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Sentiments of China Stocks,Bull or Bear?
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mamasan
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23-May-2006 15:56
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need a lot of gut to play china stocks. I belly scared. |
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robinpang
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23-May-2006 15:32
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There is probably huge sell off of china stocks now due to the high run up following the Nov/Dec of last year. After CNY, the rally goes into full swing. The big correction sees % falls as much as 20% in a day from past maket leaders like Shangha Turbo, China Sun, Luzhou, etc. However, given the volatility, there are certain sectors with stocks like Asiawater holding strong. Further, due to the lock in period of 6 months for IPOs, stocks like Sinoenv, Fabchem are also maintaining. Analyst in general do not favour china stocks for many reasons. Firstly, there is no 'value-add' to them, with cost as their main advantage. They are probably drawing their bias from the tech bubble 5 years ago where even high tech and sauvy dot.com companies can go bust. Wisdom at hindsigh are also no value here. Yet, they have not factored in the most important factor driving the bullish sentiments of china stocks, which is the buying power. The buying power of china stocks in the local bourse, which you will see in the next few days are coming from the grand-parents generation. Just taking that age group alone with their CPF contribution can drive the next Elliot wave 3 curve up the wall and hit past 3700 by year end easily. The bullish sentiments of this generation will not be easily diminish since these overseas chinese have thier roots from China. They have been waiting practically their whole lives for this opportunity. Leading the market corection in the short term will probably be Blue chips, but STI will be bolstered by China plays. In the mid to long term, bullish sentiments of China plays will again heat up the global scene and the local economy, with blue chips lagging but rallying nevertheless. This rallying will probbaly push STI from ard. 2600 to 3500 will probably end with another correction in Oct/Nov. So don't worry. Sentiments are short and fearful, but underlying demand is still strong. From a technical analysis standpoint, we might be facing a rare but possible 7 wave up-trend, since the wave 1, 3 and now 5, are quite evenly spaced! Yet a word of caution. If this is true, then this correction will be minor compared to the one at the end of the predicted wave 5, where one day drops of 10-25% can be possible. But that will be a few months later. For now, enjoy the show, and do the difficult, which is buy on the way down. Remember, market watchers are watcing, so don't get caught in the selling and go "long" on shorts position. And rare wave 5 swing in june will decimate margin traders. :-) |
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