(Entry Posted on Jan.9, 2006)
The Shanghai Composite Index inched up marginally to 1216 today disappointing many analysts's opinion. This is the fourth day in a row starting from the year's rosy debut. There are ecouraging news and new policies coming out of central government's securities regulatory body, including the opening up to foreign investors A shares from G-Stocks, which means public companies who has reformed non-floating shares. The policy indicates foreign investors can own above 10% of a public company's shares provided that these investors will not sell them in 3 years. This is echoed by current QFII foreign investment policy in which foreign investors can buy and sell freely as domestic investors. The combination of these 2 policies in effect clear the way for outsiders to make M&A deal with Chinese companies. And for the stock markets' own well-being, now the benchmark price in listing will be valued by the global market. I would say that's much more significant in short run.
The same good news came just across the pacific ocean, Dow has been doing a great job in the first week as well as, hopefully today. Four and a half year's high and 12000 level could turn to reality very shortly. Good job numbers and good corporate earnings is good contributors. Google is now trading above $460 and some analyst forcast its one year estimated price could topple $800. Wow, that's so cool.
Although the index is running higher for different reasons, the interesting fact is for both market, the declining house market is push capital out to stock market. US housing market is in quasi-bubble as a result of historically low morgage rate, similar to China's high rising real estate market in Shanghai and other cities. This is just the other way around for idle capital, the original source of Mutual Fund, seeking arbitrages.
Monday, May 22, 2006
Big starts shooting off
Entry Posted on Jan.4, 2006
Across the globe all market indice are heading off from a big start. Dow ended higher from the first day's nap, with 1.7% gain. In Shanghai, Chinese market went up today with nearly the same rise 1.8%.
Seems everything works very well in the begining of the year. Oil price is in control and Fed Reserve just indicated it will stay away from further interest rate hike. All analysts are saying 4.25% is sustaining a well performed economy as inflation fears fell out of people's concern at a time when the whole world has experienced one of the worst energy shortage.
In China, on the other hand analysts are carefully watching the on going equity market reform. New Shanghai index came today with 1% gain, which is based on the reformed firms with all shares floating, from a certain time of the year as the lock period expired. Some analyst said that will probably be the biggist uncertainty of the year and the index will go back to 800 level. We will see.
Merchentile Bank jumped 10%, which boost the whole finance sectors. As the finance industry open up is on the agenda as China's commitment to WTO, finance sector looks promising this year. Realty sector was also traded actively led by blue chip Wanke Real Estate. Technology stocks are still dormant compared with Resourse sectors' strong trading. China unicom went up by 2% and China southern airlines stay at its previous day's close. (China southern has been bearish for the whole 2005 partly because of the high energy price, but this year might be very bullish given the Chinese currency 's revaluation)
Across the globe all market indice are heading off from a big start. Dow ended higher from the first day's nap, with 1.7% gain. In Shanghai, Chinese market went up today with nearly the same rise 1.8%.
Seems everything works very well in the begining of the year. Oil price is in control and Fed Reserve just indicated it will stay away from further interest rate hike. All analysts are saying 4.25% is sustaining a well performed economy as inflation fears fell out of people's concern at a time when the whole world has experienced one of the worst energy shortage.
In China, on the other hand analysts are carefully watching the on going equity market reform. New Shanghai index came today with 1% gain, which is based on the reformed firms with all shares floating, from a certain time of the year as the lock period expired. Some analyst said that will probably be the biggist uncertainty of the year and the index will go back to 800 level. We will see.
Merchentile Bank jumped 10%, which boost the whole finance sectors. As the finance industry open up is on the agenda as China's commitment to WTO, finance sector looks promising this year. Realty sector was also traded actively led by blue chip Wanke Real Estate. Technology stocks are still dormant compared with Resourse sectors' strong trading. China unicom went up by 2% and China southern airlines stay at its previous day's close. (China southern has been bearish for the whole 2005 partly because of the high energy price, but this year might be very bullish given the Chinese currency 's revaluation)
Shanghai Stock Picks
Entry posted on Dec. 18, 2005
Baiyuan Airport will debut its American style option (put) on the coming friday and the market believe the listing will fuel another round of option speculation. The theoritical price of this put (X=7.00CNY, American Put, E=1Year) is 0.56CNY according to the market. (I didn't calculate since the data I obtained are not pooled enough). Nobody can foresee the opening price as it will certainly be crazily driven by market.
I am still confident about the future performance of Citic Securities(600030.SS). The company is obviously one the most warranteed benificiary of any finance reform happening in China. The price is still within the lower range in terms of price/net assets term. If we turn to wall street and all finance giants are priced skiedly high. The holding period might be long but investors can place their money in and out.
The other stock picks, I suggest would be low price, high potential IT related or Bio-science companies. Insigma (600797.SS) as a relatively large cap and BRIGHT OCEANS INTERTELECOM (600289.SS) as small cap and growth company can be good candidates if you believe bulls are coming around. Note that beta could be very high, in China especially.
Large cap stocks can also great oportunities. Index tracking ETFs will be a hot spot next year and some derivatives will push the underlying assets much higher.
Good Luck to your investment.
Baiyuan Airport will debut its American style option (put) on the coming friday and the market believe the listing will fuel another round of option speculation. The theoritical price of this put (X=7.00CNY, American Put, E=1Year) is 0.56CNY according to the market. (I didn't calculate since the data I obtained are not pooled enough). Nobody can foresee the opening price as it will certainly be crazily driven by market.
I am still confident about the future performance of Citic Securities(600030.SS). The company is obviously one the most warranteed benificiary of any finance reform happening in China. The price is still within the lower range in terms of price/net assets term. If we turn to wall street and all finance giants are priced skiedly high. The holding period might be long but investors can place their money in and out.
The other stock picks, I suggest would be low price, high potential IT related or Bio-science companies. Insigma (600797.SS) as a relatively large cap and BRIGHT OCEANS INTERTELECOM (600289.SS) as small cap and growth company can be good candidates if you believe bulls are coming around. Note that beta could be very high, in China especially.
Large cap stocks can also great oportunities. Index tracking ETFs will be a hot spot next year and some derivatives will push the underlying assets much higher.
Good Luck to your investment.
Dragon on the road
Note: Entry posted on December 16, 2005
Shanghai market is still trying to sneak around the reform game offered by regulatory body although we've seen jaywalkers carefully flirt with new born stock options everyday. Trading volume has been as heavy as all CBOT listed options conbined. Guess more weired thing? Call and put with the same underlying stocks, same T, same X price are moving togother ... Open you eyes, this is China market now..
The backdrop is this economic giants's complex own reform. There's a debate over the conscience of economists in China as people listen to the curtain call of splendid economic performance in 2005 as the sharp contrast against grass roots's poor. There must be something wrong. If we look at the real income earned by average people in China, city and rural area, we will find this country is not anywhere near an economic boom. If a country or an econ body is benefiting from reform and other econ growth, it is by all means (at least supposed) to be the well-being of all, new chinese elite and people at large.
Now we also see huge trade deficits from China. Ironically the money never goes to bloodshop workers in Pearl River Delta and elsewhere in China. It is, to be fair, shared by the other group of people: the new rich in China, the government by taxes(also corrupted officials, if any), and the american old by pension fund RE-invested from Chinese government. Now comes to the point, without a fairly effecient finance market in place, China's huge economy is hard to land on earth.
So how do we play the market? There's still an answer --- BEHAVIAL FINANCE.
(I will start to learn this course on my own, and I've also touched some technical stuff, there's a website I can share with you guys, if you are lucky enough jumping to my blog: http://www.stockcharts.com/education )
Shanghai market is still trying to sneak around the reform game offered by regulatory body although we've seen jaywalkers carefully flirt with new born stock options everyday. Trading volume has been as heavy as all CBOT listed options conbined. Guess more weired thing? Call and put with the same underlying stocks, same T, same X price are moving togother ... Open you eyes, this is China market now..
The backdrop is this economic giants's complex own reform. There's a debate over the conscience of economists in China as people listen to the curtain call of splendid economic performance in 2005 as the sharp contrast against grass roots's poor. There must be something wrong. If we look at the real income earned by average people in China, city and rural area, we will find this country is not anywhere near an economic boom. If a country or an econ body is benefiting from reform and other econ growth, it is by all means (at least supposed) to be the well-being of all, new chinese elite and people at large.
Now we also see huge trade deficits from China. Ironically the money never goes to bloodshop workers in Pearl River Delta and elsewhere in China. It is, to be fair, shared by the other group of people: the new rich in China, the government by taxes(also corrupted officials, if any), and the american old by pension fund RE-invested from Chinese government. Now comes to the point, without a fairly effecient finance market in place, China's huge economy is hard to land on earth.
So how do we play the market? There's still an answer --- BEHAVIAL FINANCE.
(I will start to learn this course on my own, and I've also touched some technical stuff, there's a website I can share with you guys, if you are lucky enough jumping to my blog: http://www.stockcharts.com/education )
Bull..over now?
Note: Entry Posted Nov. 8, 2005
Gasoline prices is tumbling, which pushed November's CPI down 0.6 percent, the biggest one-month decline over a very long time, we all know it is a correction in the wake of droping oil pirce from historic highs in last several month. In macro econ sense, the good news is it might compromise shopping season's any suprise guarded by Fed, who is closely watching inflation, e.g, the CPI figures bode well for future interest rates. Interest rates has moved up to 4.15% level, further increase will be very likely to hurt econ growth.
With all these in mind, market still fell marginally. Investors are not very much confident about future as this year is closing in about 2 weeks and January might be critical point as well as sensitive season for market players.
My view is as fas as we are looking at good macro econs plus good corporate earnings, there will be some gold ahead of us even when the year is drawing close...:), Merry Christmas...
Gasoline prices is tumbling, which pushed November's CPI down 0.6 percent, the biggest one-month decline over a very long time, we all know it is a correction in the wake of droping oil pirce from historic highs in last several month. In macro econ sense, the good news is it might compromise shopping season's any suprise guarded by Fed, who is closely watching inflation, e.g, the CPI figures bode well for future interest rates. Interest rates has moved up to 4.15% level, further increase will be very likely to hurt econ growth.
With all these in mind, market still fell marginally. Investors are not very much confident about future as this year is closing in about 2 weeks and January might be critical point as well as sensitive season for market players.
My view is as fas as we are looking at good macro econs plus good corporate earnings, there will be some gold ahead of us even when the year is drawing close...:), Merry Christmas...
China stock market in liquidity crisis
Note: Entry Posted October 19, 2005
There's even serious crisis taking place in this new market. No transparency, no credit, upcoming reform on non floating SOE shares, capital control, government behavial and now what becomes more obvious is the sheer loss of liquidity.
Trading has been historically low compared to even the first 10 years of this new born market. Investors who bought overpriced shares before the bubble market in 2000 are not willing to sell in loss. New comers are concerned about the furture uncertainty. The net result is 80% of the stocks are not effectively trading. Low liquidity is running through the market disregard the fact that most stocks are priced at 20-50 cents ($). Give the current regulatory reform level, this situation will not change unless investors master enough confidence to the point that the new buyers' ability overpass volume posted by market losers over last 5 years.
The other troublesome fact for chinese investors is the T+1 trading rules. As an investor, you may not sell your stocks on the day you buy them. This lead to low leverage and increase of oportunity costs for average investors. On top of that, average investors are always in unfair postion if they want to bid or ask for a price. (They might not be able to sell when stock price plunge or buy if corporate earnings comes in suprise, is that fair? Government think so when they make the rule the way) This in effect discourage them for actively participating in the market.
There's even serious crisis taking place in this new market. No transparency, no credit, upcoming reform on non floating SOE shares, capital control, government behavial and now what becomes more obvious is the sheer loss of liquidity.
Trading has been historically low compared to even the first 10 years of this new born market. Investors who bought overpriced shares before the bubble market in 2000 are not willing to sell in loss. New comers are concerned about the furture uncertainty. The net result is 80% of the stocks are not effectively trading. Low liquidity is running through the market disregard the fact that most stocks are priced at 20-50 cents ($). Give the current regulatory reform level, this situation will not change unless investors master enough confidence to the point that the new buyers' ability overpass volume posted by market losers over last 5 years.
The other troublesome fact for chinese investors is the T+1 trading rules. As an investor, you may not sell your stocks on the day you buy them. This lead to low leverage and increase of oportunity costs for average investors. On top of that, average investors are always in unfair postion if they want to bid or ask for a price. (They might not be able to sell when stock price plunge or buy if corporate earnings comes in suprise, is that fair? Government think so when they make the rule the way) This in effect discourage them for actively participating in the market.
Subscribe to:
Posts (Atom)
