Month: October 2007

Categories
China Stocks

A daunting task for QDII & China Invest Co.

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Last Updated on October 16, 2007 by stlplace

No. I’m not kidding. Big money (billions of dollars) usually is a good thing, but not easy if one wants to beat market return in a certain time. You can ask Charlie Munger (Berkshire’s vice chairman) and he will tell you Berkshire is going to make a (market+2%) annual return from now on, according to the Q&A of his latest annual conference. For reference, Berkshire (BRK.A) has beat S&P 500 by 10% compound-anually for last 40 years.

Now Mr. Lou Jiwei, head of China Invest Co., will manage a $200 b fund. He can buy half of Exxon Mobile or GE using that money. Or, if Warren agrees, Lou can buy the whole Berkshire.

QDIIs, China AMC, China South, and Havest will each have $3 to $4 billions. Today I heard Shanghai Intl Fund Management Co. 上投摩根 attracted CNY 100 b ($13.5 b) subscription for its QDII focus on Asia pacific. They are both having the problem of “starting big”. A problem nice to have, nonetheless it IS a problem. One thing for sure is QDII can not expect to get the return of their sister funds investing in domestic A share, many of which already got +100% year to date (YTD).

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Categories
Stocks

Shanghai Composite Index reached 6000

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Last Updated on October 15, 2007 by stlplace

Today is Oct 15, 2007. Shanghai Composites Index continued to defy the gravity, amid the central bank (People’s Bank of China) raised bank reserve rate by 0.5 again in the weekend. The composite index closed above 6000 (Sina) for the first time.

Interestingly, history shows the CPC congress is bad for the stock market. Here is one article goes into the details of stock market performance during past CPC conferences. Today marks the opening of 17th CPC congress.

I’m not going to predict the market, either from historical perspective or futuristic view. As a famous investor once said, if history can be used to predict the (future) stock market, all the librarians (assume they read history books in the library) will be rich 🙂

librarian pic

Categories
Stocks

China banks are still busy

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Last Updated on October 23, 2007 by stlplace

The following is picture I took at China Construction Bank in Shanghai (April 15, 2007)

IMG_4877

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Categories
Stocks

SAP buys Business Objects

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Last Updated on October 13, 2007 by stlplace

Week in review 10/07 to 10/13

China Mingsheng Bank buys a stake in a US bank.

China pork price is under control for now, how about housing? And stocks?

Oracle placed a hostile $6.7 billion bid for BEA Systems, according to Bloomberg. Enterprise software arena will have one fewer importnant player.

SAP buys Business Objects (From Reuters), SAP, the world largest business software maker, agrees to buy Business Objects, the leading (French) business intelligence softare maker. If you have not heard of Business Objects, a few years ago it acquired Crystal Reports, the well known reporting software. This leaves Canada’s Cognos the only major BI software maker.

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Categories
Stocks

New fairy tale

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Last Updated on October 13, 2007 by stlplace

(Update Oct 14) I saw this “UBS analyst conference call” from trader168, it talked about “UBS analyst followed the momentum, not the fundamental analysis”. Some food for thought amid all the craziness in the China A share market, and its ripple effect on Hongkong and US markets.

(Original) The performance of recent Haigui stocks are spectacular, here are today’s closing prices of 3 big boys recently came back from Hongkong.

China Shenhua Coal, 中國神華: 1088.HK (54.00 HKD), 601088.SS (92.12 Yuan)

COSL, China Oilfield Service Ltd, 中海油服: 2883.HK (19.72 HKD), 601808.SS (51.65 Yuan)

China Construction Bank: 0939.HK (7.27 HKD), 601039.SS (10.06 Yuan)

For reference, one HKD is slightly less than one Yuan (CNY). Interestingly, Shenhua in Chinese also means fairy tale 🙂

Categories
Stocks

What to read from PE ratio?

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Last Updated on October 12, 2007 by stlplace

PE ratio, stands for the stock price vs. earning per share ratio, is the most commonly used (and mis-used) ratio in the investing world. I saw this PE ratio question at trader168 couple days ago, the question goes like this:

BX P/E: 1.97
MSFT P/E: 21.15
JAVA P/E: 46.01
BIDU P/E: 195.95
VMW P/E: 268.98

为什么PE比能差这么远？不同行业之间的PE是不是没得比？
Why the big difference on PEs from difference companies? Is that true that we should not compare PEs from different industries? (my take: that’s true)

目前PE还算个有用的指标么？
Is PE a still usable indicator? (my take: yes. If used properly)

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Categories
Life Stocks

Xiao Ke and Kiki

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Last Updated on October 11, 2007 by stlplace

Xiao Ke is a German guy. His wife Kiki is my wife’s elder sister. They came back home to see the family, friends, and do some sight seeing. I think Xiao Ke is the first German guy I ever talked to. He has very good understanding of Chinese and Germany culture/philosophies.

I’m curious to learn how he think about the China, the economy development etc. Our conversation started when we saw the Starbucks at the mall. I said China is changing from a tea drinking nation to coffee drinking nation quickly. My point is China is taking (learning) everything from the west, good or bad. Xiao Ke did not agree with me fully. He said he was surprised to see how China blends western things into its own culture or systems. He talked it more from history point of view: after so many years, confucius, traditional holidays such as dragon boat and mid-autumn festival are still here. On the other hand, he thinks German are more “black” or “white”, they either take something or reject it fully. I think it’s a good thing to be precise on engineering: we want to make sure our cars, buildings and airplanes are safe, do we?

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Categories
China Stocks

Buffett and PetroChina

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Last Updated on October 10, 2007 by stlplace

These days “Buffett sold PetroChina stocks” are all over the news, especially in the Chinese news media. After all, Warren has the best track record among stock investors in our time. But, what should we, average investor, read from this news? Or (on the other hand) can we simple ignore this news?

First let me correct the news headline. I think we should say “Buffett reduced his stake in PetroChina H shares”, from about 11% to 5.5% of floating PetroChina H shares. Second we should not discount Buffett’s move here. Unlike Greenspan and many others, he is the guy does real investing, and beat the market (S&P 500) consistently. Of course I’m not saying we should go to another polar: follow him blindly.

PetroChina gas station pic

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Categories
Stocks Technology

Hard disk pioneers won nobel

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Last Updated on October 9, 2007 by stlplace

From Reuters, Hard disk pioneers won Physics nobel: France’s Albert Fert and Germany’s Peter Gruenberg won the 2007 Nobel Prize for physics on Tuesday for a breakthrough in nanotechnology that lets huge amounts of data be squeezed into ever-smaller spaces.

My take: Hard disk has changed the way we live and work, as we can find it in MP3 players or computers. But hard disk makers are not good investments in general. One can look at Seagate (STX), Western Digital (WDC) long term chart (5, 10 years) to see its so so performance. I think this industry is just too competititive and chronic price cuts makes the profit too thin.

Good technology does not necessarily translate into (very) profitable business. I think Google is a rare specie in the tech arena, with its unique business model and almost monopoly postion in the market, and the ever lower cost of hard drives to store its data 🙂

hard disk pic

Categories
Stocks

Ping An and China Life bid shares from each other

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Last Updated on October 9, 2007 by stlplace

PingAn insurance logo

This is what I heard from a guest at “Market today” (China-CBN). Here is how it works: China Ping’an insurance (601318, 2318.HK) and China Life insurance (601628, 2628.HK, LFC) holds significant shares (more than 3%) from each other. Now they are buying shares from each other in the market, which will drive their stock prices higher. This in turn, will bring more profit (unrealized investment gains) to each company, according to the new accounting rules being effective this year in China. As a side note, investment gains exceeded many public companies’ original (main) business profit this year. For instance, Youngor (600177), the famous apparel maker, makes more money from the investment in Citic Securities (600030) than from shirts/jackets.

I’m not accounting expert, nor have I researched how similar things are counted in US GAAP. But my gut feeling tells me China new accounting rule is one reason for the China bubble right now. Because at the end of the day, those paper profit will be gone as fast as they come.

BTW, I’m just curious, when China Life (LFC) reports to SEC, what kind of accounting do they use?