Agricultural Bank of China priced the Shanghai portion of its IPO (initial public offering) today at 2.52 yuan to 2.68 yuan a share. The Hong Kong portion of this IPO priced last week.
Today’s announcement keeps the deal on track for a mid-July offering. (I’ve repeatedly called this IPO an indicator of whether China’s banks will be able to raise all the capital they need and a way for investors to decide if it’s time to buy China’s stocks. For more on those ideas see my post https://jubakpicks.com/2010/06/24/chinas-stocks-resume-their-retreat-as-old-fears-re-emerge-after-yuan-news/ )
At the indicated Shanghai and Hong Kong prices the offering would raise about $20 billion. That’s at the low end of the $20 billion to $30 billion range projected for the IPO a few months ago. But that’s still enough for me to call the offering a qualified success.
That’s especially true if, as I suspect, the Chinese government is pricing the stock low enough to assure a rally in the first month of trading.
This hasn’t been a good year for China’s bank stocks. For example, shares of Industrial & Commercial Bank of China are down 22% this year on the Shanghai market. Given that Beijing has pulled out all the stops to round up big investors to make sure that this IPO goes, it would be unusual if the government didn’t engineer a solid profit as a thank you.
Despite the bear market in Chinese stocks that stretches back to November 2009, Shanghai and Shenzhen IPOs this year have gained an average of 29% in their first month of trading, according to Bloomberg.
Sig, I remember your post on pm. Thought it was right on. Still do. Its a well run company that takes care of its owners.
DJBarber,
I would expect China’s growth to SLOW, but not STOP. China has an inherent advantage few other countries have: it’s own internal growth engine.
sigli,
While FUQI’s financials look good, I’m not a fan of jewelry manufacturers. You’ll have to make your own trip to China on this one. 😉
t1151jf,
You are most welcome! I must admit, I’ve been pleasantly surprised by CSKI.
southof8,
If you’re going the index ETF route, I’m partial to EWM. I think Malaysia has more growth potential than South Korea.
Shameus,
DGW’s financials are ok, but I’m not a fan of the water play. I disagreed with Jim back when he “pumped” it (pun intended). If water becomes scarce, the free markets won’t get a chance to fix the problem, as governments will step in.
Careful of your timing here folks…
“Asia Stocks Drop on China Growth Concern; Treasuries, Yen Rally ”
http://noir.bloomberg.com/apps/news?pid=20601087&sid=aB_mY.uI0NfQ&pos=1
My opinion, not yet time for at least 4-9 months….
thomberg,
I own FEED, down over 49% 🙁
You probably got it right. It’s on the exchange and complies with the extensive SEC disclosure requirements, so maybe it’s just paranoia setting in. I like seeing it with my own eyes. China’s a big country. I don’t speak Mandarin. How do I know it’s real?
I own PM, but frankly am getting bored of it (probably a good thing to keep then). In case you didn’t catch it, I posted a while back that it might be a great way to go long the Euro but maintain downside protection.
Ed
Picked up some CSKI at 11 bucks last Thursday. Thanks for the tip.
Sig, are you sure it’s FUQI, and not FUQU, as in the invester?
If you have to ask, isn’t that an answer in itself?
If you want to play China’s demographic growth story, PM will eventually sell the marlboro man in China, just as it does everywhere else. And there’s no question it’s a real company, with real earning’s growth and a real (nice) dividend. Might take awhile to negotiate an entry but what nation’s smokers don’t like marlboros?
Ed, if you’re going to be such a Chicom pumper then I have to ask you to take a trip there, find out if FUQI is an actual company, and report back a.s.a.p. I’ve been watching them since before the Cramers jump on the bandwagon. They went up 6x post March low, then dropped right back down due to an accounting problem (minor?). The company is about as good of a demographic growth story as you could ask for IMO, but is it a real company?
Got to love US disclosure requirements.
Get your tickets. I’ll expect a report back after freedom’s day.
Speaking of China, what about DGW. It’s lost 55% since Jim put it on his watch list. (I picked it up on the slide down). The company seemed sound to me–profitable, even if those profits were dented some by a national ad campaign–and it seems to have long term potential. I can’t tell why it continues to slide. Any thoughts?
Glasswizard
I am not sure if McCain had gotten elected it would have been better….My guess is he wouldn’t have spent a 1 1/2 on a massive health care program that most of the public didn’t want.
I think it is fair game to talk about politics if it effects business like the story I posted. Also if you look at older posts of Jim’s he talked about the Bush adm. when they screwed up. policy. Is interesting that he now seems to give Obama a pass but its his site:)
Ed I completely agree- chl’s financials look good, it’s had good growth, and its price has gone nowhere. All of which is consistent with caution investing in any companies where the gov picks winners and losers (including us financials and apparently big oil). Ewy is the better play on yuan depegging than anything in the land of tienenman square.
And I thought the many bloodsucking tics comment was hysterical.
Back to the subject of China…
Any thoughts on China Mobile (CHL)? The largest telecom company in the world, with plenty of room to grow. I’m a little concerned about how the Chinese government has bent over backwards to help out China Unicom (CHU). Of the two, I like CHL’s financials much more, yet I am quite concerned about how China’s internal politics might play this one out.
djpoints–fair enough, fair enough. I’ve managed to shame us all again!
If you hate the political postings so much then why not lead by example and offer something more stimulating? I’ve noticed speech cops wanting to outlaw the interests of others but are void of adding much meaningful after shooting off a rant. I suggest that if you don’t like the political talk then engage us with something a little more insightful. IMO this would steer the discussion in the direction you desire much better than simply complaining, then zipping up.
Also, politics are essential to shorter term investing/trading. I don’t see how discussing ideas that may move a market one way or another is not essential.
Shameus – I would expect a little more sense of humour from a fellow ‘Paddy’…my derivations were a joke…duh!
I’ll throw in on the side of investing, trading, talking anything financial, helping each other make a few buck$ in the markets, or pointing out perilous errors to each other.
The political bashing and trashing and finger pointing and blaming are bad enough, but campaigning on Jim’s site is a new low. I’m definitely agin it. I’d even throw in with the “spare us, puh-leeze” idea: blocking posts like this.
Back to China: I’m also holding off a bit to see if their markets maybe drop some further. If ours do, it is likely their’s will also, even if Jim’s indicator works- the “great disconnect” has not quite occurred, is my main fear.
To all,
Can we stick to the S & P that we know and end the other S & P, sarcasm & politics ! thx.
$ is made not discussing politics!
Try again djpoints–Politic comes from the Greek for citizen, polites, and the Greek word for city, polis. You won’t be surprised to note, though, that the word is not related to polite, which comes from Latin, politus, polished.
And though I dislike random plugging for politicians around here, it’s worth noting that it’s hard to understand the economy, and reduce investment risk, without also considering the politicians who (refuse to) regulate it.
OJunker,
Do you seriously believe that it would have been any different with McCain?
You could have put Jesus in the white house and we would still be where we are today, although a steady stream of the water to wine gig could have kept us from being cranky about it.
hessler,
This guy your campaigning for is a politician, right? Then he’s probably a loser just like all the others. Remember the word politician is derived from “poly” = many and “tics” = blood-sucking parasite. Put the two together and you get a lot of blood-sucking parasites.
Let’s stick to helping each other make money in the stock market!
Anybody else around here own the pork processor FEED?
Jim
I’m disappointed that you let this political babbling go on. People like Hessler should be blocked from posting.
try again Governor
Hessler,
I watched Mitch Daniels fellate a Mexican burro named ‘Tico’ at Princeton frat party back in ’71. One word to describe his leadership style?…….vigorous.
Governer…..sorry for the typo.
Mitch Daniels for President 2012
I’m an independent and didn’t vote for Obama because this is exactly what I suspected. For those who live outside Chicago, the politics are brutal and corrupt insert Chicago politician’s name here (Blago, Rostenkowski etc.) We need Mitch Daniels, Govenor of Indiana in 2012. He’s a fiscal conservative that has Indiana doing great comparatively. Business minded and gets things done. He’s worked with the Teacher’s Unions to get things under control (my wife’s a teacher) and balanced the budget without tricks (Evan Bayh as Gov. failed to pay bills for six months so he could leave office with a surplus, ask the state police whose state issued gas cards stopped working.) Get on the bandwagon people. He’s what we need.
Personally, I am taking the “move into China slowly” approach. I have no doubt that the Chinese government will pull off this IPO. My only reservation is the possibility that the Chinese stocks will bottom before this happens, meaning I end up losing some ground before gaining. All things considered, China seems like the play for the rest of the year.
BYDDF, one of the foremost Chinese car companies and global leader in electric vehicles near a 1 month low. Time to buy is now.
If you want another reason why job growth is horrid read the following link from WSJ:http://online.wsj.com/article/SB10001424052748704846004575332810145193160.html?ru=yahoo&mod=yahoo_hs
It would be nice if Obama would actually work at getting people back to work and not kiss up to the grennies.
I am one independent who wishes I had not voted for Obama