Some Chinese stocks look cheap

(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.)?

Secular growth, Mindray, New Oriental

I was looking for a secular growth stock in China. By secular growth I mean the business grows continously without the normal business cycle. One benifit of secular growth is it usually does not go up or down a lot as economy cycle does. A side benifit of this is we (investors) can sleep better in the night 🙂

The opposite of “secular” is “cyclical”. For example, we normal think the following industries are “cyclical”:

1) Oil, metals and other commodities;

2) Real estate (we have seen the downturn in the US housing market lately);