China Direct Announces $10 Million in New Iron Ore Supply Agreements
The market for Chinese companies continues to stink with senior listed
companies like Yuhe International,
Inc. (YUII) and A-Power Energy
Generation Systems (APWR) getting halted by the
authorities. Then this week Muddy Waters Research
sent a public questionnaire to Spreadtrum
Communications, Inc. (SPRD) which saw its share tank but only to
recover and move up even higher. Investing in the China
space requires a serious stomach. In the mean time China Direct Industries (CDII)
continues to knock it out of the park from a operations standpoint.
today the company announced that it anticipates its wholly owned
subsidiary, CDII Trading, will commence iron ore shipments from Bolivia
into China beginning in the fourth quarter of fiscal 2011 starting July
1st ending September 30, 2011. Management estimates that CDII
Trading will ship in excess of 85,000 metric tons of iron ore in the
fiscal fourth quarter, valued
at approximately $10 million at current price levels, and
progressively ramp shipment tonnage in fiscal 2012. Management
estimates its Bolivian operations have the potential to reach quarterly
iron ore shipment levels in excess of 180,000 metric tons, or approximately
$21 million at current price levels, under its existing supply
contracts and contracts under negotiation.
CDII Completes Delivery of 15,000 Metric Tons of Iron Ore
China Direct Industries (CDII) was added to the China
Vesting Dragon Undervalued Index last Tuesday and the stock
promptly reached an interim
high of $1.59 per share up over 17%
from our coverage price of $1.35
per share. The action in CDII was much higher than average
with over volume 1.96 million shares being traded. Investors
recogized the value in being able to invest in China's growth with a
U.S. management team that consists of American citizens who make their
homes in the U.S. as well. China Vesting's previous article on
Best Chinese Company In America, has been our most well received
edition to date.
This morning CDII announced that its wholly owned subsidiary, CDII
Trading, completed delivery of 15,000 metric tons of iron ore from its
Mexican supplier. The iron ore was delivered to a major European
industrial trading company for the China market. China
Direct Industries launched its U.S. based international trading
operations in July of 2009 in an effort to capitalize on its business
relationships in China as well as to further diversify its revenue
base. Over the past year CDII Trading has entered into iron ore
supply agreements in Mexico, Chile and Bolivia for delivery into
China. After completion of the delivery from Mexico, management
expects to begin recurring shipments of iron ore from Mexico and begin
shipments from Chile and Bolivia into China sometime in the third
quarter as it works to finalize logistical, production and financing
arrangements with its suppliers.
Sunday, December 12, 2010
Chinese Students Smartest In The World
to international standardized testing exam results,
in Shanghai, China have surprised experts by outscoring their counterparts
in dozens of other countries, mastering subjects in reading as
well as in math and science. About 5,100 15 year olds in Shanghai
were selected as a representative cross-section of students in that
city. In the United States, a similar number of students from across the
nation were selected as a representative sample for the test.
The outstanding academic performance of students in Shanghai was
extraordinary, and another sign of China's rapid modernization. In math,
the Shanghai students exceeded Singapore, which has been an educational
superstar in recent years. In reading, Shanghai students
surpassed Korean students. In science, The Chinese students outplayed
Sunday, December 05, 2010
China Consumers Forced To Help Americans
rest of the world, the Chinese consumer is one of the most promising hopes for future
economic growth. In the distant future, when the United States, Europe
and Japan will have no option but to slow their spending and pay off
their debts, China
could pick up the slack. Experts forecast millions of Americans
with jobs that exist to design, make or sell goods and services to the
Far Eastern giant. This might explain why political parties,
economists, corporate executives and labor leaders all devote so effort in urging
China to increase consumption.
The rise of China is inevitable. It is the world's most
populous country, now reclaiming its long-lost power, but to continue growing
needs to make the next transition, from sweatshop economy to
innovation economy. This transition is the one that has often proved
difficult elsewhere. Once a country has turned itself into an export
factory, it cannot keep growing by repeating the the cycle. Eventually,
its rising economy needs to take two dire steps by manufacturing
quality goods that aren't just cheaper than the competition; and create
a thriving domestic market, so that its own consumers can pick up
the slack when exports inevitably slow.
Monday, November 29, 2010
China - Monetary Leaders, Mortality Deficit
has risen as the economy of the future, having grown stunningly fast
for almost 30 years now, lifting hundreds of millions of people out of
poverty. But it, too, has real problems.
The great country of the Orient that inspires fear and envy around
the world has proven
that economic growth makes almost any societal problem easier to solve,
but doesn’t guarantee better health for everyone.
According to a World Bank compilation of United Nations data, from 1990 to 2008,
life expectancy in China rose 5.1 years, to 73. Nearly every
other big developing country, be it Brazil, Egypt, Ethiopia, India, Indonesia
or Iran, had a bigger increase over that span, despite much slower
Monday, November 22, 2010
China Tries To Cool Economy
leaders have consistently made clear over the years that feuding
inflation is a top priority because it could lead to social unrest.
With prices rising this autumn for many commodities, the country's
cabinet announced that it would impose price controls on food, introduce
subsidies for the needy and increase the availability of fuel supplies.
As yet, the inflation in consumer goods in China has been largely
confined to food and energy, but avoiding more general inflation could prove
difficult. China's leaders are now certainly worried about the inflationary side
effects of those financial policies. The premier, Wen Jiabao,
recently expressed concern about climbing food prices and promising that the
government would take action.
Thursday, November 18, 2010
Biostar Pharmaceuticals (BSPM): Value in the China Drug Industry
China Vesting wanted to
highlight a company that is already
in the Dragon Undervalued Index. Biostar Pharmaceuticals
develops, manufactures and markets pharmaceutical and health supplement
products for a variety of diseases and conditions. The company's most
popular product is its Xin Ao Xing Oleanolic Acid Capsule, an
over-the-counter ("OTC") medicine for chronic hepatitis B, a disease
affecting approximately 10% of the Chinese population. In addition to
its hepatitis product, Biostar currently manufactures two broad-based
OTC products, two prescription-based pharmaceuticals, one medical
device and five health supplements.
Biostar has been public for a few years but never seemed to get any
respect from investors on any level. We remember it was about two years
ago a consulting company in China was trying to raise money for BSPM
and having zero luck. This was despite the company posting
excellent revenue and net income growth. Then a year ago
one of the very smartest institutional investors in the China deal
space bought approximately 3 million shares of BSPM in a private
placement at an average of $1.87 per share. That was when the stock
started to get some attention trading as high as $5.50 per share and
has never traded below $2.32 per share in the past 12 months.
Wednesday, November 17, 2010
China Earnings Season: The Good and The Bad
Its earnings season for everyone but China Vesting is going to focus on China Carbon
Graphite (CHGI) and China Shandong (CSNH)This
has been a huge week for all public companies most of
which run on a calendar fiscal year. For the most
part, Chinese companies trading on U.S. exchanges have been printing
RMB and seeing nice bumps in their stock prices. China
Vesting will update readers on two such companies in just a little bit.
Sunday, November 14, 2010
Chinese Students Invade American Education
record wave of Chinese high school graduates are now enrolling in colleges
throughout the United States. While China's students have long filled
American graduate schools, its undergraduates now represent
the fastest-growing group of international students. In 2009,
over 26,000 students were studying in the United States, up from about 8,000
students eight years ago. Chinese students are not only enrolled at
nationally known universities, but also at regional, state and even community
colleges that recruit overseas. Majority of these students are paying
that maximum amount of tuition which is benefiting for campuses where the
economic downturn has stripped away state financing.
China's growing number of middle-class parents, who have
diligently saved for years to get their “only child” into a top school,
hope for an advantage in a competitive job market driven by the surge of
college graduates throughout the country. Since the 1990s, China
has doubled its number of higher education institutions. More than 60%
of high school graduates now attend a university, up from 20% in the
The China 100 Stock Index closed the week at 970.47
down -13.84 (1.41%). HQ Sustainable Maritime Industries,
Inc. led the gainers up 25.42%. RINO
International Corporation was the biggest loser down (32.00%).
Thursday, November 11, 2010
China Carbon Graphite Group (CHGI.OB): Limitless RMB
our title is a half truth! There is no such thing as "limitless RMB" but when it comes to investing in China companies listed in the U.S. China Carbon Graphite Group (CHGI) is about as close as it gets. As of today, November 12, 2010 China Vesting is adding CHGI to the undervalued index at a price of $0.94. Conversely, we have decided to remove Songzai International Holding Group, Inc. (SGZH.OB) which recently changed its name to US
China Mining Group Inc.
China Carbon Graphite Group has been on our radar for quite some time but not for good reasons. The company seemed to be decent back in early 2009 when the company reported fiscal 2008 net income of $3.98
million or $0.21 per share.
2009 turned out to be just downright terrible with revenues
and net income turning into a net loss of $1.47 million or $(0.16)
Tuesday, November 09, 2010
China Steps Foot Into European Doorways
Prime Minister Wen Jiabao travels abroad, he goes prepared bearing billions
of dollars worth of business deals and a wave of approvable attention from
critical foreign investors. The Prime Minister Wen recently toured
Greece as a strategic push into Europe. Analysts say Beijing aspires
to accomplish not just more business, but also greater
influence over the economic policies set in the power corridors of Brussels
China's aim is snapping up assets depressed by the global financial
crisis and becoming a significant ally of other hard-hit European nations.
Such moves could give China a bigger presence in the European chain of
distribution and production, while allowing it to build a track record
in European to support its position on currency issues and in trade affairs
at the World Trade Organization.
The China 100 Stock Index closed the week at 1,003.22
+34.34 (3.54%). Asia Cork, Inc., leads the gainers
up (35.71%). Cninsure Inc.
was the biggest loser down (15.84%).
China Resumes Shipping Scarce Earth Minerals
ending came to the export embargo on crucial rare earth minerals to Europe,
the United States and Japan. Rare earths are increasingly in demand
due to their use in a broad range of sophisticated electronics.
Having blocked shipments to all 3 regions, Chinese
customs agents on Thursday morning allowed shipments to resume to all
three destinations. As China's own industrial needs for rare
minerals have grown, Beijing has reduced its export quotas for the minerals over
the last five years. Eventually when China is shipping its full
quotas, the outbound supply is now well below world demand. The Chinese
shipments resumed Thursday morning only hours before Secretary of State
Hillary Rodham Clinton raised the embargo issue at a news conference in
Honolulu, where she announced plans to visit China on Saturday to pursue the
matter with Chinese officials.
The China 100 Stock Index closed at 962.75
+11.06 (1.16%). China Advanced Construction Materials Group,
Inc., leads the gainers up (18.52%).
China Security & Surveillance Technology, Inc. was the
biggest loser down (14.42%).
Chinese Raises Interest Rates Sending Shockwaves
This past Tuesday China's central bank raised interest rates
for the first time in almost three years. The IMF seemed pretty
happy... "We support the decision of the central bank of China to
raise its rates," David Hawley, an IMF spokesperson, said at a
news briefing with reporters on Thursday.
"Given the pace of recovery in China, it is appropriate that the
central bank should continue to withdraw monetary stimulus and return
the pace of credit growth to more normal levels," he added.
The 0.25% rate increase is seen by economists as a way to curb asset
and real estate speculation in the Middle Kingdom. There is a
downside which is "hot money" may flow into China at an even faster
pace as institutional investors can hit a double whammy with a higher
than average yield along with the possibility of the Reminbi
appreciating in the future.
For the week, the China 100 Stock Index closed at 952.02 +14.58
(1.56%). SinoHub, Inc., leads the gainers up
(15.53%). LDK Solar Co., Ltd. was the biggest
loser down (16.30%).
Why Chinese Companies Dont IPO in China
week's special edition on why Chinese companies do not go public in
China is in response to a question posed by Mark Cuban. In case you
live on another planet, Mr. Cuban is the highly successful entrepreneur
who made a few billions with a B on his sale of Broadcast.com to Yahoo
back in the day. Currently, he is the owner of the Dallas Mavericks.
About three weeks ago Mr. Cuban Tweeted our
highly popular article Checklist
For Chinese Stock Scams.
The traffic killed our hosting company's servers but the necessary upgrades
have been made. China Vesting appreciates the recognition and today's
edition is a special thank you. We dare say no one has ever written
what we are about to disclose. This is a culmination of spending
years on the ground floor in China meeting hundreds of companies and the
"people" involved on every level of the spectrum. China Vesting is
based in Greater China and continues to meet companies and people in the
industry every day. Going forward we will be sharing more of our
insights and introducing Chinese stocks that are good opportunities.
Tuesday, October 05, 2010
A Give And Take Chinese Vacation
Workers throughout China were given three consecutive days off last
week for the annual Mid-Autumn Festival, but the
vacation comes with a 2 day string attached. Two of those
days off are to be made up by working the Saturday and Sunday on either
end of the holiday. The give-and-take arrangement is then repeated
for the National Day holiday, with employees enjoying seven straight days
off (Friday through Oct. 7) except only three of those are official free
days. The mandatory holidays may be the only method to give workers
time off, given that companies largely ignore a law guaranteeing workers
15 days of paid vacation a year. The stock market in the U.S. certainly
didn't get any breaks.For the week ending October 1st, the China Vesting 100 Stock Index closed
at 887.71 +13.27 (1.52%). China
Shandong Industries, Inc. led the gainers up +1.10
(34.38%). China America Holdings, Inc. fell to the opposite
end of the spectrum as the biggest loser last week down -20%
Monday, September 27, 2010
Bohai Pharmaceuticals (BOPH) Added To Dragon Undervalued Index
we begin today's feature edition Bohai Pharmaceuticals (BOPH), China Vesting wanted to thank Mark
Cuban for introducing us to his twitter
feed. The traffic prompted us to upgrade servers...thanks
a lot Mr. Cuban we will be sending the bill to the Dallas Mavericks...which
begs us to ask...why do they call the Mavericks "baby bulls" in China?
Why not something a little more direct in the translation to "Mavericks"?
We hope this new audience will hopefully benefit from our China perspective.
As a token of our appreciation, China Vesting will be writing an article
later this week or early next week on why so many companies do not IPO
in China. This was a point brought up by Mr. Cuban in his twitter
feed...which we were not able to view in China. China Vesting's explanation
may be the only time someone has ever spoken of the REAL reasons.
How do we know? Many Chinese reverse mergers began their paths to
the public markets waiting in the China domestic IPO queue, only to find
it "unsuitable". In addition, our contacts at the most prestigious
investment bank in China...(hint...Cough
have given ChinaVesting incredible insight. This is going to be a
must read for anyone interested in putting a penny into China stocks.
Thursday, September 23, 2010
Checklist For Chinese Stock Scams
It seems like every week another Chinese company listed in the U.S.
implodes. In the world of Chinese reverse mergers there are going
to be problem companies. China Vesting has roamed through scores
of companies in the Middle Kingdom with endless stories (which we shall
share periodically). Let us say this...the majority of these companies
are not bad...just often times misguided. Having a Chinese Chairman/CEO
list their company on a U.S. exchange is no easy task. Without sounding
too sentimental, it really is the embodiment of the American Dream.
The capital markets coupled with the "flat" world in which we live in allows
a company 7,000 or 8,000 miles away to be publicly traded in the good old
US of A.
Thursday, September 16, 2010
What is Making China Stocks Sick?
the past few months Chinese stocks trading in the U.S. have seen their
shares fall off the cliff. If we had such a location as the "Great
Cliff of America" that would be the place where these stocks are plummeting.
With the U.S. economy sucking wind and the China ramping full speed ahead
it makes little sense that Chinese stocks are shunned by investors both
retail and institutional. Research conducted by China Vesting indicates
there are numerous Chinese companies being valued at anywhere from 3-5
times previous year's earnings and 2-3 times 2010 earnings estimates.
In the universe of equities, public companies just do not trade at these
sorts of valuations. At some point...some very smart people are going
to take these low valuation companies private and keep the cash...but that's
Let's keep things really basic here...China's economy is doing very
well which translates into these China companies growing their revenue
and earnings. Common sense would dictate that Chinese stocks deserve
a premium rather than a discount to the market.
However, this is not a basic issue...it all boils down to one thing...TRUST.
People just don't trust the accounting numbers coming out of Chinese companies.
It doesn't help that two of the most famous Chinese public companies in
the U.S., Orient Paper (ONP)
and Fuqi International (FUQI)
have seen their shares drop 72% and
84% from their peaks due to accounting
problems...or the accusations of accounting problems. The public
is spooked because no one wants to be caught owning the next Chinese stock
that blows up.
Meet The Most Undervalued China Stock
It has been almost four months
since China Vesting Added China Shandong Industries (CSNH)
to the China Dragon Undervalued Index. Shares of CSNH promptly rose from
an April 15, 2010 closing price of $2.72 per share to an interim high of $3.29
the very next trading day on 99,700 shares of volume. That was by far China Shandong's
largest dollar volume day in its history. It seemed like this unknown gem of a company
was about to be discovered. Within a week of being added to the China Vesting Index,
CSNH announced on April 20, 2010 that investment banker Rodman & Renshaw
was helping the company raise $20 million in a public offering.
China Stocks rallied Tuesday on optimism China’s government may relax policy tightening measures
The International Strategy & Investment Group announced that China will relax policies that were aimed at curbing its housing industry. China will “back away” from its tightening policies in the housing market within three months as the economy faces a bigger risk from a slowdown than inflation, according to Donald Straszheim, senior managing director for China research at ISI. China's slower growth shows the nation's macroeconomic policies are working and that growth has gradually been restored to “normal,” Yi Xianrong, a researcher with the Institute of Finance and Banking under the Chinese Academy of Social Sciences, wrote in a commentary published in today's China Daily newspaper.
Chinese domestic consumption will continue to grow at a relatively fast pace in the second half of this year, a government spokesman said in Beijing today. China should use “flexible measures” such as providing more subsidies for the poor and reducing tax duties to curb inflation, the China Securities Journal reported today, citing Li Daokui an advisor to the central bank. China won’t face an economic double dip in the second half of this year, Zhu Hongren, the Ministry of Industry and Information Technology’s chief engineer, said at a briefing.
China Stocks jumped despite the National Association of Home Builder’s index dropped
The National Association of Home Builders’ Housing Market index dropped to 14 from 16 the previous month; the lowest reading since April 2009. A reading below 50 indicates homebuilders have a negative view of the housing market. Construction jobs fell further, down 2.14 million or 28% since their peak in 2006 and the residential construction subset is down nearly 600,000 jobs, or 43%, since the market's peak.
However the US stock market closed with a moderate gain Monday after investors looked back at the earning season and showed optimism as they wait for more earnings figures to be released in the next few weeks. The China 100 stock index gained 5.98 points or 0.73% to 820.98. The Panda China Large Cap Stock Index jumped 6.50 points or 0.67 % to close at 978.44. The Tiger China Small & Mid Cap Stock Index won only 1.11 points or 0.14% to close at 797.95 and the Dragon China Undervalued Stock Index climbed back 14.78 points or 2.17 % to close at 695.12.
China Stocks slumped on weak consumer confidence and poor second-quarter earnings of major companies
US stock market slumped Friday after the University of Michigan and Reuters released its consumer confidence index that dropped to 66.5 in July from 76, the lowest level in a year. The share of consumers anticipating income gains during the coming year dropped to 39 percent, the lowest on record. Three of four Americans surveyed said they expected no decline in unemployment in the next 12 months. General Electric Co, Bank of America Corp. and Citigroup Inc. reported disappointing second-quarter earnings that also helped the market to go down.
The China 100 stock index dropped 19.54 points or 2.34% to 815.01. The Panda China Large Cap Stock Index lost 16.44 points or 1.66 % to close at 972.01. The Tiger China Small & Mid Cap Stock Index slid 23.61 points or 2.88% to close at 796.64 and the Dragon China Undervalued Stock Index dropped 15.08 points or 2.17 % to close at 680.72.
China stocks dropped on figures showing that Chinese growth slowed in the second quarter
The National Statistics Bureau reported Thursday that China's gross domestic product, the broadest measure of economic output, grew 10.3 percent in the second quarter, compared with an increase of 11.9 percent during the first quarter. China’s economy has slowed and it is expected to continue at a slow pace for the rest of the year as the government took measures to ward off inflation and rein in a runaway property market. Production dropped to 13.7 percent in June from 16.5 percent in May.
The China 100 stock index lost 5.67 points or 0.67% to 835.28. The Panda China Large Cap Stock Index dropped 3.96 points or 0.40% to close at 988.46. The Tiger China Small & Mid Cap Stock Index lost 7.29 points or 0.88% to close at 820.25 and the Dragon China Undervalued Stock Index lost 4.38 points or 0.62% to close at 698.69.
China stocks closed mixed Wednesday after Federal Reserve’s latest forecast
The US Federal Reserve released today a new document where its 2010 growth prediction dropped to 3-3.5 per cent from a 3.2-3.7 percent forecast made in April. The downward revision made in June was based on recent US economic figures, Europe’s debt crisis, a volatile Wall Street, a stalled housing market and high unemployment. “Recent declines in payroll employment and industrial production, while still sizable, were smaller than those registered earlier in 2009. Household wealth was higher, corporate bond rates had fallen, the value of the dollar was lower, the outlook for foreign activity was better, and financial stress appeared to have eased somewhat more than had been anticipated in the staff forecast prepared for the prior FOMC meeting.” said the Federal Reserve staff.
However, Investors were still optimistic about the earnings season that could continue reporting good profits; as a result the three indices that formed the China 100 stock index closed mixed Wednesday. The Panda China Large Cap Stock Index lost 1.58 points or 0.16% to close at 992.42. The Tiger China Small & Mid Cap Stock Index won 4.95 points or 0.60% to close at 827.55 and the Dragon China Undervalued Stock Index gained 8.88 points or 1.27% to close at 705.99. The China 100 stock index won only 4.17 points or 0.50% to close at 841.67.
China stocks jumped after first second-quarter earnings reports beat analysts' expectations
Investors took heart from the stronger-than-expected quarterly results reported by some important companies that are considered as one of the best economic health parameters. Alcoa Inc., the largest US aluminum producer gained 1.2 percent to close at $11.00 per share after it announced its results and raised its estimate for global aluminum consumption. CSX Corp. and Intel Corp. also reported earnings and revenue that beat analysts' expectations to close the Tuesday’s trading session on the green.
CSX announced that its economy's upward momentum will continue this year, providing a good parameter for the US economic recovery as it ships a wide range of products. Alcoa has a varied customer base that provides an economic indicator of what is happening in a broad range of other industries. Intel and other chipmakers’ sells are considered a good gauge of the health of the economy as they signal consumers’ optimism.
Suntech Power Holdings slumped on Citigroup rating
Citigroup, an American financial services company based in New York, recommended selling the Suntech Power Holdings (STP) stock and said its earnings may miss analysts’ estimates next year. Suntech declined today 7 percent to $10.57, the biggest drop since May 6. The stock closed Friday at $11.37 on volume of 4,153,800 shares, above average daily volume of 3,900,038. Suntech Power Holdings is currently above its 50-day moving average of $10.24 and should find resistance at its 200-day moving average of $13.61.
Citigroup also rated Yingli Green Engergy Holding (YGE) as “hold” sending the stock down 4.35 percent to $11.86. Trina Solar Ltd. (TSL), a Changzhou, China-based maker of solar modules, lost 2.8 percent to $20.52 after Citigroup initiated coverage of the stock with a “buy” rating. Citigroup analyst Timothy Arcuri said, “Stock correlation within the group is near a record high, but these stocks typically track estimates”.
US stock market rallied on coming earnings season forecast
With no major economic data reported Wednesday, the US market rallied on a forecast from financial company State Street Corp. about the coming earnings season. State Street announced quarterly earnings at 93 cents per share on $2.3 billion in revenue, exceeding analysts’ expectations, which are estimating a slimmer profit of 72 cents per share on $2.2 billion in revenue. The announcement boosted Bank stocks to a rally followed by industrial and technology shares closing the trading session with the broadest gains in about six weeks.
The China 100 stock index won 20.88 points or 2.65% to 809.20. The Panda China Large Cap Stock Index won 23.23 points or 2.43% to close at 979.51. The Tiger China Small & Mid Cap Stock Index climbed back 23.07 points or 3.08% to close at 771.53 and the Dragon China Undervalued Stock Index jumped 14.12 points or 2.07% to close at 697.57.
Institute for Supply Management’s service sector index fell in June
The Institute for Supply Management announced its index tracking service-oriented companies slid to 53.8 in June from 55.4 in May. However it continues to grow but a slow pace as a reading above 50 indicates expansion, while a reading below 50 indicates shrinkage. Service-oriented jobs include those in hospitals, shops, restaurants, airlines, schools, construction, banks and consulting firms, among others, which represent 80 percent of U.S. employment.
"It's consistent with the general tone of data, suggesting that the pace of growth is a little more moderate. It's certainly not suggestive of the double-dip scenario that some people are pushing," said Charles Lieberman, at Advisors Capital Management. New orders also fell, to 54.4 in June, the lowest this year, from 57.1 the previous month. Export orders dropped to 48 in June, the lowest since February, from 53.5 in May.
US Labor Department reported unemployment rate dropped to 9.5 percent
The US Labor Department announced today that the economy gained 83,000 jobs in the private sector in June. Overall, employment declined by 125,000 and the unemployment rate dropped to 9.5 percent, from which 225,000 jobs were temporary census workers ending their service. Over the first half of the year, 600,000 private sector jobs were created; the average growth remained steady to 100,000 new private sector jobs each month.
The labor figures were weaker than expected by investors, who reflected their sentiment on the stock market. Major US stock indices dropped while the China 100 stock index managed to gain 6.94 points or 0.88% to 795.99. The Panda China Large Cap Stock Index closed flat at 948.31. The Tiger China Small & Mid Cap Stock Index won 8.92 points or 1.19% to close at 760.86 and the Dragon China Undervalued Stock Index gained 1.55% to close at 698.92.
Manufacturing, home sales and jobless claims data sent US stock market down
The Institute for Supply Management reported Thursday its manufacturing index fell to 56.2 in June from 59.7 in May, its lowest level since December. However, the Institute said industrial activity still to be growing but a slow pace. The sub-indices in the ISM manufacturing report showed that the prices paid index declined to 57.0 from 77.5, while the production index also eased to 61.4 from 66.6, new orders eased to 58.5 from 65.7, while the contraction in inventories eased to 45.8 from 45.6, the employment index eased to 57.8 from 59.8, imports remained unchanged at 56.5, and new export orders eased to 56.0 from 62.0.
Another Thursday’s report confirmed the data released last week from the housing market, where both the existing and new home sales dropped heavily. The pending home sales index dropped May by 30.0 percent, compared with the prior reported rise of 6.0% back in April, while compared with a year earlier, pending home sales declined by 15.6%, compared with the prior reported rise of 24.6%. Home sales dropped as soon as the government’s tax credit program expired.
US stock market dropped on investors’ concerns about more economic data coming this week
Wednesday’s trading session closed with loss for major US stock indices after investors showed concerns about downbeat economic data surged during June as the wait for more possible poor figures from the US Labor department’s report to be released later this week. Economists in a Bloomberg survey project a Labor Department report in two days will show payrolls fell this month due to a plunge in government employment of temporary workers conducting the census. Projections in the Bloomberg survey of 36 economists ranged from 23,000 to 100,000 after a previously reported 55,000 gain in May.
The China 100 stock index fell 4.13 points or 0.51% to 800.44. The Panda China Large Cap Stock Index won 5.65 points or 0.60% to 944.80. The Tiger China Small & Mid Cap Stock Index lost 7.91 points or 1.02% to close at 769.28 and the Dragon China Undervalued Stock Index fell 1.05% to close at 702.79.
China’s Leading Economic Index showed its smallest gain in 5 Months
The Conference Board, a New York-based research group, reported its Leading Economic Index for China rose by only 0.3 percent in April instead of by 1.7 percent as originally estimated. The index shows the smallest gain in five months helping to the biggest sell-off in Chinese stocks in more than a month. The China’s stock market tumbled 4.27 percent hurting US stock market by going down Tuesday along with global stock markets.
AbBank, the last of Chinas’s “big four” state banks, contributed also to send the US stock market down Tuesday after it priced its initial public offering in Shanghai below expectations. AbBank plans a dual listing in Shanghai and Hong Kong, which is estimated to raise more than 23 billion dollars and making it the world's biggest initial public offering. The bank said late Tuesday it had set a price range of 2.52 to 2.68 yuan (37 to 39 US cents) a share for the Shanghai listing, which would raise up to 10.1 billion dollars, lower than the range for the Hong Kong portion of the IPO which has been set at 2.88-3.48 Hong Kong dollars a share (37-44 US cents).
Major US stock indices fell on Monday’s economic data
The US Commerce Department said that consumer spending increased by 0.2 percent in May. Despite the slight increase, spending on goods actually decreased in May, while spending on services increased, which the Commerce Department attributed to a greater demand for electricity. However, personal income increased 0.4 percent which said consumers saved more than they spent last month.
Bond market interest rates fell to their lowest level in 14 months. The yield on the 10-year Treasury note, considered a benchmark because it is used to set rates on consumer loans including mortgages, fell to 3.03 percent Monday. In addition, Monday showed a stronger dollar signaling a weak inflation to send energy prices down along with other basic materials. Major US stock indices fell on Monday’s economic data while investors are still analyzing the results of the G-20 meeting held in Toronto last weekend where world’s leading economies pledged to reduce budget deficits.
US lawmakers agreed on a financial regulation bill
After a 20-hour session that ended at 5:39 A.M. ET on Friday US lawmakers agreed on a financial regulation bill. The 2,000-page bill was voted out of conference on a party-line vote, 27 to 16, and now heads back to the House and Senate for final passage. President Barack Obama praised lawmakers for agreeing on a historic overhaul of financial regulations that he called the "toughest consumer financial protections" in U.S. history.
Among other things the bill includes; a new 10-member oversight panel empowered to seize and break up big banks deemed “too big to fail”. Trading in many derivatives, such as the complex securities made up of bundles of home loans that ended up at the heart of the financial crisis, is being forced onto more transparent exchanges.
US stock market tumbled on disappointing retailers’ forecasts and government’s financial-overhaul bill
Retail stocks tumbled Thursday as investors worried that consumers' spending power may be waning according to disappointing earnings and forecasts reported by several retail companies. Forecasts from companies like Dell Inc., Nike Inc. and Bed Bath & Beyond missed analysts’ expectations. Dell Inc. lost 6.4%; Athletic apparel maker Nike Inc. dropped 4%; Bed Bath & Beyond fell 2.34 or 5.6% to 39.12; Macy's fell 1.24, or 6.2%, to 18.85 and J.C. Penney slid 1.42, or 5.8%, to 23.24.
Financial stocks also dropped on investors’ concerns about a financial-overhaul bill in progress that may tighten industry regulations; the bill may also cut into bank profits by allowing the government to levy a fee on banks for any funds that aren't repaid to the Treasury's bank rescue program. The bill is expected to be done by Thursday evening so President Barack Obama can have a deal in place by the time he meets with the leaders of the Group of 20 nations this weekend in Toronto. Shares of major banks dropped, J.P. Morgan Chase, fell 2.2%, to 38.03, Bank of America dropped 2.7% to 15.02 and Wells Fargo down 46 cents, or 1.7%, to 26.86.
Federal Reserve’s meeting concluded with steady interest rates amid Europe's debt concerns
The Federal Reserve's Federal Open Market Committee, FOMC, met this week in a two-day session concluding Wednesday. The FOMC indicated that short-term interest rates will remain near zero for an extended period. "Financial conditions have become less supportive of economic growth on balance, largely reflecting developments abroad," the FOMC said, referencing to Europe’s debt woes.
The Federal Open Market Committee kept its target for the federal funds rate in a range between zero percent and 0.25 percent. The prime rate will stay at 3.25 percent. Rates on home equity lines of credit and variable-rate credit cards will remain unchanged and rates on short-term certificates of deposit will remain steady as well.
National Association of Realtors reporting existing-home sales fell 2.2 percent in May
The National Association of Realtors reported Tuesday that sales of existing homes fell 2.2 percent to a seasonally adjusted annual rate of 5.66 million units in May from 5.79 million in April. Gains in the West and South were offset by a decline in the Northeast; the Midwest was steady. However sales remained at elevated levels on buyer response to the tax credit, characterized by stabilizing home prices and historically low mortgage interest rates, as Lawrence Yun, NAR chief economist, said.
Existing-home sales are completed transactions that include single-family, townhomes, condominiums and co-ops that differ from the U.S. Census Bureau’s series on new single-family home sales, which are based on contracts or the acceptance of a deposit. Approximately 180,000 home buyers who signed a contract in good faith to receive the tax credit may not be able to finalize by the end of June due to delays in the mortgage process, particularly for short sales.
China relaxes constraints on the Yuan
China's central bank announced late on Saturday it was ready to make the yuan more flexible. The yuan climbed as high as 6.8015 against the dollar, or up 0.38 percent, its strongest level since July 2005. On Sunday, Beijing ruled out a one-off move, saying there was no basis for any big appreciation and that it will keep the exchange rate at a basically stable level.
The Chinese move on the yuan will help to cool off its economy’s growth and it will boost the US, European manufacturers and exporters as they could be more competitive selling their products in China. The appreciation in the yuan will also have a negative effect on retailers as the China's imports would become more expensive. That could cut into earnings, especially since weak consumer spending limits' stores ability to pass higher prices on to their customers.
European banks stress tests to be published in July
European Union leaders on Thursday agreed that the results of stress tests on European banks will be published sometime in July. The results were not initially meant to be made public, but The EU leaders were then pressured by Spain's decision on Wednesday to make the results of stress tests on its own banks public to demonstrate solvency and leave behind rumors of banking problems. The tests will be conducted by national banking supervisors under the management of the Committee of European Banking Supervisors, starting with the EU's 25 largest institutions and in a second stage extend to more banks.
The German Finance Ministry is saying it won't publish information from banks that don't want it made public, under law it could not oblige banks to disclose the results of tests on them, though it would check how banking laws could be interpreted or changed. In the meantime it will rely on peer pressure rather than forcing reluctant lenders to disclose. Meanwhile, the Dutch Banking Association issued a strong statement opposing public disclosure and warning of bank runs.
Philadelphia Federal Reserve Bank economic index dropped
The Philadelphia Federal Reserve Bank reported its business activity index dropped to 8.0 in June from 21.4 of May. Economists forecast the index would fall to 20.9, based on the results of a Reuters poll, which ranged from 10 to 24. The index, which covers factories in the Mid-Atlantic area, is seen as one of the first monthly indicators of the health of U.S. manufacturing leading up to the national report by the Institute for Supply Management, which is due next on July 1st.
The figures follow a report from the Labor Department today that showed consumer prices fell in May for a second month. The Labor Department also said jobless claims rose by 12,000 to 472,000 last week. Initial claims for jobless benefits rose 12,000 to 472,000 in the week ended June 12.
BP establishing a fund for the Gulf of Mexico oil spill damages
Following a meeting with the President of the United States, Barak Obama, the BP Board announces an agreed package of measures to meet its obligations as a responsible party arising from the Deepwater Horizon spill. Agreement was reached to create a 20 billion USD claims fund over the next three and a half years. BP will initially make payments of 3 billion USD in Q3 of 2010 and 2 billion USD in Q4 of 2010. These will be followed by a payment of 1.25 billion USD per quarter until a total of 20 billion USD has been paid in.
While the fund is building, BP's commitments will be assured by the setting aside of U.S. assets with a value of 20 billion USD. The intention is that this level of assets will decline as cash contributions are made to the fund. The fund will be available to satisfy legitimate claims including natural resource damages and state and local response costs.
Germany’s ZEW economic sentiment indicator slumped in June
The ZEW institute based in Mannheim, Germany, said Tuesday its economic sentiment indicator dropped by 17.1 points in June. The index declined for the second consecutive month to 28.7 points in June from 45.8 points in May, the sharpest fall since October 2008, taking the index to its lowest level since April last year. The ZEW institute blamed the fall on uncertainty about how the debt crisis would unfold and over the impact of fiscal austerity packages across Europe.
The index was based on a survey of 279 analysts and investors and conducted between May 31 and June 14. "Increased uncertainty about the debt crisis and rumors about problems in the Spanish financial system are weighing on the outlook," said ZEW economist Peter Westerheide. "There is also uncertainty about the future course of the German government, for example with regard to taxes," he said.
Greece’s debt downgraded to junk status.
US stocks began higher following a report that industrial production in the Eurozone grew 0.8 percent in April, more than expected by economists. Later in the trading session investors were more influenced by the credit rating issued by Moodys. The agency downgraded its rating on Greece’s debt to “junk” status, as a result major US stock indices experienced a late-day slide again.
Moody’s said its decision was based on the strengths and risks of the financial rescue package developed by countries in the euro zone and the International Monetary Fund. It is the second of the three major agencies to accord Greek bonds junk status. Standard & Poor's did the same in late April.
US retail sales report questioning the pace of US economic recovery
After mostly international stocks soared on upbeat global economic data, today, the US Commerce Department reported retail sales fell 1.2 percent in May. It's been the first drop in eight months. Economists had forecast sales would rise 0.4 percent.
Investors were looking for support on the sales data to provide reassurances about the economic recovery in the US. Investors still hesitating because of the roller-coaster of information surged in one week; the good figures of home and auto sales, the disappointing employment report, the encouraging speech of the Federal Reserve Chairman, Ben Bernanke and the most recent report of the number of laid-off workers finding a job.
Signs of robust economic momentum in Asia and Europe
Asian stock markets mostly advanced Thursday as China confirmed exports rose 48.5 percent in May from a year ago while imports jumped 48.3 percent. Dai Xianglong, chairman of China's National Social Security Fund, said the euro would gradually stabilize and that the U.S. fiscal deficit remained a big concern, tempering safe-haven demand for the dollar. The comments helped the euro rise to 1.2106.
In Japan, the government reported the economy grew 5.0 percent in the first quarter, faster than an initial estimate of 4.9 percent. Australia reported a stronger-than-expected rise in employment numbers for May. Japan's Nikkei gained 1.1 percent, South Korea's Kospi index rose 0.9 percent, Australia's S&P/ASX 200 was up 1 percent, Hong Kong's Hang Seng rose 0.5 percent and Benchmarks in Singapore, Taiwan and New Zealand also were up.
China's exports grew 50 percent in May
Contrary to yesterday, US stocks fell today while major international stock markets soar. China’s exports report boosted global markets to a rally; China's exports grew 50 percent in May from a year earlier; the official data is scheduled to be reported on Thursday.
On Wall Street, most of the trading session was influenced by the upbeat news received from China, but in a late-day slide, stocks dropped because of fears that the oil spill in the Gulf of Mexico will send BP into bankruptcy court. BP could be forced to seek bankruptcy protection in about a month as it has lost almost 16 percent so far.
US stocks stabilized while major international stock markets remain under uncertainty
The Federal Reserve Chairman, Ben Bernanke’s speech helped instill confidence in the US stock markets, not so with major international stock indices. Ben Bernanke said that he doesn’t expect the economy to slide into recession, he expects the US recovery to continue, but he acknowledged it is unlikely to be robust.
On the other hand, the 27 countries in the EU committed Tuesday to keep each other’s public finances and to cutting debt by reducing government spending. Debt problems in countries including Greece, Spain and Portugal have raised fears that countries could default on their debt.
Global turmoil continues to pull down investor’s confidence
Friday’s downbeat news remains in the market today and as a result the vast majority of international stock markets fell sharply. Investors reacting to the news that the US economic recovery may be slowing were not convinced by Hungary's attempts to distance itself from fears of a Greek-style fiscal crisis either. The euro hit another four-year low against the dollar at $1.1946. One small piece of good news however was that crude oil fell 7 cents to $71.44 per barrel.
Britain's FTSE 100 dropped 1.1 percent, Germany's DAX index fell 0.6 percent, and France's CAC-40 fell 1.2 percent. Japan's Nikkei stock average fell 3.8 percent. The Dow Jones industrial average is down 115 points at 9,816, its lowest close since November. The Standard & Poor's 500 index is down 14 at 1,050, while the NASDAQ composite index is down 45 at 2,174.
Increased uncertainty on questionable US recovery
From robust economic data just reported on Wednesday to disappointing job data announced this Friday from US economic data, the situation has changed dramatically in the global markets showing less optimistic investors today. In Europe, the FTSE 100 index of leading British shares closed down 89.37 points, or 1.7 percent, at 5,121.81 while Germany's DAX sank 124.55 points, or 2.1 percent, to 5,930.08. The CAC-40 in France was 110.72 points, or 3.1 percent, lower at 3,446.62. In Hong Kong, the Hang Seng index remained even losing only 6.64, or less than 0.1 percent, to 19,780.07.
On Wall Street, the Dow Jones industrial average slumped 220.15 points, the NASDAQ index dropped 33.54 points or 1.46 percent to 2,269.49 and the S&P 500 index, a broad measure of the market, shed 17.90 points or 1.62 percent to 1,084.93.
A glimpse of US recovery
Despite Europe’s debt crisis concerns, today, a general optimism from traders was found after receiving positive economic data in the United States. Good reports of home and auto sales in the US were announced on Wednesday. The US economic data boosted global stock markets to a rally, The London stock market jumped 1.68 percent, Frankfurt gained 1.78 percent and Paris won 2.27 percent. Asia markets also surged, with Hong Kong gaining 1.62 percent and Tokyo soaring by 3.24 percent.
As a result most stocks closed higher for a second day. Always wanting to ruin a good party, oil prices jumped up more than 2.0% on a reported expansion US drilling bans. Although, caution from investors is expected to continue as analysts said, further clarification from the US economic figures and the inventories report is waited as there is still volatility and uncertainty in the markets.
Euro crisis slowing China's economy
The euro was down 0.29 percent at $1.2269, after having fallen to a four-year low against the dollar at $1.2112, its lowest since April 2006 which suggests that the euro zone's debt crisis is spreading to its banking system. Concerns over another crisis in the banking sector were compounded by data signaling slowing manufacturing growth in Europe and China.
After May marked the most volatile month of trading, investors focused on concerns that growth would slow in a euro zone struggling to rein in debt, in turn reducing demand for exports from economies like China, slowing production there. A survey showed the pace of China's factory output eased last month. China's PMI, an indicator of factory activity, compiled by the China Federation of Logistics and Purchasing, fell to 53.9 in May from 55.7 in April, close to analysts forecasts of 54.0, however, it stood above the threshold of 50 that separates expansion from contraction for the 15th consecutive month.
The China 100 Stock Index Tumbles in May losing 15.9%
The China 100 stock index experienced its worst month of 2010, it closing the month with correction of 15.9%.
A new bottom was made in the middle of the month when major US indices were off by 8% as a result of all the international turmoil that took place, including Europe's debt crisis and the China's tightening.These troubles remained in the background along with the recent attacks of Israel to give an interesting start to the Chinese stocks in June.
The Panda China Large Cap Stock Index closed red the first day of June at 19.16 losing 2.02%. The Tiger China Small & Mid Cap Stock Index and the Dragon China Undervalued Stock Index didnt fare any better closing red, dropping 31.17 and 14.58. As a result the China 100 stock index was dragged down 23.78 points closing at 843.
China Wavering on European Bailout, Solar Stocks Soar
U.S stocks again tumbled for the eighth time in ten days on disturbing reports that China is seriously contemplating reducing its significant investments in European area government bonds. This raised anew mounting concerns that the European sovereign debt credit crisis will grow worse before it gets any better, crushing an earlier rally begun as a result of better than expected U.S. economic data. The China Investment Corp. is considering lowering the percentage of assets it allocates toward Europe and instead will actively monitor the issues regarding the 16-nation currency and new regulations, Reuters cited Gao Xiqing, president of the sovereign wealth fund, as saying. The China 100 Stock Index closed up 11.48, as stock prices increased 1.39 %. The Panda China Large Cap Stock Index closed at 915.14, down 3.28 or .36%. The Tiger China Small and Mid Cap Stock Index gained 1.65%. The Dragon China Undervalued Stock Index rose 23.50, gaining 3.14 %.
China Shares Decline on Renewed Fears of Sovereign Debt Defaults
International markets plunged once again on continuing fears that the growing European area sovereign debt crisis will derail the fragile world wide economic recovery. With all of the major European and Asian stock exchanges down significantly, only the U.S. markets managed to recover from sharper losses earlier in the day, rebounding to close at less than half a percent down on the day. The Chinese stock market also steered significantly lower today. Mounting speculation that the national government will increase its measures to prevent asset bubbles, while the European contagion potentially hangs over the struggling international recovery progress, weighed on the index. "A slowdown in Europe’s economy will “badly hurt” Chinese exports, limiting China’s ability to allow its currency to appreciate against the dollar," Pride Investment Group Ltd.’s Lewis Wan claimed in a Bloomberg Television interview earlier today. The China 100 Stock Index closed down 16.19, as stock prices decreased 1.92 %. The Panda China Large Cap Stock Index closed at 918.43 or 1.73%. The Tiger China Small and Mid Cap Stock Index lost 1.79 %. The Dragon China Undervalued Stock Index fell down 747.51 losing 2.43 %.
U.S. Senators Accuse China of Supressing Negative IMF Report
A letter written by Senator Charles Schumer (D-NY) and Senator Lindsey Graham (R-SC) to U.S. Treasury Secretary Timothy Geitner, accused China of hiding the International Monetary Fund's conclusions about the country's currency policies. Eight additional Senators, mostly from industrial states, also signed the letter.
Back in the summer of 2009, the IMF met with China to discuss monetary policy. A staff report somewhat critical of the way the Chinese Government controlled the yuan, was, according to the Senator's letter, suppressed. IMF member countries are not required to release the reports, but failing to do so can cause great speculation. While the report did not directly accuse China of manipulating their currency to gain an unfair advantage with exports, it did conclude that the yuan was "substantially undervalued."
China's bear market attracts local investors seeking safety
China's stock market slumped into the second bear market in nine months this week. Although, such lower levels have attracted fresh investment from the local investors. The stock market is the best choice for the moment,” said Pan, a 27-year-old Shanghai accountant. “Even the bank staff advised me against depositing more money”. The high volatility zone continued in the market as some stock climbed and others touched a new low.
First on the list of gainers was China Armco Metals (CNAM). The stock closed at $5.62 gaining more than 17%.The stock has a resistance at $9 and finds a support level around $2. The company through its subsidiaries, imports, sells, & distributes metal ores & non-ferrous metals to the metal refinery industry in China.
China Price jump indicates Yuan Peg stoking inflation.
China's producer prices may have climbed the most in 18 months in April on account of rising cost of imported goods fueling signs that the country's fixed exchange rate is stoking inflation. The cost of the goods leaving the factories jumped by 6.5% from a year earlier. According to a latest news survey consumer prices may have climbed 2.7% and matching a 16 months high. “For China, the more quickly yuan appreciation kicks in, the better,” said Mr Stephen Green, head of China research at Standard Chartered Bank in Shanghai. “Appreciation is needed to absorb higher raw-material import prices, a key driver of China’s producer-price inflation.”
China Stocks Weekly Recap 5/3 - 5/7: A Boost in China Agricultural Stocks, Power Sector Lurks Behind
The picture is quite gloomy with the central bank taking measures to mitigate inflation and prevent housing sector inflation owing to record lending last year. It ordered for the third time a larger proportion of deposits to be kept as reserves with commercial banks. No wonder the Shanghai Composite Index fell to a record low since September 1, 2009. According to recent surveys, China’s producer prices, consumer prices and industrial prices have all climbed – by 6.5%, 2.7% and 18.5 % respectively. Further, with speculation in reduced planting and drought in many parts of China, investors are expecting a boost in the prices of farm products, which has quite understandably raised the prices of agricultural stocks.
Europe Crisis Taking its Toll on China Stocks
Europe’s debt crisis is largely affecting the global recovery post recession. While on one side, US equities saw the biggest drop in a year, on the other hand, China stocks fell to an eight-month low on Friday. In fact, most experts are of the opinion that if the issue is not checked immediately, there is every possibility of an economic ripple effect. The Shanghai Composite Index, which tracks the bigger of China’s exchanges dropped by 1.9%, the lowest close since Sept.1, capping a 6.4 % decline for the week. The fall can be largely attributed to property curbs and the European debt crisis hurting the exports and fixed asset investment. The debt crisis in Europe targeted US stocks, which led to a strong chance of a slide in Asian shares. Since Europe is China’s biggest export market, with one-fifth of nation’s sales going into its account, any adversities in the European market is bound to impact China stocks in a big way.
China Price jump indicates Yuan Peg stoking inflation
China's producer prices may have climbed the most in 18 months in April on account of rising cost of imported goods fueling signs that the country's fixed exchange rate is stoking inflation. The cost of the goods leaving the factories jumped by 6.5% from a year earlier. According to a latest news survey consumer prices may have climbed 2.7% and matching a 16 months high. “For China, the more quickly yuan appreciation kicks in, the better,” said Mr. Stephen Green, head of China research at Standard Chartered Bank in Shanghai. “Appreciation is needed to absorb higher raw-material import prices, a key driver of China’s producer-price inflation.”
China Developers turn to Hong Kong as lending norms toughen in Beijing
China's biggest developers are borrowing record amounts in Honk Kong taking advantage of lower interest rates to avoid a lending crackdown at home. Banks in China are demanding at least 5.2 % in annual interest for three to five years while the cost of credit in Honk Kong has fallen over the last few years. According to reports the China Overseas Land & Investment Ltd agreed to an $1.03 billion loan in February from Honk Kong. “For property developers to keep growing in what is an extremely fragmented and competitive market they have to go offshore” for funds, said Brayan Lai a credit analyst at Credit Agricole CIB in Hong Kong. “It’s one way to circumvent tight onshore credit.”
China looking up to Brazil and the US to source Soy oil supply in the wake of Argentine ban.
China, the biggest user of cooking oil has directed state owned trading companies to seek supplies of Soybean oil from Brazil and the US as it maintains an embargo on imports from Argentina. The directive has come from the Ministry of Commerce which has told three companies including Cofco Ltd to source supplies from these countries instead of Argentina. Soybeans in Chicago have increased by 5.5% since the start of April amidst speculation that China will increase imports of Soybean.
Yen finds itself in a weaker position to Dollar
The Yen sank to a new 8.5 month low against the dollar on Tuesday in response to robust US data which raised investor expectations of a rise in interest rates this year. The Euro remained at a one year low amidst concern whether the bailout package for Greece will work while the Australian Dollar held firm ahead of an expected rise in interest rates. The US Dollar gained 0.4 percent to 94.98 Yen to stabilize later at 94.90. The reason behind this can be seen in the growth of US manufacturing. This is the first rise in nearly six years since April. There was also an impressive rise in consumer spending which accounts for two-third of US economic activity. The weakness of Yen is also attributed to the low interest rates maintained by Japan which faces a difficult fiscal position as its public debts near 200 percent of its GDP.
China’s April Manufacturing grows at an impressive pace
Chinese manufacturing continued to expand at a break neck speed which is considered by many as early signs of overheating risk. The Purchasing Manager's Index [PMI] rose to seasonally adjusted 55.7 to 55.1 in March according to the report given by the Federation of Logistics and Purchasing. China is going all out to prevent property speculation to ensure that there is no asset bubble. Today’s PMI figure compares with a record-low 38.8 in November 2008, when the credit crisis and recessions in overseas markets sent export orders plunging. The economy rebounded on the 4 trillion Yuan ($586 billion) stimulus plan announced that month and record new loans from banks.
ICBC, Construction Bank post impressive profits riding on a wave of recovery
Industrial & Commercial Bank of China [ICBC] & China Construction Bank posted the largest first quarter profits among the world's banks, powered by the fastest economic growth in three years. ICBC, the world's biggest lender by market value posted an increase of $41.55 billion Yuan while the Construction bank profit increased to $35.2 billion Yuan. The two banks, emerging from recession boosted provisions for bad loans as the Chinese government aims to curb speculation in property.
Wednesday, April 28, 2010
China plans to unveil resource tax reform plan this year
China is planning a major reform in resource taxes in the current fiscal. The proposal comes on the expected lines of the long awaited overhaul of the taxation system. Previously, China has pledged to reform resource taxes in a timely manner, so the announcement from the government that it will be happening in this year itself comes as a sign of government's hardening stand. The major impact of resource taxes is expected on coal, metals, oil, and gas extraction, which will now be taxed on revenue rather than volume.
China gains more control of the World Bank
World Bank member countries on Sunday, April 26, 2010, reached an agreement to shift more power to emerging and developing nations. China’s votes increased to 4.42% from 2.78%, making it the third largest voting power holder in the 186-nation lending organization. United States’ share remained at 15.85% and Japan is in the second place with a 6.84% voting power, down from 7.62%. World Bank President Robert Zoellick said “We were just pleased that we are getting close to reflecting China’s increasing share in world economy, and that is reflected in edited voting share”. During the global financial crisis last year, China’s GDP showed an impressive growth of 8.7% year-over-year, signaling China plays a vital role for world economic growth. In the future, China’s influence to world’s economic will increase even stronger given that China is expected to grow by 10% in 2010, surpassing Japan to become the second largest world economy.
Chinese auto stocks heat up for Beijing Car Show
2010 Beijing International Automotive Exhibition, one of the major auto shows in the world, raised its curtains today and will last till May 2, 2010. During the period, approximately 990 models will be displayed in an area of about 200,000 square meters and 89 of them will make their global debut. Nearly 2,100 companies from 16 countries and region join the event. The Auto Parts section is held simultaneously at China International Exhibition Centre from April 23-27, 2010. Last year,China surpassed United States to become the world’s No.1 automobile market with a 59% year-on-year sales increase. China’s domestic auto sales also surged 44% year-over-year to 13.5 million units in 2009. The huge increase in vehicle sales was mainly contributed by the Chinese Government’s stimulus policies, including tax cuts on small-displacement automobiles, subsidies for trade ins and subsidies for farmers to purchase vehicles. With the government’s further support, China auto market is expected to continue the strong growth in the future.
Wealthy Chinese expected to boost travel industry
According to the news, Wealthy travelers snap up trips around the globe, a half-a-million-yuan tour around the world sold out in less than 10 minutes in mainland China. The trip worth $73,200 US dollars will take tourist to six continents for over 60 days. Tourists will travel by air, train, helicopter, and ship and will stay in top-level hotels all the way. Ctrip.com said the sales target was met nine minutes after the package went on sale and more than 30 mainland tourists had called to inquire about the product. The 2010 Hurun Wealth Report shows that there are 875,000 people with more than RMB 10 million, or $1.47 million US dollars, in China today, an increase of 6.1% from last year. The average age of China’s wealthy is 39 years old and travel, golf, and swimming are their leisure activities of choice. On the back of strong economic growth, China is at a stage of explosive growth in travel industry.
Wednesday, April 21, 2010
Image is Everything, China America Becomes a Dragon
When it comes to the perception of public companies, image is extremely
important. Specifically, stocks that are considered "penny stocks"
usually show characteristics of being startups with stories. Their
chances of success and bringing in lasting returns for their investors
are minimal at best. It is never good to generalize but there is
a reason China Vesting tracks over 500 companies and of those we follow
less than a dozen are considered "penny stocks". Of the companies
that China Vesting does monitor most are listed on the Nasdaq or NYSE AMEX.
This is exactly why when we first started researching China America Holdings
(CAAH) it felt like a complete waste of time. Based on the April
20th closing price of $0.04 per share the expectation levels for the company
were kept very low.
China America Holdings is in the business of selling and distributing
assorted liquid coolants which are utilized in a variety of applications,
primarily as refrigerants in air conditioning systems for automobiles,
residential and commercial air conditioning systems, refrigerators, fire
extinguishing agents and assorted aerosol sprays. The liquid coolant
business may not seem like a very attractive industry. However, according
to the State Information Center of China, the Chinese air-conditioning
market is predicted to reach a sales volume of 25 million with a 10% rise
year on year for the 2010 air-conditioning year. China also became
the world's largest auto market last year, when total vehicle sales jumped
45 percent over 2008 to 13.6 million units.
Biostar Pharmaceutical sets a record high in anticipation joining the NASDAQ
Biostar Pharmaceuticals (BSPM) hit a fresh 52-week high of $5.15 and closed at $5.05, or 7.91% higher on over three times the regular trading volume. The company today filed a Form 8-A stating that the Registration Statement on Form 8-A is being filed in connection with the listing of the common stock on The Nasdaq Stock Market. Today’s surge was buoyed by anticipation for the company’s uplisting announcement.
New Oriental Education set a record high on earnings news
In 1978, the former Chairman of China, Deng Xiao Ping, pointed out China should send more students to study abroad under the Reform and Opening-up. The Chinese Central Government then formulated the policy of “Supporting students and scholars studying abroad, encouraging them to return to China upon their completion of studies and guaranteeing them the freedom of coming and going” in 1990’s, Since then, the number of Chinese students studying abroad continues to rise. In the past 30 years, 1.39 million Chinese students have gone to overseas universities, with 200,000 in 2009 alone. According to Mr. Zhang Xinsheng, the Vice Minister of Ministry of Education of China, Chinese students studying abroad will expand to an annual of 300,000 in year 2020.
China real estate stocks slumped on loan restrictions
In order to cool down an overheating property market, Chinese government asked banks to refuse loans to people buying their third houses in areas suffering from soaring property prices. In addition, banks will also halt loans to those who cannot prove that they had lived and paid taxes for at least one year in cities where they want to buy houses. All the real estate related U.S. listed Chinese stocks in China 100 Stock Index tumbled, led by E-House China Holdings.
China Stocks Market Recap 4/12-4/16: Asia Cork (AKRK) boosted on positive earnings
The stock market hit a high on Wednesday as financial and technology giants, JP Morgan and Intel delivered positive quarterly earnings, suggesting a optimistic economic outlook. However, the excitement was devastated in the end of the week following a civil fraud charges against Goldman Sachs. The 100 Stock Index was down 2.38% for the week while Panda Large Cap, Tiger Mid/Small Cap, and Dragon Undervalued Indexes decreased by 1.52%, 3.29%, and 1.44% respectively.
China Shandong Industries becomes new addition to the China Dragon Undervalued Index
China Vesting today issued a press release announcing adding China Shandong Industries (CSNH) to the China Dragon Undervalued Index. CSNH is engaged in manufacturing and marketing handicrafts and furniture. The company offers poplar and paulownia furniture, distributed in more than 30 countries and carried by Wal-Mart, IKEA and other mass market retailers. Yesterday, CSNH filed its 10-K annual report. Revenues for the 2009 full year increased 41.12% to $59.54 million year-over-year and net income surged 73.26% to $9.98 million. The company reported cash and cash equivalent of $2.18 million and net cash provided by operating activities was $9.06 million. Since the company announced listing on OTCBB on January 21, 2010, its market capitalization has increased by $41.45 million. The stock today reached a record high of $3.29 and closed at $3.00.
Potential NASDAQ uplisting has Biostar shooting up
Biostar Pharmaceuticals (BSPM) had another substantial movement today. With the hope of being uplisted to Nasdaq, the stock has its closing bid above $4.00 for the fifth day. Accompanied by more than three times the average trading volume, BSPM set a record high of $4.92 and closed at $4.85 with a gain of 5.43%. Based on the requirements for listing on the Nasdaq, the closing bid price needs to be above $4. The previous minimum bid price was $5.
Wednesday, April 14, 2010
China technology stocks get boost on economic outlook
Today the stock market exploded on the JPMorgan Chase and Intel’s better-than-expected earnings results. Theses giants’ improved quarterly earnings gave investors a view that economy is recovering and business conditions are getting healthier. The optimism and excitement also boost U.S. listed Chinese stocks, especially the technology shares.
Zhongpin (HOGS), a Chinese food processor, fattens up on increased earnings expectations
Shares of Zhongpin (HOGS), a Chinese meat and food processer, have been up for three days in a row since the company announced to open a new pork oil plant on April 12, 2010. CEO of the company stated that one of the important benefits from this new business line is further yield from the hogs the company uses in their pork production as premium pork oil will be a new co-product. According to the release, Zhongpin has completed pre-production contracts with institutional and wholesale customers. Today before the market opened, Jesup & Lamont initiated coverage on Zhongpin with a Buy rating. Shares of the company increased 4.15% for the day on above average trading volume.
SORL Auto Parts (SORL) drives up on new contract news
Shares of SORL Auto Parts (SORL) continued to show strength on new contract news. SORL signed a strategic supply agreement with Shandong KAMA Automobile Manufacturing and believes their products will account for as much as 80% of the total products used by KAMA. In addition, SORL has been selected as a key supplier by Shandong Wuzheng Group and estimated its products supplied to Wuzheng will reach approximately $2.8 million in 2010, doubling the amount in 2009. Following the announcement, Brean Murray initiated coverage on SORL Auto Parts with a Buy rating. The stock closed at $10.44 with a gain of 4.09% for the day.
China Stocks Market Recap 4/5-4/9: Chinese Solar Stocks are the biggest winners of the week
This week from April 5 through April 9, Chinese solar stocks in the China 100 Stock Index experienced a huge gain in the middle of the week but slightly pulled back on Friday due to a falling oil price. JA Solar (JASO) on Wednesday announced raised shipment guidance for the first quarter 2010 sending most of the Chinese solar stocks up with significant gains. Solarfun Power (SOLF) increased 9.57% for the week, followed by LDK Solar (LDK), up 9.40%, JA Solar (JASO), up 6.91%, ReneSola (SOL), up 3.72%, and Suntech Power (STP), up 3.67%.
AgFeed Industries (FEED) surged in anticipation of good news
As one of the top gainers today, AgFeed Industries (FEED) had another gain of 4.92% to close at $4.96 on strong volume of 2.0 million shares, representing a 6.45% of the float. The company yesterday announced that a press conference would be held in NASDAQ MarketSite next Wednesday, April 14, 2010, sending its shares up 1.85% in yesterday’s session. The surges might be from an anticipation of good news in the upcoming conference. Among other gainers, Biostar Pharmaceuticals (BSPM) shares gradually climbed back from a previous low and jumped 5.32% for the day partially due to a positive commentary, Biostar: Best Small-Cap Pharma Stock, published by Rick Pearson at TheStreet.com. The stock currently has a resistance level located at $4.24.
U.S. listed Chinese stocks might boost on possible Yuan revaluation
According to the news, China Appears Set to Make Its Exchange Rate More Flexible, published by Keith Bradsher at The New York Times, the Chinese government is preparing to announce in the coming days that it will allow its currency to strengthen slightly and vary more from day to day. If any, the appreciation of the Yuan is going to increase the bottom line of U.S. listed Chinese companies, who earn their profit in Yuan and report their financials in U.S. dollars. Watch closely when the formal announcement rolls out. It will definitely give China 100 Stock Index a strong boost.
Wednesday, April 07, 2010
Chinese Solar Stocks Heat Up Again
No doubt, the Chinese solar stocks in the China 100 Stock Index are the biggest winners today led by JA Solar Holdings (JASO), rocketed 9.70%. Following a shipment guidance issued by JA Solar, Solarfun Power Holdings (SOLF) too jumped 7.91%, followed by ReneSola (SOL), up 7.54%, Suntech Power Holdings (STP), up 6.36%, LDK Solar (LDK), up 4.14%, Trina Solar (TSL), up 3.49%, and Yingli Green Energy (YGE), up 1.85%. Most of the Chinese solar stocks have been showing their strength lately after analyst reports giving positive outlook for global demand for solar energy. In addition, today’s positive reactions showed by investors, Chinese solar stocks will definitely still be in the spotlight for the following quarters. Also read China Solar Stocks Heat Up.
L & L International (LLEN) remains explosive
L & L International (LLEN), the most outstanding performer today in terms of dollars, continued to show its upward momentum. Shares broke through a new 52-week high set just yesterday and hit a new record of 52-week high of $14.30. Shares today exploded 12.52% higher on strong volume of 1.32 million shares, representing 7.78% of the float. Since the company announced its impressive earnings, LLEN has increased $5.4 or 60.74% with a market capitalization surging $146.2 million. Asia Cork (AKRK) is the biggest winner of the day in percentage terms, gaining 17.50%. Asia Cork is a relatively thin volume stock with a 3-month average volume of 23,000 shares. The company has notified that it will delay filing an annual report on Form 10-K ended December 31, 2009. The surge today is mostly of a technical correction.
Melco Crown Entertainment (MPEL) rocketed on upgrade
Melco Crown Entertainment (MPEL) was the biggest gainer in today’s trading following an upgrade from Neutral to Overweight at JP Morgan. MPEL rocketed 10.09% closing at $5.13 breaking above its 200-day moving average. The stock traded on 17.48 million shares, representing an 8.10% of the float. Resistance is now located at $5.37. Its 52-week range is $3.26-$8.45. Yayi International (YYIN) had another bounce from its previous low caused by weak first quarter fiscal year 2010 results. Shares closed at $2.40 with a gain of 6.67% on light volume.
China Stocks Weekly Recap 3/29-4/1: LLEN rocketed for the week and set a fresh 52-week high
This week from March 29 through April 1, the China 100 Stock Index comprising 100 US-listed China-based companies, decreased by 0.76% while its sub-indexes, the Panda Index comprised of 27 large capitalization companies increased by 1.12% led by Longtop Financial Technolgies (LFT), the Tiger Index comprised of 49 small or mid capitalization companies shed 2.09% led by Airmedia Group (AMCN), and the Dragon Index, comprised of 24 undervalued companies fell 0.09% led by China Organic Agriculture (CNOA).
China Stocks Make Good Provisions
As a time honored tradition, the International Stock and Bond Markets were closed in observance of Good Friday. On this annual occurrence, most businesses including the SEC are open for business. According to Panic of 1907 or Not, Trading Stops on Good Friday, the New York stock exchange has been closed every Good Friday for at least 144 years, except 1898, 1906 and 1907. 1907 was the same year of the Panic of 1907, also know as the 1907 Bankers’ Panic. This financial crisis that occurred when the New York Stock Exchange fell nearly 50% from its peak in 1906. According to The Panic of 1907 issued by Fred E. Foldvary, Senior Editor at The Progress Report, the fundamental causes of the Panic of 1907 were the flawed monetary and fiscal systems of the United States. Legend still has it that the panic of 1907 was the driving force behind not having a “Bad Friday”.
In honor of the Good Friday, I would like to introduce “Make Good Provisions”. While Chinese companies conduct a reverse merger and subsequently private placement, the make good provision can be usually found followed. It is a written guarantee that the company will meet their projections or be prepared to pay a penalty. This investor protection can then be used to measure future earning performance. The make good provision requires management to place up a portion of shares into escrow account and set up certain performance targets. The targets can be pre-tax net income, earning per share, revenue, or production capacity. If the company fails to achieve the goal, the stocks will be released to investors. Of course, if the company reaches the goal, the stocks will be returned.
Many of the companies we cover have make good provisions allowing us to perform hedge fund like calculations and stock analysis. Unlike most financial commentary, China Vesting reads the small print. Our premium newsletter subscribers will get proprietary analysis done on make good provisions. Here are examples from companies we cover.
China Armco Reports 2009 Results and 2010 Guidance
China Vesting first featured China Armco Metals (CNAM) on March 22 with the stock closing that day at $8.25 per share. China Vesting reconstituted its family of U.S. listed Chinese Public Company indexes by, adding CNAM to the China Tiger Small and Mid Cap Index, China Armco Metals is a leader in importing, sales, and distribution of metal ores and non-ferrous metals to the metal refinery industry in China.
We decided to add China Armco to the China Tiger Small & Mid Cap Index after the company was approved for listing on the NYSE Amex and following an announcement of a contract valued up to $100 Million to supply a major Chinese steel producer with up to 230,000 tons of scrap steel in 2010.
In the short time since we upgraded the company there has been some very positive news coming out of China Armco. Subsequently, the stock has traded above the $9.50 level twice in the past seven trading days. China Vesting believes that with the stock at or the near $9.00 levels that shares of the company are still a bargain.
E-House (EJ) surges on China’s potential properties market growth
E-House Holding (EJ) rebounded from yesterday’s loss following positive news about China’s property market issued by TheStreet.com. Eric Jackson, Senior Contributor at TheStreet.com stated that China is successfully transitioning to a domestically driven from an export-driven economy.
In 2008, Chinese government announced a $570 billion stimulus package which will be spent over the next two years to finance programs in 10 major areas, including low-income housing, rural infrastructure, transportation, and etc. TheStreet.com predicted that such projects would make China more self-sustaining economically, which would create support levels for China’s property market. Now wouldn’t that be sweet irony if China created a housing bubble of their own. The news helped E-House soar 5.73% with a close price at $20.12. The stock traded on above average volume of 1.00 million shares, representing a 1.75% of the float. E-House provides primary real estate agency services, secondary real estate brokerage services and consulting services in China.
Wednesday, March 31, 2010
Universal Travel Group (UTA) flies through its 50 DMA
During today’s trading, shares of Lihua International went up on positive earnings but A-Power Energy Generation System crashed on below expected financial results. Universal Travel Group surged on positive acquisition completion news while Orient Paper fell after announcement of pricing for public offering of 3 million shares. Asia Cork yesterday filed a form notifying its annual report will be submitted late and Tiens Biotech Group today too filed a late submission notification. The Tiger Mid/Small Cap Index fell hard largely due to Orient Paper who suffered a loss of 12.47%.