China Stocks Evoke Ghost of Bubble Past
When clear-headed investors sounded the alarm about the technology-stock bubble in the late 1990s, they were roundly ignored.
Today, another group is raising the same call about China. And many investors, who have apparently wiped their tech-stock losses from their minds, don't seem to be listening.
So it is worth going through all the reasons why Chinese stocks could destroy shareholder wealth just as efficiently as tech stocks did after early 2000.
"China looked like a bubble at the start of last year," says Mark Madden, manger of Pioneer Emerging Markets Fund, who has been selling shares in Chinese companies even though he believes in China's long-term potential. "It looks like a bigger bubble today."
Consider last year's performance. The Chinese market as measured by the Morgan Stanley Capital International China Index gained 81% in 2003. While it did trail the Nasdaq's 86% return in 1999, it should be enough to get people nervous. Chinese stocks that trade in Hong Kong rose 152% last year. The Chinese market is up 6% this year.
With performance like that, many Chinese stocks are among the most expensive in the world for their industries. And of course companies of all stripes are rushing to cash in on the bonanza by going public, even though their financial situations are mixed at best and their disclosure is generally dismal.
"My fear is that the reality of China won't meet investors' expectations," says Qu Hongbin, an analyst at HSBC Bank in Hong Kong. "A lot of people could get burned."
The list of most outrageously priced companies must by tradition be led by Internet companies such as China's top three portals -- Sina Corp., Sohu.com Inc. and Netease.com Inc. -- each rose between 220% and 420% in 2003. And then there is the requisite dot-com IPO as in Ctrip.com International Ltd., which rose 89% on its first day of trading last month, the biggest first-day jump in three years.
But the real proof that valuation is out of kilter is the prices investors are paying for mundane industries such as beer producers and carmakers. Typically, a new and volatile market such as China would trade at a valuation below the 15 times trailing 12-month earnings that is the average for emerging markets, which themselves rallied strongly last year. But China now trades at 17 times trailing earnings.
Tsingtao Brewery Co., for instance, trades at a whopping 42 times its trailing earnings, even though the Chinese brewer fell short of its target for beer sales in 2003. Its valuation compares with a global average of 18 times for the MSCI World food and beverage sector. That is also more than double the 20 times trailing earnings of Anheuser-Busch Cos., which owns a stake in Tsingtao.
Despite booming demand for new cars in China, auto companies also look pricey. Qingling Motors Co. trades around 20 times last year's estimated earnings, compared with 14 for the world automobile and parts sector; Honda Motor Co. trades at less than 10 times trailing earnings. Analysts add Brilliance China Automotive Holdings Ltd., up nearly threefold last year, is no bargain at 17 times trailing earnings. That is especially true because it is in an ownership dispute with its former chairman, Yang Rong, who fled China in May 2002 after a provincial government seized his stake in the company.
"There's often a gray area in terms of property rights when you're buying Chinese companies," says Chris Lively, a portfolio manager at Citigroup Asset Management. Not a comforting thought at any valuation.
Then there is the IPO market. Chinese initial public offerings totaled $7 billion last year. Half of that came from China Life Insurance Co.'s $3.5 billion IPO, which is up more than 60% since its listing in Hong Kong and New York last month. People's Insurance Co. of China's PICC Property & Casualty unit has also risen more than 90% since its November initial public offering.
More Chinese companies are queuing up to list, including China Construction Bank, one of the country's four large state-owned lenders, with a $5 billion offering and state-owned China Netcom, a fixed-line phone company, with a $2 billion IPO. China's leading chipmaker, Semiconductor Manufacturing International Corp., is also considering a $1 billion IPO.
In all, Merrill Lynch forecasts that Chinese IPOs this year will raise $15 billion world-wide.
The big jumps in stock prices alone suggest investors are oblivious to the risks they are taking. There are other ways to measure the froth. Take the China Fund, a closed-end fund that trades on the New York Stock Exchange and invests in small and medium-size Chinese stocks.
The fund, whose largest holding is in Sohu.com, rose 77% last year. More amazing, the $280 million fund, which is about 60% owned by individual investors, trades at a 57% premium to the value of its stock holdings.
Not surprisingly, co-manager Shifeng Ke, a director at asset-management firm Martin Currie, based in Edinburgh, Scotland, says Chinese Internet stocks are just starting their runs, though he's unloading some more-mundane names, such as Conch Cement, on valuation concerns.
There are other concerns that in a more normal environment would give investors pause. Chinese companies, for example, don't adhere to U.S. or international accounting standards. And credit-rating agencies are unable to rate most of the Chinese companies listing overseas because of a lack of transparency and disclosure. Finally, the Chinese government is involved in one way or another in most of the companies listed on the markets.
Yet like the tech mania that gripped the U.S. in the late 1990s, investors say that China stock market fever could thrive far longer than the naysayers expect.
"We're cautious on China," says George Hoguet, head of emerging markets for State Street Global Advisors. "But with so much media attention on China, there continues to be a lot of positive momentum. The market could move higher for months."
中国概念股蕴藏泡沫危机
上个世纪90年代末，当头脑清醒的投资者敲响科技股泡沫的警钟时，人们完全漠然置之。
今天，又有一部分人士对中国概念股发出了同样的警告。而许多投资者似乎根本就充耳不闻，显然是好了伤疤忘了痛，把当年泡沫破灭给他们带来的损失完全抛在了脑后。
因此，现在有必要将中国公司股票何以可能像2000年的科技股一样摧毁股东价值的个中缘由仔细分析一下。
Pioneer新兴市场基金的经理人麦克?马登(Mark Madden)称，去年年初中国概念股就像一个泡沫，而如今这个泡沫似乎越来越大了。马登一直在抛售中国公司的股票，尽管他对中国的长期潜力充满信心。
看看中国公司股票去年的表现。2003年摩根士丹利资本国际中国指数飙升81%，虽然这低于1999年那斯达克市场86%的涨幅，但也应足以引起人们的不安。去年在香港上市的中国企业股票狂涨152%，今年迄今为止中国大陆股市的涨幅为6%。
如此眩目的表现使许多中国公司股票进入全球本行业内最昂贵的股票之列。诚然，这吸引了各行业的公司争相藉上市之机来淘金，尽管它们的财务状况充其量算是良莠不齐，其信息披露程度普遍令人失望。
汇丰银行(HSBC Bank)驻香港的分析师瞿宏斌（音）称，他担心中国公司的真实情况不会达到投资者预期，许多人可能会遭受损失。 照常理来看，股价涨得离谱的公司一定是首推互联网企业，如中国三大门户网站新浪(Sina Corp.)、搜狐(Sohu.com Inc.)和网易(Netease.com Inc.)，2003年它们各自的涨幅在220%至420%之间。接下来是不可或缺的网站，如携程旅行网(Ctrip.com International Ltd.)，该股在上月上市首日上涨89%，为3年来新股首日交易的最高涨幅。
但是，价值不平衡的真正证据还是投资者为啤酒厂商、汽车制造商等传统行业支付的价格。通常说来，像中国这样波动较大的新市场，基于过去12个月的往绩本益比要低于15倍这个新兴市场平均水平，而中国目前的往绩本益比为17倍。
例如，青岛啤酒(Tsingtao Brewery Co.)的往绩本益比高达42倍，尽管该公司2003年的啤酒销售额低于其原定目标。而摩根士丹利全球食品和饮料分类指数的本益比为18倍，持有青岛啤酒股份的安海斯(Anheuser-Busch Cos)为20倍。
虽然中国市场对新车的需求激增，汽车公司的股价仍看起来偏高。庆铃汽车(Qingling Motors Co.)的股价是去年预期收益的20倍左右，而全球汽车及零部件类股为14倍；本田汽车(Honda Motor Co.)的往绩本益比不到10倍。
分析师补充说，去年上涨近3倍的华晨中国(Brilliance China Automotive Holdings Ltd)往绩本益比达到17倍，股价根本不算低，何况它还与其前董事长仰融存在所有权问题的纠纷。
然后再来看一下首次公开募股(IPO)市场。中国去年的IPO金额达到70亿美元，其中半数来自中国人寿(China Life Insurance Co.)35亿美元的IPO。中国人寿的股价自上月在香港和纽约上市以来涨幅已经超过60%。中国人民保险公司(People's Insurance Co.)自从去年11月首次公开募股以来也上涨了90%以上。
还有更多中国公司准备上市，包括中国四大国有银行之一的中国建设银行(Construction Bank)，拟发股筹资50亿美元；国有固话业务公司中国网通(China Netcom)，拟筹资20亿美元。中国领先的晶片生产商中芯国际集成电路制造（上海）有限公司(Semiconductor Manufacturing International Corp., 简称：SMIC或中芯国际)也在考虑通过发行新股筹资10亿美元。
总体而言，美林(Merrill Lynch)预计，中国公司今年的IPO将在全球范围内筹资150亿美元。
股价的大幅上涨意味著投资者忽视了他们将面临的风险。还有其他方式可以说明目前中国概念股的泡沫。以在纽约证交所交易、投资于中国中小企业股票的封闭式基金中国基金(China Fund)为例，该基金去年上涨77%，更令人惊诧的是，该基金的价格与其持股价值相比高出57%。这家2.8亿美元的基金约60%为个人投资者持有，其持股规模最大的股票是搜狐。
苏格兰资产管理公司Martin Currie的董事柯世丰（音）称，中国互联网公司股票的涨势只是刚刚开始，不过出于股价方面的担忧，他开始抛售安徽海螺水泥(Conch Cement)等传统行业的股票。
此外还有其他方面的隐忧，而在正常情况下，这些因素本应令投资者止步。例如，中国企业并不遵循美国或国际会计准则。其次，由于缺乏透明度和披露不充分，信用评级机构无法对多数海外上市的中国公司制定评级。最后，中国政府往往对海外上市的多数中国公司存在这样或那样的干涉。
但是，正像90年代末美国出现的科技股狂潮一样，投资者认为，中国股票的市场狂热持续的时间可能要远远长于反对派的预期。
State Street Global Advisors新兴市场研究主管乔治?乌格特(George Hoguet)称，我们对中国股票持谨慎态度，但是由于目前媒体对中国格外关注，中国股票仍将拥有强劲的上涨动力，今后数月可能会继续走高。
