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China, Taiwan May Sign Trade Accord

China, Taiwan May Sign Trade Accord

June 23, 2010 (Chinavestor) China and Taiwan may sign a landmark trade agreement as early as next week, a sign that a contentious relationship between the world's largest country and its island neighbor may be warming.

The trade accord is designed to cut tariffs and boost Taiwan's relationship with the mainland, the top destination for Taiwanese exports. The two countries could make an announcement as early as Wednesday that includes a list of items that will be subject to lower tariffs.

The two sides are also trying to shorten the time needed for Taiwan banks to qualify for a license to conduct yuan business on the mainland, according to Bloomberg News. Taiwan has been a sovereign nation since 1949 though China has been adamant about its desire to control the island nation.


China ADR Wrap June 22, 2010

China ADR Wrap June 22, 2010
June 22, 2010 (Chinavestor) – Enthusiasm for the relaxed Yuan/Dollar peg has officially been terminated as the Shanghai Composite could only manage a meager 0.1% gain on Tuesday while the Hang Seng dropped 0.4%. Monday's trade in the U.S. likely signaled a reversal day and that much was a evident today as a triple-digit loss for the Dow Jones Industrial Average dragged down China ETFs. The PowerShares Golden Dragon Halter USX China ETF (NYSE:PGJ) and the iShares/FTSE Xinhua China 25 Index (NYSE:FXI) both slid 1.6%. Small-caps provided no relief with the Claymore/AlphaShares China Small-Cap ETF (NYSE:HAO) giving up 1.2%.

Among large-caps, solar stocks had a black cloud hanging over them today with JA Solar (Nasdaq:JASO) and LDK Solar (NYSE:LDK) both losing more than 6%. Trina Solar (NYSE:TSL) didn't fare much better, tumbling almost 5%.


Speaking of a sector to avoid, online gaming remains just that. Shanda Games (Nasdaq:GAME) shed 4.6% while Perfect World (Nasdaq:PWRD) plunged almost 5.6%. (Nasdaq:NTES) also lost more than 5%. Internet and technology names saw some selling pressure as well with AsiaInfo Holdings (Nasdaq:ASIA) losing 5.5%. City Telecom (Nasdaq:CTEL) gave up some of last week's impressive gains by losing 4% today.

Shanghai To Permit Foreign Firms To List Shares, Sell Bonds

Shanghai To Permit Foreign Firms To List Shares, Sell Bonds

June 22, 2010 (Chinavestor) In a bid to become a leading global financial center by 2020, Shanghai is preparing to allow foreign firms to list shares and sell debt on its financial markets. China's households and corporations have a vast pool savings, $7.3 trillion by some estimates, for foreign companies to tap into.

UBS (NYSE:UBS) said Dow components such as Coca-Cola (NYSE:KO), General Electric (NYSE:GE) and Wal-Mart (NYSE:WMT) could seek Shanghai listings for their shares. The Shanghai Stock Exchange is in the process of drafting rules for the board where foreign companies will be allowed to sell shares, Bloomberg reported.

Goldman Sachs (NYSE:GS) noted that China's bond market is small when measured against comparable economies, such as the U.S. and Japan, with just $2.4 trillion in notional debt outstanding. Goldman Sachs (NYSE:GS) also  called China's equity markets “relatively immature.”

International firms are currently restricted from selling Yuan-denominated bonds in China. Foreign companies may be allowed to sell bonds in China without using local units within months as the government expands capital markets, Bloomberg News reported, citing UBS (NYSE:UBS).

Yuan Revaluation Could Benefit China's Domestic Stocks

Yuan Revaluation Could Benefit China's Domestic Stocks

June 22, 2010 (Chinavestor) News that China will relax the Yuan's peg to the U.S. Dollar could benefit Chinese consumer and infrastructure stocks, according to Iowa-based Principal Global Investors, which manages $222 billion in assets for institutions. The firm views the Yuan revaluation move as further evidence Beijing is trying to reduce its dependence on exports in a bid to bolster its domestic economy.

The Yuan has been valued 6.83 against the U.S. Dollar since July 2008 when China prevented its currency from appreciating to protect the country's exporters at the onset of the global financial crisis. The investment community believes a stronger Yuan will give China a more flexible monetary policy and the ammunition to combat inflation.

China’s central bank said it was prepared to resume appreciation because the “upturn in the Chinese economy has become more solid” and that a stronger yuan would help curb gains in consumer prices, according to Bloomberg News.

Principal Global added Chinese stocks could be volatile in near-term, but the long-term outlook remains favorable.

China ADR Wrap June 21, 2010

China ADR Wrap June 21, 2010

June 21, 2010 (Chinavestor) It was another interesting day for stock investors world wide. News that China will let its current appreciate against the dollar spurred investors' optimism in Asia, sending the Shanghai Composite Index  (SHA:000001) 2.8 percent higher for the day while the Hang Seng Index (INDEXHANGSENG:.HSI) advanced 3.0 percent. European and U.S. exchanges opened higher but much of the optimism eroded by the end of the day in the U.S., prompting the DJIA to surrender all early morning gains. Alcoa Inc. (NYSE:AA) was the best performing component of the DJIA as commodity and energy prices rose. Aluminum Corp. of China (NYSE:ACH), the third largest aluminum maker of the world, ended the day 4.0 percent higher. China Unicom (NYSE:CHU) rose 6.4 percent while Yanzhou Coal (NYSE:YZC) advanced 4.24 percent. Chinese airliners were on fire; China Eastern Airlines (NYSE:CEA) and China Southern Airlines (NYSE:ZNH) surged 5.5 percent and 5.4 percent, respectively.

Chinese stocks rose in Asia, each and every component of the 42 member Hang Seng Index (INDEXHANGSENG:.HSI) advanced. But Chinese stocks performed mixed in the U.S. - large caps advanced but smaller cap stocks lagged. The iShares FTSE/Xinhua 25 China Index (NYSE:FXI), tracking the largest 25 publicly traded Chinese companies in Hong Kong, rose 3.5% for the day. Small cap proxy Claymore/AlphaShares China Small Cap ETF (NYSE:HAO) gave up most of early morning gains ending the day 2.3% higher.

China Unicom (NYSE:CHU), the second largest Chinese mobile carrier, jumped 9.1% in Hong Kong and rose 6.4% in New York following May operational statistics revealing that 3G growth outstripped 2G growth for the first time.

Besides energy companies, Chinese airliners gave boost to the Shares FTSE/Xinhua 25 China Index (NYSE:FXI). Airliners have been returning to profitability world wide and with a stronger yuan, disposable income for ordinary Chinese is on the rise, suggesting more leisure and business travel is likely to follow. China Eastern Airlines (NYSE:CEA), the second largest Chinese carrier after swallowing Shanghai Airlines earlier in 2010, rose 5.6% followed by China Southern Airlines (NYSE:ZNH).

Petrochina Co. Ltd. (NYSE:PTR), a Hang Seng Index (INDEXHANGSENG:.HSI) heavy weight, rose 2.04 percent for the day.

Small cap stocks remained volatile. UTStarcom (NASDAQ:UTSI) announced a strategic partnership with China Merchants Bank (HKG:3968), sending its shares 15.8 percent higher by the close. Online gamers outperformed as well - (NASDAQ:NTES) rose 9.8 percent followed by the9 Ltd. (NASDAQ:NCTY). Perfect World (NASDAQ:PWRD) surrendered some of its early morning gains but closed 5.01 percent higher for the day.

The yuan appreciation boosts the top and bottom line of Chinese companies conducting business within China - something online game operators and developers are beneficiaries of. More about the currency relaxation and its implications: Why the Yuan is so important! (NASDAQ:CTRP), another travel company, rose 7.6% for the day as online travel bookings and packaged tours are expected  to rise on the wake of the stronger yuan.

Less fortunate China Precision Steel, Inc (NASDAQ:CPSL), Silvercorp Metals (NYSE:SVM) and WuXi Pharmatech (NYSE:WX) fell six percent for the day. Their weak performance took a toll on the Claymore/AlphaShares China Small Cap ETF (NYSE:HAO) on Monday.

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