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The name "Dutch Trader" refers to The Golden Age. This was a period in Dutch history, roughly spanning the 17th century, in which Dutch trade, science, military and art were among the most acclaimed in the world. Dutch ships hunted whales off Svalbard, traded spices in India and... More
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  • The War on China MediaExpress Holdings
    In my article: Shorting China part of a bigger planhttp://seekingalpha.com/article/250267-shorting-china-stocks-part-of-a-bigger-planI started the discussion about what the reason could be for investors/traders being so negative in regard to China and Chinese companies.

    I am convinced China MediaExpress Holdings (CCME) plays a minor role within this debate, although the fact that the company is a major victim of short selling. Short selling in itself is not illegal and widely used by traders to make money when they think that a share price is likely to fall. However, it is illegal when a trader deliberately tries to force the share price to go down by spreading rumours and false facts about the company. These trades are known as "trash and cash".

    Many US-listed China companies had to face systematic attacks by short-sellers. In most cases discrepancies between SAIC filings and SEC filings were the trigger for decreasing stock prices. In respect to China MediaExpress the misunderstanding about buses and contracts was a hot topic. The report of Muddy Waters is accusing China MediaExpress to inflate their numbers.

    Would it be a major corporate scandal if not all the information is as clear as should be. Would be the value of the company at stake? If there were some minor differences I don't think the estimated value would be $5.28 as Muddy Waters calculated.

    Most companies, that are under attack by short sellers choose to ignore them out of a concern for dignifying them or publicizing them. The fact that China MediaExpress on Monday announced a detailed letter available to their shareholders on its investor website is a positive sign. The letter is available at theInvestor Relationssection of CCMEs website, www.ccme.tv/eng/ir/irprofile.php

    Transparency is a two way street, so I would certainly appreciate a full inquiry by the SEC and the NASDAQ concerning the misinformation used by Muddy Waters and others to manipulate the market.

    The deliberate circulating of negative rumors and shady facts by amateur hedge fund managers; aiming to push prices down because they were short selling stocks is having a major impact on the US-listed China market's integrity. A lot of reports that have recently been published have a very short time frame, which gives you a uncomfortable feeling. Because you are really going to think: Is shorting China really part of a bigger plan?

    The fact that "long-only" managers are not trading CCME. Who the hell was selling like crazy last week
    Long only managers have increased their positions in the company.  www.nasdaq.com/asp/holdings.asp?symbol=C...
     
    Many traditional long-only managers design their portfolios to perform over the next six to twelve months. Hedge funds attack the resulting inefficiency from both sides. They do not care whether a stock is going to do well in one year or not. They want to perform well today or this week or, at worst, this month. These funds usually hold positions for a short period of time

    A lot of them are "black box" funds, where computer programs tell them what to buy. Other are news driven and want to know whether the next piece of news, or "data"point," will be positive or negative. Some of these short-term-oriented funds rely on technical analyses, the study of security trading patterns, to decipher the likely near-term future direction, while others rely on the manager's trading instinct, feel and experience.

    Many of the "black box" funds use a combination of insights, and some have been quite successful. These type of fundstend to have little to none transparency. Nobody on the outside really knows much about the portfolio

     
     
    Source: Interactive Data Management Solutions AG

    These black box” funds could also have been playing a part of the giant move in China MediaExpress Holdings last week.

    In case of China MediaExpress Holdings (CCME) fact-based articles like the one of Michael Anderson are more reliable, than the accusative articles without merits.

    Independent
    analysts of Global Hunter and Northland who did an amount of due diligence and groundwork in China are whipped out and not taking serious anymore; despite the fact that they have more knowledge and insight in the company than any of us.

    Last December the Wall Street Journal mentioned that the SEC (Securities and Exchange Commission) was going after Chinese RTO firms. Taking into account the negative reports published lately, you could start to think some kind of cold war is going on between the U.S. and US-listed China companies, Having their own strong believes about how to run a business, and meeting at the battlefield of the stock exchanges.

    Although no weapons are involved, the amount of money makes it worth to fight for. So the fight between longs and shorts will continue. After all: "It's not the short selling that's the problem, it's the damage to the integrity of Chinese companies”.

    Where are the regulators? Where is the Securities and Exchange Commission (SEC)?


    Disclosure: I am long OTCPK:CCME.
    Tags: CCME, China, RTO, SEC
    Feb 07 6:04 AM | Link | 6 Comments
  • The Day After: China MediaExpress Holdings
    Lately a lot of stuff has been going on with China MediaExpress, The latest piece of research came from Muddy Waters, LLC with the title: CCME: Taking the Short Bus to Profits.

    I honestly don't know who and what to believe anymore. From firsthand I witnessed that some institutional money was buying today. Money for the long run, I don't know.
    If that investors did due diligence, I don't know. If it is just for trading purposes, I don't know. If it is all part of a Bigger Plan? It could be.

    To be honest I don't know it anymore.

    What I know and I really believe is true is their cash balance of $4.42 per share. What they are going to do with it I don't know.

    What I am going to do I know and that's sell some out-of-the money put options
    March and get some money for free. Maybe it's not for free I don't know.

    This is the life of a trader/investor not knowing anything but believing everything.

    And yes I still believe CCME is legitimate.



    Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in OTCPK:CCME over the next 72 hours.
    Feb 04 2:41 PM | Link | 3 Comments
  • China will not disappoint us this year
    This year retail sales in China are expected to rise 15 percent year on year to over 17 trillion yuan ($2.58 trillion), amid plans to boost domestic demand, experts said Thursday.

     

    Li Heming, a researcher at the Distribution Productivity Promotion Center of China Commerce, made the forecast. Demand for motor vehicles, home appliances and travel will play a key role in Chinese domestic demand this year, analysts said.

    Compared with last year, though, the growth rate may be slower, as it is not clear if consumption-promoting measures -- like tax cuts for automobiles and a trade-in program for home appliances -- which expired at the end of 2010 will continue.

    Chinese Ministry of Commerce official Wang Xuanqing said the government will take steps to support the development of the nation's service industry. Analysts expect online shopping to maintain its extraordinary growth rate in 2011, after China's online shopping more than doubled in 2010. China's retail sales rose 18.4 percent year on year to 15.4554 trillion yuan in 2010, the National Bureau of Statistics (NBS) said Thursday.

    Another view worthly to look at is from Andy Rothman from CLSA. Mr. Rothman shares his macro economic view of China in his Sinology report.

    The most recent Sinology contains some good 2011 forecasts from Rothman and some interesting views on China that are worth sharing:

    • China’s economy is expected to grow about 9.5 percent in 2011—about 5.5 percent of that coming from investment and the rest coming from consumption.
    • Infrastructure has accounted for one-third of total urban fixed asset investment over the past six years. The amount of projects scheduled and already underway should keep that pace in 2011.
    • Total rail expansion, which includes high-speed rails, should rise to 7,500 kilometers (km) this year, up from 5,000 km in 2010. Rail expansion is expected to peak at 10,000 km
    • Investment by manufacturing firms has accounted for roughly 30 percent of total fixed asset investment over the past six years and is expected to continue in 2011.
    • Investment by private firms outpaced that of the Chinese government for nine consecutive months through November 2010, accounting for 58 percent of all urban fixed asset investment.
    • Led by China’s smaller cities, which house roughly 57 percent of China’s urban population, housing sales rose 12-15 percent on a year-over-year basis in September, October and November.
    • Rising incomes, little household debt and a healthy consumer sentiment is expected to facilitate increased consumption. Consumption is expected to account for 42 percent of GDP growth in 2011.

    These predictions hold up with a lot of major analysts who cover China, but of course there also some more critical positive research reports.

    One of them is from Handelsbanken, Sweden.

    http://research.handelsbanken.se/Attachments/14424/Chinese%20Macro%20Forecast%2013%20january%202011.pdf

    As you can read a lot is going on in China, a lot of sectors can profit this year: from Travel ( Ctrip.com, Universal Travel Group) to Convenience Food (American Lorain)



    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
    Jan 21 5:47 PM | Link | Comment!
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