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Technology Stocks : Qualcomm Incorporated (QCOM) -- Ignore unavailable to you. Want to Upgrade?

To: r.edwards who wrote (72653)	5/28/2000 12:43:00 AM
From: JGoren	Respond to of 152472

China trade deal bullish for stocks Investing tip of the week: Be more flexible with limit orders [http://aolpf.marketwatch.com/source/blq/aolpf/archive/20000526/news/current/weekend.asp] By Deborah Adamson, CBS MarketWatch Last Update: 6:37 PM ET May 26, 2000 Personal Finance News LOS ANGELES (CBS.MW) -- Wherever you stand on the China trade issue, at least there's one thing people generally agree upon: opening up the Communist country's markets will be good for American business. "It's a very, very positive trade agreement...(U.S. businesses) will have new sources of revenue that will translate to the bottom line." Kim Wallace Lehman Bros. And what's good for American business ultimately will lead to higher stock prices as sales and profits rise across many industries, said Kim Wallace, chief political strategist at Lehman Brothers. "It's a very, very positive trade agreement," he said. The deal will benefit "well-financed, well-positioned U.S. businesses with the vision and money to enter China. They'll have new sources of revenue that will translate to the bottom line - new lines of revenue that aren't figured into estimates today." This week, the House of Representatives voted to give China "permanent normal trade relations" status, a move that eventually will ease its entry into the World Trade Organization and open China's market to foreigners. Under the trade agreement, Chinese taxes or tariff will drop to an average 17 percent from 23 percent -- making U.S. goods cheaper there, Wallace said. Import quotas -- the limit on how much goods China can take in yearly according to industry -- will disappear. The agricultural, telecommunications, financial services and auto industries quickly stand to gain from an open Chinese market, he said. Companies such as Boeing (BA: news, chart) also will benefit, he said. Investor's Toolbox Stock Splits 52-Week Highs/Lows Volume Alerts Dollar Volume Leaders Price Gap Alerts Insider Buys/Sales Stock Buybacks Analyst Rating Changes International Stocks Active Trader Real-Time Headlines Stock Screener DRIP/DSP Center Interactive Charting Other Tools The Seattle-based aerospace company is one of several American companies he favors in light of the deal. The others are Qualcomm (QCOM: news, chart), IBM (IBM: news, chart) and Chinadotcom (CHINA: news, chart). See stock picks. Once China gains entry into the WTO, it will have to abide by the same rules as all the other members, Wallace said. How can a third-world country with average per capita income of less than $1,000 a year afford U.S. goods and services? Lawrence Lau, senior fellow at Stanford University's Hoover Institution and an economics professor, contends that a lot of sales will be to Chinese businesses. As for the consumer market, Lau said the richest 5 percent of the population -- about 60 million people -- can afford imported goods. The number of customers also will grow as open trade enriches more Chinese people. To be sure, the road from potential riches to real profits is paved with many pitfalls, as many companies realized during the rush towards this market in 1990s. They grappled with issues ranging from government flip-flops to widespread graft and corruption. But analysts say American businesses with a Chinese presence already deal with these problems there. The trade agreement just loosens Chinese control over business. Entry into "the World Trade Organization and (getting) permanent normal trade relations level the playing field," said Chris Legallet, chief investment officer for Newport Pacific Management, a specialist in Pacific region and international investments that manages $3.5 billion in assets. Market action and top news News that the House voted in favor of PNTR for China lifted stocks mid-week on high volume, spurring hopes that the market finally has seen a bottom and big money from institutional investors have come back. But those hopes were deflated later in the week as the buying spree flagged. The Dow Jones Industrial Average ended Friday at 10,299.24, down 3.1 percent for the week, while the Nasdaq was down 5.5 percent to 3,205.11 and the S&P dropped 2.1 percent to 1,378.02. See Market Snapshot. What's critical in coming weeks is more follow-through days for the market -- an up day on high volume again -- a lift in the strongest stocks, and better market breadth, before a bottom is in sight. aolpf.marketwatch.com