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Another Look at a Few Asian Markets

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November 25, 2009 – Comments (4)

I have written several posts in the past looking at Asian stock indices (Long Term Count of NIKKEI, HSI Long Term P/E Analysis, A Look At Some of the Asian Markets, and several others).

And it is worth re-examining as the Asian markets have led the world stock rally. They were the most oversold and hence were the earliest receivers of speculative money. It is a reasonable hypothesis that money will leave them first as well. This is a point I have made several times in the past, and have had conversations with other bloggers (such as Alphahorn) along these lines.

So some of the "hot" markets that aren't looking so hot right now are the SSEC, KOSPI and HSI. The HSI is definitely holding up better, but the SSEC and KOSPI have both retested major resistance levels and both have been "rebuffed".

Next is the old NIKKEI. Ouch. The long term chart tells the story of this Blue Supergiant, which burned so hot and so bright for decades, and is continuing to implode after fusing all that hydrogen into helium.

It has been leading down recently. And I think a lot of this has to do with the "carry trade" baton being handed from the Yen to the Dollar. So a fair question is, what happens to US markets when the carry trade gets handed off to somebody else? (Treasury Bond rates are a balloon being held underwater, but I certainly don't argue that rising rates will make the Dollar healthier. Far from it. Just more expensive. Riddle: Is a more expensive worthless dollar still worthless?")

4 Comments – Post Your Own

#1) On November 25, 2009 at 10:22 AM, binve (< 20) wrote:

I digress, here are the charts.




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#2) On November 25, 2009 at 10:58 AM, hhasia (65.98) wrote:

HI Binve

Thanks for the charts.  We had an interesting day.  The index was up on heavy volume, but the Chinese banks got hammered because of the mainland government comments.  Lets not kid ourselves. The Beijing policy machine holds alot of weight with these markets. Further, because the individual investor comprises over 25% in HSI trading and even more in Shanghai, the "mood" swings are more pronounced.  So, if the mood is good, and media plays it, the market will continue course.  Also, in Shanghai, the govt increased the amount that foreign firms could invest. So capital flows from west to east, pushing the market higher.  Having said that, the HSI is almost to the PE topping range 20-22. With only the exception of the tech bubble, the index does not hold higher without a correction.  The correction should be brief because the earnings coming out are strong across the board.

Again, thanks. 

HHASIA

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#3) On November 25, 2009 at 11:06 AM, binve (< 20) wrote:

hhasia, Thanks!

I appreciate appreciate your insight on this topic. I am going by the charts, but I do not have a very clear fundamental picture of what is going on over there (and to be honest, despite a lot of noise that many bloggers make, nobody in the Western hemisphere does). I think you have to be over there to appreciate how the social mood is affecting those markets and to read all of the explicit and implied policies coming out of the government

So I will keep charting if you keep adding your terrific insights! Thanks!!..

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#4) On November 25, 2009 at 12:29 PM, hhasia (65.98) wrote:

Binve

I agree that there are alot who do not understand the east.  But the mind set is different. Debt is bad, and few individual investors trade on margin. Loans, including margin MUST be secured. Most folks do not want to give the bank authority over their assets, and then give the bank $ too, just for a few extra bucks to trade with.  So to entice people into the game, in HK the banks lend almost on all IPO's, at low low interest rates. 

Things China has coming in 2010. Expo in Shanghai. I would expect an explosion of market interest once again. But given that Shanghai is a closed market and HK is "Free" the $ come here first. Still, the Shanghai index will likely post new highs by the end of 2010.  For investors I recommend to find a fund that can purchase direct "A" shares, not a third party proxy.

Keeping up with the reports coming out of China Daily is a good hedge to gauge the "mood". The China market is easy to figure from that. The USA is much much more complex.

HHASIA

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