High oil sent Wall Street lower today, the DJIA sinking 166.75 points to a two year low of 11,215.51 points. Shares of Chinese companies followed suit, the China ADR Index (CAI) losing 38.28 points to close at 701.88. The index is down 29.81% year-to-date (YTD), following negative Wall Street sentiment.
|
Index |
Date |
Value |
Today |
YTD |
|
CAI |
7/2/2008 |
701.88 |
-38.28 |
-29.81% |
|
CYI |
7/2/2008 |
698.16 |
-38.65 |
-30.18% |
|
CQI |
7/2/2008 |
793.40 |
-29.20 |
-20.66% |
Looking at individual stocks, losers outnumbered winners by 49:8. China's offshore specialist, CNOOC Ltd. (CEO), managed to end higher by 207 percentage points or $3.55 at $174.91. The stock price's been holding up after the October peak of the markets when it hit $218.20. CNOOC Ltd. has no refining capacity - a huge loss making arm of Petrochina (PTR) and Sinopec (SNP). China energy investors found refuge in CNOOC pushing her valuation high. The stock is trading at 19 P/E, way higher than other western oil companies. High valuation combined with the 40 % windfall tax CNOOC is subject to makes the stock risky in our opinion.
Another winner of the day is The9 Ltd (NCTY), an online game operator in China. The online gaming sector is huge in the country, total revenue surpassing that of the online marketing. There is a fierce battle among game developers and operators with fortunes changing every so often. It seems as if The9's blockbuster game, Word of Warcraft (WoW) is performing strong with additional games such as Starcraft and Wrath of the Lich King debuting above expectations. The company reported better than expected 2008 first quarter earnings on May 19 with net income increase of 21% to 46 cents an American Depositary Share (ADR), up from $9.4 million, or 38 cents an ADS, a year earlier. Revenue increased substantially to $62.7 million representing an increase of 63%. So the company is positioned well and stock market performance suggests that there is more good news and price appreciation to come.
High price of oil sent Chinese refiners Sinopec and Petrochina diving today. Sinopec is Asia's largest refiner and thus is susceptible to significant losses thanks to Beijing's price mechanism. Petrochina is China's largest oil producer but has a significant refining capacity, a business unit that is heavily bleeding. Markets seem to forgo the 18% price increase of refined products, a rise that was announced on June 20th. Ever since both companies are on the slide.
As the following chart demonstrates, China's insatiable appetite for oil is partially to blame when it comes to record oil prices. China's oil demand has been steadily growing at a 4% annual rate, making it not only the second largest oil consumer but second largest oil importer, too. China took Japan's spot just in last month, surpassing imports of Japan for the first time in modern history. Take into account that China is the second largest auto market after the United States and is growing fast.
China's premier search engine company, Baidu.com (BIDU), is on a losing streak despite strong 2008 Q1 results. Chinese companies with great 2007 performance have been losing ground steadily. Slide of China Life Insurance (LFC) is partially blamed on weak performance of Ping An, China's second largest insurer. Ping An was in talks to take over the life insurance part of Fortis, a major European insurer based in Belgium. Looks as if the deal is falling apart, sending Ping An shares to bust with LFC following suit.
Yanzhou Coal (YZC), China's third largest coal miner is taking a hit today, too. The stock price is capped by Beijing's move of June 20th when regulators introduced a temporary cap on coal prices. The move is aimed to help power generator to stockpile thermal coal for the summer peak season; but it certainly hurts profit outlook for coal miners such as Yanzhou.
| TOP MOVERS |
7/2/2008 16:00 |
|
|
Name |
Symbol |
Price |
Change |
Change% |
|
|
|
|
|
|
|
CNOOC LTD ADS |
CEO |
174.91 |
$3.55 |
2.07% |
|
THE9 LIMITED |
NCTY |
24.54 |
$2.09 |
9.31% |
|
CHINA DIG TV HDG |
STV |
13.06 |
$0.15 |
1.16% |
|
LINKTONE LTD. |
LTON |
1.82 |
$0.05 |
3.13% |
|
CHINA TECHFAITH W |
CNTF |
4.21 |
$0.04 |
0.96% |
|
|
|
|
|
|
|
CHINA UNICOM LTD |
CHU |
18.36 |
$0.03 |
0.16% |
|
SINOVAC BIOTECH L |
SVA |
3.12 |
$0.02 |
0.65% |
|
KONGZHONG CORP |
KONG |
3.81 |
$0.01 |
0.26% |
|
COGO GROUP |
COGO |
8.27 |
$0.00 |
0.00% |
|
GRAND TOYS INTL A |
GRIN |
0.28 |
$0.00 |
0.00% |
|
|
|
|
|
|
|
CHINA EASTERN AIR |
CEA |
29.04 |
-$1.92 |
-6.20% |
|
CTRIP.COM INTL LT |
CTRP |
42.05 |
-$1.99 |
-4.52% |
|
CHINA MOBILE LIMI |
CHL |
64.33 |
-$2.05 |
-3.09% |
|
CHINA LIFE INS CO |
LFC |
49.50 |
-$2.11 |
-4.09% |
|
CHINA TELECOM CP |
CHA |
51.63 |
-$2.26 |
-4.19% |
|
|
|
|
|
|
|
YAZHOU COAL MNG C |
YZC |
89.44 |
-$2.42 |
-2.63% |
|
LDK SOLAR CO ADR |
LDK |
31.85 |
-$3.14 |
-8.97% |
|
CHINA PETRO & CHE |
SNP |
86.66 |
-$5.42 |
-5.89% |
|
PETROCHINA CO ADS |
PTR |
122.49 |
-$5.59 |
-4.36% |
|
BAIDU.COM |
BIDU |
312.04 |
-$5.65 |
-1.78% |