Thursday, October 09, 2008

China Shares Scandals rock the market

I would be blind not to record this in this trading diary of mine. FerroChina, was viewed as one of the titan of the S-shares could not repay a loan. In this bear market, many scandals and negative corporate news has surfaced from S-shares.... i have long doubted the quality of those companies listed in our bourse. I mean why are the best listed in HK market? US market? So those that list in Singapore? Another observation is many of those china shares are fast becoming penny shares... look at Hongxin... one by one they were being shot down... mercilessly... sino-env, synear, jiutian, cosco, yzj, so many of them! With the current bad news on Ferro and China Dye, it should drive more fear into investors. Especially those who were sold stories about how good these china shares are.

That's why today i choose to short yanlord at $1. My view is, it is a lower high and there is no incentive for S-shares to rally for now. Confidence will be at a low after the scandals. Furthermore, property sector in China... is it still booming? My guess is the rally to $1 from it's all time low was due to the interest rate cut. However, fundamentals effect is slow and sentiment will drive the stock price for now.

They blamed shortist for the turmoil but hey they banned shorting and look? It's worse than before the ban. They are obviously no longer in control. Concerted interest rates cut, Bail out plan approval, ban shorting... nothing works anymore. When nothing works anymore... how will the market moves up? I think the important thing for now is to find an edge... anticipate which news is going to bolster the market's confidence and act on it.

DISCLAIMER: The contents in this website are for fun reading and must not be taken as a buy or sell advice. You must do your own analysis on top of my postings. By reading this blog, you agreed that i am not responsible for your trading.