When first listed July 12 on the Shanghai Stock exchange, Zhou Tiehai appeared undervalued, rising only slightly in the first few hours of trade.

But Class B* shares in the issue appreciated steadily over the next two weeks, as foreign buyers learned more about the enterprise's fundamentals. One European buyer even was rumoured to be accumulating large blocks of the stock in a bid to obtain a majority stake, traders said.

The gradual appreciating accelerated into an all-out buying spree beginning on July 26, when the unnamed European buyer discovered previously undisclosed assets in Zhou Tiehai. The stock closed out the month just below a psychological high. Traders then said they doubted the stock would rise much further.

'If the Zhou climbs much higher it will find itself very vulnerable to market fluctuations and exposed to the whims of profit-takers," said a marked analyst with a Shanghai-based securities firm.

Yet an injection of new funds on Aug. 6 caused the stock to soar on strong buying again rumoured to originate from Europe. The initial surge was followed by three to fours days of consolidation in the value of the stock. Traders said it was a technical correction, ending on Aug. 10.

The Zhou fell slowly over the next few sessions, as the European buyer, realizing its investment had become overvalued, took some profits.

By Aug. 13 the Zhou had fallen to more sustainable level, before its shares where suspended from trading ahead of a shareholder meeting.

When trading resumed Aug. 26, the Zhou took a slight knock, consolidating on Aug. 27 to a level just below its pre-suspension price.

According to market participants, the stock is now valued fairly in the eyes of the big houses and seems likely to remain stable in the foreseeable future.

Its fundamentals remain sound, and bullish traders expect renewed interest by overseas buyers to bring the Zhou Tiehai higher in the long term. Indeed, some traders said they have seen indications in recent sessions that foreign houses are accumulating the Zhou again.

* Shanghai has two stock markets. Class B shares are denominated in US dollars and tradable only by overseas investors. Class A shares. Dominated in yuan, are available only to domestic Chinese buyers.


Zhou Tiehai
Press Conference
Print 1997
55 x 102 cm
Edition of 100, signed, numbered