18 replies to this topic

[da_cheif]

[optionking]

is Honk Kong a proxy for China or rest of the world?

[Russ]

Jury's out...going sideways so far, has not taken out previous hi.

http://ichart.financ...p=s&a=v&p=s.png
http://ichart.financ...p=s&a=v&p=s.png

Edited by Russ, 13 May 2007 - 10:47 PM.

[optionking]

Russ.....do you mean Honk Kong is topping?

[GOOSE2]

No worries for the bears, Don. Thats F6 of a nasty bearish fractual.........hardy har har To Da Moon, Alice

[hopoco]

It's just a short term effect:

Investment from China


Published: 13/5/2007 | Last Updated: 13/5/2007 18:15 London Time


Is a wall of Chinese money about to hit global markets? On Friday regulators prised open the window and gave mainland investors their first opportunity to invest in foreign equities – raising the prospect that China will start decanting $4,400bn of bank savings into overseas markets.

That is some way off. Beijing has lifted restrictions on investing up to half the existing quotas for overseas investment – dubbed qualified domestic institutional investor, or QDII – in equities. That implies potential outflows of just $7bn-$9bn. Hong Kong's bourse, the obvious first port of call, can turn over more than that in a day. And even that amount may not be unleashed immediately. The attractions of, say, Hong Kong stocks pale when contrasted to the domestic market, up 48 per cent this year in local-currency terms.

Opportunities for meaningful arbitrage, too, are slim. The 40-odd stocks listed on both the domestic-currency A-share market and in Hong Kong trade on vastly differing multiples. China Life, for example, is 65 per cent more expensive in Shanghai. But the mechanics of QDII preclude stock selection; instead investors will have to buy funds or similar products sold by the banks. Given the inaugural role of these funds, the emphasis will be on conservatism and quality rather than exploiting valuation gaps.

Nonetheless, the move marks another milestone on the road to a fully convertible currency. It also demonstrates the extent of pressure on Beijing both to offset surging capital inflows and to cool the domestic stock market bubble. The stock market performance is almost wholly driven by captive liquidity, so broadening the investible universe would remove some of the froth. For now, however, the numbers are too small to have much impact on either front – or on overseas markets.

[Russ]

Russ.....do you mean Honk Kong is topping?

HK seems to be in a trading range since the start of the year, some consolidation after breaking above its 2000 hi, I don't have a read on the short term for HK. Long term I have trends on the Shanghai exchange indicating a high in the fall of 2008 but HK looks like it could top in Feb.2009 and go down into early 2010.

http://stockcharts.com/c-sc/sc?s=$HSI&p=D&b=5&g=0&i=t45448046439&r=1516.png

[hopoco]

Hong Kong shares sharply higher after Beijing relaxes QDII limits - UPDATE 05.13.07, 11:58 PM ET HONG KONG (XFN-ASIA) - Share prices were sharply higher in early trade as the market welcomed China's move to relax an investment rule to allow mainland banks and funds to buy overseas stocks under its revised Qualified Domestic Institutional Investor (QDII) scheme, dealers said. Blue chips led the rally, driving the Hang Seng Index up 447.24 points or 2.19 pct to 20,915.45 as of 10.23 am, off a high of 21,065.59 and a low of 20,900.76. Turnover was 16.7 bln hkd. Under the revised scheme, China Banking Regulatory Commission allows banks to invest up to 50 pct of the net value of their offshore investment product in stocks. 'Investors turned very bullish on the market because of the (QDII) measure, which provides banks some flexibility to invest overseas,' Kitty Chan, director at Celestial Asia Securities, said. 'There is strong interest in blue chips, which of course are sought after by funds,' said Chan. Major players were up, including HSBC (nyse: HBC - news - people ), which rose 1.90 hkd or 1.31 pct to 146.90 and China Mobile (nyse: CHL - news - people ), which gained 2.70 hkd or 3.81 pct to 73.65. China Life advanced 1.10 hkd or 4.47 pct to 25.70. A trader with a regional brokerage said Chinese financial counters, especially insurance companies, also surged as the market sees these companies as the main beneficiaries of the revised investment scheme. 'Before the revision, banks were only allowed to invest in fixed-income derivatives, and so by allowing banks to invest in stocks, many expect financial companies to benefit more from offshore investments and lift overall earnings,' the trader said. Among Chinese financials, Bank of China was up 0.13 hkd or 3.37 pct at 3.99, China Merchants up 0.32 hkd or 1.6 pct at 20.50 and China Construction up 0.15 hkd or 3.14 pct at 4.93. Bank of Communications (BoComm), which will trade for the first time in Shanghai tomorrow, gained here by 0.21 hkd or 2.55 pct to 8.44. Ping An Insurance rose 2.45 hkd or 5.51 pct to 46.90, after index compiler HSI Services Ltd said it will include the stock among the HSI constituents from June 4, bringing the total number of HSI constituents to 39 from 38 currently. Its peer PICC was up 0.16 hkd or 3.36 pct at 4.92. Local banks were also higher, with Bank of East Asia (other-otc: BKEAF.PK - news - people ) up 0.55 hkd or 1.19 pct at 46.95 and Hang Seng up 1.70 hkd or 1.55 pct at 111.10. BOC Hong Kong added 0.30 hkd or 1.56 pct to 19.56. The financial index climbed 729.65 points or 2.25 pct to 33,136.10. The property sub index was up 451.04 points or 1.83 pcta t 25,607.37. Cheung Kong (other-otc: CHEUY.PK - news - people ) jumped 3.30 hkd or 3.22 pct to 105.90 and Henderson Land advanced 0.75 hkd or 1.41 pct to 54. Sung Hung Kai firmed 0.70 hkd or 0.75 pct to 94.35. (1 usd = 7.8 hkd)

[JAP]

is Honk Kong a proxy for China or rest of the world?

No, but Da Cheif thinks it is. The higher it goes, the weaker it gets.

[da_cheif]

and who would know better than me eh......u?.....lmazoff