HK & China - Market Direction 01 (May08 - Oct08)

Re: HK & China - Market Direction & Strategy

Postby kennynah » Mon Oct 27, 2008 6:35 pm

anyways...if this free fall is causing any one distress....i suggest that person take the following actions

a) adjust or close off existing positions or pare down position size, if those positions are causing hair loss
b) get away from the market...dont bother with it... let it do what it wants to...come back a few months later...dont need to be excessively anguished over it...

what i dont understand is the immoderate concerned with mkt direction being down, except that it is good proxy of the state of economies... but dont we already know that things aren't rosy globally? so...how come we can be so surprised about how the mkt is working out this fact....

my suspicion...it stems from the overly dependence on Long stock positions...
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Re: HK & China - Market Direction & Strategy

Postby helios » Tue Oct 28, 2008 12:48 am

his question: can you see the Wave Ç ending from his chart?

source: http://4.bp.blogspot.com/_mmIJGLJfWnQ/S ... -h/hsi.png

- courtesy from Kgaihc.
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Re: HK & China - Market Direction & Strategy

Postby winston » Tue Oct 28, 2008 8:26 am

APPLE DAILY

-- The mutual fund redemption rate has jumped, according to HKIFA. Figures released by the organisation show September's net outflow reached US$1.7 billion, or three times that of August.
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Re: HK & China - Market Direction & Strategy

Postby LenaHuat » Tue Oct 28, 2008 2:03 pm

Tsang said the govt will intervene in the market when req'd. Yam was vindicated when the HKMA's intervention during the 97/98 Asian financial crisis bore fruits.

Juz a note on the HK/Chinese markets, global confidence in Chinese products have been shattered. People's suspicions are extremely heightened now, after those toxic eggs, milk, toys' paint, pets' feed, sofa allergy etc. I've been expecting a big slump in exports for a long while now.
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Re: HK & China - Market Direction & Strategy

Postby winston » Tue Oct 28, 2008 6:10 pm

Hong Kong Stocks at Cheapest in Decade Lure Investors (Update1)
By Michael Patterson and Michael Tsang

Oct. 28 (Bloomberg) -- Hong Kong's Hang Seng Index yesterday tumbled to its lowest valuation since the Asian financial crisis a decade ago after posting the worst performance this month among the 10 biggest equity markets.

The Hang Seng's 13 percent drop yesterday pushed its October decline to 39 percent and cut the index's price relative to net assets to 1.05, the lowest since September 1998. The slump is prompting Sentinel Asset Management and TCW Group, which together oversee more than $130 billion, to add to holdings in Hong Kong. The Hang Seng rallied 14 percent today.

``In the long-run, buying into this kind of forced liquidation, this kind of panic, this kind of fear, is going to make you money,'' said Kate Schapiro, a San Francisco-based international equity manager at Sentinel, which oversees $17 billion. ``We're not committing all the money on one day, but cautiously and bit by bit.''

The 42-company Hang Seng, down 60 percent from its peak a year ago, dropped as much as 15 percent yesterday, which would have been the biggest retreat since the 1989 Tiananmen Square crackdown in Beijing, as a jump in money-market rates by the most in a month heightened concern the credit crisis will ravage the city's banks and real-estate companies.

The last time the Hang Seng was as cheap on a price-to-book basis, the index rallied 76 percent over the next year.

Banks, Property Stocks

Hong Kong, a special administrative region of China since 1997, is home to the biggest market for Chinese shares that can be freely traded by foreigners.

Industrial & Commercial Bank of China Ltd., the world's biggest bank by market value, surged 16 percent today in Hong Kong trading today. The stock slumped 11 percent yesterday to the lowest level since the initial public offering two years ago, which left the shares trading at 7.98 times earnings and 1.5 times book value, the cheapest levels on record.

Cheung Kong (Holdings) Ltd., the property developer whose chairman is billionaire Li Ka-shing, traded for 0.6 times book value yesterday, the lowest level since April 2003. The shares jumped 17 percent today, following a four-day, 22 percent drop.

Equities tumbled around the world this month, wiping out more than $12 trillion of market value, as a seizure in money markets sparked by $678 billion of asset writedowns and credit losses at banks spurred concern the global economy is headed for a recession. The MSCI Asia Pacific Index tumbled 27 percent since the end of September.

Hayes Miller, the Boston-based global equities portfolio manager at Baring Asset Management, said he isn't ready to add to holdings in Hong Kong because earnings estimates in the region may prove too optimistic given the slowdown in the economy and slump in the commercial real-estate market.

`Just Too Early'

Hong Kong's economy may expand 3.5 percent next year, the slowest pace since 2003, according to estimates by the Washington-based International Monetary Fund.

``We've been more defensive,'' said Miller, who helps oversee about $40 billion. ``We're waiting to buy back into emerging markets and buy back into Southeast Asia when we think the time is right. It's just too early.''

Hong Kong's benchmark last traded at 1.05 times book value after Thailand's devaluation in 1997 sparked a plunge in currencies around the region and pushed companies saddled with billions in dollar-denominated debt into bankruptcy. The Hang Seng surged over the next year, beating the total return on the MSCI Asia Pacific Index by 7.7 percentage points.

Even after today's gain, the Hang Seng has the second- lowest price-to-book ratio among benchmarks in the 10 largest equity markets behind only Japan's Nikkei 225 Stock Average. The Hong Kong measure trades for 7.7 times the reported earnings of companies in the index, also the second-lowest ratio among the biggest markets.

``Once the debt crisis ends, there's going to be economic growth,'' said Komal Sri-Kumar, the Los Angeles-based chief global strategist at TCW Group, which oversees $118 billion. ``And you're buying the Hang Seng at one-third its valuation a year ago. I'm not saying from here we are going to boom, but I can't see things getting much worse than this.''

Sri-Kumar, who said he's been ``bearish'' on Hong Kong for the past year, now sees ``attractive value'' in the market after this month's plunge.
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Re: HK & China - Market Direction & Strategy

Postby winston » Tue Oct 28, 2008 9:21 pm

Heavyweight lender HSBC Holdings surged 20 percent to close at HK$90 after going into a free-fall in recent days.

China Construction Bank soared more than 23 percent to HK$3.23, and Industrial & Commercial Bank of China Ltd, or ICBC, gained 16.4 percent to HK$3.260.

Conglomerate Hutchison Whampoa rose 11 percent to HK$38.8.

Leading Hong Kong developer Sun Hung Kai gained 9.7 percent to HK$61.5, and Cheung Kong advanced 16.7 percent to HK$61.5.

Among other top gainers, Hong Kong's flagship airline Cathay Pacific surged more than 30 percent to HK$9.2. China Mobile, the world's largest mobile telephone compnay by subscribers, added almost 12.5 percent to HK$60.5
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Re: HK & China - Market Direction & Strategy

Postby winston » Wed Oct 29, 2008 4:51 pm

China, Hong Kong Regulators May Review Short Selling (Update1)
By Chen Shiyin and Chia-Peck Wong

Oct. 29 (Bloomberg) -- China and Hong Kong regulators may review short selling of stocks in the two markets to stem a slump in equities, newspapers said.

China plans to delay the start of margin lending and short selling on concern their introduction will aggravate market volatility, the South China Morning Post reported, citing people it didn't identify. Hong Kong's Securities and Futures Commission yesterday visited local brokerages and asked for documentation on short-selling activities, raising speculation the regulator is considering banning the practice, the Standard said.

China's CSI 300 Index has dropped 68 percent this year, the most among all Asian stock indexes, on concern a global recession will reduce demand for the nation's goods. Hong Kong's Hang Seng Index has lost 53 percent, compared with a 49 percent decline in the MSCI Asia-Pacific Index.

``There's a fear that the lack of genuine interest in risky assets and longer-term investors will allow short sellers to dominate the market,'' said Michael Foo, Singapore-based head of Asian portfolio management at Clariden Leu AG, which manages the equivalent of $126 billion in assets globally. ``This may bring back confidence in the system in the short-term, but in the longer term, regulators seem to be trying to cure a symptom rather than a cause.''

Hong Kong's Securities and Futures Commission doesn't comment on market speculation, spokesman Jonathan Li said today. Calls to the China Securities Regulatory Commission weren't answered, while the regulator's former chairman Zhou Zhengqing said the practice should be restricted.

Asia, U.S. Restrictions

Other markets have already introduced bans on short-selling. A temporary ban on so-called naked short sales in Japan took effect yesterday, Finance Minister Shoichi Nakagawa said. The government had earlier planned to introduce the restriction on Nov. 4.

The U.K.'s Financial Services Authority was the first securities regulator in the world to issue a ban on short selling last month, while regulators in Australia, South Korea, Taiwan and Indonesia have also introduced temporary bans this year.

In the U.S., the Securities and Exchange Commission on Sept. 19 introduced a temporary ban on the short selling of almost 1,000 finance-related stocks to curb speculation after the chief executive officers of now-bankrupt Lehman Brothers Holdings Inc. and Morgan Stanley accused hedge funds of driving down prices. The restriction has since expired.

`Price Stability'

Short sellers try to profit by betting prices will fall. In a short sale, traders borrow shares from their broker that they then sell. If the price drops, they buy back the stock, return it to their broker and pocket the difference. In naked short sales, traders issue sell orders and don't borrow the shares.

The China Securities Regulatory Commission said on Oct. 5 the country will start margin lending and short selling among securities companies to create ``an internal price stability'' within the local markets.

China's State Council, or cabinet, has put on hold the measures, scheduled to start next month, the Hong Kong-based South China Morning Post reported today.

Zhou, the former CSRC chairman, said today at a forum in Beijing that a lack of intervention in the nation's stock market could cause ``a panic sale'' among investors and the government should set up a stock market intervention fund.

The People's Bank of China has cut borrowing costs twice this year and said on Oct. 22 it will lower down payment requirements and cut interest rates on mortgages for first-time home buyers. The government on Oct. 19 also unveiled measures to stimulate the economy in the face of the global slowdown, including infrastructure spending and higher export-tax rebates.

Insurer Impact

The Financial Times said today China's insurance commission asked the heads of the nation's largest government-controlled insurers to help stabilize the market. Insurers have cut net sales of stocks since the meeting, the report said.

China's insurance regulator said in a statement today the nation's insurers should stick to ``long-term'' investment strategies and support the stable development of the nation's capital market.

A measure of the CSI 300's historical price volatility touched a record high of 79 earlier this month, according to data tracked by Bloomberg.

In Hong Kong, the Hang Seng Index's volatility measure climbed to 126 yesterday, the highest since 1997, according to data tracked by Bloomberg. The benchmark gauge yesterday posted its steepest gain in 11 years, jumping 14 percent and reversing a 13 percent drop the previous day.

Possible Ban?

Hong Kong government officials are divided over whether to impose a possible ban on short selling, the Standard reported, citing a government official it didn't identify. Some investors are concerned the practice may be outlawed with little advance notice, the newspaper said.

Securities and Futures Commission spokesman Li said the regulator ``closely monitors'' markets. ``If we come across any abusive short selling actions, we'll take the appropriate measures.''

The regulator said on Oct. 23 that short selling in Hong Kong is at levels ``consistent'' with those before the current financial turmoil.

Financial Secretary John Tsang said this week that the stock market will ``continue to be volatile for a period of time,'' adding that the government will act to support equities if needed.
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Re: HK & China - Market Direction & Strategy

Postby kgaihc » Wed Oct 29, 2008 9:02 pm

San San wrote:his question: can you see the Wave Ç ending from his chart?

source: http://4.bp.blogspot.com/_mmIJGLJfWnQ/S ... -h/hsi.png

- courtesy from Kgaihc.


thanks san.. i have updated the chart.. check it out here..

http://ainvestor.blogspot.com/2008/10/hang-seng.html
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Re: HK & China - Market Direction & Strategy

Postby helios » Wed Oct 29, 2008 11:54 pm

yo Kg,

the indentified 5 subwaves are very mini in degrees ...??
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Re: HK & China - Market Direction & Strategy

Postby winston » Thu Oct 30, 2008 8:18 am

Short-selling was relatively light at only 5.7 percent of total turnover.
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