Next Master the Markets Foundation Course 1.5 days - Sept 14-15, 2009. Call Dolly 03 4252 4149 to register ! Bursa Malaysia (KLSE) :-) martin_tf_wong@hotmail.com: 7:22 pm - A new high for PB Bank and a 18 L/C

Friday, May 9, 2008

7:22 pm - A new high for PB Bank and a 18 L/C


It is a buying opportunity. Pro buys at high !


Posted by Martin at 7:22 PM
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2 comments:

Anonymous said...

By Ariana Eunjung Cha
The Washington Post


SHANGHAI, China — When emergency workers found Wang sprawled unconscious after having downed two bags of insecticide, he was still clutching the PDA he had been using to check stock prices. Like a number of other small investors in China, Wang had bet — and lost — his life savings, about $15,000, on the Chinese stock market. The propaganda office and doctors at the hospital where he was treated said the 36-year-old factory worker had been preparing to get married and that he had hoped to use the money to buy an apartment for his fiancée.
Wang's attempted suicide and those of other investors are a heartbreaking consequence of China's great experiment in capitalism. In February, Li, a 25-year-old engineer, jumped from the seventh floor of the building where he worked in the city of Chengdu. His company said he had lost a huge amount on the stock market. On March 30, a 39-year-old former ice-cream- shop owner, also named Li, leaped to his death from his apartment building in the inland province of Shandong after losing a third of the $4,500 he had invested.

As China's stock markets crashed over the past six months, the Communist government reacted in a way most consumer investors like Wang did not anticipate: It watched from the sidelines. It wasn't until last week, after the Shanghai benchmark index's fall to a symbolic milestone, below 50 percent of its peak in October, that Beijing finally stepped in. Its announcements that it would slash a tax on stock transactions and control volatility by requiring some big block trades to take place off the regular stock market, pushed the market up 14 percent. It has fallen again since then, however. But given that the Chinese government has the power and money to do much more, some say the fact that its help arrived so late and is so limited means it is sending a message to shareholders that they should no longer expect a government bailout in such situations.

The former shop owner's sister, Li Chunyan, 34, said she understands that those who lost everything have only themselves to blame for risking so much. But because the stock market is "damaging common people's lives this much, there should be policies" to help them. She said even the U.S. government is doing more to help its investors: "I heard about the U.S. lowering interest rates to save the market," she said. "Well, different countries are different."

In online bulletin-board postings, small-time retail investors — who, unlike in U.S. markets, make up the vast majority of those who hold money in China's exchanges — have vented their anger at the government. "China's stock market is piled up with investors' tears and blood," wrote one shareholder.

Institutional investors, fund managers and analysts who follow the Chinese stock markets are less sympathetic, saying that the suffering of consumers who lost money is a necessary step on the road to capitalism.

"You lose money, you jump out the window, too bad. It's your problem," said Vincent Chan, head of China research for Credit Suisse. "For any market to grow, this is something the government should realize: At the end of the day, it's the investors who bear the responsibility of the investment, not other people."

The nose-dive of the Shanghai stock market and its sister exchange in the southern city of Shenzhen has been humbling for Chinese investors who had once believed the only direction share prices could go was up.

Analysts say they were overdue for a correction. Despite weak earnings by many companies and rampant corruption, the Shanghai composite index quadrupled in value from 2002 to 2007.
Briefly in November, PetroChina became the world's first $1 trillion company by some measures of its market value. But by the end of April, shares of PetroChina had plummeted to below its IPO price for the first time.

Andy Xie, a former chief economist for Morgan Stanley Asia Pacific and now an independent analyst, said the challenge for the Chinese public is that "generally speaking, retail investors bought stocks at a high point. They listened to their relatives, friends and heard propaganda. "When the stocks fall, they are unwilling to sell off and they sit there waiting for the government to save the markets," he said. "This is not rational."

Psychologists across the country say that in recent months they have seen more patients seeking treatment for addiction to gambling.

Some investors like Ma Guocheng, 26 and an office worker, say they have learned their lessons from the recent stock-market plunge. In April and May 2007, Ma invested some 270,000 yuan — about $38,600 at today's exchange rate — in stocks. By November, those shares were valued at 440,000. He thought about selling, but then he thought they would climb even higher. Now his holdings are worth 50,000, about $7,000. "I was greedy," Ma admitted. As a consequence, "I lost more than 80 percent of my total investment."

Comments: Thanks to Moolah who had featured the above news article. Somehow, it shows that the majority of Chinese are just dipping their toes in stocks for the first time over the last few years. You need to go on a bit longer so that people see stocks investing in the proper light. Already I think the Chinese government has been extraordinarily "kind" to individual investors - at least margin financing is almost non-existent in China. If it was you can probably quadruple the suicides due to the loss of savings.

For Malaysians, most have been through at least a couple of devastating bear markets (no, not the recent 1,500 to 1,150: that's not scary enough). The survivors would learn that ultimately each is responsible for their own actions and decisions. Nobody takes a cut from your winnings, so no one should share your losses. My favourite saying about the stock market: The market does not owe you a living, it is not there to make you rich but it can make you very poor.

Asians in general tend to bitch more when they face losses. Tung Kin Hwa took the brunt from HK people. Somehow, we never really saw similar "reactions" in USA when the Dow collapsed in late 1920s, I wonder why. People did jump off buildings but there were not a lot of bitching. Things happen and if you were caught off-guard, just damn your luck. People have to TAKE PERSONAL RESPONSIBILITY more, not just your investing decisions but in most things in life. The BLAME SOMEONE ELSE trend has taken a remarkable growth passage over the last decade - its always somebody's fault, never your own. Don't play the VICTIM, its stupid and immature. More self-introspection please everyone.

While it is sad that people commit suicides owing to market losses, people around should do their bit to encourage, educate and calm those around them who are facing "difficulties". That's as much as we can do.

May 10, 2008 at 10:31 AM
Anonymous said...

The Recession That Never Was is Now Over
Last Update: 01-May-08 09:30 ET


Never mind. That seems to be the attitude of all the economists and financial journalists that were falling all over themselves to irresponsibly raise alarm bells back in February and March about the horrible recession that was developing. The increase in first quarter real GDP reported Wednesday suggests that there will not be a single quarter of receding GDP this business cycle. There are two main reasons that the current cycle did not turn into a true recession.

GDP Component Trends

First, we take a quick look at the component contributions to real GDP for the first quarter. This is partly because the trends provide important clues about the outlook for second quarter GDP, and partly because we want to note the accuracy of our forecasts (as posted on Monday in the prior Big Picture column).

% of GDP Change GDP Cont. Forecast GDP Cont.
Actual
Personal Consumption 71% +0.8% +0.6% +0.7%
Net Exports -4% +0.3% +0.2%
Business Investment -- Structures 3% -7% -0.2% -0.2%
Business Investment -- Equipment, Software 9% -1% -0.1% -0.1%
Residential (housing) 4% -24% -0.9% -1.2%
Government 18% +1.5% +0.3% +0.4%
Inventories n/a +0.7% +0.8%
Total +0.7% +0.6%


The key points are:

Consumer spending was up steadily through the first quarter.
Exports are booming.
Business investment in equipment and software is holding up very well.
These points are important because they highlight what went wrong for everyone that three weeks ago was forecasting declines in GDP for the first and second quarter (which was about every major Wall Street firm).

Where Recession Forecasts Went Wrong

The two biggest fears in this business cycle were:

1) That falling home prices would lead to a downturn in consumer spending.

2) That the credit crisis on Wall Street would lead to a true credit crunch.

It is now apparent that neither happened.

The first is apparent in that home prices have been falling now for two and one-half years. The median home price is down anywhere from 15% to 20%, depending on the index. And yet, as noted above, even with high gas prices and declines in payrolls in the first quarter -- consumer spending rose at a steady rate through the first quarter.

There is a dampening effect from lower home prices, but as we noted in a September 25, 2006 Big Picture column nearly two years ago, the impact will be to shave only 0.25% from GDP growth each year.

With the fiscal stimulus now starting, consumer spending will keep rising. By the time the fiscal stimulus wears off, the housing market may well have stabilized. Payrolls will also stabilize. And consumer spending will keep rising.

The great consumer pullback never happened.

The credit crunch also never happened. Total commercial and industrial loans, as released every Friday in the Fed's H.8 report, have been rising steadily the past nine months. Even real estate loans outstanding are up.

Credit is no longer available for Wall Street transactions such as for hedge funds or private equity funds that want to purchase commercial property. Mortgage loans for many are much harder to obtain.

But companies with solid, normal businesses are not having trouble getting credit. Industrial companies in the heartland such as Caterpillar and Johnson Controls are booming. They have ample access to credit.

The credit crisis on Wall Street never turned into a credit crunch on Main Street.

What it All Means

Recession is a term that applies to the entire economy. Recession comes from the word "recede." It means DOWN.

First quarter real GDP was UP. Continued increases in consumer spending and exports will keep GDP growth positive in the second quarter. The fiscal stimulus will see to that.

There will not be a single down quarter for GDP. This is NOT A RECESSION.

Just weeks ago it was common knowledge that "everyone knows this is a recession." There were financial articles that started with "It is no longer in doubt that this is a recession, it is only a matter of how bad it will be." We disagreed then, and we disagree now.

These are very difficult economic times. Growth is well below the long-term trend of 3%. Nevertheless, there is growth. The difference is important.

If this were a true recession, job losses would be much more severe and corporate profits would not be nearly as good.

Instead, what this business cycle ultimately will be seen as is a massive correction in the housing industry that dampened consumer spending and overall growth. It is a long, drawn out correction that has caused much pain.

Because the housing problems touch so many people, it is easy for journalists and analysts to overemphasize housing prices, and similarly, gas prices. The obsession with these two issues blinded many to the reality of the limited mathematical implications of those issues, and to the surprisingly resilient and strong sectors in the economy.

Sentiment is shifting, however. Talk is moving to the nature of an economic rebound.

Yet, we doubt very much that there will be apologies from the vast armies of journalists and economists who sensationalized economic problems. Yesterday, the AP headlines page couldn't even bother with an article noting the first quarter GDP data. Never mind. That would not have left enough room for the article about someone on the Oprah Winfrey show setting the world record for holding one's breath.

May 10, 2008 at 10:54 AM

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