THE DRAGON’S EYE

Official Publication of US-China Peoples Friendship Association, Chicago Chapter, www.uscpfa.com/chicago

Roger Noback, Chapter President and Editor, 630/762-8225 June 25, 2006

“The only way to have a friend is to be one.” – Ralph Waldo Emerson

The scheduled venue, time, topic, and activity for the USCPFA June 25 meeting are

2-4 p.m. @ House of Fortune Restaurant, 2407 S. Wentworth Ave., Chinatown, Chicago

Publicly Traded Stocks of Chinese Companies

In the US and China by

Sonny Yi Shen, Managing Director, Digilog Shen LLC

“China’s stock market is up 25.4% in 2006 through May 18, compared to increases of 9% in Taiwan, 7.4% in Japan and 6.5% in Korea,” according to the 5/22 Wall Street Journal and Morgan Stanley. The May 26 WSJ reports that the benchmark Shanghai Composite Index is up 37% so far in 2006 (despite a drop that week of 4.1%), and the previous day China announced it will allow initial public offerings for the first time in a year. Has China only one stock market? Who to believe? What does this tell us about China?

Despite the recent upswing, the Chinese stock market has typically exhibited a trend that is at odds with the way the Chinese economy has been growing, and such Shanghai index remains almost 1/3 below its peak 5 years ago in 2001. This presentation describes this aspect of China’s economy, and in the process addresses investment opportunities in this highly volatile and consistently underperforming market; reports the impact of macroeconomic policies and market variables; and identifies possible investment strategies and possibly underestimated niche markets.

[Trivia lovers will note that Thornton Wilder’s play, The Matchmaker (later the Oh, Dolly broadway musical), set at the opening of the 20^th Century, opens with Dolly Gallagher’s promoting investments in publicly traded stocks of Chinese companies. The more things change, the more they remain the same?]

Sonny Yi Shen, formerly Executive Director of Goldman Sachs’ European Portfolio Trading Group, currently serves as managing director of Digilog Shen LLC and as a partner in Tradelink Equity Advisors. He is actively looking for opportunities in China, both for investments and for capital market services. In his positions, Mr. Shen developed and managed proprietary market neutral portfolios, and managed cross-country and cross-currency Exchange Trade Fund portfolios. Mr. Shen has a Ph.D in statistical physics from Oklahoma State University and a master’s degree in financial market and trading from Illinois Institue of Technology and taught Financial Mathematics at the University of Chicago.

The June 25 meeting is scheduled at the House of Fortune Restaurant, 2407 S. Wentworth Ave., Chinatown. The July 16 meeting, is scheduled in Evanston with the talk presented by a Deputy of China’s National Peoples’ Congress, who will inaugurate our series, How China Addresses the Tasks of Government, with a talk on China’s National Peoples’ Congress. The August 20 meeting features a demonstration and talk on Calligraphy: China’s Highest Form of Art, by a leading instructor of this art. Future talks will also continue in the Series on Chinese Medicine, and on Managing Cultural Differences in Business Between Chinese and Westerners.

Prof. Jane Wu’s Annual COD Travel Course in China proceeds in 2006 mainly to Xinjiang Province 7/26-8/14/06; to register, call 630.942.2356.

Several Rare Tours to North Korea are offered during the period Aug.10 through Oct. 10, 2006 through the company of longtime USCPFA members Walter Keats and Winnie Lu, Asia Pacific Travel, Ltd., see www.northkorea1on1.com or call 800-262-6420.

Typically, the regular monthly Chapter meeting is held on the third Sunday of the month (in June, the 4^th Sun.) and includes a delicious traditional Chinese multi-course meal, which begins at 2 pm; the hour long luncheon talk (with Q&A) begins at 3 pm; and all this is only $15. Meetings are typically scheduled on odd numbered months for Chicago’s Chinatown and on even numbered months for either Evanston (North Suburbs) or Naperville (West Suburbs), although this typical order is reversed for June and July, 2006. Please attend and bring a friend. Please reserve in advance at AssociationSvcs@aol.com (indicate USCPFA in subject line) or call 847.251.1400, ext. 0 (members have priority seating). Cfade62506FINALUSmail