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Alibaba Update: Intriguing Developments With These "Backdoor" Profit Plays

And thanks to some new developments, it’s a topic we need to revisit.

In a development late last week, the Hong Kong-based Alibaba said it’s looking at early September for what could be the biggest initial public stock offering (IPO) in global financial history. The company is now planning to price its offering sometime after Labor Day, a person briefed on the matter said on Thursday.

Alibaba valued itself at $130 billion in a recent regulatory filing, up from an earlier recent estimate of $116 billion. Valuations of the company have surged over the past year after earnings essentially tripled. A year ago the company was valued at $62.5 billion.

The big debate on Wall Street right now has to do with how Alibaba will value itself for purposes of the IPO.

  • China

  • "A New Age in the History of Energy" as China Tops the U.S. in Consumption China, powered by years of surging economic growth, is now the world's largest energy consumer, bumping the United States from the top spot for the first time in more than a century, according to new data from the International Energy Agency (IEA).

    China consumed 2.25 billion tons of oil equivalent last year, or about 4% more than the United States, which burned through 2.17 billion tons of oil equivalent. China's total energy consumption was just half that of the United States a decade ago.

    "The fact that China overtook the U.S. as the world's largest energy consumer symbolizes the start of a new age in the history of energy," IEA chief economist Fatih Birol told The Wall Street Journal. The United States had been the world's biggest overall energy consumer since the early 1900s, he said.

    China was expected to become the biggest energy consumer in 2015, but the economic meltdown and green energy programs in the United States accelerated the transition, Birol said.

    Read More...
  • China Stockpiling Uranium in Rush to Build More Nuclear Plants China is stockpiling uranium and purchasing the yellow metal in unprecedented quantities as part of its effort to build new nuclear reactors and provide electricity for its power hungry populace.

    The nation may purchase about 5,000 metric tons of uranium this year, more than twice as much as it consumes, Thomas Neff, a physicist and uranium-industry analyst at the Massachusetts Institute of Technology in Cambridge, said in a July 6 telephone interview with Bloomberg News.

    India and China are gearing up for the biggest expansion of nuclear energy since the 1970s oil crisis to cut pollution and supply their economies with enough fuel to keep them growing twice as fast as Europe and North America.

    "They are essentially stockpiling in anticipation of new reactor build," said Neff, who is an independent director of GoviEx Uranium Inc., a privately held exploration company with interests in Niger. "They are stockpiling like crazy."

    Read More...
  • Google Hangs On To China, but It's Too Late to Make up Profit Losses Google Inc. (Nasdaq: GOOG) announced Friday that China renewed its Internet license to operate a Web site, but the previous months of tension have already damaged Google's chance at mainland profitability.

    Google's chief legal officer David Drummond posted the announcement on the company's blog Friday morning.

    "We are very pleased that the government has renewed our ICP license," Drummond wrote, referring to Internet content provider license. "And we look forward to continuing to provide Web search and local products to our users in China."

    The license renewal should dissipate - at least, temporarily - months of tension that started earlier this year when Google claimed China was the source of cyber attacks on its databases and user e-mail accounts. Then the company said it would stop censoring search results in compliance with China's government regulations. China prohibits Internet users from accessing offensive and politically controversial material.

    Read More...
  • The Global Double-Dip Recession: Which Markets to Hold… And Which Ones May Fold Last week's stock-market meltdown was a worldwide affair, and was touched off by trader fears of a global "double-dip" recession.

    However, the truth is that the odds of a recessionary reprise are high in just a few countries - primarily those that have experienced excessive fiscal and monetary "stimulus," or that have real inflation problems.

    The rest of the world is recovering just fine.

    To find out which markets to hold - and which ones may fold - please read on...

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  • Slowing Factory Output Suggests Global Economic Recovery May be Weakening A slowdown in manufacturing growth spread across the globe in June, as factory output fell in China, Europe and the United States, suggesting the global economic recovery may be losing steam.

    But the overall level of factory activity continued to expand, suggesting that manufacturers may be experiencing a return to more normal rates of growth rather than heading for a contraction.

    In China, manufacturing growth slowed more than economists had forecast, and a gauge of factory output in the 16-member euro region fell for the second consecutive month, two surveys showed.

    Read More...
  • Question of the Week: Readers Respond to Money Morning's Question on China's Currency After months of intense political pressure, China last week announced that it would allow its currency to gradually appreciate against the U.S. dollar. China's currency - the yuan - has been pegged to the American greenback since 2008.

    "This is going to lead to a transition from export-lead, investment-lead to more of a consumption-lead economy going forward," Jing Ulrich, chair of China equities and commodities at JPMorgan Chase & Co. (NYSE: JPM), told CNBC. "I think the ramifications are profound not just for the next few months but actually for the coming years."

    Not surprisingly, U.S. exporters embraced the news as an opportunity to compete against Chinese companies and to reduce the U.S. trade deficit. Foreign nations, including the United States, have accused China of undervaluing its currency to give its exporters an advantage in global trade.

    Chinese domestic consumption stands to benefit the most, as consumers will have more purchasing power on top of China's recent wave of multi-industry wage increases. Western companies that reach out to Mainland China can access a consumer base with more money and an increased desire to spend, which should give Western investors a chance to cash in on climbing profits.

    However, not everyone will see immediate benefits from the new currency policy. In fact, the combination of big double-digit wage increases in China and an increase in the yuan will reanimate inflation.

    Read More...
  • Commodities Are Key as China Continues to Call the Shots China ended up being the big story this month, as investors looked past Europe to the Far East for clues about what shape the global recovery - if you can even call it that - is taking.

    Markets around the globe tanked yesterday (Tuesday) after the Conference Board revised its leading economic index for China to show the smallest gain in five months in April. The index rose just 0.3% in April, which was a significant reduction from the 1.7% gain the Board reported on June 19.

    The news of the error contributed to the biggest sell-off in Chinese stocks in more than a month, and sent U.S. indices into a dizzying downward spiral. The Dow Jones Industrial Average plunged 268.22 points, or 2.65%, to close at 9,870.30 and the Standard & Poor's 500 Index tumbled 33.33 points, or 3.10%, to close at 1,041.24.

    Read More...
  • Buy, Sell or Hold: Enbridge Energy Partners, L.P. (NYSE: EEP) Brings Some Stability to a Volatile Market It seems like every week there's a new development that forces investors to rethink their investment strategies.

    This week we will see the initial consequences of the weekend's all-important Group of 20 (G20) meeting. A lot of very important issues are up for debate among the world's top 20 countries, as are policies that will shape the intensity and distribution of global growth in the months and years ahead.

    The meeting will be fraught with controversy as each economy is proceeding at its own distinct pace of growth and faces its own set of challenges.

    China, which recently showed a superlative 50% year-over-year increase in exports, has run out of excuses to justify its undervalued currency. The country also is facing strong inflationary pressures, which include labor strikes by workers demanding higher pay.

    Read More...
  • Is it Time to Bet Against the U.S. Dollar? The U.S. dollar has been one of the world's strongest currencies in the first part of 2010. But, is the greenback really the bet choice for safety, quality and security? Read this report to find out why it's time to bet against the dollar... Read More...
  • Hot Stocks: General Electric is Being Powered by China Growth, but Held Back by its Financial Arm General Electric Company (NYSE: GE) has more than a century of history behind it and it's seen worse times than we're going through right now. It's a global juggernaut, and its foothold in emerging markets - particularly China - makes the company worth looking at.

    But at the end of the day, its financial unit is holding GE back, and that isn't likely to change any time soon.

    Let me explain.

    Read More...
  • Question of the Week: Readers Respond to Money Morning's Afghanistan Mineral Wealth Query The news that there is $1 trillion of Afghanistan mineral wealth hiding in the country's scarred and deserted landscape has global investors calculating how likely it would be for this incredibly poor country to transform itself into a natural-resources powerhouse.

    It has also spawned debates about which nations should be given a piece of this vast apparent fortune.

    The discovery - and its transformational potential - is mind-boggling: At $1 trillion, the estimated value of the mineral reserves is 100 times the size of Afghanistan's entire economy, estimated at $12 billion. And it's not just the dollar figures that could bring about change. Much of Afghanistan's economic activities involve drug-trafficking and terrorism. About 40% of the country's population lives below the poverty line, and 70% lives on $2 a day.

    Read More...
  • We Want to Hear From You: Are You Worried About China's Currency Rise Sparking Inflation? After months of intense political pressure, China announced Saturday that it would allow its currency to gradually appreciate against the U.S. dollar. China's currency - the yuan - has been pegged to the American greenback since 2008.

    "This is going to lead to a transition from export-lead, investment-lead to more of a consumption-lead economy going forward," Jing Ulrich, chair of China equities and commodities at JPMorgan Chase & Co. (NYSE: JPM), told CNBC. "I think the ramifications are profound not just for the next few months but actually for the coming years."

    Not surprisingly, U.S. exporters embraced the news as an opportunity to compete against Chinese companies and to reduce the U.S. trade deficit. Foreign nations, including the Untied States, have accused China of undervaluing its currency to give its exporters an advantage in global trade.

    Read More...
  • Why China's Foxconn Will Hurt the Global Economy More Than the BP Oil Spill Before this month, chances are pretty good that you'd never even heard of Taiwan's Foxconn International Holdings (PINK ADR: FXCNY). And yet, Foxconn is one of the world's most important manufacturers.

    Given that the formerly anonymous giant is now at the forefront of the zooming escalation in labor costs that's currently taking place in Mainland China - and given the enormous implications of the inflationary pressures that will result - chances are excellent that Foxconn will have a bigger effect on the world economy this year than even BP PLC (NYSE ADR: BP).

    If that weren't enough, China's decision to let the yuan appreciate against the U.S. dollar will actually magnify this impact: If the Chinese currency strengthens, then the yuan-denominated wage increases will have an even-more-inflationary effect on the cost of China-made goods selling at your local Wal-Mart (NYSE: WMT).

    To understand the "Foxconn Effect" - and to see how to position your investments - please read on...

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  • China's Plan For Yuan Appreciation Likely to Boost Inflation in U.S. & Lift Chinese Consumer Stocks China's plan to let the yuan appreciate against the U.S. dollar is likely to hit U.S. shoppers in the pocketbook, while also making the stocks of companies with goods aimed at Chinese consumers more attractive.
    But because of wage pressures, the effects of China's move to introduce more flexibility to its currency policy won't fundamentally change its inflation problems, according to Money Morning Contributing Editor Martin Hutchinson.

    "With workers in China demanding huge wage increases to keep up with prices, there's really no economic case for letting the yuan appreciate," Hutchinson said in an interview yesterday (Monday).
    But a rising yuan and wage increases in China may gradually spell bad news for U.S. consumers.

    "Eventually, the guy shopping at WalMart Stores Inc. (NYSE: WMT) won't like it when he sees prices go up 15% or more...prices of Chinese goods - everything from video games to sweatshirts - are likely to rise in dollar terms," Hutchinson said.

    Read More...
  • China's CNOOC Will Ramp Up Deepwater Oil Drilling as BP's Oil Spill Kills U.S. Exploration China's CNOOC. Ltd. (NYSE ADR: CEO) will step up its long-term deepwater oil exploration plans with a close eye on safety measures in the wake of the BP PLC (NYSE ADR: BP) Gulf oil spill that has halted U.S. deepwater drilling.

    The state-controlled oil company has exclusive rights to develop China's offshore resources and has plans to start exploring the South China Sea with nine new projects this year.

    " Read More...