Stocks fell again on Friday, weighed down by inflation concern and apathy of market regulator. I guess this weekend and maybe the week ahead will be some sleepless nights for most investors in China, who buried their wealth in such a "sucking trap". Rational investors would think government will eventually step into the field and stabilize the market or as least sooth the panic. Chances are the regulator sticks to their apathy and thus endanger the social stability.
It's a fun to find that in the business page of the famous internet portal Netease.com, the headline was "Annual Earning Report: St CSRC", CSRS refers to the regulatory body "China Security Regulatory commission", while ST means the listed firms with 3 consecutive years of loss. CSRC is for sure the biggest loser in the market. The sensitive page was soon deleted by internet censor.
Nearly 6 years low, as most stocks went down by 50-80% from its bullish history of 2000, it is a critical point of china financial market. We will witness the painful transfer very soon, but for average investors at large, it will be the tragic time in their life. Best regard to them, the avant-gardes that help lay foundation of a great market.
US market was down again as oil price went up to 55 bucks.
Saturday, April 23, 2005
Wednesday, April 20, 2005
Dual Dump Again
China market shed another 16 points on Wednesday(1184.19) and approaching its 6 year low again. Investors dumped technology stocks as scandals developed especially today with focus on Juyou Networks(000693.SS). Many blue chips such as Tongfang(600100.SS) and Shanghai Belling(600171.SS) lost 10%.(10% change is the single daily limit of trading) What brought market down in market view lies partly in bad news for additional issue of Pudong Dept Bank(600000.SS). This follows the Baosteel issue just days ago which hit the market on the face. Regulatory inconsistency complicates market sentiment and more upset investors, who have been "cheated"(to some extent that's perfectly true)over the years by regulatory body. Public offering in China is nothing more than deluding investors to donate their wealth for SOEs to squander, so to speak. The most ironically featured joke in world financial market is that CSRC post "investors protection is our top priority" on its website.(http://www.csrc.gov.cn/en/homepage/index_en.jsp) In such a context, regulatory body should take all blames and might be at the agenda for correcting its own deregulation. The bottom line is that the main purpose of such a government agency is nothing but making "capital most efficiently utilized". This is the starting point.
Economic growth driven by fixed investment covers and kind of dominates everything negtive today, but the restructure of capital market is essential. The healthy and competitive economy requires diverting savings to more economic growth driven by consumption through well functioned capital market, which guarantees the most effecient use of fund. This works for all economies.(especially a direction for Chinese economy today)
Back here US market experienced another downturn as CPI picked up in March which brought back inflation concerns. Dow closed at 10012.38.
Economic growth driven by fixed investment covers and kind of dominates everything negtive today, but the restructure of capital market is essential. The healthy and competitive economy requires diverting savings to more economic growth driven by consumption through well functioned capital market, which guarantees the most effecient use of fund. This works for all economies.(especially a direction for Chinese economy today)
Back here US market experienced another downturn as CPI picked up in March which brought back inflation concerns. Dow closed at 10012.38.
Monday, April 18, 2005
Monday trailing in Shanghai
Shanghai index dumped another 20 point to 1197.735. While corporate earnings turn to be new fuel for further weakening of the market, the fallout of Baosteel's new floating is still pulling the string of investor's pocket. Energy sector lost more credits as Yangtzi Power damped quarterly earning expectation. China Unicom stayed flat and Citic Security fell 2.88%.
Saturday, April 16, 2005
Big Sell, and Baosteel Sell
Market witnessed the biggest selloff in wall street on Friday as Dow closed down to 10080.34. Over the week the index was off 3.55 percent and other index also setting fresh low for the year. Stocks has now erase all the gains buildup in the rally started from November last year. The bench mark broke through anything technicians might have said were support points. My guess is next trading day the round number of 10000 will be tested.
Across the ocean chinese market tumbled in the last trading day of the week with Shanghai Composite Index losing 17.37 points. The market sentiment soured over the staged Baosteel's new floating of additional 50bn shares, which turn the investors's mood back to negtive. This translate into another round of distrust to the government's effort to bring the equity market back in "track".
The country's regulatory body - China Securities Regulatory Commission has been malfunctioned. The commssion seems to overlook supposedly the role of enhancing capital efficiency and market oversight. It has turn out to the service provider of state-owned enterprises and their super parent of state assets administration and supervision commission. The best evidence of Baosteel's new issue can be easily spotted by market which many said the new capital raise would further lower the capital use efficiency mesured by RoA or Revenue per units of Assets. This concern is brought up by world analysts when chinese economy is compared to the potential growth of india economy. The latter is said to be more efficient in term of using capital fund.
Another fact that the market hardly notice is the involvement of China International finance corp as Baosteel's underwritter. The payoff of this issue and its related M&A transaction will probably bring CIFC 1.5bn by 7% average underwriting charges using wall street standard. Lobby activity might have been entensive since the market's negtive acceptance when the plan was leaked out last year.
Over next week, Shanghai index will have a high chance of going up on Monday but then it's nobody's guess. For stocks, 600030 and 600050 are still in my watching list.
Across the ocean chinese market tumbled in the last trading day of the week with Shanghai Composite Index losing 17.37 points. The market sentiment soured over the staged Baosteel's new floating of additional 50bn shares, which turn the investors's mood back to negtive. This translate into another round of distrust to the government's effort to bring the equity market back in "track".
The country's regulatory body - China Securities Regulatory Commission has been malfunctioned. The commssion seems to overlook supposedly the role of enhancing capital efficiency and market oversight. It has turn out to the service provider of state-owned enterprises and their super parent of state assets administration and supervision commission. The best evidence of Baosteel's new issue can be easily spotted by market which many said the new capital raise would further lower the capital use efficiency mesured by RoA or Revenue per units of Assets. This concern is brought up by world analysts when chinese economy is compared to the potential growth of india economy. The latter is said to be more efficient in term of using capital fund.
Another fact that the market hardly notice is the involvement of China International finance corp as Baosteel's underwritter. The payoff of this issue and its related M&A transaction will probably bring CIFC 1.5bn by 7% average underwriting charges using wall street standard. Lobby activity might have been entensive since the market's negtive acceptance when the plan was leaked out last year.
Over next week, Shanghai index will have a high chance of going up on Monday but then it's nobody's guess. For stocks, 600030 and 600050 are still in my watching list.
Friday, April 15, 2005
Where To Go? Bear or Bull, or Even Panda~
As oil price had gone up to nearly 60 bucks, it's returned to 50 level with, interestingly, the same trend going on in stock market. Dow has touched the lowest point for the year at 10,278.75 among some not "encouraging" news from corporate earnings. Big player IBM and Apple are in the headlines. Russell 2000 was also down 1.76 percent which tracks small cap companies.
The story recently in China is particularly interesting in that the market has been filled out by a whole lot of information about a pilot program to resolve the non-floating state-owned shares. Trading volumes are high in this week as investors, especial institutional investors are changing their positions. As rumors are developing, stocks with perceptive Reform Test are trading high. Another interesting feature of the market move is old players as Shenzhen Development Bank (000001.SZ) and Changhong (600839.SS) hit a comeback, which might be a hype or not.
Although the direction of equity market is not clear, the foreign currency denominated B-shares index has grown significantly compared to its brother A-shares. I guess one of the reason is that investors perceive the arbitrage opptunities once the floating of non-tradable shares will ultimately bring up the combination of A shares and B shares, the latter is greatly cheaper with the current peg rate with US dollar. The Shanghai composite intex stands at 1223 as market open low in the midst of Baosteel's troublesome seasoned issue and uncertainty of market heading.
Citic Securites (600030.SS) is at the moment traded at 5.12Y, and China Unicome (600050.SS) at 2.71Y.
The story recently in China is particularly interesting in that the market has been filled out by a whole lot of information about a pilot program to resolve the non-floating state-owned shares. Trading volumes are high in this week as investors, especial institutional investors are changing their positions. As rumors are developing, stocks with perceptive Reform Test are trading high. Another interesting feature of the market move is old players as Shenzhen Development Bank (000001.SZ) and Changhong (600839.SS) hit a comeback, which might be a hype or not.
Although the direction of equity market is not clear, the foreign currency denominated B-shares index has grown significantly compared to its brother A-shares. I guess one of the reason is that investors perceive the arbitrage opptunities once the floating of non-tradable shares will ultimately bring up the combination of A shares and B shares, the latter is greatly cheaper with the current peg rate with US dollar. The Shanghai composite intex stands at 1223 as market open low in the midst of Baosteel's troublesome seasoned issue and uncertainty of market heading.
Citic Securites (600030.SS) is at the moment traded at 5.12Y, and China Unicome (600050.SS) at 2.71Y.
Friday, April 01, 2005
Market Suprise not From Wall Street
Dow lost nearly 100 points as the concern of inflation rises and job figure did not meet the forcast. Martet tended to be flat without any suprise.
The suprise came from China where the stock market has been struggling for a couple of years. And it just tested its lowest level in 6 years, which analysts say is supposed to be worse considering newly listed stocks account for more weight.
The market rebound sharply in the afternoon triggered by a rumor from HK news paper. It gains 42 points to 1223.57(Shanghai Index).While no one has confirmed, institution investors began to exploit the opportunity, whether for good or for bad. The rumor said that the high lever financial officials have made up guidelines of how to deal with the State-Owned equity,which is not yet tradable in the market. By allowing these shares to be treated as convertible preferred stocks with maturity of 30 years, the concern of full circulation of these shares could be nearly dimished. Does the market play a big joke on April 1? The puzzle is for sure no easy to solve. Although I don't very much buy into such a plan, my guess of the market's response is a combination of quite a few elements.
Firstly, the market has fallen to a level of strategic participation, for instituation investors and potential takeover planner. I think M&A will be big topic in 2 years or so, which i wish i could talk it later.
Secondly, the revaluation of RMB is a trigger, I found the benefitaries are the major winners of today's market gain. Steel manufacters such as Baosteel and Oil firms as Sinopec led the rebound.
Another reason I would say is it has somthing to do with the macro economic policy. If money withdraws from real estate sectors, it probably will be channeled to equity market, which is acturally attractive to some investors.
The risk is still out there unless the rumor turns out to be true. I guess my suggestion is changing stocks to some IB and Banking sectors(600030.SS etc.) or China Unicom(600050.SS).
The suprise came from China where the stock market has been struggling for a couple of years. And it just tested its lowest level in 6 years, which analysts say is supposed to be worse considering newly listed stocks account for more weight.
The market rebound sharply in the afternoon triggered by a rumor from HK news paper. It gains 42 points to 1223.57(Shanghai Index).While no one has confirmed, institution investors began to exploit the opportunity, whether for good or for bad. The rumor said that the high lever financial officials have made up guidelines of how to deal with the State-Owned equity,which is not yet tradable in the market. By allowing these shares to be treated as convertible preferred stocks with maturity of 30 years, the concern of full circulation of these shares could be nearly dimished. Does the market play a big joke on April 1? The puzzle is for sure no easy to solve. Although I don't very much buy into such a plan, my guess of the market's response is a combination of quite a few elements.
Firstly, the market has fallen to a level of strategic participation, for instituation investors and potential takeover planner. I think M&A will be big topic in 2 years or so, which i wish i could talk it later.
Secondly, the revaluation of RMB is a trigger, I found the benefitaries are the major winners of today's market gain. Steel manufacters such as Baosteel and Oil firms as Sinopec led the rebound.
Another reason I would say is it has somthing to do with the macro economic policy. If money withdraws from real estate sectors, it probably will be channeled to equity market, which is acturally attractive to some investors.
The risk is still out there unless the rumor turns out to be true. I guess my suggestion is changing stocks to some IB and Banking sectors(600030.SS etc.) or China Unicom(600050.SS).
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