Mispricing China (II)

By Sampson Iroabuchi Onwuka

....This does not take anything away from Chinese companies in Nigeria that is worthy of mention, but in terms of crude oil, it is amazing how China can navigate between these giants, and how they conduct themselves in the main is quite remarkable. But there is need to remain committed to these changes which now remain part of the daily dribble on Nigerian Crude oil

What is however troubling is why the names of these companies are not made public yet, since many of these Chinese oil companies differ from each in very market terms. And many of these companies are so successful through investment ranks of Americans and Asians that these companies are by Standard Deviation expensive, especially for a third world economy like Nigeria.

Above all, there is a consistent downfall dip of Chinese Red Chip companies (that is Chinese Companies operating outside the People’s Republic of China), that need arises to question the wisdom behind pushing towards big names and big corporation like Sinopec and Petro China when Nigeria can arrange a much deeper alternative. If business is all about making money, why should Nigeria out price itself in a business that involves the rest of us. I mean to say that these two mentioned companies are not different from various other expensive companies in Nigeria. There are categorically the same saving for the name and assumption

There are Crude oil producing and refinery companies in China that are quite cheap relative to what is now available, many of them quite cheap but nearly all of them out of reach, given the formidability of Petro China and Sinopec, both of whom are registered through ADR and applied public wise through by dollars.

This cheap and downward Red Chip stocks suggests that business inside China is not that encouraging. Chinese big companies are having a hard time in China and business in not as usual given their very expensive bagging, which under a new lover like Nigeria would become much fruitful. These companies can have access to main events in Nigerian Crude Oil and of course we build small and gradually with them. These companies may also be enticed with other ventures in Nigeria like Hydroelectricity which Hu Jintao is a specialist. PIPE dreams from perhaps a Shenshen economy will not disappoint many Nigerians private placement.

Understanding how Chinese markets work is also a great advantage when pricing China, locally and internationally. Understanding that Chinese market, especially the oil industry is not an organic whole is an added advantage in Crude oil and refinery business. That a difference exists between for instance, Shenshen and Shanghai Stock exchanges is important. These two are very close but very different in operational dynamics. Taking advantage of what is being offered in these provinces is what Global Markets are about. Understanding why companies registered in any of China South stock exchanges or companies originating in the South, differ from the North of China is quite a necessity and economic pricing advantage.