Have had this stock for years and traded it many times. I know China had some terrible weather problems this year but can't figure out what seems to be ailing price at this time. Any sensible answers much appreciated. Tempted to buy more but would like some input from others before I do so. TIA
I think it's just a temporary "falling out of favor" syndrome.
GSH has a good business model. Recession no recession, there are still a large number of people coming into and within China having to travel (the bus consumes more times whereas the plane ticket is relatively more expensive), commute to work (an increasing number of people living in Shenzhen to cut living expenses and working in Hong Kong), transporting goods (moving orders from nearby factories - from Lunggang or Dongguan to Hong Kong), or simply going back home (Chinese New Year). In a nutshell, the train is quicker, more punctual and less pricey.
I have lived in Shenzhen and travel back and forth to Hong Kong everyday (The fare is about HKD 38 for regular and HKD 65 for first class) and twice every week to Guangzhou (about RMB 75 one way but subject to change), taking Guangshen trains almost everyday. It's always packed. So, fundamental wise, it's still good, just like BNI or UNP, prices go up and down but eventually, and hopefully with good management and no funny accounting, GSH will do better in the longer run.
<<Yes I realize he is 'odd' (wacky) but so are a lot of other very wealthy people. Money don't care who owns it.>>
True enough, but it is worth noting that five sexual harassment lawsuits haven't taught Charney a bit of discretion. There are a lot of people who think Charney's acting out could become increasingly expensive for APP, but at the same time the company is, to some degree, a one-man show and they may not be able to do without him. That makes for a potentially risky situation. Four of Charney's five sexual harassment suits have been dismissed and it is possible the costs investors are afraid of will never materialize, but as long as the potential is out there it will be a drag on the stock.
I am not saying APP is not a good investment. I am simply saying investors should be aware of the issues. Of course, that is true for any investment, but the issues here are a little unusual and they are something not all investors think to look for.
I think it is all China and not GSH. I see four things in play:
1. There was a bit of a China bubble last year. This stock never belonged at $45. I think the bubble is mostly deflated at this point, but that started the current trend.
2. There is concern that the Chinese economy may be weakening. I think this is probably more real than the bubble at this point, but at the current price GSH looks like a good value even in a slowing economy. I don't see much more downward pressure from this.
3. Attention to human rights issues concerning China has expanded this year, both because of Tibet and Sudan. The SRI crowd is reconsidering whether they should be invested in China, and reducing their positions in case they decide the answer is "no." You can love or hate SRI, but at this point it simply isn't good investment to ignore them.
4. The Olympics. It was a silly idea, but a lot of people thought the Olympics were going to offer an immediate boost to Chinese stocks (as if investors somehow didn't anticipate that the Olympics were going to be in Beijing and price them in in advance). That didn't happen, and now I think there has been a little bit of frustration selling. We may get a little boost when Olympics-related spending starts to hit bottom lines, but myself I wouldn't bet on it. There was probably nearly as much spending for build-out before the games as there will be by visitors and advertisers during the games, so I don't expect a big pop.
I think all of these factors have contributed to GSH's fall, and to its apparent inability to get back up. Like I said above, I do think the stock is a good value at this point. However, there is an old saying about never trying to catch a falling knife. I will get back into this stock, and odds are I will miss the bottom, but I would rather miss it by being too late than by being too early.
ps. lawwman - My read is that the drop in the dollar against the Yuan should be helping the ADS. Do you see it differently?
Thank you for your thoughts. I'm holding 3k shares rite now and WANT to buy more but that 'little voice' says wait. As far as economy in China goes I watched a show last week and I have to say it really looks to be booming as far as the cities go. It also featured a company called American Apparel APP that is opening 17 (I think) stand alone stores with goods made in USA. They 'claim' US goods are a staus symbol. Not touting but I am watching.
Again thanks for insights, good luck to you both
I am with you!! Its my largest losing position and the fact we cant find out anything about whats going on is frightening!! I buy a thousand shares every so often but a lot has to do with the dollar versus the yuan. Their ridership is up, and this is before the Olympics. They are taking thousands upon thousands across China to gamble in Macao. Lots of positives but the silence is deafening!!