Power And Dollar

Did G20 End Unilateralism?

Many countries (Russia, India, China, …) talk about multi-polar world.  Some think this financial crisis marks the end of American unilateralism.  This G20 probably is not that marker.  However, this G20 is going toward the direction of containing political risks within America.

 

However, these countries did get some concessions from this G20.  The news release from this G20 news release gives us some ideas what concessions are:

 

More voting power will be allocated to the other countries, although the details of the future votes are unclear.  We will only know by 2011.01, says point 20.  The critical element will be if US will remain above 15%, since any vote of 15% against a resolution makes it a veto and US has 17% of the votes right now.  Russia has 2.74%, India has 1.91% and China has 3.72%.  Even Brown supports China’s quest for more votes (direct quote lacking).

 

One interesting China did in this G20 is that China insist on the new capital injection to be in bonds and not a loan.  Is China using some minute difference to make SDR more tradeable?  

 

If true, over the term, it will be a negative to companies like Merrill (NYSE:MER), Goldman (NYSE:GS), Citi (NYSE:C) etc.

 

China wants to weaken the dominance of USD.  To do so, China recently advocates a new global currency.  That is definitely not doable in this G20.  However, the direction is very clear.  And China has the time to wait for this objective.  Since China is not a democracy, its political objectives are not bounded by the election cycles.  China can wait for another one or two decades for this kind of things.  Making IMF’s loans more tradeable will facilitate the future steps (another 10 years) of making IMF’s SDR a financial product available to all, including the amateur day traders at home.  Remember how long it took Euro from an inter-government toy to become tradeable among banks and then in exchanges and then in print.  China has the time for this. 

 

Argentina and China recently signed a currency swap deal.  Such a swap helps Argentina’s currency stability or abates its currency devaluation, thus economic stability.  Why is China so into this matter?  Any international trade involving two non-US countries is still priced in USD.  Therefore, completing a trade actually involves two currency exchanges: currency A to USD and then USD to currency B.  Such a swap is to reduce these transactions.  Is it a big deal?  If a company operates 10% margin, currency exchange can easily eat up a 1% of the 10% margin.  So, in the very micro sense, a company can increase profit by 1%/ 10% (10%).  However, China is not simply looking at this bread crumb.  

 

When USD is this intermediary currency, USD has a lot more money in circulation than any other currency.  For that reason, USD is able to get a lot of it printed than it is actually needed domestically.  Internationally active entities end up having to keep a lot of its financial resources in USD.  What will they do with these US dollars?  Buy more US bonds, or even simply a DJ index for the day.  These actions make US government financing cheaper, US stocks higher P/E ratios.  All these ultimately gave Wall Street firms more experience in international finance.  American firms have been the drivers of the most large international mergers and acquisitions.

 

The positive spin of having a USD replacement to the global economy is it will contain a good portion of political risks within America. 

April 2, 2009 Posted by | Current Events, opinion, politics, US politics, wordpress-political-blogs, 中國 | Leave a comment

Who Just Financed The Auto Bailout? What Do They Really Want To Buy?

How much money are GM (NYSE:GM), Ford (NYSE:F) and Chrysler asking?  $25B.  What if someone already lent more than that $25B money to America 2 months ago?  Should America use that money for the auto industry or something else?  Like the new stimulus people talked about? 

 

Back when Treasury Secretary Paulson was having his stunt show of $700B domestically and internationally, China became the largest lender to the largest debtor (from the second largest).  While most (16) of the reported 29 markets shrank their lending to America, China actually made the biggest increase in lending this year in September (the latest data available) both in dollar amount as well as in proportion of the portfolio.  

 

China lent an addition of $43.6B, from $541.4B to $585B, largest in the year for China, as well as the largest increase in the world.  This is 8.1% increase for China.  China is actually taking a much larger portfolio risk on America.  If China had any portfolio risk management, China must have broken all their portfolio risk controls by now.  

 

China is of course serving its own interest at the same time.  Propping up US economy for a while will assure that US currency slows down its decline, slows down its decline in imports, that the pressure on currency exchange rate is dampened.  

 

This is another angle to this irony.  Competitors or not, China and America are dependent on each other.  If America is indeed in decline, as CNN reports and National Intel Council finds, then America may want to learn a lesson from England.  

 

UK has been experiencing a decline for a long time.  However, they continue to enjoy a greater influence than their economy can support.  They managed to find a buyer for their asset, political asset.  This is no different than a retiring accountant (doctor, lawyer, real estate brokerage owner) selling his book of business to a younger partner through an earn-out model.  

 

When you sell your business, you can sell the whole business up front, in cash.  Say 2 years, 3 years of the profit.  However, the buyer may have a hard time to take everything in one go, especially we are talking about a young business partner.  The young business partner needs a certain time to get acquainted with the clients to prevent client attrition, especially if the business is a relationship heavy business, like politics.  So, have two partners in the firm at the same time, the young partner gradually increase its shares over the years as the old partner reduces his work load and introduces the younger partner to the existing clients.  

 

This is what England did.  England maintained a “special relationship” with America by serving American interests since WW2, transforming its political assets to the benefit of America, re-aligns its own interests at the same time.  England did not suffer the decline France had.  If America perceives this “decline” as reality (rather than another ploy from the intelligence and military community to get more budget), then the next question is: Who will secure our future interests?  Who is the buyer?  What is our inventory?  At what price?  Who is our rep? 

 

 

With that in mind, how consequential is Sudan or Tibet or even Taiwan in this bilateral relationship?

 

 

November 21, 2008 Posted by | Barack Obama, Current Events, 美國, Democrats, economics, obama, politics, Republican, wordpress-political-blogs, 中國 | Leave a comment

What Does North Korea’s Six-Party Talk Matter?

North Korea is the next news item after G8.  Six-party talk starts on 07.10.  This is expected to be a minister level meeting.  Therefore, some big items are to be discussed.  Bush needs to accomplish something more than Iraq and Afganistan.  North Korea also wants to cash out something out of a desperate President and then start the next round of talks.  Some results will come out before11.04.  Some real progress can be made in the next Six-Party talk.  What does it matter? 

 

This will produce a lot of long term effect.  Short terms are logistics and symbolic, such as an agreement, declaration of some sort (peace), exchanging offices, etc.

 

A minister level meeting is an indication that a conclusion is in sight.  This is not just about sanctions, economic aid or light water reactor.  They are, literally small potatoes, for a minister level meeting.  Will the end of Korean War finally be an agenda item?  Finalizing the border between North and South Koreas? 

 

If these questions are on the table, then the outcome will give us a sketch of what the unification process for North and South Koreas will be.  If the meeting will not reach to that point, then it would be interesting to see what derails since Japan has no clout in Six-Party talk; South Korea has no position against North Korea; China is generally believed to want a nuclear free Korea peninsula. 

 

Of course, if all goes well, South Korea can finally convince itself that peace is here.  Fiscal spending can decrease.  The ripple effect will be: what about the military bases?  If they will stay, who pays?  The same question can be asked about the bases in Japan.  What will China’s position be in the middle of all this?

 

What about the border that defines South Korea and Japan?  If there will be mutual recognition of the two Koreas, they need to agree to each other’s boundary.  What will North Korea’s position on the border dispute between Japan and South Korea?  Will North Korea even drag the WW2 war crime into the agenda too?  How far will and can North Korea stretch Japan?  What is the price to pay to get the Japanese abductees back to Japan?

 

Or, will the talk turn first to the commercial projects?  Does Russia want more investors at the eastern end of Siberia?  How is that Siberia oil pipeline going?  Will this be a pre-text for some Northeast Asia security mechanism or trust building exercise?  Will this bring up the border dispute between Russia and Japan? 

 

Any kind of Northeast Asia security mechanism leads to re-balancing the response time of US military.  How will Japan react to that?  Since these border disputes are created by the final days of WW2, will the end of Six – Party talk pull out a long overdue clean-up talk?  That is something Japan wants to avoid badly.

 

 

If Okinawan independence movement is an institutionalized movement, then this is the time to plot their moves.  The end of Six – Party inevitably leads to Taiwan Strait, another WW2 antique problem. 

 

If so, a behind the scene negotiation between China and America is the real determinant.  In that context, North Korea is really the pivot of a lot of things.

July 10, 2008 Posted by | Current Events, Japan, korea, opinion, politics, wordpress-political-blogs, 台灣, 国事, 天下事, 中國 | 2 Comments

Where are Beijing and Taipei heading to?

Beijing and Taipei just signed their agreement to have direct flights (36 flights / annum).  In addition to establishing direct flights, both sides will also establish visa granting offices.  What are the important and relevant points here?

 

It is too early to say which entity will carry this function on the Taipei side.  On the Beijing side, it is obvious that will be China Travel Services .   This is a company total owned by the Beijing government.  The implication here is Taipei needs to have a debate about what to be done about Mainland China companies operating in Taiwan.  This is something Taiwan did not prepare for. 

 

What Taiwan should really want is: if there is any grease to be distributed on the Mainland side, make sure the grease is distributed to a non-government owned entity.  If that is not possible, then make the recipient as remotely government controlled as possible.  Diluting (or weakening) the influence of Communist Party is the goal when unification comes.  Since reciprocity is a must in an agreement like this, Taiwan has no problem in instituting such a condition on its own end.  If Mainland doesn’t like it, it just becomes another chip on the table.  So the requests can work out like these: the tourist companies need to be publicly traded which no stocks are owned by government or government owned companies.  The visa applications will be collected by tourist companies and forwarded to a government agency.  

 

In fact this office establishing was not on the original agenda.  This again shows Taiwan has a lot more development potential for its negotiation staff.  And it also shows Taiwan needs to check its own inventory: what chips does Taiwan have, especially Mainland China will get stronger annually?

 

Outside of this agreement and moving forward, what Taiwan needs is some space in the international arena.  And Mainland China President Hu is really selling the co-inhabitant atmosphere.  Hu is selling so hard for the following reasons:

1)      Hu is having his second and final term of presidency.  Taiwan is the holy grail for any Mainland China or Taipei president;

2)      Tibet gave China a bad rep and Olympics is coming;

3)      Sichuan earthquake, no matter how well Mainland China government performed during the crisis, is still a negative.

 

For relationship and confidence building purposes, now is the time to give more exposure to Taiwan.  APEC could be a place for it since Mainland China should be very confident about its own influence there.  WHO is another place since sovereignty is not as prominent as health security in that organization.  If Hu wants this as his accomplishment, then he needs to dance with Taiwan: Give more love offense to Taiwan.  

 

We all know the famous line of Roosevelt: “we have nothing to fear but fear itself.”  However, will this same line work if a Mainland Chinese president says it while the audience is Taiwan voters?

June 13, 2008 Posted by | business, China, Current Events, economics, 香港, opinion, politics, Taiwan, wordpress-political-blogs, 台灣, 中國 | Leave a comment

How a Presidential Candidate Promise Puts Country at Corner

Mainland China and Taiwan started their first negotiation in a decade.  A big topic of this negotiation is the direct flight between two sides.  This negotiation serves as an example to America how election campaign promises should be carefully drafted since the presidential election is under way, for instance the date of Iraqi withdrawal, whether to negotiate with Iran, North Korea, Cuba and the like.

 

This negotiation is the first priority for President Ma of Taiwan since one of his campaign promises is direct flight starting on July 1 of 2008.  

 

This campaign promise possibly led the negotiation team to have a very short time frame to draft their agenda and options during the negotiation and subsequently affect the negotiation result.  

 

Passenger flights are of top priority since the photo op of passengers getting off the plane is too valuable.  Therefore, the goods transportation is likely to be off the table.  However, that can be of higher importance to Taiwan.

 

Furthermore, Taiwan possibly left other aviation priorities off the tables.  Here are a few:

 

1)      Can flights fly to a second destination within the territory?  Example:  can a flight from Taiwan to Shanghai fly to Beijing afterwards?

2)      Can flights fly to another country afterwards?  Example:  can a flight from Taiwan to Shanghai fly to Japan afterwards?

3)      Can airlines establish maintenance hubs in the other’s territory?  

 

All these questions actually benefit more for the Taiwan side than the mainland side.  However, once a negotiation is over, another aviation negotiation probably will take another few years while the governments tackle other big political items, such as sea ports.  Thus, the next aviation negotiation probably will begin with another president term at best.

 

Now why are they important?

 

For the first question, Taiwan is a much smaller space. It has a lot fewer air traffic nodes.  The gain for Mainland airlines is actually small, especially the number of flights and airlines are supposed to be reciprocal in aviation negotiations.  However, Mainland China has another 100 cities each with a population of 1 million.  The gain for Taiwan aviation industry will take years to realize financially.  

 

For the second question, President Ma of Taiwan’s business plan is to be the bridge to China for the West, analogous to UK to continental Europe for America.  For that to realize, the first item to tackle is for Taiwan to become a transportation hub.  The second question becomes vital.

 

The negotiation is about flight between 2 sides and not about domestic aviation market.  However, having a hub in the other side is beachhead to fight the domestic market.  Since the mainland China’s domestic aviation is the ultimate price for Taiwan aviation industry, if economic integration is to follow through, eliminating this big hurdle is important.  The scale of a hub is of course negligible at this stage.  However, this will be an expensive item to negotiation in the future.  While the goodwill is overloaded, this should be item to cash in right now, right here.  

 

Aviation business has a long investment cycle.  Aviation manufacturing has defense implication.  Taiwan needs to muster every advantage at every step to prevent a big swallow by Mainland China in the future.  Therefore, this third question will add a lot of points to Taiwan.  If ignored, Taiwan will give up a great asset for a future show down of unification negotiation.

 

Because of a promise on a date of direct flight, Taiwan probably forgot a basket of items.  American voters have to see if the candidates are giving promises that will put the future presidency at an inflexible corner.

June 12, 2008 Posted by | Barack Obama, China, Current Events, economics, election, Election 2008, John McCain, mccain, obama, opinion, politics, Thoughts, wordpress-political-blogs, 台灣, 中國 | Leave a comment

Is A China-Japan Joint Military Exercise Next?

A relief request from China is new.  It is so 21st century of China.  However, it is a request to Japan military from Beijing government.  The announcement came from the Foreign Ministry.  The request was previously submitted to the Japanese military by the Chinese military.  The significance is Japanese military is prevented “operating” overseas.  China (Beijing or Taipei) has been against Japanese military operations overseas in different degrees.  Thus, this request originating China is very unusual.

 

In fact Chinese military first cleared out the request with Japanese military before the diplomatic request.

  

The material requested are tents, blankets, and food, which require no expertise of Japanese technology or products uniquely produced by Japan.  The same material can be supplied by US (with bases in Japan), Taiwan, or South Korea.  Chinese military wants to strengthen its relationship with Japanese military. 

 

If the motive is about strengthening the relationship and the material and the transportation are the primary motives, then the intent to strengthen this relationship is of interests to the US.  

 

To strengthen the relationships between these two military is to build trusts not only among these two militaries but also the governments.  Japan’s primary defense need is North Korea and China.  So, China is trying to use this opportunity to remove itself as a military threat against Japan, similar to China’s insistence on bringing all sides (six sides) to the nuclear talks with North Korea.  

 

Why?

 

A peaceful Korea peninsula, whether it is a unified Korea or not, is what South Koreans need to justify the removal of all American bases.  Convincing Japan that China will not avenge Japanese invasion and war crimes from the 20th century is the only thing for Japan to remove all American bases.  

 

Japan’s domestic operation only policy for the military is a result of WW2.  And as a result, Japan always feels its incompleteness as a sovereign country.  Is China passing a signal that this domestic operation only policy is negotiable?  Or is this an opportunity provided by China for Japan to earn its merit of a complete sovereign country?  What is next? A joint miltary exercise with Japan?

 

Japan has also been convincing the rest of the world that Japan deserves to be a member of the UN security-council.  China has been the main opponent for that exactly because of Japan’s role in WW2.  

 

Hu’s recent visit in Japan stressed the point that China is only asking Japan to recognize history and not to deny history and that China has no interests in retribution.  All Chinese leaders said something similar in regard to “no retribution”.  However, the difference with Hu is he stressed that Japan need not “deny” history.  Is this a move from Hu to melt the ice?

 

Or is this completely a humanitarian effort?

May 29, 2008 Posted by | China, Current Events, Japan, opinion, politics, Thoughts, wordpress-political-blogs, 中國 | 2 Comments

First Democratically Elected Chinese Mayor

Democracy and human rights often accompany each other when the developing countries are criticized.  Ever since Bush 2, US is now on the human rights violation list too.  China is of course a major human rights violator.  However there is something interesting going on:  China is contemplating having a mayor (among 18 other political reforms) democratically elected.  Protecting human rights requires a reliable judicial system.  The outcome of this study becomes important not only for China human rights activists but also others who study China’s financial sector.

 

Well, China’s mayors have always been “democratically” elected.  It’s just they always have one candidate.  But now, China is getting a (yes, one) mayor position to be elected with multiple candidates.  The proposal is not studying the question of “if” but “how”.

 

What is the significance?  Why there? Why now?

 

The city is Shenzhen, a city next to Hong Kong.  The first impact is on Hong Kong.  Multiple candidates are allowed for Hong Kong mayor election.  However, the mayor is elected by 800 electors, hand picked by China.  However, China’s election is always elected by residents of the municipalities.  Therefore, once Shenzhen’s proposal is implemented, this will be a pressure for Hong Kong to have a more democratic election.  

 

Shenzhen has always been the most open spot in China.  It is the closest spot Hong Kong, the place for most open information, most new ideas.  This city has the Nasdaq of China.  The first hi-tech companies started in Shenzhen.  It has the longest traditional of R&D firms in China.  Motherboards, solar panel companies were all first started here, either through Hong Kong capital or through foreign companies with a management base in Hong Kong.  This would be the place with the most educated voters.  In addition, this city has the least political influence of all economically charged municipalities, unlike Guangzhou (the capital of Guangdong province) Shanghai or Beijing.  So, of all suitable municipalities, this city has the least political risk.

 

This election is still years away since it is still in the proposal stage.  Elections are anything new to China.  Timing is the second significance.  China chose to start this process now probably in anticipation of more serious talks with Taiwan.  Taiwan has a mature democracy.  For a unification of Mainland China and Taiwan, Taiwan will obviously demand a more democratic Mainland China, as a delay tactic or not.  Therefore, some sort of reform will be inevitable.  Thus, this is the pre-emptive strike on the Mainland China part.  

 

Among the 18 other items are direct election of congressmen (instead of Communist Party appointment); more judicial independence; transparency of public officials’ income and asset; public debate before voting; the separation of executive, legislative and judicial powers; strengthening the management of public finances; monitoring the government owned enterprises; reform of public education; reform of public medical services; delegation of local authorities to manage local economy.  

 

The implementation of judicial reform will strengthen the credibility of Shenzhen courts, especially when Shenzhen is getting more and more complicated cases, not only personal property dispute, but also securities laws, patent laws, foreign trade laws.  The multiple candidate election and direct election of congressmen will give more influence to the new middle class residents, who tend not to be party members.  These changes will actually make Shenzhen a more attractive securities market and become more competitive against Shanghai’s securities market.

May 28, 2008 Posted by | China, Current Events, election, 香港, opinion, politics, Taiwan, Thoughts, Tibet, wordpress-political-blogs, 台灣, 中國 | , | 2 Comments

Lessons Learned? What About Tibet?

The latest toll from CNN is more than 20k deaths, 160k injured, 15k still missing, 5 mil homeless, 4400 aftershocks, and unspecified number of dams are in danger, what can we learn from this natural disaster?  China has successfully minimized, thus far, the domestic political fall out of this natural disaster, can China turn this natural disaster into a contribution to the rest of us?  Will China use this event to let the Tibetan issues drop off the radar?  This could be one event that China can score some points before the Olympics starts.  

 

First of all, China finally learnt to take the initiative to release information themselves.  On the contrary, Myanmar is reluctant to release any information.  Although the freedom of the press is still very limited, by taking the initiative to release the news, even the bad news, China has now become a reliable source of information.  The threat of rumor (of disease, of higher death toll, of dam damage, of corruption in the local areas, inefficiency of government led relief effort) has been starved off.  This leads to a government of higher mandate, rubbing the next round of unrest off to appreciate the governance of the Beijing government.  

 

Secondly, accepting foreign experts to help eases the diplomatic tensions with Japan and leads a more peaceful atmosphere with Taiwan.  It also shows the confidence of Beijing government. 

 

Thirdly, China used different military units to assist the relief effort.  This earned a lot of credit among the overseas Chinese for the Chinese military due to Tiananmen Massacre back in 1989.

 

The west will see if China will use this event to divert all international media attention away from Tibet and quietly cancel all the Tibetan talks that have been in progress.  Is China using this as a pretext to their advantage?  If China can honor the promise of another round of talk with Dalai Lama’s representatives, then China can show some positive outcome in this issue, China may be able to weaken the international pressure on this front.  

 

A painful lesson China may have to learn is big infrastructure project are not only costly to build and maintain, but also risky to sustain over a long period of time.  Man is infinitely small before any kind of natural disaster.  Although no nuclear energy facility has been damaged, the stati of different nuclear related production facilities remain unknown to the outside world.  Many dams in the region are still under threat.  Now millions of residents are now under threat.  If China can share the lessons with the rest of world, China can now truly make a tragic disaster into a lesson for all to benefit.  

 

What kind of dam designs is more stable?  What kind of fault line makes an ideal dam location unsustainable?  Once we factor in the risks involved, are these dams still as financial viable as the electricity they generate?  Even though Japan may have the best expertise in earthquake, Japan never has that kind of experience in dams.  Netherland probably is the expert in dams, but they never experience with dams on fault lines.  Can China overcome this event and share the experience?  This will convince the hawks in the west that China is truly a peaceful stakeholder.  

May 16, 2008 Posted by | China, Current Affairs, environment, opinion, politics, Thoughts, wordpress-political-blogs, 中國 | Leave a comment

Double Standard On Myanmar vs China?

Updated information about China Earthquake And Your Money is edited into the same link.  Myanmar is not accepting aid staff.  What about China?  There is no news about China accept to date.  China still has 26,000 people under debris.  However, we do not see any media response to this refusal.

 

In fact Thailand got a very firm answer that Myanmar will not be accepting aid either.  There was an international outcry.  Robert D. Kaplan, a national correspondent for The Atlantic and a fellow at the Center for a New American Security even used Albright’s argument that human rights trumps state rights to justify unilateral aid assistance.  

 

Myanmar’s worried about these aid staff.  Myanmar suspects the aid staff will facilitate some covert operations of the west, or some sort of color (Orange in Ukraine) revolution will come out of these aid staff.

 

Currently, China only accepted civilian, non-governmental organizations’ (NGO) aid. 

China has declined aid offered from Taiwan, not responded the offer of rescue dogs from Czech, among many others.  Is China embarrassed about accepting aid?  Is China also worried about foreign governmental staff?  Is this a double standard of the media?  Or does it actually expose some special interests of the countries offering aid staff to Myanmar?  This uneven media/international response toward China may only make Myanmar more suspicious.

*The Institute for Radiological Protection and Nuclear Safety said China’s governmental research nuclear reactors and reactor fuel production facilities in China could be damaged.  They are within 44 miles to the center.  Nuclear generation sites are 600 miles away and should be fine.

May 14, 2008 Posted by | China, Current Affairs, Myanmar, nonprofits, opinion, politics, Thoughts, wordpress-political-blogs, 中國 | 3 Comments

China Earthquake And Your Money

CNN continues to report the newest death toll caused by China’s earthquake.  What stocks are affected by this earthquake?  This natural disaster in China is a lot closer to America than Myanmar’s simply because China is a lot more involved in the global economy.

 

More than 2 dozens of Chinese public traded companies can be found in the States either as stocks or as ADR.  The PetroChina (NYSE: PTR) is the first one to be affected because it has fields in Sichuan, the province where the quake occurred.  Those oil wells are now shut.  This company is the largest oil company in China.  Nippon Oil (TSE only) has a joint venture with PetroChina.  

 

China Telecom (NYSE: CHA) may get the worst hit since it has 10% of all land lines in the region.

Sinopec (NYSE: SNP), which is developing a field in Sichuan may see decrease in revenue.  Damage to this gas field is unknown.

 

China Life (NYSE: LFC) is also dropping since it is expected to have a lot more life insurance claims.  This life insurance company is the largest in China.  The selling pressure is short term since the life insurance penetration in that area is low.  In fact, the price has come back up after the initial drop.  This selling pressure only lasted for 1 day.

 

PICC Property & Casualty (other-otc: PPCCF) may actually get a bigger hit than the life insurance companies.

 

Negative impact on HSBC will be minimal since this bank has very exposure to this geographic area.

 

Qingling Motors (OTC: QGLHF) will get negative impact.  This area has some exposure to auto factories and circuit design.  However, the foreign trade is not concentrated here. 

 

Huaxin Cement’s price is going up already, in anticipation of more infrastructure projects.  Huaxin is traded in Shanghai only.  Lafarge SA (OTC: LFRGY), of France, is the parent company of Huaxin.  Cement company Anhui Cement is other-otc: AHCHF.

 

Construction equipment companies that have a presence in China will do well.  Check Caterpillar’s (NYSE CAT) exposure in China or Hong Kong.  Its competitors are Deere, Gehl.  Astec builds road construction equipements and components (NASDAQ ASTE).  Check its exposure in China or Hong Kong.  A strong exposure will be a good sign.   

All medical supplies companies are going up in China and Hong Kong.

 

Foreign companies such as IBM, Intel, Wipro (NYSE: WIT) have sites here.  Japanese Toyota and Hitachit also have sites here. 

This earthquake will drive up inflation in China.  Given the tourism brought by Olympics, Chinese yuan is expected to appreciate until the end of the games.

 

If your desired company cannot be found in the States, find a proxy company in Hong Kong stock exchange, or ADR in the states.  If you are interested at funds, then get an Asian (or Far East) fund that has a heavier emphasis of infrastructure and medical supplies industries, a heavier emphasis in Hong Kong.  A lot of companies in China may get suspended if it has a big swing in price.  Hong Kong does not have such restriction.  This gives your mutual fund manager a greater flexibility.

May 13, 2008 Posted by | banking, business, China, Current Events, economics, 香港, finance, Investment, market, opinion, politics, stock, Thoughts, trading, wordpress-political-blogs, 国事, 中國 | 2 Comments