Saturday, 20 June 2009
A frothy market in China makes both developers and investors interested in real estate nervous. But with overseas property markets often quite undervalued, Chinese investors are heading offshore to take advantage of fire sale prices.
In our report “Time for a Pause” dated 8 June, we stated the FSSTI was likely to correct after meeting resistance at the 38% retracement level at near 2400. We also said the index was extremely overbought.
We have now seen the pullback, not just for the FSSTI but also for the Hang Seng Index, which we had also highlighted. Both indices show corrective structures- patterns that indicate that the move is a regular pullback and not a trend reversal. We also believe that Thursday*s price action marked the tail-end of the correction for both indices or the first leg of the corrective structure.
The attached chart shows the FSSTI correcting towards the apex of a prior wave iv move in a 3-legged zigzag structure. We believe the support will hold at between 2190 and 2237. If the FSSTI rises past 2260, there is scope for a minimum 62% retracement of the pullback. We had recommended investors take profit on some stocks such as City Dev, Wing Tai, Straits Asia Resources, SGX and First Resources. We recommend a re-entry on these stocks.
Fragile state blamed on shoddy construction and embezzlement of funds
Beauty China’s joint auditors Grant Thornton and HLB Hodgson Impey Cheng steered clear of expressing an opinion on the group’s financial statements for the year ended Dec 31, 2008, after they were unable to verify the recoverability of outstanding trade receivables and found significant uncertainties facing its going-concern status.
Regulators yesterday lifted a nine-month ban on Chinese initial public stock offerings after markets rebounded in recent months from the plunge that prompted the moratorium.
Shares of Brilliance China Automotive Holdings, which has a joint venture with Bayerische Motoren Werke, fell 8.93 per cent yesterday after the government told state media it had no plans to buy BMW cars for official use.
The rules will allow approved industrial users to buy electricity directly from power generators and require power transmission firms to clearly lay out their transmission charges.
In spite being a Communist bureaucrat in his entire political career, Zhao demonstrated a clear and concise understanding of the inherent weaknesses of a one-party system. In comparison, Prime Minister Lee recently proclaimed that a one-party state is the only viable political system for Singapore.
Exactly one year ago, President Hu Jintao engaged in his first online chat with the mainland’s netizens and in a speech the same day urged officials “to pay attention to the internet and find new ways of leading public opinion”.
The mainland says it made an operating profit of 1 billion yuan (HK$1.13 billion) hosting the Beijing Olympics - but the figure excludes the construction cost for the venues, a long-awaited National Audit Office report said yesterday.
Thursday, 18 June 2009
Hotel waitress Deng Yujiao has walked out of a courtroom in Hubei a free woman after killing an official, but she is paying a price and so is the country’s rule of law, warned mainland lawyers and rights groups.
Shanghai formally opened its doors to outsiders yesterday, releasing details of new rules that allow them to become permanent residents.
Wednesday, 17 June 2009
China-based Combine Will International Holdings, which is listed on the Singapore Exchange (SGX) mainboard, is planning to spin off its moulds and tooling segment through a listing on the Korean Securities Dealers Automated Quotations (Kosdaq).
The reason is simple. No matter how much neighbouring governments might despise and fear the loathsome North Korean regime, no one wants to pick up the economic bill if it collapses, forcing an early reunification with South Korea.
Pay no attention to that 35 percent gain in the past three months – this is still every bit of a bear market, no matter what traditional definitions say.
Tuesday, 16 June 2009
Risk aversion has eased, while inventory rebuilding and new business spending bode well for an economic recovery that could provide a dramatic surge in corporate profits by year end, Goldman Sachs senior investment strategist Abby Joseph Cohen said Monday.
In sum, we believe the recent rally of commodity prices is partly a correction of overshooting, helped partially by updated economic data, but most importantly, a result from excess liquidity that has weighed on the dollar and brewed expectation for inflation. Whether or not the rally will persist depends on whether central banks will continue the monetary largess or tighten the tap.
Monday, 15 June 2009
Mainboard-listed Asia Tiger Group says that its investment in Think Environmental Limited, a UK-based waste management company, will begin operation of a waste management site this July. The site will process up to 75,000 tonnes of commercial waste annually and is expected to generate revenues of about $10.7 million a year.
Porsche SE said China may pass Germany as its second-biggest market within three years on rising wages and demand for the $260,000 Panamera sports sedan.
China may become the world’s biggest luxury market in some years but cultural challenges to win customers’ hearts for certain types of products remain, industry executives said. Champagne house Taittinger said it could make high-end sparkling wine in China but the market was not ready for it yet, while Lamborghini said the country’s tradition of luxury chauffeurs, bigger than sports driving, made expansion there a challenge.
The view for the week ahead therefore remains the same as it’s been for many weeks now - liquidity and momentum are in the bulls’ favour, but investors should stay alert for signs that could cause the trend to bend because there are actually many if you look hard enough.
Recent bond sales easily raised billions for cities in eastern provinces such as Anhui and Zhejiang. Repaying will be harder.