The HK market consolidated in advance of the Fed meeting dropping 285 to 31,352. There were hopes that the Fed would cut 50 basis points but that proved to be overly optimistic. In any event, the Fed cut was 0.25% to 4.5%, and discount was cut to 5%. The US marklet softened initially but came back with 137 point rise.
Market Indices
Australia All Ordinaries 6779.10 + 0.10%
Bombay Sensex* 19837.99 + 0.28%
Hong Kong Hang Seng 31352.58 - 0.90%
Japan Nikkei 16737.63 + 0.52%
Shanghai Composite 5954.76 + 0.98%
Singapore STI 3805.70 + 0.19%
South Korea Composite 2064.85 + 0.61%
Taiwan Weighted 9711.37 - 0.48%
*Late trading
Wednesday, October 31, 2007
Tuesday, October 30, 2007
HK New High!
HK closed on a new high, again! And this time, the property stocks suffered a sell off in the afternoon on fears of fund raising via placements (SHK Properties placed HK$11 billion yesterday after the market close). HK and Shanghai were the only 2 markets in Asia to close higher.
The Chinese financials did very well again today, especially China Construction Bank. The word on the street is we are looking at HK$10.
Market Indices
Australia All Ordinaries 6772.50 - 0.52%
Bombay Sensex* 19783.51 - 0.97%
Hong Kong Hang Seng 31638.22 + 0.16%
Japan Nikkei 16651.01 - 0.28%
Shanghai Composite 5897.19 + 2.60%
Singapore STI 3798.45 - 0.56%
South Korea Composite 2052.37 - 0.51%
Taiwan Weighted 9757.93 - 0.52%
*Late trading
The Chinese financials did very well again today, especially China Construction Bank. The word on the street is we are looking at HK$10.
Market Indices
Australia All Ordinaries 6772.50 - 0.52%
Bombay Sensex* 19783.51 - 0.97%
Hong Kong Hang Seng 31638.22 + 0.16%
Japan Nikkei 16651.01 - 0.28%
Shanghai Composite 5897.19 + 2.60%
Singapore STI 3798.45 - 0.56%
South Korea Composite 2052.37 - 0.51%
Taiwan Weighted 9757.93 - 0.52%
*Late trading
Monday, October 29, 2007
HS Index up 1,181!
The HK market set another new high today rising 1,181 points (3.89%) to close at 31,586 on turnover of HK$178 billion. Shanghai rose 165 (2.83%) to close at 6,034. Shares throughout the region rose on the back of a 134 points rise in the DJIA last Friday and Nikkei's increase of 192 today.
In HK the property stocks led the advance on expectations that the Fed will continue to cut interest rates further with some expecting a 50 basis point cut.
Market Indices
Australia All Ordinaries 6808.20 + 1.37%
Bombay Sensex* 19977.67 + 3.82%
Hong Kong Hang Seng 31586.90 + 3.89%
Japan Nikkei 16698.08 + 1.17%
Shanghai Composite 5747.99 + 2.83%
Singapore STI 3819.78 + 1.28%
South Korea Composite 2062.92 + 1.72%
Taiwan Weighted 9809.88 + 1.85%
*Late trading
In HK the property stocks led the advance on expectations that the Fed will continue to cut interest rates further with some expecting a 50 basis point cut.
Market Indices
Australia All Ordinaries 6808.20 + 1.37%
Bombay Sensex* 19977.67 + 3.82%
Hong Kong Hang Seng 31586.90 + 3.89%
Japan Nikkei 16698.08 + 1.17%
Shanghai Composite 5747.99 + 2.83%
Singapore STI 3819.78 + 1.28%
South Korea Composite 2062.92 + 1.72%
Taiwan Weighted 9809.88 + 1.85%
*Late trading
Sunday, October 28, 2007
ICBC = I Can Buy Chinese (But Carefully!)
At the 12th Asia Securities Forum in Cebu, Philippines in March this year, I gave a presentation on the HK Securities Market which covered the listing of Chinese companies. At that time, I out up a slide that says ICBC (not Industrial and Commercial Bank of China but I Can Buy Chinese) as my prediction of where the market was going.
Since then of course, the HSI has hit a historical high of 30,400 moving up in leaps and bounds but still lagging the Shanghai market. Let there be no misunderatnding. HK is the proxy market for China. The Shanghai and Shenzhen markets are closed to foreigners except through QFII (Qualified Foreing Institutional Investors programme) which has a tiny US$10 billion quota shared by 50 institutions (the recent turnover in HK is between US$15-20 billion per day with a historical high of US$25 billion).
If you buy the China Story then you have to buy in HK. About 60% of the market value and 75% of the daily turnover are in Chinese stocks. The Gulf States' national budgets were based on US$35 per barrel. Now that oil is US$85, where is all that excess cash going? Certainly not to the US. Of the BRIC countries (Brazil, Russia, India, China) China has the most compelling story and the most advanced market through it's proxy in HK. When I visited ADIA (Abu Dhabi Investment Authority, the earliest and biggest Middle Eastern government investment fund) early this year, I was surprised to see Chinese nationals sitting across the table. They were hired by ADIA out of the China to research Chinese stocks.
Having said all that, I am always asked what companies to buy. My answer has always been the Chinese financials. Don't get me wrong, they are probably not the hottest thing around but in my mind they are the safest. What other in dustry has regulators sitting on top to ensure that things do not go badly wrong?
I cannot say the same for Chinese resource companies.
Recently, Chinese resource companies have been bid sky high. I am not convinced that they are worth the valuations. The market is huge, that much I agree. But resource companies are valued on the basis of their reserves and the price of their products. On the basis of reserves, the Chinese resource comapnies are valued at double their western counterparts. Do we expect their existing reserves or the prices to suddenly double?
Warren Buffett recently sold Berkshire Hathaway's 1.3% stake in PetroChina (#00857), China's largest oil company (an the largest company in China on market value). At about US$440 billion, it is the world's No. 2 company based on market value, behind ExxonMobil's $508 billion valuation. PetroChina trades for more than 20 times estimated 2007 profits, or twice its historic price/earnings multiple (Exxon's P/E is 13x and other Western oil companies such as Chevron and ConocoPhillips trade at around 10x). Berkshire bought its stake four years ago for less than US$500 million, and may have made as much as US$4 billion on the sale.
Although huge valuation gaps between Chinese and U.S. companies exist outside the resource sector, I am more relaxed because the pebetration of financial products is miniscule. China Life Insurance (LFC) has a market value of $245 billion, five times that of MetLife or Prudential Financial.
However, we cannot apply the same arguments to resource companies in China because oil and coal are fungible international commodities. Also, it is difficult for Chinese resource companies to buyout Western resource companies because of politics. US Congressional opposition frustrated an attempted takeover of Unocal by China's state-owned oil company in 2005; Unocal later was sold to Chevron.
The key to high stock-market values in China is that ordinary Chinese investors have little choice because of capital restrictions on investing overseas and the scarcity value created by the thin floats in many big Chinese companies. PetroChina, now 88%-owned by the Chinese government, will sell Chinese investors US$9 billion of Class A shares to be listed on the Shanghai Stock Exchange. But the government's stake will slip only to 86%. Until now, PetroChina's shares have traded only in Hong Kong and as ADRs on the New York Stock Exchange. If all the company's shares were freely held, PetroChina would not command such a high valuation.
Since Chinese investors cannot buy Western stocks, comparison between PetroChina and Exxon is only useful for Western investors who can buy both. PetroChina is listed in HK and trades at more reasonable value precisely because HK is an open market with no capital or investors restrictions.
The only thing going for PetroChina is that its profits are depressed by price controls in the Chinese market for gasoline, other oil products and natural gas. The company gets about $3 per thousand cubic feet of natural gas, half of what Exxon nets. The gradual lifting of price controls in China will boost PetroChina's refining and natural-gas profits but prices will have to double before PetroChina and Exxon trades at similar PE's.
St. Louis-based Peabody Energy, the world's largest private-sector coal producer, trades at 30 times earnings while China Shenhua trades at 60x. China's largest coal company, China Shenhua Energy (#01088), is valued at $200 billion. When China Shenhua was listed in Shanghai earlier this month, its share price doubled in value. It since has risen to RMB 77 per share. China Shenhua, which already was listed in Hong Kong, now has a market value of about $190 billion, more than 10 times Peabody's value. Yet its annual production and reserves are less than Peabody's. But China Shenhua gets far higher prices for its coal than Peabody, and has power and railroad assets.
Since then of course, the HSI has hit a historical high of 30,400 moving up in leaps and bounds but still lagging the Shanghai market. Let there be no misunderatnding. HK is the proxy market for China. The Shanghai and Shenzhen markets are closed to foreigners except through QFII (Qualified Foreing Institutional Investors programme) which has a tiny US$10 billion quota shared by 50 institutions (the recent turnover in HK is between US$15-20 billion per day with a historical high of US$25 billion).
If you buy the China Story then you have to buy in HK. About 60% of the market value and 75% of the daily turnover are in Chinese stocks. The Gulf States' national budgets were based on US$35 per barrel. Now that oil is US$85, where is all that excess cash going? Certainly not to the US. Of the BRIC countries (Brazil, Russia, India, China) China has the most compelling story and the most advanced market through it's proxy in HK. When I visited ADIA (Abu Dhabi Investment Authority, the earliest and biggest Middle Eastern government investment fund) early this year, I was surprised to see Chinese nationals sitting across the table. They were hired by ADIA out of the China to research Chinese stocks.
Having said all that, I am always asked what companies to buy. My answer has always been the Chinese financials. Don't get me wrong, they are probably not the hottest thing around but in my mind they are the safest. What other in dustry has regulators sitting on top to ensure that things do not go badly wrong?
I cannot say the same for Chinese resource companies.
Recently, Chinese resource companies have been bid sky high. I am not convinced that they are worth the valuations. The market is huge, that much I agree. But resource companies are valued on the basis of their reserves and the price of their products. On the basis of reserves, the Chinese resource comapnies are valued at double their western counterparts. Do we expect their existing reserves or the prices to suddenly double?
Warren Buffett recently sold Berkshire Hathaway's 1.3% stake in PetroChina (#00857), China's largest oil company (an the largest company in China on market value). At about US$440 billion, it is the world's No. 2 company based on market value, behind ExxonMobil's $508 billion valuation. PetroChina trades for more than 20 times estimated 2007 profits, or twice its historic price/earnings multiple (Exxon's P/E is 13x and other Western oil companies such as Chevron and ConocoPhillips trade at around 10x). Berkshire bought its stake four years ago for less than US$500 million, and may have made as much as US$4 billion on the sale.
Although huge valuation gaps between Chinese and U.S. companies exist outside the resource sector, I am more relaxed because the pebetration of financial products is miniscule. China Life Insurance (LFC) has a market value of $245 billion, five times that of MetLife or Prudential Financial.
However, we cannot apply the same arguments to resource companies in China because oil and coal are fungible international commodities. Also, it is difficult for Chinese resource companies to buyout Western resource companies because of politics. US Congressional opposition frustrated an attempted takeover of Unocal by China's state-owned oil company in 2005; Unocal later was sold to Chevron.
The key to high stock-market values in China is that ordinary Chinese investors have little choice because of capital restrictions on investing overseas and the scarcity value created by the thin floats in many big Chinese companies. PetroChina, now 88%-owned by the Chinese government, will sell Chinese investors US$9 billion of Class A shares to be listed on the Shanghai Stock Exchange. But the government's stake will slip only to 86%. Until now, PetroChina's shares have traded only in Hong Kong and as ADRs on the New York Stock Exchange. If all the company's shares were freely held, PetroChina would not command such a high valuation.
Since Chinese investors cannot buy Western stocks, comparison between PetroChina and Exxon is only useful for Western investors who can buy both. PetroChina is listed in HK and trades at more reasonable value precisely because HK is an open market with no capital or investors restrictions.
The only thing going for PetroChina is that its profits are depressed by price controls in the Chinese market for gasoline, other oil products and natural gas. The company gets about $3 per thousand cubic feet of natural gas, half of what Exxon nets. The gradual lifting of price controls in China will boost PetroChina's refining and natural-gas profits but prices will have to double before PetroChina and Exxon trades at similar PE's.
St. Louis-based Peabody Energy, the world's largest private-sector coal producer, trades at 30 times earnings while China Shenhua trades at 60x. China's largest coal company, China Shenhua Energy (#01088), is valued at $200 billion. When China Shenhua was listed in Shanghai earlier this month, its share price doubled in value. It since has risen to RMB 77 per share. China Shenhua, which already was listed in Hong Kong, now has a market value of about $190 billion, more than 10 times Peabody's value. Yet its annual production and reserves are less than Peabody's. But China Shenhua gets far higher prices for its coal than Peabody, and has power and railroad assets.
Friday, October 26, 2007
Hang Seng Index at historical high 30,405
Finally we broke through the 30,000 resistance level, and resoundingly so by rising 550 points to 30,405. The hope is that the Federal Reserve will cut interest rate by 50 basis points because of the bad news coming out of the US.
The HK dollar moved to the string side of the peg against the US dollar because of the inflows of funds into HK. Most of this is destined for the stock market as a proxy for the RMB since the chinese currency is not convertible. The H shares have assets in RMB and earn RMB.
Market Indices
Australia All Ordinaries 6716.40 + 1.08%
Bombay Sensex* 19243.17 + 2.52%
Hong Kong Hang Seng 30405.22 + 1.84%
Japan Nikkei 16505.63 + 1.36%
Shanghai Composite 5589.63 + 0.49%
Singapore STI 3766.82 + 1.61%
South Korea Composite 2028.06 + 2.60%
Taiwan Weighted 9631.51 + 0.66%
*Intraday trading
The HK dollar moved to the string side of the peg against the US dollar because of the inflows of funds into HK. Most of this is destined for the stock market as a proxy for the RMB since the chinese currency is not convertible. The H shares have assets in RMB and earn RMB.
Market Indices
Australia All Ordinaries 6716.40 + 1.08%
Bombay Sensex* 19243.17 + 2.52%
Hong Kong Hang Seng 30405.22 + 1.84%
Japan Nikkei 16505.63 + 1.36%
Shanghai Composite 5589.63 + 0.49%
Singapore STI 3766.82 + 1.61%
South Korea Composite 2028.06 + 2.60%
Taiwan Weighted 9631.51 + 0.66%
*Intraday trading
Thursday, October 25, 2007
Reversal of Fortunes?
Hong Kong closed at a record high, but Shanghai plunged on interest-rate worries and concerns that the central government will clamp down on inflation.
Market Indices
Australia All Ordinaries 6644.80 - 0.11%
Bombay Sensex* 18770.89 + 1.39%
Hong Kong Hang Seng 29854.49 + 1.78%
Japan Nikkei 16284.17 - 0.45%
Shanghai Composite 5562.39 - 4.80%
Singapore STI 3707.14 + 1.59%
South Korea Composite 1976.75 + 2.24%
Taiwan Weighted 9568.26 + 1.33%
*Intraday trading
Market Indices
Australia All Ordinaries 6644.80 - 0.11%
Bombay Sensex* 18770.89 + 1.39%
Hong Kong Hang Seng 29854.49 + 1.78%
Japan Nikkei 16284.17 - 0.45%
Shanghai Composite 5562.39 - 4.80%
Singapore STI 3707.14 + 1.59%
South Korea Composite 1976.75 + 2.24%
Taiwan Weighted 9568.26 + 1.33%
*Intraday trading
Wednesday, October 24, 2007
29,997: So near and yet so far.
The HK market opened strong on the back of a 109 point rise on the DJIA overnight. The HSI got within 29,997 before retreating from the pyschological barrier of 30,000 finishing in negative territory.
Market Indices
Australia All Ordinaries 6652.10 - 0.38%
Bombay Sensex* 18602.52 + 0.59%
Hong Kong Hang Seng 29333.53 - 0.15%
Japan Nikkei 16358.39 - 0.56%
Shanghai Composite 5843.10 + 1.21%
Singapore STI 3666.28 - 0.79%
South Korea Composite 1933.36 - 0.75%
Taiwan Weighted 9442.62 - 0.63%
*Intraday trading
Market Indices
Australia All Ordinaries 6652.10 - 0.38%
Bombay Sensex* 18602.52 + 0.59%
Hong Kong Hang Seng 29333.53 - 0.15%
Japan Nikkei 16358.39 - 0.56%
Shanghai Composite 5843.10 + 1.21%
Singapore STI 3666.28 - 0.79%
South Korea Composite 1933.36 - 0.75%
Taiwan Weighted 9442.62 - 0.63%
*Intraday trading
Tuesday, October 23, 2007
HK UP 1,003
This is a market in transition. It can't decide whether it is too high or whether it is poised for further gains. After the correction yesterday the market was up 3.54% to finish at 29,376 virtually unchanged from Thursday last. Current month futures closed at 29,481 (a premium of over 104), and next month futures closed at 259,525 (a premium of 148).
Chinese financials staged a recovery. I must admit I am partial to the Chinese banks and insurance companies. They have regulators (CBRC and CIRC) sitting on top of them to make sure they don't go too far off track, and they can legitimately profit from the stock market rise. Just imagine buying into HSBC in 1971 at HK$4 and holding until now. Well, you can dream on or you can buy the Chinese banks.
Chinese financials staged a recovery. I must admit I am partial to the Chinese banks and insurance companies. They have regulators (CBRC and CIRC) sitting on top of them to make sure they don't go too far off track, and they can legitimately profit from the stock market rise. Just imagine buying into HSBC in 1971 at HK$4 and holding until now. Well, you can dream on or you can buy the Chinese banks.
Monday, October 22, 2007
HK Stocks Dropped 1,091 points
As expected the HK market followed the US down. However, the drop was actually less than expected being only 3.7%. Compared with 26 Ocotber 1987 when the market fell 45% when it re-opened after a 4 day clsosure, and 10% on 23 october 1997 this was literally a drop in the bucket.
Market Indices
Australia All Ordinaries 6592.10 - 1.95%
Bombay Sensex* 17441.30 - 0.68%
Hong Kong Hang Seng 28373.63 - 3.70%
Japan Nikkei 16438.47 - 2.24%
Shanghai Composite 5667.33 - 2.59%
Singapore STI 3642.64 - 2.81%
South Korea Composite 1903.81 - 3.36%
Taiwan Weighted 9360.63 - 2.61%
*Intraday trading
Market Indices
Australia All Ordinaries 6592.10 - 1.95%
Bombay Sensex* 17441.30 - 0.68%
Hong Kong Hang Seng 28373.63 - 3.70%
Japan Nikkei 16438.47 - 2.24%
Shanghai Composite 5667.33 - 2.59%
Singapore STI 3642.64 - 2.81%
South Korea Composite 1903.81 - 3.36%
Taiwan Weighted 9360.63 - 2.61%
*Intraday trading
Saturday, October 20, 2007
October 19, 1997: Then and Now
Yesterday was the 20th anniversary of the Black Monday Crash of 19 October 1997. Right on cue the US market fell 366 points. Are we looking at a repeat of the crash. I think not.
There are some similarities but the differences are very significant.
1. On 19 October 1997, the market crashed 22.6% (508 points0 in 1 day. This time, the drop was only 2.6%.
2. Back then the average P/E was 22x and treasury bonds were yielding 10%. Now the average P/E is 18x and Treasuries are yielding only 5%.
3. In 1997, the US$ was under attack and in order to counteract rate rises by the Bundesbank (which was fighting inflation in Germany) the Federal reserve had to raise interest rates. Now, the Fed is cutting interest rates to offset the effects of the sub-prime mess. So are all the other central banks.
One final point, even if the market falls, remember that 18 months later, the market was back up to where it was before the crash. Sit tight.
HK market was closed for a holiday on Friday 19 October 2007. The Shanghai marker recovered its nerve somewhat when the CSRC denied that it was looking to arbitrage the HK and Shanghai prices for dual liosted stocks.
There are some similarities but the differences are very significant.
1. On 19 October 1997, the market crashed 22.6% (508 points0 in 1 day. This time, the drop was only 2.6%.
2. Back then the average P/E was 22x and treasury bonds were yielding 10%. Now the average P/E is 18x and Treasuries are yielding only 5%.
3. In 1997, the US$ was under attack and in order to counteract rate rises by the Bundesbank (which was fighting inflation in Germany) the Federal reserve had to raise interest rates. Now, the Fed is cutting interest rates to offset the effects of the sub-prime mess. So are all the other central banks.
One final point, even if the market falls, remember that 18 months later, the market was back up to where it was before the crash. Sit tight.
HK market was closed for a holiday on Friday 19 October 2007. The Shanghai marker recovered its nerve somewhat when the CSRC denied that it was looking to arbitrage the HK and Shanghai prices for dual liosted stocks.
Friday, October 19, 2007
Oil Prices Put Damper on Share Prices
HK was closed for a holiday.
Market Indices
Australia All Ordinaries 6723.30 - 0.85%
Bombay Sensex* 17596.61 - 2.20%
Hong Kong Hang Seng** 29465.05 + 0.57%
Japan Nikkei 16814.37 - 1.71%
Shanghai Composite 5818.04 - 0.12%
Singapore STI 3747.98 - 1.62%
South Korea Composite 1970.10 - 1.75%
Taiwan Weighted 9611.72 - 0.26%
*Late trading
**Market closed for holiday
Market Indices
Australia All Ordinaries 6723.30 - 0.85%
Bombay Sensex* 17596.61 - 2.20%
Hong Kong Hang Seng** 29465.05 + 0.57%
Japan Nikkei 16814.37 - 1.71%
Shanghai Composite 5818.04 - 0.12%
Singapore STI 3747.98 - 1.62%
South Korea Composite 1970.10 - 1.75%
Taiwan Weighted 9611.72 - 0.26%
*Late trading
**Market closed for holiday
Thursday, October 18, 2007
The Big 30
HK breached the 30,000 level in intra-day trading on the back of reports that the CSRC is studying mechanisms to arbitrage the prices of stocks listed in bothe HK and Shanghai. Shanghai fell 3.5% on fears that the arbitrage will hit Shanghai prices as investors gravitate towards the HK market. The HSI touched 30,025 but closed lower at 29,465 when the CSRC said it was misquoted.
Wednesday, October 17, 2007
Climbing a Wall of Worry
The HK market opened down but closed up. There appears to be buying support at around 28,500. Yesterday, the story was the changing leadership. Today, there were concerns that the Chinese economy is running too hot.
Market Indices
Australia All Ordinaries 6696.10 - 0.23%
Bombay Sensex 18715.82 - 1.80%
Hong Kong Hang Seng 29298.71 + 1.19%
Japan Nikkei 16955.31 - 1.07%
Shanghai Composite 6036.28 - 0.92%
Singapore STI 3839.73 + 0.76%
South Korea Composite 1983.94 - 1.09%
Taiwan Weighted 9562.16 - 0.32%
Market Indices
Australia All Ordinaries 6696.10 - 0.23%
Bombay Sensex 18715.82 - 1.80%
Hong Kong Hang Seng 29298.71 + 1.19%
Japan Nikkei 16955.31 - 1.07%
Shanghai Composite 6036.28 - 0.92%
Singapore STI 3839.73 + 0.76%
South Korea Composite 1983.94 - 1.09%
Taiwan Weighted 9562.16 - 0.32%
Tuesday, October 16, 2007
17th Party Congress
Yesterday, the market was up over 700 points as the 17th Communist Party Congress got under way. Today it was down because there is concern that the new leadership may implement measures to cool the economy and therefore "burst the bubble". What new leadership?
All major decisions are taken at the premier and vice premier level. There may be changes at the head of various departments, etc. but the working level will also remain the same. So, there will be very little rocking of the boat by the "new brooms". The concept of a "new broom" is a very westernised. In the West, new leaders typically fought their way to the top, and are anxious to "clean house" so that they start anew. In the East, one gets to the top by being a team player, and we can expect the major directions to remain unchanged as new leadsers are picked to carry on the work of the old.
Most Asian markets fell on renewed credit-crunch jitters and profit-taking, but Shanghai shares bucked the trend, closing at another record high. Yesterday, Shanghai topped 6,000 for the first time rising 5 times over 2 years. Many have compared Shanghai to Taiwan in the early 90's which also rose 5 times in 18 months. However, we must remember that taiwan continued to double over the next 2 years before it came crashing down.
HSBC took a pounding because of Citi's write downs, and this brought all the financials down with it, including the Mainland ones.
Market Indices
Australia All Ordinaries 6692.00 - 0.70%
Bombay Sensex* 19081.23 + 0.12%
Hong Kong Hang Seng 28954.55 - 1.98%
Japan Nikkei 17137.92 - 1.27%
Shanghai Composite 6092.05 + 1.03%
Singapore STI 3810.72 - 1.33%
South Korea Composite 2005.76 - 1.46%
Taiwan Weighted 9592.47 + 0.78%
*Intraday trading
All major decisions are taken at the premier and vice premier level. There may be changes at the head of various departments, etc. but the working level will also remain the same. So, there will be very little rocking of the boat by the "new brooms". The concept of a "new broom" is a very westernised. In the West, new leaders typically fought their way to the top, and are anxious to "clean house" so that they start anew. In the East, one gets to the top by being a team player, and we can expect the major directions to remain unchanged as new leadsers are picked to carry on the work of the old.
Most Asian markets fell on renewed credit-crunch jitters and profit-taking, but Shanghai shares bucked the trend, closing at another record high. Yesterday, Shanghai topped 6,000 for the first time rising 5 times over 2 years. Many have compared Shanghai to Taiwan in the early 90's which also rose 5 times in 18 months. However, we must remember that taiwan continued to double over the next 2 years before it came crashing down.
HSBC took a pounding because of Citi's write downs, and this brought all the financials down with it, including the Mainland ones.
Market Indices
Australia All Ordinaries 6692.00 - 0.70%
Bombay Sensex* 19081.23 + 0.12%
Hong Kong Hang Seng 28954.55 - 1.98%
Japan Nikkei 17137.92 - 1.27%
Shanghai Composite 6092.05 + 1.03%
Singapore STI 3810.72 - 1.33%
South Korea Composite 2005.76 - 1.46%
Taiwan Weighted 9592.47 + 0.78%
*Intraday trading
Monday, October 15, 2007
Hong Kong: China's Proxy Market
Asian indexes mostly rose, with oil and blue-chip gains driving Chinese markets to record closes while technology gains boosted Tokyo shares ahead of earnings reports. HK rose 702 to close at 29,540 which is yet another new high.
The HK market is being re-rated. Back in 1997, we had 6 million of population and 800,000 investors. Now with the announced QDII, through train, and other investors potentially coming from the Mainland, the market is looking very different from a domestic demand standpoint. Then we need to add the demand from overseas investors who is looking at HK as a proxy market for the Mainland because over 60% of the HK market capitalisationa dn over 70% of the daily turnover are in Maionland stocks.
The main investors are from the Middle-East. When I visited Saudi Arabia and Abu Dhabi early this year, I was told by their government investment authories that their national budget is based on US$35 per barrel. With oil now at US$85 per barrel, the excess need to be invested somewhere. Of the BRIC countries (Brazil, Russia, India, and China) HK is the biggest market and has the best regulatory and corporate governance environment.
Market Indices
Australia All Ordinaries 6751.60 - 0.13%
Bombay Sensex* 19085.12 + 3.60%
Hong Kong Hang Seng 29540.78 + 2.44%
Japan Nikkei 17358.15 + 0.16%
Shanghai Composite 6030.08 + 2.15%
Singapore STI 3862.02 + 0.12%
South Korea Composite 2035.39 + 0.44%
Taiwan Weighted 9518.45 + 0.23%
*Intraday trading
The HK market is being re-rated. Back in 1997, we had 6 million of population and 800,000 investors. Now with the announced QDII, through train, and other investors potentially coming from the Mainland, the market is looking very different from a domestic demand standpoint. Then we need to add the demand from overseas investors who is looking at HK as a proxy market for the Mainland because over 60% of the HK market capitalisationa dn over 70% of the daily turnover are in Maionland stocks.
The main investors are from the Middle-East. When I visited Saudi Arabia and Abu Dhabi early this year, I was told by their government investment authories that their national budget is based on US$35 per barrel. With oil now at US$85 per barrel, the excess need to be invested somewhere. Of the BRIC countries (Brazil, Russia, India, and China) HK is the biggest market and has the best regulatory and corporate governance environment.
Market Indices
Australia All Ordinaries 6751.60 - 0.13%
Bombay Sensex* 19085.12 + 3.60%
Hong Kong Hang Seng 29540.78 + 2.44%
Japan Nikkei 17358.15 + 0.16%
Shanghai Composite 6030.08 + 2.15%
Singapore STI 3862.02 + 0.12%
South Korea Composite 2035.39 + 0.44%
Taiwan Weighted 9518.45 + 0.23%
*Intraday trading
Friday, October 12, 2007
Xinxin Mining up 119%
Asian indexes declined, as profit taking on financial, real-estate and exporter shares following Wall Street's overnight decline reversed a week of record highs. HK opened weak and was down over 600 points at one stage. However, bargain hunting crawled back some of the losses to close down 294 at 28,838.
The one bright spot was the newly listed share which closed at $14.24 (high $14.90)on the IPO price of $6.50.
Top 5 IPO debuts in 2007
119.08%: Xinxing Mining 12 Oct 2007
97.74%: China High Speed Transmission Equipment 4 Jul 2007
81.76%: Tiangong International 26 Jul 2007
78.95: Emperor capital 24 Apr 2007
77.45%: Hildili Industry 21 Sep 2007
Market Indices
Australia All Ordinaries 6760.10 - 0.29%
Bombay Sensex* 18377.02 - 2.30%
Hong Kong Hang Seng 28838.37 - 1.01%
Japan Nikkei 17331.17 - 0.73%
Shanghai Composite 5903.26 - 0.17%
Singapore STI 3857.25 - 0.48%
South Korea Composite 2026.44 - 1.57%
Taiwan Weighted 9496.47 - 2.07%
*Intraday Trading
The one bright spot was the newly listed share which closed at $14.24 (high $14.90)on the IPO price of $6.50.
Top 5 IPO debuts in 2007
119.08%: Xinxing Mining 12 Oct 2007
97.74%: China High Speed Transmission Equipment 4 Jul 2007
81.76%: Tiangong International 26 Jul 2007
78.95: Emperor capital 24 Apr 2007
77.45%: Hildili Industry 21 Sep 2007
Market Indices
Australia All Ordinaries 6760.10 - 0.29%
Bombay Sensex* 18377.02 - 2.30%
Hong Kong Hang Seng 28838.37 - 1.01%
Japan Nikkei 17331.17 - 0.73%
Shanghai Composite 5903.26 - 0.17%
Singapore STI 3857.25 - 0.48%
South Korea Composite 2026.44 - 1.57%
Taiwan Weighted 9496.47 - 2.07%
*Intraday Trading
Thursday, October 11, 2007
HS Index at 29,000
The HK market rose 562 points to close at a record 29,133.
The following statistics are made available by the HKEx:
Securities market
- The Hang Seng Index closed at a record high of 29133.02 today, up 563.69 points.
- Today's securities market turnover value was $179,409 million, the second largest in history.
- Today's closing market capitalisation was a new high of $21,512 billion. The previous trading day's (10 October 2007) closing market capitalisation was $21,061 billion.
The following statistics are made available by the HKEx:
Securities market
- The Hang Seng Index closed at a record high of 29133.02 today, up 563.69 points.
- Today's securities market turnover value was $179,409 million, the second largest in history.
- Today's closing market capitalisation was a new high of $21,512 billion. The previous trading day's (10 October 2007) closing market capitalisation was $21,061 billion.
Wednesday, October 10, 2007
2007-08 Policy Address
In his Policy Address, the Chief Executive of the HKSAR outlined his plans for HK. From the financial standpoint the most important being a reduction in tax rates, and the building of massive infrastructure projects to facilitate the integration with the Mainland. The following is an extract.
10 Major Infrastructure Projects for Economic Growth
“Infrastructure development can bring about huge economic benefits... the value added would be more than $100 billion annually. In addition, some 250 000 additional jobs would be created.”
South Island Line: Construction to start in 2011
The Sha Tin to Central Link: Will connect the Northeast New Territories and Hong Kong Island via East Kowloon. Construction to start in 2010
The Tuen Mun Western Bypass and Tuen Mun-Chek Lap Kok Link: Upon completion in 2016, will link Deep Bay in Shenzhen, the Northwest New Territories and Hong Kong International Airport
The Guangzhou-Shenzhen-Hong Kong Express Rail Link: Construction of high-speed rail link between West Kowloon and Guangzhou will start in 2009
Hong Kong-Zhuhai-Macao Bridge: Aim to complete financial arrangements in the near future
Hong Kong-Shenzhen Airport Co-operation: Will study the feasibility of a rail connection between Hong Kong International Airport and Shenzhen Airport
Hong Kong-Shenzhen Joint Development of the Lok Ma Chau Loop: Will work with the Shenzhen authorities to develop the Lok Ma Chau Loop
West Kowloon Cultural District: Aim to enact legislation in mid-2008 so West Kowloon Cultural District Authority can be established as soon as possible
Kai Tak Development Plan: First cruise terminal berth expected to be operational in 2012
New Development Areas (NDAs): Will plan for NDAs to provide quality living space in the northern New Territories
Asian shares advanced following gains on Wall Street, with Shanghai closing at a record high while Hong Kong rose on banking-sector strength.
The HK stock market must have liked the policy direction as it rose to close at 28,569 with the Chinese financials leading the way.
Market Indices
Australia All Ordinaries 6744.60 + 0.85%
Bombay Sensex* 18658.25 + 2.07%
Hong Kong Hang Seng 28569.33 + 1.21%
Japan Nikkei 17177.89 + 0.10%
Shanghai Composite 5771.46 + 0.97%
Singapore STI 3814.45 - 1.33%
South Korea Composite 2041.12 + 1.34%
Taiwan Weighted** 9639.83 - 0.80%
*Intraday trading
**Market closed for holiday
10 Major Infrastructure Projects for Economic Growth
“Infrastructure development can bring about huge economic benefits... the value added would be more than $100 billion annually. In addition, some 250 000 additional jobs would be created.”
South Island Line: Construction to start in 2011
The Sha Tin to Central Link: Will connect the Northeast New Territories and Hong Kong Island via East Kowloon. Construction to start in 2010
The Tuen Mun Western Bypass and Tuen Mun-Chek Lap Kok Link: Upon completion in 2016, will link Deep Bay in Shenzhen, the Northwest New Territories and Hong Kong International Airport
The Guangzhou-Shenzhen-Hong Kong Express Rail Link: Construction of high-speed rail link between West Kowloon and Guangzhou will start in 2009
Hong Kong-Zhuhai-Macao Bridge: Aim to complete financial arrangements in the near future
Hong Kong-Shenzhen Airport Co-operation: Will study the feasibility of a rail connection between Hong Kong International Airport and Shenzhen Airport
Hong Kong-Shenzhen Joint Development of the Lok Ma Chau Loop: Will work with the Shenzhen authorities to develop the Lok Ma Chau Loop
West Kowloon Cultural District: Aim to enact legislation in mid-2008 so West Kowloon Cultural District Authority can be established as soon as possible
Kai Tak Development Plan: First cruise terminal berth expected to be operational in 2012
New Development Areas (NDAs): Will plan for NDAs to provide quality living space in the northern New Territories
Asian shares advanced following gains on Wall Street, with Shanghai closing at a record high while Hong Kong rose on banking-sector strength.
The HK stock market must have liked the policy direction as it rose to close at 28,569 with the Chinese financials leading the way.
Market Indices
Australia All Ordinaries 6744.60 + 0.85%
Bombay Sensex* 18658.25 + 2.07%
Hong Kong Hang Seng 28569.33 + 1.21%
Japan Nikkei 17177.89 + 0.10%
Shanghai Composite 5771.46 + 0.97%
Singapore STI 3814.45 - 1.33%
South Korea Composite 2041.12 + 1.34%
Taiwan Weighted** 9639.83 - 0.80%
*Intraday trading
**Market closed for holiday
Tuesday, October 09, 2007
Another Roller Coaster Day
Asian shares ended higher, as Japanese investors showed renewed confidence, while strong trading debuts from several companies propelled shares in Hong Kong and Shanghai.
HK opened up then down. When I left to go to a meeting it was down over 200. I was still at a meeting when the market closed up 457 to close at 28,228 on HK$129 billion turnover. Some were disappointed with the turnover, but we must remember that last year the daily average was only HK$30 billion, and in the first 6 months of this year it was only HK$60 billion. So HK$120 billion days are nothing to sneeze at.
Market Indices
Australia All Ordinaries 6687.70 + 0.31%
Bombay Sensex* 18174.74 + 4.30%
Hong Kong Hang Seng 28228.04 + 1.65%
Japan Nikkei 17159.90 + 0.56%
Shanghai Composite 5715.89 + 0.41%
Singapore STI 3865.75 + 1.19%
South Korea Composite 2014.13 + 0.07%
Taiwan Weighted 9639.83 - 0.80%
*Intraday trading
HK opened up then down. When I left to go to a meeting it was down over 200. I was still at a meeting when the market closed up 457 to close at 28,228 on HK$129 billion turnover. Some were disappointed with the turnover, but we must remember that last year the daily average was only HK$30 billion, and in the first 6 months of this year it was only HK$60 billion. So HK$120 billion days are nothing to sneeze at.
Market Indices
Australia All Ordinaries 6687.70 + 0.31%
Bombay Sensex* 18174.74 + 4.30%
Hong Kong Hang Seng 28228.04 + 1.65%
Japan Nikkei 17159.90 + 0.56%
Shanghai Composite 5715.89 + 0.41%
Singapore STI 3865.75 + 1.19%
South Korea Composite 2014.13 + 0.07%
Taiwan Weighted 9639.83 - 0.80%
*Intraday trading
Monday, October 08, 2007
HK: International Financial Centre?
HK wants to be an international financial centre. In many ways, it already is. We have 70 of the world's top 100 banks operating here. Over 200 of the 280 banks operating in HK are foreign registered. Of the US$ 560 billion in deposits, over half is in foreign currencies. Most of the world's top investment banks are already here. And the list goes on.
But in terms of the geographical spread of our listed companies, we are still tied to China which accounts of over 60% of our market capitalisation, 70% of our daily trading volume, and 90% of our IPO's. So where did we go wrong?
Actually, we did nothing wrong. We are just a century or two too late. Over 100 years ago, London was already floating China railway bonds! When New York outgrew London because of the size of the US domestic economy (something we are already seeing with Shanghai and China) London became bankers to the world. New York was content as it was too insular and too busy. HK must not make this mistake.
We must make ourselves attractive to issuers in other markets and follow London's example. NY is wise to the game. It has already spent millions of dollars commissioning studies of its competitiveness. And so has London, after all it invented the term international financial centre. So it isn't going to be easy this time around. They didn't like losing the Chinese IPO market and sure as hell would not want anyone poaching in their backyard.
We have 3 problems:
1. All the major investment houses are either US or UK based.
They have divided up the world among their subsidiaries into The Americas, Europe Africa and the Middle East, and Asia. It would take a very brave banker from one of the Asian subsidiaries to poach on something in the Europe sphere of influence. And that is why so many Russian companies (over 200) are listed in London. The bankers in Moscow are all sent from the UK. That, and the loose listing regime of AIM (more on that later).
2. Bankers sent out here are looking to their year end bonuses and are reluctant to invest their time in developing other markets.
And who can blame them, after all they have quota's and targets to meet. And our local investment banks are too small to take on market development work.
3. Our listing regime does not make it easy to list in HK.
Our market grew out of a purely domestic (HK) need, and protection of the small retail investors figure very high in terms of priorities. However, retail investors now account for less and less of the market share but the legislation is still skewed towards their protection. Fund managers tell us that the rule of law is of paramount importance, and it is. Especially, after a market blow up when every man and his dog is "asking where are the regulators?". But in the overall scheme of things fund managers will go where there is a profit to be made. You don't keep your job for long if you refuse to go into a market because of a lack of regulations while everyone is making a bundle there.
Dubai International Financial Exchange has spent millions building an excellent legal and regulatory infrastructure but only has 3 listings in 3 years to show for it. Ultimately, a market has to have a balance of regulation and openess. That is where AIM has done extremely well.
So how to solve these problems? The HK Government has to take the lead in longer term market development. This is not unfamiliar territory. HK has an excellent organisation in the Trade development Council. The TDC was set up to promote HK products made by small and medium enterprises too small to market them effectively overseas. It has trade offices all over the world promoting HK products (these days they are mostly made in Shenzhen but designed and sold by HK firms), organising trade shows, and bringing buyers to HK to meet with local companies.
Recently, it has made a very far sighted move into promoting HK services (including financial services) as well as the more traditional products. I have been on numerous trade missions with them promoting HK as a listing destination including Saudi Arabia, Abu Dhabi, Dubai, Kazakhstan, Taiwan, Moscow and St. Petersburg not to mention the promotions into China. It has done a lot but much remains to be done.
We need to have financial services attachees or specialists in some of the TDC offices abroad who understand what HK can do and can sniff out opportunities for HK financial services firms e.g. fund raising for toll roads in Vietnam, golf courses in St. Petersburg, joint venture banks in Moscow, etc. We have done all this before in China. We have the expertise. We can do it again. But, we need to know that there are opportunities.
Then, we need financial specialists on the HK staff to co-ordinate the efforts on this side. And finally, we need HK government support to undertake some of these projects similar to Exim banks facilities and guaranties. If the US/UK banks are not interested, we may be able to bring in the Chinese banks. After all, they are already making acquisitions and forays abroad.
--------------------------------------------------------------------------------
Coming back down to earth, let's look at how the Asian markets fared.
Most shares made strong gains across the Asian-Pacific region. Hong Kong closed slightly lower on profit-taking pressure after tracking record gains in Shanghai as financial firms played catch-up following a week-long holiday.
Market Indices
Australia All Ordinaries 6667.20 + 0.75%
Bombay Sensex* 17372.79 - 2.30%
Hong Kong Hang Seng 27770.29 - 0.22%
Shanghai Composite 5692.75 + 2.53%
Singapore STI 3820.31 - 0.06%
South Korea Composite 2012.82 + 0.84%
Taiwan Weighted 9717.17 + 1.04%
*Intraday trading
But in terms of the geographical spread of our listed companies, we are still tied to China which accounts of over 60% of our market capitalisation, 70% of our daily trading volume, and 90% of our IPO's. So where did we go wrong?
Actually, we did nothing wrong. We are just a century or two too late. Over 100 years ago, London was already floating China railway bonds! When New York outgrew London because of the size of the US domestic economy (something we are already seeing with Shanghai and China) London became bankers to the world. New York was content as it was too insular and too busy. HK must not make this mistake.
We must make ourselves attractive to issuers in other markets and follow London's example. NY is wise to the game. It has already spent millions of dollars commissioning studies of its competitiveness. And so has London, after all it invented the term international financial centre. So it isn't going to be easy this time around. They didn't like losing the Chinese IPO market and sure as hell would not want anyone poaching in their backyard.
We have 3 problems:
1. All the major investment houses are either US or UK based.
They have divided up the world among their subsidiaries into The Americas, Europe Africa and the Middle East, and Asia. It would take a very brave banker from one of the Asian subsidiaries to poach on something in the Europe sphere of influence. And that is why so many Russian companies (over 200) are listed in London. The bankers in Moscow are all sent from the UK. That, and the loose listing regime of AIM (more on that later).
2. Bankers sent out here are looking to their year end bonuses and are reluctant to invest their time in developing other markets.
And who can blame them, after all they have quota's and targets to meet. And our local investment banks are too small to take on market development work.
3. Our listing regime does not make it easy to list in HK.
Our market grew out of a purely domestic (HK) need, and protection of the small retail investors figure very high in terms of priorities. However, retail investors now account for less and less of the market share but the legislation is still skewed towards their protection. Fund managers tell us that the rule of law is of paramount importance, and it is. Especially, after a market blow up when every man and his dog is "asking where are the regulators?". But in the overall scheme of things fund managers will go where there is a profit to be made. You don't keep your job for long if you refuse to go into a market because of a lack of regulations while everyone is making a bundle there.
Dubai International Financial Exchange has spent millions building an excellent legal and regulatory infrastructure but only has 3 listings in 3 years to show for it. Ultimately, a market has to have a balance of regulation and openess. That is where AIM has done extremely well.
So how to solve these problems? The HK Government has to take the lead in longer term market development. This is not unfamiliar territory. HK has an excellent organisation in the Trade development Council. The TDC was set up to promote HK products made by small and medium enterprises too small to market them effectively overseas. It has trade offices all over the world promoting HK products (these days they are mostly made in Shenzhen but designed and sold by HK firms), organising trade shows, and bringing buyers to HK to meet with local companies.
Recently, it has made a very far sighted move into promoting HK services (including financial services) as well as the more traditional products. I have been on numerous trade missions with them promoting HK as a listing destination including Saudi Arabia, Abu Dhabi, Dubai, Kazakhstan, Taiwan, Moscow and St. Petersburg not to mention the promotions into China. It has done a lot but much remains to be done.
We need to have financial services attachees or specialists in some of the TDC offices abroad who understand what HK can do and can sniff out opportunities for HK financial services firms e.g. fund raising for toll roads in Vietnam, golf courses in St. Petersburg, joint venture banks in Moscow, etc. We have done all this before in China. We have the expertise. We can do it again. But, we need to know that there are opportunities.
Then, we need financial specialists on the HK staff to co-ordinate the efforts on this side. And finally, we need HK government support to undertake some of these projects similar to Exim banks facilities and guaranties. If the US/UK banks are not interested, we may be able to bring in the Chinese banks. After all, they are already making acquisitions and forays abroad.
--------------------------------------------------------------------------------
Coming back down to earth, let's look at how the Asian markets fared.
Most shares made strong gains across the Asian-Pacific region. Hong Kong closed slightly lower on profit-taking pressure after tracking record gains in Shanghai as financial firms played catch-up following a week-long holiday.
Market Indices
Australia All Ordinaries 6667.20 + 0.75%
Bombay Sensex* 17372.79 - 2.30%
Hong Kong Hang Seng 27770.29 - 0.22%
Shanghai Composite 5692.75 + 2.53%
Singapore STI 3820.31 - 0.06%
South Korea Composite 2012.82 + 0.84%
Taiwan Weighted 9717.17 + 1.04%
*Intraday trading
Friday, October 05, 2007
Correction? What Correction?
Asian markets were mixed, with Japanese shares down ahead of a three-day weekend, while Hong Kong rebounded on bargain hunting following a two-session slump. Stocks in HKL resume the rally with 3.18% bounce. The benchmark Hang Seng Index rose 857 points to close at 27,831 which is still 1,000 points off the intra day high on Wednesday.
Market Indices
Australia All Ordinaries 6617.30 + 0.57%
Bombay Sensex* 17732.85 - 0.25%
Hong Kong Hang Seng 27831.52 + 3.18%
Japan Nikkei 17065.04 - 0.16%
Singapore STI 3822.62 + 1.03%
South Korea Composite 1996.03 - 0.38%
Taiwan Weighted 9617.26 - 0.11%
*Intraday trading
Market Indices
Australia All Ordinaries 6617.30 + 0.57%
Bombay Sensex* 17732.85 - 0.25%
Hong Kong Hang Seng 27831.52 + 3.18%
Japan Nikkei 17065.04 - 0.16%
Singapore STI 3822.62 + 1.03%
South Korea Composite 1996.03 - 0.38%
Taiwan Weighted 9617.26 - 0.11%
*Intraday trading
Thursday, October 04, 2007
A 2-Day Correction ... Wonder of Wonders!
Asian markets ended lower, reacting to a lower close on Wall Street, as investors continued to take profits from recent gains. HK was not helped by an article in the South China Morning Post (SCMP) suggesting that the Chinese authorities have banned the simultaneous listings of Chinese companies on the Shanghai and HK exchanges. In future they are supposed to list in Shanghai first and then later in HK.
This of course will have an impact on the HK market. The paper suggested that companies would choose to list in Shanghai because of the higher P/E's compared to HK. They appear to have forgotten that Chinese shares do not enjoy the high P/E's on listing as the CSRC apparently puts pressure on companies to lower their P/E's in order to ensure "successful" underwriting and aftermarket trading.
That does not mean that it would not affect HK. If the company achieves a P/E of, say, 40 times in the aftermarket, how can the management justify a later listing in HK for half of that? Actually, it will be quite easy as there is no market for secondary issues in China, and any additional fund raising will typically cause the stock price to fall. However, in the meantime, while we are all learning the new realities, China keeps chugging along with the lion's share (25%) of the worldwide IPO market. Unfortunately HK has been relegated to 8th place.
You can see how this affected sentiment by the market performance yesterday and today. But isn't it uncanny that the market tanked immediately after lunch as if a signal has been given? Interesting!
Market Indices
Australia All Ordinaries 6579.90 - 1.28%
Bombay Sensex* 17753.27 - 0.53%
Hong Kong Hang Seng 26973.98 - 1.84%
Japan Nikkei 17092.49 - 0.62%
Singapore STI 3783.81 + 0.78%
South Korea Composite 2003.60 - 0.52%
Taiwan Weighted 9627.39 - 0.75%
*Intraday trading
This of course will have an impact on the HK market. The paper suggested that companies would choose to list in Shanghai because of the higher P/E's compared to HK. They appear to have forgotten that Chinese shares do not enjoy the high P/E's on listing as the CSRC apparently puts pressure on companies to lower their P/E's in order to ensure "successful" underwriting and aftermarket trading.
That does not mean that it would not affect HK. If the company achieves a P/E of, say, 40 times in the aftermarket, how can the management justify a later listing in HK for half of that? Actually, it will be quite easy as there is no market for secondary issues in China, and any additional fund raising will typically cause the stock price to fall. However, in the meantime, while we are all learning the new realities, China keeps chugging along with the lion's share (25%) of the worldwide IPO market. Unfortunately HK has been relegated to 8th place.
You can see how this affected sentiment by the market performance yesterday and today. But isn't it uncanny that the market tanked immediately after lunch as if a signal has been given? Interesting!
Market Indices
Australia All Ordinaries 6579.90 - 1.28%
Bombay Sensex* 17753.27 - 0.53%
Hong Kong Hang Seng 26973.98 - 1.84%
Japan Nikkei 17092.49 - 0.62%
Singapore STI 3783.81 + 0.78%
South Korea Composite 2003.60 - 0.52%
Taiwan Weighted 9627.39 - 0.75%
*Intraday trading
Wednesday, October 03, 2007
Roller Coaster Day
Asian stocks ended mixed, as Tokyo shares hit a two-month high and Hong Kong stocks suffered harsh reversals from profit-taking. When we went to lunch today, the HK market was up some 300 points. After lunch, the HS Index plunged over 719 points to close at 27,479 with record turnover of HK$209 billion.
Is this the beginning of the end? Most likely not. The market was up over 1,000 yesterday for no apparent reason and surely it is due for a correction. Since mid August when the market plunged to 19,500 intra-day, we have gained a handsome 8,000 points. Surely time to take a little profit.
Market Indices
Australia All Ordinaries 6665.40 - 0.03%
Bombay Sensex* 17719.95 + 2.26%
Hong Kong Hang Seng 27479.94 - 2.55%
Japan Nikkei 17199.89 + 0.90%
Singapore STI 3754.62 - 1.03%
South Korea Composite** 2014.09 + 2.62%
Taiwan Weighted 9700.07 + 0.80%
*Intraday trading
Is this the beginning of the end? Most likely not. The market was up over 1,000 yesterday for no apparent reason and surely it is due for a correction. Since mid August when the market plunged to 19,500 intra-day, we have gained a handsome 8,000 points. Surely time to take a little profit.
Market Indices
Australia All Ordinaries 6665.40 - 0.03%
Bombay Sensex* 17719.95 + 2.26%
Hong Kong Hang Seng 27479.94 - 2.55%
Japan Nikkei 17199.89 + 0.90%
Singapore STI 3754.62 - 1.03%
South Korea Composite** 2014.09 + 2.62%
Taiwan Weighted 9700.07 + 0.80%
*Intraday trading
Tuesday, October 02, 2007
Who says the market has to be "rational"?
On the back of a 190 point rise in the Dow on Monday, the HK market finished up over 1,057 at 28,199 accompanied by record turnover of HK$163 billion. Turnover this high can only be attributed to institutional buyers who are afraid of being left behind in the rush to "buy China".
As today is the first trading day of the last quarter, the tsunami of foreign institutional funds hitting our shores would guarantee that the year will end on a high note.
The following statistics are made available by the HKEx:
- The Hang Seng Index (HSI) closed at a record high of 28199.75 today, up 1057.28 points, the fourth largest point rise in history. It was the largest point rise since 20 August 2007 when the index was up 1208.50 points. The HSI's 3.90 per cent rise today was its largest in per cent terms since 19 September 2007 when the index was up 3.98 per cent.
- The Hang Seng China Enterprises Index (H-shares index) closed at a record high of 17973.87 today, up 955.93 points, or 5.62 per cent.
- Today's securities market turnover value was $163,942 million, the largest ever.
- Today's turnover value for H-share and red-chip companies was $74,737 million and $18,778 million respectively.
- Today's derivative warrants turnover was $27,987 million, the largest ever.
- A record high total of 1,019,309 trades were concluded today.
- Today's closing market capitalisation was a new high of $20,757.1 billion. The previous trading day's ( 28 September 2007 ) closing market capitalisation was $20,054.9 billion.
Top 10 daily turnover values in history (Up to 2 October 2007)
Daily turnover value in HK$
Main Board GEM Market total
Rank ($) ($) ($) Date
1 163,132,418,781 810,057,000^ 163,942,475,781 2/10/2007
2 148,575,515,387 634,708,800 149,210,224,187 28/9/2007
3 147,053,974,999 831,473,240 147,885,448,239 27/9/2007
4 140,057,412,983 814,970,399 140,872,383,382 24/9/2007
5 138,709,411,014 657,991,096 139,367,402,110 19/9/2007
6 132,283,181,902 710,132,583 132,993,314,485 21/9/2007
7 129,178,392,000 605,960,271 129,784,352,271 25/9/2007
8 126,346,932,691 696,609,067 127,043,541,758 27/8/2007
9 122,942,024,498 639,900,384 123,581,924,882 28/8/2007
10 121,055,884,537 1,314,151,868 122,370,036,405 1/8/2007
^ Figures rounded
Top 10 point rise in history
Up to 2 October 2007
Rank Point rise Date
1 1705.41 29/10/1997
2 1326.24 2/2/1998
3 1208.50 20/8/2007
4 1057.28 2/10/2007
5 978.66 3/9/1997
6 977.79 19/9/2007
7 816.07 25/9/2000
8 806.59 16/10/1998
9 723.99 17/3/2000
10 722.96 31/5/2000
Elsewhere in the region, stocks gained across Asia, with several major indices touching record levels as investors shrugged off continued credit-crunch woes.
Market Indices
Australia All Ordinaries 6667.60 + 1.33%
Bombay Sensex* 17328.62 + 0.22%
Hong Kong Hang Seng 28199.75 + 3.90%
Japan Nikkei 17046.78 + 1.19%
Singapore STI 3790.54 + 0.94%
South Korea Composite 2014.09 + 2.62%
Taiwan Weighted 9623.25 + 1.42%
*Intraday trading
As today is the first trading day of the last quarter, the tsunami of foreign institutional funds hitting our shores would guarantee that the year will end on a high note.
The following statistics are made available by the HKEx:
- The Hang Seng Index (HSI) closed at a record high of 28199.75 today, up 1057.28 points, the fourth largest point rise in history. It was the largest point rise since 20 August 2007 when the index was up 1208.50 points. The HSI's 3.90 per cent rise today was its largest in per cent terms since 19 September 2007 when the index was up 3.98 per cent.
- The Hang Seng China Enterprises Index (H-shares index) closed at a record high of 17973.87 today, up 955.93 points, or 5.62 per cent.
- Today's securities market turnover value was $163,942 million, the largest ever.
- Today's turnover value for H-share and red-chip companies was $74,737 million and $18,778 million respectively.
- Today's derivative warrants turnover was $27,987 million, the largest ever.
- A record high total of 1,019,309 trades were concluded today.
- Today's closing market capitalisation was a new high of $20,757.1 billion. The previous trading day's ( 28 September 2007 ) closing market capitalisation was $20,054.9 billion.
Top 10 daily turnover values in history (Up to 2 October 2007)
Daily turnover value in HK$
Main Board GEM Market total
Rank ($) ($) ($) Date
1 163,132,418,781 810,057,000^ 163,942,475,781 2/10/2007
2 148,575,515,387 634,708,800 149,210,224,187 28/9/2007
3 147,053,974,999 831,473,240 147,885,448,239 27/9/2007
4 140,057,412,983 814,970,399 140,872,383,382 24/9/2007
5 138,709,411,014 657,991,096 139,367,402,110 19/9/2007
6 132,283,181,902 710,132,583 132,993,314,485 21/9/2007
7 129,178,392,000 605,960,271 129,784,352,271 25/9/2007
8 126,346,932,691 696,609,067 127,043,541,758 27/8/2007
9 122,942,024,498 639,900,384 123,581,924,882 28/8/2007
10 121,055,884,537 1,314,151,868 122,370,036,405 1/8/2007
^ Figures rounded
Top 10 point rise in history
Up to 2 October 2007
Rank Point rise Date
1 1705.41 29/10/1997
2 1326.24 2/2/1998
3 1208.50 20/8/2007
4 1057.28 2/10/2007
5 978.66 3/9/1997
6 977.79 19/9/2007
7 816.07 25/9/2000
8 806.59 16/10/1998
9 723.99 17/3/2000
10 722.96 31/5/2000
Elsewhere in the region, stocks gained across Asia, with several major indices touching record levels as investors shrugged off continued credit-crunch woes.
Market Indices
Australia All Ordinaries 6667.60 + 1.33%
Bombay Sensex* 17328.62 + 0.22%
Hong Kong Hang Seng 28199.75 + 3.90%
Japan Nikkei 17046.78 + 1.19%
Singapore STI 3790.54 + 0.94%
South Korea Composite 2014.09 + 2.62%
Taiwan Weighted 9623.25 + 1.42%
*Intraday trading
Monday, October 01, 2007
Holiday in HK
Asian stocks rose modestly, with Tokyo ending higher after the release of a key corporate-sentiment survey. Markets in Hong Kong and Shanghai were closed for Chinese National Holiday holidays.
Market Indices
Australia All Ordinaries 6579.80 - 0.02%
Bombay Sensex 17328.62 + 0.22%
Hong Kong Hang Seng 27142.47 + 0.29%
Japan Nikkei 16845.96 + 0.36%
Singapore STI 3755.22 + 1.32%
South Korea Composite 1962.67 + 0.83%
Taiwan Weighted 9488.50 + 0.13%
Market Indices
Australia All Ordinaries 6579.80 - 0.02%
Bombay Sensex 17328.62 + 0.22%
Hong Kong Hang Seng 27142.47 + 0.29%
Japan Nikkei 16845.96 + 0.36%
Singapore STI 3755.22 + 1.32%
South Korea Composite 1962.67 + 0.83%
Taiwan Weighted 9488.50 + 0.13%
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