Monday, March 17, 2008
Searching among Rubble
Everything is shattered so badly that it's getting difficult to tell a good company from a bad one if one only looks at the share price movement. Indiscriminate selling is everywhere as the yen carry trade continues to be unwound. I really feel sympathy for those who are going to Japan for the Easter holiday, like my brother. But I feel even more sympathy over my stock holdings, of which prices move more like mortgage backed securities now.
After the surge of Yen, I can safely declare RMB is now the 2nd cheapest currency after the USD, which I wouldn't hold. As the USD looks oversold and RMB looks undervalued, owning China stocks in HKD remains the best option. HKD is a funny currency as it's pegged to USD but economically tied to RMB. As interest rate is extremely low and will go even lower, I hope that'll eventually attract speculative money.
After today's decline both the HSI and HSCEI are up by only 6.5% from the end of 2006. Yes, it even underperformed holding yen in time deposit! Here are some stocks which I found are even trading below 2006 year-end prices. (please feel free to add to the list if you find more companies of similar caliber)
ICBC (1398) -3.7%
BofC (3988) -30.6%
BofComm (3328) -16.2%
China Life (2628) -3%
PetroChina (857) -16%
Sinopec (386) -15%
Datang (991) -10%
Huaneng (902) -33%
Mengniu (2319) -23%
Fuji (1175) -49%
Bank of EA (23) -18%
CoscoPac (1199) -30%
ND paper (2689) -52%
I don't know about you but this looks like a typical all-star team to me, and could've been a portfolio held by any given fund. But if you hold these stocks then you would've underperformed the index by a wide margin. Whether this serves a valid investment lesson is another day's topic. Today I'm more interested in finding broken jewels among the rubble, sort of like wild men finding ways to survive after a huge earthquake or nuclear disaster.
The reasons for the dismal share price performances could be that the market is now less enthusiastic about their prospect, or they have problems not identified before, or they happen to be heavily held by funds who need to liquidate positions, or a combination of the above and other factors. Therefore this is not an endorsed list but rather a to-do list.
It's a lot of work to be done in a bad mood but I think it'd be worth the effort in the end.
DISCLOSURE: I happen to hold 3328, 3988, 991, and 1199 at time of writing. This doesn't mean I prefer these holdings over the rest at all.
After the surge of Yen, I can safely declare RMB is now the 2nd cheapest currency after the USD, which I wouldn't hold. As the USD looks oversold and RMB looks undervalued, owning China stocks in HKD remains the best option. HKD is a funny currency as it's pegged to USD but economically tied to RMB. As interest rate is extremely low and will go even lower, I hope that'll eventually attract speculative money.
After today's decline both the HSI and HSCEI are up by only 6.5% from the end of 2006. Yes, it even underperformed holding yen in time deposit! Here are some stocks which I found are even trading below 2006 year-end prices. (please feel free to add to the list if you find more companies of similar caliber)
ICBC (1398) -3.7%
BofC (3988) -30.6%
BofComm (3328) -16.2%
China Life (2628) -3%
PetroChina (857) -16%
Sinopec (386) -15%
Datang (991) -10%
Huaneng (902) -33%
Mengniu (2319) -23%
Fuji (1175) -49%
Bank of EA (23) -18%
CoscoPac (1199) -30%
ND paper (2689) -52%
I don't know about you but this looks like a typical all-star team to me, and could've been a portfolio held by any given fund. But if you hold these stocks then you would've underperformed the index by a wide margin. Whether this serves a valid investment lesson is another day's topic. Today I'm more interested in finding broken jewels among the rubble, sort of like wild men finding ways to survive after a huge earthquake or nuclear disaster.
The reasons for the dismal share price performances could be that the market is now less enthusiastic about their prospect, or they have problems not identified before, or they happen to be heavily held by funds who need to liquidate positions, or a combination of the above and other factors. Therefore this is not an endorsed list but rather a to-do list.
It's a lot of work to be done in a bad mood but I think it'd be worth the effort in the end.
DISCLOSURE: I happen to hold 3328, 3988, 991, and 1199 at time of writing. This doesn't mean I prefer these holdings over the rest at all.
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