Bitcoin Value Steadies AfterChinese Government Warning Drop And Internet Sector Surges After China SecuritiesRegulatory Commission Suggesting Risks

December 9, 2013 |  Print | Comments | Category: Internet, Law & Policy, Security

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Five Chinese government units,including the People's Bank of China, Ministry of Industry and InformationTechnology, China Banking Regulatory Commission, China Securities RegulatoryCommission, and China Insurance Regulatory Commission, have jointly issued anotice about preventing risks against Bitcoin speculation.

Though the warnings were not fullcondemnations of the cyptocurrency, sell prices on exchanges as geographicallydiverse as China-based BTC China and U.S.-based Coinbase.com dropped by as muchas 40% over the last few days, respectively. But in the past twelve hours, gthevalue on these types of exchanges has appeared to level off at around a valueof USD750 per bitcoin.

The government notice pointed outthat Bitcoin is not a currency in a real sense and it does not have the equallegal position as a currency. Therefore, it shall not use and circulate ascurrency in the Chinese market.

The notice also said thatfinancial organizations and payment organizations shall not set prices to theirproducts and services with Bitcoin; they shall not buy, sell or trade Bitcoinas a central counterparty; they shall not implemented insurance businessesrelated to Bitcoin or include Bitcoin into the insurance coverage; and theyshall not directly or indirectly provide other Bitcoin-related services tocustomers.

The five government units saidthis risk warning notice aims to protect the property rights of the public,safeguard the legal tender status of Renminbi, prevent money laundering risks,and maintain financial stability.

The notice clarified the natureof Bitcoin, which is a specific virtual product and it does not have the samelegal position as currency. However, since the trading of Bitcoin is anInternet trading activity, ordinary people can continue to participate in itunder the premise of this type of risk awareness.

Internet Sector Surges AfterChina Securities Regulatory Commission Sugguesting Risks

China Internet Sector Realitycheck: Bubble burst or a healthy correction?

2014-04-11 00:00:00

Sector share price corrected onaverage 20% since 7 March 2014. We saw that higher P/E stocks and newly listednames registered larger decline, while low P/E stocks saw relatively lesscorrection. At the current level, share price is flat YTD.

Growth rate vs valuation stillvery reasonable. We see sector P/E ratio is attractive, given the growthprospects. Median sector 2014/15E P/E is 22.5x/19.7x, this compares to 2015/16EEPS median growth of 30.5%/23.7%. We attribute the recent downward earningsrevision for 2014 earnings to investment in mobile Internet-key for longer-termsustainable growth. We see this proactive investment a positive development forthe sector. Long-term growth prospects of the sector include: (mobile) usersgrowth, new business models and new verticals penetration.

When will "New Economy"stock be back in favour? Per our APAC equity strategist Sakthi Siva's analysis(detailed report), Baidu and Tencent have consistently traded at premiums overthe regional average (on P/B vs ROE basis) since 2004. Over the past 10 years,this premium swings in a wide band. For China Internet stocks, we expectsentiment turns more positive gradually with strong e-commerce sector growth,increasing mobile revenue penetration, and more clarity in new businessexpansion.

Buying opportunity. We see thecurrent share price weakness as a short-term correction, rather than the"burst of bubble" (or unsustainably high sector valuation). Wehighlight buying opportunities in good quality Internet names like Baidu,Tencent, Soufun Qihoo, YY and Vipshop.

ChiNext faces bubble risk

Updated:2013-10-10 14:58

( Xinhua)

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BEIJING- China's ChiNext Board, a Nasdaq-style index tailored for growth enterprises,is facing increasing bubble risk in a profit frenzy, the China Business Newsreported on Thursday.

During Wednesday's trading, the ChiNext Indexhit a historical high of 1,418.48 points before retreating slightly to close2.03 percent up at 1,415.83 points. Compared to the start of the year, theindex has increased more than 98 percent.

The jump of the secondary market came againsta backdrop of sluggish performance of the main board this year and almost oneyear of suspension of initial public offerings. The benchmark ShanghaiComposite Index has slumped nearly 2.9 percent since the beginning of the year.

The report compared gains on the ChiNextBoard to the lackluster profit of the 355 listed firms on the ChiNext withtheir half-year profits rising only two percent.

A two-percent profit increase cannot supporta 98-percent rise of the ChiNext Index, according to the report.

Speculative capital has become active underthe government's general restructuring of the economy by eliminating and upgradingtraditional industries while boosting emerging sectors such as those featuredon the ChiNext Board with its listed companies in electronics, entertainment,games, and telecom.

Expectations for future growth of the boardmay be difficult to rationalize as speculation in the market has created abubble, according to a report by the China Southern Asset Management, aShenzhen-based fund management company.

The report by the company also warned thatsigns of profit-taking on the ChiNext Board are emerging, leading to biggerrisks.