Olympics - Investment Ideas

Olympics - Investment Ideas

Postby winston » Wed May 07, 2008 9:48 pm

Olympic Stocks..

May 7 (Bloomberg) -- The biggest beneficiaries of the Beijing Olympics are turning into also-rans on concern their shares climbed more than justified by the potential to profit from the August athletic contests.

The 23 companies whose earnings Macquarie Group Ltd. said in November 2006 will get a boost from the Games fell by an average 21 percent this year compared with a 12 percent drop in the Hang Seng China Enterprises Index, data compiled by Bloomberg show. Air China Ltd., the nation's largest carrier, led the tumble, losing half its value this year, while Beijing Capital International Airport Co. dropped 36 percent.

Even after the declines, the Olympic stocks are expensive, trading at an average 30 times reported profit compared with 19 times for the Hang Seng China index of 42 Hong Kong-listed shares. The Olympic stocks rose 69 percent on average in 2007, more than the index's 56 percent gain, on expectations the Games will spur demand for everything from sporting goods to hotel stays.

``Companies that are Olympic-related went up just on the basis of Olympics with no good fundamentals,'' said Mark Mobius, who oversees $47 billion in emerging-market equities at Templeton Asset Management Ltd. in Singapore. ``We have not bought any because the prices went up too fast and too high.''

Travel Demand

Olympic shares fell further behind as the Chinese stock market rallied in April. The basket of Olympic stocks created by Macquarie, Australia's biggest securities firm, rose 5 percent last month compared with an 18 percent gain in the Hang Seng China index.

``It's interesting but there aren't that many direct Olympic plays and you've got to wonder whether it's already a crowded trade,'' said Samantha Ho, a Hong Kong-based fund manager who oversees more than $3 billion of Hong Kong and China equities at Invesco Asia Ltd. ``Valuations were stretched last year.''

Air China doubled between July 1 and Oct. 30 as the carrier announced plans to add routes and staff to fly the 1.7 million people that Olympic organizers estimate will travel to Beijing for the games.

Beijing Capital, operator of the city's airport, climbed 39 percent in the same period as Asia's second-busiest airfield said it would open a runway for Olympic air traffic.

Beijing North Star Co., the property arm of the city's government, surged 51 percent on its first day of trading in Shanghai in October 2006 on expectations the Olympics would increase construction projects and spur sales. The company, which is building the Olympic Media Village, more than doubled in Hong Kong trading during the first eight months of 2007, hitting a record HK$7.89 on Aug. 27.

`Dramatic Fall'

The retreat started this year amid a slump in Chinese stocks that dragged down the benchmark CSI 300 Index by 28 percent after two years of gains. The shares are set to recover, said Tim Rocks, Macquarie's Hong Kong-based strategist, who compiled the bank's Olympics stock list.

``We've seen a dramatic fall across the entire China universe, and the reasons for that are overstated,'' Rocks said. ``Tourism and property stocks, which will benefit from Olympics demand, will do better than the broader market once overall dynamics improve.''

JF Asset Management Ltd.'s Howard Wang said he doubts earnings will benefit enough from the Olympics to justify higher share prices. Beijing Capital boosted annual profit at the slowest pace in four years in 2007. Beijing North Star's profit increased 17 percent last year to 463.1 million yuan ($66 million), compared with a 55 percent gain in 2006.
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HK & China - General News

Postby winston » Mon May 12, 2008 3:27 pm

I've posted before that the Olympics is just a small part of BJ's economy and the BJ economy is only a small part of China's economy..

============================

BEIJING, May 11 (Xinhua) -- China, with a large economic size, would not face recession after the Olympic Games, the World Bank's new chief economist Justin Yifu Lin said on Sunday.

Some Olympics hosts experienced post-Olympic decline because investment dropped. China, however, would not have such problem with a much larger economic volume, said Lin, who was also the World Bank's newly appointed senior vice president.

The size of Chinese economy dwarfed the investment on building venues and infrastructure for the 2008 Beijing Olympics, he said.

China had plenty of investment prospects as the country was to host the World Expo and the Asian Games in 2010, and a few other important international events after the Olympic Games.

Meanwhile, the country's appetite for infrastructure investment and spending on industry upgrading were also likely to ward off any post-Olympic slump, he said.
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Re: HK & China Economic News

Postby LenaHuat » Mon May 12, 2008 8:28 pm

I think Justin Lin is far too optimistic abt China post-Olympics.
The CNY snowstorm and now the 7.8 Sichuan earthquake showed that China could have gotten her priorities wrong. Trophy projects take priority over pro-citizenry-welfare projects.
Inflationary pressures are stirring up public wrath.
The much-deflated SSE has also caused much anguish amongst millions of small-time investors.

Personally, I am avoiding the Chinese/HK stock markets until after the Olympics. The ride has been very good so far but things have turned ugly since the beginning of the year.
Please invest with care in the Chinese/HK mart.
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HK & China - General News

Postby winston » Mon May 12, 2008 9:13 pm

LenaHuat wrote:Personally, I am avoiding the Chinese/HK stock markets until after the Olympics.


Hi L,

I actually think that the A shares should be quite ok until the Olympics. The reason is that the government will continue to come up with market-friendly measures, to support the market before the Olympics.

We have already seen a reduction of brokerage fees as well as the suspension of shares sales. The next measure could be the introduction of margin accounts.

It would not look too good if some small speculators are smashing up the reception areas of the brokerage firms during a stockmarket crash just before the Olympics. No face lah :roll:

Take care,
Winston

P/S Anyway, we can't invest in the A shares except thru the A50Chinatracker or the JF Nine Dragon fund. And HK is also quite spineless (influenced by US & SH )
Last edited by winston on Tue May 13, 2008 8:34 am, edited 1 time in total.
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Re: HK & China Economic News

Postby LenaHuat » Tue May 13, 2008 8:24 am

Hi Winston

I could be awlfully wrong abt the Chinese stock markets. But fighting inflationary pressures is the greatest priority now. The Central Bank has raised the banks' reserve ratio once again. The upside of Chinese stocks is more uncertain than certain. The dark clouds seem to be hanging too low for my comfort.
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HK & China - General News

Postby winston » Thu May 15, 2008 2:04 pm

China is now trying to have clean air before the Olympics. What is the impact on stocks ?
From UOB-Kay Hian:-

Impact on stocks. Steel companies not based in the six regions will benefit the most from steel price rises. The beneficiaries include the three state-listed steel stocks – Angang Steel (347.HK) Maashan Iron (323.HK) and Chongqing Iron (1053.HK.).

Hidili (1393.HK) – which sells coking coal and coke to clients in southwestern China, where reconstruction of Sichuan will take place after the earthquake – will not be hurt. China Shenhua and Yanzhou Coal said they do not need to cut output during this period. However, Yanzhou Coal, which is highly leveraged to spot prices and sells mostly to customers along the coast and the regions hurt by the Olympics shutdown, is vulnerable to softening spot coal prices due to power output cuts, which will reduce the demand for thermal coal.

Datang International acknowledges that utilisation hours will fall this year as a result of the output cuts. It is not a bad thing for the power producer, as the less it produces, the smaller its losses, as power prices are capped. China Power International’s operations in Shanxi will also be slightly reduced, as a result.
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HK & China - General News

Postby winston » Tue Jun 24, 2008 11:35 am

Businesses in China take a pre-Olympics hit

New visa restrictions, the Sichuan earthquake and unrest in Tibet weigh on companies that rely on foreign customers.

By Don Lee, Los Angeles Times Staff Writer

Yiwu, China

June is normally one of the busiest months in this commercial hub, home to the largest wholesale market in the world. Traders from around the globe descend here to bargain with tens of thousands of merchants and place their year-end orders.

But walk through the hotel lobbies, Middle Eastern restaurants and the city's big trading emporium, where some 30,000 stalls are jammed together, and it's clear that this isn't a typical year.

"Business has never been so bad,"
said Ma Yi, manager of the Arabian Restaurant. "Well, what can we do? The Olympics has to open."

The Beijing Olympics in August may be China's biggest international event in decades, but the Games have hardly been a windfall for many businesses in Yiwu, about 200 miles south of Shanghai, and in other cities that rely heavily on foreign customers. The main issue: China's recently tightened visa restrictions, imposed ostensibly for public security reasons ahead of the Olympic Games.

The government is now requiring business-visa applicants to submit papers bearing official stamps from local governments and the hotels where they will be staying. What's more, foreigners can no longer use Hong Kong as an easy gateway to enter mainland China, as many have done for years.

"You know, there are many hotel reservation websites that cannot provide such stamps," said Jiang Fangzheng, assistant manager at Yiwu Hotel.

He says his four-star hotel can help with the paperwork, but customers are nonetheless canceling reservations every day. Government security in hotels has been tightened too, with police making random visits to guest rooms to check visitors' passports, he says.

"Foreign customers are simply afraid of the hassles," Jiang said. "They don't really understand it."

Leisure travel is also taking a pre-Olympics hit in China, with the recent earthquake in Sichuan province and the unrest in Tibet adding to the industry's woes. China's western region is one of the nation's biggest tourist draws, but the May 12 quake, which claimed nearly 70,000 lives, shut down places such as the Wolong Nature Reserve, the world's largest panda breeding center, outside the Sichuan capital of Chengdu. Damaged roads and government restrictions have made it difficult to travel to Jiuzhaigou, a scenic resort area in northern Sichuan, and farther west into Tibet.

Export businesses, already struggling with a global slowdown and a rising Chinese currency that's making selling goods overseas more expensive, complain that they can ill-afford another shock. Although some larger foreign customers have agents in China, others are accustomed to making frequent trips to shop and check supplies before they're shipped.

In China's northern port city of Weihai, Jin Jiazhu exports garlic, frozen vegetables, bamboo products and glycerin, a chemical used in medicine and cosmetics. Many of his customers are in South Korea, just 200 miles across the Yellow Sea. Because of product safety and quality concerns last year, Jin says his clients have been coming more frequently to inspect goods.

But with the new visa regulations, half a dozen of Jin's customers haven't been able to come recently. That's left several containers of his products sitting in a warehouse or on the docks, Jin says. Last week, he closed his vegetable-processing plant and laid off 80 workers.

"I thought that with the Olympics, I would have a good year of business," he said. "But the reality is just the opposite."

Jin hopes things will return to normal after the Games, which conclude Aug. 24. But there's been no clear word on that from Beijing. In fact, it was weeks after foreigners and business groups complained about visa delays and rejections that the Chinese government acknowledged that it had tightened regulations.

"We just don't know yet," said Becky Xia, senior China manager at Fragomen Global Immigration Services in Shanghai, referring to how long the additional requirements would last. Xia stressed, however, that "if you follow the right application procedures, the government will issue a visa with no problem."

That's little comfort to foreigners in cities such as Yiwu, where they have long come in and out with ease.

Yiwu, with a population of about 1 million, including temporary residents, built its economy around international trade. The city boasts a wholesale mall that is the size of 350 football fields. In the four-story building, vendors sell all kinds of goods, including housewares and hammers, framed pictures of Jesus, Harley-Davidson look-alike motorcycles and Egyptian water pipes.

The halls of the mall are usually teeming with foreigners, but on a recent Monday afternoon, Omar Odeh was one of the few on the third-floor section where Christmas goods are sold. Odeh, who runs a toy and gift shop in Kuwait, said he didn't have trouble traveling to China because he held a one-year, multiple-entry visa.

"But I know people who couldn't come because of the visa problem," he said, holding a clipboard detailing his purchases and pricing plans.

Many merchants at the mall downplayed the effect of fewer visitors, saying customers were still ordering by phone and through the Internet.

Wang Yueying, a native of Wenzhou, an entrepreneurial hot spot in eastern China, sat behind the counter of her store, tying a ribbon on a gold Christmas ornament. She said only about 20% of her business came from repeat orders on the Web. The rest were from new customers or those who want to deal in person.

"The products are all selling kind of slow," Wang said. Of the Olympics, she said sheepishly: "Yeah, it's not been good for business here."
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HK & China - General News

Postby winston » Mon Jun 30, 2008 3:01 pm

From UOB-Kay Hian :-

A mini rally is possible ahead of Beijing Olympics. We see one window of opportunity to make nice gains in the run-up to 2008 Beijing Olympics, given the inclination of the Chinese Communist Party to celebrate the landmark event and ensure that millions of investors in the stock markets will join in the Olympics’ fun, especially after six months of gloom triggered by a
series of natural disasters.

What can the government do to boost market sentiment? We see several potential catalysts:

1) Setting up a market stabilisation fund to support the market or mop up the huge amount of state shares that will join the A-share free float;

2) Raising the base price for the implementation of the windfall tax from US$40/bbl to US$60/bbl or even higher. This will benefit market heavyweights like PetroChina and CNOOC and boost sentiment towards the broader market;

3) Introduction of an index futures;

4) Allowing share buyback by parent companies of listed state firms;

5) Postponing major initial public offerings (IPOs);

6) Recovery of confidence in Beijing’s economic and disaster management skills as CPI continues to trend lower in the coming months and economic growth remains robust.
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HK & China - General News

Postby winston » Sat Jul 05, 2008 8:35 pm

China to shut more factories for Olympics - Xinhua
Sat Jul 5, 2008 5:01am EDT

BEIJING, July 5 (Reuters) - Tianjin, a port city just east of Beijing, has ordered 40 factories to shut for the Olympics, the latest dramatic step taken by China to ensure that pollution does not spoil the Games in August.

The factories, including two cement makers, will be closed from July 25 to Sept. 20, the official Xinhua news agency reported on Saturday. It gave no estimate of economic losses from the closures in the city, about 115 km (70 miles) from the capital.

The Tianjin order follows news on Friday that Tangshan, an industrial city about 150 km (90 miles) east of Beijing, will shut nearly 300 factories this month to improve air quality for the Games.

Tianjin, which will host some of the Olympic soccer matches, will also halt construction at 26 building sites near its stadiums.

Beijing, one of the most polluted cities in the world, has spent 140 billion yuan ($20.43 billion) to combat chronic pollution in its preparations for the Olympics, which open on Aug. 8.

But China's capital city was still shrouded in thick smog this week, with buildings just a few hundred feet away barely visible -- the kind of air quality that would embarrass the authorities and potentially disrupt sporting events during the Olympics because of health concerns.

From July 1, vehicles that fail to meet emissions standards have been banned from entering downtown Beijing. And from July 20, Beijing will launch a traffic control system to take half of the city's 3 million cars off the road, using an odd-even licence plate system.

The Beijing municipal government issued rules in April ordering industrial firms such as Shougang Group, one of China's major steel producers, to reduce or stop production from July 20.
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Re: Olympics - Investment Ideas

Postby winston » Mon Aug 04, 2008 7:57 am

Games concept stocks uninspired
MandyLo andAlfredLiu
Monday, August 04, 2008

With the Beijing Olympics kicking off in four days, Games-related stocks may disappoint bullish investors as government policies dampen market flourish expected to be inspired by the event.

Contrary to market forecasts, the price of most Olympic-related H shares - from sport products to hotels - dived in the first half of this year.

"Tourism-related stocks once expected to benefit from the Olympics, are instead weakened by the government's tightening measures since the first quarter," said Nomura International analyst Jim Wong.

Beijing Capital International Airport (0694) issued a profit warning on 29 July, in part due to government restrictions on air traffic. BCIA operations data indicated that the airport's cumulative aircraft movements in the first five months of this year were 1.9 percent down on the same period in 2007.

Though Olympics sponsors can build their brands in Beijing, outdoor advertising companies such as Clear Media (0100) are restricted by a rule that ad panels can only be sold to games sponsors during the 19-day event, a Morgan Stanley report said.

Clear Media owns 6,000 ad panels, of which 3,500 have been sold to Olympics sponsors, 1,000 are for government use and about 1,500 will be empty during the Games.

The stocks of hotel operators have dropped sharply over the last three months because of room oversupply in China and flat demand for accommodation as the government has restricted tourist numbers. "Overinvestment by mainland hotels has led to market supply more than 50 percent in excess of demand," said Philip Securities director Louis Wong.

The property market is expected to be quiet as the Games will distract buyers' attention, JPMorgan analyst Raymond Ngai said in a report.

"The Olympics is not good news to the industry as developers and customers are taking a wait-and-see approach," said Centaline (China) deputy general manager and director Lai Kwok-keung.
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