Category: China

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China Stocks

Home Inns and Longtop

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Home Inns (HMIN) is raising fund through convertible bond (up to) $149 m (reuters news). It seems they still need the cash to expand.

Longtop got more analyst converge: Deutsche bank and Jefferies initiated with Buy with target price of $30 and $29, respectively. Quoted here:

Deutsche Bank initiates coverage on Longtop Financial Technologies (NYSE: LFT) with a Buy rating, setting a $30 price target, citing a great position within its quickly growing industry, unique barriers to entry and impressive operating results…

Jefferies initiated Longtop Financial (NYSE:LFT) with a Buy rating and $29 target, as they expect strong earnings growth over the next several years from an acceleration in P&L performance and the company’s attractive secular demand backdrop.

home inns map pic
(image from thestockmasters.com)

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China Stocks

Not so harmonious stock market?

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According to Chinatimes.cc (Shui Pi),

上证指数自10月16日创出历史新高6124点之后已经连续下跌30天，下跌1346点，跌幅达到20%，市值的损失高达5万亿左右，相当于这一轮牛市启动之前中国股市的整个市值，不夸张地说，是蒸发了一个传统股市。按照跌幅超过25%可以视作牛熊转换的理论来看，这样的调整即便不能算崩盘，至少也是大起大落的一种表现，更何况根据媒体的统计，从2006年11月至今，投资者亏损面已经达到70%以上，挣钱的不足25%。

……

一个和谐社会是离不开一个和谐的股市的，要把胡锦涛总书记“创造条件让更多的群众拥有财产性收入”的讲话精神落到实处同样需要一个充满着阳光和希望的股市。投资者要有风险意识，管理层又何尝不是如此呢？

Seriously, harmonious or not, I do not think there is a stock market in which more than 50% of the participants making money. To be more realistic, I think 30% make money, 70% lose money is common in stock markets, especially in short term (say one year time frame as shown above).

On the other hand, I do believe investing in 401k (say, buy and hold index funds for 25 years) will mostly likely bear fruits for investors. As one can see this is totally different from the “make fast money” mindset for majority of the stock traders in China, including many mutal fund managers 🙂

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China Stocks

My take on Longtop

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longtop logo

First a little background. Longtop did its high profile IPO on Oct. 24, a short month ago at NYSE (think how much market sentiment has changed since then). As the first Chinese software company listed in NYSE, Longtop is in the sweet spot in terms of the customers they serve: the Chinese banks. Chinese banks, both the big 4 and the (smaller) city commercial banks, have lots of money to spend lately, after raising tons of cash through IPO in recent years.

On the serious side, the banks do need to improve the workflow and upgrade their IT system, so that their customers don’t have to wait one hour for over the counter service, or wait half an hour for ATM machine. The banks are also targeting the newly minted middle class for personal banking, credit card and other services. After all, it IS a competitive environment. China opened up RMB services to foreign banks early this year. If people can not get the services at domestic banks, they may go to foreign banks.

Here are two common questions for Longtop.

1) The usage of the IPO proceeds.
According to its F1 prospectus, the company plan to use the net proceeds of this offering as follows:

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China

Shanghai housing market

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I read some interesting Chinese posts from soufun today. I just put the links here: thought we may get a better picture of Shanghai housing market by reading them all.

Pudong new housing one day tour 浦东看房一日游.

Songjiang overview 松江新城高品质公寓 (the author appears to be biased toward Poly since he/she is Poly West Bay 保利西子湾 owner); also post about lastest price at 保利西子湾.

Vanke housing buying experience 谈谈买房经历和体验 (this one is funny, in progress); another guy one month house hunting journey 一个月火速抢房日记.

Note I have not toured any of those properties, so use the reviews as your reference…

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China IPO

VisionChina Media IPO on the deck

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“For every Focus Media, there are 10 AirMedia or VisionChina Media”.

I took bus and taxi from time to time when I was in Shanghai, because I don’t have my own car. One thing I notice is those LCD screens on bus, metro and taxi. There are news on the bus LCD, the ones in metro and taxi are mostly advertisement. Twice have I seen the NFL (American national football league) stuff on metro. Anyway, I think this LCD advertisement thing should make money, both for the transportation companies and advertisers.

Now one such company, VisionChina Media (proposed ticker:VLSN), is coming to Nasdaq. Here is the excerpt from Pacific Epoch: Out-of-home advertising network VisionChina Media Inc. set the price range for its planned Nasdaq initial public offering at US$9.50 to US$11.50 per share, according to a filing with the US Securities and Exchange Commission. VisionChina plans to sell 13.5 million American Depository Shares in the offering to raise up to US$155 million. Credit Suisse, Merrill Lynch & Co, CIBC World Markets, and Piper Jaffray are underwriting the IPO. VisionChina generated net income of US$3.7 million in the first nine months of 2007. VisionChina uses real-time mobile digital TV broadcasts to provide content and advertising on mass transit systems in China. The company began operations on April 8, 2005. VisionChina plans to trade under the ticker “VISN”.

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China Stocks

IS Nov 8 the turning point?

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for Chinese stock market? It looks more and more like it, after two brutal weeks for many small investors/speculators in China. Here is an old article from ChinaTimes.cc (via JinRongJie). The title is 泡沫不死 挤压不止.

From my observation, it is very rare that a prime minister would comment the stock market directly. But again this is China. Borrow the marketing slogan from LiNing (sports wear) anything is possible, 一切都有可能.
===========
本报记者 吴君强 　　
　　11月8日，农历二十四节气“立冬”。仿佛是巧合，这天股市寒风凛冽，沪指重挫近5%，上千只股票下跌。沪指上周跌8%，创下9年来最大单周跌幅。中期调整终以暴跌的姿态确立。 　　

　　在接受《华夏理财》记者采访时，多位分析师认为，本轮中期调整中，大盘可能下探至5000点或4950点。一些更悲观的分析师则认为，在4700点—4800点区域，大盘才能得到有力支撑。 　　

　　他们说，一、二、三线股齐跌，再也没有什么“二八”、“八二”现象充门面，在趋势转向之后，现在有太多的理由，去看空A股市场了。 　　

　　该是“动手”的时候了 　　

　　一切都是有征兆的。 　　

　　11月3日，国务院总理温家宝在外访问之际，罕见地对目前的中国股市作出详细论述。 　　

　　“内地股市增长很快，防止股市泡沫，维持市场平稳健康发展，不要大起大落，将是十分艰巨的。”温家宝说，股市的波动牵扯国家的经济和股民的利益，政府随时关注。他还表态，政府将采取市场手段对股市进行调节，防止其大起大落。 　　

　　“温总理最近的讲话，表明中央对资产泡沫问题的重视程度明显提高。”南方基金一位基金经理说。 　　

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China Stocks

Premier Wen Talks about housing, stocks

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in Singapore, two of the most heated topics in China these days. Here is the Chinese excerpt from DFdaily.

Housing:
他在新加坡国立大学发表演讲后回答提问时说，应该说，中国改革开放30年来居民住房的条件有很大的改善，现在城乡居民住房面积人均超过20平方米，但是分布不均，特别是近些年来房价上涨较快，人民有很大的意见。

　　解决房地产问题，温家宝谈了四点考虑。他说，首先，政府的职责最重要的是要搞好廉租房，让那些买不起房或者进城打工的农民工能够租得起房、住得上房。为此，中国政府今年将安排49亿元用于廉租房建设，再加上地方财政，投入将达到几百亿。他说，明年我们将加大廉租房建设的力度。

　　其次，是建设经济适用房。他说，经济适用房大多数是面向中产阶级的，他们中有许多工资也不是很高。在中国，经济适用房户均面积90平方米是比较适当的，因为中国人多地少，“对廉租房和经济适用房，政府应提供和保障土地的需要，当然(这些)土地也要节约和集约使用”。他说，对于高档住房，主要靠市场调节，“但是也必须有国家的宏观调控，防止利用房地产进行炒作造成市场混乱”。

　　温家宝指出，要让全国人民懂得中国的国情，中国是有13亿人口的国家，要守住18亿亩耕地的“红线”才能养活中国人。中国每年新生人口要超过1000万，每年由农村进入城市需要解决住房的进城人员达到1800万，还有2100万流动农民工，也需要居住条件。所有这些问题，政府都要统筹兼顾。

　　温家宝说，这次来新加坡会有机会再看看新加坡的组屋。他说：“几年前，我曾经专门考察过，受到不少启发。”

premier wen jia bao pic

Stocks:
新华网新加坡11月19日电(记者张永兴李涛)中国国务院总理温家宝19日在这里从三方面谈了政府在股票市场应该做的事情。

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China Stocks

China to tax stock real estate gains?

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There are conflicting news about this hot topic. The initial news, according to Hexun, the Chinese tax bureau is going to collect tax on the gains made from stocks and real estate for people earn more than 120,000 Yuan per year. Note in China 120,000 Yuan is the threshold for people to file personal income tax.

personal income tax(source: xazr.com)

But according to Xinhua and Netease, the Chinese tax bureau is not ready to collect capital gain tax from stock sales yet.

My take: the personal income tax and especially the filing of personal income tax (for person earn over 120,000) are still fairly new. The Chinese stock market is also fairly new (compared to western markets). It IS good for China to align the tax system, encourage investing (in stocks) while keep the fairness of society (people from different income level). But keep this balance and how to accurately calculating taxes will NOT be easy for the goverment, and brokage firms.

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China Stocks

Starbucks, Panera

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Yesterday morning when I went to Panera (St. Louis) Bread to get morning bagel, I noticed they raised the price from 89 cents to 95 cents. I can fully understand the pressure they are facing: the rising wheat, diary, and energy cost.

Today Starbucks came out with earning, and understandablely a disappointing outlook (bloomberg).

SBUX and PNRA are hit on two sides: the rising costs of raw materials; and shrinking pockets of US consumers.

Long term, I do believe Starbucks will do very well in China, and other emerging markets; but right now, the sales from China is just too small to overcome the difficulty in the US…So I will NOT try to be hero at this time.

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China Stocks

Currency wars

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Early August 2007, when I was in Shanghai, the US stock market underwent a crisis from the sub-prime mortgage. At that time the focus was on BearStern and its two hedge funds. In China, and in overseas Chinese financial community, the book named Currency Wars authored by Mr. Song Hongbing was very popular. So I bought one in Shanghai. The heart of this book is (in my own words): we are inceasingly live in a world that controlled by international bankers. In a way, ordinary people (like you and me) are very much like their (bankers) slaves.

Currency wars logo (picture from Amazon China)

As I am reading the book about Fed history (Wiki: US Fed reserve), and listening to Ben Berneke (the Fed chairman) speech this morning, I think this is very interesting: is Ben Berneke, an Econ professor from Princeton, look like the representative of the bad guys (a.k.a., the bankers)?

Here are some comments about the book at douban.