New Asia Developments = Opportunities for Investors

Robert Hsu, June 30, 2009

In this Issue:

Rising Fuel Prices, Burgeoning Profits
The Arms Dealer for China's Drilling Companies
The Chinese Ripple Effect
A Much-Needed Boost for Taiwan's Economy
One of the Hottest IPOs of 2009

Rising Fuel Prices, Burgeoning Profits

While you may not know the exact price that crude oil per barrel is trading, I'm sure that you know it's on the rise. Gasoline prices at the pump have moved steadily higher in recent months, as demand picked up around the globe. And most consumers have taken notice that a gallon of gas is now costing near $3.

As we discussed in last week's Asia Insider, China's energy demands are one of leading causes driving crude oil prices higher. As of today, crude per barrel is nearing $72. The jump in prices this week, though, was a direct result of a weakening U.S. dollar and the militant attacks in Nigeria that shut down an offshore oil platform on Monday.

But no matter what the cause -- geopolitical, rising demand or a depreciating U.S. dollar -- I'm expecting crude oil prices to trade above $60 per barrel throughout the rest of 2009. And so is China.

Unlike the U.S., the Chinese government controls oil prices within the country, using a mechanism that accounts for crude oil prices, taxes and refiners' profits. So if crude oil prices increase or decrease by more than 4% over 22 straight business days, the Chinese government discusses adjusting prices.

So with crude oil per barrel rising higher throughout June, the Chinese government lifted diesel and gasoline prices today for the second time this month, marking the third time this year. If you recall, on June 1, Chinese policymakers raised prices by 8%. This time around, fuel prices were increased 11%.

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