December 30, 2008

#01-203: Reading Boomtown Chronicles 67

wide view of an urban area with bushes in the foreground, over which is written "READING BOOMTOWN CHRONICLES"
Shenzhen, the Boomtown

Note: Between Lesson #01-128 and #01-208, I wrote 72 lessons explaining expressions in articles published in the Shenzhen Daily. Read more about "Reading Boomtown Chronicles."

Get Ready: If you wanted to buy or sell stocks, would you trade over-the-counter, or would you only deal through a proper stock exchange?

Boomtown Chronicles Part XXIV - published Monday, December 22, 2008 (cont.)

  • "joint-stock bank" and "joint-stock casualty insurance company"

joint stock company: a corporation or partnership that sells stocks, giving partial ownership to those who own the stocks; abbreviated "JSC."

  • China Merchants Bank was "the first Chinese bank to have a foreign investor as a controlling shareholder."

shareholder: partial owner in a JSC, as each stock he owns gives the owner a "share" in the company.

controlling shareholder: a shareholder who owns more than half of the shares issued, and therefore has control of the company.

  • China Merchants Bank was also "the first Chinese joint-stock bank to go public."

to go public: As mentioned in Lesson #01-197, this means selling shares to the public. This is generally begun through an "IPO," an "initial public offering" of stock shares.

  • Shenzhen Development Bank began trading its stock "over the counter" in April 1988.

over-the-counter, or OTC, trading: when two parties trade stocks directly (though perhaps through dealers), avoiding the use of a stock exchange.

  • Shenzhen Development Bank also started a "bull run" in 1996, at the end of "a three-year bearish period."

bulls and bears: As discussed in Lesson #01-147, a "bull market" is characterized by investor optimism and growth, and a "bear market" is pessimistic. I added that "no one is quite sure how these terms originated."

But let's take a closer look. Some say the term "bear" is related to an old French proverb which recommends caution and is therefore somewhat pessimistic: "Don't sell the bearskin before you've killed the bear." As for "bull," it has been suggested that it comes from Latin bulla, a signed document (compare "bulletin"), which means that a lot of contracts are moving around.

I think the explanation may be simpler. A bull is characterized by energy and aggression; he is likely to charge ahead blindly into any situation. On the other hand, bears are sluggish and cautious (unless aroused), more likely to turn away than attack.


Read more:

Practice: Choose the correct term to fill in the blank in the sentence below:

  1. bear markets
  2. bull market
  3. controlling shareholder
  4. joint stock company
  5. over-the-counter
  6. shareholder

  1. The board decided not to meet because the ________ wasn't available.
  2. Miriam prefers not to trade in ________ because they're risky.
  3. It seems that as time passes more and more trades are made ________.
  4. In one sense, employees work for every ________ in a company.
  5. Turning your privately-owned business into a ________ can be a way to bring in more operating cash.
  6. Most people love a ________ because "a rising tide lifts all boats"--that is, a strong economy is good for everyone.

Answers are in the first comment below.

Submitted to the Shenzhen Daily for December 30, 2008

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