The October Effect

With the exception of October 2007, october can right lay claim to being the worst month for stock markets.

October 2007 proved to be different for HK at least because China had announced the "thru train" allowing Chinese retail investors to buy stocks in HK. With over 150 million registered investors in China each being able to exchange USD50,000 per year this announcement gave further life to a flagging market.

However, the arrangements were made by the China Banking Regulatory Commission (CBRC) to allow banks to conduct this business, and the scheme ran into bureaucratic infighting with the China Securities Regulatory Commission (CSRC) warning of dire consequences for the Chinese stock market (which was over valued) if Chinese investors were allowed to invest their money elsewhere ie HK. Finally, the scheme was suspended awaiting 'further clarification".

Back to October. This past October 2008, recorded the worst performance inall markets with HK down 22%, Japan down 24%, Korea down 23% and US down 17%. Market capitalisation fared even worst down 50% for the year as some companies disappeared completely.