TRANSCRIPT: The continuing meltdown in Chinese
shares prices, French President Sarkozy up to
Beijing, and will Republican Senator Trent Lott
become a lobbyist for Taiwan?
Sinomania! Volume I Webisode 41, November 27,
2007
Markets Meltdown!
Monsieur Sarkozy Beats Brussels to Beijing.
And an update on IPOs!
MARKETS MELTDOWN
The Shanghai Composite closed below 5,000 on
November 22 for the first time since late August
and ended today at 4,958.849 off almost a thousand
points since the start of this month. My prediction
of 4,600 for the index at the start of the New
Year is close at hand.
The story is the same for all shares: the CSI
300 closed at 4,800 November 26 back to levels
last seen at the end of August. B shares are equally
battered: Shanghai Bs closed under 325 Monday
wiping out months of gains. ShenZhen Bs ended
at 663 at the start of the week taking the index
back to early July levels. A more volatile profile
has emerged for ShenZhen Bs reflecting the lack
of solid fundamentals in the much smaller ShenZhen
exchange.
In nearby Hong Kong, the Hang Seng Index recovered
well on Monday gaining over four percent to close
at 27,626.62 after a sharp slide last week and
the index is still well below the end of October
peak.
As for the individual investor initiative out
of mainland China, Beijing’s man in Hong Kong,
Donald Tsang was quoted last week as saying that
PM Wen Jiabao told him – Tsang was in Beijing
for his annual summit – that the program will
move forward “cautiously and pragmatically” (what
else would you expect from Beijing?) but gave
no timetable. Tsang’s talks in Beijing also gave
the go ahead for further Renminbi business in
Hong Kong where the Yuan is already circulating
as a reserve currency.
MÉNAGE À TROIS?
It’s summit season in Beijing and apart from
local dignitaries such as Hong Kong Chief Executive
Donald Tsang, the Chinese capital is currently
host to an important European Union – China summit.
The EU is expected to come down hard on Beijing
and try to force the Chinese to bargain over runaway
exports, currency appreciation, product safety
violations and other politically useful topics.
But before the ministers even assemble at the
table, the EU position may be undermined by French
President Nicolas Sarkozy’s France First summit
with Chinese counterpart President Hu Jintao this
Monday.
In a showy signing ceremony befitting two civilizations
that revel in theatrics, Sarkozy and Hu revealed
commercial deals for France worth tens of billions
of Euros. The list of recipients reads like a
who’s who of important French state-owned conglomerates:
energy giant Areva will sell China two atomic
reactors and over a third of its production of
uranium pellets, Alstom, Alcatel-Lucent, Suez,
Électricité de France, and Airbus
will all get big new contracts that will share
French technology and create growing bonds between
the two countries. Monsieur Sarkozy called China
a “great global power” and essentially trumped
whatever cards the EU had for its tenth China
summit.
IPO REPORT
According to its filings with the US Securities
and Exchange Commission, Xinyuan Real Estate Company
Limited, incorporated in the Cayman Islands but
operating in China, plans to offer 17 and a half
million American Depositary Shares representing
two common shares priced between $13 and $15 US
dollars per ADS. The listing is approved for the
New York Stock Exchange under symbol “XIN.”
The company hopes to raise around $225 million
US dollars. Xinyuan focuses on residential real
estate in more developed cities in China with
strong growth. Typical property development is
Hong Kong style high-rise communities with retail
shopping, parks, and even schools.
ChinaEdu Corporation has filed with the SEC in
America for an IPO of over six million American
Depositary Shares priced at $10 to $12 US dollars
each. The listing will be on NASDAQ with symbol
“CEDU.” ChinaEdu is the biggest online
education service provider in China an area of
potentially explosive growth. So one to watch!
China Sunshine Paper Holdings Company wants to
raise around $95 million US dollars with an IPO
on Hong Kong as soon as December 12. The shares
will be valued at $5.75 to $7.45 Hong Kong dollars
and the money will be used to expand production
of linerboard a more high-end component of corrugated
packaging.
Finally, on China’s domestic markets, regulators
approved the Shanghai A share IPO of China Shipping
Container Lines. Through an offering of almost
two and a half billion A shares the company could
raise $1.6 billion US dollars.
TAIWAN LOSES A FRIEND BRIEFLY?
Republican Senator Trent Lott of Pascagoula,
Mississippi, an almost twenty year veteran of
the U.S. Senate and once the Majority Leader,
announced unexpectedly that he will resign. Speculation
is that he wants to avoid new laws coming into
force that restrict former elected officials from
becoming lobbyists. When you consider Mr. Lott’s
tireless efforts to get his hometown’s shipyards
business to build destroyers and submarines for
Taiwan it will be interesting to see if he registers
as a foreign agent sometime before Taiwan President
Chen Shui-bian’s election next spring.
