Sydney, Oct 26, 2007 (ABN Newswire) - India is emerging, China has well and truly done so, and other Asian economies, outside of Japan, are still on solid growth paths. The AMP's Head of Strategy, Dr Shane Oliver says that while the sharemarket boom is maturing, some parts are not as susceptible as others. Asia, specifically Chin and India continue to offer value.
In fact Dr Oliver says both are in 'the driver's seat' and will be for some years to come. Here's his latest report: For some time we have been of the view that the global equity bull market that commenced in March 2003 has entered a more exuberant phase. But if we have entered a more exuberant phase it's natural to ask what will be the focus of this investor exuberance. Stage three of the cyclical bull market Cyclical bull markets go through three stages:
1. A recovery phase from excessive pessimism - which characterised the initial share rally in 2003;
2. An earnings driven phase where strong earnings growth drives share prices higher – this has essentially been the case since late 2003 into this year; and
3. An exuberance driven phase where share prices rise faster than earnings - as investors become increasingly optimistic pushing share valuations to extremes. The third stage can last for years as was the case in the late 1990s in the US where IT stocks became the focus.
Our assessment is that we have now entered stage three, but we are a long way from reaching the extremes that normally characterise bull market tops. Stage three is characterised by slowing profit growth, rising price to earnings (PE) multiples, rising volatility as more investors become exposed and shares start to lose some of their earnings support and increasing investor exuberance for a key investment theme (or themes) which results in a narrowing of participation in the market's advance.
The first three are now arguably evident:
• Profit growth is slowing in most regions;
• PEs are rising helped by US monetary easing – lower interest rates make shares more attractive relative to cash and hence usually result in higher PEs;
• Volatility is on the rise. This is clearly evident in the increasing severity of share market corrections.
For example, corrections in the Australian share market are becoming more severe – just 3.5% in 2004, two 8% corrections in 2005, a 12% fall last year and a 14.8% decline in July/August this year.
And after a huge rebound since mid-August it looks like share markets are now undergoing another correction, although this one should be more modest than the falls into August as the Fed continues to cut interest rates. But the big question is what will be the focus of investor exuberance this time around? The next investment mania: Every decade seems to end with some form of global investment mania that attracts investor attention in a big way. In the late 1960s/early 1970s there was a mania in mining stocks and then the "nifty fifty" in the US.
In the late 1970s there was a mania in gold. In the second half of the 1980s it was Japan. In the late 1990s it was technology stocks. Our view is that the next investment mania is likely to be focused on emerging markets and related themes. The emergence of the BRICs, and China and India in particular, is the biggest economic displacement this decade.
This has been a very positive force in the global economy, boosting growth while helping to keep inflation and interest rates down. But as is often the case, investors can end up pushing asset prices too far. So in thinking about what is the next investment mania to take hold, emerging markets, China, Asia and related plays such as commodities are ideal candidates. This is arguably already underway. While all share markets have benefited from recent US monetary easing, Asian shares have risen far quicker from the August correction.
And in part reflecting its Asian exposure the Australian share market has too, with resources leading the way. Asia now into a secular bull market versus world: Relative to global shares, Asian shares now appear to be back into a secular bull market. After booming during the "Asian miracle" years, Asian shares spent a decade spinning their wheels. The next chart shows the performance of Asian equities in absolute terms (top line) and relative to global equities (bottom line).
When the relative return line is rising, Asian shares are outperforming global shares and vice versa for falls. But while Asian shares have started to accelerate relative to global shares the ratio in the chart above is well below 1990's peaks suggesting it may have a long way to go. Asian shares now at a premium to global shares Asian share valuations are not as compelling as they were a few years ago and are in fact trading at a PE premium compared to global shares.
However, there are good reasons for believing that this is sustainable. Firstly, Asian economies are now in far better shape than was the case during the "Asian miracle" years. In contrast to the situation ten years ago: current accounts are in surplus; foreign exchange reserves are huge; foreign debt has collapsed; inflation rates are low; Asian currencies are undervalued; and corporate gearing is low.
On top of this, there has also been a big improvement in government transparency, the availability and quality of information, the prudential supervision of banks and in corporate governance. If anything, given Asia's current account surpluses & huge foreign exchange reserves macro risk has now shifted away from Asia to the US which has been highlighted by the US sub-prime crisis. This is the exact opposite of the situation a decade ago. In the second half of the 1990s, Asia was in trouble and the US was the place to be. Today it is the other way around.
In many ways the current environment is a bit like that of the early 1990s which saw a US downturn, lower US interest rates and liquidity rush into Asia, which arguably helped start off the huge out-performance of Asian shares into the mid 1990s.
Secondly, Asia offers stronger growth prospects than developed countries which should result in higher earnings growth and see them trading on a higher PE ratio. China and India in the driver's seat Of course the current run-up in Asian shares is dominated by China and India. Hong Kong is benefiting from the boom in Chinese shares and lower interest rates flowing from its $US currency peg.
There are several points to note. First, while valuations are stretched in both countries with Indian shares trading on a PE of 23 times and mainland China on a PE of 50 times, by historical standards this is not that extreme. Japanese shares peaked on a PE of 70 times in 1989 and the tech heavy NASDAQ hit a PE of 160 in 2000. Secondly, China and India offer the strongest earnings growth in Asia and so it is little wonder they trade on higher PE's compared to the rest of Asia. Finally, severe monetary tightening capable of really threatening their share markets seems a fair way off in both countries. Non-food inflation in China remains low at around 1% and inflationary pressure has started to abate in India. This means that the strength in both these countries share markets could have a way to go, notwithstanding periodic corrections.
The China/India theme is also likely to have a positive impact on the rest of Asia as it is helping to underpin intra-regional trade and attracts capital to the region. Expect Asia to out-perform over the next few years The table below provides a rough guide as to potential share market returns over the next few years.
They are based on starting point dividend yields and assume share prices rise with nominal economic growth. While actual returns are likely to be wildly different the reasonable dividend yields and stronger growth potential in Asia support the case for several years of out-performance from Asian shares (whether it becomes a mania or not). Conclusion Asian shares are likely to be relative out-performers over the next few years helped by the China/India theme, US led global monetary reflation which will help drive investment dollars into the region & their strong economies.
(Source: http://www.abnnewswire.net/press/en/43649/Australasian-Investment-Review.html)
Friday, October 26, 2007
Tuesday, October 23, 2007
PE Ratio Analysis in Stock Market
In many of my articles I talk about the PE or Price Earnings ratio, sometimes called PER in the UK. This measure is one of the most important and easiest ways to value the price of a stock. Using the PE ratio, you can make sure that you never over pay for a share and ensure that, over the long term, you will be handsomely rewarded for your pick.
So, what is the PE ratio?Although ofter quoted on web sites such as yahoo finance when you look up a stock, its simple to calculate yourself by taking the price of the stock and dividing by the earnings per share.
I like to think of the PE ratio in the following manner: if the company decided that it wanted to buy all its stocks back, the PE ratio is the number of years worth of earnings it would take. Therefor a company with a PE of 5 could pay for itself in 5 years whereas one on a PE of 50 would take 50 years. Obviously the lower the PE the better.
Why do people buy stocks on high PE ratios?The answer is usually that this high PE ratio is justified by the fact that the company is considered a ‘Growth’ company with the earnings expected to increase rapidly.
A good example of this is Google, on a PE of 45. It is expected that this company will keep growing rapidly along with its share price BUT in times of trouble, people often come to their senses and realize that such companies don’t deserve these high ratings and these types of shares often suffer the most.
Companies on low PE ratios are usually out of favor, often shunned by the masses for no good reason. Take my current favorite, RBS, it has double digit growth and makes huge amounts of money yet is on a lowly PE ratio of 7 which I consider unjustified.
The advantage of buying a ‘cheap’ stock is that in times of trouble, as they are already cheap and providing the other fundamental ratios are good, they have far less than they can fall. The price of RBS could fall by 50% but on a PE of 3.5 it would be the buy of your investing career, if Google halved I’m not sure I’d buy it on a PE of 22.5 as it could conceivably have further to fall.
The PE ratio is one of the most important ratios. I use it in both my HYP portfolio and when selecting value shares that usually go on to outperform market indices.
(Source: http://www.jargon-free.com/pe-ratio-explained/41/)
So, what is the PE ratio?Although ofter quoted on web sites such as yahoo finance when you look up a stock, its simple to calculate yourself by taking the price of the stock and dividing by the earnings per share.
I like to think of the PE ratio in the following manner: if the company decided that it wanted to buy all its stocks back, the PE ratio is the number of years worth of earnings it would take. Therefor a company with a PE of 5 could pay for itself in 5 years whereas one on a PE of 50 would take 50 years. Obviously the lower the PE the better.
Why do people buy stocks on high PE ratios?The answer is usually that this high PE ratio is justified by the fact that the company is considered a ‘Growth’ company with the earnings expected to increase rapidly.
A good example of this is Google, on a PE of 45. It is expected that this company will keep growing rapidly along with its share price BUT in times of trouble, people often come to their senses and realize that such companies don’t deserve these high ratings and these types of shares often suffer the most.
Companies on low PE ratios are usually out of favor, often shunned by the masses for no good reason. Take my current favorite, RBS, it has double digit growth and makes huge amounts of money yet is on a lowly PE ratio of 7 which I consider unjustified.
The advantage of buying a ‘cheap’ stock is that in times of trouble, as they are already cheap and providing the other fundamental ratios are good, they have far less than they can fall. The price of RBS could fall by 50% but on a PE of 3.5 it would be the buy of your investing career, if Google halved I’m not sure I’d buy it on a PE of 22.5 as it could conceivably have further to fall.
The PE ratio is one of the most important ratios. I use it in both my HYP portfolio and when selecting value shares that usually go on to outperform market indices.
(Source: http://www.jargon-free.com/pe-ratio-explained/41/)
Tuesday, October 16, 2007
Kijang Emas - Malaysia Gold Coin Investment....
Kijang Emas Gold Bullion Coins (Malaysia 999.9 Pure Gold Coins)
The Kijang Emas is Malaysia’s very own gold bullion coins. It was launched on 17 July 2001 by Bank Negara Malaysia and minted by Royal Mint of Malaysia Sdn Bhd. The kijang is the official logo of Bank Negara Malaysia.The Kijang Emas marks Malaysia as one of the countries in the world to issue its own gold bullion coins and it is distributed at 30 Maybank Branches. Minted in 999.9 to a thousand parts pure gold, the Kijang Emas offers a stable store of value with potential for capital appreciation over time. And most importantly, this gold coin is tradable at the market.
Specifications of (Malaysia 999.9 Pure Gold Coins)
The design on the obverse of each coin depicts a leaping barking deer, or kijang in Malay. The reverse features the hibiscus, the national flower of Malaysia.
(Malaysia 999.9 Pure Gold Coins) - Gold is always worth for investment
Thinking about investing? Stock Market? A house or property? Gold? Yes, gold offers secure value and is easy to invest.Gold acts as a reliable “store of value” because it fulfils the functions of money. It is portable and divisible. Its weight is a good measurement of a unit of value.
It is indestructible, relatively scarce and cannot be “manufactured”. It is easily recognisable and acceptable as a form of payment.Historically, the value of national currencies rises and falls but the value of gold remains, remarkably stable. Gold is an asset that does not depend upon governments or corporations promise to repay.
It is not directly affected by the policies in any country and it cannot be repudiated or frozen, as in the case of assets.Gold is the most liquid asset. It can be readily bought or sold 24-hours a day in one or more markets around the world. This cannot be said of most investments, including stocks of the world’s largest corporations. In addition, the trading spreads on bullion are generally narrower than the spreads on stocks and bonds (which are considered as liquid assets).Finally, it takes about the same amount of time to execute a trade in gold as is does for stocks and bonds. Whether your investment approach is conservative or aggressive, gold can play a vital role in diversifying your portfolio.Many experts urge investors to keep a portion of their total assets in gold.
A typical portfolio is invested primarily in financial assets such as stocks and bonds. Gold’s low-to-negative correlation with stocks and bonds makes it an excellent portfolio diversifier. Kijang Emas, a perfect gift for all occasions Cracking your head over what to purchase for your best friend’s wedding? A graduation? To reward staff for top performance? Anniversary? Birthday celebration? New born? Father’s Day?
right time to buy kijang emas? (Malaysia 999.9 Pure Gold Coins)The enduring value and beauty of Kijang Emas makes it the perfect gift for special occasions and as a premium item.
Kijang Emas bullion coins are available in small sizes, therefore you don’t need to be wealthy to invest in gold. In many cultures, gold serves as a family heirloom or wealth transfer vehicle passed on from generation to generation.
When is the right time to buy?Is now the right time to buy? The answer is always YES! Gold is an investment for the long run. The right time to buy Kijang Emas is when you understand what it is and what it can do for your portfolio.
Find out more at http://www.maybank2u.com.my/promotions/goldcoin.shtml
Year 20007 Gold Proce Market Forecast and Review
Introduction of the Gold Market Forecast
· After the excessive gains in H1 2006, prices have been broadly consolidating.
· Concern is now focussed on how the financial markets will cope with a slowdown in US economy and a likely weakening of the dollar.
· How will foreign creditors react to this, will they reduce their dollar holdings?
· Industrial demand for precious metals is sound and new high- tech applications should provide good ongoing demand and support for prices.
· But above all investment interest is likely to remain the bullish factor.
The bull market in Gold started to accelerate when prices rose above $460/oz in September 2005. The rally was seen across the commodities and was mainly driven by aggressive fund
buying. Between September 2005 and the end of January 2006, prices rose 25%, but after a short pause in Q1 06, the rally accelerated again. Indeed the March to May 2006 rally saw prices rise from $533/oz to $730/oz, a 37% increase. The move was spectacular, but there was little doubt that the rally had also run ahead of itself and the gains would not be sustainable. As it turned out, the speed and extent of the increase seemed to unnerve even those involved in it, which led to a sharp sell-off as funds reduced exposure across the markets. This led to a 25% correction back to $543/oz and signalled the end of a phase of the rally that had up until then been almost a one-way-bet.
If the first part of the year was a one-way bet, the second half was characterised by volatile gyrations as the market tried to consolidate. This led to an extended period of sideways trading in a wide range between $540/oz and $680/oz. The price oscillations have, however, created opportunities for all sectors of the market, with good trade and investment buying seen into the dips below $600/oz, while the rallies have provided range trading opportunities for the more speculative element of the market.
Factors driving Gold prices
- oil price
- jewellery demand
- US Central Bank Official Sales
- De-hedging
- Investment demand gains market share in India
- Political Uncertainty
- Long term investment buying
- The future markets
Conclusion
Overall the trends in the Gold market that have been influencing prices over the past few years are expected to continue. These include concerns over dollar weakness and the state of the US economy, the level of geopolitical unrest and how this could impact oil prices and the potential for investment interest to carry on growing. Out of these, the greatest concern is now focussed on how a slowdown in the US economy will affect the dollar and the mass of investments that are dollar based. With the rapid expansion in hedge funds, combined with the asset price acceleration over the past few years, the financial markets could be in for a volatile time. As such we feel the Gold will play and increasingly important part in the financial markets in the year ahead. This is especially so now that the ETF has opened the Gold market up to a much larger pool of potential investors.
Overall therefore now that the excessive gains from the March to May rally have been consolidated, it looks as though Gold prices are trending higher again. As such dips are expected to attract good buying interest from investors and trade buyers and we feel the up trend will resume. Although there is likely to be considerable resistance on the way up, we feel that prices will trade back above $700/oz again next year and may even spike over $800/oz. However for this to happen would require the dollar to weaken significantly, but an economic slowdown may be the trigger that brings that on. Over the past six years the average percentage gain from one year’s high to the next has been 19%. If this trend continues then it would mean prices reaching $868/oz. Overall we expect trading to spend most of 2007 in the $590/oz to $750/oz range, although spikes above $750/oz would not be out of the question.
Invest on gold..... start from today. To buy gold coin in Malaysia...
pls log on to www.maybank2u.com.my to find out more information on the "kijang emas" gold coin.
Monday, October 15, 2007
Malaysia Property Market Review
The Malaysian property market got off to a flying start in 2007 and all expectations were for a dramatically bumper year – however, as is often the case with markets that are so open and therefore vulnerable to international exposure, the negative economic situation in the US has had a somewhat broad effect on the Malaysian economy this year and this has translated into the real estate sector in the form of lower than expected sales volumes.
But investors need not concern themselves – the fundamentals remain the same and they remain exceptionally positive in our view and what’s more, the Malaysian property market has been boosted this week by reports of significant Middle Eastern investment commitment and going forward, the property sector is expected to be one of the main areas of the economy to benefit from the forthcoming 2008 budget according to Forbes.com.
A Middle Eastern consortium led by the Qatar based General Insurance and Reinsurance company Gulf Petroleum Ltd (Qatar) issued an announcement over the weekend that it will commit over 1.44 billion US dollars to the energy, Islamic banking and Malaysian property sectors with a number of currently open agreements expected to be executed as early as tomorrow in the Malaysian capital city.
At the meeting on Monday it is also expected that Sheikh Nasser, who is the Qatar General Insurance chairman, will meet the Malaysian Prime Minister Abdullah Ahmad Badawi to cement their nation’s close ties suggesting this investment commitment is merely the start of future developments and joint ventures.
Naturally this level of commitment is sufficiently substantial and it means that the Qatar consortium will require a physical presence in the region and it is expected they will establish operations in Kuala Lumpur.
In the other news out this week which bodes exceptionally well for the ongoing success of the Malaysian property market, Forbes.com has reported that the 2008 budget in Malaysia will likely see many positive changes including either a reduction in personal income taxes or an increase in tax relief measures such as an increase in the minimum level of taxable income for example and that this will serve as a booster to domestic activity in the property sector.
Additionally, specific measures are expected to be implemented to directly promote activity in the Malaysian real estate market such as introducing an exemption on stamp duties for residential property, tax relief for housing loans and larger withdrawals from provident fund savings to purchase property in Malaysia.
Based on Amberlamb, the lower than expected sales volumes so far in 2007 everything in the Malaysian property garden is still rosy.
p/s: Malaysia has different types of properties such as service apartment, condominium, link-storey house, low cost flat, semidetanched and bungalow.
(Source: http://www.amberlamb.com/index.php/a/n/00260-malaysian-property-market-boosted/)
But investors need not concern themselves – the fundamentals remain the same and they remain exceptionally positive in our view and what’s more, the Malaysian property market has been boosted this week by reports of significant Middle Eastern investment commitment and going forward, the property sector is expected to be one of the main areas of the economy to benefit from the forthcoming 2008 budget according to Forbes.com.
A Middle Eastern consortium led by the Qatar based General Insurance and Reinsurance company Gulf Petroleum Ltd (Qatar) issued an announcement over the weekend that it will commit over 1.44 billion US dollars to the energy, Islamic banking and Malaysian property sectors with a number of currently open agreements expected to be executed as early as tomorrow in the Malaysian capital city.
At the meeting on Monday it is also expected that Sheikh Nasser, who is the Qatar General Insurance chairman, will meet the Malaysian Prime Minister Abdullah Ahmad Badawi to cement their nation’s close ties suggesting this investment commitment is merely the start of future developments and joint ventures.
Naturally this level of commitment is sufficiently substantial and it means that the Qatar consortium will require a physical presence in the region and it is expected they will establish operations in Kuala Lumpur.
In the other news out this week which bodes exceptionally well for the ongoing success of the Malaysian property market, Forbes.com has reported that the 2008 budget in Malaysia will likely see many positive changes including either a reduction in personal income taxes or an increase in tax relief measures such as an increase in the minimum level of taxable income for example and that this will serve as a booster to domestic activity in the property sector.
Additionally, specific measures are expected to be implemented to directly promote activity in the Malaysian real estate market such as introducing an exemption on stamp duties for residential property, tax relief for housing loans and larger withdrawals from provident fund savings to purchase property in Malaysia.
Based on Amberlamb, the lower than expected sales volumes so far in 2007 everything in the Malaysian property garden is still rosy.
p/s: Malaysia has different types of properties such as service apartment, condominium, link-storey house, low cost flat, semidetanched and bungalow.
(Source: http://www.amberlamb.com/index.php/a/n/00260-malaysian-property-market-boosted/)
Malaysia Election? Time to wait for Malaysia Bull Stock Market?
From Thomson Financial News, it stated that Citigroup (NYSE:C) said Monday it expects Malaysia to call an early election and predicted that its stock market will rally if that happens.
Economist Chua Hak Bin said 'Prime Minister (Abdullah Ahmad) Badawi will likely call early elections, possibly by December this year or early next year, to capitalize on improving economic sentiment and recent by-election successes,''
From the historical analysis, the KLCI (Kuala Lumpur Composite Index) has risen an average 6.2 percent in the 3 months leading up to an election, and gained by the same margin in the 3 months after elections.
Another good point is Malaysia's economic performance under our "honored" Abdullah Badawi's stewardship has been "good all this while,' GDP growth with average 6% and inflation well contained at 3%, the analysts forecast pegging Malaysia ringgit at 3.30 ringgit per dollar by end 2008.
What is your finding on this?
Economist Chua Hak Bin said 'Prime Minister (Abdullah Ahmad) Badawi will likely call early elections, possibly by December this year or early next year, to capitalize on improving economic sentiment and recent by-election successes,''
From the historical analysis, the KLCI (Kuala Lumpur Composite Index) has risen an average 6.2 percent in the 3 months leading up to an election, and gained by the same margin in the 3 months after elections.
Another good point is Malaysia's economic performance under our "honored" Abdullah Badawi's stewardship has been "good all this while,' GDP growth with average 6% and inflation well contained at 3%, the analysts forecast pegging Malaysia ringgit at 3.30 ringgit per dollar by end 2008.
What is your finding on this?
Are you ready? Bursa Malaysia's Currently is rising.
Bursa Malaysia Bhd. said third-quarter net profit more than doubled year-to-year because of better performance in the stock-derivative markets.
Trading volumes accelerated this year as Asian stock markets hit records or multiyear highs, and the company expects the stock and derivatives markets to continue to be resilient and sustain its financial performance in the fourth quarter.
"For the rest of the year, we will focus on rolling out a number of initiatives across the market," Bursa Malaysia Chief Executive Yusli Mohamed Yusoff said.
For the third quarter, net profit surged to 56 million ringgit ($16.6 million) from 25.1 million ringgit, while revenue rose 80% to 122.3 million ringgit, the Malaysian stock-exchange operator said.
The velocity -- the rate at which shares changed hands -- in the stock market was 50% in the third quarter, up from 27% a year earlier, Bursa Malaysia said. The daily average trading value was 2.1 billion ringgit compared with 800 million ringgit.
The total number of derivatives contracts traded in the third quarter was 1.6 million, compared with 1.2 million, resulting in a 17% year-to-year increase in trading revenue from the derivatives market.
For the nine months ended Sept. 30, net profit rose to 191.1 million ringgit, from 79.5 million ringgit a year earlier, while revenue climbed to 388.8 million ringgit from 217.2 million ringgit.
This puts Bursa Malaysia on track to meet Thomson Financial's consensus 2007 net-profit estimate of 245.83 million ringgit, analysts said.
Daily average trading value in the stock market reached 2.5 billion ringgit for the nine months, compared with one billion ringgit the year earlier, Bursa Malaysia said.
Since the end of last year, Bursa Malaysia's shares have risen 64% as of Thursday, outperforming a 26% gain in Kuala Lumpur Stock Exchange's benchmark composite index in the same period.
(Source: WSJ News: 12 Oct, 2007)
Trading volumes accelerated this year as Asian stock markets hit records or multiyear highs, and the company expects the stock and derivatives markets to continue to be resilient and sustain its financial performance in the fourth quarter.
"For the rest of the year, we will focus on rolling out a number of initiatives across the market," Bursa Malaysia Chief Executive Yusli Mohamed Yusoff said.
For the third quarter, net profit surged to 56 million ringgit ($16.6 million) from 25.1 million ringgit, while revenue rose 80% to 122.3 million ringgit, the Malaysian stock-exchange operator said.
The velocity -- the rate at which shares changed hands -- in the stock market was 50% in the third quarter, up from 27% a year earlier, Bursa Malaysia said. The daily average trading value was 2.1 billion ringgit compared with 800 million ringgit.
The total number of derivatives contracts traded in the third quarter was 1.6 million, compared with 1.2 million, resulting in a 17% year-to-year increase in trading revenue from the derivatives market.
For the nine months ended Sept. 30, net profit rose to 191.1 million ringgit, from 79.5 million ringgit a year earlier, while revenue climbed to 388.8 million ringgit from 217.2 million ringgit.
This puts Bursa Malaysia on track to meet Thomson Financial's consensus 2007 net-profit estimate of 245.83 million ringgit, analysts said.
Daily average trading value in the stock market reached 2.5 billion ringgit for the nine months, compared with one billion ringgit the year earlier, Bursa Malaysia said.
Since the end of last year, Bursa Malaysia's shares have risen 64% as of Thursday, outperforming a 26% gain in Kuala Lumpur Stock Exchange's benchmark composite index in the same period.
(Source: WSJ News: 12 Oct, 2007)
FDI in China Grow Tremendously! All the China People are Rich!
Foreign direct investment (FDI) in China increased by 10.87% to reach US$47.2 billion during the first nine months of the year, compared with the same period last year, according to a report from the Ministry of Commerce.
During the first three quarters of 2007, about 28,206 foreign-funded companies were founded, which is 6.05% less than the amount founded in the whole of 2006.
FDI in China declined by 2.36% to US$5.27 during the month of September, and 3,358 foreign-funded companies were approved to be established in the same period, decreasing by 11.49%.
Many foreign countries and regions have turned their resources towards investment in China. Amongst all the countries, Hong Kong, British Virgin Islands, Republic of Korea, Japan, Singapore, U.S., Cayman Islands, Samoa, Taiwan and Mauritius are some of the countries that are most active in investments in China.
During the first three quarters, investment from the above mentioned countries accounted 86.73% of the total FDI in China. In addition, investment from the U.S. fell by 2.88% and the amount of foreign-funded companies founded by the U.S. declined by 16.41%.
For more info, please log on to: China Knowledge Online (http://www.chinaknowledge.com)
During the first three quarters of 2007, about 28,206 foreign-funded companies were founded, which is 6.05% less than the amount founded in the whole of 2006.
FDI in China declined by 2.36% to US$5.27 during the month of September, and 3,358 foreign-funded companies were approved to be established in the same period, decreasing by 11.49%.
Many foreign countries and regions have turned their resources towards investment in China. Amongst all the countries, Hong Kong, British Virgin Islands, Republic of Korea, Japan, Singapore, U.S., Cayman Islands, Samoa, Taiwan and Mauritius are some of the countries that are most active in investments in China.
During the first three quarters, investment from the above mentioned countries accounted 86.73% of the total FDI in China. In addition, investment from the U.S. fell by 2.88% and the amount of foreign-funded companies founded by the U.S. declined by 16.41%.
For more info, please log on to: China Knowledge Online (http://www.chinaknowledge.com)
Wednesday, October 10, 2007
China Bull Market Pauses as Pork Prices Soar?
In China's big cities, maids are going back to work and casting their day-trading dreams to the wind. The number of new accounts for trading Chinese A-shares (the most basic stock available to retail traders in the Middle Kingdom) is dropping far from recent record highs.
But from their offices on Capitol Hill they cannot feel the impact of China's rampant growth-it has consistently risen more than 11% per year-on the average consumer. While we complain about soaring fuel prices, China has caps on gasoline prices. Pork, however, is a different matter.
Notice that the market has wobbled since late May. This probably has the most significant impact on new account openings, since the strong springtime trend was what lured so many into their first share purchases. What this tells us is that the Chinese retail shareholder is fickle.
The lesson for us waiguoren ("foreigners") scoping out the Shanghai scene from afar is that China's exchange world still operates according to different principles than western markets. Bulls abound but they don't always feel like charging. Since China lacks a sophisticated derivatives market and short selling, investors either bet long or not at all.
Are you after smart money or just fast money? I would bet that few Chinese investors would be able to answer that question quickly, if they can even differentiate. In a land where a decade is often the difference between an oxcart and an Audi, more wild swings can be expected, but Chinese investors have certainly developed a taste for the market's meat.
By Sam Hopkins (http://www.wealthdaily.com/articles/pork-china-global+investing/804)
Despite all the Wall Street hubbub about the Dow Jones Industrial Average hitting 14,000, the Shanghai Stock Exchange and its progress so far this year absolutely dwarfs the Dow and the more representative S&P 500 index
.
.But these exchange movements do not take place in a vacuum. The tension between economic growth and price fluctuation is being felt all over the world these days in a big way. Perhaps nowhere more than China, where a lack of elasticity in the local currency is putting pressure on local consumers as US legislators gripe for different reasons.Legislators from both the Democratic and Republican parties contend that manipulation of the yuan, or renminbi ("people's currency") has assisted the loss of over three million American manufacturing jobs to China since 2001.
But from their offices on Capitol Hill they cannot feel the impact of China's rampant growth-it has consistently risen more than 11% per year-on the average consumer. While we complain about soaring fuel prices, China has caps on gasoline prices. Pork, however, is a different matter.
The wholesale price of pork rose by nearly 75% in June over the year before, the Ministry of Agriculture announced this Monday. That means that the majority of Chinese who not drive and do not use commoditized goods like metals and fuel are still getting thrown into the fire of sharp market movements.Last year, record low prices led to increased slaughtering of young piglets and sows in order to depress supply.
Then a contagion called blue-ear pig disease spread throughout the rural Yangtze River Valley this year, killing 27.5% of the swine that contracted it.Such food price surges have resulted in corn tortilla riots in Mexico, where biofuel competes with bellies for the power kernels can provide. In China, the survivors of Mao's disastrous Great Leap Forward and other periods of famine are surely terrified to go back to such scarcity, and a generation raised on KFC and internet bars just won't accept state-mandated "sacrifice.
"The Beijing government's National Development and Reform Commission fears China's own potential for food riots, urging local authorities this Monday to ban the establishment of new corn processing facilities to ease demand. Rice, wheat, and corn prices have all gone up by about 8% so far this year over 2006 levels.
As 300,000 new trading accounts were opened per day this spring during the peak of the neophyte frenzy, China's staggering 40% household savings rate continued to tick downward (though hopefully not all the way to the American nadir of -1%).
It is important to get China's new export-fueled wealth circulating, but the market is not for the faint-hearted. Take another look at the Shanghai Stock Exchange, this time by itself:
Notice that the market has wobbled since late May. This probably has the most significant impact on new account openings, since the strong springtime trend was what lured so many into their first share purchases. What this tells us is that the Chinese retail shareholder is fickle.
The lesson for us waiguoren ("foreigners") scoping out the Shanghai scene from afar is that China's exchange world still operates according to different principles than western markets. Bulls abound but they don't always feel like charging. Since China lacks a sophisticated derivatives market and short selling, investors either bet long or not at all.
Are you after smart money or just fast money? I would bet that few Chinese investors would be able to answer that question quickly, if they can even differentiate. In a land where a decade is often the difference between an oxcart and an Audi, more wild swings can be expected, but Chinese investors have certainly developed a taste for the market's meat.
By Sam Hopkins (http://www.wealthdaily.com/articles/pork-china-global+investing/804)
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