyramid in front of the Sanlitun Village shopping centre in Beijing. On his shoulders are balanced four people; on theirs, six more. The human sculpture portrays the impact of China’s one-child policy – as a generation of only children, now adults, contemplate looking after increasing numbers of older relatives. BBC report
In S’pore it was a two-child policy and “babies are for graduate mums only” (OK I exaggerate on the latter, but you know what I mean) but the effect is still the same.
To solve this goof-up, the government then introduced the FT policy, except that FTs turned out in many cases to be Foreign Trash (they are veerry cheap) rather than the Foreign Talents. Now we are waiting to see how this FT balls-up will be solved. What with Tharman supervising the manpower ministry, I am reasonably optimistic something will be done that will satisfy the people. Especially since at least 40% of the voters are angry with the FT policy in its present form.
The hedgie who made a fortune shorting subprime mortgages, and who made money buying BoA when one Temasek was selling, recently lost US$100m over a China play despite doing serious due diligence. http://dealbook.nytimes.com/2011/06/24/paulson-speaks-out-on-sino-forest/?nl=business&emc=dlbkpma21
If such an investor with all his resources and acumen, can still get snookered, what makes the ordinary retail investor here think he can do better?
Ignore S-Chips? They can ruin yr finances.
Some see serious trouble ahead, some see the troubles as to be expected in a rapidly expanding economy, and are notb that serious. http://www.bbc.co.uk/news/business-13802453
And do remember Temasek has big bets on China.
So does GIC.
SIAS is, as usual, calling for more measures to safeguard investors’ interesting following yet another S-Chip fiasco.
SIAS has a research department. Why can’t it do what Muddy Waters Research is doing? This US firm has issued damning reports on five Chinese cos listed in the US. He approaches each case like an investigation, sifting through corporate registration documents and even hiring private investigators to pose as potential business partners.
In today’s ST, Perennial China Retail Trust took out a full-page ad in colour in ST to extol the IPO’s merits.
Two pages away, ST carried a story headlined ” CapitaLand’s share dip linked to China”. In juz slightly smaller type face, the headline went on, “Poor showing due to concerns over firm’s greater exposure, vulnerability to policy changes”.
If I were Perennial, I’d ask ST for a refund. This headline sums up the thesis why this is an IPO to avoid.
Find it difficult to poke holes in DBS’ analysis. But note DBS was one of the IPO mgr and that HPH is trading below its IPO price of US$1.01. DBS says:
Firm prospects over the short and medium term. We like HPH Trust for its stable and growing earnings profile, which we believe will be driven by continued rising trade volumes into and out of the Pearl River Delta region, translating into an annual growth of 10 per cent in distributions to unit-holders for the next few years.
HPH Trust is due to report its interim results by mid-August, and we are expecting a distribution per unit (DPU) of about 1.8 US cents to be declared.
Maintain ‘buy’ and US$1.15 TP. Given that HPH Trust seems to be well on its way to meeting our projections in FY2011 and FY2012, current FY2011 and FY2012 yields look very attractive at 6.6 per cent and 7.2 per cent, respectively; expect DPU compound annual growth rate of 10 per cent up to 2013.
Our target price implies a total return potential in excess of 30 per cent at current prices. Among Singapore-listed Reits, business trusts and high yield plays, HPH Trust offers one of the highest combinations of yield and DPU growth.
This story tells how Yahoo may have been taken for a ride in China: Yahoo is upset with its Chinese partner Alibaba over the latter’s transfer of a major internet asset to its chief executive.
If a major MNC, with its legions of lawyers, accountants and executives, can end up in this type of situation, wouldn’t it be better for retail investors to avoid S-Chips as a matter of principle?
Jim O’Neill, chairman of Goldman Sachs Asset Management, said investors should shed their pessimism and stop hoarding cash amid prospects for a global stock rally that could start in China.
Bloomberg story. Note Goldman is setting up a yuan-denominated fund to invest in China.
Remember Warren Buffett is bullish on China but remains committed to investing in the US.
SGX has mandated that S-Chips introduce new measures that could give them more control over their mainland-based legal representative or top executives.
But “constructive”, “nation-building” Today reports that there practical problems.
“If you don’t have the cooperation of the legal rep, then you might not be able to go through the whole procedure and then to effect the removal of the legal rep because you can foresee that the legal rep will not give full cooperation in helping you to remove himself,” said Mr Lin Song, co-head of international China practice group at law firm KhattarWong.
The lawyer was referring to the paperwork involved in effecting the removal of the Chinese-backed legal representative. Company transactions become binding only when they bear the firm’s corporate seal and the power to affix this seal is vested only in the legal representative.
“The issue is more on the execution level even though you might have in the articles of association all these provisions when you really need to remove the legal rep … you may face difficulty,” Mr Lin said.
“For example, the listed company might be required to present the local authority a stamp registration form and other documents which might require the legal rep to sign,” he added.
Mr Robson Lee, partner at Shook Lin & Bok LLP, echoed the same sentiment that the SGX ruling might not be enough to clip the wings of Chinese-backed executives.
Mr Lee, who also sits as a director for S-chip firm Youcan Food International, said there are practical enforcement difficulties to ensure compliance by the executive management that are based in China.
“It would be better to put in place the necessary legal provisions in the articles of association to give the board of the listed company the legal right to intervene when things go wrong,” he said.
Martin Wheatley, the outgoing head of Hong Kong’s securities market regulator, said today that sponsors’ due diligence of initial public offerings has been “inadequate” at times.
“In many cases, sponsors are spread too thinly in terms of the number of deals they’re bringing to the market at any one time”.
Hong Kong’s regulator may make sponsors of IPOs in the city liable for statements in their clients’ prospectuses to prevent fraud of locally listed Chinese companies.
Never ever heard any MAS official say there was anything wrong with sponsors’ due diligence despite some new listcos coming out with profit warnings shortly after being listed.
I’ve been told that MAS does not inspect sponsors to ensure that they are following “best practices”. It is left to SGX. A few years ago, a then prominent IPO sponsor was “suspended” from bringing new listings to market.
The HK proposal to make sponsors of IPOs in the city liable for statements in their clients’ prospectuses is a gd one, and should be adopted to prevent fraud in listing S-Chips.
Hongwei’s independent director Ji Yicheng has resigned saying,”personal reasons, heavy workload”. If the director of a troubled listco can quit when the listco gets into trouble, then what is corporate governance all abt? Such an action is making a mockery of the responsibilities of being an independent director
The SGX must do something to prevent an independent director of a troubled S-Chip, indeed any troubled listco, from resigning. Such a resignation must have the approval of SGX.
The directores at the time the company got into into trouble must sort out the mess. They cannot be allowed to “move on”.
CapitaLand is trading below its FY2010 NAV per share of S$3.32. This has not been seen since September 2009 to May 2010. CapitaLand is currently in a position of balance sheet strength (FY2010: S$7.2 billion cash, 0.18 net gearing), and has balanced exposure to diversified property segments across different geographical regions. DBS Sec
Moreover, the market has assigned no value to any accretion from an expected S$6 billion in capital deployment this year. We update assumptions and maintain a ‘buy’ rating with a fair value of S$4.05 at parity to RNAV.
Me: Nothing to do with balance sheet strength or profitability. Investors are concerned with its large China exposure. And I hear hedgies are shorting it as a proxy bet against Chinese property.
What with the uncertainty in Libya and the coming GE, time to take a break from trying to find gd investments, here and overseas.
Go do sumething more productive? Like fishing? Or buy a Chinese island?
Two S-Chips have been suspended because of audit problems.
What more dangers lurk in the S-Chip swamp? Whatever the case, those Ozzies who don’t want ASX to be taken over by SGX have two more reasons.
United Envirotech is owned by local blue chip UEL
OCBC likes the stock despite revising its value downwards by 5% to 0.65. When report was issued on 2 February, the stock had closed at 0.455. Read the rest of this entry »
To avoid being shafted.
I was reading these Shanghai Asia related letters to the press a couple of weeks was and preening myself myself for giving Shanghai Asia a miss several yrs ago. What attracted me then was that the company was making foil paper for cigarette manufacturers. And the Chinese were (and are) smoking all the way to hell.
But fast forward to today and this business is being sold at an unattractive price. Minority shareholders are rightly upset but can’t do anything because the controlling shareholder supports the deal.
I gave it a miss because S-Chips were then in the Wild, Wild West when it came to corporate governance. They still are it seems, notwithstanding the efforts of SGX and the SIAS, the shareholders’ champ, to assure us that S-Chips are well regulated.
Even Chinese companies listed in the US are considered dodgy by this widely followed writer on all things investments.
So let’s give S-Chips that have everything in China except a few independepent directors here a miss, shall we?
If S’pore is as close to China as MM, PM, SM and other ministers, and our “constructive, nation building” media say they are, surprised that the Chinese do not do it via S’pore.
A gd explanation from a biased economist. He wants to use tariffs to “fix” China.
[I]nflation is the market’s way of undoing currency manipulation. China has been using a weak currency to keep its wages and prices low in dollar terms; market forces have responded by pushing those wages and prices up, eroding that artificial competitive advantage. Some estimates I’ve heard suggest that at current rates of inflation, Chinese undervaluation could be gone in two or three years — not soon enough, but sooner than many expected. Read the rest of this entry »
In their new book, “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise” (John Wiley & Sons), Carl E. Walter and Fraser J.T. Howie paint a troubling portrait of China’s economy and its financial system. Despite the nation’s mind-boggling growth and images of gleaming skyscrapers and luxury cars, the authors say China’s growth model is flawed and fragile, and they warn about substantial risks accumulating in its banking system.
Backgrounder: S’pore Inc has big bets on China
According to a report by a pair of economists out of the Asian Development Bank Institute, the success of Apple’s iPhone plays a major role in contributing to the USA’s trade deficit with China. The Wall Street Journal (login required) explains that while sales of the iPhone show around a billion trade surplus with China on paper as of 2009, the actual figure is a lot less because the iPhone is only assembled in China, not designed there. While the wholesale price of an iPhone is 8.96, the value of the only truly “Chinese” part is assembly, valued at .50 per unit. But because the iPhone ships from inside China, the entire value gets added into the trade figures, thus showing the billion trade surplus. If the numbers actually accounted for the true value coming out of China, the surplus for 2009 would have been about million instead — meaning in reality there is an almost billion trade deficit just from the iPhone alone.
The local media reported that the company managing Suzhou Industrial Park (SIP) could be slated for an initial public offering (IPO) of at least 4.5 billion yuan ($883.3 million), going by conservative estimates.
The project started off with Singapore taking a dominant 65 per cent stake and the Chinese taking the minority interest of 35 per cent. But its shareholding reform in 2001 saw this structure reversed with China taking the majority 65 per cent. Singapore’s interest has since been pared down to 28 per cent following capital injection by new investors.
MM in 2004 listed out four success indicators for the SIP. They are attracting businesses and investments; urban planning and development; ‘software’ transfer; and finally, a public listing. (Extracts from BT, but others too covered story)
Funny none of them reminds us that S’pore Inc invested US$147m in the park as of 2000, and that the losses then were US$90m. Sumething ST reported years ago.
Could it be because the 28% S’pore Inc owns could be worth US$153m (after dilution)? Financially S’pore Inc could have made some money (US$6m), not taking into account its share of the US$90m accumulated loss. If the loss is taken into account, it would have lost US$52m.
Either way a marginal gain or loss (I’m assuming S’pore Inc didn’t invest more), taking into account, if true, the goodwill that our teaching “tai kor” would have generated among the Chinese, something our ministers and our media constantly like to remind us of.
And S’porean self-haters (many on the internet) would be banging their balls in frustration that S’pore Inc didn’t lose big time. Though they would be consoled a lot of ministers and senior civil servants spent plenty of time on this project.
So it’s very strange that our “constructive, nation building” media did not report this triumph of S’pore Inc? Or am I missing sumething?
But then our media is not first world class, only fourth world class. Everything must be “betterest”. Another example
The economy did 14.7%, highest in Asia. This was trumpeted by our MSM last week.
If our stock market was tops (or near) in Asia, there would be the usually trumpets.
But our mkt as measured by STI only did 10.1%. Read the rest of this entry »
Macquarie Int’l Infrastructure Fund has transformed itself into a China play with infrastructure assets in China and Taiwan. In 2010, it sold all kinds of investments like nursing homes in Canada.
It promises to be a Asian infrastructure play.
It’s latest presentation (Nov 2010) says it has 37cents in cash, RNAV of 80 cents a share, and no borrowings at MIIF level. But if it’s share of its investments borrowings are included gearing is 57%. Taz the catch.
Got to find out how its investments are valued and its plans for its cash.
Let you know. Wary as MIIF has been a dog with fleas. And if one annualises its Sept dividend payment, it yields abt 5%. Bit low for trust that was promising gd payouts at IPO time.
MIIF prior to the restructuring showed the problems of the model that Temasek and CitySpring mgt aped. Macquarie group was a pioneer of the model of using lots of debt to buy boring utility assets, and then spinning the assets off into trusts. Investors got income, Macquarie got fees at every level. Then the economic crisis struck and all lost out.
China is being shafted again.
China lends money to the US so that Americans can buy Chinese gds. It’s the biggest holder of US govmin bonds, losing billions yearly.
Now it’s lending to EU countries so that EU can buy Chinese. Article China’s support appears aimed at curbing losses on its growing financial investments in Europe, as well as helping to thwart a deeper downturn in an economic bloc that has overtaken the United States as China’s largest trading partner.
All this lending doesn’t reflect that china is the financial hegemon
Lord Keynes said, “If you owe your bank manager a thousand pounds, you are at his mercy. If you owe him a million pounds, he is at your mercy.” The quotation means that if someone owes a large amount of money, the borrower too is at risk.
If you can’t get yr excuses right first time, try and try again.
Finally Global Logistic Properties (GLP) got it right. As I blogged earlier it got its nickers in a twist when explaining why its prospectus did not disclose a non-compete agreement http://atans1.wordpress.com/2010/12/16/glps-non-actionimplications-for-sgxs-bid-for-asx-spore-inc/
Last Wednesday BT reported,”[it] did not specifically disclose information about a non-compete arrangement with ProLogis because it didn’t see the US-based firm as a real threat to its business, sources close to GLP told the media yesterday … GLP had looked into whether ProLogis was likely to re-enter the Chinese market when the non-compete clause expires next February, and felt that the chance was ‘remote’ … it would be hard for ProLogis to restart its mainland China business, as it had sold all its assets and brand name in the country to GLP … They may still have a large operation elsewhere in the world. They may still have a large market cap. But they have no presence in Asia – that’s it,’ said the source on why the non-compete information was not material.
This reasoning I can buy. And it would seem, so does the market. On Friday it was +0.14 to 2.26. It was trading at 2.18 the day before BT had an article abt its non-disclosure. It then fell.
Why did it take so long to come up with a decent explanation It wrote twice to the media spouting gibberish. Hope it Read the rest of this entry »
Remember the “S” stands for “Shanghai” and “H” for Hongkong.
Growth in China has averaged around 10 percent a year for the last decade and shows little sign of slowing. As trade flows with the rest of the world increase — HSBC says they will reach $5 trillion by 2015, which means growth of 13 percent a year — more of China’s cross-border trade will be settled in yuan.
On paper, HSBC is well placed to take a good chunk of business in that yuan-denominated trade. It is often one of the first foreign entities to win key licenses in China. It was the first to settle a cross-border yuan trade last year, the first to handle a yuan-denominated interest rate swap in Hong Kong in October, and it became the first international bank to complete yuan settlements in six continents with a deal in Brazil last month. … Read the rest of this entry »
Global Logistic Properties (GLP), got ‘buy’ calls from 4 brokers (3 foreign) last week. It is a “buy” because it is leading provider of logistics facilities in China.
It owns logistics facilities in China and Japan – Asia’s two largest economies – and may expand into other economies (GLP says it is ‘building the leading distribution facility platform in Asia) in the region, stands to benefit from Asia’s strong economic growth. In particular, rise of consumer spending in China will boost profits.
Citi has a target price of $2.78 for GLP. It noted that yields from the sector are typically higher than those from the retail and prime office property segments in fast-developing China, and that the logistics space does not face the high policy risks that GLP’s residential peers are exposed to.
Nomura has a $2.58 price target for the stock. UBS, has a $2.65 price target for the stock.
In addition to these points, DBS says: We derive an RNAV of $2.76 using a sum-of-the-parts analysis that captures the value of its underlying assets as well as potential re-investment opportunities from balance sheet deployment. Our TP of $2.76 is pegged at parity to RNAV. Key risks to investment stem from regulatory and policy as well as global economic conditions.
BTW GIC is its single-largest shareholder.
I mentioned Midas Holdings earlier in the year.http://atans1.wordpress.com/2010/05/24/midas-here-be-value/. Then DMG & Parners and Kim Eng were recommending it, if I recall correctly. Looks like it is an S-Chip that proved sceptics wrong.
A CIMB Research dated Nov 24 has rated it an “Outperform”.
MIDAS plans to expand its aluminium extrusion capacity further to 70,000 tonnes (+40 per cent) by H1 FY12 after its recent capacity expansion. Coupled with strong results from its metro train maker associated company, we see better earnings growth ahead. As a result, we raise our net profit forecasts for FY10-12 by 1-11 per cent. Our TP rises accordingly from $1.14 to $1.26, still based on 15 times CY12 PE, in line with peers. We see stock catalysts from sizeable contract wins in FY11 from Chinese train makers. Maintain ‘outperform’.
Midas has announced plans to add 20,000 tonnes of capacity by H1 FY12 that would bring its total extrusion capacity to 70,000 tonnes. It may locate the new production lines outside its current plant for strategic reasons, and we see southern Chinese cities as possible locations. In view of its expansion plans, we lift our FY12 average production capacity assumption to 60,000 tonnes.
I hear Kim Eng, DMG & Partners, UOB KH are also recommending the stock.
China’s main economic planning agency has moved to reassure people who fear inflation is getting out of control.
But the Shanghai stock market was down on Monday and Tuesday on fears of more measures to control inflation especially that of food. The market fell almost 2% on Tuesday.
The BBC Online article continued: The National Development and Reform Commission (NDRC) said in a statement that the country had “the capacity” to keep prices in check.
There is particular concern about food price inflation, amid suggestions that some people are hoarding commodities.
But the NDRC said the government had adequate reserves of foodstuffs like poultry, eggs and grain to meet needs.
Food prices jumped 10.1% in October from a year earlier, increasing the overall inflation rate to 4.4%, well above the government’s 3% target.
Hedge funds cut bullish bets on oil by the most in almost three months amid speculation fallout from the Irish debt crisis and China’s efforts to curb inflation will slow economic growth, sapping demand for fuel.
The funds and other large speculators reduced so-called long positions, or wagers on rising prices, by 15 percent in the seven days ended Nov. 16, according to the Commodity Futures Trading Commission’s weekly Commitments of Traders report, released Nov. 19. It was the first drop in four weeks and the largest decline since the seven days ended Aug. 24.
And remember that if China uses its energy resources as efficiently as the West and Japan
Still lower than 1980 levels as this chart shows
But big macs are getting more expensive in China. The US policy of QE2 is forcing up the real value of the yuan (via the price of gds, services and food). The more the Chinese defend the exchange rate to prevent the Yuan from appreciating in norminal terms, the more the real value of yuan rises.
The US is still the hegemon.
Mkts are flying what with Aug- Oct passing without a mkt collapse and the Fed pumping money into the system. Time to join the party. I’ve sat on the sidelines so far this yr, so I’ll sit on my hands a bit longer. Must admit its hard not to want to do something.
The CEO of HSBC, said late last week, there were likely to be “some bumps in the road ahead” in developing countries, especially in China. Reminder: HSBC generates most of its earnings growth in Asia.
“Our latest data from emerging markets points to a slowdown in the rate of recovery,” he said in a statement. But the bank added that it still expected growth in the region to outpace that of the developed world for the foreseeable future.
He gave a positive outlook for the rest of the year, saying that “the global economy is in better shape than many expected a year ago.” But that “while fears of a double dip in the West may be overplayed, the passage from downturn to upturn is clearly taking longer than previous cycles.”
HSBC said pretax profit in the third quarter was “well ahead” of the period a year earlier, as reserves for bad loans reached its lowest quarterly level since early 2007. Its lending business in the United States accounted for the biggest share of improvements. Business in October was “in line with third-quarter trends,” HSBC said. HSBC does not give detailed earnings figures on a quarterly basis.
The investment banking unit of HSBC also reported a drop in trading. HSBC said performance of the business was “robust although trading activity was lower.”
The Economist has constructed a “Sinodependency index”, comprising 22 members of America’s S&P 500 stockmarket index with a high proportion of revenues in China. The index is weighted by the firms’ market capitalisation and the share of their revenues they get from China. It includes Intel and Qualcomm, both chipmakers; Yum! Brands, which owns KFC and other restaurant chains; Boeing, which makes aircraft; and Corning, a glassmaker. The index outperformed the broader S&P 500 by 10% in 2009, when China’s economy outpaced America’s by over 11 percentage points. But it reconverged in April, as the Chinese government grappled with a nascent housing bubble.
I’ll try to get the names of other companies on this index.
China announced an unexpected increase of its key interest rates by 0.25 percentage point last week.
Local stockbroker DMG says
Some of the corporates we follow will be positively impacted by the interest rate hike:
There should be a net positive impact on China Essence Group (unrated) with higher borrowing costs likely to be more than offset by savings from US dollar- and Hong Kong dollar-denominated debts. China Essence is a potato starch manufacturer and derives most of its revenue from China’s domestic market. Interest-rate and foreign-exchange risks pertain mainly to its 690 million yuan (S$135 million) in outstanding debts, consisting of a US$50 million short-term bank loan; 90 million yuan in working capital loans; and HK$250 million (S$42 million) in zero-coupon convertible bonds due in December 2011 (with repayable amount at HK$378 million). With a significantly smaller yuan-denominated debt, we see net positive foreign exchange impact on weaker USD and HKD.
The Chinese (people and state-owned enterprises (SOEs)) are flocking to Angola in darkest Africa. The latter are there for the natural resources that China needs, the former because they see the personal opportunities that they see the SOEs drive into China will bring them. Smart people, the Chinese.
So shouldn’t S’porean entrepreneurs and companies (TLCs, GLCs, and SWFs included) head for Africa? Rather than head for China, or Asia as the govmin keeps encouraging us to do? True Asia esp China waz the place to do in the 80s and 90s and early noughties, but if the Jews of Asia are moving on out of their country into Africa, shouldn’t we?
Are our ministers on auto-pilot mode, or is there something they dislike abt Africans?
BTW when I was a student in London in the late 1970s, I got a lot of stick from African students. They tot one LKY was a racist. I argued that he was simply stating facts. This stance cost me dear: I wasn’t invited to partake of raw stakes of lion, zebra or antelope meat. I love steak tartar.