Wednesday, June 25, 2008

US-listed Chinese Stocks in Focus -- Xinhua Finance Consumer Confidence Index Inches up

Beginning in September of 2007, I started to get accustomed to reading reports of slumping consumer confidence in China. Every month, Xinhua Media, one of China's premier financial information and media service provider emails me a copy of their benchmark consumer confidence index they started in April 2007. This month (June), consumer confidence inched up for the second time since September of 2007, the other gain being the month of March-- which can partially be attributed to recovery efforts after a week long freezing snow storm which crippled southern China in late winter.

In this case too, investors should remain cautious, as the analysis released along with the new figures in indicate, confidence rose in certain areas of China and dropped in others. Among China's major cities, consumer confidence rose in Beijing and Ghuangzhou while it fell in Shanghai. Overall, below is long-term picture of the Xinhua Finance eziData China Consumer Index.

Xinhua Finance is one of China's domestic premier financial information and media service provider. Listed on Tokyo's Mothers Board (9399), Xinhua Finance is headquartered in Shanghai, with a global network spanning 12 countries worldwide.

Beijing's gain can be attributed in large, due to the upcoming Olympic games in August. Overall gains in the index, as described in the report can be attributed to two major factors;

"continuously easing general price rises due to the central government appreciating the RMB (yuan) and acting correctly to stem inflationary pressures. Second, encouraged patriotism among average Chinese from the Wen Chuan earthquake rescue efforts, which in a very abstract sense thereafter encouraged consumers to remain more enduring when facing difficulties."

Now the investor at this point should ask him/her self... Is it time to get into China? Big names like Jimmy Rogers say yes, but realize they know the market beyond just the scope of China. Rogers knows and analyzes much of his China picks within the larger context of Asia and more particularly, the global commodity market.

Jimmy Rogers for instance has recently focused on Taiwan's market, and made comments on Japanese stocks being relatively "under-valued." This does not mean it's time to pour your assets into stocks from the mainland, although major financial media that blizt's viewers with anything he says have interpreted it as such.

For the long term investor out there... It is difficult with a lack of transparency and speculative investment in many Chinese ADR's, to really value most stocks accurately. No less, here are some equities on my China watch list, two of which I currently own.

Note I do not own all these stocks, I'll admit to buying shares of XFML and CHCG.OB recently, and that I used to own CAGC.OB, but, I no less still follow these stocks and feel these five in particular have become more attractive in light of recent pull backs, leaving XFML, CHCG and CAGC under-valued by the market.

GRO and CHNR less so, and I know less about the two companies leaving me apprehensive about investing in either. I also question the true profitability of CHNR, which I feel has a great deal of hidden debt will find the Iron, Zinc and Copper mines in operation and their exploration projects within China will not yield as much raw material as the company has projects.

1) Xinhua Finance - XFML, as described above is a leading provider of financial news in China. The company I receive the monthly consumer confidence report from, and which I am personally invested, is involved with more than just financial news. They provide advertising services to upscale Chinese firms, own the rights to certain TV stations in China, own newspapers (which are not suffering declining circulation as they are in the US and still used as the primary medium of obtaining news in the mainland), among other operations.

2) China 3c Group - CHCG.OB.

*** now for three commodity related plays, two in the agriculture sector and one in metals, which I am personally weary of despite all the hype surrounding it-- China Natural Resources Inc

3) China Agritech Inc - CAGC.OB

4) Agria Corporation Inc - GRO

5) China Natural Resources Inc - CHNR



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