HK & China - Market Direction 01 (May08 - Oct08)

[winston]

Hong Kong mutual fund industry hit by sales drop

HONG KONG (Reuters) - Hong Kong mutual fund sales slumped in the first seven months of 2008, as tumbling global stock markets spurred investors to redeem once high-flying equity funds, according to industry data released on Thursday.

The Hong Kong Investment Funds Association (HKIFA) said gross sales fell 40.9 percent to $15.2 billion (8.6 billion pounds). Net sales after redemptions were just $115.2 million, a 98 percent plunge from the same period in 2007.

Equity funds helped lead the decline, with gross sales dropping 52 percent to $10.1 billion. The sector suffered net outflows as investors redeemed some $10.4 billion of funds.

Such outflows are particularly negative for the investment management industry because equity funds typically charge higher management fees than bond and money market products.

Stock markets have slumped this year on worries about the financial industry's woes, inflation and slowing global growth, with the MSCI main world equity index .MIW00000PUS hitting its lowest since July 2006 on Thursday.

Greater China and European regional equity funds suffered the biggest net redemptions in Hong Kong from January to July, with investors pulling more than $400 million out of each. Japan funds were hit with $190.2 million in net redemptions.

Gross sales of Greater China funds tumbled from more than $5 billion in 2007 to about $1.7 billion.

By contrast, bond funds saw more then $1 billion in net inflows, while investors put $133.37 million of net new money into safe-haven money market and liquidity funds.

"It is expected that due to weak global economic outlook and the negative implications on corporate earnings, as well as the volatility in the commodity and financial markets, investors probably will continue to stay on the sidelines," the industry group said in a statement.

The HKIFA said its membership includes more than 50 fund management

[kennynah]

ho say lah !!!!

[KimHuat]

Hi K,
Can share your happiness with this news of mutual fund???

[kennynah]

hello kimhuat...

your ID siang sui liao..

kim kim ...and ....huat huat... why didnt i think of using it last time...

about your question... i have no answer...

i was just elated by Lena's post...

and now...i know why you ask...answer is.... i posted in the wrong thread....wahahahahahaha...

paiseh ...

[KimHuat]

Kim Kim...Huat Huat!, Hope every one in Huatopedia Huat Huat!!!

I thought u have a feeling that mutual fund selling is half done already, we will reach "what the hell" position by month end.

[winston]

TOL:-

Monday is a holiday in HK & SH.

If there is a deal for Lehman over the week-end, HK may not be able to participate in the rally.

At the same time, if you are a short-seller in HK, would you not take some of your profits now, instead of carrying your positions over the week-end ? If not, wouldn't you be covering your positions today ?

And what about some policy measures being announced by the Chinese regulators over this long week-end ? Everyone in China have been breathing down the necks of the Chinese regulators to do something, as SSE has been in a free-fall ...

[winston]

China steps up pace of foreign fund approvals

SHANGHAI - China's securities regulator, seeking to support a slumping stock market, has given approval for six more foreign institutions to invest in Chinese securities.

The licensing of the six institutions in August marks the fastest monthly pace of approvals in nearly four years, the official Shanghai Securities News said on Saturday.

It brings to 65 the total number of investors in China's Qualified Foreign Institutional Investor (QFII) scheme, which was launched in 2003 as the main way for foreigners to buy Chinese equities.

The newly approved investors still need to obtain currency quotas from China's foreign exchange regulator. Individual quotas are commonly around US$100 million to US$200 million, and quotas issued so far total roughly US$11 billion.

China agreed in talks with the United States late last year to raise the ceiling for the combined quota to US$30 billion from US$10 billion. But it has been reluctant to grant new QFII licences rapidly, partly because large inflows of foreign funds could destabilise its markets.

In the past two months, however, a plunge of the main stock index to 21-month lows, down 66 per cent from last October's peak, has prompted the securities regulator to promise to bring in more foreign funds to help stabilise stock prices.

Meanwhile, slowing appreciation of the yuan against the dollar has threatened to trigger net capital outflows from China, potentially giving the foreign exchange regulator more room to permit inflows into the country.

Foreign investors cannot bring in enough money to make much of an impact on China's stock market; combined QFII quotas are equivalent to less than 1 per cent of market capitalisation.

But foreigners were among the first investors to start pulling out of the market as it peaked late last year, so signs of fresh buying by them could boost local investors' confidence.

The six QFII institutions approved in August include ACE INA International Holdings, an affiliate of New York-listed insurer ACE, Canada's Caisse de depot et placement du Quebec, and the corporation running Harvard University in the United States, according to the securities regulator's website.

The others are South Korea's Samsung Investment Trust Management Co, AllianceBernstein of the United States, and Singapore's Oversea-Chinese Banking Corp. -- REUTERS

[kennynah]

W, u can relax tmrw

[winston]

K, you mean Monday

Anyway, I have not really been trading much as being a contrarian is suicidal and going with the trend can also be dangerous as you can easily be whip-sawed ...

[winston]

As expected and every little action helps...

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China cuts benchmark lending rate

China today took the market by surprise by announcing a 27 basis point cut in the nation's benchmark lending rate.

The cut, coming amid turmoil in the global financial sector, lowers the cost of one-year bank loans to 7.20 percent and is effective from tomorrow.

The People's Bank of China also lowered the reserve requirement for all lenders except the country's five biggest banks and the Postal Savings Bank by 1 percentage point.

It is the first time that the PBOC has lowered the proportion of deposits that lenders must hold in reserve since November 1999.

The cut in reserve requirements is effective from September 25, the central bank said.