2008/02/06
New era, what new era
Every time a major boom of the stock market nears an end, commentators come up with a new theory that claims the arrival of a "new era", which reflects human being's desire to defeat recession for good. Just before the market crash in 1929, famous economist Irving Fisher did that, announcing that the then newly established Federal Reserve in the U.S. would do the job. By the market meltdown in 2000, it was the information technology that acted the one-time hero. The 2007 version was taken over by the theory of decoupling. With "there ain't no such thing as a free lunch" being an economic principle, the market rule should be: "There ain't no such thing as a 'new era'". A good thing about Chinese calendar is that it reminds us of the cycling of the nature. The family of twelve animals takes turn. Now, it is rat that is coming back. Unfortunately, Western calendar adds cardinal numbers -- 2007, 2008, 2009, 2010 and so on, as if time mindlessly shuttles us toward unmanned space of the universe.
2008/01/09
2007/02/17
2007/02/13
The Year of Lazy Pig
Pig is lazy. It sleeps and eats all day all over the place. It is sloppy, dirty and ugly -- outright unproductive, except for the value of its flesh. i miss the Year of Dog as it is winding down.
Dog is lovely. It is hardworking, detective, loyal, helpful, friendly, yet entertaining. Dog takes the jobs of security guard, foreman, first-aider, custom officer and hunters, while in most cases, people keep dog as pet and have a lot of fun with it. However, the rotation of Chinese Zodiac calendar fairly allows each of the 12 designated animals to have its own turn.
Chinese follow the tradition to associate the New Year's fortune with the characteristic of the zodiac animal the year belongs to. From Tiger's courage and Horse's energy, to Monkey's cleverness and Roast's high spirit, the distinctive features of most zodiac animals cheer us up. Unfortunately, Pig seems to lack its appeal.
Now, it is this uninteresting animal that is knocking the door. What a Pig Year we are about to see!
Yet, laziness is good for its own sake. At least, it is safe from destruction.
The recent Years of Pig, 1971, 1983 and 1995, shared the same bluntness as the hog. The stock market in 1995 was consolidating after 1994's plunge and would have two years to spare before the 1997 market crash. The Chinese companies making their listing debut in Hong Kong have invited a mania for them in early 1990's until their valuations become too high to sustain themselves. The property sector, the pivot of the Hong Kong economy, also saw its upward trend halt in 1994 when the government tightened its regulations. Therefore, its precedent Dog, 1994, had already taken care of the hopes and distresses before the Pig arrived in 1995. Pig had nothing left to do but healing the wounds.
Let's turn the Zodiac wheel around and get back to 1983. The stock market had already plunged two years earlier in the midst of uncertainty about the sovereign of Hong Kong after 1997. The year of 1983 saw the stock market flat. A year later, the British and Chinese government came to an agreement about the handover, and another wave of bull market emerged.
Further, Pig's visit in 1971 saw the market heating up, but the boom did not kick off until the following year.
In a nutshell, Lazy Pig jumped over the whole decade of 1960's, an era of political unrest. It skipped the worldwide energy crises in mid-1970's. Lazy Pig can't recall how the 1987 markets crashed in the U.S. and Hong Kong. It was absent during the 1997-98 Asian Financial Crises as well. It might be sleeping that Sunday afternoon in July 2003 when half a million of people took the street, demanding democracy.
Lazy Pig hates surprise, positive or negative. Turbulence just can't fit the calm of Lazy Pig. At least, the recent history in Hong Kong confirms the tranquility in Pig Year.
The affection toward stability by Lazy Pig did something good to Hong Kong. In 1983, the dollar peg was established. Before that, the Hong Kong dollar had fluctuated freely and had worryingly depreciated. Although it has drawn criticism in recently year, for its lack of flexibility, the dollar peg has played a crucial role for the stability of the financial system and the confidence of investors ever since.
Besides, some "mysterious forces" surrounding Lazy Pig boosts enterperneurship. Jimmy Lai launched Apply Daily newspaper in 1995 and the media industry would never be the same. i remember that my editor told me to follow Apply Daily as the role model when i joined a well-established newspaper in 1996 -- one year following Apple Daily's birth.
The year that Li Ka-shing founded his property flagship Cheung Kong was Pig -- 1971. That year was proven to be critical for Cheung Kong's development in the 1970's. Cheung Kong floated its shares in the stock exchange just in time to catch the market boom in 1972. The market crashed in 1973. Had it missed the chance, SK Li would have to wait for another boom. Unfortunately, Lee Shaw Kee missed that chance, and he waited for almost ten years before he got his flagship Henderson Land listed.
Those "mysterious forces" also favored the personal career in 1995. Donald Tsang was promoted to become the Financial Secretary, which prepared him for taking the challenges against financial crises three years later -- he did "get the job done", as he would be happy to recall these days.
Although these moves in career and business development seemed to be a natural step forward, as Lazy Pig hates surprises, these moves proved to be important to Hong Kong's media and financial health.
Will 2007 be another peaceful Pig Year? This Zodiac analysis contrasts with the financial point of view that i stated in the previous articles. Will Lazy Pig get burnt and become a delicious barbecued food?
Should Zodiac calendar ever have any impact on the reality, Lazy Pig would place its blessing on the enterperneurship, as it did. That's important because we have long missed that the successful business stories as those of KS Li and Jimmy Lai. Critics say that it has become more and more difficult for Hong Kong people to climb up the social and capital ladder. Has the business environment changed in a way that it no longer favors enterperneurship? i would study this topic and share my views with you later.
Copyright Quam
Dog is lovely. It is hardworking, detective, loyal, helpful, friendly, yet entertaining. Dog takes the jobs of security guard, foreman, first-aider, custom officer and hunters, while in most cases, people keep dog as pet and have a lot of fun with it. However, the rotation of Chinese Zodiac calendar fairly allows each of the 12 designated animals to have its own turn.
Chinese follow the tradition to associate the New Year's fortune with the characteristic of the zodiac animal the year belongs to. From Tiger's courage and Horse's energy, to Monkey's cleverness and Roast's high spirit, the distinctive features of most zodiac animals cheer us up. Unfortunately, Pig seems to lack its appeal.
Now, it is this uninteresting animal that is knocking the door. What a Pig Year we are about to see!
Yet, laziness is good for its own sake. At least, it is safe from destruction.
The recent Years of Pig, 1971, 1983 and 1995, shared the same bluntness as the hog. The stock market in 1995 was consolidating after 1994's plunge and would have two years to spare before the 1997 market crash. The Chinese companies making their listing debut in Hong Kong have invited a mania for them in early 1990's until their valuations become too high to sustain themselves. The property sector, the pivot of the Hong Kong economy, also saw its upward trend halt in 1994 when the government tightened its regulations. Therefore, its precedent Dog, 1994, had already taken care of the hopes and distresses before the Pig arrived in 1995. Pig had nothing left to do but healing the wounds.
Let's turn the Zodiac wheel around and get back to 1983. The stock market had already plunged two years earlier in the midst of uncertainty about the sovereign of Hong Kong after 1997. The year of 1983 saw the stock market flat. A year later, the British and Chinese government came to an agreement about the handover, and another wave of bull market emerged.
Further, Pig's visit in 1971 saw the market heating up, but the boom did not kick off until the following year.
In a nutshell, Lazy Pig jumped over the whole decade of 1960's, an era of political unrest. It skipped the worldwide energy crises in mid-1970's. Lazy Pig can't recall how the 1987 markets crashed in the U.S. and Hong Kong. It was absent during the 1997-98 Asian Financial Crises as well. It might be sleeping that Sunday afternoon in July 2003 when half a million of people took the street, demanding democracy.
Lazy Pig hates surprise, positive or negative. Turbulence just can't fit the calm of Lazy Pig. At least, the recent history in Hong Kong confirms the tranquility in Pig Year.
The affection toward stability by Lazy Pig did something good to Hong Kong. In 1983, the dollar peg was established. Before that, the Hong Kong dollar had fluctuated freely and had worryingly depreciated. Although it has drawn criticism in recently year, for its lack of flexibility, the dollar peg has played a crucial role for the stability of the financial system and the confidence of investors ever since.
Besides, some "mysterious forces" surrounding Lazy Pig boosts enterperneurship. Jimmy Lai launched Apply Daily newspaper in 1995 and the media industry would never be the same. i remember that my editor told me to follow Apply Daily as the role model when i joined a well-established newspaper in 1996 -- one year following Apple Daily's birth.
The year that Li Ka-shing founded his property flagship Cheung Kong was Pig -- 1971. That year was proven to be critical for Cheung Kong's development in the 1970's. Cheung Kong floated its shares in the stock exchange just in time to catch the market boom in 1972. The market crashed in 1973. Had it missed the chance, SK Li would have to wait for another boom. Unfortunately, Lee Shaw Kee missed that chance, and he waited for almost ten years before he got his flagship Henderson Land listed.
Those "mysterious forces" also favored the personal career in 1995. Donald Tsang was promoted to become the Financial Secretary, which prepared him for taking the challenges against financial crises three years later -- he did "get the job done", as he would be happy to recall these days.
Although these moves in career and business development seemed to be a natural step forward, as Lazy Pig hates surprises, these moves proved to be important to Hong Kong's media and financial health.
Will 2007 be another peaceful Pig Year? This Zodiac analysis contrasts with the financial point of view that i stated in the previous articles. Will Lazy Pig get burnt and become a delicious barbecued food?
Should Zodiac calendar ever have any impact on the reality, Lazy Pig would place its blessing on the enterperneurship, as it did. That's important because we have long missed that the successful business stories as those of KS Li and Jimmy Lai. Critics say that it has become more and more difficult for Hong Kong people to climb up the social and capital ladder. Has the business environment changed in a way that it no longer favors enterperneurship? i would study this topic and share my views with you later.
Copyright Quam
2006/12/11
Dogonomics
Mind your steps as in the Year of Dog as always. Fengshui master tells you that stepping onto dog dirt brings bad luck. There shouldn't be any exception during the coming year.
In their column in The New York Times Magazine, Steven Levitt and Stephen Dubner, discussed how to deal with the problem of dog doop. After horses' manure in the 19th century, dogs' wastes have brought another threats to the hygienic environment in the urban streets. The authors guess the dog population in New York is one million, making the dog-to-human ratio to be 1-to-20. If 99% of all the dog owners pick up after their dogs. That still leaves poop produced by 10,000 dogs uncleared in the street everyday. The fine for inconsiderate dogkeepers is US$50 for the first offense, which is clearly not threatening enough. The law enforcement appeared to be very relaxed. Only 471 dog-waste violations were ticketed.
The majority of dogkeepers pick up after their dogs. How can we stop the inconsiderate dogkeepers? One of the new ideas is to license the dogs and keeping their DNA records. Once the dirts are found in the street, the government officers will trace the DNA records and mail the offending owner a ticket. It would cost US$30 million to establish a DNA databank for all dogs in New York, let alone the administrative expenses to be incurred case-by-case, which makes such a practice nonsense.
i wonder if we can invent a kind of diaper customized for dogs. The government could make a rule requiring all dogkeepers to have their dogs wearing diapers in the street. Any violation will be fined. i am not sure such a rule will breach animal's rights, or petkeeper's rights. If this law is established, a whole new income stream will be generated for the industry of pet supplies and diaper manufacturers, such as Pampers.
When people enjoy convenience that brings soical costs, i think, "privatizing" the social costs, by mandating the use of diapers or fining, could be a remedy, but never a complete solution. After all, everyone being considerate is a key to eliminating negative externalities. Keeping the street clean very much relies on doglovers' disciplines. Standing in the dog's shoes, you don't want to walk in dirty streets especially in your bare feet.
******
Dogs, well-known to be loyal and honest, know who owns what more clearly than many people, according to Peruvian economist Hernando de Soto.
After the fall of the Berlin Wall in 1989 and the disolvation of the Soviet Union in 1991, the Communist world joined China, which started the reform in 1979, to follow the market economy. Today, proverty is prevailing in large part of these countries. Capitalism has failed to bring prosperity, some people criticize. Hernando points out that macroeconomic reforms cannot be built on sand. The rule of law, beginning with the property law, forms the bedrock of capitalism.
Without a private property system, infrastructure and building development, and businesses cannot draw financing. The problem is a majority of the population of developing and former communist countries do not have legal property rights over their assets. These assets include land, businesses and intellectual know how. The property rights should also be well documented in a formal legal system, which is a further obstacle in the developing countries.
During a trip to Bali, Indonesia, Hernando wandered in the fields of rice, with no idea where the property boundaries were. But the dogs knew, as he recalled. "Every time I crossed from one farm to another, a different dog barked. Those Indonesian dogs may have been ignorant of formal law, but they were positive about which assets their masters controlled." When Indonesian ministers consulted Hernando about the establishment of a property system in rural Indonesia, this economist told them thatIndonesian dogs had the basic information they needed to set up a formal property system. He asked them to start from the sketches by listening to the barking dogs. "Ah, reponded one of the ministers, "jukum adat" (the people's law)!"
******
Dogs have an economic mind.
In "Cafe Hayek", a blog named after economist Friedrich Hayek, Don Boudreaux explains his dog's behavior by economics. He just bought a 10-week-old soft-coated wheaten terrier, Molly, while he has a 14-year-old beagle, Priscilla. The two dogs get along well, except when Molly approaches Priscilla's food bowl. Priscilla becomes fierce and growls whenever Molly comes close to her food bowl. Molly is scared away.
However, both dogs peacefully share the same water bowl. Priscilla has no complaint about it. They often drink from the same bowl together.
How comes the difference? Water is an essence of life as food. A dog can live longer without food than it can live without water. In that sense, water is more important than food. Why does Priscilla care more about her food than her water?
To answer this question, Boudreaux borrows the concept of marginal analysis. By the survival of fittest hypothesis, dog's ancestors in the wild learnt that water is more easily accessible than food. Put differently, an additional unit of food is more costly to gain than an additional unit of water, which makes the protection of food more worth fighting for.
What a nice homey place to learn economics if only you keep at least two dogs!
Jan 25, 2006
Copyright Quamnet
In their column in The New York Times Magazine, Steven Levitt and Stephen Dubner, discussed how to deal with the problem of dog doop. After horses' manure in the 19th century, dogs' wastes have brought another threats to the hygienic environment in the urban streets. The authors guess the dog population in New York is one million, making the dog-to-human ratio to be 1-to-20. If 99% of all the dog owners pick up after their dogs. That still leaves poop produced by 10,000 dogs uncleared in the street everyday. The fine for inconsiderate dogkeepers is US$50 for the first offense, which is clearly not threatening enough. The law enforcement appeared to be very relaxed. Only 471 dog-waste violations were ticketed.
The majority of dogkeepers pick up after their dogs. How can we stop the inconsiderate dogkeepers? One of the new ideas is to license the dogs and keeping their DNA records. Once the dirts are found in the street, the government officers will trace the DNA records and mail the offending owner a ticket. It would cost US$30 million to establish a DNA databank for all dogs in New York, let alone the administrative expenses to be incurred case-by-case, which makes such a practice nonsense.
i wonder if we can invent a kind of diaper customized for dogs. The government could make a rule requiring all dogkeepers to have their dogs wearing diapers in the street. Any violation will be fined. i am not sure such a rule will breach animal's rights, or petkeeper's rights. If this law is established, a whole new income stream will be generated for the industry of pet supplies and diaper manufacturers, such as Pampers.
When people enjoy convenience that brings soical costs, i think, "privatizing" the social costs, by mandating the use of diapers or fining, could be a remedy, but never a complete solution. After all, everyone being considerate is a key to eliminating negative externalities. Keeping the street clean very much relies on doglovers' disciplines. Standing in the dog's shoes, you don't want to walk in dirty streets especially in your bare feet.
******
Dogs, well-known to be loyal and honest, know who owns what more clearly than many people, according to Peruvian economist Hernando de Soto.
After the fall of the Berlin Wall in 1989 and the disolvation of the Soviet Union in 1991, the Communist world joined China, which started the reform in 1979, to follow the market economy. Today, proverty is prevailing in large part of these countries. Capitalism has failed to bring prosperity, some people criticize. Hernando points out that macroeconomic reforms cannot be built on sand. The rule of law, beginning with the property law, forms the bedrock of capitalism.
Without a private property system, infrastructure and building development, and businesses cannot draw financing. The problem is a majority of the population of developing and former communist countries do not have legal property rights over their assets. These assets include land, businesses and intellectual know how. The property rights should also be well documented in a formal legal system, which is a further obstacle in the developing countries.
During a trip to Bali, Indonesia, Hernando wandered in the fields of rice, with no idea where the property boundaries were. But the dogs knew, as he recalled. "Every time I crossed from one farm to another, a different dog barked. Those Indonesian dogs may have been ignorant of formal law, but they were positive about which assets their masters controlled." When Indonesian ministers consulted Hernando about the establishment of a property system in rural Indonesia, this economist told them thatIndonesian dogs had the basic information they needed to set up a formal property system. He asked them to start from the sketches by listening to the barking dogs. "Ah, reponded one of the ministers, "jukum adat" (the people's law)!"
******
Dogs have an economic mind.
In "Cafe Hayek", a blog named after economist Friedrich Hayek, Don Boudreaux explains his dog's behavior by economics. He just bought a 10-week-old soft-coated wheaten terrier, Molly, while he has a 14-year-old beagle, Priscilla. The two dogs get along well, except when Molly approaches Priscilla's food bowl. Priscilla becomes fierce and growls whenever Molly comes close to her food bowl. Molly is scared away.
However, both dogs peacefully share the same water bowl. Priscilla has no complaint about it. They often drink from the same bowl together.
How comes the difference? Water is an essence of life as food. A dog can live longer without food than it can live without water. In that sense, water is more important than food. Why does Priscilla care more about her food than her water?
To answer this question, Boudreaux borrows the concept of marginal analysis. By the survival of fittest hypothesis, dog's ancestors in the wild learnt that water is more easily accessible than food. Put differently, an additional unit of food is more costly to gain than an additional unit of water, which makes the protection of food more worth fighting for.
What a nice homey place to learn economics if only you keep at least two dogs!
Jan 25, 2006
Copyright Quamnet
The Year Of Rooster: Advice From An Extemporaneous Fortuneteller
There is a Chinese saying that "personality determines destiny". i agree, to a certain extent, but not totally. In the investment world, at least, there are so many uncertainties and possibilities that two people with identical personalities could have very different returns if they invest in different markets and years, and receive different information. However, the personality of an investor indeed makes a whole lot of difference when making investment decisions. For instance, those who are reluctant to admit mistakes tend to hold onto losing investments too long, while those who learn from mistakes would move onto the next opportunities where they see fit.
Like it or not, there are Chinese rituals to follow around Lunar New Year. (Fortunately, these rituals are only practiced AROUND Lunar New Year!) All the people in town become extraordinarily superstitious about what to eat, say and wear. All things are done to bring good luck for the year ahead. Yes, there are so many things uncontrollable. The fun part is fortune telling based on Chinese Animal Zodiac.
People born in different years in a cycle of 12 have specific personalities, according to the zodiac calendar. Not a single type specifically represents successful investors. i believe that an all-rounded investor should adapt certain animal characteristics. He should be as courageous as tigers, tolerant as pigs, clever as monkeys, hardworking as horses and suspicious as rats. See it positively, we, human beings, are capable of learning. We learn from birds how to fly.
Summarizing Master Peter So Man Fung's predictions on wealth, people born in the Years of Pig, Rabbit and Horse would have good fortune in the coming year. Those born in the Years of Dog and Dragon will receive hard-earned money. All the others' fortune will be fair.
i would base on investors' personalities indicated by the Animal Zodiac, as well as Quam's 2005 outlook, to predict the fortune the investors will have this year.
THE YEAR OF THE ROOSTER:
(1933, 1945, 1957, 1969, 1981 and 1993, etc.)
"Roosters are courageous, hardworking, shrewd, arrogant, reckless, selfish and eccentric. They are thirsty for knowledge, devoted to work and definite involved in decision-making. They are skilled at what they do and attentive to details. However, they tend to seem boastful to others."
There are fewer no-brainer market opportunities in 2005 than 2004. Skill and attention to details are required. The market would likely go flat. Eager roosters may need more patience. Their aggressiveness may lead them to invest in property stocks, which could be rewarding. Quam believes that property-investing companies would be outstanding performers, thanks to increasing demand for office and retailing space, but limited supply of it.
THE YEAR OF THE DOG
(1934, 1946, 1958, 1970, 1982 and 1994, etc.)
"Dogs are honest, quiet, intelligent, generous, stubborn, loyal and faithful to those they love. They are introverted listeners, dedicated but also cynical and prone to letting their external anxieties get the better of them. Constant worry, a sharp tongue, and a tendency to be a faultfinder will always plague them."
Dog's loyalty and faithfulness might make them long-standing investors of HSBC #5, Manulife #945 and CLP #2. Their patience would likely pay off this year. The share price of HSBC could probably reach $160. Funds would likely continue to flow toward high-yield stocks, including CLP. Manulife might have reached its short-term target at $350-360, but remains to be a solid long-term investment.
THE YEAR OF THE PIG
(1935, 1947, 1959, 1971, 1983 and 1995, etc.)
"Pigs are honest, reliable, sincere, tolerant, shy, affectionate, kind, impulsive and short tempered. They are splendid companions, intellectuals with a very strong need to set difficult goals and carry them out. In addition they are extraordinarily naive. Their unquenchable thirst for knowledge will facilitate their success whereas their quest for material comfort will frustrate it. Pigs also will sacrifice their lives for good causes."
It sounds like pigs would make good stockbrokers. As investors, pigs' thirst for knowledge pushes them do research studies. If their talents show up in the technology side, they would pick up a few opportunities, such as China Mobile #941. It doesn't take a genius to know that demand for telecommunications in the PRC will go up continuously.
Does investing in H shares means "sacrificing their lives for good causes"? Not so dramatically. We expect to see more austerity measures to cool down the overheating economy, but remain optimistic about the long-term prospects of China's economy.
THE YEAR OF THE RAT
(1936, 1948, 1960, 1972, 1984 and 1996, etc.)
"Rat was the first animal in the Chinese zodiac cycle. It is usually considered aggressive, ambitious, suspicious, power-hungry, honest, generous, quick to anger and prone to spend freely. They are imaginative, charming, and truly generous to the one they love. However, they have a tendency to be hot-tempered and overly critical."
Ambitions might lead rats to the admirations of commodities. Quam predicts that commodities would see further corrections in prices after China passed the supply bottleneck last year.
But if their ambitions are put on China's trades, rats will have a good year. It would take some imaginations, which rats are never short of, to invest in China Merchant #144, as the share has climbed to record highs.
THE YEAR OF THE OX
(1937, 1949, 1961, 1973, 1985, 1997, etc.)
"Ox is a symbol of powerful individuals with unyielding and stubborn personalities. They are natural born leaders who typically succeed when given the chance and will also make outstanding parents. They are upright, inspiring, easy-going and conservative."
Stubbornness and conservativeness would direct Ox's focus to the blue chips. Generally speaking, the downside for most large caps is limited at the current levels. At the current level, 13,700, the Hang Seng Index is priced at about 16 times 2004 P/E and hopefully 15 times 2005 P/E. The current valuation is even lower than the beginning of 2004, when the HSI, at 12,600, bore a 17x historical P/E and 15.4 times prospective P/E.
THE YEAR OF TIGER
(1926, 1938, 1950, 1962, 1974 and 1986, etc.)
"As the fighting animal, tigers are sensitive, aggressive, unpredictable, charming, emotional, courageous and capable of great love. Often risking themselves, they have a carefree life."
Investing in small-caps fits tigers' adventurous style. Those tigers who took great risks by investing in Macau-concept stocks should have had windfalls. But if they haven't cashed in by now, they might soon realize they have fallen into hunters' traps. The Macau-concept might turn out to be a mirage.
Tigers may consider buying some small-caps with solid businesses, such as Chen Hsong #57 and Baltrans #562.
THE YEAR OF THE RABBIT
(1927, 1939, 1951, 1963, 1975 and 1987, etc.)
"Rabbits are affectionate, talented, obliging, always pleasant, valuing security and tranquility. They have a tendency to get too sentimental and superficial and to avoid conflict and emotional involvement. Being cautious and conservative, they usually take no risk and are successful in business."
Caution and conservativeness might lead rabbits to invest in bonds. Rabbits must pay attention. Interest rates would continue their steadily upward trend, which implies a downward trend of bond prices. Moreover, the fixed coupon payment by bonds would catch up with inflation. There are signs showing that rises in prices of raw materials are making their way to the consumer level. In general, stocks would outperform bonds.
Prudence would help protect rabbits from losing their investment principals, which is crucial to long-term capital accumulations.
THE YEAR OF THE DRAGON
(1928, 1940, 1952, 1964, 1976 and 1988, etc.)
"Dragons are considered intelligent, gifted, bossy, loud, garish, and unfaithful, but also popular and successful, full of vitality and enthusiasm. They usually look stubborn on the outside, but softhearted inside."
Dragons should manage their investment portfolios well, given their vitality and enthusiasm. Li Ka-shing is a dragon, a model investor. He is a long-term investor in Cheung Kong #1 and also an adventurer on 3G operations in Europe.
THE YEAR OF THE SNAKE
(1929, 1941, 1953, 1965, 1977 and 1989, etc.)
"Those born under this sign are usually considered clever, passionate, determined, romantic, intense, rich in wisdom and charm, but vain. Women born under the Snake are often beautiful. Snakes will be strongly guided by their intuition. They certainly will win a lot of money, but have to avoid procrastination and a stingy attitude towards money."
Intuition makes snakes great traders, especially of currencies. The long-term trend for the US dollar would be down, given its twin deficits. But the short-term rebound could burn fingers. Snakes need their cleverness and intuition to dance in probably the world's most unpredictable market.
THE YEAR OF THE HORSE
(1930, 1942, 1954,1966, 1978 and 1990, etc.)
"Horses are hardworking, intelligent and friendly, cheerful and popular, but impatient. Usually they consider themselves superior to others. They have a strong streak of selfishness and sharp cunning and should guard against being egotistical."
Studiousness might drive horses to put their hopes on industrial stocks. Manufacturers were hit hard last year by rises in production costs and keen pricing pressure. With oil prices remaining buoyant and excess production capacity in China, environment for manufacturers will remain tough this year. i recommend horses buy companies with in-house know-how, diversified markets and products, economies of scale and quality management. Chen Hsong and Lung Kee #255 are good candidates.
THE YEAR OF THE RAM
(1931, 1943, 1955, 1967, 1979 and 1991, etc.)
"Rams are creative, artistic, passionate, elegant, warmhearted, honest, charming but pessimistic, timid, disorganized and vulnerable. Too dependent on material comforts, they are easy to complain and do not respond well to pressure, but will find their own natural solution to a problem when given space."
Rams must love shopping. A natural way to make investment decisions is to do spot checks. Rams would probably find investing in retailers interesting. Ram's fortune this year would likely be as lucky as last year. We expect local retailing to continue to recover. Our top picks in this sector are Veeko #1173 and Luk Fook #590, but we are increasingly concerned about Luk Fook's corporate governance after it said it is paying premium rents to the boss' father. We also like Mirabell #1179.
THE YEAR OF THE MONKEY
(1932, 1944, 1956, 1968, 1980 and 1992, etc.)
"Monkeys are intelligent, inventive, clever, entertaining but also dangerous and easily discouraged. Because of their extraordinary nature and magnetic personality, they are always well liked and make close friends. However, they can't be trusted. They should guard against being an opportunist and distrusting other people."
Monkeys play with warrants (Tony Measor is a monkey). The derivative markets are zero-sum games. Trading volume was record high last year. There must be increasing number of participants, losers and winners. We don't discourage adult investors from gambling. If they choose to, we suggest they buy HSBC calls with long maturity. They should also consider the premiums before committing.
Monkeys could earn windfalls if they spot the next rally after the Macau fever.
Kung Hei Fat Choi! Wish all Quam readers have a prosperous Year of Rooster!
Source of information about Chinese Animal Zodiac: Chinatoday.com
Feb 8, 2005
Copyright Quamnet
Like it or not, there are Chinese rituals to follow around Lunar New Year. (Fortunately, these rituals are only practiced AROUND Lunar New Year!) All the people in town become extraordinarily superstitious about what to eat, say and wear. All things are done to bring good luck for the year ahead. Yes, there are so many things uncontrollable. The fun part is fortune telling based on Chinese Animal Zodiac.
People born in different years in a cycle of 12 have specific personalities, according to the zodiac calendar. Not a single type specifically represents successful investors. i believe that an all-rounded investor should adapt certain animal characteristics. He should be as courageous as tigers, tolerant as pigs, clever as monkeys, hardworking as horses and suspicious as rats. See it positively, we, human beings, are capable of learning. We learn from birds how to fly.
Summarizing Master Peter So Man Fung's predictions on wealth, people born in the Years of Pig, Rabbit and Horse would have good fortune in the coming year. Those born in the Years of Dog and Dragon will receive hard-earned money. All the others' fortune will be fair.
i would base on investors' personalities indicated by the Animal Zodiac, as well as Quam's 2005 outlook, to predict the fortune the investors will have this year.
THE YEAR OF THE ROOSTER:
(1933, 1945, 1957, 1969, 1981 and 1993, etc.)
"Roosters are courageous, hardworking, shrewd, arrogant, reckless, selfish and eccentric. They are thirsty for knowledge, devoted to work and definite involved in decision-making. They are skilled at what they do and attentive to details. However, they tend to seem boastful to others."
There are fewer no-brainer market opportunities in 2005 than 2004. Skill and attention to details are required. The market would likely go flat. Eager roosters may need more patience. Their aggressiveness may lead them to invest in property stocks, which could be rewarding. Quam believes that property-investing companies would be outstanding performers, thanks to increasing demand for office and retailing space, but limited supply of it.
THE YEAR OF THE DOG
(1934, 1946, 1958, 1970, 1982 and 1994, etc.)
"Dogs are honest, quiet, intelligent, generous, stubborn, loyal and faithful to those they love. They are introverted listeners, dedicated but also cynical and prone to letting their external anxieties get the better of them. Constant worry, a sharp tongue, and a tendency to be a faultfinder will always plague them."
Dog's loyalty and faithfulness might make them long-standing investors of HSBC #5, Manulife #945 and CLP #2. Their patience would likely pay off this year. The share price of HSBC could probably reach $160. Funds would likely continue to flow toward high-yield stocks, including CLP. Manulife might have reached its short-term target at $350-360, but remains to be a solid long-term investment.
THE YEAR OF THE PIG
(1935, 1947, 1959, 1971, 1983 and 1995, etc.)
"Pigs are honest, reliable, sincere, tolerant, shy, affectionate, kind, impulsive and short tempered. They are splendid companions, intellectuals with a very strong need to set difficult goals and carry them out. In addition they are extraordinarily naive. Their unquenchable thirst for knowledge will facilitate their success whereas their quest for material comfort will frustrate it. Pigs also will sacrifice their lives for good causes."
It sounds like pigs would make good stockbrokers. As investors, pigs' thirst for knowledge pushes them do research studies. If their talents show up in the technology side, they would pick up a few opportunities, such as China Mobile #941. It doesn't take a genius to know that demand for telecommunications in the PRC will go up continuously.
Does investing in H shares means "sacrificing their lives for good causes"? Not so dramatically. We expect to see more austerity measures to cool down the overheating economy, but remain optimistic about the long-term prospects of China's economy.
THE YEAR OF THE RAT
(1936, 1948, 1960, 1972, 1984 and 1996, etc.)
"Rat was the first animal in the Chinese zodiac cycle. It is usually considered aggressive, ambitious, suspicious, power-hungry, honest, generous, quick to anger and prone to spend freely. They are imaginative, charming, and truly generous to the one they love. However, they have a tendency to be hot-tempered and overly critical."
Ambitions might lead rats to the admirations of commodities. Quam predicts that commodities would see further corrections in prices after China passed the supply bottleneck last year.
But if their ambitions are put on China's trades, rats will have a good year. It would take some imaginations, which rats are never short of, to invest in China Merchant #144, as the share has climbed to record highs.
THE YEAR OF THE OX
(1937, 1949, 1961, 1973, 1985, 1997, etc.)
"Ox is a symbol of powerful individuals with unyielding and stubborn personalities. They are natural born leaders who typically succeed when given the chance and will also make outstanding parents. They are upright, inspiring, easy-going and conservative."
Stubbornness and conservativeness would direct Ox's focus to the blue chips. Generally speaking, the downside for most large caps is limited at the current levels. At the current level, 13,700, the Hang Seng Index is priced at about 16 times 2004 P/E and hopefully 15 times 2005 P/E. The current valuation is even lower than the beginning of 2004, when the HSI, at 12,600, bore a 17x historical P/E and 15.4 times prospective P/E.
THE YEAR OF TIGER
(1926, 1938, 1950, 1962, 1974 and 1986, etc.)
"As the fighting animal, tigers are sensitive, aggressive, unpredictable, charming, emotional, courageous and capable of great love. Often risking themselves, they have a carefree life."
Investing in small-caps fits tigers' adventurous style. Those tigers who took great risks by investing in Macau-concept stocks should have had windfalls. But if they haven't cashed in by now, they might soon realize they have fallen into hunters' traps. The Macau-concept might turn out to be a mirage.
Tigers may consider buying some small-caps with solid businesses, such as Chen Hsong #57 and Baltrans #562.
THE YEAR OF THE RABBIT
(1927, 1939, 1951, 1963, 1975 and 1987, etc.)
"Rabbits are affectionate, talented, obliging, always pleasant, valuing security and tranquility. They have a tendency to get too sentimental and superficial and to avoid conflict and emotional involvement. Being cautious and conservative, they usually take no risk and are successful in business."
Caution and conservativeness might lead rabbits to invest in bonds. Rabbits must pay attention. Interest rates would continue their steadily upward trend, which implies a downward trend of bond prices. Moreover, the fixed coupon payment by bonds would catch up with inflation. There are signs showing that rises in prices of raw materials are making their way to the consumer level. In general, stocks would outperform bonds.
Prudence would help protect rabbits from losing their investment principals, which is crucial to long-term capital accumulations.
THE YEAR OF THE DRAGON
(1928, 1940, 1952, 1964, 1976 and 1988, etc.)
"Dragons are considered intelligent, gifted, bossy, loud, garish, and unfaithful, but also popular and successful, full of vitality and enthusiasm. They usually look stubborn on the outside, but softhearted inside."
Dragons should manage their investment portfolios well, given their vitality and enthusiasm. Li Ka-shing is a dragon, a model investor. He is a long-term investor in Cheung Kong #1 and also an adventurer on 3G operations in Europe.
THE YEAR OF THE SNAKE
(1929, 1941, 1953, 1965, 1977 and 1989, etc.)
"Those born under this sign are usually considered clever, passionate, determined, romantic, intense, rich in wisdom and charm, but vain. Women born under the Snake are often beautiful. Snakes will be strongly guided by their intuition. They certainly will win a lot of money, but have to avoid procrastination and a stingy attitude towards money."
Intuition makes snakes great traders, especially of currencies. The long-term trend for the US dollar would be down, given its twin deficits. But the short-term rebound could burn fingers. Snakes need their cleverness and intuition to dance in probably the world's most unpredictable market.
THE YEAR OF THE HORSE
(1930, 1942, 1954,1966, 1978 and 1990, etc.)
"Horses are hardworking, intelligent and friendly, cheerful and popular, but impatient. Usually they consider themselves superior to others. They have a strong streak of selfishness and sharp cunning and should guard against being egotistical."
Studiousness might drive horses to put their hopes on industrial stocks. Manufacturers were hit hard last year by rises in production costs and keen pricing pressure. With oil prices remaining buoyant and excess production capacity in China, environment for manufacturers will remain tough this year. i recommend horses buy companies with in-house know-how, diversified markets and products, economies of scale and quality management. Chen Hsong and Lung Kee #255 are good candidates.
THE YEAR OF THE RAM
(1931, 1943, 1955, 1967, 1979 and 1991, etc.)
"Rams are creative, artistic, passionate, elegant, warmhearted, honest, charming but pessimistic, timid, disorganized and vulnerable. Too dependent on material comforts, they are easy to complain and do not respond well to pressure, but will find their own natural solution to a problem when given space."
Rams must love shopping. A natural way to make investment decisions is to do spot checks. Rams would probably find investing in retailers interesting. Ram's fortune this year would likely be as lucky as last year. We expect local retailing to continue to recover. Our top picks in this sector are Veeko #1173 and Luk Fook #590, but we are increasingly concerned about Luk Fook's corporate governance after it said it is paying premium rents to the boss' father. We also like Mirabell #1179.
THE YEAR OF THE MONKEY
(1932, 1944, 1956, 1968, 1980 and 1992, etc.)
"Monkeys are intelligent, inventive, clever, entertaining but also dangerous and easily discouraged. Because of their extraordinary nature and magnetic personality, they are always well liked and make close friends. However, they can't be trusted. They should guard against being an opportunist and distrusting other people."
Monkeys play with warrants (Tony Measor is a monkey). The derivative markets are zero-sum games. Trading volume was record high last year. There must be increasing number of participants, losers and winners. We don't discourage adult investors from gambling. If they choose to, we suggest they buy HSBC calls with long maturity. They should also consider the premiums before committing.
Monkeys could earn windfalls if they spot the next rally after the Macau fever.
Kung Hei Fat Choi! Wish all Quam readers have a prosperous Year of Rooster!
Source of information about Chinese Animal Zodiac: Chinatoday.com
Feb 8, 2005
Copyright Quamnet
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