THE DRAGON’S EYE

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

Roger Noback, Chapter President and Editor, 630/762-8225, rogernoback@msn.com March 18, 2007

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

Scheduled venue, time, topic, and activity for the USCPFA March 18, 2007 meeting

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

CHINESE CURRENCY APPRECIATION and

STOCK INVESTMENTS

By Larry Cao, Analyst, Morningstar, Inc. and Former Official at China’s Central Bank

The value of the Renminbi (RMB), China’s currency, has appreciated recently, and the speaker expects it to continue to appreciate in 2007. While much of the media attention has been focused on its impact on trade balance and global surpluses, this presentation looks more closely on its implications to the stock market in the US. Considering the 400+ point decline in the Dow Index at the end of February, and similar declines around the world, attributed to developments in China, this talk is particularly timely.

RMB appreciation and its corollary, dollar depreciation, is basically bad news for US investors. The speaker examines RMB appreciation’s impact on US macro-economic variables such as nominal interest rate and inflation rate as well US corporate data such as companies’ cash flow growth. The presentation concludes with a discussion of effective ways of selecting more solid investment funds that generate strong performance in both up and down economic cycles.

FOR COURTESY AND INFORMATION, PLEASE ATTEND!

Larry Cao, CFA, a former official at China’s central bank, is an equity analyst at Morningstar, the financial research firm. Before coming to the US, he was involved in managing foreign exchange reserves at the People’s Bank of China, China’s central bank. He is frequently interviewed by financial outlets including Business Week, CNBC, and Wall Street Journal for his analysis of stocks. He co-authored an article on macroeconomics with Franco Modigliani, the Nobel Prize Laureate, which was published in the Journal of Economic Literature, a top-tier journal of theoretical economics. He is the author on capital structure for the International Encyclopedia of Social Sciences, 2nd edition to be published by McMillan Reference.

Larry was a management consultant at McKinsey, advising leading multinationals in a variety of industries. Later, he managed various portfolios at Munder Capital Management, a US-based institutional investor with over $4 billion assets under management, including a number of 5-star and 4-star rated stock portfolios and one that won the prestigious Lipper Award. Larry has a BA degree in Economics from Peking University and an MBA degree from the University of Notre Dame. He also conducted graduate study and research in economics at Harvard University and MIT.

***The April 15 Talk in Evanston is: CONTEMPORARY MEDIA ART IN CHINA (working title) by Zheng Bo, artist and Ph.D. candidate, Northwestern U. Art History Dept.***

***The USCPFA-Chicago Chapter staffed booths at both of the following 2/17 Chinese New Year events to publicize our Beijing Art Exhibit shown at the COD Library, and we obtained new members and friends by also soliciting memberships and spreading information about the Chapter’s mission and programs: (1) The afternoon Sunny Ridge Family Center Chinese New Year Celebration, at COD (adjacent to our Beijing Art Exhibit). Sunny Ridge places Chinese infants with adoptive parents, and the Chapter is in the process of developing cooperative projects with them. (2) The evening Chinese New Year’s Eve Party of the CAAGC (Chinese American Association of Greater Chicago), at which the Chapter exhibited examples of the work of our Beijing artists. The Chapter filled almost 2 tables at the 2/17 CAAGC New Year’s Eve Party and all enjoyed the entertainment from Beijing with the other 1000+ patrons. Thanks to those who helped in the foregoing activities; PLAN TO ATTEND (and help) NEXT YEAR.

The regular monthly Chapter meeting 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.

CfaDE31807FINAL3Ema