Posted on Leave a comment

Shanghai Composite 52 week low

Reading Time: 2 minutes

Shanghai composite index closed new 52 week low today, at 3094.67 (down 12% compared to a year ago).

Shanghai composite index pic
(full size pic here, powered by Google Finance)

But I don’t think too much of it, other than the valuation of China A share market is more attractive now. The composite index itself is screwed up because PetroChina A share (601857) has more than 20% of weight, much bigger than its floating shares weight. In case you did not pay attention to PetroChina (NYSE:PTR, 0857.HK), 601857 was CNY 43.96 on Nov. 06, 2007, and closed CNY 16.02 as of today Apr. 18, 2008. That’s a whopping 63.56% drop!

My simply valuation tool for A shares
A more reliable indicator for A share valuation, a tool I found useful, is this AH spread sheet. As one can see from this spead sheet, some Chinese banks’ A share (include ICBC, 601398) is very attractive now. That is, assume the H share is fairly priced. One caveat of this approach, is we can only use it for companies have both A and H shares. But again, I don’t see many gems in the A share only companies in China 🙂

China index fund/ETF (FXI, PGJ, CAF)

Continue reading Shanghai Composite 52 week low

Posted on Leave a comment

Financial Media: I

Reading Time: 2 minutes

With the growth of web and blogging, there are more and more financial resouces we can turn to: we are not limited to the good old newspaper for stock prices, volume anymore. Don’t laugh at me, ten years ago I did precisely that in Shanghai. But the conveniece of data access does not come at no cost. One thing I noticed from my own behavior change is “overflow of mis-information”. Let me explain.

I remember a well known overseas Chinese web site started out with attention getting (not tasteful) news title and porn, things one would not like his/her kids to see. The motivations: attention, advertisment dollar and profit. In this “post newspaper and Yahoo”, “google and youtube are the kings” era, people are living a fast pace society, attention of pentential customers are more and more scare. The news editors/reporters are fighting for this, financial news is no exception.

Moral Responsibilty of news producer
As you may know, Chinese domestic stock market crashed lately. Shanghai composite index went from last Oct. highs of 6,000 to today’s 3,300. I think the media, the so called “experts” (from Jim Rogers to Yang Bai Wan) are also responsible for the bubble and bust in Chinese market, along with the regulatory, the mutual funds, and the naive Shan Hu (individual investors), etc.

Continue reading Financial Media: I

Posted on Leave a comment

A-share and H-share

Reading Time: < 1 minute

I wrote about the bubble of PetroChina during its Shanghai IPO last Nov. I understand lots of people in China (San Hu 散户) are under water on this one. Obviously they bought into this “the most profitable company in Asia” slogan touted by some institutions that wanted to dump their shares during IPO.

Here I list some of the A share and H share price, and their bubble factor.

PetroChina: 601857.SS: CNY 26.39; 0857.HK HKD 12.27 (still lot of bubble !)

PetroChina gas station pic

On other hand, insurance companies and banks are more rationally valued.

Continue reading A-share and H-share

Posted on 1 Comment

Holy PetroChina

Reading Time: < 1 minute

(Update Nov. 6) There are many reports saying that PetroChina is the largest company in the world, according to its market capital (> 1 trillion USD), after its IPO/secondary offering in Shanghai. This is a bit misleading, as similar claims regarding ICBC (1388.HK), and China Life (NYSE:LFC) being the largest bank and insurance company in the world. For two reasons:

1) The market cap calculation is based on China A share price, which is artificially high, because of the close nature of China A share market;

2) Even if market cap calulcation has some merits, the China companies make less money compared to its peers in the west, Exxon Mobile, Citibank, or AIG. Keep in mind Chinese companies such as PetroChina has a monopoly position in China.

(Original Nov 4 evening CST) PetroChina started trading in Shanghai under ticker symbol 601857, corresponding to 0857 in Hongkong. It’s trading just under 44 Yuan at 11AM Beijing time. Note 0857 is trading at HKD 18.50 at the same time. One HKD is slightly less than one Yuan.

All in all, I think traders in China are crazy.

Posted on Leave a comment

Buffett and PetroChina

Reading Time: 2 minutes

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

Continue reading Buffett and PetroChina