Yeah. China tumbles 9 %. Hong Kong slides. FTSE, DAX, CAC take a walloping.
Dow, TSX, Nasdaq get whupped!
BSE takes a dive but not to the extent the others do- only 1.25% down.

China Market Commentary - February 27, 2007
Hamon Investment Group, Hong Kong, China

The significant fall in the China market today triggered sell offs in "H" shares and HK shares. After several months of strong performance this sell off, while it seems severe, is a healthy correction which reflects the Chinese government's attempts to cool the market before the NPCC meeting next month.

China/Hong Kong stock markets came under selling pressure in the afternoon today after the Shanghai B-index dropped 8.28% after hitting a new high this morning and the Hang Seng Index was down 1.76% (HSCEI down 3.07%).

Excel China Fund has 13.7% of its portfolio invested in Mainland China stocks and 21% in cash as of February 26, 2007.
The rumours that surrounded this fall were:


That the chairman of CSRC may leave his post soon. We believe, whether it is true or not, bears little relevance to the market as the position will be held by another government official. Also, the ultimate responsibility decision making power for China's stock market does not only lie with the CSRC but at more senior government levels that require broader government consensus.


Speculation that interest rates may be raised. This rumour has been going around since mid-January. Given that the PBOC just raised bank reserve requirements last week and inflation in January was below market estimate, we do not think a near term interest hike is likely. Even if it is true, we believe the impact would not be significant, as real interest rates would remain negative.


Speculation of the potential implementation of a capital gains tax. Again we don't think this is likely. The potential implementation of a capital gains tax could be very damaging and we do not believe the government is ready to discourage investors, having just revived the market after 5 years of bearishness. The tax bureau is also not technically ready for such a taxation.
In summary, we believe today's sell off in the China market is a combination of market rumour, as well as profit taking, after the market has risen strongly last year. As you know, the Mainland Chinese government has been warning that the market has risen a long way very quickly, and has been trying to orchestrate or "jawbone" some form of correction prior to the NPCC meeting. We believe between now and the March NPCC, the "A" share market will "consolidate", however the government does not want a bear market, but a cooling off in the stock market and property market. The rotation that we had been seeing from large caps into better value small caps is a reflection of investors concern over valuations. This correction will remove some of the excessive exuberance. In China we still like the mid cap sector, domestic consumption, and prospects for infrastructure spending.

We believe the H share/B share markets, which were dragged down by A shares, look even more attractive now due to the much cheaper valuation and better fundamentals. After the NPCC (March. 5-16) we will go into the reporting season when we expect to see attractive results. On April 19, we will see the first quarter macro numbers including GDP growth, FAI growth, export growth and consumption growth. All these numbers should be strong or even stronger than expected.

Our portfolios are, in our opinion, not expensive on a forward PER of 16x with earnings growth of 28% in 2007.
With best regards

Hugh Simon
Chief Executive
Hamon Investment Group
3510-15 Jardine House
One Connaught Place
Central, Hong Kong

Hi Investpro,


I would like your comments on the case below.It's not a market meltdown but..the stock itself...

I was trading in options and making some acceptable profit here and there, untill last week where one stock dropped down to 42% in one day, due to US mortgage subprime loan problem.

Now the questions is, a coupple of lawyers are suing the management and I was wondering whether it's prudent to take part in it or simply forget it as a bad judgement. Do you have any insight on these kind of things. The management was so blunt they said they won't be expecting to make any profit for another 5 years, which caused the rout.

Thanks

And the tumbling continues. All major markets are losing ground.

Quote:

---

Originally posted by Val

Hi Investpro,


I would like your comments on the case below.It's not a market meltdown but..the stock itself...

I was trading in options and making some acceptable profit here and there, untill last week where one stock dropped down to 42% in one day, due to US mortgage subprime loan problem.

Now the questions is, a coupple of lawyers are suing the management and I was wondering whether it's prudent to take part in it or simply forget it as a bad judgement. Do you have any insight on these kind of things. The management was so blunt they said they won't be expecting to make any profit for another 5 years, which caused the rout.

Thanks

---

World wide markets gain ground. SSE in China is up 6% this year despite last week's fall.
The TSX is below the value at the outset of the year. Shame on it!


http://www.shanghaidaily.com/sp/article/2007/200703/20070306/article_308074.htm

Shanghai stocks rally on strong buying of banks
2007-3-6
Change font size:
-- Advertisement --

SHARES in Shanghai, the epicenter of last week's market meltdown, rebounded today, with the key Composite Index gaining 1.97 percent on strong buying of banks and other financial shares.

The Shanghai Composite Index closed at 2,840.18 after rising as much as 2.6 percent during the session. The smaller Shenzhen Composite Index gained 0.7 percent to 731.19.

But trading was light as investors watched for cues from the annual session of China's national legislature, the Associated Press said.

Financials were broadly higher. Shanghai Pudong Development Bank jumped nine percent to 23.60 yuan (US$3.05); Bank of China rose 3.4 percent to 4.84 yuan and China Minsheng Banking added 5.0 percent to 11.50 yuan.

Despite a nearly nine percent drop on February 27 that set off a chain reaction of market volatility around the globe, and further declines since, the Shanghai Composite Index remains about 6.2 percent above where it started the year.

Meanwhile, in an annual "development plan" reported by state media today, the Shanghai Stock Exchange pledged to focus on attracting share listings by top notch companies, many of which already have shares traded in Hong Kong and other overseas markets.

The plan calls for speeding up reforms to help stabilize the markets and counter surging volatility.


Shanghai Daily News

Shanghai Composite Index rises 2nd day in a row.

http://www.chron.com/disp/story.mpl/ap/fn/4608628.html

China Stocks Rise for a 2nd Day


© 2007 The Associated Press

TOOLS
Email Get section feed
Print Subscribe NOW
SHANGHAI, China — China's stocks rose for a second day Wednesday as the market showed signs of stabilizing following recent volatility.

The benchmark Shanghai Composite Index, which tracks both A and B shares, ended up 2 percent at 2896.59, having also gained 2 percent in the previous session. The Shenzhen Composite Index rose 2.6 percent to 750.25, following a 0.7 percent gain Tuesday.

Blue chips rose on demand from investment funds and brokerages were up on positive earnings outlooks.

Lin Songli, an analyst at Guosen Securities, said the benchmark index was unlikely to hit a record in the near term because of profit-taking.

Among the most actively traded companies, China United Telecommunications advanced 3.3 percent to 5.36 yuan, Daqin Railway surged 7.6 percent to 11.93 yuan, and China Petroleum & Chemical rose 2.8 percent to 8.94 yuan.

CITIC Securities rose 8.3 percent to 39.94 yuan and the smaller Hong Yuan Securities advanced 7 percent to 21.88 yuan, on expectations of surging commission income over the first quarter due to active stock trading in China this year.

Despite a nearly 9 percent drop on Feb. 27 that set off a chain reaction of market volatility around the globe, the Shanghai Composite Index remains about 6.2 percent above where it started the year.

http://www.iht.com/articles/ap/2007/03/08/business/AS-FIN-MKT-Asian-Markets.php


Tokyo, Hong Kong shares rally as most Asian markets continue to recover from selloff
The Associated PressPublished: March 8, 2007





HONG KONG: Japanese and Hong Kong stocks rallied Thursday to reverse losses in the previous session as most Asian markets continued to recover from their recent swoon.

In Tokyo, the benchmark Nikkei 225 index surged 325.69 points, or 1.94 percent, to finish at 17,090.31 points. It was only the market's second gain in eight days.

Investors snapped up stocks of Toyota and Canon after the market had plunged 8 percent during a five-session stretch through Monday. The yen's weakness, which helps Japan's exporters, also encouraged investors.

Toyota Motor Corp. rose 1.29 percent to 7,840 yen (US$67.01), Canon Inc. added 1.51 percent to 6,160 yen (US$52.65) and Sony Corp. posted a 2.92 percent to 5,990 yen (US$51.20).

Traders said they would be paying close attention to the U.S. Labor Department's employment report Friday to gauge the health of the U.S. economy, Japan's biggest export market.

Today in Business

With South Korean concession on beef, it and U.S. may be closer to a trade agreement
European Central Bank raises interest rate
Wind energy, surprisingly to some, has economies of scale, too
In Hong Kong, shares rose sharply, boosted by stronger-than-expected earnings by Hong Kong Exchanges & Clearing. The blue-chip Hang Seng Index rose 256.53 points, or 1.36 percent, to 19,175.17.

Among gainers, Hong Kong Exchanges surged 3.6 percent to HK$76.80 after the city's stock and derivatives exchanges operator reported an 88 percent increase in its 2006 net profit, on a strong rise in market turnover and investment income last year. The result was 12 percent higher than analysts' forecasts.

Conglomerate Swire Pacific leapt 3.6 percent to HK$90.2 after the company posted a 20.3 percent rise in its 2006 net profit, as revaluation gains and stronger contributions from property rental and airline operations offset lower property sales.

But Sun Hung Kai Properties Ltd. bucked the trend, becoming the biggest blue-chip decliner after reporting Wednesday a 13 percent decline in its first-half underlying profit due to lower property sales.

In currency dealings, the dollar was trading at 116.75 yen, up from 116.09 yen late Wednesday in New York. The euro fell to US$1.3176 from US$1.3178.

Elsewhere:

BANGKOK: Thai shares ended 0.2 percent higher at 671.98 after a session of lackluster trade, as many investors were waiting to hear economic policies from the newly appointed Finance Minister.

JAKARTA: Indonesian shares surged 1.6 percent at 1,771.56, helped by gains in most Asia markets, plus firmer IDR. Traders said the local market gained momentum and continued its rebounding trend after a sell-off early this week.

KUALA LUMPUR: Malaysian shares rallied, gaining 2.6 percent at 1,187.06, led by banking stocks and continued bottom-fishing by foreign funds.

MANILA: Philippine shares dropped as investors, prompted by Wall Street losses overnight, cashed in on gains from the previous session. The benchmark 30-company Philippine Stock Exchange Index shed 34.89 points, or 1.1 percent, at 3,028.37.

MUMBAI: Indian shares bounced back sharply in line with the rebound in Asian markets, with gains led by Hindustan Lever and cement stocks. The Bombay Stock Exchange's 30-stock Sensitive Index, or Sensex, surged 3.7 percent, or 469.60 points, at 13,049.35.

SEOUL: South Korean shares advanced for a third consecutive day, led by brokerage stocks and steelmaker Posco. The Korea Composite Stock Price Index, or Kospi, rose 12.94 points, or 0.9 percent, to 1,423.89.

SHANGHAI: Chinese shares rose for the third straight session, driven higher by strong demand amid the launch of new securities funds. The benchmark Shanghai Composite Index jumped 1.1 percent to 2,928.01. The Shenzhen Composite Index surged 1.7 percent to 763.20.

SINGAPORE: Singapore's shares ended higher for the third session amid lackluster trading, but traders warned last week's correction may not be over. The Straits Times Index gained 63.34 points, or 2.1 percent, to close at 3,122.49.

SYDNEY: Australian shares closed almost unchanged, but dealers remain nervous ahead of the next moves on Wall Street with the focus turning to Friday's U.S. jobs report. The benchmark S&P/ASX 200 index fell just 3 points at 5,822.3, near the day's high.

TAIPEI: Taiwanese shares rose, led by gains in food and transport stocks. The Weighted Price Index of the Taipei Stock Exchange jumped 92.98 points, or 1.2 percent in heavy volume to close at 7,573.87.

WELLINGTON: New Zealand's stocks were slightly higher, but continuing nervousness about global market volatility and a lack of positive local leads kept most investors on the sidelines. The benchmark NZX-50 index rose 6.8 points or 0.2 percent to 4,069.40.