Sorry there’s been no BLOG for the last two days. I was out of the office, and couldn’t get to it.
There’s a bunch of news out of China, but the most recent event is the big surge in China market’s on Wednesday’s trading.
The Shanghai A shares were up 2.67% yesterday, and the B shares climbed 2.95%- this is a huge move for an index. Economic indicators were strong, suggesting there’s still growth in China.
The Chinese Conference Board said its leading economic indicator rose .6% in July. Mei Luwu, fund manager at Lion Fund ($7.8 billion in assets) says valuations have reached bottom leaving limited downside, and the worst in inflation has passed.
In other news:
Newly minted US Ambassador to China Gary Locke delivered his first speech, saying China must open up important sectors of its economy to foreign investment. Foreign investors have been locked out of mining, health care, energy, and financial services. He also went into the politically sensitive realm of internet freedom.
And speaking of internet freedom, several of the mega cap China internet stocks were crushed yesterday on an article in the Wall Street concerning China’s look at the VIE structure of US public companies with China businesses. I put out two buy recommendations on the the news. Sign up for your two week free trial to find out which stocks I’m recommending, and what calls I’m selling against those stocks.
GM was out with big news yesterday concerning a joint venture with a Chinese Auto maker to develop electric cars in China. GM plans to export their Volt electric car to China, but this is a completely separate business. This JV will develop the next generation of electric cars to be sold in China.
As if there isn’t enough evidence of the importance of the China market, Boeing announced yesterday it is designing new planes with the Chinese market in mind. Boeing expects to sell 5,000 jets in China over the next 20 years.
That’s it for today. Plenty of good, not so good, and very interesting news out of China in the early part of this week.
In overnight trading Asian markets could not decide what to do, so they did very little. Typical for August out in front of the September storm.
The horrendous consumer confidence number shook the markets a little, but that was replaced with some optimism that the FED might take action to stimulate the economy.
Here’s your recap of a few news items out of China:
The Shanghai A shares were up .04% on the day, and the B shares up .23% on the day in rather light trading.
Web site “All Things Digital” carries an article today highlighting the move of American social and mobile businesses to China. Rising American companies are seeing China as the “3rd” frontier for expansion. They point out nearly all the growth in Fortune 11 companies is coming from China. Incomes are rising in China. Chinese consumers are spending, and the demographics of the internet just keep getting better. 70% of the world’s virtual goods sales in 2010 occurred in Asia.
George Greig, the manager of the William Blair International Growth Fund, is becoming more cautious on emerging markets as a whole. He sees slowing demand from the US and Europe as having an effect, and is worried about a real estate bubble bursting in China.
Respected economist Qiao Yongyuan was out with a forecast of 5.4% to 5.6% rise in the CPI, which suggests inflation has peaked and will slow. He sees the PPI peaking at 7.3% in August, and then heading down thanks to lower oil prices and slowing demand for manufactured goods.
Yan Ji, HSBC analyst, says the Chinese markets will continue to slump for and will continue to head downward in the short term. He believes the Chinese government will continue its tightening regime. The Shanghai composite index has fallen 8.6% this year, and 14% last year.
Chinese Premier Wen Jiabao said reining in consumer prices remained Beijing’s priority.
A study recently completed by the Julius Baer Group Ltd. concludes China will have half of Asia’s millionaires by 2015.
That’s all for today. Hopefully there will be a lot more colorful stuff after we get into September.