China - die Wiege des Bösen (für Aktien?)

I've long been (irrationally?) uneasy about China. See Sept. 1, 2005 column
So this intrigues me.

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Ein ähnliche Aktien-Euphorie in Saudi-Arabien endete 2006 mit über 50 % Verlusten. Auch dort hatten Kleinaktionäre Haus und Hof verkauft, um an den "sensationellen Gewinnen" teilzuhaben. Viele von ihnen, darunter viele Frauen, sind jetzt wegen Depressionen in psychologischer Behandlung, sofern sie sich das überhaupt noch leisten können.

Hier die Bilanz des Saudi-Hypes:

YEALD, 30.11.2006 19:13
Saudi-Arabien: Albtraum aus 1001er Nacht

JOURNALISTEN Der Crash an den arabischen Börsen traf besonders Saudi-Arabien ins Mark. Viele Anleger aus dem wüsten- und ölreichen Königreich verloren über Nacht nicht nur Hab und Gut, sondern offenbar auch fast den Verstand. Ärzte sprechen von einem Massenphänomen.

von Ronald Tietjen

Im islamisch-konservativen Königreich Saudi-Arabien muss man schon sehr verzweifelt sein, um auf offener Straße einen Striptease hinzulegen. Doch selbst davor schrecken frustrierte Kleinanleger derzeit nicht mehr zurück. In Damman ließ ein Kleinanleger laut „Arab News“ seiner Wut freien Lauf und riss sich vor einer Bank buchstäblich die Kleider vom Leib. Dabei schrie er seinen ganzen Frust über hohe Verluste an der Börse heraus. Sein Geld brachte ihm die Aktion nicht wieder, dafür 50 Schläge auf den Allerwertesten.

Der Schmerz der 50 Hiebe wird vermutlich schnell vergehen. Die seelische Pein über den Kursrutsch an der Börse dagegen eher nicht. Doch damit steht der Mann nicht allein da. Laut der Zeitung „Al-Watan“ hat der Börsen-Crash in Saudi-Arabien viele Tausend Anleger so schwer getroffen, dass sie wegen Depressionen und anderer psychischer Leiden arbeitsunfähig sind. In den vergangenen neun Monaten hätten die Ärzte im Königreich allein rund 40.000 Patienten untersucht, die ihre Beschwerden mit hohen Verlusten an der Börse begründet hätten, heißt es in dem Bericht.

>> Hohe Verschuldung

Zu den Betroffenen zählten in überraschend großer Zahl auch Frauen. Viele hätten - ohne Wissen ihrer Männer - zum Teil Häuser und all ihren Schmuck verkauft, um Aktien zu kaufen. Die nach dem Aktiensturz geschockten Gatten haben dann die Scheidung eingereicht, weshalb die Frauen nun in völlig hysterischem Zustand die Ärzte aufsuchten, wird eine Medizinerin zitiert. Lehrer wurden entlassen, weil sie in der Schule online an der Börse handelten statt zu unterrichten. Polizisten erschienen nicht zum Dienst, weil der Kauf von Wertpapieren eine Zeitlang am Tag mehr einbrachte, als eine Woche auf Verbrecherjagd zu gehen.

Gier beherrschte auch lange Zeit die Märkte in Dubai, in Kairo, Doha, Kuwait, Amman und Abu Dhabi. Allein die Verluste des laufenden Jahres belaufen sich nach Angaben von Fondsmanagern inzwischen auf 500 Milliarden Dollar. Von den gigantischen Gewinnen, die seit Anfang 2005 an den arabischen Börsen gemacht wurden, ist fast nichts mehr übrig. Der saudische Tadawul All Share Index hat sich seit Neujahr halbiert. Der Dubai Financial Market Index fiel sogar noch stärker.

>> Verluste lange unbekannt

„Viele arabische Anleger kannten bisher überhaupt keine fallenden Aktienkurse“, so der Londoner Nahost-Börsenexperte Ben Kapetzky zu den Gründen des Hypes. „Die haben niemals erlebt, was es heißt, Geld zu verlieren, weil sie vor noch nicht allzu langer Zeit eingestiegen sind.“ Tatsächlich erlebten die Börsen Arabiens in den vergangenen zweieinhalb Jahren eine Blasenbildung, die zu vergleichen ist mit dem absurden Treiben, was Ende der 90er-Jahre in Deutschland am Neuen Markt ablief. Noch vor drei Jahren besaß nur jeder dreizehnte Saudi Aktien, heute ist es jeder sechste. Psychologen verweisen auf gesellschaftliche Zwänge in dem streng islamischen Land: „Saudis sind Spieler, die aber nicht spielen dürfen. Wetten ist verboten, Automatenspiele auch. Eben alles, was Spaß macht. Das Spekulieren ist so etwas wie ein Surrogat gewesen.“

>> Einstürzende Neubauten

Dass es irgendwann zu einer Konsolidierung oder sogar zu einem Kursabsturz kommen würde, darüber wurde allerdings schon Monate vor dem Crash gefachsimpelt. Auch schon, als in Euro noch Zertifikate aufgelegt wurden, die fantastische Gewinne versprachen. Bereits im März berichtete YEALD über das schlechte Timing des gerade aufgelegten "Dubai Top Select Zertifikat" (ISIN: DE000DB52810) der Deutschen Bank. Das Open End-Papier bildet keinen Index ab, sondern ist als Aktienkorb zu verstehen, der aus nur sieben Aktiengesellschaften besteht, die allesamt vom enormen Immobilienboom in den Vereinigten Arabischen Emiraten profitieren sollten.

Namentlich sind es National Central Cooling Company (TABREED), SHUAA Capital, Union Properties, Dubai Investment, Arab Technical Construction, Amlak Finance und auch Emaar Properties, die für das gigantische Vorzeigeprojekt "Burj Al Arab" verantwortlich zeichnen.
          §
Bereits nach wenigen Wochen mussten sich Anleger, die den märchenhaften Prospektunterlagen aufgesessen waren, über ein drastisches Minus ärgern. Die Bilanz ist bis dato nicht besser geworden: der Kursabschlag für 2006 beträgt 51 Prozent. Tendenz: eher weiter sinkend.

Von vielen Fondsmanagern heißt es: Die Börsen Arabiens sind heißer als der Sand der Sahara um die Mittagszeit. Da kann man sich schnell die Finger verbrennen. Privatanleger sollten eher nach Asien oder Südamerika schauen, wenn sie in Schwellenmärkte investieren wollen.

>> Interventionen bisher erfolglos

Viele noch investierte Anleger hoffen auf weitere Interventionen des saudischen Königshauses, das mehrfach bereits an den Börsen aktiv wurde und Stützungskäufe tätigte. Das konnte den Kurssturz bisher nicht bremsen, auch wenn sich die Situation an den Märkten Arabiens wieder leicht zu beruhigen scheint. Die Risikofaktoren sind aber immer noch da: Die Iran-Krise, der brüchige Friede zwischen Juden und Palästinensern, die Unsicherheit über den Ölpreis – in Saudi-Arabien ein Dauerthema auch an der Börse. Viele befürchten größere Abschläge, was vor allem Investoren zu noch mehr Zurückhaltung in die Länder des Nahen Ostens veranlassen könnte. Trotz des rund 25-prozentigen Preisrückgangs seit dem Sommer hält z. B. der Mineralölkonzern ExxonMobil den derzeitigen Ölpreis immer noch für viel zu hoch. "Etwa die Hälfte des Preises ist Spekulation und spiegelt keine Knappheit von Öl wider", sagte Gernot Kalkoffen, Deutschland-Chef von ExxonMobil.

Wenigstens aber sollen jetzt die Benzinpreise sinken in Saudi-Arabien. Von 18 Cents auf 14 Cents pro Liter. Nicht unclever von König Abdallah. Denn wenn der Saudi etwas noch lieber mögen soll als das Zocken an der Börse, ist es Autofahren...  

If the U.S. believes that China has not met this commitment, it can re-start WTO proceedings in Geneva.

Schwab could not resist making a jab at Congress, where criticism over the White House China policy has been unrelenting.

"Members [of Congress] with whom I have spoken appreciate the value of results over rhetoric," Schwab said.

The agreement comes roughly two weeks before top Bush Administration economic officials will travel to Beijing for the twice-per-year policy dialogue.

The U.S. is pressing the Chinese government to end its historic role controlling the economy, especially quick action from the leadership to relax China's control over the foreign exchange value of its currency.

For its part, Chinese leaders want to end U.S. restrictions over Chinese purchases of high-tech equipment and also want to use some of their huge reserves to invest in American companies without opposition from Congress.

The bilateral talks will take place Dec. 12-13 outside Beijing.

The share price has since fallen 37pc. Shenhua Energy is down 32pc, a fate shared by a long list of resource, industrial, and trading companies deemed sensitive to the credit cycle.

Among the losers yesterday were: Cosco shipping (down 5.5pc on the day); Harbin Pharmaceutical (-5.65pc); Aluminium Corp of China (-4.9pc); Wuhan Iron & Steel (-4.27pc) and Baoshan Iron & Steel (-3.9pc).

The tumbling stock market may be a warning that the Chinese economy is headed for a sharper slowdown than expected after years of torrid growth, reaching an annual rate of 12pc this autumn.www.telegraph.co.uk/money/main.jhtml?xml=/...ILC-mostviewedbox

""The economy has moved to a situation of excess demand with increasing pressure on monetary aggregates from the continued accumulation of officially-owned foreign currency assets. If this situation persists, and global food prices do not moderate as expected, there is a risk of inflation becoming entrenched, as in the mid-1990s,"" it said.

Faster inflation could add momentum to speculative activity in the real estate and equity markets, it added.

Meanwhile the current account surplus is projected to reach 350 bln usd this year, and rise to over 500 bln usd in 2009.

Growing domestic investment in heavy industries such as iron, steel and cars has resulted in a surge of exports while imports only grew slowly, boosting the trade surplus, the OECD said.

""Overall in the first 10 months of 2007, the cumulative trade balance was over 100 bln usd more than the annual figure for 2006. With the service balance likely to increase somewhat, the current account surplus is expected to reach over 350 bln usd in 2007, 11.25 pct of GDP,"" it said.

""Given the assumption of a constant exchange rate, the surplus on the current account is projected to continue expanding,"" it added.

China central bank raises bank reserve ratio by 1 percentage point - UPDATE

China's central bank said it is raising the reserve requirement on bank deposits by one percentage point in a bid to curb credit growth.

The increase, the 10th this year, puts the reserve ratio, or the proportion of deposits that must be held in reserve, at 14.5 pct for most banks, effective December 25.

The People's Bank of China said in a brief statement on its website that the increase is in line with a decision reached at the recent economic work conference, a key gathering to map economic strategy, calling for tighter monetary policy.

The latest move is considerably more aggressive than past reserve requirement hikes. The previous increase, which went into effect on November 26, was 0.5 percentage point.

The central bank, which has also raised interest rates five times this year, has become increasingly concerned that lending growth is too fast and that in turn is fueling inflation.

Goldman Sachs said it expects China's consumer price index (CPI) inflation for November to reach a decade-high 6.7 pct year-on-year. China's CPI growth has topped six pct over the past three months, reaching highs of 6. 5 pct in both August and October.

The banking regulator, the China Banking Regulatory Commission, has already told banks to hold down new lending in the final months of the year, and official sources said it is expected to reduce the target for lending growth for next year by two percentage points to 13 pct.

For the first 11 months, retail sales rose 16.4 percent from a year earlier to 8.02 trillion yuan, the statistics bureau said. Sales in urban areas jumped 19.2 percent in November from a year earlier, while rural spending climbed 18 percent.

A ``large part'' of this month's spending growth was due to inflation, said Kevin Lai, senior economist at Daiwa Institute of Research in Hong Kong.

Car companies are sharing the spoils of the shopping spree. Automobile sales climbed 35 percent in November from a year earlier. Geely Automobile Holdings Ltd., China's largest privately owned carmaker, earlier reported a 56 percent jump.

Cosmetics sales rose 33 percent, today's report showed, and furniture spending soared almost 60 percent.

Meat, Poultry, Eggs

Food and fuel costs are driving China's inflation. Spending on meat, poultry and eggs jumped 45 percent in November from a year earlier. For grains and edible oils, the gain was 48 percent. Spending on petroleum products climbed 22 percent.

China has raised minimum wages and reduced a tax on interest income to fatten consumers' wallets.

Disposable incomes among urban households, after adjusting for inflation, rose 13.2 percent to 10,346 yuan in the first nine months from the same period a year earlier. Earnings in rural areas climbed 14.8 percent to 3,321 yuan.

Stock and property-price gains are encouraging spending.

The benchmark CSI 300 Index of shares has surged almost 150 percent this year. House prices in 70 major cities jumped 9.5 percent in October from a year earlier, the biggest increase since records began in August 2005.

China's economy, the world's fourth largest, expanded 11.5 percent in the third quarter from a year earlier.  

China to allow commercial banks to invest QDII funds in UK stock market

The China Banking Regulatory Commission said it and the UK financial regulators have agreed to allow Chinese commercial banks to invest qualified domestic institutional investor (QDII) funds in UK stocks and funds.

The moves aims to expand commercial banks' QDII investment channels and spread investment risks, the banking regulator said in a statement posted on its website.

China has established an office to take charge of constructing and managing the country's strategic oil reserves, the economic planning agency said.

The National Development and Reform Commission said the move is aimed at accelerating the construction of reserve facilities and enhance their management.

The office is authorized by the State Council to stockpile crude and release reserves as well as monitor oil markets, it said.

China, the world's second largest consumer and importer of oil after the US, aims to build up a strategic oil reserve of 12 mln tons by 2010, from 2-3 mln tons currently, said Chen Deming, former vice-director of the NDRC.

The country's first strategic oil reserve, in Zhenhai in the eastern province of Zhejiang, began stocking up in October 2006.

Other facilities in Phase I are at Zhoushan in Zhejiang, Huangdao in Shandong province and Dalian in Liaoning province.  

His comment appears to confirm what many in the industry already suspected. A research report by HSBC issued on Friday cited new official internal guidelines for the QDII funds to suggest that China has expanded its geographical scope from a narrow focus on Hong Kong to other world markets by limiting exposure to any single market, Hong Kong included, to between 30% and 40% of their assets.

HSBC estimates about $219 billion in portfolio investment will flow out of China in 2008, of which some $78 billion will be parked in Hong Kong. The total includes $112 billion from intermediaries allowed under the QDII program such as mutual funds, brokerages, banks and insurance companies; $67 billion from China Investment Corp., China’s new foreign exchange investment agency; $13 billion from the country’s national social security fund; and $27 billion directly channeled by Chinese individuals into Hong Kong market.

HSBC said the impact could be big, even considering Asia in isolation. Assuming that half of the non-Hong Kong flows from China go into fixed-income instruments and that 30% of the rest ventures outside Asia, Chinese buying of equities in Asia markets other than Hong Kong would total $50 billion, about the same as the typical flows from all foreign investors in the past few years. (Net buying by foreigners of Asian stocks--including Japan’s--in 2007 was $44 billion, down from $65 billion in 2006.)

The first beneficiaries could be Chinese stocks listed on foreign exchanges, including the 126 Chinese stocks listed in Singapore, 72 in the United States (of which 51 are listed on Nasdaq and 21 on the New York Stock Exchange), 14 in the United Kingdom, three in Germany and three in Japan. “Most of these have lagged behind H-shares in terms of valuation and analyst coverage,” HSBC noted.

The expanding spread of Chinese investment would help assuage concerns expressed by China’s premier, Wen Jiabao, in November, when he cautioned the Chinese public about the potential risks of placing a one-way bet on Hong Kong. (See: “ Hong Kong Spooked Over China Investment”)

The resumption of preparations for the through-train program also means China’s different, quarreling government bureaus with a stake in financial regulation have come to a consensus on how to proceed. (See: “ China To Cap Citizens’ Buying Hong Kong Stocks”) The incentives are substantial. After all, with pressure on the yuan to appreciate unabated and its foreign reserves growing at a pace of more than $30 billion a month, China itself stands to be the biggest beneficiary of all.

Profits will almost surely remain relatively robust this year, as the economy continues to grow 10% a year, but that rate is likely to slow. And while earnings are still expected to rise more than 20% this year, earnings growth at financial and energy companies likely will slow even more.

That is crucial because market moves are increasingly dictated by a clutch of supersized stocks in those two industries, such as Industrial & Commercial Bank of China, the country's biggest lender by assets, and PetroChina, one of its top oil producers. The 20 biggest stocks on China's market include 12 financial firms and three energy companies.

"We think the global slowdown [in 2008] will show up in China's growth and corporate profits," said Gene Ma, president of China Economic & Business Monitor Group in Beijing. Perhaps a quarter of industrial sales in China, from power to chemicals, depend on exports, and "there are some head winds for China's banks," he said.

As China's market surged last year, bulls used soaring profits as ammunition to argue that investors were responding to solid improvement in the corporate landscape -- and to counter critics who dismissed the rally as gambling by a manic and ill-informed public.

The problem is that continued torrid profit growth is already baked into market expectations. The price-to-earnings ratio for Shanghai-listed stocks finished 2007 at a whopping 59 times the previous year's earnings, albeit down from 71 times at the market's peak in October, according to exchange data.

At valuations like that, the smallest hiccup in earnings can send stocks tumbling, though China's markets have traded at much higher P/Es than would be sustained in the stock markets of more market-oriented economies. In the U.S., academic research has shown that expensive stocks that have already turned down are very likely to keep falling, which is what happened during the tech-stock bust.

Since it was listed in Shanghai in November, PetroChina has emerged as the market's key swing stock. That is another factor tying the market's fortunes to profit figures, as PetroChina enjoyed a windfall in 2007 as crude-oil prices soared toward $100 a barrel.

Merrill Lynch analysts recently lowered their expectations for PetroChina's 2008 earnings per share to 87 fen (12 cents) -- a 7.4% gain from 2007 -- from 94 fen expected previously. PetroChina's Shanghai-listed shares finished 2007 at 30.96 yuan ($4.24) compared with an IPO price of 16.70 yuan.

At least two key factors might hurt earnings growth -- a potential slowdown in China's export markets and Beijing's credit-tightening policy.

"It is by no means guaranteed that just because the Chinese economy is strong, earnings will be increased," according to analysts at Macquarie Research.

Global fund managers, who increasingly see China taking a hit from an expected slowing in overseas demand, are already lowering expectations for stocks. China was considered the least attractive Asian market by mutual-fund managers surveyed in December by Merrill Lynch. Almost half of respondents anticipated slightly weaker Chinese economic growth during 2008.

Polls in China offer a mixed message. Local investors appear less enthusiastic about stocks than three months ago, but they still expect share prices at the end of 2008 to be higher than at the beginning. Local Chinese markets are largely closed to foreign investors, but traders can access mainland shares in Hong Kong and other overseas markets.

If weaker earnings growth begets a weaker stock market, then the weak stock market might cause earnings to weaken further. That is because many Chinese companies get a chunk of their profits from gains in the stock market. Investment gains represented a quarter of the aggregate $60 billion in net profits at listed companies in the first three quarters of 2007, according to market researcher Shanghai Wind Information Co. Wind Information's figures take into account a wider universe of Chinese companies than is represented in the MSCI, which tracks the H shares of big mainland groups traded in Hong Kong.

In addition, a weak market might hurt sales of stock mutual funds, an increasingly significant source of income for banks.

Also in focus are a variety of factors that may weigh on earnings of listed companies, including bank deposit interest rates that are rising faster than lending rates, pinching bank margins. A stronger yuan might put further pressure on exporters, with the Chinese currency having gained 6.9% against the U.S. dollar in 2007 and expected by many analysts to keep strengthening this year.

On the bright side: Many Chinese companies will enjoy a tax break, which may offset weakness elsewhere on the bottom line. But a government plan to implement dividend payments at state-owned companies could erode their financial positions.

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YEAR OF THE ... BEAR?

•  Background: Stocks in China doubled in price last year, but ended weakly with a pullback from the record high.
•  The Issue: Corporate profit growth will probably slow down, hurting such stock sectors as financials and energy.
•  Investors' Call: In a Merrill Lynch survey of mutual-fund managers last month, China was the least favorite (or most "underweighted") Asian market.

Unter Berufung auf das Beratungsunternehmen Ernst & Young ist der Hauptgrund für die Maße an faulen Krediten in China in den politischen Strukturen des Landes zu suchen. So ist China ein Ein-Parteienstaat. Diese kommunistische Partei sei nach wie vor mit den staatlichen kontrollierten Banken verflochten. Diese würden über einen unreformierten Kern verfügen. Überall dort, wo ein Ein-Parteiensystem regiere gebe es Verschleiß, Korruption und Vetternwirtschaft. Zwischen 2000 und 2001 seien 60 Prozent sämtlicher Kreditvergaben politisch gesteuert gewesen. Seit 2000 seien mindestens 2 Prozent der neuen Kredite in den not leidenden Bereich geraten. Die chinesischen Banken könnten vor einer neuen Welle an uneinbringlichen Krediten stehen. Hiefür spreche unter anderem die rasche Darlehensvermehrung in 2003 und im ersten Halbjahr 2004.

China stehe in der Bewältigung seiner not leidenden Kredite vor einem Strukturproblem. In Japan führten ähnliche Probleme Ende der 80er-Jahre zu einem Crash mit einer sich über ein Jahrzehnt erstreckenden wirtschaftlichen Stagnation. Ein Platzen der Blase in China sei vor allem in einigen Monaten nach den Olympischen Sommerspielen in 2008 in Peking wahrscheinlich, heißt es weiter in dem Bericht.

de.biz.yahoo.com/04012008/389/...ennte-kreditkrise-drohen.html

On December 12, China's fund management firms, securities brokerages and banks - the main implementers of QDII funds - received a "gauge document" from the China Securities Regulatory Commission (CSRC) stating that QDII funds can in future be invested in mainland as well as overseas markets. That means the funds can be used to trade in yuan-denominated A shares listed in Shanghai and Shenzhen.

The change was seen by some as another move by the regulator to prop up the QDII scheme, which has failed to develop as quickly as initially intended. Others saw it as a reaction to faltering local markets, which after raising concern of overheating early in the year as they continued the strong gains of 2006, have declined by about 20% since November, threatening the holdings of millions of retail investors who have little other outlets to increase their savings.

The QDII scheme, launched in April 2006, is at present the only legitimate channel for mainland Chinese investors to buy overseas equities. Under the program, Chinese banks, fund managers and insurers are allowed to invest in securities, government and corporate bonds and fixed-income instruments on overseas markets within certain quotas.

One purpose behind the scheme, which allows individuals to convert yuan funds freely for capital investment overseas, was that it would help trim expansion of the country's growing foreign exchange reserves, curb excessive liquidity in domestic markets and reduce pressure on the Chinese currency to appreciate. It is was also part of moves to liberalize the yuan on the capital account.

China several years ago liberated the yuan in the current account, which roughly speaking deals with daily flows of money. It only partly opened the capital account, through the QDII and Qualified Foreign Institutional Investor schemes, by which overseas funds can enter the mainland market. Only when the yuan is free on the capital account will it be a fully convertible currency.

"Easing foreign exchange reserve pressures is part of the aim of the introduction and expansion of the QDII scheme, but more important is further liberalizing the yuan on the capital account," Guo Song, director of the capital accounts department at the State Administration of Foreign Exchanges (SAFE), said at a forum in Beijing in November.

By the end of last March, just before the QDII scheme was launched on April 18, China's foreign-exchange reserves, propelled by a huge trade surplus and foreign direct investment, had reached US$875.1 billion, up 32.8% year-on-year. This amount helped to drive up liquidity in domestic markets and intensified pressure on the government to allow a faster appreciation of the yuan against the US dollar.

The QDII scheme was seen as a way of cooling local stock markets by offering a new channel for the country's more than 100 million stock investors, who have little more than 1,000-plus companies listed on the Shanghai and Shenzhen stock exchanges to put their money into. Local and foreign-currency savings had risen to 31.8 trillion yuan (US$4.4 trillion) by the end of March, of which around half was from households, according to the figures provided by the People's Bank of China.

Even so, funds continued to pour into the local stock markets, seen as offering better returns than overseas outlets even before the subprime mortgage crisis in the US had started to be felt around the world. China's CSI 300 Index, a measure of stocks on the Shanghai and Shenzhen exchanges, rose about 160% last year. That compares with a maximum gain of about 60% in the Hong Kong benchmark Hang Seng Index.

Some economists said the strength of the A-share market, with the better returns it offered, was one reason behind the change to allow QDII funds to invest at home even though the scheme was intended to ease excessive domestic liquidity.

"QDII should abide by the following rule: capital flows to where profits and returns are high. That's why the funds can be invested 100% locally or abroad," said Wang Lianzhou, a retired securities law professor who led the QDII Drafting Committee.

The QDII "should be built on sufficient conditions and a solid foundation", he said. "Its investment performance has not been satisfying ... So the move by the CSRC is affirmative in correcting the problem once it was found."

As of December 31, the per-share net asset value of the first batch of QDII products had all fallen below one yuan, translating into a paper loss for subscribers as the funds were sold at one yuan a unit. For example, Huaxia Global Selected Stock Fund reported a per-unit net asset value of 0.893 yuan, Southern Global Selected Stock Fund reported a per-unit net asset value of 0.937 yuan and Harvest Overseas Fund reported 0.897 yuan.

Investment in mainland markets has also been made more attractive by the appreciation of the yuan since the government scrapped the currency's direct link to the US dollar in July 2005. The yuan strengthened about 7% last year and forward contracts indicate it may gain a further 9% against the US currency this year. Even so, the domestic stock market has declined by about 20 per cent since November, as government measures such as increased interest rates to cool the economy have started to bite.

By that light, the gauge document was also "a responsible move for regaining investors' interest", Wang said.

Zhu Geyu, director of marketing at China International Fund Management Company, one of the fund managers approved to invest in overseas stocks, said it was wrong to say permission to invest in the domestic market was granted due to the temporary loss in value of QDII products.

"Every policy launch is considered from the angle of long-term development by a regulatory authority, which would not change a policy solely because of short-term volatility or temporary drop of the products' initial-offer prices," he said.

He said the gauge document confirmed institutional investors' right to choose where to put funds and was in line with the QDII products' concept of global investment.

The QDII scheme was introduced with an initial total quota of $14.2 billion, and 17 banks and funds were awarded quotas to invest overseas. Only $4 billion was remitted as of March 2007, due to restrictions imposed by the authorities on the design of QDII products, the appreciation of the yuan and the greater returns to be gained from investing in the domestic stock market.

Beijing later eased regulations to include brokerage houses and other institutions to invest through QDII, so that the total investment quota had reached $42.17 billion as of the end of September, of which $16.1 billion was granted to banks, $19.5 billion to fund management companies and $6.57 billion to insurers, according to the 21st Century Economic Herald.

Among institutions granted QDII quota are 20 insurers including China Life Insurance Company, Ping An Insurance (Group) Company, PICC Property and Casualty Company and China Reinsurance Company, the China Insurance Regulatory Commission said at the end of November.

The expansion of the QDII to mainland stocks was criticized by Yi Xianrong, a researcher with the Institute of Finance and Banking under the Chinese Academy of Social Sciences (CASS). The scheme, as implied by its name, was for investing in overseas markets, he said

"Allowing QDII to invest in the A-share market will only mean it will miss its goals of reducing excess liquidity and foreign exchange reserves. Meanwhile, there are many A-share funds in China for those who want to buy domestic shares, so it's ridiculous for the institutional investors to buy A shares after trying so hard to get the QDII quotas," he said.

"The possible high returns from the soaring A-share market should not be a reason for the new change as each market has ups and downs."

Issac Meng, a Beijing-based economist at BNP Paribas Securities, echoed Yi's views, saying it was ridiculous for QDII funds to invest in A-shares as this would cause operational and regulatory issues. "The change might pose operational issues such as how the awarded quotas should be divided into overseas or A-share markets, or if the institutions with QDII quotas need to ask for extra quotas for the A-share market," he said.

Industry players expect the amount of QDII funds that will flow into A-shares to be less than the amount going overseas. Zhu, from China International Fund Managemement, said funds could be used for combinations such as "China and India" investments that would include A shares.

Hao Kang, fund manager of the China Opportunity Global Stock Fund at ICBC Credit Suisse, argued that the change extended the institutional investors' "right to choose" in investing in overseas markets, which in turn would enhance their profit opportunities at different stock markets.

"However, given that time for China to fully open its existing capital market to the world is not ripe, even if QDII funds will be allowed to invest in the A-share market, the proportion of funds under my management that will be allocated to the A-share market will be limited to about 10%. The fund will focus on overseas markets," Hao said.

Wang Jingxin, an analyst at Guosen Securities, expected the proportion of QDII funds that will be allocated to the A-share market to be limited in the short term. "I don't think much of the share of funds will be invested in the A share market. Otherwise, the QDII funds will turn out to be A-share funds," he said.

An official at China International Capital Corp (CICC), who asked not to be named, said "priority will be given to H shares, though the QDII quotas will be allowed to invest in A-shares and other overseas markets, as we know the Hong Kong stock market better". H shares refers to mainland-incorporated companies listed in Hong Kong.

CICC, in which Morgan Stanley holds a 34% stake, said on December 17 that it had received a $5 billion quota for its QDII fund and expected to launch a product before or after the Chinese New Year in early February.

Yi, from CASS, said that despite the increasing number of markets in which the QDII funds can be invested, H shares will benefit most as the mainland institutions have a better understanding of the Hong Kong stock market and the mainland companies listed there.

Jun Ma, chief economist at Deutsche Bank, expected that between $50 billion and $70 billion will flow to Hong Kong from the mainland via the QDII program in the next six to 12 months.  

Investors were guaranteed a profit of US$447 after only 14 months and an annual rate of return as high as 32.5%. The scam may seem impossible outside China, where ant products are largely unheard of, but within the country ants are believed to carry healing properties that can increase physical stamina, prolong youth, heighten immunity and increase sexual potency. So, to the greedy and the ignorant, the scheme appeared to be a good bet. For a while, it even seemed to work for all concerned, but when product sales slumped and the company started using investors' deposits as income, Yilishen had crossed the line into illegality.

In the end, the scheme collapsed, Yilishen went bankrupt and investors had nowhere to turn. The company is now being liquidated. Wang was arrested last month, but the charge against him is not fraud; rather, he is being held for "instigating social unrest" after thousands of out-of-pocket investors, demanding compensation for their losses, stormed the provincial government offices in the capital of Shenyang last November. The demonstration reportedly turned violent, and police were called in to quell the riot.

According to the official Xinhua News Agency, police allege that the angry demonstration actually started at Yilishen's offices, but then Wang paid employees, including company executives, to organize a protest against the government instead. Why he would do this is not clear from the Xinhua report, but it is clear that he is now in jail, his reputation in tatters, and his once successful company is no more.

Wang's ant-breeding scheme had been running for eight years before it collapsed, and no one in officialdom bothered to call him out - not even after the mastermind of an almost identical scheme was sentenced to death last year in a Liaoning court. Wang Zhendong was found guilty of duping more than 10,000 "ant farmers" out of $390 million between 2002 and 2004 with the promise of a return of up to 60% on their investment. During that same period, police in Liaoning say, they shut down 16 companies engaged in fraudulent schemes involving nearly $1.4 billion.

Such scams are not peculiar to Liaoning, however. Xinhua reports that between July 15 and August 16 last year, authorities discovered 600 fraudulent schemes in 14 provinces and cities, arresting 3,300 people. And, again, those 600 scams represent only what has been reported. Multiply by 10 or more, and China becomes a swindler's dreamland.

One big reason so many scams go undetected is the complicity of notoriously corrupt local officials. For a long time, Wang Fengyou's case smelled of such a partnership but, finally, the investors' violent protest forced the hand of authorities.

Wang's rags-to-riches story has become a familiar theme in China. He was born into a poor farming family in the village of Fushun in Liaoning, and his education did not go beyond middle school. But his humble beginnings did not curb his ambition. After a number of failed business ventures in his home province, he moved in 1993 to the capital city of Guangzhou in wealthy southern Guangdong province. There he started a taxi business that he sold five years later for a handsome profit. This allowed him to move back to Liaoning and found Shenyang Dingxi Technology, the starting point for his ant-breeding scheme. In 1999, Wang established Yilishen, a highly successful joint venture involving nine different companies invested in health products and property.

Along the way to wealth and success, Wang created a formidable public relations machine, cultivated a reputation as a philanthropist and, of course, made a wide array of political and social connections, known as guanxi in China. Yilishen lured prospective investors by publishing glowing testimonies from successful ant breeders who vowed that they had made huge profits while staying at home. The company also regularly advertised on CCTV, China's national television network, and boasted endorsements from celebrities such as the country's top comedian, Zhao Benshan. Zhao may now also be a victim of the Yilishen scandal as rumors fly that he will be banned from performing in CCTV's signature program, the Lunar New Year Gala, which features China's most popular celebrities.

Wang also burnished his and his company's image by donating nearly $1.4 million to public causes. So it was no surprise when, in 2006, the Ministry of Commerce granted his company a coveted direct-selling license. That license came two years after the US Food and Drug Administration had prohibited the import of Yilishen products, which the agency deemed to have zero value as health products.

There seem to be two morals to this story. If you are trying to read the tolerance of provincial governments for Ponzi schemes, the message appears to be: scam as much as you like as long as you don't cause a riot. But there is also a bigger lesson for the Chinese masses, many of whom have been so shamelessly cheated: ignorance and greed are a bad combination.

Kent Ewing is a teacher and writer at Hong Kong International School. He can be reached at kewing@hkis.edu.hk.
www.atimes.com/atimes/China/JA12Ad01.html

 s dazu auch

264. Aufstand in China
265.

viel Glück ;-)

""US commercial and diplomatic thinking regarding China's commercial behavior and long-term prospects needs to shift to account for this conclusion.""

Because China's growth has not been export-led, Keidel said the United States should concentrate on improving domestic components of its own international competitiveness rather than blaming China for imbalances.

""Of course, this is not to say that successful export growth is not a vital part of China's development strategy,"" he said.

""Exports are clearly one of many essential components in a development strategy driven mostly by domestic demand.""

Last year, Keidel released a study indicating China's economy is about 40 pct smaller than most estimates. The World Bank reached a similar conclusion in December.

CICC is 1st broker to launch QDII fund

CHINA International Capital Corp will today become the Chinese mainland's first brokerage to launch a fund product under the Qualified Domestic Institutional Investor program.

The broker's US$5-billion fund, which will start subscriptions today, will be operated by its office in Hong Kong.

The fund differs from other QDII products that are issued by mutual fund management firms in that it is flexible in equity investments.

When the stock market encounters a lot of risks, the fund's proportion of equity investment can be reduced to as low as 25 percent while it can be raised to 95 percent in a bullish market, with up to 85 percent invested in Hong Kong-listed shares.

"It provides a tool to counter risks and allows the fund to share growth when the stock market is bullish," Wu Xianxing, an analyst at Haitong Securities Co, said. "Such a design may boost sales of the product."

Other products issued by mutual fund management firms usually have more than half of their investment in equities, according to Wu.

For example, the China Opportunity Global Stock Fund, issued by ICBC Credit Suisse Asset Management Ltd last month, has 60 percent of its assets in stocks.

Besides CICC, six other Chinese brokerages have been approved to start businesses under the QDII - CITIC, China Merchants, Guotai Jun'an, Everbright, Orient and Huatai Securities. They join fund management firms, banks, insurers and trust companies.

China 4Q GDP likely grew tad slower, as export demand weakened, domestic investment cooled marginally on policy tightening.

China GDP tipped +11.3% in 4Q (vs +11.5% in 3Q), according to average economist forecast in Dow Jones Newswires poll. Data, due next week, will offer latest sign of how badly U.S. subprime-loan sector collapse is hurting global economy.

"The slowdown in the U.S. economy is going to push the Chinese economy in the direction (of slower growth) that policymakers haven't been able to," says Daniel Melser, a Sydney-based economist at Economy.com., Moody's Corp. economic research unit.

"The uncertainty is about how big the U.S. slowdown will be." Data likely to come out next week, no official time set

China ruled out full democracy for Hong Kong in 2012 on Saturday, ignoring the majority opinion in the former British colony, but said it may pick its leader by universal suffrage at the following opportunity, in 2017.

Full democracy for forming Hong Kong's legislature would follow in 2020, the Standing Committee of China's parliament, the National People's Congress (NPC), said.

Qiao Xiaoyang, a senior NPC official, said it opted for a delay till 2017 to preserve Hong Kong's stability based on a principle of "gradual and orderly progress."

"This is the most active and progressive arrangement we can have," he told a forum in Hong Kong.

Chief Executive Donald Tsang welcomed the ruling, urging Hong Kongers to shelve their differences and work together to hammer out the details.

"We must treasure this hard-earned opportunity," Tsang told reporters. "I sincerely urge everybody to lay down all disagreements and start moving toward conciliation and consensus."

But the city's vocal pro-democracy camp, a key voting block in the legislative council, was disappointed at what it saw as yet another delay. It organized a protest march that drew a few hundred people outside the historic legislative building.

The decision to rule out 2012 was effectively the NPC's second veto of a possible date for universal suffrage after a 2004 ruling that quashed hopes for full elections in 2007.

www.reuters.com/article/worldNews/idUSHKG24093920071229  

Die Korrektur des SSE sollte mindestens bis 3600 runter gehen. Auch
ein weiterer Absturz in den Bereich 2700 bis 2800 (Korrektur-Tief von
Feb. 2007) würde mich nicht wundern.

Der Chart zeigt aber auch ganz klar, dass ein parabolischer Index-Anstieg,
der ja bereits zur Thread-Eröffnung zu beobachten war (Stand damals: 2870),
keine Garantie dafür ist, dass sich der Index ab da nicht noch einmal
verdoppelt.

China to relax rules on foreign investment in securities   Chinese foreign exchange regulator is to loosen its control over the Qualified Foreign Institutional Investor (QFII) program, which allows overseas institutions to invest in Chinese securities market.  The State Administration of Foreign Exchange (SAFE) is revising rules concerning restrictions on QFII money, and may cut down the lock-up period required before QFII money is allowed to invest in the mainland market, the financial website Hexun quoted SAFE deputy head Li Dongrong as saying on Tuesday.

 

No timetable for implementation of the reforms was given, nor were further details of how it would be carried out released.  It would be another major move in China's plan to further develop its capital market through the introduction of QFII system since 2002, after the regulator tripled the investment quota from $10 billion to $30 billion in December last year, analysts said.

China stocks fall 5.5% in a correction  A fresh wave of selling hit China's equities on Wednesday, pushing a key index down more than 5 percent, amid a mixture of lingering worries.  The Shanghai Composite Index tumbled 5.5 percent to 3,413.90 points, marking a loss of 44.26 percent drop from its peak in Mid-October.  Analysts said the decline was a natural correction as the gauge surged nearly 400 points after touching the lowest level in nearly a year last Thursday.  Worries over temporary liquidity might also be a factor, as a new wave of initial public offerings started this week after a 40-day gap.  In the past few months, investors in the country have flocked to the primary market for almost risk-free gains as volatility increased in the secondary market. However, that trend might slow down as several major players have fallen below their IPO prices.  What also weighed on investors' sentiments are concerns about further monetary tightening to fight inflation, which hit 8.7 percent in February. It is widely believed that the March figure, while easing a bit, will stay above 8 percent.  Fears over a decline in corporate earnings, the cornerstone of a bull market, due to the impact of the credit crisis in the United States and a faster appreciating yuan, added to the selling pressure.  Less than 10 percent of the 1,400 stocks in the Shanghai and Shenzhen bourses posted gains, while trading volume shrank slightly to some 124 billion yuan ($17.71 billion).  Blue chips led the decline, with PetroChina tumbling 4.84 percent to 17.32 yuan per share, approaching its IPO price of 16.7 yuan.  Financial shares continued their weak performance.

The Industrial and Commercial Bank of China fell 4.6 percent to 6.01 yuan, while China Life nosedived 7.34 percent to 30.16 yuan

The Shanghai Stock Exchange Composite Index [SSEC] declined from a high of 6124 in October to a low of 3271 or 46.6% in a little over five months. Measured from the 2005 low just under 1000, it has given back over 50% of the gains.

The low of 3271 was between the 50% retracement and a very strong support at around 3000 that went back to Feb.and Mar. 2007. Back then, a 9% one day drop in the SSEC was the shot heard around the world, but it's hardly noticeable in this chart.

The 61.8% retracement sits just under 3000. While there is some danger that the 3000 level is in play since the 50% retracement was taken out, the extreme RSI reading argues for at least a temporary rebound. At any rate, the 3000 level has every reason to hold if things come to that.

So I would argue that the risk/reward here is acceptable for a long term investor.

Verblüffende Ähnlichkeit der Charts...

On closer examination, however, a vastly different story emerges. By the end of 2007 almost half of China’s GDP growth was attributed to exports and government consumption, a dramatic reversal from 2003 when growth was dominated by investment and private consumption.

While savings rates have been traditionally high, immense wealth has been invested in the stock market and real estate. The Shanghai index lost two-thirds of its value since its peak in mid-October 2007 and the Hang Seng is down over 50% from its peak a year ago.

While fixed asset investment may be rising, one-third is continuing to pour into the real-estate sector (up 29% year-on-year) despite vacant commercial floor space in China rising by 6.1% at the end of July (the latest month for available statistics). Real estate prices are experiencing their slowest growth in 18 months and new home prices in Guangzhou and Shenzhen have actually declined. Meanwhile growth in new car sales, while still robust, is slowing.

Not surprisingly, consumer confidence, according to official Chinese statistics, is drifting downwards and Western ratings on Chinese commercial banks, the holders of unused commercial real estate, are being lowered. Those on the cusp of entering the middle class are faring poorly as tens of thousands of small and medium sized enterprises go bankrupt.

Guangdong Province alone, the heart of China’s low-cost manufacturing base, has seen half of the shoe manufacturing industry close shop (over 2,200 factories) this year. These are some of the low-skill, low-wage jobs China wants to replace with high value-added manufacturing. However, there has been very little preparation for laying the foundations for such an economy. The largest destination for fixed asset investment has been manufacturing, much of which has been concentrated in low-end commodities.

The expectation in Beijing earlier this year, teeming with cranes and construction workers, was for a post-Olympic surge in foreign companies opening offices in the capital. That was of course before the threat of recession hit the world’s major economies.

Laid-off factory employees, along with millions of migrant construction workers likely to be left jobless as construction slows, will return to a countryside largely unchanged from when they left years before. It should come as no surprise then that demonstrations against local officials in smaller cities quickly escalate into “mass incidents.” Fixed investment in education, health, and social programs accounted for a paltry 2.3% of the total through July.

Unless current expansionary monetary and fiscal policies are directed at skills development, an expanded intellectual property rights enforcement bureaucracy and research and development capacity, China may be running headlong into a great economic brick wall. Rising middle class expectations, shrinking manufacturing jobs, and a lack of qualified workers are more of a threat to continued economic growth than the People’s Bank of China’s exposure to U.S. Treasury bonds.

Economic development has been the foundation of social stability and party legitimacy for the past several decades. Premier Wen, in his recent UN speech, reaffirmed China’s commitment to reform and opening. That entails some hard choices regarding China shifting away from its traditional focus on low-end production. As the world economy continues to flounder (and most expect a U.S. led turn around is at least a year away) China faces the fading memories of a successful Olympics and a wave of unemployed workers with very little to cheer about.

Brian Klein is an International Affairs Fellow of the Council on Foreign Relations.

http://www.feer.com/economics/2008/october/The-Great-Crash-of-China