In an article titled Shanghai Market Sees Red the Journal says:
“It is rich in irony. But preparing to celebrate the 60th anniversary of the People’s Republic of China, the Communist Party won’t want a plunging stock market to mar the festivities.
At least, this is the latest thinking among traders betting on an end to the slide in Chinese stocks.
It highlights the Shanghai market’s defining characteristic: Successful investing there requires sniffing the winds from Beijing.
The recent selloff — taking the Shanghai Composite down 16% from its Aug. 4 high — has been stoked by fear Beijing will tame its massive rate of bank-loan expansion.”
I would agree that successful investing in not just China, but many emerging markets requires following the government’s moves on a regular basis. Some of the money from the stimulus program is moving into the stock markets. China’s car sales is growing exponentially due to high demand created by tax breaks and other incentives.
After Coal, oil is the major source of energy for China. As the following charts show, China was the 3rd largest importer of oil in 2008 and majority of the imports come from the middle east.
Source: Energy Information Administration, US Department of Energy
As China’s economy grows demand for oil will continues to grow and the large Chinese oil companies would benefit. Already some of the Chinese oil producers are active globally. In July, “Crude imports jumped 18% from a month ago to 19.63 million metric tons last month, or about 4.64 million barrels a day, according to monthly data released by China’s General Administration of Customs.”
One easy way to invest in the oil companies are via the 3 Chinese oil ADRs listed in the NYSE. A brief summary of them follows:
1.China National Offshore Oil-CNOOC (CEO) is a producer of offshore crude oil and natural gas with operations in People’s Republic of China, Indonesia, Australia, Nigeria, Canada and Singapore. The current dividend yield is 3.91%. In 2008, total revenues was about $18B and the annual earnings growth is 28%. China National Petroleum Corp. and Cnooc Ltd. are trying to acquire to Repsol YPF’s stake in its Argentine unit YPF for $17 billion.
2.China Petroleum & Chemical Corporation (aka Sinopec Corp.) (SNP) is involved in integrated oil, gas and chemical operations in the People’s Republic of China. At the end of last year the company operated 16 oil and gas producing fields. The stock is up 41% YTD.
3.PetroChina Company Ltd (PTR) is another integrated oil and natural gas producer and distributor with a market cap of over $200B. Revenues grew consistently over the past 5 years and the yield is 4%. PTR has nearly doubled from the March lows.
