Three Monday morning movers
Today's Financial News - Posted October 19, 2009
The markets are off to a good start this week. Will a slew of economic news change the trend or is Dow 11,000 the next stop? Or does it even matter thanks to China’s winning ways?
By Andrew Snyder, TodaysFinancialNews.com
Baltimore – (TFN): The equities market is starting a critical week in positive territory. With a slew of influential earnings reports due throughout the next five days, a handful of important economic data and a commodities market that won’t quit running, it will be interesting to see where we stand on Friday afternoon.
For now, there are plenty of newsmakers worth watching.
Following the recent trend, many of the market’s biggest movers are coming straight from China.
The 44% gain that AutoChina International (NASDAQ:AUTCW) is handing its shareholders this morning is a perfect example. Just a week ago, shares of the commercial car seller were trading for about $6 each.
Today they will cost you nearly $20 a piece.
The gains come thanks to the company’s recent debut on the NASDAQ market. By moving from the over-the-counter-market to the electronic exchange, AutoChina opened its shares to a slew of new investors, which have commenced an all-out buying spree.
It is proof investors are eyeing the Chinese economy and its growth potential like never before.
Made in China
For more evidence, turn to Shiner International (NASDAQ:BEST) and its 30% surge in share price. The company is rewarding its investors today because of news it has inked a contract with China’s largest “meat product” producer.
As a $45 million food-packaging manufacturer, Shiner is a major beneficiary of a food-safety law that went into effect earlier this year. Today’s contract is expected to be worth an extra $586,000 in monthly sales.
Again, it is more proof that China’s maturing economy will provide strong rewards for international investors.
Here in the United States, our economy is in a unique stage of its own. While there is plenty of growth potential in “seedling” industries, many of our most economically important industries have long since reached maturity.
In order for them to keep expanding at a rate that keeps investors happy, they have to buy their growth. Today’s news from Sprint Nextel (NYSE:S) is a good example.
As a $10 billion player in the nation’s wireless industry, Sprint cannot simply land a new contract and double its market value overnight. If it wants to significantly increase its top line, it has to purchase it.
Expensive hush money
That is exactly why the company announced this morning it is shelling out $831 million to get its hands on iPCS (NYSE:IPCS). The $24 per share offering price has sent shares of iPCS up by more than 30% today.
This proposed merger will be interesting to watch as the two companies are currently fighting several court cases recently filed by iPCS. Today’s acquisition news may simply be a cheaper way of eradicating the pesky litigation.
We will certainly hear from shareholders over the next few days and weeks. A 35% premium is considered fairly light these days.
Again, that’s the difference between Chinese and the U.S. markets. In Asia, they are growing the old-fashioned way. Here at home, it takes a different route to get where we are going.
Call me a traditionalist, but I like what China has going on much better.
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