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To: Larry S. who wrote (50320)	1/5/2004 8:19:03 AM
From: E.J. Neitz Jr	Respond to of 53068

Credit Ratings in China--WSJ ( Are you sure you know China) Can Be Mere Guesswork By JOEL BAGLOLE Staff Reporter of THE WALL STREET JOURNAL HONG KONG -- International credit-rating companies charging into China are operating in such darkness that many investors question the value of their work in the country. Demand for credit ratings -- an assessment of how willing and able a borrower is to repay debts -- is growing as more Chinese companies raise capital from international investors. But faulty accounting, poor corporate governance and a lack of disclosure hamper the raters' efforts. China doesn't adhere to international accounting standards, and publicly listed companies can be controlled by private parent companies that aren't required to disclose financial information. To make matters worse, the government issues misleading statistics. Whether rating companies succeed in enhancing transparency among Chinese companies is a key test as the nation attempts to develop world-class capital markets. If Fitch Ratings, Moody's Investors Service and Standard & Poor's can push companies into releasing more information and their ratings are seen as reliable, that could help bolster confidence in China as it looks to foreign investment to fuel its growth. Though China is opening, it's a slow process. Brian Colton at Fimalac SA's Fitch Ratings in Hong Kong, rates China's sovereign bonds. Part of his job is to assess China's economy. But Mr. Colton says he's never sure how reliable the data are. He often tallies the gross domestic product figures of China's 23 provinces and seven administrative regions and finds the total is different than the national GDP figure issued by Beijing. "Sometimes you have a column of figures that don't add up to the total at the bottom. It's that bad," he says. However, China is a potentially lucrative market, with more than eight million corporations and 130 banks hungry for capital to expand. Since 1998, the annual value of initial public offerings in China has increased nearly 50% while bond issuance has doubled, according to financial data provider Thomson Financial. So far, the international ratings companies combined have rated fewer than 100 Chinese enterprises. Ratings companies charge as much as $80,000 for an initial rating and up to $40,000 a year to maintain surveillance on companies and adjust ratings as needed. Critics say the raters' work in China is useless because it's based on limited information. They are also alarmed by the willingness of the companies -- which have been criticized in recent years for failing to spot trouble at Enron Corp. and other accounting blowups -- to work around big problems. "If you have any credibility, you would probably be rating everything junk in China," says Scott Kennedy, an assistant professor at Indiana University in Bloomington, Ind., who specializes in China's political economy. Brad Aham, an Asian equities portfolio manager at State Street Corp., who has $2 billion invested in emerging Asian markets, puts it this way: "Credit rating agencies can keep the markets abreast of ongoing structural problems in China, but in terms of data that affect markets on a daily basis, rating agencies aren't that useful." Fitch, Moody's and McGraw-Hill Cos.' S&P are focusing on the Chinese government's sovereign bonds and companies listed on stock exchanges outside the mainland, where disclosure is better than at nonlisted enterprises. Publicly listed companies such as China Mobile (Hong Kong) Ltd. and Huaneng Power International Inc. have had their bonds rated investment grade. Charles Chang, an associate director at Fitch Ratings in Hong Kong, was able to rate a Chinese retailing company that was considering a bond issue in 2002, despite the fact that there was little information available about China's retail sector or the company's finances. To compensate, he constructed "stress scenarios," and hypothesized about the company's ability to cope if retail sales fell sharply or the economy slowed suddenly. "It wasn't easy," he says. Fitch and Standard & Poor's have begun conducting public-information ratings, which use publicly available information and media reports to evaluate a company rather than consultations with management. Fitch and S&P say such ratings are necessary in China, where company cooperation is hard to get. But in China such ratings can rely on censored media reports. Moody's has stopped public-information ratings, saying they're inaccurate. Indiana University's Mr. Kennedy says the rating companies give Chinese institutions inappropriately high ratings because they weigh favorably the country's huge economic growth and government support of state-owned enterprises. Fitch, Moody's and S&P each tie their ratings on China's banks to the ratings on the government's bonds. But executives say they have to do this because the country's banks are insolvent, with nonperforming loans accounting for as much as half the total loan portfolios. Ratings companies say problems are inevitable as China moves from a state-planned economy to a free market economy. They add that they are more critical than China's domestic credit-rating firms. And they say that China is making efforts to improve corporate governance, making it mandatory for public companies to report financial data on a quarterly basis rather than every six months and opening two national accounting institutes to train people in international accounting. "You'll never have all the facts," says Wei Yen, a China bank analyst at Moody's, a unit of Moody's Corp., in Hong Kong. "You get what information you can and make a decision based on your logic."

To: Larry S. who wrote (50320)	1/5/2004 8:25:28 AM
From: Wowzer	Read Replies (1) \| Respond to of 53068

Hmmmm no, don't recall, is it worth staying last for?

To: Larry S. who wrote (50320)	1/5/2004 2:03:08 PM
From: E.J. Neitz Jr	Read Replies (1) \| Respond to of 53068

Big-time bullish Veteran strategist Wien sees stocks rising, gold at $500 and Osama nabbed. January 5, 2004: 1:01 PM EST By Meghan Collins, CNN/Money Staff Writer NEW YORK (CNN/Money) - Morgan Stanley strategist Byron Wien has made his forecasts for 2004 -- his 19th straight year of looking into the future -- and they are awfully bullish. This year, however, the veteran market watcher included a second list of alternative, more bearish predictions, but said they didn't mean he doesn't believe in the first set. "I am doing this because I think a strong case can be made for either set and because I think it is constructive to try something new," Wien said in his "10 Surprises for 2004" report. "Don't think I'm copping out. I'm committed to the positive set and if the year turns out negatively, I promise not to pull out the bearish surprises and say I had the right idea all along, but just went a little bit astray when I announced my bullish preference in January." Wien expects the Standard & Poor's index of 500 stocks to surge another 18 percent to about 1,300 this year. He accurately predicted last year's stock rally -- the S&P 500 rose 26.4 percent versus his forecast for a 25 percent gain. He said the Federal Reserve will hold short-term interest rates steady all year, with inflation staying low, and predicted that the yield on the 10-year Treasury note yield will stay below 5 percent. It hovered around 4.40 percent Monday. But despite strength in stock and bond prices -- as well as in the dollar -- investors will flock to precious metals as they seek greater returns. Wien sees gold hitting $500 an ounce and silver soaring to $8 an ounce. Wien also predicted that Osama bin Laden will be captured, and that no major terrorist attack will hit the United States this year. The mutual fund scandal will drop out of the spotlight as companies adopt stricter restrictions, avoiding a pullout by investors, he said. He claims budget problems in Germany and France will hurt the euro, and that the dollar will rebound against the European currency. He sees the euro buying $1.05 versus about $1.26 currently, near its highest ever. Among the top stock performers of 2004: Pfizer, Wyeth, and Bristol-Myers Squibb, due to the presidential candidates touting the need for more innovative drugs and research. Wien also said multinational stocks would come back into favor, especially high quality companies such as General Electric, Microsoft, Honeywell, Coca-Cola, and Altria. ConocoPhilips and BP will be big-cap outperformers after oil moves above $40, he said, due to deteriorating political conditions in Saudi Arabia. Elsewhere, Wien said stocks will rise in Japan, boosted by the economy, with the Nikkei rising to 13,000 from about 10,825 Monday. On the political front back home, he said Dick Cheney will not run for re-election with President Bush, but will be replaced on the ticket by Senate majority leader Bill Frist. Meanwhile, Defense Secretary Donald Rumsfeld and his deputy Paul Wolfowitz will resign, saying their work is essentially done, he predicted. But in his more bearish take on the new year, Wien focuses on increasing inflationary pressures and their impact on stocks, bonds and currency. Among his alternative predictions: The S&P 500 runs out of fuel after an early rally and falls back to 1,000, the 10-year Treasury yield jumps to 6 percent, the dollar declines and the Fed jacks short-term rates up to 4 percent. And despite catching bin Laden in 2004, a terrorist attack in the United States temporarily increases the risks for investors and slows the Bush re-election campaign. In addition to correctly forecasting last year's stock rally, Wien called the pickup in the economy and solid gains in the housing market, as well the fact that tax law changes would encourage companies like Microsoft to begin paying dividends. He also called oil at about $30 a barrel. But he also made some predictions that never came to light, including the resignation of German Chancellor Gerhard Schroeder, a Hillary Clinton bid for the presidency, the resignation of former Iraqi leader Saddam Hussein, and the resignation of Fed Chairman Alan Greenspan. Wien also missed when he said the Fed would raise rates this year and the 10-year Treasury yield would hit 5.5 percent.