Hopes that the Olympics would cure Chinese market woes have been dashed
By Wei Gu Published: July 30, 2008
HONG KONG: Many investors who believed the Beijing Olympics would drive the Shanghai stock index to peaks rivalling the Himalayas have lost their shirts.
Similarly, those who believe the index might dive as low as 2,008 after the 2008 Games might miss a big rebound. The market may benefit from a short-term sentiment lift, particularly if China wins a lot of gold.
Investors - disheartened by terrorist threats to the Games, summer power shortages, logistics nightmares and factory closures in a bid for blue skies - are desperate for an Olympics honeymoon for stocks that could be just around the corner.
An upward jump in the market is possible partly because the Chinese index is among the worst-performing in the world this year, down some 45 percent.
The Olympics could send the index back above the 3,000 level, from current levels near 2,900. Whether the rally can be sustained, though, depends on Beijing’s resolve in following through on much-needed reforms after the Games.
The market might benefit from a likely policy vacuum in the next month. Beijing probably won’t introduce more tightening or any drastic reforms before the torch goes out, especially since President Hu Jintao recently stressed the need for economic stabilization to make sure the Games are a success.
Dong Tao, an economist for Credit Suisse, said there was a desire that “the most publicized event in China’s own history needs to start in great joy and end in enormous satisfaction,” adding that the “Chinese leadership wants to make sure the economy and stock market prosper.”
Investors in Chinese stocks certainly need all the help they can get. Just a year ago, almost every brokerage firm was churning out reports predicting the market could go through the roof before the Olympics. The only worry back then was about a post-Olympics lull. The subprime crisis, $140 a barrel oil and the Sichuan earthquake were nowhere on the radar screen.
Problems now cloud China’s Olympic mood: companies that wished to make a killing out of the Games have seen dampening sales prospects; beer makers have problems driving trucks into Beijing given heightened security; work at construction sites has been halted because the authorities sent many migrant workers home; and Beijing hotels are lowering their rates on less demand.
The swirl of negative publicity that has accompanied the run-up to the Olympics has pushed sentiment so low that it could only improve when the overhang is removed, said Aaron Boesky, chief executive of Marco Polo Investments Group, which focuses on China stocks.
“When we are at the Olympics, that moment will galvanize public sentiment,” Boesky said. “I would not ask for a better beacon for sentiment reversal.”
History has shown that the Olympics can boost asset prices. In the four years leading up to the games during the past nine Olympics, stocks of the host countries on average rose 56 percent and property prices went up 13 percent, according to Credit Suisse.
China is no exception, other than the fact that the rally has come too fast and furious. Chinese stocks, after more than doubling last year and falling as much as 50 percent this year, are still double the level they were at two years ago.
Now investors are crossing their fingers for a more typical boost from the Games. Four out of the last five countries to host the Games have seen their domestic stock market rise during the Olympics month, with Australia being the only exception.
The Olympic honeymoon might have started already, with the index now up about 12 percent from its year low. But the future of China’s market depends more on whether Beijing can carry out market-oriented reforms than on the success of a sporting event.
Beijing might raise domestic fuel prices again this autumn to help ease rampant power and energy shortages. Energy price hikes are inflationary in nature, but they could help reduce China’s voracious appetite for energy. China could also introduce the long-overdue start-up board and shorting mechanism after the Games, which might increase market volatility in the short term but improve its efficiency longer term.
The biggest question on everyone’s mind now is whether China’s super growth cycle is coming to an end.
“It is more important to watch what Beijing does after the Olympics, whether it can bring confidence back into China stocks,” said Yang Liu, chair of Atlantis Investment Management. “Other than us Chinese, few investors now think the Olympics will move the market in one way or another.”
BEIJING, July 30 (Xinhua) -- What sells best in the Olympic Village? Not the mascots toys Fuwa, nor commemorative stamps. The real big hit in the Olympic Village is those tiny shiny pins.
There is only one official licensed products store in the Olympic Village. And everyday hundreds of Olympic villagers pour in, choosing different kinds of souvenirs for their friends and relatives.
Wang Ze, salesman of the store, told Xinhua here on Wednesday that there were over three thousand kinds of commodities in the store but nearly one-third of the daily sale came from pins.
"We have about 300 different kinds of pins with various themes, like Beijing Opera, Chinese snacks, Olympic venues, mascot and various sports. The daily sale can reach 30,000 yuan," said a smiling Wang, who treated every customer patiently in his pin section.
"Pins about different Olympic sports are very popular. Most athletes would like to buy a set of those on their own sport. The pins can be bought separately or by sets," Wang added.
Brazilian rower Beltrame Fabiana, who was walking around the shelves, said, "I like pins very much, and I have a collection of several hundred back at my home. I want to buy some pins about rowing and the mascots here."
Like Fabiana, many athletes, and even sports journalists, have their own collection of pins. They attended tournaments all around the world and collected pins from all around the world. The Beijing Olympic Village also provides a platform for these enthusiastic collectors to show their collections and trade them.
In the international zone of the Olympic Village lies a pin trading center. During the Beijing Games, the place will turn to an ocean of pins, with pin-lovers intoxicating in it and exchanging their experiences as well as collections.
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Hopes that the Olympics would cure Chinese market woes have been dashed
By Wei Gu Published: July 30, 2008
HONG KONG: Many investors who believed the Beijing Olympics would drive the Shanghai stock index to peaks rivalling the Himalayas have lost their shirts.
Similarly, those who believe the index might dive as low as 2,008 after the 2008 Games might miss a big rebound. The market may benefit from a short-term sentiment lift, particularly if China wins a lot of gold.
Investors - disheartened by terrorist threats to the Games, summer power shortages, logistics nightmares and factory closures in a bid for blue skies - are desperate for an Olympics honeymoon for stocks that could be just around the corner.
An upward jump in the market is possible partly because the Chinese index is among the worst-performing in the world this year, down some 45 percent.
The Olympics could send the index back above the 3,000 level, from current levels near 2,900. Whether the rally can be sustained, though, depends on Beijing’s resolve in following through on much-needed reforms after the Games.
The market might benefit from a likely policy vacuum in the next month. Beijing probably won’t introduce more tightening or any drastic reforms before the torch goes out, especially since President Hu Jintao recently stressed the need for economic stabilization to make sure the Games are a success.
Dong Tao, an economist for Credit Suisse, said there was a desire that “the most publicized event in China’s own history needs to start in great joy and end in enormous satisfaction,” adding that the “Chinese leadership wants to make sure the economy and stock market prosper.”
Investors in Chinese stocks certainly need all the help they can get. Just a year ago, almost every brokerage firm was churning out reports predicting the market could go through the roof before the Olympics. The only worry back then was about a post-Olympics lull. The subprime crisis, $140 a barrel oil and the Sichuan earthquake were nowhere on the radar screen.
Problems now cloud China’s Olympic mood: companies that wished to make a killing out of the Games have seen dampening sales prospects; beer makers have problems driving trucks into Beijing given heightened security; work at construction sites has been halted because the authorities sent many migrant workers home; and Beijing hotels are lowering their rates on less demand.
The swirl of negative publicity that has accompanied the run-up to the Olympics has pushed sentiment so low that it could only improve when the overhang is removed, said Aaron Boesky, chief executive of Marco Polo Investments Group, which focuses on China stocks.
“When we are at the Olympics, that moment will galvanize public sentiment,” Boesky said. “I would not ask for a better beacon for sentiment reversal.”
History has shown that the Olympics can boost asset prices. In the four years leading up to the games during the past nine Olympics, stocks of the host countries on average rose 56 percent and property prices went up 13 percent, according to Credit Suisse.
China is no exception, other than the fact that the rally has come too fast and furious. Chinese stocks, after more than doubling last year and falling as much as 50 percent this year, are still double the level they were at two years ago.
Now investors are crossing their fingers for a more typical boost from the Games. Four out of the last five countries to host the Games have seen their domestic stock market rise during the Olympics month, with Australia being the only exception.
The Olympic honeymoon might have started already, with the index now up about 12 percent from its year low. But the future of China’s market depends more on whether Beijing can carry out market-oriented reforms than on the success of a sporting event.
Beijing might raise domestic fuel prices again this autumn to help ease rampant power and energy shortages. Energy price hikes are inflationary in nature, but they could help reduce China’s voracious appetite for energy. China could also introduce the long-overdue start-up board and shorting mechanism after the Games, which might increase market volatility in the short term but improve its efficiency longer term.
The biggest question on everyone’s mind now is whether China’s super growth cycle is coming to an end.
“It is more important to watch what Beijing does after the Olympics, whether it can bring confidence back into China stocks,” said Yang Liu, chair of Atlantis Investment Management. “Other than us Chinese, few investors now think the Olympics will move the market in one way or another.”
What sells best in the Olympic Village?
By sportswriter Wu Junkuan
BEIJING, July 30 (Xinhua) -- What sells best in the Olympic Village? Not the mascots toys Fuwa, nor commemorative stamps. The real big hit in the Olympic Village is those tiny shiny pins.
There is only one official licensed products store in the Olympic Village. And everyday hundreds of Olympic villagers pour in, choosing different kinds of souvenirs for their friends and relatives.
Wang Ze, salesman of the store, told Xinhua here on Wednesday that there were over three thousand kinds of commodities in the store but nearly one-third of the daily sale came from pins.
"We have about 300 different kinds of pins with various themes, like Beijing Opera, Chinese snacks, Olympic venues, mascot and various sports. The daily sale can reach 30,000 yuan," said a smiling Wang, who treated every customer patiently in his pin section.
"Pins about different Olympic sports are very popular. Most athletes would like to buy a set of those on their own sport. The pins can be bought separately or by sets," Wang added.
Brazilian rower Beltrame Fabiana, who was walking around the shelves, said, "I like pins very much, and I have a collection of several hundred back at my home. I want to buy some pins about rowing and the mascots here."
Like Fabiana, many athletes, and even sports journalists, have their own collection of pins. They attended tournaments all around the world and collected pins from all around the world. The Beijing Olympic Village also provides a platform for these enthusiastic collectors to show their collections and trade them.
In the international zone of the Olympic Village lies a pin trading center. During the Beijing Games, the place will turn to an ocean of pins, with pin-lovers intoxicating in it and exchanging their experiences as well as collections.
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