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Volume I, Episode 29
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: China Stock Markets Get Higher But For How Much Longer and an IPO Update...
Sinomania! Volume I Webisode 29, August 22, 2007

China's Markets Levitate!
But A Surprise Rate Hike May Bring Them Back to Ground;
And an IPO Update!


Chinese stocks continue an upward trend confounding critics and traders alike with their robust performance. Markets in Hong Kong are breaking new records all summer. The Hang Seng index ended August 22 at 22,346.88 after a dramatic gain last Friday. The benchmark Shanghai Composite index closed August 22nd at 4,980.075 after a yo-yo run that saw the index fall sharply in the first half hour of trading then briefly touch just a hair under 5,000 at the end of the day. The CSI 300 index crossed the 5,000 mark this week and closed at 5,051.688.

Again B shares are the odd man out closing August 22 at 314.295. Shanghai B shares have lost significant ground since only last week and remain a long way from their peak on May 28. Indeed it now appears obvious that Shanghai B shares are the one class impacted by the tripling of the stamp duty on trading transactions May 30.

Were B shares in Shanghai manipulated by "day-traders"? Of course intra-day and true day-trading are not possible in Chinese stock markets under current rules. But there are plenty who make money or try hard to by capitalizing on the end of day close and open prices on the Shanghai B share market. This behavior is less evident with ShenZhen B shares but the pattern appears to be there also.

So has the fun gone out of B shares? Perhaps for now but there is plenty of promise left in Chinese B shares. In fact, we may be seeing a new environment develop for these shares as short-term investors lose interest. Fact is many B shares are from the best Chinese companies with the greatest long-term potential. For foreign investors really bullish about the future of China, B shares are a chance to own a piece of Chinese companies and be part of this most exciting early stage of Chinese equity development. I'll have more on B shares at another time.

Chinese stock markets may be surprising with their resilience but many analysts continue to expect a drop in prices and still hold out for a ten to even 20 percent "correction" if credit conditions tighten in the second half. The unexpected interest rate hike by China's central bank on Tuesday may be signal of market volatility to come of uncertain duration.

The People's Bank of China announced its fourth rate increase of the year August 21 raising the interest rate on bank deposits to 3.6 percent and the lending rate to 7.02 percent. The move is part of broader effort to control bank lending and growth of the money supply. July inflation was running at 5.6 percent and M2 money supply figures were up 18 and a half percent. The key word the central bankers used was "stabilize" and many expect there to be more rate increases in the second half. The end result is a credit squeeze keeping China on par with the rest of the world's big economies.


Financials continue to cash in with several IPOs coming:

Bank of Beijing is planning a Shanghai domestic IPO this year to be followed by a H Share listing on Hong Kong sometime later. The amount of the offering is not known at this time. Bank of Beijing is 19.9 percent owned by Dutch conglomerate ING.

Commonwealth Bank of Australia is the owner of the maximum possible foreign stake in Hangzhou City Commercial Bank which plans a 5 billion Yuan A share listing on Shanghai. The application is currently under review by Chinese regulators.

An IPO in the hot and fast growing tourism sector is Songshan Shaolin Tourism Group expected to go public in 2008. The company manages the tourist resources around the Shaolin Temple in Henan Province where Kung Fu originated. There are numerous Buddhist temples in the region and 60 Kung Fu schools attracting up to four million tourists last year. The IPO may be on domestic markets or in Hong Kong.

And remember Nineyou International the Chinese online game provider set to IPO in Osaka, Japan? As we mentioned earlier the IPO was troubled with a lawsuit from T3 Entertainment, the Korean creator of one of its primary online game properties. Nineyou will now counter sue and has withdrawn its IPO indefinitely.

I hope you're having a great summer.

I'll see you next time!

© Sinomania! 2007 All Rights Reserved.

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