(FXC) iShares FTSE China 25

The planned stock market debut of Facebook, with eye-watering multiples and instant multi-billion dollar fortunes for its co-founders, is front-page news.

“Facebook exists to make the world more open and connected, and not just to build a company,” the 27-year-old chief executive Mark Zuckerberg wrote in a letter to investors in the filing.

What are Facebook’s prospects in China? Think of the China Market as a `walled garden' says Gary Rieschel in this five-minute Bloomberg video.

Valuta


China Market `Walled Garden' for Facebook

Feb. 2 (Bloomberg) -- Gary Rieschel, founder and managing director of Shanghai-based Qiming Venture Partners, talks about Facebook Inc.'s planned initial public offering and the social-networking website's business prospects for the China market. Facebook filed to raise $5 billion in what would be the largest Internet IPO on record. Rieschel speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)

Video (5.08 mins)
http://www.bloomberg.com/video/85432552/

The Economist this week has a special report focusing on what it calls ‘state capitalism’:-

"The crisis of liberal capitalism has been rendered more serious by the rise of a potent alternative: state capitalism, which tries to meld the powers of the state with the powers of capitalism. It depends on government to pick winners and promote economic growth."

The review focuses on the new state capitalism of the emerging world rather than the old state capitalism in Europe, because (says the author) that reflects the future rather than the past. However, the trend raises some tricky questions about the global economic system.

FXC companies would be exemplars of this new state capitalism.

This, the first of seven articles, gives an overview of the issues.


Valuta



Special report: State capitalism

The visible hand

The crisis of Western liberal capitalism has coincided with the rise of a powerful new form of state capitalism in emerging markets, says Adrian Wooldridge

Jan 21st 2012 | from the print edition



(1,600 words + graphics + comments)
http://www.economist.com/node/21542931


RELATED ARTICLES (accessible via the link above):-

In this special report
• »The visible hand [See above]
• Something old, something new
• New masters of the universe
• Theme and variations
• Mixed bag
• The world in their hands
• And the winner is…

This MarketWatch article has a cautionary tale about the ‘third wave’ of Chinese companies to be listed in the USA. Those followed the ‘first wave’ of state-owned enterprises (SOEs) in the 1990s and the ‘second wave’ blue chip stocks.

Many of the third wave were small Chinese companies which were tarted up and touted by their Wall Street shepherds, to feed a market for initial public offerings (IPOs) from a public hungry for ‘hot’ Chinese stocks. But many such firms were flaky, unfit for IPO and dud investments.

This tale IMO echoes the caution of people like Aberdeen’s Asia MD Hugh Young about investing in Chinese private companies without getting to know them thoroughly over time.

The large SOEs that FXC holds are enough direct exposure to China for my risk appetite at present.


Valuta



Outside the Box Jan. 20, 2012, 12:01 a.m. EST

China’s stock bubble was made in the U.S.A.

Commentary: Eager investors bought first and asked questions too late
By Junheng Li

NEW YORK (MarketWatch) — When a hot investment theme feeds on investor greed, ignorance and laziness — and is further inflated by unscrupulous, opportunistic investment banks — ugly things tend to happen, as U.S. investors in Chinese stocks are learning.


Junheng Li is the founder and an equity analyst of JL Warren Capital LLC, an independent equity research firm.

(1,400 words + graphics + comments)
http://www.marketwatch.com/story/chinas-stock-bubble-was-made-in-the-usa-2012-01-20?pagenumber=2

The Chinese government and communist party mouthpiece Xinhua has this upbeat take on yesterday’s Global Economic Prospects (GEP) 2012 report from the World Bank.


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Chinese economy heads for soft landing in 2012 with room for fiscal stimulus: WB chief economist

English.news.cn 2012-01-18 18:24:15


BEIJING, Jan. 18 (Xinhua) -- China's economy can achieve a soft landing in 2012 despite a global economic slowdown, World Bank chief economist Justin Lin said Wednesday.

China's massive foreign exchange reserves will help the world's second-largest economy shrug off external pressures and maintain a growth rate above 8 percent this year, Lin said at a press conference on the global economic outlook.

As official data show that the government's fiscal deficit is equivalent to about 25 percent of its gross domestic product, China has "lots of room" for a stimulative fiscal policy to stabilize its economy and maintain rapid growth, due to its low debt levels, Lin said.

According to data from the National Bureau of Statistics on Tuesday, China's GDP rose 9.2 percent year-on-year in 2011 to reach 47.16 trillion yuan (7.26 trillion U.S. dollars), with a projected fiscal deficit of 900 billion yuan.

To stimulate its domestic demand, China can rely on either investment or consumption, although the key will be to increase incomes, said Lin, who is also the World Bank's senior vice president for development economics.

"Judging from official data, the proportion of consumption in China's GDP is relatively low and still has room for improvement," Lin said, adding that China should learn a lesson from overspending in Europe and the United States.

In its "Global Economic Prospects 2012" report, the World Bank projected China's economy to expand 8.4 percent in 2012 and 8.3 percent in 2013, warning developing countries to prepare for further downside risks, as eurozone debt problems and weakening growth in several emerging economies are dimming global growth prospects.

Global growth will be around 2.5 percent and 3.1 percent for 2012 and 2013, respectively, according to the World Bank report.

"Developing countries need to evaluate their vulnerabilities and prepare for further shocks while there is still time," Lin said.

Developing countries have less fiscal and monetary space for remedial measures than they did in 2008 and 2009. As a result, their ability to respond may be constrained if international finance dries up and global conditions deteriorate sharply, Lin said.

To prepare for that possibility, Hans Timmer, director of development prospects at the World Bank, said developing countries should pre-finance budget deficits, prioritize spending on social safety nets and infrastructure and stress-test domestic banks.

After expanding by 9.7 percent in 2010, the regional GDP in the East Asia and Pacific region grew an estimated 8.2 percent in 2011, but growth is projected to ease to 7.8 percent for both 2012 and 2013, according to the World Bank report.


(400 words)
http://news.xinhuanet.com/english/china/2012-01/18/c_131367421.htm