Is China First Feeling the REAL Negative Impact of their Olympics Property Bubble?

China’s central government has created internal growth targets for the various administrative divisions within China.  These local governments, in turn, have turned to real estate development as an easy way to reach their centrally assigned internal growth targets.  The result is tens of millions of unoccupied, luxury apartments that the average Chinese laborer cannot afford.  Part of this is due to China’s stringent requirements for acquiring real estate: 50% down with the balance paid off in three years.  When apartments sell for $300,000 and the average laborer earns less than $6,000, the market won’t clear.

But, even more importantly, the phenomenon of these so-called ghost cities suggests that much growth in China has been illusory.  An Australian news program called Dateline recently did a report on these ghost cities.  The whole 15 minute report is well worth watching, but perhaps its most salient part is the following exchange between the reporter and a Hong Kong-based financial analyst, Gillem Tulloch:

GILLEM TULLOCH: It’s essentially the modern equivalent of building pyramids. It doesn’t really add to the betterment of lives, but it adds to the growth of GDP.

REPORTER: And maintaining economic growth is the government’s number one priority.

GILLEM TULLOCH: It’s basically happening because China is a command economy and the Chinese Government can dictate where the resources are spent.

REPORTER: And so, if the order goes out to build, local governments build?

GILLEM TULLOCH: That’s right. If the central government sets a GDP target, they have to meet the target and the easiest way to do it is just to build.”

All of this makes one wonder what the broader implications for China’s economy are.  Clearly, an economy whose real estate sector has been overbuilt and is not clearing in a normal matter is not a sustainable one. One need only to travel to Detroit to see the malign effects of too much housing with too little demand.  With that in mind, I decided to take a look at some of the more prominent Chinese companies trading on the US exchanges.  Intuition would suggest that those Chinese companies which have diversified internationally will be less affected by the economic mismanagement at home; nonetheless, the ultimate effects of illusory growth may be bad for all Chinese stocks.

Following is a list of all of these stocks, along with some summary fundamental information about them.  This universe of stocks has a total market capitalization of just over $1 trillion.  The mean market capitalization is $14.5 billion, while the median is only $500 million.  As this would suggest, the following is very highly skewed towards lower-capitalization stocks, with a few companies with a market capitalization of one hundred billion dollars or more.  The larger and more liquid companies likely are better positioned to deal with whatever fallout comes from China’s building spree.

  • 3SBio (NASDAQ:SSRX): its recent price is $16.83, its 52-week high is $18.21, and its 52-week low is $10.00. It is trading at 8.2% off its 52-week high and 68.3% off its 52-week low. Its market capitalization is $51,969,188, its earnings per share are $0.57, and its price-to-earnings ratio is 29.41. Its market capitalization as a percent of this universe of stocks is 0.0048%. 3SBio, Inc. is a biotechnology company. The Company researches treatments in the areas of nephrology, oncology, supportive cancer care, inflammation, and infectious diseases.
  • 51Job (NASDAQ:JOBS): its recent price is $62.71, its 52-week high is $68.55, and its 52-week low is $16.64. It is trading at 9.3% off its 52-week high and 276.9% off its 52-week low. Its market capitalization is $862,185,981, its earnings per share are $1.26, and its price-to-earnings ratio is 49.7. Its market capitalization as a percent of this universe of stocks is 0.0790%. 51job, Inc. provides integrated human resource services in China, with a strong focus on recruitment related services. The Company’s recruitment related services are delivered in both print and online formats.
  • Acorn international (NYSE:ATV): its recent price is $5.16, its 52-week high is $5.89, and its 52-week low is $3.04. It is trading at 14.1% off its 52-week high and 69.7% off its 52-week low. Its market capitalization is $51,185,444, its earnings per share are ($0.24), and its price-to-earnings ratio is impossible to calculate since earnings are negative. Its market capitalization as a percent of this universe of stocks is 0.0047%. Acorn International Inc. is an integrated multi-platform marketing company. The Company develops, promotes, and sells consumer products and services through its direct TV sales and nationwide distribution network.
  • Actions Semiconductor (NASDAQ:ACTS): its recent price is $2.46, its 52-week high is $2.60, and its 52-week low is $1.95. It is trading at 5.7% off its 52-week high and 26.2% off its 52-week low. Its market capitalization is $35,259,992, its earnings per share are $0.00, and its price-to-earnings ratio is 512.5. Its market capitalization as a percent of this universe of stocks is 0.0032%. Actions Semiconductor Co. Ltd. is an IC design company. The Company provides system-on-a chip solutions for the development and manufacture of personal media or MP3 players.
  • Agria (NYSE:GRO): its recent price is $1.45, its 52-week high is $2.35, and its 52-week low is $1.11. It is trading at 62.1% off its 52-week high and 30.6% off its 52-week low. Its market capitalization is $45,370,501, its earnings per share are ($1.82), and its price-to-earnings ratio is impossible to calculate since earnings are negative. Its market capitalization as a percent of this universe of stocks is 0.0042%. Agria Corporation researches and develops, produces, and sells upstream agricultural products. The Company currently offers corn seeds and sheep breeding products such as frozen sheep semen, sheep embryos, and breeder sheep, as well as seedling products.
  • AirMedia Group (NASDAQ:AMCN): its recent price is $5.38, its 52-week high is $8.24, and its 52-week low is $2.83. It is trading at 53.2% off its 52-week high and 90.1% off its 52-week low. Its market capitalization is $176,460,130, its earnings per share are ($0.08), and its price-to-earnings ratio is impossible to calculate since earnings are negative. Its market capitalization as a percent of this universe of stocks is 0.0162%. Airmedia Group, Inc. operates digital media advertising networks. The Company operates digital television screens displaying advertising in Chinese airports.
  • Aluminum Corp of China (NYSE:ACH): its recent price is $24.39, its 52-week high is $28.88, and its 52-week low is $18.03. It is trading at 18.4% off its 52-week high and 35.3% off its 52-week low. Its market capitalization is $13,194,492,114, its earnings per share are $0.22, and its price-to-earnings ratio is 110.84. Its market capitalization as a percent of this universe of stocks is 1.2090%. Aluminum Corporation of China Limited, also known as Chalco, is a producer of alumina and primary aluminum in China. The Company refines bauxite into alumina and smelts aluminato to produce primary aluminum.
  • ATA, Inc. (NASDAQ:ATAI): its recent price is $7.85, its 52-week high is $8.65, and its 52-week low is $2.72. It is trading at 10.2% off its 52-week high and 188.6% off its 52-week low. Its market capitalization is $87,216,953, its earnings per share are ($0.09), and its price-to-earnings ratio is impossible to calculate since earnings are negative. Its market capitalization as a percent of this universe of stocks is 0.0080%. ATA, Inc. provides computer-based testing services. The Company also provides career-oriented, test-based educational programs and test preparation solutions.
  • Baidu.com (NASDAQ:BIDU): its recent price is $141.88, its 52-week high is $143.48, and its 52-week low is $60.22. It is trading at 1.1% off its 52-week high and 135.6% off its 52-week low. Its market capitalization is $49,307,969,549, its earnings per share are $1.54, and its price-to-earnings ratio is 91.85. Its market capitalization as a percent of this universe of stocks is 4.5180%. Baidu, Inc. operates an Internet search engine. The Company offers algorithmic search, enterprise search, pay for performance and news, MP3, and image searches.
  • China Digital TV (NYSE:STV): its recent price is $7.22, its 52-week high is $9.49, and its 52-week low is $5.21. It is trading at 31.4% off its 52-week high and 38.6% off its 52-week low. Its market capitalization is $420,523,040, its earnings per share are $0.57, and its price-to-earnings ratio is 12.7. Its market capitalization as a percent of this universe of stocks is 0.0385%. China Digital TV Holding Co., Limited provides conditional access, or CA, systems to the digital television market. The Company also licenses set-top box designs to set-top box manufacturers and sells digital television application software such as electronic program guides and subscriber management systems to digital television network operators.
  • China Eastern Airlines (NYSE:CEA): its recent price is $18.32, its 52-week high is $34.58, and its 52-week low is $18.21. It is trading at 88.8% off its 52-week high and 0.6% off its 52-week low. Its market capitalization is $4,131,724,187, its earnings per share are $3.39, and its price-to-earnings ratio is 5.4. Its market capitalization as a percent of this universe of stocks is 0.3786%. China Eastern Airlines Corporation Limited provides passenger and cargo airline services.
  • China Finance Online (NASDAQ:JRJC): its recent price is $4.46, its 52-week high is $8.59, and its 52-week low is $4.36. It is trading at 92.6% off its 52-week high and 2.3% off its 52-week low. Its market capitalization is $19,668,645, its earnings per share are $0.09, and its price-to-earnings ratio is 52.1. Its market capitalization as a percent of this universe of stocks is 0.0018%. China Finance Online Company provides financial data. The Company offers Chinese financial and listed company data over the Internet. China Finance offers its data to Chinese subscribers.
  • China Grentech (NASDAQ:GRRF): its recent price is $3.43, its 52-week high is $3.71, and its 52-week low is $1.51. It is trading at 8.2% off its 52-week high and 127.2% off its 52-week low. Its market capitalization is $3,238,675, its earnings per share are $0.64, and its price-to-earnings ratio is 5.34. Its market capitalization as a percent of this universe of stocks is 0.0003%. China GrenTech Corporation Limited provides wireless products and services in China. The Company also develops radio frequency (NYSE:RF) technologies.
  • China Life Insurance (NYSE:LFC): its recent price is $58.10, its 52-week high is $74.37, and its 52-week low is $53.63. It is trading at 28.0% off its 52-week high and 8.3% off its 52-week low. Its market capitalization is $109,478,640,525, its earnings per share are $2.73, and its price-to-earnings ratio is 21.28. Its market capitalization as a percent of this universe of stocks is 10.0314%. China Life Insurance Co., Limited offers a wide range of life, accident, and health insurance products and services.
  • China Medical Tech (NASDAQ:CMED): its recent price is $12.39, its 52-week high is $14.45, and its 52-week low is $9.40. It is trading at 16.6% off its 52-week high and 31.8% off its 52-week low. Its market capitalization is $39,980,053, its earnings per share are $4.16, and its price-to-earnings ratio is 2.98. Its market capitalization as a percent of this universe of stocks is 0.0037%. China Medical Technologies, Inc. is a medical device company. The Company develops, manufactures, and markets products using high intensity focused ultrasound, or HIFU, for the treatment of diseases and disorders. China Medical Technologies, Inc. is based in Beijing.
  • China Mobile (NYSE:CHL): its recent price is $47.15, its 52-week high is $54.70, and its 52-week low is $44.36. It is trading at 16.0% off its 52-week high and 6.3% off its 52-week low. Its market capitalization is $189,223,800,624, its earnings per share are $4.42, and its price-to-earnings ratio is 10.66. Its market capitalization as a percent of this universe of stocks is 17.3384%. China Mobile Limited, through its subsidiaries, provides cellular telecommunications and related services in the People’s Republic of China and Hong Kong SAR.
  • China Nepstar (NYSE :NPD): its recent price is $3.76, its 52-week high is $7.37, and its 52-week low is $2.47. It is trading at 96.0% off its 52-week high and 52.2% off its 52-week low. Its market capitalization is $198,339,999, its earnings per share are $0.02, and its price-to-earnings ratio is 154.61. Its market capitalization as a percent of this universe of stocks is 0.0182%. China Nepstar Chain Drugstore Limited owns and operates a retail drug store chain. The Company has locations throughout China.
  • China Petro & Chemical (NYSE:SNP): its recent price is $105.02, its 52-week high is $111.92, and its 52-week low is $70.15. It is trading at 6.6% off its 52-week high and 49.7% off its 52-week low. Its market capitalization is $91,054,994,095, its earnings per share are $12.55, and its price-to-earnings ratio is 8.37. Its market capitalization as a percent of this universe of stocks is 8.3433%. China Petroleum and Chemical Corporation (Sinopec) refines, produces and trades petroleum and petrochemical products such as gasoline, diesel, jet fuel, kerosene, ethylene, synthetic fibers, synthetic rubber, synthetic resins, and chemical fertilizers. Also, The company explores for and produces crude oil and natural gas in China.
  • China Southern Airlines (NYSE :ZNH): its recent price is $21.20, its 52-week high is $39.30, and its 52-week low is $18.83. It is trading at 85.4% off its 52-week high and 12.6% off its 52-week low. Its market capitalization is $4,162,648,558, its earnings per share are $5.28, and its price-to-earnings ratio is 4.01. Its market capitalization as a percent of this universe of stocks is 0.3814%. China Southern Airlines Company Limited provides commercial airline services throughout China, Southeast Asia and other parts of the world. The Company also provides other airline related services including aircraft maintenance and air catering.
  • China Sunergy (NASDAQ:CSUN): its recent price is $3.93, its 52-week high is $4.99, and its 52-week low is $3.40. It is trading at 27.0% off its 52-week high and 15.6% off its 52-week low. Its market capitalization is $29,178,875, its earnings per share are $1.18, and its price-to-earnings ratio is 3.32. Its market capitalization as a percent of this universe of stocks is 0.0027%. China Sunergy Company Limited manufactures and distributes solar cells for solar modules. The Company produces its solar cells from silicon wafers utilizing crystalline silicon solar cell technology to convert sunlight directly into electricity through a process known as the photovoltaic effect.
  • China Techfaith (NASDAQ:CNTF): its recent price is $4.35, its 52-week high is $4.78, and its 52-week low is $1.91. It is trading at 9.9% off its 52-week high and 127.7% off its 52-week low. Its market capitalization is $15,350,410, its earnings per share are $0.51, and its price-to-earnings ratio is 8.5. Its market capitalization as a percent of this universe of stocks is 0.0014%. China Techfaith Wireless Communication Technology Limited designs mobile handsets and develops smart phones. The Company serves Chinese and international mobile handset brand owners.
  • China Telecom (NYSE:CHA): its recent price is $64.59, its 52-week high is $65.06, and its 52-week low is $41.24. It is trading at 0.7% off its 52-week high and 56.6% off its 52-week low. Its market capitalization is $52,274,214,819, its earnings per share are $2.98, and its price-to-earnings ratio is 21.68. Its market capitalization as a percent of this universe of stocks is 4.7898%. China Telecom Corporation Limited, through its subsidiaries, provides wireline telephone, data, and Internet, as well as leased line services in China.
  • China Unicom (NYSE:CHU): its recent price is $18.34, its 52-week high is $18.61, and its 52-week low is $10.91. It is trading at 1.5% off its 52-week high and 68.1% off its 52-week low. Its market capitalization is $43,213,038,480, its earnings per share are $0.25, and its price-to-earnings ratio is 73.67. Its market capitalization as a percent of this universe of stocks is 3.9596%. China Unicom (Hong Kong) Limited, through its subsidiaries, provides telecommunications services in the People’s Republic of China. The Company’s services include cellular, paging, long distance, data, and Internet services.
  • ChinaEdu (NASDAQ:CEDU): its recent price is $7.40, its 52-week high is $8.15, and its 52-week low is $6.32. It is trading at 10.1% off its 52-week high and 17.1% off its 52-week low. Its market capitalization is $45,425,567, its earnings per share are $0.35, and its price-to-earnings ratio is 21.25. Its market capitalization as a percent of this universe of stocks is 0.0042%. ChinaEdu Corporation provides educational services in China. The Company offers both online and off-line services to degree and non-degree programs for students from kindergarten through college.
  • City Telecom [HK] (NASDAQ:CTEL): its recent price is $14.51, its 52-week high is $16.48, and its 52-week low is $9.11. It is trading at 13.6% off its 52-week high and 59.3% off its 52-week low. Its market capitalization is $557,554,739, its earnings per share are $0.76, and its price-to-earnings ratio is 19.05. Its market capitalization as a percent of this universe of stocks is 0.0511%. City Telecom (NYSE:HK) Limited, through its subsidiaries, provides international telecommunications services and fixed telecommunication network services. The Company’s services include broadband Internet access, local VoIP, IP-TV and corporate data services, direct dial, international calling cards, and mobile call forwarding services.
  • CNinsure (NASDAQ:CISG): its recent price is $13.52, its 52-week high is $28.62, and its 52-week low is $12.63. It is trading at 111.7% off its 52-week high and 7.0% off its 52-week low. Its market capitalization is $34,104,066, its earnings per share are $1.30, and its price-to-earnings ratio is 10.4. Its market capitalization as a percent of this universe of stocks is 0.0031%. CNinsure, Inc. operates an independent insurance agency and brokerage company. The Company provides insurance-related services, such as claim assessments and 24-hour emergency services, but do not assume underwritting risks. CNinsure, instead, distributes to their customers in China, insurance products underwritten by domestic and foriegn insurance companies operating in China.
  • CNOOC (NYSE:CEO): its recent price is $265.97, its 52-week high is $271.94, and its 52-week low is $147.57. It is trading at 2.2% off its 52-week high and 80.2% off its 52-week low. Its market capitalization is $118,806,671,785, its earnings per share are $18.58, and its price-to-earnings ratio is 14.32. Its market capitalization as a percent of this universe of stocks is 10.8861%. CNOOC Limited, through its subsidiaries, explores, develops, produces, and sells crude oil and natural gas.
  • Ctrip.com (NASDAQ:CTRP): its recent price is $45.70, its 52-week high is $53.16, and its 52-week low is $31.35. It is trading at 16.3% off its 52-week high and 45.8% off its 52-week low. Its market capitalization is $26,239,222,118, its earnings per share are $1.06, and its price-to-earnings ratio is 43.06. Its market capitalization as a percent of this universe of stocks is 2.4043%. Ctrip.com International, Ltd. is a consolidator of hotel accommodations and airline tickets in China.

Stay tuned for Part 2…

Don’t Miss: Spring Ahead April 2011 with Our Flagship Newsletter and Winning Stock Ideas>>