Excerpt from our Wall Street Breakfast, a one-page summary of this morning's key market-moving and stock-moving stories:
HEARD IN ASIA: China Railroads Stay on Track [Wall Street Journal]
Summary: A report published last month by the Chinese Ministry of the Railway said Beijing plans to invest 1.25 trillion yuan (~$160b) by 2010 on track, trains and civil engineering. Analysts are very bullish on the railroad sector in China, but unfortunately for overseas investors, it will be difficult to make a play. Two stocks analysts like in particular, Daqin Railway and China Railway Tielong Container Logistics, only trade in Shanghai as Class-A shares, which non-Chinese cannot purchase directly. One possible play is Guangshen Railway, which is listed in Hong Kong and has ADRs on the NYSE. Deutsche Bank analysts say the sector is a "must own" for the next 2-3 years, adding that, "China's railway sector is at the beginning of its reform cycle. Nearly all parts of the railway supply chain will benefit from this sector transformation." According to a report by the same firm, China handles about 24% of global rail traffic but has only 6% of the world's track.
Related links: Media coverage: China Daily, Xinhua and IHT: Guangshen Railway Plans Share Sale. Commentary: A Bleak Report For The Railroad Industry • Over the summer Marc Gerstein of Reuters included Guangshen Railway in his analysis of railroad stocks.
Potentially impacted stocks and ETFs: Guangshen Railway (NYSE:GSH), General Electric (NYSE:GE), Siemens (SI) • ETF: PowerShares Gldn Dragon Halter USX China (NASDAQ:PGJ)
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