Author:  Jeffrey Friedland

The world hit seven billion people last week, and I think I met half of them on the road from New Delhi to Agra here in India. They were on foot, on bicycle, on motor scooters. They were in pickups, dented cars and crammed into motorized rickshaws. They were dodging monkeys and camels and cows. Somehow, though, without benefit of police or stoplights, this flow  of humanity that is modern India impossibly went about its business. But just when your mind tells you that this crush of eople will surely overwhelm all efforts to lift the mass of India out of poverty, you start to notice a pattern: Every few miles there’s a cellphone tower and a fresh-looking building poking out of the controlled chaos. And the sign out front invariably says “school” – engineering school, biotechnology school, English-language school, business school, computer school or private elementary school. India is still the only country I know where you can find a billboard advertising “physics degrees.”  All these schools, plus 600 million cellphones, plus 1.2 billion people, half of whom are under 25, are India’s hope – because only by leveraging technology and brains can India deliver a truly better life for its masses.

Famed investor Barton Biggs of Traxis Investors recently was quoted as saying, “I think right now we are beginning a run in China, For the last four months China has hurt me rather than helped me, but I think it is about to end.”

Biggs, has more than half of his firm’s investments in Asia, and is convinced that the Chinese authorities are engineering a turn around, based on “careful signs by the Chinese authorities.”

As quoted by Yahoo Finance’s Breakout, Biggs indicated that the China bears and “wise guys” are in for a rude awakening.

“I think we’re about to run in the shorts on China,” Biggs was quoted as saying. “I think they’re (the shorts) going to feel considerable pain.”

In addition to major investments in China, Biggs’ Traxis Partners also has big investments in Thailand, Indonesia and Hong Kong.

Biggs indicated that he thinks that the U.S. and Europe will endure five years of pain and suffering, but that Asia will be the engine of world economic growth.

Biggs is a New York money manager who runs the multi-billion hedge fund, Traxis Partners. Bigss was previously the chief global strategist for Morgan Stanley, a firm that he worked at for thirty years.

Biggs is frequently seen on CNBC, and has been a member of the Barron’s Roundtable.

Biggs has been named by Institutional Investor magazine to its “All-America Research Team” 10 times, and was voted the top global strategist and first in global asset allocation from 1996 to 2000 by the magazine’s “Investor Global Research Team.”

It wouldn’t be a stretch to say Biggs wrote the book on emerging-market investing.

Aurthor: Jeffrey Friedland

The company’s decision to also list in Ulaanbaatar is to provide an opportunity to Mongolian investors to participate in purchasing the IPO shares. Mongolia recently launched its stock exchange.

The IPO will be managed by Macquarie Group Ltd., Goldman Sachs Group Inc., Deutsche Bank AG, and BNP Paribas.

The Mongolian government is very supportive of the development of mining properties in the country.  Last year Mongolia’s coal production double to 25 million metric tons,
and became the country’s biggest export.

Erdenes Tavan Tolgoi was formed in July the Mongolian government picked the participants in the mining property.  The government selected China Shenhua Energy Corp. Peabody Energy Corp., and a Mongolian-Russian group to participate.  China Shenhua owns 40 percent, Peabody owns 24% and the Mongolian-Russian group owns 36 percent.

Author: Jeffrey Friedland

As a follow-up to Vice President Joe Biden’s trip to China, the China Daily reported:

Zhu Chao, assistant dean of the School of Finance at the Capital University of Economics and Business, said Biden’s promises were more symbolic than meaningful.

Analysts said that the long-term strategy for China to reduce dollar asset risks is to boost the global profile of the yuan.

“China needs to find an alternative for the US dollar, which means that it must promote the internationalization of the yuan,” Xiang said. But he added that China needs to have a freely
convertible yuan, market-based interest rates and an open financial market in order to achieve that goal.

Zhu also advised that China should take active measures to shift away from US Treasury related risk. “For example, China and Russia could hold each other’s currencies as reserves, and use more yuan in the settlement of bilateral trade,” Zhu said.

Stephen Roach, the non-executive chairman of Morgan Stanley Asia, said that the US debt crisis has shaken China’s confidence in Washington but the pro-consumption shift in its economic structure will help reduce the pace of its foreign-exchange accumulation.

“The US debt crisis has taken a serious toll on China’s confidence in Washington’s economic stewardship,” Roach said in a research note.

The U.S. budget deficits and for that matter the American way of life is being financed by debt.  There is no question that the Chinese and others would prefer an alternative to
holding U.S. Treasury securities, especially with a near zero yield. The luxury of the rest of the world financing the American way of life will diminish over time, the only question is when.

For the full China Daily article: http://www.chinadaily.com.cn/usa/us/2011biden/2011-08/19/content_13146676.htm

More important than what happens with the markets this week, is what the long-term prospects for America are.  I’d like to be optimistic, but I’m not.

In today’s New York Times, Thomas Friedman stated:

In the wake of the hugely disappointing budget deal and the S.& P.’s debt downgrade, maybe we need to hang a new sign in the immigration arrival halls at all U.S. ports and airports. It could simply read: “Welcome. You are entering the United States of America. Past performance is not necessarily indicative of future returns.”

Because our country is now finding itself in the worst kind of decline — a slow decline, just slow enough for us to keep deluding ourselves that nothing really fundamental needs to change if our future is to match our past.”

Over the years Friedman has taken a global perspective in his books, columns and television appearances. But today’s column is not one of optimism for America’s future, but instead a very pessimistic view.  (Check out his full column at http://www.nytimes.com/2011/08/07/opinion/sunday/Friedman-win-together-or-lose-together.html?ref=opinion.

Those that believe that America will succeed in resolving its economic problems because of a position that “America is America,” have to also deal with today’s reality.  America is on borrowed time.  America’s continuing to place its future and that of its children in the hands of foreign holders of government debt is a disaster waiting to happen.  America’s foreign debt is held by many governments who resent the role of the U.S. dollar as a reserve currency, and for that matter what America stands for and America’s way of life.  The implications are clear.  The role of the U.S. dollar as a reserve currency will diminish over time.

Let’s hope that Washington will wake up to  ”change you can believe in” having to become, “change that must happen now.”

Author: Jeffrey Friedland

Obama’s anti-capitalism agenda, coupled with a dysfunctional Washington has now resulted in the S&P downgrade.  This action by S&P shouldn’t be a surprise to anyone, as S&P has warned the U.S. for months.  I don’t anticipate any great immediate effect on the American economy or America’s ability to borrow, but the long-term implications are very clear and very negative to the global financial community and to those Americans who live outside Washington.

But this downgrade, the ongoing budget deficits, the problems with governmental budgets of state and local governments, coupled with the Obama driven mantra that permeates the Federal bureaucracy and regulatory agencies perceives Wall Street and capitalism as evil. This has created an environment where high unemployment will be the “new normal” and an environment where the American Dream is no longer possible.

But, there is good news for global investors and hundreds of millions of entrepreneurs outside the United States.

I returned from a short trip to Brazil last evening. I’m pleased that the American Dream is now the Brazilian Dream for tens of millions of Brazilians.  I flew back to the U.S. through Panama.  The local version of the American Dream is alive in Panama.

Last month I was in China, and the American Dream is definitely the Chinese Dream for hundreds of millions of Chinese.

Since the beginning of this year I have also been to Singapore, Thailand and Sri Lanka, yes Sri Lanka.  Local versions of the American Dream are also alive in those countries.

In the coming months we’re increasing our firm’s involvement in some of these Big Emerging Economies, with the desire of helping entrepreneurs in these Big Emerging Economies in achieving their local version of what was the American Dream.

Author:  Jeffrey O. Friedland

Information announced by Dealogic and Grant Thornton indicated that in 2010 American companies turned to stock markets in Australia, Taiwan, South Korea, Canada and the United Kingdom.

While the factors that impacted the decision for each company who went public overseas vary, reasons include the increasingly tougher regulatory environment in the United States as well as overall costs to go public.  In recent years, U.S. investment banks have increasingly been less interested in underwriting initial public offerings (IPOs) for smaller companies, and institutional investors are not at all interested in smaller companies.

The dwindling number of U.S. companies going public in the U.S. has huge implications for entrepreneurs being able to grow, contribute to the U.S. economy and add jobs in the U.S.  As American entrepreurs are increasingly forced to look overseas for stock market listings, the fear also exists that they’ll shift their geographic focus to the country or region where they have their stock market listing.

More disturbing is the dwindling number of U.S. public companies.  At the beginning of 1998 there were almost 8,800 U.S. public companies.  By the end of 2009 the number decreased 40 percent to 5,100.

Author:  Jeffrey Friedland

Disclaimer/Disclosure:  Friedland Global Capital assists growing entrepreneurial companies in Big Emerging Countries to obtain stock market listings in the United States, Canada, Germany, the United Kingdom and Singapore.

The huge increase in the shares of these two Chinese companies is very significant.  With much of the bad press regarding auditing issues of Chinese companies, the fact that the two biggest gainers on Nasdaq were Chinese companies is very significant. It shows that American investors are realizing that they can no longer ignore owning shares of Chinese companies, especially as the American and European debt crisis continues, and the U.S. remains mired in an economic quagmire.  It is also an affirmation by American investors that there are “good Chinese companies” that are traded in the U.S.

The shares of China Auto Logistic (CALI) increased over 78% yesterday. Approximately 2.2 million shares changed hands, a 11,186 percent increase over the company’s 65 day average volume. The shares rose $.91 or 78.4 percent to $2.07. This morning China Auto Logistic’s shares are up an additional 2.78%.

Yesterday’s price move took place after the company announced the closing on July 1st of a private placement that resulted in the company selling shares at a 50% premium over the share price at the time of the closing.  The private placement consisted of three million shares at a price of $1.75 per share and raised $5.25 million.

In announcing the private placement, Tong Shiping, the CEO and Chairman of China Auto Logistic indicted that the private placement investors in purchasing the shares above market, “clearly appreciate the strength and growth potential of our company, which has been masked by the unprecedented current predicament of Chinese stocks in the U.S. The full year sales advance in 2010 above 32%, as I had said repeatedly, was unsustainable. Nevertheless, I believe we will continue to see very healthy, world leading double digit sales in 2011 and beyond, following year-over-year growth through the first five months this year of about 4.2%, nearly 7% growth in passenger car sales, and continuing double digit growth in luxury sales.”

Yesterday, the shares of ChinaNet Online Holdings Inc. (CNET) increased over $1 to $2.60 yesterday, an increase of almost 64%. Over 345,000 shares were traded, an increase of almost 1200 percent over the company’s 65 day average volume.  This morning the shares are up an additional 3.5% to $2.69. There was no company news announcement yesterday by ChinaNet Online Holdings that could account for the huge volume and a huge increase in price, so the reason for the huge increase in price and increased volume is unclear.

Author:  Jeffrey Friedland

Many of us believed that for the OTC BB to viable as an alternative to its upstart competitor, OTC Markets (otcmarkets.com), the operator of the OTC QB, required new technology in the form of an electronic trading platform.  it was generally thought that under Rodman & Renshaw’s control and operation that this new technology would be implemented.  Today virtually all of the trades taking place for OTC BB traded companies are in fact being executed on the OTC QB.

As indicated below, in a posting by DealFlow Media’s Reverse Merger Wire, one phrase, “FINRA asked the SEC in a filing May 4 for permission to change the name of the OTCBB to the “Non-NMS Quotation Service” or the NNQS. This would allow FINRA to continue to operate what has been known as the Bulletin Board while selling certain assets to Rodman” is very disquieting. Essentially what it appears is happening is that while FINRA would be selling “certain assets” to Rodman & Renshaw, that FINRA is trying to maintain a role of “gatekeeper” over the OTC BB as well as OTC QB, probably through maintaining control over the Form 211 listing process, that would require companies to go through the cumbersome and bureacratic 211 process with FINRA for the OTC BB, OTC QB as well as the proposed new NNQS.

Many of us had seen the acquisition of “certain assets” of the OTC BB by Rodman & Renshaw, as well the success OTC Markets has had with the operation and level of trading activity of the OTC QB as good moves that would prove beneficial for capital creaton, and Entrepreneurship.  If my assumption is correct, it appears that the covnerse will be true, that if FINRA remains in control of the 211 process, it will be bad for American capital creation, entrepreneurship and most importantly job creation by entrepreneurial companies who have traditionallly been able to access the capital markets by having their shares traded on the OTC BB.  on.

Here is the full posting by DealFlow Media’s Reverse Merger Wire, (reversemerger.dealflowmedia.com):

Roth, OTC Markets Raise Concerns about OTCBB Sale

Posted June 16, 2011 4:45PM PST – Both Roth Capital Partners and attorneys for OTC Markets raised concerns about the Financial Industry Regulatory Authority’s (FINRA) sale of the Over the Counter Bulletin Board (OTCBB) trademark and other assets to Rodman & Renshaw in letters sent to the Securities and Exchange Commission last month.

FINRA asked the SEC in a filing May 4 for permission to change the name of the OTCBB to the “Non-NMS Quotation Service” or the NNQS. This would allow FINRA to continue to operate what has been known as the Bulletin Board while selling certain assets to Rodman.

Byron Roth, chief executive at Roth Capital, and an attorney for OTC Markets submitted letters to the SEC on May 31 protesting the name change because it may confuse investors and consumers into thinking that the OTCBB, long associated with FINRA, was somehow still tied to the regulator.

“It is not at all clear what benefit to investors and the market would result from the proposed renaming of FINRA’s quotation system, and there certainly has been no showing that any such benefit would outweigh the potential harm of such investor confusion,” wrote Michael Trocchio, with the law firm Bingham McCutchen, who represents the OTC Markets. “The threat of unnecessary risk without a clear benefit to investors makes the Proposal controversial, and should lead the Commission to require public comment and further analysis prior to deciding whether to approve the Proposal.”

The letters also expressed concerns that the sale could give Rodman an unfair competitive advantage.

“Roth believes that permitting Rodman, a member of FINRA, to acquire and use the highly-regarded and well known OTCBB brand name and the OTCBB.com website will bestow a significant competitive advantage upon Rodman to the detriment of Rodman’s competitors, including Roth and other investment banking firms and market makers,” Roth said in the letter. “We believe the Rule Filing imposes a significant burden on competition, or at least the possibility of such a burden, and that this matter should be more fully considered.”

It is unclear when the SEC might render a decision regarding the name change.