China Prosperity International Holdings (CPIH) 45 5/8 +34 9/16: The land rush is on! With the ink barely dry on the trade agreement document between the US and China, investors continue to buy anything related with China. The buying interest is so heavy that little known companies with little history and certainly, limited revenues, are being scooped up by investors. Even building and construction companies based in Hong Kong have caught the eye of investors as this provider of interior fit-outs services of existing and new buildings is attracting much attention this morning. While this company deals primarily in the construction of commercial properties, it has recently signed agreements for a multimedia broadband project in mainland China in which the company will take a stake in the project. In essence, the company is becoming a supplier of high-speed Internet access over the Chinese telephone network. Such news is enough to cause investors to trip over each other in order to secure a piece of what is virgin ground for the Internet. Mind you, prior to the recent surge in price, the stock had traded between twenty-five cents and 3 1/4. Accordingly, CPIH's market cap has skyrocketed from $18 million when the stock traded at 1 1/4 just a couple of days ago to over $650 million and rising. Certainly, investors are betting on the upside potential for what could be a lucrative market. But even with the signed trade agreement with China, how China operates and behaves, particularly its bureaucratic institutions, will require much overhauling as even Hong Kong-based companies have had setbacks with Ministry of Information Industry owned companies. But that's just a minor problem. The real question is how will the Chinese population afford PCs so that they can access the Internet. While the Chinese public is better off today than twenty years ago, its annual income is still third-world class. Maybe this is where free-PCs come into play. If we can give away the PCs, then everyone in China will have access to the Internet and the problem will be solved. Of course, the expense will be borne by the Internet supplier in exchange for signing an extended service contract. If so, maybe investors should also be hog-wild over PC stocks on the news that they will too experience a significant spike in demand. Somehow, this is hard to believe. RN
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