Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : HONG KONG -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (1382)	3/9/1998 6:32:00 PM
From: RealMuLan	Read Replies (1) \| Respond to of 2951

Doug: you might like this article from this week's AsiaWeek -- Red Chip Frenzy Again? China-backed firms are pricey but worth a look WHERE AMIDST THE ASIAN economic debacle can an investor find a country with strong economic growth, a solid currency and a proven government economic team? China stands at the head of a very short list, and that nation's long-held reputation as Asia's emerging economic giant and new-found gloss as an island of stability both tempt investor attention. The downside? China's economy faces huge hurdles as it restructures, and China-related stocks are notoriously speculative and sentiment driven. Still, analysts say that long-term exposure to China is bound to reap gains. One popular way to buy a piece of China is through Hong Kong-listed "red chips" -- shares in Hong Kong companies controlled by mainland Chinese parents. So popular, in fact, that the market's red chip index has rocketed over 80% since hitting bottom in mid-January, compared to the blue-chip Hang Seng Index's 40% gain over the same period. Why? Punters are hoping the just-opened National People's Congress (NPC) in Beijing (see story on page 30) will act to boost the economy and help red chips. But while the Hang Seng has recovered to within 30% of its August 1997 all-time high, the red chip index is still 57% off its peak. "For long term investors, I think China still offers growth," says Credit Lyonnais Securities Asia analyst Ken Ho. "While some red chips are approaching high valuations, we are not seeing anything like the heyday of 1997." Bottom line -- you may not double your money, but you can earn a good return over a two-year period with judicious stock picking and good timing. The timing part is easy -- wait until after the NPC. "Investor enthusiasm will cool down when all the news is out and rumors cleared up," says an analyst at Seapower Securities in Hong Kong. "If you are looking at long term investment, after March will be a good time to see what's going on." The picking part is not as simple, because the red chip formula that powered the 1997 frenzy is unlikely to work quite as before. It used to go like this -- a red chip would issue new shares and use the cash to buy assets cheaply from its parent, the new assets would balloon the company's turnover and profit, allowing it to issue more shares and go around the circle again. Now, the economic turmoil has stifled the new issues market. So how to pick? Analysts agree -- go for quality. "The market will polarize quality and lack of quality further," says a European brokerage analyst in Hong Kong. "Last year, everything would go up. Now fund managers have cooler heads." The key considerations -- size, strong parents, and cash on hand. "My favorite is Shanghai Industrial," says the Seapower analyst. "They have net cash and they are the window company of Shanghai Municipality." The cash, left over from share issues last year, will allow Shanghai Industrial to keep making acquisitions to add to its interests in cigarettes, packaging, pharmaceuticals and toll roads, while its parentage assures it of access to assets in one of China's most vibrant regions. But good parentage does not justify paying too much. Beijing Enterprises, which is involved in everything from transportation infrastructure to the city's McDonald's franchise, is on most analysts' wish list, but its shares are already sky high. "This is the only conglomerate under the control of the Beijing municipal government so that justifies a premium, but at the current level it's a bit expensive," says Wilson Yung of Nikko Research Center in Hong Kong. A strong position in a growth industry is another buying point. Container-leasing firm COSCO Pacific, controlled by one of China's top shipping companies, merits a look, says the European brokerage analyst. "Even though China's export growth will slow this year, containerization is a major growth factor behind the expansion of China's trade, and COSCO can still enjoy very high growth," he says. So don't lament missing the rally -- look past the froth and do your homework. All money values in U.S. dollars except share prices, which are in H.K. dollars. Sources: Asiaweek Research, Bridge Information Systems, The Estimate Directory By Jonathan Sprague / Hong Kong pathfinder.com@@kF4cR3DkjgIAQGHS/asiaweek/current/issue/biz3.html

To: RealMuLan who wrote (1382)	3/10/1998 12:08:00 PM
From: Tom	Read Replies (1) \| Respond to of 2951

Yiwu: Thanks very much for posting the Asia Week piece. I'd forgotten to look at it this past weekend. The article, especially the final passage, is right on top of the truth. It also permitted me for a moment to escape my few concerns over the current situation and, as I am want to do at times, think of what great possibilities exist for the future of China and the region. Thanks again. Tom

To: RealMuLan who wrote (1382)	3/11/1998 2:10:00 PM
From: ----------	Read Replies (1) \| Respond to of 2951

This article is very interesting for a couple of reasons. First, I find it refreshing that the Government practices what it preaches. Beijing has allowed free press, as witnessed in the Hong Kong papers and the BBS sites I have seen in China, regarding economic issues. They do not allow political dissention. Beijing has also separated the two. While they maintain a "hard line" on political & territorial issues, they are , IMO, being a good economic neighbor to their fellow Asian countries. They have taken the very logical approach that economics & politics should not always mix. I have no idea how this is perceived by others. But to me, it shows sound economic reasoning, and a leadership with enough confidence in themselves to set politics aside and do what is best for the ENTIRE region. Suharto & Indonesia could learn a lesson here, as Suharto has continued to use the economy as a political tool for his personal gain instead of doing what is best for his country, or for the region. Just my opinion. Doug