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Someone on CNBC yesterday said that China is doing this, but that they are
doing it to keep the companies from all going bankrupt at the same time. He
said the idea was to let the companies down slowly rather than trying to
artificially inflate them. I read the article and it is scary, but this guy
on the tube put a less ominous face on it. Either way, it doesn't indicate
that the chinese economy is ready to take off.
Kent
-----Original Message-----
From: Joe Frabosilio <joe6964@xxxxxxxx>
To: realtraders@xxxxxxxxxxxxxxx <realtraders@xxxxxxxxxxxxxxx>
Date: Thursday, August 03, 2000 10:32 AM
Subject: [RT] GEN:Another Castle in the Sky story
Hi Group,
I'm a little behind on my reading with the Wall Street Journal,
found this on the front page of 7/31/2000 " Blind Rally" " To Milk a
Cash Cow, CHina Pumps Air into a Stock Bubble"
Mr. Lu's Zhengzhou Baiwen Co. is a government controlled department
store operator and household-goods wholesaler, is on the brink of
failure. Its debts are almost double the value of its assests,
creditors are trying to liquidate it, and Baiwen's once-vaunted,
distribution network is shrinking by the day.
Mr. Lu is in a meeting with bankrupt subsidiary and angry securities
regulators, his assistants nudges him and says "His company's stock is
surging"
The Beijing government generally uses the stock market to funnel money
into aliling government enterprises, by exercising its power to decide
which companies are allowed to list their shares and which aren't.
Over the past 10 years Chinese investors have been putting money into
some of the country's worst companies.
Beijing keeps corporate info. away from the people, allowing rumors to
run wild.
There is a lot more, too much to type. I thought this would capture the
main idea.
Trade Well,
Joe Frabosilio
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