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I am an equity option and futures trader. I have been trading the markets since 1979. More about me on my website
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  • New China Syndrome | Wednesday Night Chinese Takeout  0 comments
    Dec 8, 2013 7:03 PM | about stocks: BIDU, SINA, QIHU, DANG, YOKU, CTRP

    (click to enlarge)This is the first blog for Wednesday Night Chinese Takeout! Each Wednesday I will focus on China and various China stocks. I will try to rotate through various market sectors but also try to keep the stocks to primarily very actively traded stocks.

    The China Syndrome

    Some of you may have seen the 1979 movie called "The China Syndrome". It starred Jane Fonda, Jack Lemmon and Michael Douglas. The story was about how a whistle-blower tried to warn people about the shortcomings of the plant and the nuclear reactor had a near meltdown.

    The film was released on March 16, 1979. The 3 Mile Island Nuclear accident occurred 12 days later in which 1 of 2 nuclear reactors had a partial nuclear meltdown. It was a little eerie, to say the least. The term China Syndrome came from the thinking that if a nuclear meltdown started, it couldn't be stopped, and would literally melt all the way through the Earth to the other side of the China.

    New China Syndrome

    The New China Syndrome is a little more upbeat. I am using New China Syndrome to refer to the new dynamics of modernization and economic advancement that is occurring in China and drawing the world to its doorstep. What is occurring there is fascinating and here are just a few tidbits:

    1. China is now the No. 2 economy in the world based on GDP.
    2. More people live in China than in any other country on the planet. The world population is 7.1 billion according to the U.S. Census Bureau and China has 19% of it at 1.35 billion.
    3. 604 million. That is the number of internet users in China based on the latest figures from the China Internet Network Information Center, according to Young's China Business Blog. Let's see, that's about 46% of their population and almost twice the total number of people in the United States.
    4. The 3 Gorges Dam on the Yangtze River is the world's largest power station in terms of installed capacity at 22,500 MW.
    5. China just launched it first moon space mission on Dec. 2. The intent is to soft land a lunar probe on the surface of the moon.
    Middle Kingdom

    Of course I could go on and on. The world is changing and it is changing fast! But before I go to the subject of stocks, I want to mention some historical things about China that might make the current activity not so surprising. Middle Kingdom is a name often used for China. I am not sure where it originated but it may have been because they thought they were in the middle of the world.

    In Jimmy Roger's book, A Bull in China, he mentions several interesting historical items:

    • Chinese explorer Cheng Ho set sail on ships twice the size of Columbus' ships in the fifteenth century and explored much of the world.
    • The Chinese invented gunpowder centuries before the Europeans.
    • In the sixteenth century, when European explorers took the lead by venturing to the New World, over half the silver found in the Americas, ended up in China as payment for trade. ( sound familiar, since they are today, the world's largest creditor nation)
    • The ancient capital of Changan, now called Xi'an, was at one time the largest city on earth.
    • Evidence of rice cultivation and recognizably "Chinese" art, reaches back around seven thousand years. The history of the various dynasties is truly fascinating.
    Back to Stocks

    In this first post dedicated to China I am going to focus on 6 technology stocks:

    1. Baidu, Inc. (NASDAQ:BIDU) Baidu is considered to be the Google of China and has 80% of the search market. I just saw an article where Robin Li, the founder of Baidu, has now become the richest man in China.
    2. SINA Corporation (NASDAQ:SINA) SINA is an online media company and owns Weibo which is an online blogging company. SINA was founded in 1997 so it's been around for a while.
    3. Qihoo 360 Technology Company Ltd. (NYSE:QIHU) Qihoo is a challenger to Baidu.
    4. E-Commerce China Dangdang Inc. (NYSE:DANG) Probably comparable to Amazon for China.
    5. Youku Tudou Inc. YOKU) This is the YouTube of China.
    6. International Ltd. (NASDAQ:CTRP) This is the Priceline of China.

    We'll at the charts for these stocks along with the Shanghai Composite Index in this evening's video. On to the video...

    Again since I am unclear about video on Seeking Alpha, please go to my website to view the video.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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