(Jan 31) Read this piece from Shui Pi, a reknown Chinese stock columnist. Quote a paragraph here:
统计表明，2007年中国资本市场融资再融资的规模近8000亿，而印花税为2005亿，两者相加近10000亿，相当于流动市值的十分之一。这笔钱是从市场中拿走的，基本上不可再生。如果2008年的主板融资规模维持不变，那么再加预期中的创业板的融资规模和大非解禁的资金数量，增量资金的需求量就是一个天文数字。2008年的股市有那么乐观吗？He is saying, the transaction cost plus the new IPO last year totaled RMB 1 trillion, which is about 10% of the total market float.
(Original) After recent brutal selling of Chinese domestic market, it appears some “blue chip” stocks are fairly cheap. For instance, 600030, Citic Securities (CS), the No.1 broker (and No. 2 investment banker) in China, traded at around CNY 67.00, considering its 2007 earning of CNY 4.00 (up 400% from last year CNY 0.80), the PE ratio is about 17, not that far compared to Goldman Sachs (NYSE:GS), which has a PE about 10.
Why the stock is so cheap now, I mean compared to high flying couple months ago (last Oct.)?
I suspect some big boy are cashing out, for instance, China Life (NYSE:LFC) got lots of 600030 at under CNY 10.00 in year 2006, selling at current CNY 67 is not a bad idea.
Of course, the big question for potential CS investors, is to ask whether the Chinese stock market will go down from here (and will not come back for a while). In that case, we should not bargain hunting CS…It seems to me recent selling off is a bit excessive, maybe caused by the snow storm across Southern China, the power outage, and all the scary…