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CCME - This is where a great PR firm comes in handy lets see what TEG can do.
This is where a great PR firm comes in handy lets see what TEG can do.
FMCN CNYD VIT LFT CAAS many others doing just fine....question is what gets one in the strong group?
How DEER is proactive for their stock:
Deer Consumer Products, Inc. Announces $20 Million Stock Buyback, Raises 2010 Earnings Guidance, Provides Business Updates
Deer Reports Absolutely No Signs of Consumer Buying Slowdown in the Chinese Domestic Markets for Deer Products
http://finance.yahoo.com/news/Deer-Consumer-Products-Inc-prnews-2575620165.html?x=0&.v=1
Here is an earlier one they did to be proactive.
Deer Consumer Products, Inc. Reports No Negative Sales Trend or Currency Risks From European Customers
Deer Announces Executive Appointments
http://finance.yahoo.com/news/Deer-Consumer-Products-Inc-prnews-4288243888.html?x=0&.v=1
This is what CCME should do:
Deer Consumer Products, Inc. Announces $20 Million Stock Buyback, Raises 2010 Earnings Guidance, Provides Business Updates
Deer Reports Absolutely No Signs of Consumer Buying Slowdown in the Chinese Domestic Markets for Deer Products
prnewswire
Press Release Source: Deer Consumer Products, Inc. On Monday May 17, 2010, 6:55 am EDT
NEW YORK, May 17 /PRNewswire-FirstCall/ -- Deer Consumer Products, Inc. (Nasdaq: DEER; website: http://www.deerinc.com), one of the world's largest vertically integrated designers and ODM/OEM manufacturers of home and kitchen electronics marketing to both global and China domestic consumers, announced today the following updates:
$20 Million Share Buyback:
Deer has initiated a stock buyback program, which allows the Company to purchase from time to time in open market transactions, up to $20 million worth of Deer common stock. As of Q1/2010, Deer had more than $75 million in cash (or $2.31 per share in cash) without any long term debts or bank credit needs.
"In light of Deer's current low valuation for reasons totally irrelevant to our fundamentals, and with our common stock trading at 3 times cash and an estimated mid-single-digit 2010 P/E (price to earnings) multiples, Deer feels strongly about taking proactive actions in enhancing shareholder value. Deer has sufficient cash on hand to fund both the share buyback program and grow our business," commented Mr. Bill He, Chairman & CEO of Deer.
Deer's management currently owns approximately 50% of the Company's entire shares outstanding. All of these management-controlled shares are locked up for 3 years and are restricted from selling to the public market prior to January 2013. Deer management believes its interests are totally aligned with those of the Company's public shareholders.
Business Updates:
"We see absolutely no signs of a consumer buying slowdown in the high margin Chinese markets for Deer's products. Our sales tend to grow along with China's consumer disposal income growth which has been outstanding. Our products are not highly expensive items, such as real estate or automobile investments. Therefore, wealthier Chinese consumers can easily make purchase decisions for Deer products that make their busy lifestyles far more convenient. Deer has a growing presence at two of China's largest retailers, which collectively represent 8% of China's total retail electronics sales. Deer is also progressing very well in deepening our sales channels and marketing to the remaining 92% of China's broader retail space. We are excited and highly positive about our markets and outlook," said Mr. Bill He.
Deer Raises 2010 Revenues and Earnings Guidance:
"Deer is currently experiencing strong domestic and global sales. Deer's robust existing and new order flow pipelines will likely result in higher than anticipated earnings growth. We are comfortable with raising Deer's 2010 earnings guidance to approximately $26 million in net income on revenues of approximately $160 million, with significant growth anticipated in our seasonally strong second half of 2010. We see little execution risk in achieving and potentially exceeding these new earnings growth targets," concluded Mr. Bill He.
About Deer Consumer Products, Inc.
Deer Consumer Products, Inc. (Nasdaq: DEER; website: http://www.deerinc.com) is a NASDAQ Global Select Market listed U.S. registered public company headquartered in China. Managed by the Company's founders, Deer has a 15-year operating business as well as a strong balance sheet. Supported by more than 103 patents, trademarks, copyrights and approximately 2,000 company-trained seasonal and full time staff, Deer is a leading designer, ODM/OEM manufacturer and global marketer of quality small home and kitchen electric appliances. Deer's product lines include blenders, juicers, soy milk makers and a large variety of other home appliances designed to make today's lifestyles simpler and healthier. With more than 100 global clients/branded products such as Black & Decker, Ariete, Disney, Toastmaster, Magic Bullet, Back to Basics and Wal-Mart, and rapidly expanding China domestic market footprint, Deer has enjoyed rapid sales and earnings growth in recent years.
Safe Harbor Statement
All statements in this press release that are not historical are forward-looking statements made pursuant to the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. There can be no assurance that actual results will not differ from the company's expectations. You are cautioned not to place undue reliance on any forward-looking statements in this press release as they reflect Deer's current expectations with respect to future events and are subject to risks and uncertainties that may cause actual results to differ materially from those contemplated. Potential risks and uncertainties include, but are not limited to, the risks described in Deer's filings with the Securities and Exchange Commission.
Contact Information:
Corporate Contact:
Ms. Helen Yongmei Wang
Deer Consumer Products, Inc.
Tel: 011-86-755-86028285
Email: investors@deerinc.com
HSU can absolutely move a stock....CCME would be right up his alley imo
FMCN CNYD continues strength.......sector strength is there....connection needs to be made
CNYD dropped below the 200 day moving average in May at 11 it is 15 now
http://finance.yahoo.com/echarts?s=CNYD#chart1:symbol=cnyd;range=3m;indicator=ema(200)+sma(200)+volume+mfi;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
CAAS dropped below its 200 day moving average twice and it is now above
http://finance.yahoo.com/echarts?s=CAAS#chart2:symbol=caas;range=3m;indicator=ema(200)+sma(200)+volume+mfi;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
AUTC dropped below its 200 day moving average and it is now above
http://finance.yahoo.com/echarts?s=AUTC#chart1:symbol=autc;range=3m;indicator=ema(200)+sma(200)+volume+mfi;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined
yes i dont think any catalyst will be needed ...this was a flush out ...i epxect reversal is coming
there has been approx 80- trading days (4 months) since the warrant redemption at avg daily trading volume of 400k....so 32m in volume.....would think the warrant flippers are done or near an end imo
Jacky Lam did not RECENTLY throw down $45k at $13 per share because bad news is coming...CFO knows all.....this is about shorts , a low float, and panicked retail investors.....so many stocks have done this over the years then to retrace strongly to the upside....another example CSKI (which could be scammish) ,,,,,had great numbers.....i called it on the first earnings report on nasdaq and it popped from 12 to 14.....retraced to 10-11 weak as can be..shorts controlled it ...then it snapped to like 16 then eventually 20's (sure it is down now for other issues)....this is a cycle and I believe we are in the final stages of it being played out......I understand the frustrations....i would be lying if I said it was not frustrating...but EPS/growth does not lie...and value and price eventually converge....
Q2 results should be .55-.62 EPS.....20m NI vs 8m prior year.....would think we get a guidance raise.....
I think that fri was margin calls and stops being taken out.....and yes shorts continuing to manipulate this stock....the stock has bounced into earnings every time and this report should be stellar
Jacky Lam did not just throw down 45k at $13 because he knows something bad is coming
CCME guy at 11 with 6600 shares was hit with 100 shares and left....what does that tell you is really going on here?
CCME guy at 11 with 6600 shares was hit with 100 shares and left....what does that tell you is really going on here?
CCME share price crazy considering they are going to be reporting approximately $0.55-$0.62 cents eps while net income goes from 8m to 20m+ (my estimate).......guidance you would think has to be raised....although I hope they shock the shorts and rise guidance before the Q2 release. I think we start to move upwards here.....possible coverage, news, and earnings move.......look at VIT pe of 35 sigh.......
CCME share price crazy considering they are going to be reporting approximately $0.55-$0.62 cents eps while net income goes from 8m to 20m+ (my estimate).......guidance you would think has to be raised....although I hope they shock the shorts and rise guidance before the Q2 release. I think we start to move upwards here.....possible coverage, news, and earnings move.......look at VIT pe of 35 sigh.......
CCME green - what a sight for sore eyes!!!!!!!
CCME should do .55-.60 eps this Q imo
on SKBI....they have subsequently disappointed by never opening the new facility and then major dilution......facts can change so yes the facts have changed on their fundies......at the time it was a fundies play no longer........and yes i do make mistakes....geez
yes those stocks were momentum plays.....none of them had the fundamentals to support and sustain a move like CCME
I am afraid I am to blame for the mess on yahoo boards (and I do not frequent them). It is one guy who hates me....and has for years....he creates unlimited aliases and bashes the yahoo message board of every stock I am long......true story......but take heart.....
He bashed Pdo - before it went from 5 to 45
EFUT before it went from 11 to 45
APWR before it went from 12 to 30
SKBI before it went from this area 11's to 22
and the list goes on.......he bashes the loudest from the initial pop and pullback when the stock acts dead....never have failed to see a run after this point on any of my stocks.....the fact we have 800k shorts makes it more of a dream scenario......any day this thing can and will rocket with volume and not look back imo.......
Shorts will do it until the day it does not work and I think that day is soon upon us....then 800k will scramble to cover...you know this is just manipulated and see a huge bounce is coming that will sustain imo
CCME moves up FAST.....this thing will rocket when it takes off 800k shorts trying to cover
CCME earnings move soon....take heart in this...last year's Q2 2009 comp was 8.3m net income.....in q1 2010, the weakest qtr, they did 18m.....should be a blowout report and guidance raise should be imminent.....
CCME earnings move soon....take heart in this...last year's Q2 2009 comp was 8.3m net income.....in q1 2010, the weakest qtr, they did 18m.....should be a blowout report and guidance raise should be imminent.....
Funny how we are always expecting some specific catalyst......but I cannot count the times that stock like these have just started to move and take off out of the blue.....once volume starts you know it has begun.......after SKBI did their secondary (and I think SKBI now is a much lesser of quality stock than CCME) the stock was at the same place the 11's and acted the same dead and shorted......then when even I had given up to an extent it just started rising.......EFUT back in the day was dead in the 11's for awhile then it blasted to 50 out of the blue.......my point is sometimes there is no specific catalyst except big money finds a gem and runs it to the hill......APWR was a SPAC came to nasdaq popped like CCME then fell to the 11 area and acted dead like this...boom then wind energy theme came and it took off to $30....china ad theme and consumer theme is real ....set up is similar.....the right people have to figure it out.....CCME is better quality than any of the above stocks.....
China stocks now offer appetizing entry point, say analysts
AlertEmailPrintShare By Chris Oliver , MarketWatch
HONG KONG (MarketWatch) -- After slumping by more than one-fifth since the start of the year, its little surprise there's scant enthusiasm for China shares.
But analysts say Chinese stocks are now at valuations that have historically provided good entry points for investors.
Macquarie Securities flagged the issue in a research note earlier this month, saying on the basis of expected earnings, Shanghai shares were trading 24% below their long-term average. They are also just 14% higher in terms of expected earning than the lows seen in August 2005, when they slumped to an eight-year low amid concerns the Chinese government would begin selling its stakes in state companies.
"Local sentiment is beginning to shift back in favor of local equities," said Macquarie analysts, led by Michael Kurtz, in a note.
Though China's economic clout makes it a key player in any global recovery scenario, observers are also closely watching its stock market because of its recent tendency to foreshadow the shifting tide in world markets.
Chinese stocks were among the first to recover from the global crisis, turning higher in October 2008, almost six months before U.S. and European markets began to rally. Chinese markets turned lower in August, signaling a change in momentum months before other markets would begin to sputter.
In recent times, investors have been shying away from Chinese equities amid concerns that Beijing's efforts to cool down the property market could snowball into a deeper economic contraction.
However, Kurtz wrote in the note that he believes those worries are overstated. Authorities stand ready to loosen policy if housing prices fall too much, and are warming to the idea of a shift to an easing stance before year end, he says.
"China's leadership remains reluctant to allow sub-8% [annual] growth," said Macquarie analysts in their note.
In the four weeks through early June, sectors such as property developers, industrial materials and energy have outperformed relative to the CSI 300 index, Kurtz said. The strength could be a sign that the sectors most leveraged to China's tightening policy, targeted at preventing a bubble in the housing market, are looking beyond the horizon to the time when the tightening runs its course.
In an effort to cool the housing market, Beijing has lifted the ratio of reserves that banks must set aside as deposits three times this year. It also rolled out administrative measures to dampen speculation.
Bullish on China's Consumers
China's economy is slowing, but its consumer sector is growing, says Robert Horrocks, chief investment officer of Matthews International Capital Management, which specializes in Asia. That presents international-stock investors with unique opportunities, he tells Money & Investing editor Jonathan Burton.
China's Shanghai Composite has slumped about 22% since the beginning of the year and is down about 8% from a year ago. the Hang Seng China Enterprises Index, Hong Kong's benchmark for China shares, is off nearly 10% from a year ago.
Analysts at J.P. Morgan believe China's growth will cool as it exits its "ultra-expansionary policies" but it will avoid the sharp slowdown many investors fear. The analysts said Europe's sovereign debt problems are among external risks that complicated the economic outlook, though the current gloom appears as wrong-headed as overheating fears of a few months earlier.
In fact, any signs that Beijing is preparing to backtrack on its tightening policy "should provide a boost in sentiment and shift investor focus back to valuations that are undemanding in a historical context," wrote J.P. Morgan's Jing Ulrich.
Citigroup also spelled out its upbeat view of the region, advising investors to move out of defensive stocks and towards those leveraged for growth.
The recent correction in stock prices is normal during the second year of an economic recovery, wherein initial enthusiasm of recovery gets pared back. At current levels, markets across Asia, excluding Japan, are valued at 1.8 times price to book value - in line with historical valuations at this stage, Citi said. That means this a good entry point, with a 71% probability that shares will be higher six months from now, according to Citi's calculations citing data dating back to 1975.
the entire article is nonsense......you get better bashes on yahoo (ok that is an exaggeration) :=)
yes and bus ridership going to drop off the map in a land of 1.2b people anytime soon.....LOL weakest bash of all of it.....
Here is some fresh exciting info on CCME :
http://super-trades.blogspot.com/2010/06/ccme-new-exciting-concept-appears-to-be.html
Yuan Unshackled May Strengthen China Shift to Domestic Demand
June 20, 2010, 12:55 PM EDT
MORE FROM BUSINESSWEEK
(For more on China’s yuan decision, see {EXTRA <GO>})
June 21 (Bloomberg) -- China’s signal of an end to the yuan’s fixed rate to the dollar may accelerate a shift toward domestic demand as the prime driver of growth as President Hu Jintao seeks to strengthen household incomes.
The People’s Bank of China two day ago indicated it’s abandoning the 6.83 yuan peg to the dollar adopted during the global crisis to shield exporters. The central bank said while there’s no basis for “large scale” moves in the currency, the exchange rate will be allowed increased “flexibility.”
A stronger yuan will boost the purchasing power of China’s households that have helped propel imports to a record level, and companies from Orient Paper Inc. to Air China Ltd. that purchase goods from overseas. The lift adds to trends already under way that are stoking wages, as workers demand higher paychecks from employers including Honda Motor Co.
“Over a longer time, today’s announcement opens the door for increased yuan appreciation that will help adjust China’s economy towards a consumption-driven economy,” said Ma Jun, chief China economist at Deutsche Bank AG in Hong Kong, who is a former researcher for China’s State Council, or Cabinet, and used to work at the International Monetary Fund.
The Chinese central bank made its announcement at 7 p.m. Beijing time on June 19 in a posting on its website, a week before leaders from the Group of 20 meet in Toronto.
Economic Restructuring
The PBOC said in a follow-up statement yesterday that a more flexible currency will “direct resources to domestic- demand driven sectors such as services” and help curb an excessive reliance on exports, signaling it anticipates the currency will rise.
Authorities will resume a managed float of the yuan, also known as the renminbi, against a basket of currencies, according to the June 19 statement. Before the exchange rate was frozen in July 2008, Premier Wen Jiabao’s government had allowed a 21 percent advance versus the dollar over three years.
Goldman’s Bet
Goldman analysts said in a note to clients that the weekend statement reaffirmed their recommendation to purchase 12-month non-deliverable forwards, with a target of 6.50, compared with last week’s close of 6.7125.
The small move anticipated in coming months means there will be limited impact on the economy in the short term, said Ma. At the same time, exchange-rate strengthening will likely over time lead to greater household purchasing power, according to the Washington-based IMF, which conducts annual reviews of its member economies.
Yuan flexibility “will help increase Chinese household income and provide the incentives necessary to reorient investment toward industries that serve the Chinese consumer,” IMF Managing Director Dominique Strauss-Kahn said in a statement. It may also damp inflation, John Lipsky, the fund’s No. 2 official, said in a Bloomberg Television interview.
Consumer prices rose 3.1 percent in May from a year before, exceeding the government’s 3 percent target average for 2010.
Paper Profits
A stronger currency will benefit Chinese paper makers as the costs of pulp imports will drop. That’s particularly true as exports aren’t an important part of the business, according to Winston Yen, chief financial officer for Hebei, China-based Orient Paper, speaking in April.
It would also be a boon to China Southern Airlines Co., China Eastern Airlines Corp. and Air China by cutting dollar- denominated fuel bills and the cost of debt payments for purchases of Boeing Co. and Airbus SAS planes, according to Ally Ma, an analyst at Citigroup Inc. in Hong Kong.
The yuan decision follows a strengthening in China’s economy that saw gross domestic product expand 11.9 percent in the first quarter from the same period of 2009. Surging industrial production, exports, retail sales and property prices have sparked concern of an overheating that may end in a bust.
U.S. Treasury Secretary Timothy F. Geithner had advocated yuan flexibility as a means of addressing China’s price pressures, outside of the argument of American lawmakers that the yuan peg was an unfair subsidy for China’s exporters.
In an indication of confidence in the U.S., China increased holdings of Treasury notes and bonds by 2.6 percent to $900.2 billion in April from the previous month, after reducing its stake by 6.5 percent from November through March, according to U.S. data released June 15.
Lesson From Crisis
China’s leaders are aiming to buttress domestic incomes and reduce reliance on exports that collapsed during the crisis, culminating in a record 26 percent drop in shipments in May 2009 from a year earlier.
A more flexible yuan “is not a panacea” for global trade imbalances, Stephen Roach, chairman of Morgan Stanley Asia Ltd., said in an e-mail. Countries with large savings, such as China, “still need to take additional actions to stimulate internal private consumption,” he said.
In the past 10 years, China’s economy became more unbalanced, with consumption’s share of GDP falling to 35 percent last year from 45 percent in 2000, according to Societe Generale SA. Now, a rebalancing “seems to be occurring by default” as labor shortages in coastal provinces encourage wage gains that will boost consumer spending, Glenn Maguire, a Hong Kong-based economist for the bank, said in a report last week.
Government’s Task
“Consumer spending won’t see significant advances unless the government effectively reduces people’s precautionary savings for education, health care and old age,” said Liu Li- Gang, a Hong Kong-based economist at Australia and New Zealand Banking Group Ltd.
The State Council earlier this month approved a program to map out development strategies for each of the nation’s regions, the official Xinhua news agency reported June 12. President Hu plans to convene a meeting to discuss how to narrow the income gap later in the year, the Hong Kong-based newspaper South China Morning Post reported over the weekend.
More than 20 provinces and cities have overseen increases in minimum wages in recent months to help support incomes, and a focus of the 4 trillion yuan ($586 billion) stimulus package on boosting inland regions has helped reduce reliance on the export-linked coast.
Internal Regions
Manufacturers including Ningbo-based Dejin Textile Co., Shanghai-based China Crown Textile Co. and Shenzhen Jufeng Handicraft Co. have said the development of internal regions, such as Chongqing, has made it harder for them to attract migrant workers to factories on the east coast.
Meantime, employees in foreign-owned plants have been demanding higher compensation. Honda, Japan’s No. 2 carmaker, raised pay by 24 percent at a parts-making factory in Foshan, Guangdong province, after a strike crippled its production in China. Labor unrest then spread to Toyota Motor Corp.
At the same time as seeking to strengthen household incomes, China’s leaders have been pulling back on monetary stimulus in an effort to stem asset-price inflation. Data on June 10 showed property prices rose at a near-record pace, with costs jumping 12.4 percent across 70 cities from a year earlier.
The move to allow a stronger yuan means authorities may not need to tighten domestic monetary policy as much as previously was the case, according to Morgan Stanley. Wang Qing, Greater China economist at Morgan Stanley in Hong Kong, wrote in a note that the PBOC likely won’t raise interest rates this year. He also said the government may raise its target for 2010 credit growth from 7.5 trillion yuan. A record 9.59 trillion yuan of new loans were signed last year.
“The Chinese are increasingly confident they can make this adjustment to a domestic-driven economy rather than the one relying on exporting low-value-added stuff to the rest of the world,” Jim O’Neill, chief global economist at Goldman, said in an interview with Bloomberg Television in St. Petersburg, Russia, after the PBOC statement.
--Li Yanping. With assistance from Timothy R. Homan in Washington, Paul Abelsky in Moscow, Ryan Chilcote in St. Petersburg, Russia, Kevin Hamlin in Beijing and Kim Kyoungwha and Patricia Lui in Singapore. Editors: Chris Anstey, Paul Panckhurst
%CNY
Yuan Unshackled May Strengthen China Shift to Domestic Demand
June 20, 2010, 12:55 PM EDT
MORE FROM BUSINESSWEEK
(For more on China’s yuan decision, see {EXTRA <GO>})
June 21 (Bloomberg) -- China’s signal of an end to the yuan’s fixed rate to the dollar may accelerate a shift toward domestic demand as the prime driver of growth as President Hu Jintao seeks to strengthen household incomes.
The People’s Bank of China two day ago indicated it’s abandoning the 6.83 yuan peg to the dollar adopted during the global crisis to shield exporters. The central bank said while there’s no basis for “large scale” moves in the currency, the exchange rate will be allowed increased “flexibility.”
A stronger yuan will boost the purchasing power of China’s households that have helped propel imports to a record level, and companies from Orient Paper Inc. to Air China Ltd. that purchase goods from overseas. The lift adds to trends already under way that are stoking wages, as workers demand higher paychecks from employers including Honda Motor Co.
“Over a longer time, today’s announcement opens the door for increased yuan appreciation that will help adjust China’s economy towards a consumption-driven economy,” said Ma Jun, chief China economist at Deutsche Bank AG in Hong Kong, who is a former researcher for China’s State Council, or Cabinet, and used to work at the International Monetary Fund.
The Chinese central bank made its announcement at 7 p.m. Beijing time on June 19 in a posting on its website, a week before leaders from the Group of 20 meet in Toronto.
Economic Restructuring
The PBOC said in a follow-up statement yesterday that a more flexible currency will “direct resources to domestic- demand driven sectors such as services” and help curb an excessive reliance on exports, signaling it anticipates the currency will rise.
Authorities will resume a managed float of the yuan, also known as the renminbi, against a basket of currencies, according to the June 19 statement. Before the exchange rate was frozen in July 2008, Premier Wen Jiabao’s government had allowed a 21 percent advance versus the dollar over three years.
Goldman’s Bet
Goldman analysts said in a note to clients that the weekend statement reaffirmed their recommendation to purchase 12-month non-deliverable forwards, with a target of 6.50, compared with last week’s close of 6.7125.
The small move anticipated in coming months means there will be limited impact on the economy in the short term, said Ma. At the same time, exchange-rate strengthening will likely over time lead to greater household purchasing power, according to the Washington-based IMF, which conducts annual reviews of its member economies.
Yuan flexibility “will help increase Chinese household income and provide the incentives necessary to reorient investment toward industries that serve the Chinese consumer,” IMF Managing Director Dominique Strauss-Kahn said in a statement. It may also damp inflation, John Lipsky, the fund’s No. 2 official, said in a Bloomberg Television interview.
Consumer prices rose 3.1 percent in May from a year before, exceeding the government’s 3 percent target average for 2010.
Paper Profits
A stronger currency will benefit Chinese paper makers as the costs of pulp imports will drop. That’s particularly true as exports aren’t an important part of the business, according to Winston Yen, chief financial officer for Hebei, China-based Orient Paper, speaking in April.
It would also be a boon to China Southern Airlines Co., China Eastern Airlines Corp. and Air China by cutting dollar- denominated fuel bills and the cost of debt payments for purchases of Boeing Co. and Airbus SAS planes, according to Ally Ma, an analyst at Citigroup Inc. in Hong Kong.
The yuan decision follows a strengthening in China’s economy that saw gross domestic product expand 11.9 percent in the first quarter from the same period of 2009. Surging industrial production, exports, retail sales and property prices have sparked concern of an overheating that may end in a bust.
U.S. Treasury Secretary Timothy F. Geithner had advocated yuan flexibility as a means of addressing China’s price pressures, outside of the argument of American lawmakers that the yuan peg was an unfair subsidy for China’s exporters.
In an indication of confidence in the U.S., China increased holdings of Treasury notes and bonds by 2.6 percent to $900.2 billion in April from the previous month, after reducing its stake by 6.5 percent from November through March, according to U.S. data released June 15.
Lesson From Crisis
China’s leaders are aiming to buttress domestic incomes and reduce reliance on exports that collapsed during the crisis, culminating in a record 26 percent drop in shipments in May 2009 from a year earlier.
A more flexible yuan “is not a panacea” for global trade imbalances, Stephen Roach, chairman of Morgan Stanley Asia Ltd., said in an e-mail. Countries with large savings, such as China, “still need to take additional actions to stimulate internal private consumption,” he said.
In the past 10 years, China’s economy became more unbalanced, with consumption’s share of GDP falling to 35 percent last year from 45 percent in 2000, according to Societe Generale SA. Now, a rebalancing “seems to be occurring by default” as labor shortages in coastal provinces encourage wage gains that will boost consumer spending, Glenn Maguire, a Hong Kong-based economist for the bank, said in a report last week.
Government’s Task
“Consumer spending won’t see significant advances unless the government effectively reduces people’s precautionary savings for education, health care and old age,” said Liu Li- Gang, a Hong Kong-based economist at Australia and New Zealand Banking Group Ltd.
The State Council earlier this month approved a program to map out development strategies for each of the nation’s regions, the official Xinhua news agency reported June 12. President Hu plans to convene a meeting to discuss how to narrow the income gap later in the year, the Hong Kong-based newspaper South China Morning Post reported over the weekend.
More than 20 provinces and cities have overseen increases in minimum wages in recent months to help support incomes, and a focus of the 4 trillion yuan ($586 billion) stimulus package on boosting inland regions has helped reduce reliance on the export-linked coast.
Internal Regions
Manufacturers including Ningbo-based Dejin Textile Co., Shanghai-based China Crown Textile Co. and Shenzhen Jufeng Handicraft Co. have said the development of internal regions, such as Chongqing, has made it harder for them to attract migrant workers to factories on the east coast.
Meantime, employees in foreign-owned plants have been demanding higher compensation. Honda, Japan’s No. 2 carmaker, raised pay by 24 percent at a parts-making factory in Foshan, Guangdong province, after a strike crippled its production in China. Labor unrest then spread to Toyota Motor Corp.
At the same time as seeking to strengthen household incomes, China’s leaders have been pulling back on monetary stimulus in an effort to stem asset-price inflation. Data on June 10 showed property prices rose at a near-record pace, with costs jumping 12.4 percent across 70 cities from a year earlier.
The move to allow a stronger yuan means authorities may not need to tighten domestic monetary policy as much as previously was the case, according to Morgan Stanley. Wang Qing, Greater China economist at Morgan Stanley in Hong Kong, wrote in a note that the PBOC likely won’t raise interest rates this year. He also said the government may raise its target for 2010 credit growth from 7.5 trillion yuan. A record 9.59 trillion yuan of new loans were signed last year.
“The Chinese are increasingly confident they can make this adjustment to a domestic-driven economy rather than the one relying on exporting low-value-added stuff to the rest of the world,” Jim O’Neill, chief global economist at Goldman, said in an interview with Bloomberg Television in St. Petersburg, Russia, after the PBOC statement.
--Li Yanping. With assistance from Timothy R. Homan in Washington, Paul Abelsky in Moscow, Ryan Chilcote in St. Petersburg, Russia, Kevin Hamlin in Beijing and Kim Kyoungwha and Patricia Lui in Singapore. Editors: Chris Anstey, Paul Panckhurst
%CNY
Once upon a time there was a SPAC called APWR........It acquired a chinese company......came to nasdaq.....had initial pop....was shorted back down......they all bashed APWR as it was shorted from the initial pop giving up on it calling it a POS.....that is the ONLY stock I was big on at that time..........then the wind energy theme hit and APWR the SPAC ran to $30+ per share..........now we have the new theme building........chinas switch to higher domestic consumption....yuan revalue albeit gradual.....wages rising for the consumer........retailers and ADVERTISING stocks will do well this is a similar set up and I expect that CCME will make a similar run to APWR soon....maybe starting this week
China’s pledge to make the yuan more flexible may boost shares denominated in the currency when markets open tomorrow, China International Capital Corp. and Societe Generale SA said.
“If it leads to appreciation for the yuan, it’s good news for the market,” Hao Hong, global equity strategist for CICC in Beijing, said in a report today. “Investors will want to get into Chinese assets because they will be worth more. It will also deflect political criticism and help stem inflation.”
The People’s Bank of China said yesterday that it will “increase the renminbi’s exchange-rate flexibility” after the economy improved. Officials have kept the yuan, also known as the renminbi, at about 6.83 per dollar since July 2008, aiding the nation’s exporters and fueling tensions with trade partners.
A stronger yuan would aid Chinese companies by boosting their purchasing power, while the likelihood of the currency appreciating is an incentive for foreign investors to buy yuan- denominated stock, Glenn Maguire, a Hong Kong-based economist for the French bank, said in a phone interview today.
“It’s probably going to be a positive for the A-share market,” Maguire said. “It makes A-share valuations look more attractive,” he said, declining to estimate how much shares may gain. The local-currency A-shares rose in 2005 when China revalued its currency, he added.
The Shanghai Composite Index has tumbled 23 percent this year as the government pares stimulus measures and Europe’s sovereign-debt crisis adds to the risk of a renewed global slump. In 2005, the benchmark, which covers both A shares and foreign- currency B shares, rose 2.5 percent on July 22, the day after the government revalued the currency.
China Petroleum & Chemical Corp., Asia’s largest refiner, said today that it would benefit from yuan gains.
‘Obvious’ Result
“Almost all of our sales are on the domestic Chinese market and we purchase a great deal of raw oil for processing from overseas,” spokesman Huang Wensheng said by phone. “If the ability of domestic consumers to take on higher costs increases and the cost of our overseas purchases decreases, then the result for us is an obvious one.”
CICC’s Hao expects airlines and paper producers to benefit most from possible yuan appreciation, saying it will reduce the cost of raw materials such as fuel oil and pulp. CICC was the top-ranked brokerage for China research in the annual survey by Asiamoney magazine.
Shares of raw-material importers such as Sinopec, and companies with dollar-denominated debt, such as China Southern Airlines Co., gained in trading after the revaluation in 2005.
The situation this year isn’t entirely the same. The central bank’s announcement yesterday that it will scrap an effective peg to the dollar didn’t include a one-off gain for the currency. In 2005, the yuan immediately rose 2.1 percent as part of a policy shift.
The latest policy shift may support the currencies of Taiwan, South Korea and Australia, economies closely linked to China, over the rest of this year, Maguire said. A stronger currency because of “gradual” appreciation will boost the country’s purchasing power, he said.
--Paul Panckhurst, Allen Wan. Editors: John Liu, Allen Wan
To contact Bloomberg News staff for this story: Paul Panckhurst at +86-10-6649-7574 or ppanckhurst@bloomberg.net
WSJ - China's Move On Yuan Bodes Well For Riskier Assets
By Robert Flint
OF DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--China's pledge Saturday to allow the yuan more flexibility bodes well for riskier assets tied to global growth.
The surprise announcement by the People's Bank of China indicates China is confident enough about economic recovery and the stability of the world financial system to permit the yuan to resume strengthening against the greenback. That message will ripple through all types of financial markets when trading starts Monday.
Equities, commodities and growth-sensitive currencies such as the euro and Australian dollar are likely to gain, while the greenback and U.S. Treasuries retreat. Regional Asian currencies could also get a knee-jerk lift because they stand to benefit the most from increased economic activity in China.
"It is bullish for risky assets as the statement signaled China has become more optimistic about the growth outlook and didn't the see euro-zone [debt] crisis having material effects on exports," said Jim O'Neill, chief economist at Goldman Sachs. "It is a sign of Chinese self-confidence."
In the statement in English and Chinese on the PBOC's Web site, the central bank said: "The global economy is gradually recovering. The recovery and upturn of the Chinese economy has become more solid with the enhanced economic stability."
However, the PBOC statement all but ruled out a large one-off revaluation of the Chinese currency and only indicated a return to the yuan's slow appreciation without being specific. Therefore, the immediate effects on markets could be limited.
"I don't expect a major reaction, but the announcement could move Treasurys lower ahead of auctions," said Ward McCarthy, chief financial economist at Jefferies & Co. in New York. Because a very gradual appreciation of the yuan is expected, the longer-term effects on markets should also be gradual, McCarthy said.
The European economy is likely to be the primary beneficiary, which could boost European stocks and be the catalyst for riskier trades, he said. By releasing the de facto peg that's kept the yuan's exchange rate versus the greenback steady for nearly two years, China will also enable the euro to slide against the yuan as well as the dollar, thus increasing the export competitiveness of European products. A resumption of yuan appreciation would end nearly two years of stability against the greenback.
The Chinese currency had gained roughly 21% in the three years following a 2.1% revaluation on July 21, 2005. But when the credit crisis hit the world financial system late in the summer of 2008, Chinese authorities froze the dollar at about CNY6.83, in part to maintain the competitiveness of Chinese exports as the world economy sunk into recession.
Commodity-backed currencies, such as the Australian and Canadian dollars, should rally, but the rally "may well be short-lived if the pace of [yuan] appreciation disappoints," said Geoffrey Yu, currency strategist at UBS in London. According to a UBS analysis, when China in July 2005 abandoned its effective dollar peg, the Australian dollar climbed 1.6% against the greenback. The U.S. dollar, on the other hand, sold off heavily against the Japanese yen, dropping 2.7% on the day.
The yen is seen as both a safe-haven alternative to the greenback and as proxy for the tightly controlled yuan. Chinese regulations prevent speculative trading in the yuan by investors in China or abroad. The timing of the announcement, a week ahead of the meeting of the Group of 20 nations in Toronto, is significant in that it removes the yuan as a hot topic during the high-level discussions.
Pressure on China from the U.S. and European Union to let the yuan gain had been mounting ahead of the meeting. China's trading partners see a stronger yuan as a key factor in addressing imbalances in the world trade.
U.S. Treasury Secretary Timothy Geithner welcomed the PBOC announcement of increased yuan flexibility, stating in a press release, "Vigorous implementation would make a positive contribution to strong and balanced global growth."
Officials in Europe, Japan and with the International Monetary Fund had similar reactions. It's uncertain if the announcement will mollify critics in Congress, who have been clamoring for action against what they consider an artificially weak yuan.
Senator Charles Schumer (D, N.Y.) called China's announcement "vague and limited" in a statement issued Saturday.
Many investors may also delay final judgment on the PBOC's decision. "Given that our clients have medium- to long-term views, the prudent course is to wait and see," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co. in New York.
(Bradley Davis and Min Zeng contributed to this article.)
Roach, O’Neill Say China Yuan Move Shows Confidence in Recovery
June 19, 2010, 6:07 PM EDT
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By Gopal Ratnam and Timothy R. Homan
June 19 (Bloomberg) -- China’s decision to allow a more flexible yuan shows the country’s leaders are convinced the world economic rebound is durable, said economists Stephen Roach and Jim O’Neill.
“This move is a vote of confidence in the global recovery,” Roach, Chairman of Morgan Stanley Asia Ltd. said in a e-mail. “Markets are going to like” the decision, said Jim O’Neill, chief global economist for Goldman Sachs Group Inc.
China’s central bank said the decision to “increase the renminbi’s exchange-rate flexibility” was made after the world’s third-largest economy improved. Chinese authorities had prevented the currency from strengthening since July 2008 to help exporters cope with sliding demand triggered by the global financial crisis.
The announcement may help restore investor confidence shaken by the European debt crisis, O’Neill said in an interview in St. Petersburg, Russia.
“It could be that China is doing its bit to rescue the world markets,” he said. “It may allow for attention to be diverted from the obsession with the European monetary union and the sovereign currencies in Europe.”
China’s decision, a week before Group of 20 leaders meet in Toronto to consider ways to safeguard the economic recovery, may deflect criticism that its undervalued currency has added to lopsided global flows of trade and investment. The announcement signals an end to the currency’s two-year-old peg to the dollar.
‘Not a Panacea’
Even so, Roach said the shift “is not a panacea for an unbalanced global economy.” Countries such as China with trade surpluses will have to take steps to stimulate private demand, he said, while countries such as the U.S. “need to show a credible commitment to fiscal consolidation and take actions that would boost personal saving.”
The People’s Bank of China ruled out a one-time revaluation, saying there is no basis for “large-scale appreciation,” and kept the yuan’s 0.5 percent daily trading band unchanged. The yuan is a denomination of China’s currency, the renminbi.
The currency appreciated 21 percent in the three years after a peg to the dollar was scrapped in July 2005 and replaced by a managed float against a basket of currencies including the euro and the Japanese yen.
Gains Unclear
Lardy said it’s unclear how much the currency will be allowed to strengthen.
“I think if they had in mind some indication of a specific amount, they might have announced that today. I would not anticipate a second announcement; the markets are just going to see.”
O’Neill predicted the yuan will appreciate 1 percent when markets open June 21 and predicts a 5 percent appreciation by year’s end.
Chinese exports have helped drive growth in the world’s third-largest economy.
China’s overseas sales jumped 48.5 percent in May from a year earlier, the biggest gain in more than six years. Exports exceeded imports by $19.5 billion, from $1.68 billion in April and a deficit of $7.24 billion in March that was the first in six years.
Increasingly Confident
“The Chinese are increasingly confident they can make this adjustment to a domestic-driven economy rather than the one relying on exporting low-value-added stuff to the rest of the world,” O’Neill said.
It remains to be seen if China’s decision is a “symbolic move or a true shift in China’s currency policy that will result in significant currency appreciation,” Eswar Prasad, a senior fellow at the Brookings Institution in Washington and a former IMF economist, said in an e-mail.
Still, “this move signifies recognition by Chinese officials that a more flexible exchange rate is in China’s own interest,” Prasad said.
Changes in China’s exchange rate may not have an impact on the bilateral trade balance, John Frisbie, president of the U.S. China Business Council said in an e-mail.
“Much of what we import from China is stuff that we imported from elsewhere before,” Frisbie said. “If we didn’t import it from China, we’d likely just import it from somewhere else.”
--With assistance from Baizhen Chua, Li Yanping, Judy Chen, Dingming Zhang, Belinda Cao, Bob Chen, Denis Maternovksy and Ryan Chilcote. Editors: Christopher Wellisz, Ann Hughey.
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To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net Gopal Ratnam in Washington at gratnam1@bloomberg.net.
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
Goldman’s O’Neill Predicts Yuan to Gain 1% When Markets Reopen
June 19, 2010, 2:39 PM EDT
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By Denis Maternovsky
June 19 (Bloomberg) -- Goldman Sachs Group Inc. Chief Global Economist Jim O’Neill said China’s currency, the yuan, will appreciate 1 percent when markets open June 21, after China’s leaders decided to allow a more flexible currency.
“Markets are going to like” China’s decision, which shows the nation’s leaders “are increasingly confident,” O’Neill said today in an interview with Bloomberg Television in St. Petersburg, Russia.
O’Neill said he is maintaining his forecast that the yuan will appreciate 5 percent by the end of the year and called the currency “close to fair value.”
To contact the editor responsible for this story: Mark Rohner at mrohner@bloomberg.net
Chinese stocks will likely gain and bond yields fall because a shift on currency policy typically signals that the People's Bank of China will not immediately raise interest rates.
http://economictimes.indiatimes.com/news/international-business/China-yuan-move-may-disappoint-on-near-term-rise/articleshow/6069192.cms
He said a more flexible yuan will "help increase Chinese household income and provide incentives necessary to reorient investment toward industries that serve the Chinese consumer."
IMF chief welcomes more yuan flexibility
WASHINGTON
Sat Jun 19, 2010 9:10am EDT
June 19 (Reuters) - The head of the IMF, Dominique Strauss-Kahn, on Saturday welcomed China's announcement to make the yuan more flexible, saying it will boost Chinese household incomes and domestic investment.
In a statement, Strauss-Kahn said a stronger yuan was in line with findings of a mutual assessment report being presented by the IMF at the Group of 20 leaders' summit in Toronto next week.
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