Wednesday, November 19, 2008
Some statistics to share
Best performing HSI members
#1 Sino Land 1.1% down
#10 HKE 3.2% down
Best performing midcap members
#1 Lifestyle 3.8% up
#10 Chinese Estates 1.5% down
Best performing smallcap members
#1 Samling 5.2% up
#10 K. Wah 4.3% down
So far so good, all HSI members were down and some mid/small caps went up, not too unsurprising. Below is the more interesting bit.
Worst performing HSI members
#1 Pingan 12% down
#10 HLP 6% down
Worst performing midcap members
#1 OOIL 10.8% down
#10 Shun Tak 5.3% down
Worst performing smallcap members
#1 Kowloon Development 10.2% down
#10 Polytec 3.6% down
In short the bigger the company the larger the fall. De-leveraging you may say, which can explain almost anything now. Because small caps have inherently lower credit quality in eyes of banks, their shares were less lent against in the 1st place and hence can't be de-leveraged as much now. Another explanation is we're near the end of the selling circle, when the best managed companies get sold too. But we can't use recession or depression as a reason, because in that case bigger companies should fare better and hence decline less. The market is indeed acting funny lately.
To conclude, larger companies are more defensive yet cheaper, favorable combination.
In the end the prices are jumping up and down like crazy, it's difficult to make sense of it, and to profit from it.
If you happen to like for example CLP and it was sold down by 10% because of say fund redemption, then it's good news to you. It may fall even greater the day after becoz of say another few funds selling, nobody knows for sure, and I don't see how one can anticipate and profit consistently on this basis.
In the end one should try aim to profit from businesses, as opposed to daily prices.
I like to see myself as a long term investor, but the swings in the market do give trading opportunities. Trading is new to me, but I think that if you do the trading with shares you like anyway, it's worth trying. I won't have a loss if I get stuck with these companies. (Because I wanted to have them anyway.)
I've earned some money with trading China Mobile and Huaneng Power, but lately their wild gyrations seem to have hit a support level. Hence my idea that in October we had many funds dumping these holdings at any price. Now, even though this week has been bad, these 2 shares (and some others) refused to go down significantly.
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