Others   

Good time for China stocks again?

SAN FRANCISCO (MarketWatch) -- The sharp overnight decline in Chinese stock prices reflects Beijing officials' mounting concern over heady and unsustainable speculation, a mutual-fund manager specializing in Chinese stocks said Wednesday, and he warned that investors should brace for more upheaval.

China's stock market has run up "too much, too fast," said Richard Gao, lead manager of the San Francisco-based Matthews China Fund.

"I don't know if at this point the market has corrected enough yet," he added. "Investors need to keep in mind that this is a high-risk, high volatility market."

China's local A-share stock index is up almost 143% in the last 12 months, according to Morgan Stanley Capital International Inc. Heightened concern that Chinese stocks were overheating was clearly behind a senior Chinese government official's criticism of the market's valuation earlier this week, a cold appraisal that toppled Chinese stocks and their related U.S. listed shares on Wednesday.

"There is a bubble growing. Investors should be concerned about the risks," Cheng Siwei, vice-chairman of the standing committee of the National People's Congress, said in an interview published in the Financial Times on Tuesday.

"In a bull market, people will invest relatively irrationally. Every investor thinks they can win. But many will end up losing. But that is their risk and their choice," Cheng added.

Bullish on bridges

Gao noted that buyers have been "over-excited and over-optimistic" about Chinese stocks.

"Corporate fundamentals are still good, but the market overall is running ahead of the fundamentals," Gao said. "The government wants to remind people that there's risk in the market and you need to be more cautious in terms of stock trading."

The fund manager said he's lately become cautious about Chinese consumer and financial stocks, offsetting exposure to these portfolio mainstays with investments in companies involved in developing China's infrastructure, such as toll road, bridge and port builders, utilities and power plants.

"Those sectors are comparatively cheaper than the high-flying financials and consumer stocks," Gao said.

One recent addition to the portfolio is China Communications Construction Corp., the country's leading builder of port facilities, bridges and railways. Gao is also upbeat on longtime fund holding Huaneng Power International Inc., an independent power company with plants across China.

"We are quite positive still on the long-term fundamentals, and China is going to need build-up in infrastructure," Gao said. "Those companies we believe have very good growth."

While Chinese stocks may correct further in the near term, Gao said the country's economic growth prospects and corporate outlook is strong. He expects China's economy to continue growing in the 9% to 10% range annually for at least the next couple of years. Such robust expansion, coupled with effective government controls to keep expansion on a high but stable track, ultimately bodes well for Chinese stocks, Gao said.

Indeed, he said, for investors with a multiyear horizon, "any corrections or big sell-offs are opportunities."

--------------

 

just one word, money, more money, one trillion ?? or more trillion..coming, so Olympic 2008 oso need more money, so how to say China stock is bubbling now, is those ppl finding execuses to take profit 1st, then end of the day, still more money into in bag, let c weather they make more or making less.... U tink tink those top ppl would want to rock the boat now or just trying to slow the boat a little.

 

HONG KONG (MarketWatch) - China's leading share index tumbled Wednesday, staging its biggest single-day decline since June, after a senior legislator warned that the market may be overheating after a stunning 130% gain in 2006.

The comments by Cheng Siwei, vice-chairman of the standing committee of the National People's Congress, in an interview with the Financial Times, raised concerns the Chinese government may take official action to cool speculation after the market hit a record high last week.

The Shanghai Composite closed down 144 points, or 4.9%, at 2,786.33.

The FT cited Cheng as saying he was concerned the stock market was overheating.

"There is a bubble going on, investors should be concerned about the risks... .But in every bull market people will invest relatively irrationally," he said.

Analysts said it was too early to tell whether official measures to cool the market were forthcoming.

"It's the (Chinese) government's objective to talk down the market, but it doesn't want to trigger a crash either," said Pauline Dan, a fund manager with Manulife Asset Management in Hong Kong. "They will gradually leak out bits and pieces of news and issue some directives in the short term to try and cool market sentiment."

Other Chinese indexes also fell sharply. The DJ CBN 600, which reflects about 80% of China's free-float market capitalization, lost 6.2% to 18,376.61.

Hong Kong's Hang Seng Index tumbled 1.7% to end at 20,106.42.

"Sentiment (in Hong Kong) remains quite good but people will not be too keen to chase shares ahead of the Fed's meeting," said Alex Wong, asset management director at Ample Finance Group.

-------------

 

--------------

 

Chinese stocks climbed partly on news that the country may unify taxes for local and foreign firms at 25%, which would reduce the burden on domestic companies.



"Today's rally was a bit overdone even though there's news that China may change its tax system," said Y.K. Chan, a strategist at Phillip Securities.



China plans to set a unified corporate income tax rate of 25%  in 2007 in a move that will scrap the country's decade-old preferential treatment for foreign firms, the official China Securities Journal said on Monday. Domestic financial stocks are tipped to be the biggest gainers under the proposed system.

 

   Just have a scan of China stocks. Most are up a couple of cents.

 

   China stocks are active today following report by ML on China Sun. Beginning of rotational play?

 

I think it is simply naived to generalize your 'betting' as China Stocks or Thai ,etc etc.....  . Whether it is China or Singapore stocks, there sure to have good and bad managed companies of wide variety of different businesses. Therefore, I feel it is better to look into the business types with good managements rather than just in general. Cheers!

 

News of a Chinese fund manager being detained as part of the on-going Shanghai inquiry has also rekindled talks that some S-chips listed here may also be investigated. There has been some talks of accounting irregularities in some Chinese listed companies here. Apparently, this was a reason for the sudden reduction in participation.

 

Used TA to do comparsion with other stock, esp like EPURE's IPO.

 

Hi Singaporegal,
But on second thought, perhaps you can develope some short-term ultra-agile TA tools to tame them with? Are there any at the moment?

 

Yah... agree with you... I usually avoid China plays because of this. Hard to predict price trends.s

 

Hi Singaporegal,
More volatile stocks means more choice for punters. But TA tools may be unusable for taming them.

 

Good observation compass. Small ones that head here tend to be very volatile.

 

china stocks has same pattern of clob stocks ie play few months quiet few months play few month then quiet few months. in fact better than clob as china is a very very big market. hong kong will swallow all the megabuck deals, small ones will head here. if no more come here due to tighter regulations all the more existing ones had better chances of rotational plays

 

Will Epure a china play stock included ??.

 

China plays starting to move up.



Nomura said the Chinese consumer market was "a fast-growing sector that may be overlooked and undervalued, but accessible", with many producers enjoying higher net profit, despite facing depressed margins because of higher prices for raw materials.



"Higher volumes and new launches help the companies mask the impact, and retain fast growth at the bottom line," Nomura said in a recent note.



In its assessment of 20 Chinese companies listed here, Nomura said the following offered the best prospects: China Fishery, Pine Agritech and China Hongxing, because of their capital expenditure plans; Beauty China and Reyoung Pharmaceutical, because of their earnings stability; and -- at the top of the rankings -- Synear, because of its return on equity.

 

PrimePartners has created an index to track the performance of 25 Chinese companies listed here. The PrimePartners China Index will be available through the stock exchange's price feed from Monday. To begin with, it will not be calculated in real time.



The PrimePartners China Index is meant to be a benchmark for investors as more and more Chinese stocks are traded on the exchange here, PrimePartners chairman Quek Peck Lim said.



"One of seven shares traded daily comes from this segment. It is therefore important," Quek said.



There were 105 Chinese companies listed here by last month, with combined market capitalization of $28.4b, representing 5.9% of the exchange's market capitalization.



"As they continue to grow in tradability, then it becomes important to have all these other derivatives and futures contracts, [as] additional liquidity pools for the market itself," said Quek.



The 25 companies in the index include COSCO, Pine Agritech and People's Food. The criteria used to chose them include market capitalization, trading volume, free float and industry representation. The composition of the index will be reviewed every six months.

 

ICBC plans to sell HK$29.2b (S$5.99b) of shares to corporate investors. Among them are GIC which will receive HK$2.8b of shares and UOB which will buy HK$1.6b of shares.



Dr Cheng Yu Tung, xhairman of New World Development; Lee Shau Kee, chairman of Henderson Land Development; the Kuok Group; Nan Fung Group; and Qatar Investment Authority will each buy HK$1.6b of shares.



Cheung Kong, Hutchinson Whampoa, Citic Pacific and Sun Hung Kai Properties each agreed to sign up for HK$800m of shares.



Citi Pacific chairman Larry Yung and the Kwok family trust, the controlling shareholder of Sun Hung Kai Properties, will each receive HK$800m of shares.

 

True China stocks may be temporarily affected by the anti corruption probes on going in China. However for the integrity of Chinese stocks the serious intents of the central Govt. to clean up the act will ultimately boost confidence in China investments if China wants to compete in the World financial systems. I think the least affected will be the Singapore listed stocks  as they have to undergo stringent scrutinies and qualifications by our SES. I think the CAO saga is most illustrative of the regulatory  excellence of the Chinese stocks here. Doubtless more than commercial considerations, that so many China stocks are listing here are also to enhance their image and international marketability here. All in all the anti corruption campaign in China is a plus for China listings here.