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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 - NetEase.com (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!

Ctrip.com (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.

Why the yuan is so important!

Why the yuan is so important!
June 22, 2010 (Erwan Mahe) We can only applaud the decision by the Peoples Bank of China this weekend, given our consistent and regular criticisms of the yuan's undervaluation in these lines (TC 05-10-09: Central Bank Officials Raise the Volume About the Yuan!).

By allowing the Renminbi to adjust gradually against the dollar, China is positioning itself strategically as a responsible partner ahead of the G20 meeting next weekend, although there remains some real questions as to the scale of this adjustment (3%-5% per annum?).

 

Read more...

Hot China stocks following Yuan relaxation

Hot China stocks following Yuan relaxation

June 21, 2010 (Chinavestor) Investors wonder how do Chinese ADRs perform following the Yuan relaxation. One thing is for sure: large cap Chinese stocks rose, almost universally, while small caps remained sensitive to stock specific news.

Looking at larger cap Chinese ADRs at  noon, stocks with market capitalization of $500 million or more, one of the most striking development is that almost all of these China stocks advanced. This is different from smaller names where over ten percent of all Chinese names are under water.

UTStarcom (NASDAQ:UTSI) advanced 14.2% following a strategic partnership with China Merchants Bank. Winner Medical (NASDAQ:WWIN) rose 4.8 percent making up for losses in the last two weeks. Gushan Environmental Energy Limited (NYSE:GU) rose 6.5%, just as foretold in the overbought report this morning.

Among large caps, E-House Holdings (NYSE:EJ) and Ctrip.com Int. (NASDAQ:CTRP) advanced the most followed closely by Perfect World (NASDAQ:PWRD) and China Southern Airlines (NYSE:ZNH). Another internet and online game related stock, NetEase.com Inc. (NASDAQ:NTES) rose 6.59 percent by noon.

It was obvious that Chinese airliners are gong to outperform on Monday, based on their strong showing in Hong Kong earlier the day. The yuan revaluation helps domestic players to report more profits in dollars, boosting their ADR price. Shares of China Eastern Airlines (NYSE:CEA) (HKG:0670) rose 7.14% in Asia while China's largest carrier by fleet size, China Southern Airlines (NYSE:ZNH) (HKG:1055) rose 6.53%. China shares soar in Asia on Yuan Peg End

Chinese real estate firms outperformed in Shanghai earlier the day, Poly Real Estate (SHA:600048) jumped 5.1% in Shanghai on Monday. So it came as no surprise that E-House Holdings (NYSE:EJ), a real estate service provider and an explosive NYSE listed China stock, caught fire on Monday.

Ctrip.com Int. (NASDAQ:CTRP) is a Chinese blue chip with quality earnings and strong balance sheet on its back. Whenever markets do well, Ctrip has a chance to shine. Additionally, the overbought monitor caught the momentum of Ctrip.com Int. (NASDAQ:CTRP) on time, no wonder we placed it on the "BEST" buy list last Friday. What an "easy" way to get away with over 8% return just in one day!

Perfect World (NASDAQ:PRWD) is a Chinese online game developer and operator with strong profitability and a lackluster performance following 2010 first quarter report. We said that following the report that "Looking forward, this sock offers trading opportunities for the smart investor. For one, current stock price under $26 is not only a significant drop from last week but is below 10-DMA, 30-DMA and 50-DMA as well. While this might be a bearish signal for many, we're of a view that the stock is much better from a fundamental point of view than its technicals suggests." Detailed analysis of PWRD following 2010 Q1: Perfect World tumbles on growth concerns.

NetEase.com Inc. (NASDAQ:NTES) is another online game developer and operator - and much more - that caught fire on Monday. Shares of the company rose 6.59% for a reason. NetEase.com (NASDAQ:NTES) is the most profitable Chinese online gamer yet it underperformed relative to the overall market as the sector fell out of investors' favor. Shanda Interactive (NASDAQ:SNDA), another industry leader, gas been on the oversold screen for the last five days!

When it comes to small cap big movers on Monday, UTStarcom (NASDAQ:UTSI) is the best with a 14.2% jump! China Merchants Bank and UTStarcom signed a partnership deal, effective for three year, under which both companies are expected to see strong profit growth. Details: UTStarcom Inks Financing With China Merchants.

Winner Medical (NASDAQ:WWIN), a Chinese medical supplier maker, rose 4.8 percent. This is a relatively young China stock on the market with a positive outlook. I personally had a chance to meet its founder, CEO and Chairman last month - and was impressed by it. Read coverage: Interview with Jianquan Li, CEO of WWIN

Gushan Environmental Energy Limited (NYSE:GU) rose 6.5%, exactly as predicted this morning. "Gushan Environmental Energy (NYSE:GU) is expected to jump on Monday - along with the rest of the energy sector. Shares of Petrochina (NYSE:PTR), the largest Hong Kong listed China company, jumped 4.7% earlier today, the most in four years. Expect GU to outperform the broad market on Monday." China stocks advance on Yuan peg relax

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