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Strategies & Market Trends : China Warehouse- More Than Crockery -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (2071)	12/17/2003 7:21:42 PM
From: RealMuLan	Read Replies (1) \| Respond to of 6370

China, China, China, China Tens of readers mentioned the accelerating rise of Chinese manufacturing as an impetus for worldwide economic growth, the consumption of base metals mined and refined overseas; the surge of buying power among the country’s middle class. Assessment: If China’s banking system doesn’t collapse or the economy overheat in a paroxysm of inflation, it’s hard to argue against the thesis. China has become the low-cost factory to the world in much the same way that England and Germany once were, and the United States once was. Although painful to European and American manufacturers now, it is ultimately a positive development in world history. Investment plays: The Chinese are already the world’s top consumers of mobile phones; a reader proposed China Unicom (CHU, news, msgs), a leading telecom conglomerate, is a conservative way to play. Reader Ed Auerbach, who has visited and studied China, likes China Unicom but prefers popular beer-maker Tsingtao Brewery (TSGTY, news, msgs) and gasoline/chemicals refiner China Petroleum & Chemical (SNP, news, msgs), also known as Sinopec. Said Auerbach: “Sinopec is one of only two real refiners in China, and it is very undervalued.” Car sales in China have almost doubled this year, and Auerbach suggests the two refiners cannot keep up with consumer or industrial demand for energy. As a refiner, thus a net buyer of petroleum, you buy Sinopec if you believe oil prices are going to head down over the next year and the demand for chemicals will rise. If oil stays within OPEC’s $24-$30 band, then Sinopec’s earnings could be robust, potentially compelling an expansion of its current 11 P/E multiple. If you believe oil prices are going to head up instead, then consider Chinese oil and gas explorer CNOOC (CEO, news, msgs). However in a recent report, Goldman Sachs’ Asian energy analyst disagreed with this thesis, arguing that fundamental developments do not merit an upgraded opinion of the Chinese energy companies and warning that “poor capital discipline” and the potential for a reversal of liquidity in the region were big unfactored risks. moneycentral.msn.com