Trend and Outlook of China Theme Stocks ????????????

1
Trend and Outlook of China Theme
Stocks????????????

• By Dr Warren Huang, ( ?????) OSA ?????
  website www.osawh.com
• wh3928_at_yahoo.com/ osawhh_at_citiz.net
• May 8, 2004, Milpitas, California

2
Lecture Summary

• 1. OSA challenges the unknown futures make your
  dream come true
• 2. Two master hands controlling US/China economy,
  capital market asset prices
• 3. Monetary policy, WTO impact on macro-economic,
  asset prices simulation.
• 4. China/US economic and capital market outlook
  OSA forecasts
• 5. China/US asset prices, bubble earning for
  banking, finance reform
• State enterprises reform, corporate
  governance
• . Privatization, IPO/ ADR/ H stock listing
  M/A performance prices tracking OSA
• 6. Monetary policy, WTO impact on China Interest
  rates, bond, derivatives OSA
• 7. Monetary policy, WTO impact on China stock
  indices futures, derivatives prices OSA
• 8. Monetary policy, WTO impact on currency, RMB
  market forces, prices mechanism, OSA
• 9. Monetary policy, WTO impact on China Housing
  wealth, prices, bubble earning warning
• 10 Monetary policy, WTO impact on China IT
  industry post bubble burst recovery OSA.
• 11. Monetary policy, WTO impact on China Oils
  upstream/Downstream performance OSA
• 12. Monetary policy, WTO impact on China/Global
  Commodity, Metals futures prices
• 13. Monetary policy, WTO impact on China/Global
  Biotech Performance, stock prices.
• 14. Sample OSA charts Henseng, Nikkei index OSA
  simulation charts

3
OSA challenges the unknown futures, fight
competition, make your dream come true OSA
????????

• Dr. Huang developed global strategic management
  for Mobil US board of directors dreams in global
  value chain profit optimization
• He inspired by Prof Nash turning numbers into
  equation wining the Nobel Prize.
• Prof/Dr Huang extensive information knowledge
  base development Out of 1972 -1980 ( daily Wall
  Street Journals, Business Week trading data,
  market and economic analysts, technical analysis
  and Monte Carlo, statistical analysis fail to
  tracking economic cycles.
• He Trained thousands Taiwan, Tsinghua, Tunghai,
  Fudan, Peking, Zechiang, Dalian University
  students, applied his Ph.D thesis Moon-landing
  guidance and control to challenge the unknown
  future in thousands structural dynamic models
  developed out of
• 12 years information knowledge base, He
  patented Improve Process by OSA in US and 82
  countries, 1980, pioneered two master hands
  controlling global economic cycles and capital
  market prices , through monetary policy tracking
  published thousands articles on Taiwans
  government, banking, finance, daily news papers,
  journal accurately tracking Taiwan, Japan, Hong
  Kong, US daily results since 1985 and supporting
  state enterprises, banking, finance strategic
  reform, change management, thousands CEO,
  executives training workshops making his dream
  of impossible mission of challenging the unknown
  futures come true.
• Dr Huang helping 30 million China, Taiwan
  investors, banking finance, enterprises
• personal and corporate dream come true
  through thousands nationwide TV, radio lectures
  and banking, securities CEO, executives workshops
  since 1994 and www.osawh.com website (visited
  by million global government, central banks, TOP
  banking, finance, enterprises executives ,
  universities since 1998).

4
Monetary policy, WTO impact on inflation, GDP
growth ???????????????

• Excessive money supply, rising commodity, asset
  prices and depreciate currency push inflation and
  GDP higher

export
Macro-economic inflation and GDP growth
Consumer demand
Monetary policy
currency
Commodity prices
Business demand
Foreign direct investment
CPI inflation rate
Consumer demand
5
Monetary, economic, fiscal policy impact on
China macro-economic control and daily capital
market asset prices since 1989

• Dr. Huang accurately predicted on SINA.com USA
  Dec. 1999 that US high tech bubble burst , plunge
  70- 90 and Nov. 2003 Singapore, Shanghai,
  Euro-events Asian/China Finance, Capital Markets
  Conf. 1000 QFII recommended H share, ADR China
  shares up 80 soaring oil, commodity prices led
  to US rate hike after May 2004, China continue
  credit tightening, Nasdaq and China stocks 20
  correction early 2004
• He accurately predicted in July 10, 1994 to Wall
  Street Journal and Wuhan Guotai, Wanguo CEO that
  Shangha A index will soared to 800 from 333 in
  Aug.1994.(WSJ published late July China B share
  rebound,
• Shanghai A rebound to 820 in Aug-Oct, 1994)
• He was invited by Wanguo, Guotai and banking CEO
  to offer lecture to thousands investors, traders,
  money manager predicted Shanghai A will be traded
  600-800 during 1994-1996 due to macro-economic
  control, results published on Wuhan securities
  news Oct. 31, and Beijin Financial Times 1994
• He accurately predicted in Wuhan stock
  information journal Feb. 1995 that Shanghai A
  will rebound from 540 to 800. It did on May 18
  soared from 590 to 920 and plunged to 580 in
  three days, recommended buy Shanghai
  Petrochemical at one dollar soared to 8 in Aug.
• He accurately predicted June 20, 1995 on Beijin
  Central Peoples radio one hour interview, and
  Financial Times, Economic Daily news, Commercial
  Times that Shanghai A will soar from 600 to 800
  in Aug.1995.
• Predicted on Wuhan securities news March 3, 1996,
  that China Peoples Bank will cut interest rate,
  stock market go to bull markets, Shanghai A break
  1600.
• Spoke to Shanghai Eastern radio and Shanghai
  stock exchange, Dec. 16, 1996
• to predict Shanghai A will rebound from
  1000 to 1700 in 1997 after 10 price limit.
• Predicted to Beijin Peoples Bank finance
  staff July 2001 that China stock bubble burst
  plunge to 1600 from 2200, Yunyue will plunge from
  100 to 50, ST stocks down 50 .
• Predicted May 2003 on website that China
  housing, auto bubble burst, stocks will plunge
  30-50 , Shanghai A will plunge from 1650 to
  1350, facing credit tightening May

6
Enterprises reform, privatization MBO and IPO
Prices

• Maximize corporate/plant wide operating profit
  margin through cost reduction and products,
  market innovation develop, implemented by goal,
  mission, performance oriented strategic (top
  management), and executive Operations Simulation
  Analysis teams
• ADR/IPO prices F (Home country and listed market
  investor sentiment, corporate profit margin)
• F (Shanghai A index,/ Dow Jones Index,
  corporate profit margin)

7
Inflation, interest rate, Government, corporate
bond yield simulation

• Asset, commodity prices, excessive money supply
  led to inflation, credit tightening
• Led to rising interest rates and bond yields

currency
Consumer spending
Interest rates, bond yield
Inflation rates
Money supply growth
currency
oil, commodity, asset prices
8
Global currency and RMB market forces mechanism
simulation

• WWW.osawh.com/currency.html tracking trade
  surplus/deficit, interest rate spread impact on
  daily 40 currencies and last 12 years RMB ( 3 to
  12) since 1998

Integrating into Black-Schole for derivatives
prices hedging
US trade deficit
Daily US dollar, RMB global exchange rates
futures prices
your country trade surplus/deficit
Interest rate spread between US and yours
9
China Housing prices, bubbles,wealth mechanism
simulation

• Housing prices are fueled by money supply,
  excessive credit, stock markets wealth gain

Housing prices bubble, wealth Housing stock
prices simulation
Money supply growth
Mortgage interest rate
Stock market wealth
Stock index changes
MBS credit derivatives
10
Asian Stock indices prices futures and trading
volume simulation

• www.osawh.com/prod03.html tracking 40 stock
  indices, wealth, prices are generated from money
  supply, lower interest rates and stock price,
  wealth gain, hot money inflow, US investor
  sentiments

Integrate into Black-Schole For derivatives
prices, hedging
Money supply growth Consumer spending
China Shanghai/Shenzhen, A, B, Henseng,
H-Share,Nikkei, Taiwan Index, Dow Jones/ Nasdaq
H stock index, futures, Investor sentiment ,
trading volume
Interest rate/inflation rate
currency
US investor sentiment
NY Dow Jones/Nasdaq stock index
11
Information industry post bubble burst recovery
simulation

• IT industries benefited by consumer, business
  spending rebound, but hurt by price war due to
  excessive capacity, but China IT and high tech
  hardware and software suffered by sharp foreign
  competition

IT industry chips, PC, telecommunication Demand
and spot prices , profit margin, stock prices,
derivatives
IT industry business spending
Consumer spending
IT industry excess capacity and Products,
market innovation
Investors sentimentNasdaq
12
Auto and steel, Aluminum demand, prices mechanism
simulation

• China auto, steel, Aluminum, facing credit
  tightening ( will feel full impact early next
  year) and sharp price war competition among GM,
  Ford, Toyota, Benz and partners, drag auto, steel
  demand and prices, profits, stock prices.

Consumer spending
Auto demand , utility Asset Backed
Securitization , stock prices mechanism
simulation
Auto loan interest rate
Steel prices, import duty, energy prices
13
China Oil petrochemicals demand, prices
performance simulation

• China oil upstream/downstream are well
  positioned, fully integrated follow Dr. Huang1991
  speech to SINOPEC, Beijin on globalization,
  integration strategy
• CNOOC, SINOPEC, PetroChina stock prices doubled
  , but downstream suffered by soaring oil
  prices)since Dr. Huang recommendation in Beijin
  workshops 2001, Taipei, 2002

Consumer spending
Oils, heating oil, gasoline , petrochemical,
plastics prices Profit margin, stocks simulation
Currency
Gasoline, heating oil, petrochemical
feedstock Prices, costs
14
Reform and merger/acquisition performance
simulation

• Stock prices plunged more than 50-90 gained in
  pre-merger speculation due to post merger
  integration performances,

Pre and post merger profit margin and
stock Prices simulation
Pre-merger, reform goal setting targeting
Post merger profit margin
Investor sentiments
Post merger integration performance
15
Corporate governance bubble burst early warning
simulation

• Tracking cost and financial accounting and
  investors sentiment speculation bubbles for
  scandals early warning in China Guanxia, ST stocks

Production and sales tracking
Strategic and execution corporate governance
OSA teams tracking financial accounting stock
prices
Cost accounting bubble tracking
financial accounting earning tracking Balance
sheet and off-balance sheet Derivatives, IPO,
merger activities tracking
Investor sentiments, stock index
16
Banking Securities insurance riskearly warning
simulation

• China assets bubbles tracking, early warning for
  government regulation

Equities market asset Bubble price
Banking nonperformance credit default Consumer,
business credit, market risks Resulted market
bubble burst risks simulation
Housing market asset Prices bubble
Industrial sectors Asset bubbles
Business, consumer demand Sentiment bubble
17
Causes, onset, recovery of Financial ,currency
energy banking, bubble burst crisis and NPL loan

• Excessive money supply and hot money inflow
  resulted inflation, currency
• plunge, rate hike and stocks, properties prices
  plunge and NPL loan

Excess money supply Consumer spending
Strong Export growth
All leading to financial, currency, bubble
burst Crisis, recovery will begin until trade
surplus And currency rebound, interest rate cuts,
stock prices rebound www.osawh.com/riskm.html
Excess foreign capital Inflow resulted currency
appreciation
Runaway inflation and interest rate hike Stock
prices and consumer demand plunge
Export decline and currency plunge
NPL Loan
18
Strategic QFII and QDII investment risk
management early warning

• Two master hands controlling China and global
  economy and industrial sectors profitability and
  stock prices for QFII/QDII asset allocation,
  wealth management investment strategy, risk
  control avoid chasing the markets trillion
  dollars loss

Domestic and global market prices And risks
simulation
Money supply, interest rates
Currency exchange rates
Investors sentiments
Industrial sectors asset prices bubble, profit
margin simulation
19
Global Biotech Performance, stock prices OSA

• Global biotech companies stock pricesdepend on
  product, market innovation and investors
  sentiments

Products, Markets innovation
Biotech companies Stock prices
Revenue/Profits
Investor sentimentsNasdaq index
20
?????????????????????????(????)???????????????????
(????)????????????????

• ?? ?? ?? ?? ???????? CHL
  ????????   11- 18?? CHU
  ????????  6- 10???? CHA
  ????????  20- 30??? SNP
  ??????????????   28- 35???? PTR
  ??????????????   35- 47???? CEO
  ??????????????  30- 45??. LFC
  ?????????????? 18- 26?? ACH
  ??????????????   50- 75??? SLUJY
  ????????   3-  4.5????
  GSH ?????????????? 12- 17???? SHI
  ?????????????? 28- 37???? 
  ?????????????? 15- 21???? CEA
  ??????????????  15- 20?? ANGGY
  ??????????   12- 19

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China economic and capital market outlook,
opportunities, challenges

• China economy benefited by 56 billion DFI and 30
  growth in export, 345 billion foreign reserve,
  facing uneven development, widening wealth gap
  between rich coastal region and rural poor,
  excessive loan demand in auto, steel, housing (24
  growth) and falling manufacturing prices,
  forced China Peoples Bank raised bank reserve
  ratio to 7 , cut 150 billion from loan
• RMB facing appreciation pressure, will be
  gradually switch to managed float in the future,
  coastal area benefit by DFI facing housing
  bubbledemand and price will peaking out, while
  rural house stop decline
• Consumer and business spending will be slowed
  down with money supply peaking out at 21 to 18
  , to cool asset bubbles, resulted inflation
• IT and industry benefited by US, Asian demand
  and prices rebound, however facing severe
  competition
• Auto industry benefited by domestic demand, will
  slowdownfacing price war, tariff cut, sharp
  competition among GM, BENZ, Toyota and Ford
• Banking sector still facing mounting
  nonperformance loan and credit tightening
• Oil/petrochemicals, transportation sectors hurt
  by soaring oil prices, benefited by increased
  demand and prices rebound, profit margin
• Shanghai, Shenzhen stocks will be traded in 20
  range 1335-1650

22
Hong Kong Economy, Capital Market outlook,
challenges, opportunities

• Hong Kong is recovery from SARS and export slump,
  getting out on recession, but still in deflation,
  due to China opening tourists to Hong Kong and
  free trade zone and US economic recovery, getting
  out of SARS threat resulted hot money speculation
  on stock market rebound 50 led to money
  supply growth and GDP creeping up to 2.5
• However consumer, retail and housing,
  construction is still weak drag by high
  unemployment at 8.5
• Banking sectors benefited by expanding tourist,
  stock market rebound, but still weak consumer
  load demand due to high unemployment
• Properties, construction sectors demand is weak,
  despite recover from SARS housing prices down 70
  return to 1991 level, with no sign in near term
  rebound
• Manufacturing sector facing high oil, feedstock
  prices, falling prices, fail to compete with
  China competition Benefited by
  increased demand and prices rebound, profit
  margin
• Henseng index will be benefited by improved US,
  Asian recovery , export
• Boost , but hurt by peaking out China demand
  resulted money supply growth expansion to 3. 5
  and US stock market Dow moving above 10,000,
  However, export growth is limited
• Henseng index is overheated, will be traded
  10,000-14,500 next year

23
Conclusions and recommendations

• OSA simulators predicted 6 month ahead the
  monetary, economic, fiscal policy, WTO impact on
  macro-economic, capital market asset prices to
  achieve sustainable profit growth and prices
  stability
• Monetary , economic, fiscal policy, WTO impact on
  China capital markets asset prices simulation,
  early warning is the key to sustainable profit
  growth supporting strategic China banking,
  finance, enterprises reform.
• Monetary , economic, fiscal policy, WTO impact on
  China capital markets asset prices simulation,
  early warning avoided trillion dollar market loss
  due to current
• Chasing the markets, speculation on technical
  charts, market, business, economic data. It
  provide QFII, QDII rational, reliable decision
  investment and risk management decision tools in
  asset allocation, wealth management
• Thousand strategic structural dynamic OSA models
  tracking China and global economic and daily
  capital market asset prices supporting China and
  global capital market decision makers through
  in-house workshops, corporate memberships and
  full banking, finance, enterprises reform, change
  management OSA program

24
Tokyo Nikkei Stock index futureSimulation

• Monetary policy and US economy impact on Japan
  Nikkei index

Daily Yen exchange rate
Yen
25
Conclusions and Recommendation

• OSA simulators predicted 6 month ahead the
  monetary, economic, fiscal policy, WTO impact on
  macro-economic control, capital market asset
  prices to achieve sustainable profit growth and
  prices stability
• Monetary , economic, fiscal policy, WTO impact on
  China capital markets asset prices simulation,
  early warning is the key to sustainable profit
  growth supporting strategic China banking,
  finance, enterprises reform.
• Monetary , economic, fiscal policy, WTO impact on
  China capital markets asset prices simulation,
  early warning avoided trillion dollar market loss
  due to current
• Chasing the markets, speculation on technical
  charts, market, business, economic data. It
  provide QFII, QDII rational, reliable decision
  investment and risk management decision tools in
  asset allocation, wealth management
• Thousand strategic structural dynamic OSA models
  tracking China and global economic and daily
  capital market asset prices supporting China and
  global capital market decision makers through
  in-house workshops, corporate memberships and
  full banking, finance, enterprises reform, change
  management OSA program