davidinchina

25 Comments

    • New Rules for Chinese Stock Market Investors [view article]
      I think this was simply a not-too-subtle attempt by Francorp to plug his company. Sep 28 09:27 PM
    • Synutra Goes Beyond Government Orders in Infant Formula Recall [view article]
      Farmers and milk collection agents in China are paid by volume, therefore they can make more money if they add water. Adding melamine falsely raises the protein level during testing covering up the fact that water was added. In many other countries farmers are paid according to milk solids/ components i.e. fat & protein, and so there would be no advantage to adding water.
      Sep 17 07:30 PM
    • No Rest for the Chinese Stock Market [view article]
      How do corporations react (to profits being squeezed)? Maybe by adding melamine to their infant milk powder products ... Sep 15 11:12 AM
    • Anecdotal Evidence of Risks in China's Banking System [view article]
      So one scenario is that senior officials at large banks are approving what look like legitimate loans at the going market rate, but that this money is then funneled into the informal banking sector where it can earn a much higher return. A nice business for those who get a cut of the interest rate differential until things go pear shaped ... Jun 30 11:07 AM
    • China: Inflation or Stagnation? [view article]
      A small point but price hikes of RMB0.5-1.5 at McDonalds would translate into rises of 7-21 American cents.

      Whatever the official inflation figures show the fact is that life is getting more expensive in China, especially for foreigners as the price of imported food products has jumped 50% or more in some cases. Whether that is inflationary pressure, increased import duties or simple price gouging is hard to tell.       Jun 26 09:14 PM
    • Think U.S. Is Volatile? Check Out Shanghai [view article]
      Wow, thats amazing. All the investors in China are deliberately driving the market lower to try to force the government to intervene.

      No one seems to have told my Chinese mother in law who is headed for the exit if there is enough of an upswing for her to get her money back.       Apr 01 08:56 PM
    • Is China's Stock Market Nearing a Bottom? [view article]
      I would have thought there was potential for the market to go down a lot further. As you yourself have pointed out numerous times inflation is going to be a major issue in the coming year and the government is also trying to bring GDP growth back to a more sustainable level. Raising interest rates and tightening credit are logical ways to do this and would be detrimental to both the stock market and real estate. Mar 31 08:16 PM
    • A Bull In China: Jim Rogers' Latest Book on China's Growing Importance [view article]
      Perhaps you should also read this FT book review. Mr Rogers may not be all he seems.


      New market proves difficult to corner

      By Jamil Anderlini

      Published: January 10 2008 02:00 | Last updated: January 10 2008 02:00

      On this Chinese version of the board game Monopoly . . . it's not a roll of the dice, but a corner on the best information, that will help you pass 'Go'," celebrity investor Jim Rogers asserts in his new book about investment in China.

      Rogers is known for helping George Soros establish the Quantum Fund in the 1970s, for writing books such as Investment Biker and Hot Commodities and for predicting the bottoming-out and recovery of the Chinese stock market. Unfortunately, in this book, Rogers does not provide "a corner on the best information".

      The title - A Bull in China - is somewhat misleading to start with, since Rogers upped sticks from the US to Singapore, rather than China. When I asked him recently why, if he is so bullish on the country, he doesn't live here, he replied that his family had planned to live in Shanghai until the shocking air pollution made them decide on far-flung Singapore instead.

      The book reads like a combination of personal memoir, stock pick listings and historical explanation of the Chinese economic miracle. The style is breezy and intended to entertain but at times gets bogged down in trying to explain the complexities of the Chinese stock market.

      The most interesting parts are the author's personal recollections of his first visit to China in the mid-1980s. Rogers provides a great description of buying a single share in a bank over the counter in Shanghai in 1986 before the Chinese stock markets had even been set up. He also describes trips on his motorbike across the country when many roads turned to sand or were washed away by floods.

      Sadly, such anecdotes make up a small part of the book.

      The underlying hypothesis is indisputable - that China will continue to grow and there will be lots of good investment opportunities in a range of industries - but this revelation comes two and a half years into a bull run in the Chinese stock market that has seen the benchmark index jump six-fold.

      During a recent publicity tour Rogers made headlines by announcing that he was selling every US dollar asset he owned and buying China's renminbi assets. But when I asked what exactly he was buying he was less forthcoming. He conceded that prices in the Chinese real estate and stock markets were reaching bubble levels and no one should buy them now, but said he was not making direct investments in factories or unlisted local companies. Pressed a bit harder, he correctly pointed out that any foreigner can open a bank account in China and he was buying cash.

      The renminbi is still not a freely convertible currency and, although it used to be much easier to buy renminbi than to exchange it for foreign currencies, in early 2007 the government ordered Chinese banks to restrict individuals' annual purchases of renminbi to the equivalent of $50,000, the same amount that can be changed into foreign currencies each year.

      China has a thriving black market and extensive underground banking system but Rogers assured me he has not resorted to illegal means to buy renminbi. As a significant institutional investor, Rogers may be able to structure some sort of offshore, renminbi-based non-deliverable forward contracts with an investment bank but that is hardly an option available for individual investors wanting to get a piece of China.

      At times, this book reads like a collection of analyst research notes with each section followed by an incomplete list of Chinese companies with stock codes and a quick blurb. Quite a few of the highlighted companies are domestically listed "A-shares", which individual foreign investors are not yet allowed to buy. At other times, the book reads like a history of China's capital markets. But much of the information is out of date and in some places inaccurate or misleading.

      For instance, his explanation of the confusing Chinese stock market contains some key errors, such as an assertion that the proportion of shares in the market owned by the government dropped from 78 per cent in 2002 to less than 50 per cent by mid-2006. In fact, the state directly owned more like 50 per cent of all shares in 2002 and the proportion of state ownership in the market has risen since then following a spate of big state-owned enterprise listings.

      To his credit, Rogers clearly believes in the China story he is selling in this book. But it doesn't take a financial wizard to be positive on the country's long term prospects and with the proliferation of books on offer from other old China hands there is little need to bother with this list of stock picks.

      Copyright The Financial Times Limited 2008       Feb 07 06:06 AM
    • Bullish on China Digital TV [view article]
      Maybe the Chinese people don't want digital TV if it means paying more money: cmp.hku.hk/2008/01/03/... Jan 13 08:59 PM
    • China Digital TV Holding Co. Enters the Bargain Bin [view article]
      Maybe the Chinese people don't want digital TV if it means paying more money: cmp.hku.hk/2008/01/03/.../ Jan 06 05:51 AM
    • Giant Interactive: A Primer in Virtual Currency [view article]
      This a translation of an interesting article that came out recently in the Chinese media about the elements of gambling in Zhengtu Online and how a player became addicted to the game. The article was pulled from the website that published it, possibly because of pressure from Shi Yuzhu, the founder of GA.

      danwei.org/electronic_...       Dec 31 10:17 PM
    • Giant Interactive Group: Great Potential in Play [view article]
      They priced their IPO at a rich valuation considering it is a one-trick pony. One of their in-house developers told me that their upcoming titles are okay but nothing special, and quite (too) similar to the existing Zhengtu Online. However the original game was okay because of heavy marketing so maybe they can do the same for their upcoming titles. Nov 05 09:02 AM
    • Giant Interactive Group: Great Potential in Play [view article]
      They priced their IPO at a rich valuation considering this is a one trick pony. One of their in-house developers told me that their upcoming titles were okay but nothing special, and quite (too) similar to Zhengtu Online. However a big factor in the success of their existing title is heavy marketing and so maybe they can make their upcoming titles a success. Nov 05 08:48 AM
    • Giant Interactive Group: Great Potential in Play [view article]
      They priced their IPO at a rich valuation considering this is a one trick pony. One of their in-house developers told me that their upcoming titles were okay but nothing special, and quite (too) similar to Zhengtu Online. However a big factor in the success of their existing title is heavy marketing and so maybe they can make their upcoming titles a success. Nov 05 08:48 AM
    • Webzen: Undervalued Asian Name? [view article]
      The $US35m you mention for Huxley is not an upfront payment, most of it is guaranteed royalty payments that are payable if the game reaches certain milestones after launching such as a certain level of users. Like most games that The9 licenses the money payable upfront is not much at all but $US35m is a good headline for both parties.

      I don't think it is even scheduled to launch in Korea until 2008 so it won't be in China until after that.       Apr 10 09:25 AM
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