BEIJING (AP) — China will tighten monetary controls next year to curb rapid credit growth, said a deputy central bank governor quoted Monday by a government newspaper.
The communist government is trying to cool an investment boom that it worries could ignite financial problems and rein in an inflation surge that saw politically sensitive consumer prices rise in October at their fastest monthly rate in a decade.
"We need to strengthen macro controls, limit the total volume of money and credit and adjust the credit structure," the China Securities Journal quoted Liu Shiyu as saying at a conference on China's 2008 economic outlook.
The remarks sparked jitters among investors and contributed to declines in the Shanghai and Hong Kong stock markets.
State media reported earlier that Communist Party leaders decided this month to shift monetary policy "from prudent to tight" in 2008 to prevent overheating and a surge in inflation.
Chinese leaders want rapid economic growth to reduce poverty but worry that runaway spending on factories, real estate and other assets could cause a debt crisis if ill-conceived projects fail. They are trying to channel more money into renewable energy and other cleaner industries and into building housing for the poor.
China's economy is expected to grow by 11.5 percent this year and by more than 10 percent in 2008. A sharp rise in food costs has fed a spike in inflation that saw consumer prices rise by 6.9 percent in November over the same month last year, the highest rate since 1996.
Regulators will rely on "window guidance," or orders to lenders, and direct institutions to tighten credit management and control credit growth, Liu said.
The government also will increase channels for companies and individuals to get access to foreign investment and money from other non-bank sources, according to the report.
S'pore's love doctor gets paid to correct sex mistakes as couples do 'live demo' for him. Jeanmarie Tan
Dec 18, 2007
(Dec 16) HE may be a doctor.
But even then, would you allow him to go into your bedroom and watch you have sex?
Well, some would, it seems.
And pay good money for it too.
Their hope: That he can help them save their crumbling marriage.
Several local couples in their late 30s and 40s have engaged homegrown sex guru Wei Siang Yu to do so.
Dr Wei (L), popularly known as Dr Love, says he has sat in the same room with eight couples in the past two years while they had sex.
They pay 'a couple of thousands' for five or so sessions which could stretch over three months.
One of these sessions includes Dr Wei visiting their homes, where the couples give him a 'live demo' so that he can correct their mistakes and pinpoint their problems.
Dr Wei, who attended medical school at Melbourne's Monash University, gets many requests from couples who don't think three's a crowd - some even from Malaysia and Indonesia. But he has to turn them down because of his busy schedule.
And he said he can sift out genuine couples in need of help from those who simply want to indulge their kinky fantasies.
DESPERATE
Still, his methods are unusual and can raise eyebrows.
Dr Wei, 38, who is also chief editor of the Love Airways sex magazine, and has his own radio and TV show, spoke to The New Paper on Sunday from his Playroom sex-counselling centre on Seah Street.
'I must make sure it's a case that's really super desperate and there's nobody else who's able to help them,' he said. 'Only then will I do it.'
But is it necessary and ethical for a doctor to do this? Doesn't it smack of voyeurism?
Dr Wei countered cautiously: 'Yes, it's a very difficult and sensitive issue.
'That's why I deal with only those whom I know have very serious, real problems - to the point where they keep begging you so many times and actually drop tears (over their sex lives).'
The couples were all on the brink of divorce because of years of bad sex - 'no ejaculation, no orgasm, no feeling, no communication'.
They were either not keen to try, or had already given up on, the 'normal medical system' - seeing GPs, counsellors, urologists and gynaecologists.
Still, he is aware of the potential problems - which was evident by his reaction when we asked him for an interview for this article. He was initially reluctant, as he was concerned it may give his detractors an excuse to accuse him of 'encouraging couples to be naked in front of doctors'.
But he insisted that he's only trying to help his patients, for most of whom, it's their 'last resort'.
The president of the Singapore Medical Association, DrWong Chiang Yin, said that although Dr Wei's methods 'sound unusual', it's 'not fair' for the organisation to comment as its committee members aren't 'experts' in the area of sexual health.
Dr Wong said: 'If he claims his patients gave consent, then it may not violate the ethical code.'
The Singapore Medical Council declined to comment as it usually doesn't look into practices of individual doctors unless a complaint has been lodged.
However, a veteran gynaecologist, Dr Atputharajah Vytialingam, who has counselled hundreds of couples with sexual problems, feels there is 'no necessity' to watch them have sex.
He said: 'I'm surprised because even sex clinics in the US don't do such things - unless it's for research purposes. It's definitely not part of accepted practice.
'Even if a doctor gets the patient's consent, he is in a position of trust and power, so there's always possibility of abuse - especially if the patients are so desperate that they'll do things they won't normally do.
'So he has to figure out how far he can go and set his own boundaries.'
But what do the couples themselves say?
When we asked to speak to them, Dr Wei said they have completed their sessions and are 'not media-friendly'.
However, he said they need not be self-conscious or conservative when they do the deed with him around.
'The majority were really relaxed, enthusiastic and open (in showing me their problems). Maybe because they think I'm a friendly, non-judgmental doctor and they are comfortable with me. They take me almost like a mirror to give them feedback.'
Usually, one sex session is enough for Dr Wei to 'get the picture'.
He admits that watching couples having sex 'isn't the most comfortable position to be in', and he does it 'almost like a scientist'.
'I take an objective, professional approach. I'm there solving problems, looking at the faces, expressions, movements and body parts.'
With one couple, he managed to diagnose that the woman suffered from hypothyroidism, which caused her to feel cold all the time and unable to have sex.
He recalled: 'Actually, she doesn't want to be naked, but she doesn't know (about her condition). And the aircon made their bedroom even colder than winter!'
In another case, he identified genital warts around the woman's vagina, and proceeded to give the couple a tutorial about sexually-transmitted diseases.
And because jet-setting Dr Wei is in Singapore for only two or three days every week and doesn't have time to follow up on the cases, he has a team of local doctors who take over.
UNUSUAL
He has found cases of childhood sexual abuse, androgen problems and vaginismus or menopause and has referred them to psychiatrists, urologists or gynaecologists.
'My role is to create a multi-disciplinary, evidence-based approach for couples,' he said. 'I'm able to use my experience, and their openness to communicate with me, to understand the case from inside out.'
Dr Wei may be unusual in adopting such an approach, but he is not the only one getting such requests.
Even non-medical sex therapists aren't spared.
Tantra coach and founder of Tantrapath Christina Low, 36, said that in the last three months, about 10 couples have tried to make appointments with her via e-mail or phone, asking her to meet them at a hotel and teach them tantric sex.
She said: 'They think if a teacher is around, she can bring them to a higher level - whether it is different techniques or positions - and they can have better sex.'
She always says no to such requests.
'I find it very strange, and it's not necessary,' she said.
'I want my clients to eventually be the witness to their own lovemaking, that they become so good that they don't need any teacher.'
During her private sessions, couples are clothed.
Even when the men are taught how to find their partner's G-spot.
The women then remove their underwear but are covered by a sheet.
American Bill M has been attending Ms Low's classes with his Singaporean girlfriend for two months, and believes their sex lives can be improved without any 'show-and-tell'.
The 43-year-old finance manager enjoys tantric exercises because they are 'sensual yet wholesome', but doesn't want sex to become 'artificial, exhibitionistic and no longer sacred'.
Another couple who took Ms Low's coaching is MrDec K and his wife, who have a 3-year-old daughter.
The 36-year-old manager said they went through 'a rough patch' which caused them to find sex 'discomforting', and are currently trying to 'reignite the flame'.
They have gone for counselling and consulted a gynaecologist for their problems, but the marriage hasn't deteriorated to the point where drastic measures need to be taken.
He said: 'It's a bit extreme, but to each his own. It doesn't fit what I expect or can accept, but if it's done in a professional manner, I don't see anything wrong with it.'
ASSURANCES have been given that Air China will not block a tie-up between China Eastern Airlines, Singapore Airlines (SIA) and Singapore's Temasek Holdings. Karamjit Kaur
Tue, Dec 18, 2007 The Straits Times
ASSURANCES have been given that Air China will not block a tie-up between China Eastern Airlines, Singapore Airlines (SIA) and Singapore's Temasek Holdings. Setting the record straight, China Eastern chairman, Mr Li Fenghua, told The Straits Times he was informed by the Chinese government just last week that state-owned Air China promised not to stand in the way of the partnership.
This was after the government, which supports SIA's and Temasek's bid for a 24 per cent stake in the Shanghai-based carrier, instructed Air China to back off.
Mr Li made his comments during a one-day stop in Singapore, as part of a roadshow to investors ahead of a shareholders' meeting on Jan 8 to vote on the deal. With the biggest potential hurdle out of the way, he is confident other minority stakeholders will support the marriage.
The roadshow in Hong Kong, Singapore and cities in mainland China is to explain to investors several key things, Mr Li said.
First, contrary to what some may think, there is no other higher offer on the table, and it is 'highly unlikely' that a new offer will come before the Jan 8 meeting.
Second, if the deal with SIA and Temasek falls through, share prices - which have risen 80 per cent since the tie-up was announced - 'will tumble', he said.
'From the meetings I have had with investors so far, I am confident they now understand what is at stake here and will bless the deal,' added Mr Li.
China Eastern is 57 per cent-owned by parent CEA Holdings, which needs just 9 per cent more to hit the 66 per cent threshold required for the deal to be successfully voted through.
Although the tie-up is supported by the Chinese government, there is speculation that Air China's parent, China National Aviation Corp, will try to block the deal, which has created some unease among shareholders.
Yesterday, Hong Kong-listed China Eastern shares fell 6.39 per cent to HK$6.30.
SIA and Temasek's joint bid of HK$7.2 billion (S$1.33 billion) prices the airline's shares at HK$3.80 each.
Although China Eastern had received higher offers from other airlines before the deal with SIA was sealed, management chose to go with the 'best-run airline in the world', Mr Li said.
'This is not just a capital injection. The significance of the tie-up lies more in the introduction of best practices and improving our product and service levels.'
This is why the tie-up involves exchange of staff, he said. SIA will send 12 people to China Eastern, which will likewise attach its own staff to the Singapore carrier.
SIA is fully committed to the deal, which will give it important access to the fast-growing China aviation market, the airline's divisional vice-president for planning, Mr Michael Chan, said during the meeting with investors yesterday.
China Eastern, which expects to return to profit this year after two years of losses, has big expansion plans. The airline currently has a fleet of just over 200 planes operating more than 500 mainly domestic routes, but plans to lift its fleet size to 323 by 2010, Mr Li said.
BEIJING - CHINA'S advantages as a low-cost labour market could be eroded by mid-century because of its rapidly ageing population, state media reported, citing the China National Committee on Ageing. China has six people in the workforce for every retiree, but that ratio could narrow to 2:1 between 2030 and 2050, according to a committee population survey, its first since 2000.
'We might encounter the heaviest burden, especially after 2030, when the demographic dividend is set to end,' the China Daily on Tuesday quoted Mr Yan Qingchun, deputy director of the National Committee on Ageing, as saying.
'With fewer people of working age and more pressure in supporting the elderly, the economy will suffer if productivity sees no major progress,' Mr Yan said.
China's ageing population is growing at 3.2 per cent every year, five times the total population growth, according to the committee's figures. The population imbalance is also exacerbated by strict family planning policies that limit most urban families to one child.
China is already home to more than half the old people in Asia and by 2050 its elderly are expected to exceed 400 million.
The greying population is also expected to put a huge financial strain on China's health care system and other support services.
Across the vast countryside, more than half of the elderly did not have any medical insurance and fewer than 5 per cent received pensions, the report said. -- REUTERS
MARKET TALK: STX Pan Ocean Korea/Singapore Arbitrage Soon - CS
2007/12/18
0245 GMT [Dow Jones] Investors may be able to arbitrage STX Pan Ocean''s Singapore-listed (V33.SG) and Korean-listed (028670.SE) shares soon, but it''s not clear how much upside the move would bring for the Singapore-listed shares, says Credit Suisse. "Fungibility could happen as soon as early 2008," broker says in note; move will allow investors to buy cheaper Singapore-listed shares and sell them at higher price in Korea, should mean gap between two narrows. But Credit Suisse adds, "while the discount gap between the Singapore-listed and Korea-listed shares is likely to narrow, we are uncertain of the impact on Singapore-listed shares, noting that the Korea-listed shares have been generally trending down for the past three weeks." Singapore-listed shares currently down 0.8% at S$2.62; Korean-listed shares +1.2% at KRW3,000 (S$4.69). (KIG)
Emerging problems in major economies cloud outlook
(SHANGHAI, China) Asia's dynamic economic growth is expected to slow modestly next year as its biggest economies grapple with emerging problems, from inflation in China to appreciating currencies in India and Japan.
The expected slowdown in the US economy - a vital export market - and higher oil prices also cloud Asia's outlook.
In China, worries persist that the economy is overheating. Inflation hit a peak of 6.5 per cent this year, while real estate and stock prices also have soared, posing a challenge to policymakers whose options are limited by China's continued controls on the currency and capital markets.
'It's a delicate balance,' said Nick Lardy of the Peterson Institute, a Washington think-tank.
'They want growth, but they don't want inflation. At the same time they might cut investment too much,' he added.
Still, despite the uncertainties, China looks set for yet another year of double-digit expansion, with both the World Bank and Asian Development Bank forecasting gross domestic product growth at 10.8 per cent in 2008, down from the 11 per cent-plus growth anticipated for this year.
In India, a record surge in foreign investment has resulted in a sharp appreciation of the rupee, which is already hurting exports, especially earnings of the highly profitable outsourcing industry.
The country's central bank has repeatedly tightened its monetary policy and somewhat succeeded in reversing a spike in inflation earlier this year.
But its measures have sapped the momentum of growth as new investments and sales in areas such as automobiles have slowed with higher lending rates.
Analysts expect the Indian economy to grow 9 per cent this year for the fourth straight year and to slow slightly to between 8 per cent and 8.5 per cent in 2008.
In Japan, Asia's biggest economy, the major concerns are about a slowdown in US growth and a stronger yen, which erodes the foreign-earned income of the country's exporters.
Direct exposure of Japanese financial organisations to US mortgage market troubles is expected to be limited.
But uncertainty over a possible fallout has weighed on Tokyo share prices and dampened Japanese investor sentiment.
The International Monetary Fund is forecasting that Japan will grow 1.7 per cent in 2008, down from an estimated 2.0 per cent this year. -- AP
China Considers Extra Lending Curbs to Cool Growth
Dec. 18 (Bloomberg) -- China is studying extra lending curbs to prevent overheating in the world's fastest-growing major economy, according to a central bank official.
The People's Bank of China is considering requiring a larger proportion of new deposits to be set aside as reserves, said a central bank official who declined to be named because he's not authorized to speak publicly. It's also studying larger reserve requirements for bigger banks with faster loan growth, he said.
Targeted restrictions would restrain lending growth without hurting cash flow and profits at banks that haven't been taking on as many new deposits. The central bank raised the reserve ratio this month to 14.5 percent, the highest in at least 20 years, as excess liquidity fuels inflation and asset bubbles.
"A higher reserve ratio on new deposits will directly curb banks' ability to use the money to increase lending," said Wang Qian, an economist at JPMorgan Chase & Co. in Hong Kong. "The central bank is likely to tighten loan growth more aggressively next year."
The central bank official said so-called "differentiated" reserve rules could be a short-term tool for cooling loan growth. For example, the requirement for new deposits could be 0.5 percentage point to 1.5 percentage points higher than for existing deposits.
Crackdown on Loans
China's crackdown on bank lending this quarter is to curb money-supply growth driven by trade surpluses that pumped a record $238 billion into the financial system in the first 11 months. The government says economic overheating and inflation are the key risks for 2008.
Fixed-asset investment climbed 26.8 percent in the first 11 months of 2007, raising the risk of excess capacity should a global slowdown trim demand. Inflation last month surged to the fastest pace since December 1996.
House prices in 70 major cities climbed 10.5 percent in November from a year earlier and the benchmark CSI 300 Index of stocks soared more than 150 percent in the past 12 months.
China's banking regulator last month told lenders to limit loan growth that had already topped its target ceiling of 15 percent this year.
"More targeted increases in reserve ratios may help to rein in lending by bigger banks without hurting smaller ones," said Sun Mingchun, an economist at Lehman Brothers Holdings Inc. in Hong Kong. "The trade surplus is likely to keep growing next year, making the central bank's job even tougher."
Bank of Communications Ltd., the smallest among China's top five state-owned banks, is among the lenders worst-affected by increases in reserve requirements because of its high proportion of loan assets, according to a Dec. 10 report by UBS AG.
Foreign Lenders
Reserves parked with the central bank only earn interest of 1.89 percent, compared with a benchmark one-year deposit rate of 3.87 percent and a lending rate of 7.29 percent.
Local and foreign lenders were asked to strictly control lending for the rest of the year at three emergency meetings from Nov. 8 to 15, Xinhua Finance News reported last month.
Short-term deposit rates should increase by larger amounts than long-term rates, the central bank official said. The central bank should also boost deposit rates at a faster pace than lending rates to curb banks' margins. The People's Bank of China did that in two of this year's five rate increases.
The central bank is increasing the requirement by 1 percentage point, the most in four years, from Dec. 25. That will freeze about 380 billion yuan ($51 billion) in the banking system, compared with about 3.6 trillion yuan of new loans in the first 11 months of this year.
BEIJING, Dec 18 (Reuters) - China's state firms must carefully manage their books or face a risk of bankruptcy as the government ratchets up its economic tightening, the head of the country's state asset watchdog said on Tuesday.
Companies overly reliant on credit to fund their operations will be squeezed and some are already teetering on the edge of trouble, said Li Rongrong, chairman of the State-owned Assets Supervision and Administration Commission, or SASAC.
China has intensified its year-end ritual of credit tightening in the past two months, leaning heavily on banks to freeze net new lending until the end of 2007, and bankers say the clampdown looks set to continue into the new year.
"Macro tightening has just started. We have to prepare sufficiently," Li said. "If some firms cannot withstand the forces of macro tightening and manage the various risks, I'm afraid some will fall bankrupt."
Earlier this month, China's top leaders said a priority for 2008 would be to tighten monetary policy in order to keep the economy from overheating.
Chinese enterprises across a range of sectors have poured money into expanding production over the last few years, driving up capacity, pinching margins and forcing some to take out new loans just to pay operating costs.
China has let thousands of indebted state firms go under since the 1990s in a process of economic restructuring that has also enabled some key companies, particularly in the resources sector, to become strongly profitable.
FASTER REFORMS China's state-owned enterprises (SOEs) administered by the central government reported annual profit growth of 31.7 percent in the first 11 months from a year earlier to 918.66 billion yuan ($124.5 billion).
But Li said most of the money came from a small group of companies and that some state firms lacked a foundation for growth.
The official China Securities Journal estimated that more than 60percent of last year's SOE profits were generated by just nine companies, such as PetroChina <0857.HK>, Baosteel <600019.SS> and China Mobile <0941.HK>.
Li warned that tighter credit markets could snap the capital chain for companies using short-term loans to finance long-term projects. Higher resource prices, the appreciating yuan and a U.S. slowdown would combine to make 2008 a challenging year for Chinese state business, he added.
SOE shareholding reforms will speed up in 2008, with SASAC pushing more firms to list on exchanges in China and abroad while inviting private Chinese and foreign companies to take equity stakes, Li said.
Some state group companies would also be asked to inject more of their leading businesses into their listed subsidiaries, he added.
SASAC ordered 116 of the 152 firms under its oversight to submit by Thursday their plans for paying dividends to the government on last year's net profits, part of a long-awaited move to better distribute the nation's wealth.
The commission said it was collecting the dividends on a trial basis this year, charging only half the rate that will be due next year.
China said last week that companies in resource industries, including oil and power, would have to pay a dividend of 10 percent starting in 2008, while those in competitive industries, such as steel and electronics, would pay 5 percent.
SASAC has said it would like to use mergers and sales to cut the number of state firms it oversees to fewer than 100.
Dec 18 (Reuters) - Societe General's China fund arm, Fortune SGAM Fund Management, said on Tuesday it had won official approval to launch a fund to invest in overseas financial markets under China's Qualified Domestic Institutional Investor (QDII) scheme. [ID:nSHA138396]
The following is a list of Chinese mutual fund firms that have won official QDII licences this year to invest domestic clients' money in overseas financial markets.
So far, 11 domestic fund houses have obtained the licences, and four of them have launched products under the scheme -- aimed at giving domestic residents more investment opportunities and to promote a better balance in China's international payments.
Currently, Chinese fund management firms are allowed to raise a maximum of $4 billion for each of such QDII funds from initial public offerings. The quota can be expanded to $5 billion through additional offers, industry officials say.
Fund management companies that have launched such funds:
NAME SIZE INVESTMENT FOCUS $ bln China Southern Fund Management Co 4 global markets China Asset Management Co 4 global markets China International Fund Management 4 Asia Pacific market Harvest Fund Management Co 4 China plays
Fund management companies that have won QDII licences but have not yet launched the products:
Fortune SGAM Fund Management Co Bank of Communications Schroder Fund Management Co Yinhua Fund Management Co China Universal Asset Management Co Fortis Haitong Investment Management Co ICBC Credit Suisse Asset Management Co Changsheng Fund Management Co
Note: Huaan Fund Management Co Ltd was the first Chinese fund house to launch a QDII fund -- an international structured product. The fund was launched last October after the company received a $500 million foreign exchange quota.
Fund management companies are competing with banks, brokerages, insurers and trust firms to roll out QDII funds.
China International Capital Corp (CICC), an investment bank co-owned by Morgan Stanley , has won a licence allowing it invest $5 billion in client money abroad, a state newspaper reported on Monday.
The move would bring the total number of such quotas to four brokers, including CICC, CITIC Securities, Guotai Junan Securities, and China Merchants Securities, to $20 billion, Sun Lujun, a senior official from State Administration of Foreign Exchange (SAFE), told the China Securities Journal.
QDII funds run by fund management companies attracted strong demand this year because they focus on stock investments, and because the threshold for subscribing to funds launched by other financial institutions is generally higher.
JPMorgan estimates about $90 billion of QDII funds will come from China by the end of 2008, half from asset managers, $25billion from insurers, $15 billion from banks and $5 billion from securities houses.
The stock market really hasn’t been all that volatile
By Mark Hulbert, MarketWatch Dec. 18, 2007
ANNANDALE, Va. (MarketWatch) -- Monday was yet another day in which the Dow Jones Industrial Average rose or fell by more than one hundred points.
In fact, Monday’s loss was closer to 200 points: The Dow Jones Industrial Average lost 172.65 points. Of the 11 trading sessions so far this month, six have experienced a triple-digit gain or loss. And of the 21 days in November when the stock market was open, 12 witnessed a daily change this large.
This much volatility certainly seems extraordinary. During the calendar years 2005 and 2006, for example, there were fewer than three of such triple-digit change days in the average month.
A careful review of the historical record, however, teaches us that recent volatility isn’t all that out of the ordinary. There have numerous other periods in U.S. stock market history in which the market’s day-to-day changes were far bigger than what we’ve experienced lately.
The first reason this isn’t well appreciated is that our memories are short. We were spoiled by the stock market’s relatively calm and civilized advance in 2005 and 2006. As a result, many were seduced into thinking that was normal.
It wasn’t.
Another reason that many mistakenly think that recent market volatility is unusual: We focus more on the number of Dow points that are gained or lost than we do on the percentages that those points represent. With the stock market so much higher today than in prior decades, it can look like we have more volatility today when in fact we don’t.
When I started the Hulbert Financial Digest in 1980, for example, the Dow was around 800. A 1% change, therefore, would have been amounted to a measly eight points. A similar percentage gain or loss today would amount to more than 130 points.
Needless to say, however, a percent is a percent.
Dutifully focusing on percentage changes, therefore, I compared recent volatility with what prevailed at other periods back to the Dow’s creation in 1896. It turns out that recent choppiness doesn’t even come close to being a record.
I first measured the frequency of trading sessions in which the Dow rose or fell by at least 1%. It turns out that there have been 11 such days out of the past 20.
Lest you think that’s a high frequency, consider this: There have been nearly 2,000 such 20-day periods since 1896 in which there were more than 11 days with percentage changes this large.
What if we focused on changes of at least 2%? To be sure, Monday’s loss didn’t qualify (it was “just” 1.3%), but there have been several days in recent weeks with changes this big. Well, when measured this way, recent volatility is even less extraordinary there have been nearly five thousand 20-day periods since 1896 in which there were more 2%-change days than we’re experienced recently.
From at least one perspective, the market’s relative calm of late is disappointing. Had recent volatility been at record levels, then we would have been able to draw some mildly positive conclusions about the stock market’s near-term prospects.
That’s because the market historically has tended to perform better following periods in which there has been a high frequency of days in which the market rose or fell by at least 1%.
But, because recent volatility isn’t at record levels, we can’t draw even that mildly positive conclusion.
Instead, all that a historical perspective can provide us is the solace that our senses are misleading us: Recent market gyrations might feel like a roller-coaster ride, but in fact they aren’t that unusual.
Mark Hulbert is the founder of Hulbert Financial Digest in Annandale, Va. He has been tracking the advice of more than 160 financial newsletters since 1980.
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China to Tighten Credit Controls in '08
BEIJING (AP) — China will tighten monetary controls next year to curb rapid credit growth, said a deputy central bank governor quoted Monday by a government newspaper.
The communist government is trying to cool an investment boom that it worries could ignite financial problems and rein in an inflation surge that saw politically sensitive consumer prices rise in October at their fastest monthly rate in a decade.
"We need to strengthen macro controls, limit the total volume of money and credit and adjust the credit structure," the China Securities Journal quoted Liu Shiyu as saying at a conference on China's 2008 economic outlook.
The remarks sparked jitters among investors and contributed to declines in the Shanghai and Hong Kong stock markets.
State media reported earlier that Communist Party leaders decided this month to shift monetary policy "from prudent to tight" in 2008 to prevent overheating and a surge in inflation.
Chinese leaders want rapid economic growth to reduce poverty but worry that runaway spending on factories, real estate and other assets could cause a debt crisis if ill-conceived projects fail. They are trying to channel more money into renewable energy and other cleaner industries and into building housing for the poor.
China's economy is expected to grow by 11.5 percent this year and by more than 10 percent in 2008. A sharp rise in food costs has fed a spike in inflation that saw consumer prices rise by 6.9 percent in November over the same month last year, the highest rate since 1996.
Regulators will rely on "window guidance," or orders to lenders, and direct institutions to tighten credit management and control credit growth, Liu said.
The government also will increase channels for companies and individuals to get access to foreign investment and money from other non-bank sources, according to the report.
Too close, too much?
S'pore's love doctor gets paid to correct sex mistakes as couples do 'live demo' for him.
Jeanmarie Tan
Dec 18, 2007
(Dec 16) HE may be a doctor.
But even then, would you allow him to go into your bedroom and watch you have sex?
Well, some would, it seems.
And pay good money for it too.
Their hope: That he can help them save their crumbling marriage.
Several local couples in their late 30s and 40s have engaged homegrown sex guru Wei Siang Yu to do so.
Dr Wei (L), popularly known as Dr Love, says he has sat in the same room with eight couples in the past two years while they had sex.
They pay 'a couple of thousands' for five or so sessions which could stretch over three months.
One of these sessions includes Dr Wei visiting their homes, where the couples give him a 'live demo' so that he can correct their mistakes and pinpoint their problems.
Dr Wei, who attended medical school at Melbourne's Monash University, gets many requests from couples who don't think three's a crowd - some even from Malaysia and Indonesia. But he has to turn them down because of his busy schedule.
And he said he can sift out genuine couples in need of help from those who simply want to indulge their kinky fantasies.
DESPERATE
Still, his methods are unusual and can raise eyebrows.
Dr Wei, 38, who is also chief editor of the Love Airways sex magazine, and has his own radio and TV show, spoke to The New Paper on Sunday from his Playroom sex-counselling centre on Seah Street.
'I must make sure it's a case that's really super desperate and there's nobody else who's able to help them,' he said. 'Only then will I do it.'
But is it necessary and ethical for a doctor to do this? Doesn't it smack of voyeurism?
Dr Wei countered cautiously: 'Yes, it's a very difficult and sensitive issue.
'That's why I deal with only those whom I know have very serious, real problems - to the point where they keep begging you so many times and actually drop tears (over their sex lives).'
The couples were all on the brink of divorce because of years of bad sex - 'no ejaculation, no orgasm, no feeling, no communication'.
They were either not keen to try, or had already given up on, the 'normal medical system' - seeing GPs, counsellors, urologists and gynaecologists.
Still, he is aware of the potential problems - which was evident by his reaction when we asked him for an interview for this article. He was initially reluctant, as he was concerned it may give his detractors an excuse to accuse him of 'encouraging couples to be naked in front of doctors'.
But he insisted that he's only trying to help his patients, for most of whom, it's their 'last resort'.
The president of the Singapore Medical Association, DrWong Chiang Yin, said that although Dr Wei's methods 'sound unusual', it's 'not fair' for the organisation to comment as its committee members aren't 'experts' in the area of sexual health.
Dr Wong said: 'If he claims his patients gave consent, then it may not violate the ethical code.'
The Singapore Medical Council declined to comment as it usually doesn't look into practices of individual doctors unless a complaint has been lodged.
However, a veteran gynaecologist, Dr Atputharajah Vytialingam, who has counselled hundreds of couples with sexual problems, feels there is 'no necessity' to watch them have sex.
He said: 'I'm surprised because even sex clinics in the US don't do such things - unless it's for research purposes. It's definitely not part of accepted practice.
'Even if a doctor gets the patient's consent, he is in a position of trust and power, so there's always possibility of abuse - especially if the patients are so desperate that they'll do things they won't normally do.
'So he has to figure out how far he can go and set his own boundaries.'
But what do the couples themselves say?
When we asked to speak to them, Dr Wei said they have completed their sessions and are 'not media-friendly'.
However, he said they need not be self-conscious or conservative when they do the deed with him around.
'The majority were really relaxed, enthusiastic and open (in showing me their problems). Maybe because they think I'm a friendly, non-judgmental doctor and they are comfortable with me. They take me almost like a mirror to give them feedback.'
Usually, one sex session is enough for Dr Wei to 'get the picture'.
He admits that watching couples having sex 'isn't the most comfortable position to be in', and he does it 'almost like a scientist'.
'I take an objective, professional approach. I'm there solving problems, looking at the faces, expressions, movements and body parts.'
With one couple, he managed to diagnose that the woman suffered from hypothyroidism, which caused her to feel cold all the time and unable to have sex.
He recalled: 'Actually, she doesn't want to be naked, but she doesn't know (about her condition). And the aircon made their bedroom even colder than winter!'
In another case, he identified genital warts around the woman's vagina, and proceeded to give the couple a tutorial about sexually-transmitted diseases.
And because jet-setting Dr Wei is in Singapore for only two or three days every week and doesn't have time to follow up on the cases, he has a team of local doctors who take over.
UNUSUAL
He has found cases of childhood sexual abuse, androgen problems and vaginismus or menopause and has referred them to psychiatrists, urologists or gynaecologists.
'My role is to create a multi-disciplinary, evidence-based approach for couples,' he said. 'I'm able to use my experience, and their openness to communicate with me, to understand the case from inside out.'
Dr Wei may be unusual in adopting such an approach, but he is not the only one getting such requests.
Even non-medical sex therapists aren't spared.
Tantra coach and founder of Tantrapath Christina Low, 36, said that in the last three months, about 10 couples have tried to make appointments with her via e-mail or phone, asking her to meet them at a hotel and teach them tantric sex.
She said: 'They think if a teacher is around, she can bring them to a higher level - whether it is different techniques or positions - and they can have better sex.'
She always says no to such requests.
'I find it very strange, and it's not necessary,' she said.
'I want my clients to eventually be the witness to their own lovemaking, that they become so good that they don't need any teacher.'
During her private sessions, couples are clothed.
Even when the men are taught how to find their partner's G-spot.
The women then remove their underwear but are covered by a sheet.
American Bill M has been attending Ms Low's classes with his Singaporean girlfriend for two months, and believes their sex lives can be improved without any 'show-and-tell'.
The 43-year-old finance manager enjoys tantric exercises because they are 'sensual yet wholesome', but doesn't want sex to become 'artificial, exhibitionistic and no longer sacred'.
Another couple who took Ms Low's coaching is MrDec K and his wife, who have a 3-year-old daughter.
The 36-year-old manager said they went through 'a rough patch' which caused them to find sex 'discomforting', and are currently trying to 'reignite the flame'.
They have gone for counselling and consulted a gynaecologist for their problems, but the marriage hasn't deteriorated to the point where drastic measures need to be taken.
He said: 'It's a bit extreme, but to each his own. It doesn't fit what I expect or can accept, but if it's done in a professional manner, I don't see anything wrong with it.'
Air China 'will not block SIA-China Eastern deal'
ASSURANCES have been given that Air China will not block a tie-up between China Eastern Airlines, Singapore Airlines (SIA) and Singapore's Temasek Holdings.
Karamjit Kaur
Tue, Dec 18, 2007
The Straits Times
ASSURANCES have been given that Air China will not block a tie-up between China Eastern Airlines, Singapore Airlines (SIA) and Singapore's Temasek Holdings.
Setting the record straight, China Eastern chairman, Mr Li Fenghua, told The Straits Times he was informed by the Chinese government just last week that state-owned Air China promised not to stand in the way of the partnership.
This was after the government, which supports SIA's and Temasek's bid for a 24 per cent stake in the Shanghai-based carrier, instructed Air China to back off.
Mr Li made his comments during a one-day stop in Singapore, as part of a roadshow to investors ahead of a shareholders' meeting on Jan 8 to vote on the deal. With the biggest potential hurdle out of the way, he is confident other minority stakeholders will support the marriage.
The roadshow in Hong Kong, Singapore and cities in mainland China is to explain to investors several key things, Mr Li said.
First, contrary to what some may think, there is no other higher offer on the table, and it is 'highly unlikely' that a new offer will come before the Jan 8 meeting.
Second, if the deal with SIA and Temasek falls through, share prices - which have risen 80 per cent since the tie-up was announced - 'will tumble', he said.
'From the meetings I have had with investors so far, I am confident they now understand what is at stake here and will bless the deal,' added Mr Li.
China Eastern is 57 per cent-owned by parent CEA Holdings, which needs just 9 per cent more to hit the 66 per cent threshold required for the deal to be successfully voted through.
Although the tie-up is supported by the Chinese government, there is speculation that Air China's parent, China National Aviation Corp, will try to block the deal, which has created some unease among shareholders.
Yesterday, Hong Kong-listed China Eastern shares fell 6.39 per cent to HK$6.30.
SIA and Temasek's joint bid of HK$7.2 billion (S$1.33 billion) prices the airline's shares at HK$3.80 each.
Although China Eastern had received higher offers from other airlines before the deal with SIA was sealed, management chose to go with the 'best-run airline in the world', Mr Li said.
'This is not just a capital injection. The significance of the tie-up lies more in the introduction of best practices and improving our product and service levels.'
This is why the tie-up involves exchange of staff, he said. SIA will send 12 people to China Eastern, which will likewise attach its own staff to the Singapore carrier.
SIA is fully committed to the deal, which will give it important access to the fast-growing China aviation market, the airline's divisional vice-president for planning, Mr Michael Chan, said during the meeting with investors yesterday.
China Eastern, which expects to return to profit this year after two years of losses, has big expansion plans. The airline currently has a fleet of just over 200 planes operating more than 500 mainly domestic routes, but plans to lift its fleet size to 323 by 2010, Mr Li said.
18 December 2007
China ageing population to erode low-cost labour
BEIJING - CHINA'S advantages as a low-cost labour market could be eroded by mid-century because of its rapidly ageing population, state media reported, citing the China National Committee on Ageing.
China has six people in the workforce for every retiree, but that ratio could narrow to 2:1 between 2030 and 2050, according to a committee population survey, its first since 2000.
'We might encounter the heaviest burden, especially after 2030, when the demographic dividend is set to end,' the China Daily on Tuesday quoted Mr Yan Qingchun, deputy director of the National Committee on Ageing, as saying.
'With fewer people of working age and more pressure in supporting the elderly, the economy will suffer if productivity sees no major progress,' Mr Yan said.
China's ageing population is growing at 3.2 per cent every year, five times the total population growth, according to the committee's figures. The population imbalance is also exacerbated by strict family planning policies that limit most urban families to one child.
China is already home to more than half the old people in Asia and by 2050 its elderly are expected to exceed 400 million.
The greying population is also expected to put a huge financial strain on China's health care system and other support services.
Across the vast countryside, more than half of the elderly did not have any medical insurance and fewer than 5 per cent received pensions, the report said. -- REUTERS
MARKET TALK: STX Pan Ocean Korea/Singapore Arbitrage Soon - CS
2007/12/18
0245 GMT [Dow Jones] Investors may be able to arbitrage STX Pan Ocean''s Singapore-listed (V33.SG) and Korean-listed (028670.SE) shares soon, but it''s not clear how much upside the move would bring for the Singapore-listed shares, says Credit Suisse. "Fungibility could happen as soon as early 2008," broker says in note; move will allow investors to buy cheaper Singapore-listed shares and sell them at higher price in Korea, should mean gap between two narrows. But Credit Suisse adds, "while the discount gap between the Singapore-listed and Korea-listed shares is likely to narrow, we are uncertain of the impact on Singapore-listed shares, noting that the Korea-listed shares have been generally trending down for the past three weeks." Singapore-listed shares currently down 0.8% at S$2.62; Korean-listed shares +1.2% at KRW3,000 (S$4.69). (KIG)
Asia's growth may slow in '08
Emerging problems in major economies cloud outlook
(SHANGHAI, China) Asia's dynamic economic growth is expected to slow modestly next year as its biggest economies grapple with emerging problems, from inflation in China to appreciating currencies in India and Japan.
The expected slowdown in the US economy - a vital export market - and higher oil prices also cloud Asia's outlook.
In China, worries persist that the economy is overheating. Inflation hit a peak of 6.5 per cent this year, while real estate and stock prices also have soared, posing a challenge to policymakers whose options are limited by China's continued controls on the currency and capital markets.
'It's a delicate balance,' said Nick Lardy of the Peterson Institute, a Washington think-tank.
'They want growth, but they don't want inflation. At the same time they might cut investment too much,' he added.
Still, despite the uncertainties, China looks set for yet another year of double-digit expansion, with both the World Bank and Asian Development Bank forecasting gross domestic product growth at 10.8 per cent in 2008, down from the 11 per cent-plus growth anticipated for this year.
In India, a record surge in foreign investment has resulted in a sharp appreciation of the rupee, which is already hurting exports, especially earnings of the highly profitable outsourcing industry.
The country's central bank has repeatedly tightened its monetary policy and somewhat succeeded in reversing a spike in inflation earlier this year.
But its measures have sapped the momentum of growth as new investments and sales in areas such as automobiles have slowed with higher lending rates.
Analysts expect the Indian economy to grow 9 per cent this year for the fourth straight year and to slow slightly to between 8 per cent and 8.5 per cent in 2008.
In Japan, Asia's biggest economy, the major concerns are about a slowdown in US growth and a stronger yen, which erodes the foreign-earned income of the country's exporters.
Direct exposure of Japanese financial organisations to US mortgage market troubles is expected to be limited.
But uncertainty over a possible fallout has weighed on Tokyo share prices and dampened Japanese investor sentiment.
The International Monetary Fund is forecasting that Japan will grow 1.7 per cent in 2008, down from an estimated 2.0 per cent this year. -- AP
China Considers Extra Lending Curbs to Cool Growth
Dec. 18 (Bloomberg) -- China is studying extra lending curbs to prevent overheating in the world's fastest-growing major economy, according to a central bank official.
The People's Bank of China is considering requiring a larger proportion of new deposits to be set aside as reserves, said a central bank official who declined to be named because he's not authorized to speak publicly. It's also studying larger reserve requirements for bigger banks with faster loan growth, he said.
Targeted restrictions would restrain lending growth without hurting cash flow and profits at banks that haven't been taking on as many new deposits. The central bank raised the reserve ratio this month to 14.5 percent, the highest in at least 20 years, as excess liquidity fuels inflation and asset bubbles.
"A higher reserve ratio on new deposits will directly curb banks' ability to use the money to increase lending," said Wang Qian, an economist at JPMorgan Chase & Co. in Hong Kong. "The central bank is likely to tighten loan growth more aggressively next year."
The central bank official said so-called "differentiated" reserve rules could be a short-term tool for cooling loan growth. For example, the requirement for new deposits could be 0.5 percentage point to 1.5 percentage points higher than for existing deposits.
Crackdown on Loans
China's crackdown on bank lending this quarter is to curb money-supply growth driven by trade surpluses that pumped a record $238 billion into the financial system in the first 11 months. The government says economic overheating and inflation are the key risks for 2008.
Fixed-asset investment climbed 26.8 percent in the first 11 months of 2007, raising the risk of excess capacity should a global slowdown trim demand. Inflation last month surged to the fastest pace since December 1996.
House prices in 70 major cities climbed 10.5 percent in November from a year earlier and the benchmark CSI 300 Index of stocks soared more than 150 percent in the past 12 months.
China's banking regulator last month told lenders to limit loan growth that had already topped its target ceiling of 15 percent this year.
"More targeted increases in reserve ratios may help to rein in lending by bigger banks without hurting smaller ones," said Sun Mingchun, an economist at Lehman Brothers Holdings Inc. in Hong Kong. "The trade surplus is likely to keep growing next year, making the central bank's job even tougher."
Bank of Communications Ltd., the smallest among China's top five state-owned banks, is among the lenders worst-affected by increases in reserve requirements because of its high proportion of loan assets, according to a Dec. 10 report by UBS AG.
Foreign Lenders
Reserves parked with the central bank only earn interest of 1.89 percent, compared with a benchmark one-year deposit rate of 3.87 percent and a lending rate of 7.29 percent.
Local and foreign lenders were asked to strictly control lending for the rest of the year at three emergency meetings from Nov. 8 to 15, Xinhua Finance News reported last month.
Short-term deposit rates should increase by larger amounts than long-term rates, the central bank official said. The central bank should also boost deposit rates at a faster pace than lending rates to curb banks' margins. The People's Bank of China did that in two of this year's five rate increases.
The central bank is increasing the requirement by 1 percentage point, the most in four years, from Dec. 25. That will freeze about 380 billion yuan ($51 billion) in the banking system, compared with about 3.6 trillion yuan of new loans in the first 11 months of this year.
BEIJING, Dec 18 (Reuters) - China's state firms must
carefully manage their books or face a risk of bankruptcy as the
government ratchets up its economic tightening, the head of the country's state asset watchdog said on Tuesday.
Companies overly reliant on credit to fund their operations will be squeezed and some are already teetering on the edge of trouble, said Li Rongrong, chairman of the State-owned Assets Supervision and Administration Commission, or SASAC.
China has intensified its year-end ritual of credit tightening in the past two months, leaning heavily on banks to freeze net new lending until the end of 2007, and bankers say the clampdown looks set to continue into the new year.
"Macro tightening has just started. We have to prepare
sufficiently," Li said. "If some firms cannot withstand the forces of macro tightening and manage the various risks, I'm afraid some will fall bankrupt."
Earlier this month, China's top leaders said a priority for 2008 would be to tighten monetary policy in order to keep the
economy from overheating.
Chinese enterprises across a range of sectors have poured money into expanding production over the last few years, driving up capacity, pinching margins and forcing some to take out new loans just to pay operating costs.
China has let thousands of indebted state firms go under
since the 1990s in a process of economic restructuring that has
also enabled some key companies, particularly in the resources
sector, to become strongly profitable.
FASTER REFORMS
China's state-owned enterprises (SOEs) administered by the
central government reported annual profit growth of 31.7 percent
in the first 11 months from a year earlier to 918.66 billion yuan
($124.5 billion).
But Li said most of the money came from a small group of companies and that some state firms lacked a foundation for growth.
The official China Securities Journal estimated that more than 60percent of last year's SOE profits were generated by just nine companies, such as PetroChina <0857.HK>, Baosteel <600019.SS> and China Mobile <0941.HK>.
Li warned that tighter credit markets could snap the capital
chain for companies using short-term loans to finance long-term
projects. Higher resource prices, the appreciating yuan and a
U.S. slowdown would combine to make 2008 a challenging year for
Chinese state business, he added.
SOE shareholding reforms will speed up in 2008, with SASAC
pushing more firms to list on exchanges in China and abroad while
inviting private Chinese and foreign companies to take equity
stakes, Li said.
Some state group companies would also be asked to inject more
of their leading businesses into their listed subsidiaries, he
added.
SASAC ordered 116 of the 152 firms under its oversight to submit by Thursday their plans for paying dividends to the government on last year's net profits, part of a long-awaited move to better distribute the nation's wealth.
The commission said it was collecting the dividends on a
trial basis this year, charging only half the rate that will be
due next year.
China said last week that companies in resource industries,
including oil and power, would have to pay a dividend of 10
percent starting in 2008, while those in competitive industries,
such as steel and electronics, would pay 5 percent.
SASAC has said it would like to use mergers and sales to cut
the number of state firms it oversees to fewer than 100.
Dec 18 (Reuters) - Societe General's China fund arm, Fortune SGAM Fund Management, said on Tuesday it had won official approval to launch a fund to invest in overseas financial markets under China's Qualified Domestic Institutional Investor (QDII) scheme. [ID:nSHA138396]
The following is a list of Chinese mutual fund firms that have won official QDII licences this year to invest domestic clients' money in overseas financial markets.
So far, 11 domestic fund houses have obtained the licences,
and four of them have launched products under the scheme --
aimed at giving domestic residents more investment opportunities
and to promote a better balance in China's international payments.
Currently, Chinese fund management firms are allowed to raise a maximum of $4 billion for each of such QDII funds from initial public offerings. The quota can be expanded to $5 billion through additional offers, industry officials say.
Fund management companies that have launched such funds:
NAME SIZE INVESTMENT FOCUS
$ bln
China Southern Fund Management Co 4 global markets
China Asset Management Co 4 global markets
China International Fund Management 4 Asia Pacific market
Harvest Fund Management Co 4 China plays
Fund management companies that have won QDII licences but
have not yet launched the products:
Fortune SGAM Fund Management Co
Bank of Communications Schroder Fund Management Co
Yinhua Fund Management Co
China Universal Asset Management Co
Fortis Haitong Investment Management Co
ICBC Credit Suisse Asset Management Co
Changsheng Fund Management Co
Note:
Huaan Fund Management Co Ltd was the first Chinese fund house to launch a QDII fund -- an international structured product. The fund was launched last October after the company received a $500 million foreign exchange quota.
Fund management companies are competing with banks, brokerages, insurers and trust firms to roll out QDII funds.
China International Capital Corp (CICC), an investment bank
co-owned by Morgan Stanley , has won a licence allowing it invest $5 billion in client money abroad, a state newspaper reported on Monday.
The move would bring the total number of such quotas to four
brokers, including CICC, CITIC Securities, Guotai Junan
Securities, and China Merchants Securities, to $20 billion, Sun
Lujun, a senior official from State Administration of Foreign
Exchange (SAFE), told the China Securities Journal.
QDII funds run by fund management companies attracted strong
demand this year because they focus on stock investments, and
because the threshold for subscribing to funds launched by other financial institutions is generally higher.
JPMorgan estimates about $90 billion of QDII funds will come from China by the end of 2008, half from asset managers, $25billion from insurers, $15 billion from banks and $5 billion from securities houses.
Choppy waters?
The stock market really hasn’t been all that volatile
By Mark Hulbert, MarketWatch
Dec. 18, 2007
ANNANDALE, Va. (MarketWatch) -- Monday was yet another day in which the Dow Jones Industrial Average rose or fell by more than one hundred points.
In fact, Monday’s loss was closer to 200 points: The Dow Jones Industrial Average lost 172.65 points. Of the 11 trading sessions so far this month, six have experienced a triple-digit gain or loss. And of the 21 days in November when the stock market was open, 12 witnessed a daily change this large.
This much volatility certainly seems extraordinary. During the calendar years 2005 and 2006, for example, there were fewer than three of such triple-digit change days in the average month.
A careful review of the historical record, however, teaches us that recent volatility isn’t all that out of the ordinary. There have numerous other periods in U.S. stock market history in which the market’s day-to-day changes were far bigger than what we’ve experienced lately.
The first reason this isn’t well appreciated is that our memories are short. We were spoiled by the stock market’s relatively calm and civilized advance in 2005 and 2006. As a result, many were seduced into thinking that was normal.
It wasn’t.
Another reason that many mistakenly think that recent market volatility is unusual: We focus more on the number of Dow points that are gained or lost than we do on the percentages that those points represent. With the stock market so much higher today than in prior decades, it can look like we have more volatility today when in fact we don’t.
When I started the Hulbert Financial Digest in 1980, for example, the Dow was around 800. A 1% change, therefore, would have been amounted to a measly eight points. A similar percentage gain or loss today would amount to more than 130 points.
Needless to say, however, a percent is a percent.
Dutifully focusing on percentage changes, therefore, I compared recent volatility with what prevailed at other periods back to the Dow’s creation in 1896. It turns out that recent choppiness doesn’t even come close to being a record.
I first measured the frequency of trading sessions in which the Dow rose or fell by at least 1%. It turns out that there have been 11 such days out of the past 20.
Lest you think that’s a high frequency, consider this: There have been nearly 2,000 such 20-day periods since 1896 in which there were more than 11 days with percentage changes this large.
What if we focused on changes of at least 2%? To be sure, Monday’s loss didn’t qualify (it was “just” 1.3%), but there have been several days in recent weeks with changes this big. Well, when measured this way, recent volatility is even less extraordinary there have been nearly five thousand 20-day periods since 1896 in which there were more 2%-change days than we’re experienced recently.
From at least one perspective, the market’s relative calm of late is disappointing. Had recent volatility been at record levels, then we would have been able to draw some mildly positive conclusions about the stock market’s near-term prospects.
That’s because the market historically has tended to perform better following periods in which there has been a high frequency of days in which the market rose or fell by at least 1%.
But, because recent volatility isn’t at record levels, we can’t draw even that mildly positive conclusion.
Instead, all that a historical perspective can provide us is the solace that our senses are misleading us: Recent market gyrations might feel like a roller-coaster ride, but in fact they aren’t that unusual.
Mark Hulbert is the founder of Hulbert Financial Digest in Annandale, Va. He has been tracking the advice of more than 160 financial newsletters since 1980.
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