Mark today on your calendar as a momentous and historical one, two days ago actually although it took western media a couple days to wake up over the weekend, and now it is still being reported as a sidebar, AIG gets 40 bil more, and, oh, yes, China announced a stimulus package. 586 bil. The difference being the States are spending over a trillion on a bailout and China announces spending to build real railways, bridges, highways and other infrastructure. The difference also being the U.S. is printing more money to make the bailout while China will spend real, hard earned cash. Mr. Obama, is stepping into multiple messes of our own making while China is on the move. Good luck to Obama, the U.S. and China, and, of course, FMCN. Today's events are watershed in human history. Earnings, good or bad, against this backdrop will be interesting!
This is a better read:
Four reasons China should be high on your list
Unfortunately the author doesn't know what he is talking about.In the last 20 years, numerously people predicted China's economy will collapse. They were wrong EVERY single time. The reality is that China now is even stronger than any time in the past 20 years. It has much more flexibility than any of the major economy in the world to deal with this crisis. Look at the recent 586B stimulus package, proportionally it is much more significant than the 700B in the US, as a % of GDP. There are two more things that are noteworthy: they don't need to issue debt to fund it, as the government has been running surplus for years (read yuan won't depreciate against US$); they already have pretty concrete ideas on how to spend the money, so the impact to real economy will be swift.
Companies like FMCN are trading at ridiculous low valuation, partly because the hedge funds need cash at any cost. We probably won't see this kind of price for a long time.
Come on, guys. Every couple years, when the world economy is coming a bit (or admittedly a bit more), people predict the end of the world. 100000 companies will go bust? So what? Do you really think this is gonna harm a state like China?
I give you just two of many examples that make me believe in the chinese economy:
1. A couple months ago a friend of mine brought me a watch from China, a fake of a very, very expensive swiss mechanical original. Now, while anywhere else in the world people would just take a cheap quartz and change the surface to make it look like the original, these guys in China reproduced the whole mechanical clockwork!
2. A while ago a German company manufactoring dyes had lots of problems with chines companies faking their products. So they decided to print a hologram on every product so that people can tell whether a product is an original or not. One week later, the Chinese came up with a faked hologram.
Things like these tell me that China is a bit different. If they can do such fakes, it's only a small step for them to produce their own innovative products.
i got to thinking a bit more re this post over the weekend.
I dont think it EVEN applies to FMCN.
Think about it. FMCN targets companies like http://focusmedia.cn/en/aboutus/ourcustomers.htm
Whereas if it targetted _just_ co's who are export driven, it would be a different, not so favorable story.