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Decoupling
2008-03-10 03:58:47
Since the US economic slowdown, people around are talking about "decoupling", whether emerging markets can continue their growth in face of economic slowdown in US. The answers are yes or no, different people have their own reasons for the guess.Today, China officials announced the trade figure for February. The trade surplus declined more than expected, and the export growth was slowest in 6 years. This probably gives us some ideas of how US economic slowdown can impact on China. The Economist published an article "The decoupling debate", which argued that the export of emerging markets would not be much affected as the decrease in export to US would be offset by the increase in export to other emerging countries. There is of course some reality in this argument I think, but the late


What's happening in the market? Psychology again
2008-03-09 22:29:06
Last week was a bad week. Many of the markets had their worst weekly slump in years.The condition in the credit market continued to be serious. Carlyle Group, one of the leading private equity firms, had one of the highly leveraged fund, which holds Fannie Mae's and Freddie Mac's securities, suffered from substantial financial distress because of continuous big number of margin calls from various banks. To meet the margin calls, they were forced to liquidate its assets in this gloomy market at low price.Recently, I have been continuously thinking of the market in relation to psychology of market participants. When credit was easy, and market was performing well, the prospect would look good, investors would then be less risk averse. When risk was not properly priced, in good time, not


HSBC 2007 full year result
2008-03-04 22:08:53
In fact they have announced their results for two days, but I still want to say something.HSBC is among the first financial institutions to warn about the seriousness of subprime issue in US, and it was the first group of financial institutions who made provision for the bad loans related to subprime. HSBC exposed itself to subprime through subsidiary HSBC Finance in US, which was formerly Household International, which it acquired years ago. Unlike many other banks like UBS which exposed itsel to subprime primarily by buying MBS, CDO and other similar kinds of fixed income securities, HSBC is actually the one who lend the money out. In such a case, the bank probably have more power to re-negotiating the terms of debt to prevent default. As for banks like UBS, they are not even possibl


Record High Inflation in China
2008-02-19 07:09:55
The Chinese government have just announced the consumer price index for January. Inflation in China has reached a 11-year high of 7.1%, after the worst snowstorm in a century affected food supply. The prices of food category products 18.2%, in particular, the price of pork rose 58.8%! High inflation will certainly pose an important social problem. I just watched the TV news in Hong Kong, the old lady said she has no money to buy food, because the food price rose much!As I have written before, China has been trying hard to prevent overheating of the economy and inflation. China has raised interest rate and bank reserve ratio for many times last year, but it seems that there wasn't much use. Why was that!?When we look at the money supply data, I guess we would be more clear about why.
Read more: Record

Hong Kong's government budget
2008-02-16 10:46:17
Last year, our government ran a budget surplus of tens of billions Hong Kong dollar.How to use the surplus is always a much debated topic, and more importantly, it is always a very political topic. Politicians always ask for things like tax rebate in order to "return the wealth to the citizens".As I have written on that before, our government has been doing countercyclical fiscal and monetary policies in the past for so many years, which hugely exaggerated the ups and downs of the business cycle. And I think they will do so again.If any of you have read Alan Greenspan's autobiography, the U.S. government ran a big budget surplus in President Clinton time. His personal suggestion to use the surplus was to pay off the debt of U.S. government, the the president packaged this as "save socia


An Apology
2008-02-16 09:42:56
I really have to apologize for writing nothing for more than 2 weeks! I wrote so much because I was at the time waiting for the new job to start. And now, it started. So I don't have so much time to bring so many things here.But I hope to bring you a few commentaries in the coming week!
Read more: Apology

CFA Level II
2008-01-28 01:21:20
After months of torturing with Level I of CFA and passed it, here comes another few months of torturing with the Level II...


Last week in the markets (21-15/1/2008)
2008-01-27 04:23:50
We have experienced a really dramatic week in various markets last week. We experienced a large sell-off in at the beginning, and big recovery in the second half of the week.Last week began with large sell-off in the Asian markets. We were asking the question, are we entering the bull market? Indeed, due to the concern of US recession, we have had an awful start of this year. Large sell-off continued in European markets. On Monday, the US markets were closed, but stock futures dropped.On Tuesday, we continued to see large sell-off in Asian markets, which was really panic selling. On a surprise move, the Federal Reserve slashed the Federal Funds Rate before the US markets opened that day by 0.75%, largest single move seen in recent years. We saw a mild sell-off on US markets that day.


Asian Market Wrap Up (24/1/2008)
2008-01-24 07:06:04
I apologize for my lateness of today's Asian market wrap up because I was out and not looking at the market closely today. So I don't really have many points to say, except this one...Hong KongHong Kong market is the only major market in Asia which dropped today, but the market was quite dramatic today. The Hang Seng Index has rose more than eight hundred points in morning trading, but it closed with a 2.29% loss. I have mentioned the "through-train" arrangement in my previous article. Today morning, rumor was around the market, which the "through-train" arrangement will soon become reality, in which the investors in China can invest in Hong Kong stocks directly and freely, but in the afternoon, the Chinese authority clarified that there was no clear timetable. So the stocks dropped i
Read more: Market

Asian Market Wrap Up (23/1/2008)
2008-01-23 04:06:06
After the Fed rate cut last night in Asian time, the Asian market re-gained some of the loss in the past two days.Hong KongThe Hong Kong's benchmark Hang Seng Index rose a respectable 10.72%, which has erased the loss of the large sell-off yesterday. The Hang Seng Index rose, led by HSBC (5:hk), which rose HK$11.8 to 116.2, or 11.3%. The Fed rate cut was helpful to property sector of Hong Kong, thanks to the currency peg of HKD and USD. Major banks in Hong Kong have announced the mortgage rate and saving rate cut. Cheung Kong (1:hk) and Sun Hung Kai (16:hk) rose about 10% in Hong Kong trading. As the saving rate is further lowered, with the inflation forecast at about 4%, we have negative real interest rate now, which would be beneficial to property stocks in Hong Kong due to the anti
Read more: Market

The Fed cut Fed Funds Rate
2008-01-22 08:54:47
The Federal Reserve just announced the rate cut of the Fed Funds Rate of 0.75% from 4.25% to 3.5%, which is the biggest one-day move in recent time. The Federal reserve cut the rate to deal with the "weakening economic outlook and increasing downside risks to growth".After the emergency rate cut, the indexes future still drops, but rebounded from previous 5% drop. The afternoon trading of European markets seems to have rebounded a bit after the emergency rate cut of the Fed. At London, FTSE 100 posts a 1.48% rise after the slump yesterday. Other markets in Europe also rebounded a bit. However, the overall sentiment remains bearish.Full coverage from Bloomberg


Asian Market Wrap Up (22/1/2008)
2008-01-22 04:17:24
There is not much to say about Asian Market to say. The Markets extended the slump yesterday. All major indexes drop more than 5% in the region.Hong KongThe benchmark Hang Seng Index dropped to 21,757.63, down 8.65%. In this two-day slump, the Hang Seng Index has lost 13.65%. Stocks dropped because of the concern of US recession, but it seems that investors in Hong Kong has been panicking and selling off their holdings to cut loss. Yes, I do see value in some stocks. In particular, I believe that the property and banking sectors of Hong Kong companies (Hong Kong companies only, I am not talking about any H-shares, or the London-based HSBC) would be my picks now. Hong Kong Banks like Bank of China (HK) (2388:hk), ICBC (Asia) (349:hk), Wing Lung Bank (96:hk), etc, would be benefited f


New Monetarism
2008-01-22 01:05:53
How hard is subprime hitting US and global economy? I write this article to introduce the view by David Roche, which I watched from Bloomberg TV some weeks ago. Maybe his theory would help us to understand how subprime can hit so hard on US and global economy.Money MultiplierIn the past, commercial banks receive deposits from you and I, paying small interest to us, and lend to others at higher interest rate, earning the spread between lending and saving. Remember our introductory Economics textbook in college, that because the borrower of money would end up deposit the money back into the banking system, the banking system now have more deposit, and thus, they can lend out more. For example, if I am a CEO of a company, planning to acquire some plants and equipment, I would ask bank for


Asian Market Wrap Up (21/1/2008)
2008-01-21 20:41:17
The markets continue to be bearish, mainly on the concern of US subprime crisis and the risk of entering into recession.Hong KongThe Hong Kong market went down, with the benchmark Hang Seng Index closed at 23,818.86, down 1,383 or 5.49%. The Hang Seng Enterprise Index closed at 13,531.45, down 1,029.9 or 7.07%. HSBC (5:hk) continue its drop on the concern of its exposure to subprime mortgage. In today's Hong Kong trading, HSBC was down to HK$ 113.6, down $4.8 or 4.05%. Bank of China (3988:hk), another bank traded in Hong Kong which also has significant exposure to subprime mortgage, dropped to HK$3.37, down $0.23 or 6.39%. Other Chinese banks which has little or no subprime exposure also dropped significant in Hong Kong trading today, despite the good outlook and the speculations of e
Read more: Asian , Market

Economic outlook: Hong Kong
2008-01-20 23:00:00
Hong Kong is a strange case.Our government like bubbles. They want to get the liquidity from the Mainland China to our stock markets, saying that it is to help our country to solve the problem of excessive liquidity. Our government also have no sense that economy needs some sort of control. Our economy is almost too good now, GDP grows strongly, people spend much in festive seasons, and we really see a scene of big prosperity in Hong Kong.Despite this, the government really has no intention that the economy needs some measures to prevent overheating. John Tsang JP, the financial secretary of HK government, is talking about how to "return the wealth to the fellow citizens" in planning his first budget address, which probably would include tax cuts or rebate. If you were a Keynesian, yo
Read more: Economic , Hong Kong

Economic outlook: UK
2008-01-20 22:13:32
Commentators in Hong Kong have been talking about US economic slow down in face of the subprime crisis. How about UK? We have not been focusing on UK lately, and only focus on US. However, It does not really mean that UK is really in a much better position than US, although not many people mentioned or realized this.At the turn of this year, I have seen two people talking about how unprepared the UK economy is in face of the current turmoil. First, Anatole Kaletsky wrote at The Economist: The World in 2008, wrote that UK is facing the first major risk of economic slow down due to a several reasons, which, while compared to the situation in US, seem to be even more worrying. First of all, the housing price in UK rose much more than US (205% vs. 103%). Second, household debts were larg
Read more: Economic

Are stocks now bargain?
2008-03-12 10:50:55
This is purely my speculation about the financial market I based in, which is Hong Kong. I would say that it is. The stocks prices have been plunging for much. If we consider that last major... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]


Links for 12/3/2008
2008-03-12 10:31:52
UK's Darling set to cut growth, raise borrowing British finance minister Alistair Darling looks set to cut growth forecasts and ramp up borrowing in his first budget on Wednesday as the economy faces... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]


Links for 10/3/2008
2008-03-11 09:00:10
Blackstone Profit Falls 89% on Credit Market Meltdown BoCom Chairman Jiang Says HSBC Applied to Raise Stake China Trade Surplus Narrows as U.S. Demand Weakens China trade surplus fall may be... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]


Links for 11/3/2008
2008-03-11 08:59:29
'Financial Model' Abuse Linked to Market Meltdowns China's Inflation Surges to 8.7% as Food Prices Soar Dollar Gains Most in 3 Months Versus Yen on Fed Lending Steps Economy weak but not enough for... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]


Links for 17/3/2008
2008-03-17 10:09:06
Bear Stearns tremors - now affecting candle-sticks Expert chartist view on near term prospects for the financial markets on both sides of the Atlantic. Dollar's nosedive stirs joint intervention... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]


The Fed cuts the Fed Funds Rate by 75 bp
2008-03-18 13:28:57
See what Ben Bernanke's doctoral thesis advisor said about the Chairman: Federal Reserve Chairman Ben S. Bernanke has the skills to guide the U.S. economy through a credit squeeze, now in its eighth... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]
Read more: Funds

Links for 18/3/2008; Today's Focus
2008-03-18 13:26:24
The Federal Reserve is expected to cut the Fed Funds Rate today. Stocks and Asia and Europe rose first time in four days. Goldman Sachs (NYSE: GS) and Lehman Brothers (NYSE: LEH) reported... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]
Read more: Focus , Today

Ben Bernanke vs. Jim Rogers
2008-03-20 06:52:35
Jim Rogers said Ben Bernanke is "an idiot". And he continues to be very critical of the Fed's policy making yesterday on Bloomberg, saying the Bernanke and his colleagues know nothing about... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]


Bottoming process?
2008-03-20 05:53:46
An influential blogger Mr. Market in Hong Kong, an advocate of Benjamin Graham's Value Investment who has published a book on investment (and going to publish his second book), has written in his... [[ This is a content summary only. Visit my website for full links, other content, and more! ]]


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