........especially for those putting their faith in unknown companies of unknown value and unknown management in far-off unknown lands;


Times Online . April 18, 2007

Betex shares suspended after two senior staff arrested

Chinese lottery firm suspends sales of its software nationwide following police action
Robert Lindsay

Shares in Betex, the Aim-listed Chinese lottery scratchcard and gaming software operator founded by former banker Peter Greenhill, were suspended this afternoon after two of its senior staff were arrested by Chinese police and a third appeared to be on the run.

In a statement, Mr Greenhill said the company had suspended sales of the software product across China: "The Company has received information that two of the senior staff at its Beijing operation have been detained and that a further senior staff member is being sought by the Chinese police authorities in the province of Jilin."

He said the company was working with its legal advisers to try to obtain more information and was assisting the authorities wherever possible.

Betex said it believed the alleged illegal activity "relates to conduct by these individuals and does not call into question the legality of the Company's software product, or the conduct of the Company."

It added: "Owing to the uncertainty surrounding the situation, and the significance of these operations to the financial performance of the Company, the Company has requested a temporary suspension of trading in its shares on AIM pending clarification of the situation."

Betex's business is almost entirely dependent on the Chinese market. Its shares have collapsed from a high of 80p shortly after flotation a year ago, hit by fears over a clampdown on online gambling. They were suspended at 32.5p.

At the end of last year it unveiled a plan to begin selling lottery scratchcards in partnership with lottery authorities in Hebei province.

Scratchcards in China were a huge hit before being withdrawn during the 1990s after concerns over fraud.

------------------------------------



Be warned - for this will not be the last such company to disappear down the pan with your hard-earned loot!

Tuesday May 1, 08:13 AM


China Wonder says trading of shares suspended on AIM after broker resigns

LONDON (Thomson Financial) - China Wonder Ltd said its shares have been suspended on AIM following the resignation of Blue Oar Securities PLC as its nominated adviser and broker.

Independent - 5 May 2007

Investors gave a belated thumbs-down to EnterpriseAsia a day after the company told investors it would seek to de-list its shares from AIM. Although the company needs 75 per cent shareholder approval to de-list, most traders gave the statement little consideration until a big seller dumped the stock yesterday. By the close, its shares lost more than half their value, falling 10.5p to 9.5p.

OXN LN shares suspended

The only good news about OXN and BTX (not sure on China Wonder) is there were signs you could read before hand

OXN ---- stated results which showed that the stuff didn't work weeks before the suspension it should not of surprised that Petrol Ofisi would pull out leaving costs to be picked up by OXN

BTX --- end of last year related to some scam on their software ---- no management control evident even then

If in doubt ......get out !!!

FT - May 6 2007

Chinas stock market


However you measure it, the Chinese stock market is a bubble. Top cadres have warned as much. New offerings are doubling in value on day one and shareholder accounts are multiplying at a phenomenal rate. So far this year, the domestic currency A share market is up 43 per cent and daily turnover exceeds $30bn.

The authorities face a stark choice: act now to deflate the bubble or wait for the inevitable implosion and equally inevitable street protests. But Beijing has limited tools with which to take pre-emptive action. Verbal warnings and the stemming of credit by hiking banks reserve requirements have both failed. Interest rates would need to be sky-high before investors spurned the stock market, up almost 1 per cent a day in the past two months, while bank deposits currently yield negative returns in real terms.


____________________________________________________________________



.....................and so on and soforth. It all just has to go pop some time soon.
Anyone believing that the present frenzy in rising markets will continue much longer is simply deluding themselves.
It's a real world that we live in and a very simply fact of life is 'what goes up must come back down again'.
Often with quite a bump!

keep this thread very much alive to remind some on this site that Chinese business ethics and transparency and practices are very different from those in the West, flawed as those might also be.

BUT, so long as you realise the risks & understand that this is a bubble which must eventually burst, make some quick profit.
Many people did very well out of the tech/telecom boom & also the internet gambling stocks.
There is quick money to be made from this particular boom also.

time to be alert then, Bodisen!! just about banned on every exchange bar AIM.

FT - May 8 2007 - By James Mackintosh

Hedge fund banking on higher than predicted interest rate rises


Clarium Capital, the $2bn San Francisco hedge fund run by Peter Thiel, the Paypal co-founder, is betting that central banks will raise interest rates far more than most people expect after concluding that the global wave of liquidity is being generated by petrodollars.

Mr Thiel's thesis is simple, if unconventional. Oil-rich Arab states and gas-rich Russia are earning $600bn a year, which they are investing back into geared financial assets such as structured products, hedge funds and property, supporting global asset prices. The resulting liquidity is helping the price of assets from London homes to equities to emerging market bonds bubble up.

NEW YORK (Reuters) - Wed May 9, 2007

Market guru Grantham calls global bubble a fool's game - By Herbert Lash


Legendary market strategist Jeremy Grantham knows calling a market crash is a fool's game, but he says those who egg on a bubble are even greater fools.
Grantham, who at 68 doesn't think for a moment of stepping down from the Boston asset management firm GMO he co-founded in 1977, finds nothing more appealing than analyzing a global market he finds totally out of whack. He calls the crash of the Japanese stock market he foresaw two decades ago the highlight of his career. Now he argues a bubble is building worldwide that's unprecedented in scope. "This in its own way is every bit as unusual as anything that has preceded it in my career. We've never seen anything close to a global bubble," Grantham said on Monday. "Calling the end of it is the ultimate mug's game, and yet, betting as if it never will end is perhaps the biggest mug's game of all," said Grantham, using British slang for a fool or victim. We're dangerously close to that now, he said. "So I'm probably a mug even getting involved in mentioning the word bubble, but they're even bigger mugs for behaving as if bubbles don't break and bubbles don't form and everything's fine," he said.

Grantham is known as a "perma bear" in market parlance for his consistently negative views on valuations, but he's also forecast some market booms accurately. He saw a rally in emerging market assets after the tech bubble burst in 2000, and a rally in bonds and stocks in 1982 when gloom abounded on Wall Street. His early call on emerging markets has helped push assets under management at GMO to more than quadruple since to $145 billion. Now Grantham is focused on the U.S. stock market's seemingly endless drift higher, which he calls "the greatest bear-market rally in history," and he is concerned with how central bankers deal with a looming crash.

The MSCI All Country World Index was down 0.6 percent at 395.99 on Monday, after setting a new life-time high of 398.63 on Monday, part of an inexorable march higher this year.

A poorly handled global market crash could hit trade and economic growth for a couple of years, he believes. He gives central banks perhaps a 50-50 percent chance of getting policy right and stopping a major recession across the world. "If everyone behaves cleverly, all the central bankers work in unison, they get it right," Grantham said. But if recent history is a guide, halting a market decline may be difficult. Overpriced assets will likely tumble and lending norms will likely tighten regardless of how well central banks act. He refers to former Federal Reserve Chairman Alan Greenspan as an example. "Did Greenspan get it right in the last few years of his regime? I would say he got it pretty darn right, but the Nasdaq dropped 79 percent and he behaved impeccably," he said.

Grantham, who is known for his study of the relative values of asset classes and global markets, makes it clear that he's not worried by the economy, rather market valuations. "My fight is not with the economy; with a little bit of luck we'll do OK. My fight is with overpriced assets, which in the end are just an excuse for something to go wrong," he said. Driving the bubble in world markets is a rare combination of high economic growth around the world and an abundance of capital due to low inflation across much of the globe.

"Has there ever been this kind of wonderful combination of factors without a bubble? We can't find one," he said. "These conditions are very, very rare and when you get them you get bubbles."

Telegraph - 12/05/2007 -By Mark Kleinman in Hong Kong and Richard Spencer in Beijing

Shanghai 'stir-fry' frenzy could be recipe for disaster


Buddhist monks, pensioners, and housewives are flocking to take part in China's biggest stir-fry - local slang for the new national sport of speculating in the stock market. An investment frenzy triggered by China's economic growth and eccentricities in its unique communist-capitalist financial system have led to an explosion in share prices. This week, the Shanghai stock exchange index hit the 4,000 mark - just three weeks after passing 3,000 and up more than three times from a low of 1,200 less than two years ago. Frantic government warnings that it is a bubble waiting to burst have not scared off small investors. "All the other chefs at my restaurant have put money in," said Yang Dachao, 32, a cook who has just "stir-fried" his 5,000 savings into an account at one of Beijing's high street securities shops. "I sat on the fence when the market hit 3,000. When it hit 4,000 I had to get in."

Yesterday, the shop was overflowing with scores of customers from students to pensioners. Elderly men played chess on the floor in the lobby, while a party of housewives, all from the same street, drank flasks of tea as they examined the share screen for signs of red - the colour of profit is communism's only visible relic: a share that is in the red is going up, while those going down are shown in green. Already this year, more than 10 million Chinese small investors have opened broking accounts allowing them to trade shares on the Shanghai stock exchange, compared to 3million during the whole of 2006. Many initial public offerings in Hong Kong and Shanghai, including the world's largest, Industrial & Commercial Bank of China's $21.9bn dual listing last autumn, are several times oversubscribed. Since February, when a sharp one-day correction saw the Shanghai Composite Index plunge 9pc, the march of Chinese share prices has been upwards.

The A-share index is up 50pc in the year to date, on top of a 130pc increase in 2006. The volume of shares being traded has jumped. On one day this week, $49bn of shares changed hands, a figure larger than all other Asian stock exchanges combined. "This is an incipient bubble: it is beginning to resemble something of a mania," said Jim Rogers, the investment guru. Currency controls and low interest rates, designed to keep China's currency, industry and exports competitive, mean there are few ways to invest money at a profit other than in property and the markets. Hence both are subject to regular "bubbles". Gao Xuichen, 36, an insurance broker from Shanghai, recently joined the rush to open a broking account - and promptly invested much of his savings in Chinese shares. "When interest rates on savings are so low, it is more sensible to invest like this," he said.

With demand apparently outstripping supply and Chinese corporate earnings on the rise, it is little surprise that shares prices are being forced upwards so quickly. However, because almost all the shares on the Shanghai exchange are minority holdings in state-controlled companies whose internal workings are often opaque, government intervention can hit prices. "It's actually riskier than a casino," said Zhang Zhongshu, 55, who saw his life savings from his grocery store disappear in a previous bubble. "At least on a gaming table you can take your stakes away immediately." He was overjoyed when his stake of 7,000 rose to 35,000, but he lost almost all of it when the government triggered a collapse seven years ago with tighter regulations. Chinese newspapers are full of dire tales of people who have mortgaged their properties on the markets, while Shi Changxing, 60, a Buddhist monk from Xi'an, told a local newspaper he had been investing his living allowance.

Few think the boom can last much longer, with or without government intervention to correct it. That, in the view of most economists, may pose a serious headache. Hung Liong, an economist at Goldman Sachs, said: "We believe an overly-stretched A-share valuation and its eventual correction could severely impair households' balance sheets, exacerbate income and wealth distribution, and set back years of progress made on capital market reform." Stephen Green, an economist with Standard Chartered Bank in Shanghai, said the market was clearly overvalued. "You have seen this dramatic acceleration and that's usually a sign that something's about to go wrong." His fears are echoed by Shang Hequan, a retired government official who has seen his 14,000 investment gallop to 200,000 by careful playing of the markets. "I've just taken all my money out," he said. "The market's too high - it'll crash any time." Such is the level of concern among policymakers that even the head of China's central pension "safety net", Gao Xiqing, recently admitted he was reducing the fund's exposure to mainland equities. Mr Gao followed a path now becoming well-worn by the country's central bank governor, who warned this month that the markets were "defying gravity".

The key question is what the government plans to do. Previous interest rate rises have failed to stem the flow of money and officials in Beijing are said to be reluctant to take far-reaching measures before the quinquennial Communist Party Congress - when many top government jobs will change hands - in October. "If they [the government] make the currency [the yuan] convertible, that would help to mop up some of the money sloshing around," said Mr Rogers. But there is no sign of that yet. Jerry Lou, a China specialist at Morgan Stanley, suggested other measures in a research note this month, including a capital gains tax on stock investment, a move by market regulators to allow stock shorting, or the accelerated disposal of part of the government's estimated 50pc stake in the Chinese stock markets. Most agree that Beijing must act quickly. In his note to clients, Mr Lou said his mother's neighbours were no longer talking to him after he advised them in January to steer clear of shares.

To many other ordinary Chinese, making money has never been simpler.

Independent - By Danny Fortson - 13 May 2007

Takeovers: Is it the late 90s all over again?


Fuelled by cheap credit, money is pouring into takeover deals. The question now is whether 'we are at the top of a hill' or 'looking over the edge of a cliff' The signs are getting difficult to ignore. Nearly every day, it seems, news breaks of another mega-takeover that will in a stroke change the face of an industry. Bankers talk of a "new paradigm" to explain company valuations out of line with any historical point of reference. Stock markets are rapidly approaching all-time highs and in some places, such as America, surpassing them.
Insider trading is rampant, with one in four deals in the UK preceded by suspicious activity. Remuneration for executives and hotshot investors has reached ludicrous proportions, leading to increasingly loud questions about just how much longer this can go on.

Sound familiar? "There was a real feeding frenzy in the late Nineties," says Piers de Montfort, head of UK investment banking at Credit Suisse. "If you weren't growing, buying, consolidating, you were vulnerable. That market was as close to out of control as I have ever seen. I don't see that this time. It's more controlled now, and the markets continue to reward sensible, strategic transactions." Last month was the busiest ever for mergers and acquisitions, with nearly $650bn (330bn) in deals announced. That pushed the total value to $1.9 trillion so far this year. "M&A is dominating my life," says one exasperated banker. The 71bn (48bn) takeover battle between Barclays and a group led by Royal Bank of Scotland for ABN Amro, the Dutch bank, is the largest ever in the global sector. Alliance Boots, which agreed to be purchased for 11.1bn by private equity giant Kohlberg Kravis Roberts (KKR) last month, is Europe's largest leveraged buyout. Other big deals include the 12.1bn proposal for tobacco group Altadis by buyout groups CVC and PAI, Thomson's 8.7bn media deal for Reuters, and AstraZeneca's recent $15.2bn pharmaceuticals purchase of MedImmune in America. Takeovers this year amount to more than half of all of those announced in the record year of 2000, when $3.3 trillion worth of acquisitions took place. It's an unsettling comparison. To be fair, there were different factors at work then. The frenzy of the late 1990s and 2000 was fed by the overwhelming urge felt by companies to get in on the new internet economy. Establishing a beachhead on the web and securing "traffic" took precedence over stodgy old concerns like turnover and profits. The result was a wave of logic-defying deals on a scale not seen before or since.

When investors finally stopped to consider what Alan Greenspan, the former head of the US Federal Reserve, described as the "irrational exuberance" of the time, the fallout was horrendous. A rash of bankruptcies followed. Companies spent the next several years unwinding the deals they had done and paying back billions. Jobs were lost. In the US, the centre of the action, a mild recession ensued. But fear not: this time, we are told, it is different. "We are at the top of the hill rather than a mountain, and the hill isn't particularly steep or strenuous," says one banker. "In the late 90s, when it got near the end, we knew we were looking over the edge of a cliff." Such statements are made, of course, with the benefit of hindsight. But most observers agree that the majority of the deals being struck today make much more sense strategically, even if the final price paid is questionable. After all, if Warren Buffett, the world's second-richest man, is ready to get it on the act, it can't be all bad. At his annual shareholder meeting earlier this month, the ukelele-playing Oracle of Omaha said he would "love" to splash out $40bn to $60bn on a company. He explained: "The entire world is definitely on our radar screen and we hope to be on its... The cash is coming in faster than the ideas."

So why the rash of deals now? Perhaps more important than any other factor is the benign credit environment. Despite four hikes in less than a year, UK interest rates remain near historic lows and the chance of a return to the double-digit levels of the early 1990s is virtually nil. That has fomented nearly a decade of strong economic growth. It also means that debt used to fund takeovers is cheap and plentiful. "Interest rates now vary within a very small band. Fifteen years ago, everybody - the UK, the US, Europe - had their own monetary policy. The market had not yet come to terms with global monetary policy," says Mr Montfort. "The environment today is much more stable and we are not seeing anything that is likely to change that. With greater predictability, buyers are getting more comfortable with medium-term trends, and are doing deals that are braver." In other words, when corporate chieftains look out to the horizon, they see smooth seas. Globalisation is credited with increasing the predictability and growth of industries, such as mining, that in the past were subject to the cyclical nature of more limited markets. That sense of security, combined with balance sheets brimming with cash and the willingness of lenders to grant unheard- of amounts of debt, has given executives the confidence to make bold moves. So deals that have been simmering for years - Rupert Murdoch's $5bn pass at Dow Jones in America, and Thomson's bid for Reuters -- are finally coming to fruition. "There's a bit of uncertainty about how long this will last, so a lot of things that were meant to happen in the autumn, people have put forward. It's bird-in-the-hand type stuff," explains another banker. There are also more buyers. Private equity firms - investment groups that raise pools of money to buy companies, restructure them and then sell on - raised a record $210bn last year and are slated to capture another $250bn this year, according to research firm Private Equity Intelligence. That's nearly four times the amount they had at their disposal just five years ago. These groups accounted for one-fifth of all the deals done in 2006.

Yet worrying signs are cropping up, especially the debt packages used by private equity to buy companies. Traditionally, loans were studded with conditions that acted as an early-warning system. This would be triggered when a business tripped up. In the worst case, banks could take control of a business that fell foul of its covenants. Fierce competition among banks for these deals, however, has made them increasingly supine. So-called "covenant-lite" agreements that do away with many of the old conditions are now common. Such is the level of demand that some buyout firms have begun to demand big interest rate reductions even after the financing terms have been signed off. KKR and Goldman Sachs did this recently in a $3bn refinancing of Kion, a forklift company they had purchased. The reduction on one loan of 50 basis points and of 75 basis points on another meant tens of millions less in annual payments. The firms won the decreases even though they had already agreed to higher rates. Despite the much harsher terms for the banks, both loans were vastly oversubscribed. "Private equity firms are taking advantage of ferocious demand to push through pricing reductions and structural changes unimaginable 12 months ago," explains Fenton Burgin, head of the debt advisory group at Close Brothers. "Conventional principles of credit analysis appear to have been suspended in some instances."

Consider the purchase of Alliance Boots. If KKR and Stefano Pessina, deputy chairman of the chemist, pull it off, the 11.1bn takeover will be the largest yet by private equity in Europe. KKR and Mr Pessina have said they will pay 2.6bn between them out of the total 12bn they need to finance the deal and leave some money left over for investment. The remaining 9.4bn will be sold to institutional investors, which will be offered no voting rights for taking on more than 80 per cent of the risk. Few foresee any problems in attracting enough investors. There's also the case of Gartmore. Hellman & Friedman, the US buyout firm, acquired the fund manager for 522m - 180m of its own cash, plus 342m of debt - last year. That deal closed in September, and now, just eight months later, it has put the finishing touches on a refinancing of the entire 522m price tag. This has allowed Hellman & Friedman to recoup all of the 180m it paid to take over the business, in effect reducing its risk to zero while maintaining its ownership. Such large debt loads leave little room for manoeuvre if a company runs into trouble, raising fears that some acquired firms are being set up for failure. "We'll see a lot of these deals go south if the markets slip away and a recession bites. All that debt around [companies'] necks will become a noose," warns one banker.

However, the pervading sense in the market is that Rumsfeldian "known unknowns" which could throw the current run off course, such as global interest rate changes and hiccups in economic growth, have been minimised. Investors are more worried about "unknown unknowns" - macro-economic shocks, a war or natural disasters. This was the concern that came up repeatedly over cocktails at a gathering last week of London hedge fund managers at Claridge's Hotel in Mayfair. Perhaps no other sector has benefited more from the market's performance, or would be better placed to opine about its future. The world's top 25 managers, for example, made an average of $570m each last year - more than double the figure for the year before. As an industry, they now control more than $1.5 trillion around the world. Increasingly, they are also jumping on the M&A bandwagon by taking much larger stakes in companies or buying them outright. Last month Dresdner Kleinwort formed a new group to begin selling M&A ideas direct to hedge funds. Six months ago, such deals would only have been brought to private equity firms or corporate clients.

Yet at the reception last week, there seemed an implicit acknowledgement in the money men's conversation that these indeed are the good times, and the days are numbered. "This can't go on for ever. It's got crazy," said one. "The prices people are paying now will mean a lot of pain later. That's just the cyclicality of business. I would be surprised if it didn't end up that way."

China's April Inflation Adds Fuel to Stock Bubble - By Nipa Piboontanasawat

May 14 (Bloomberg) -- Inflation in China, the world's fastest-growing major economy, held above the benchmark deposit rate for a third month, adding fuel to a growing stock market bubble as households hunt for higher returns. Consumer prices gained 3 percent in April from a year earlier after rising 3.3 percent in March, the National Bureau of Statistics said today. The central bank's target ceiling for inflation in 2007 is 3 percent. Central bank Governor Zhou Xiaochuan is concerned about a stock market bust, after the benchmark CSI 300 Index rose more than 80 percent this year. Chinese households have flooded to the share market, partly because inflation outpaces the returns on bank deposits. The one-year benchmark rate is 2.79 percent.

``The central bank is increasingly concerned about asset bubbles,'' said Ma Jun, an economist at Deutsche Bank AG in Hong Kong. ``The social implications could be huge if there is a major correction -- most of the new investors in China are poor, low-income people and they will be hit the most.''

The yuan held near its highest close since the end of a fixed-exchange rate in July 2005, trading at 7.6785 against the dollar.

China should raise interest rates further to soak up excess cash and prevent the economy from overheating, the official China Securities Journal said today, citing research by the National Development and Reform Commission.


Switching to Stocks

Investors in China opened 8.58 million new accounts at brokerages in the first quarter, up from 5.38 million for the whole of 2006, according to the China Securities Depository and Clearing Corp. China's banking regulator last week announced lenders will be able to buy stocks abroad, a measure that may help to cool the local share market. ``The central bank is concerned about negative interest rates boosting the flow of funds to the stock market,'' said Michael Dai, an economist at Bank of China (Hong Kong) Ltd. ``Money supply and lending are still strong.''


Food Prices

Food prices climbed 7.1 percent in April from a year earlier after jumping 7.7 percent in March, the statistics bureau said. Prices of consumer goods increased 3.4 percent after gaining 3.7 percent. Food costs, which account for a third of the consumer price index, are rising as farmland shrinks and a growing and richer population pushes demand higher. The government has sold grains in auctions and subsidized farmers to boost the supply of food for 1.3 billion people. For the first four months, consumer prices rose 2.8 percent on the same period last year. April's inflation rate was the second-highest of the past two years. March had the highest rate.


Excessive Manufacturing

In India, the world's second-fastest growing major economy, inflation was 5.7 percent last month, nearly double China's rate. In China, overcapacity of manufactured goods is helping to hold down prices, along with government controls on electricity and fuel. About 70 percent of 600 consumer goods were in oversupply, the Ministry of Commerce said last year. China's economy, the world's fourth largest, grew 11.1 percent in the first quarter from a year earlier. The People's Bank of China on April 29 ordered lenders to set aside more money as reserves for the seventh time in 11 months to freeze money pumped into the economy by the export boom. It has raised interest rates three times since April last year and sold bills to drain cash from the financial system. Economists surveyed by Bloomberg News last month expect the central bank to raise the lending and deposit two more times this year. The one-year benchmark lending rate is at 6.39 percent.

FT (letters)- May 15 2007

The coming crash in Chinese stocks - By William Gamble


Sir, Six years ago, according to an article in the FT, Wu Jinlian, an economist with the State Council Development and Research Centre, described the Chinese market as worse than a casino. Not much has changed. The lack of transparency, corporate governance, free press and property rights has divorced the Chinese market from any economic reality. As Cheng Siwei, a senior member of the National People's Congress, pointed out, only 30 per cent of the more than 1,300 listed companies had investment value. In relationship-based systems such as China's, "truthiness" has been mistaken for the truth of a rule-based market.

What has changed are the effects. In the past six years the Chinese economy has become a major factor in the world economy. When a bubble bursts in China, it will not stay in China. If the government decides to support the market, it fortunately has the cash. Unfortunately, it is in US Treasury bills. If there is no intervention, the debris from a crash will unsettle a rising Chinese middle class and their political apathy.

Where Shanghai goes, Hong Kong is sure to follow. It is doubtful that investors will make a distinction between China and the rest of the emerging markets, so undoubtedly several more will fall. The problem in China is that the stock market is not the only bubble. Speculative bubbles also exist in property markets upon which much of Shanghai's economy depends. China's irrational exuberance has also been driving commodity prices around the world. These markets will be tested along with much of the financial engineering involved in private equity, hedge funds and credit derivatives. And pensioners in the US may wake up to discover that their interests are being determined in a Beijing court presided over by a retired Peoples Liberation Army major.

The collapse of the Chinese stock market is not a question of if, only when. The real question will be how many dominoes it will take with it.

William Gamble
Emerging Market Strategies
East Providence, RI 02914, US

Yahoo - Comment & Analysis - Friday May 18

Can China Defuse Its Stock Market? - By Frederik Balfour


Here's a surefire recipe for a stock bubble: Take blistering economic growth, throw in strong corporate earnings, add artificially low interest rates, and stir in a dash of inflation. Then rule out any viable investment opportunities besides equities, and you'll quickly find yourself moving past "pop" and into "kaboom" territory. That pretty much sums up the situation in China, where 250,000 new retail investors are crowding into the market every day. Together, the mainland's 70 million traders have pushed Shanghai's benchmark index up nearly 50% since the beginning of the year, following a 130% gain in 2006.

Beijing is terrified of what might happen when that bubble bursts. Many investors are pensioners and other jobless people who have plowed their savings--and sometimes even funds raised by mortgaging their homes--into stocks. If the market tanks, Beijing fears, it could dent consumer confidence and send disgruntled investors out into the streets. The rest of the world, meanwhile, is worried that any collapse would quickly spread to exchanges across the globe.

Financial experts say there's a way China could create greater stability: stock index futures. Sophisticated traders in developed markets use these wagers on the direction of shares to cushion themselves against massive losses if the market falls. Futures also theoretically dampen volatility as more pricing information is factored into investment decisions. China currently has no equity derivatives such as stock options and futures, and short-selling stocks--betting that the price will go down--is banned. That means people can make money only in a bull market, and have no choice but to cut their losses when prices tumble. And if everyone rushes for the exits, shares go into a tailspin.


DELAYS AND DOUBTS

Beijing understands this and had originally hoped to introduce index futures this spring. Now the launch has been delayed until at least September. The reason: While futures might eventually create more stability, in the short term investors who don't fully understand the concept might get spooked and start selling their shares. "There is a commonly held belief, which is wrong, that the introduction of futures causes underlying stocks to fall," says Fraser Howie, who manages the China portfolio for CLSA Asia-Pacific Markets. "The authorities are concerned about anything that could pop the bubble."

There's a second fear. To work well, futures markets require transparency, ample safeguards against insider trading, and a sophisticated investor base, all of which are glaringly absent in China. While futures can smooth out the bumps in the market, they also let traders leverage their bets, increasing their potential profits--but also the risk of bigger losses if they get it wrong. "Futures won't achieve what the government is trying to do," says Carl Walter, managing director at JPMorgan in Beijing. "They may even cause more volatility."

Previous Chinese experiments with financial futures haven't been particularly auspicious. In the early 1990s, China introduced bond futures but abruptly halted trading in 1995 after a securities company, acting on bogus insider information, lost billions of dollars on futures, driving itself into bankruptcy and landing its CEO in jail. Since then, trading in most derivatives has been banned, though futures contracts for commodities such as copper, soybeans, and corn are traded on three exchanges.

Daily Mail - 18 May 2007 - Sam Fleming

China could be heading for a crash


Asia's richest man warned China's stock market has turned into a 'bubble' that may be on the brink of collapse. Li Ka- shing, whose empire stretches from ports and bridges to mobile phone firm 3, said he was increasingly worried about dazzling valuations on the Shanghai exchange. 'There is a bubble in the China stock market,' he said. 'I don't want to see the bubble bursting, but investors should be careful about that.'

The warning came as US Federal Reserve chairman Ben Bernanke added his voice to fears about the debt-fuelled private equity takeover boom. He said the Fed is looking into 'significant risks' associated with takeover financing. Li's words will cast a shadow over world markets, as equities set new records every day. A brief setback in Shanghai in February prompted declines across the globe. Many analysts fear that was just a dress rehearsal for the real thing. China's main index is up 86% this year alone. Analysts have calculated the main Shanghai market trades at around 50 times earnings, compared with only 13 in London. The boom has come as Chinese citizens open hundreds of thousands of share accounts every day, yanking their cash out of banks and plunging it into equities. While the Chinese government has pledged to slow the pace of growth and damp down asset prices, its efforts have done little to dent savers' 'irrational exuberance', said Gerard Lyons, of Standard Chartered.

'There's no doubt that it's overheating. I would-n't be surprised if there is a near-term setback,' he said. 'What we are seeing is a reflection of a booming economy. People are looking for an avenue for their savings. Recently it was in housing, now it's in the stock markets.'

Last week the Chinese government eased its restrictions on overseas investments to divert savings from domestic equities, but Li said the amounts involved were too small.

So there seems to be a lot of negative sentiment on Cina, how best to play it? Put option on the Hang Seng? Set up a CFD account with a finger on the button to short ? Can you short the Chinese index?

IG do a Chinese 25 Tracker CFD which you could short quite happily; the danger being of course that everyone says the bubble will burst and it probably will, but when? In the mean time the a shorter could lose an awful lot of money.

The Observer - Sunday May 20, 2007 - Ruth Sunderland

Slump? Don't say they didn't warn you


It has been the Week of the Warning. The alarm bells are not being rung by the usual gloomy suspects, but by figures whose views command worldwide respect because they have generally read the runes right. First, Anthony Bolton, arguably Britain's most respected fund manager, stepped down from his throne at Fidelity saying he fears a stock market slump and worries about the banks' eagerness to finance private equity deals with risky 'covenant-lite' loans. The banks have embraced cov-lites, a US import, in their sheer desperation to mop up a slice of the private equity business, even though these relaxed contracts reduce their ability to intervene if a borrower shows signs of distress. The Bank of England shares Bolton's concern, as does Ben Bernanke, the chairman of the US Federal Reserve, who issued a warning of his own. Then yesterday G7's financial stability forum issued a report calling for greater protection against possible risks to the financial system from hedge funds.

Tycoon Li Ka-shing, Asia's richest man, voiced his belief that China's stock market is now a bubble that could burst painfully.

Even top-end art dealers are bemused by the exuberance in the markets. Prices for post-war works, fuelled by demand from Russian and Chinese buyers, hit a record this week when a 1950 Rothko sold in New York for $73m. That prompted seasoned Manhattan dealer Richard Feigen to liken the modern art frenzy to tulip mania. There are concerns over the mergers and acquisitions boom, not least the eyewatering 85 per cent premium Microsoft is paying to take over online advertising business aQuantive. Closer to home, the chief executive of Land Securities said the 710bn commercial property market had peaked and was already showing signs of a slowdown. Plenty of City folk have been bearish for some time about the domestic housing market, though they dare not say so publicly as prices continue to defy gravity, despite clear hints in the Bank of England's inflation report that interest rates will have to rise again. Whether a further increase will be enough to dampen the appetite for debt remains to be seen. Debt is no longer seen as a financial tool to be treated with caution, but as the magic lever that will unlock huge gains, whether in housing or in private equity deals.

Amnesia is part of the problem. Negative equity is about as real a concept to today's housebuyers as ration books. People have also forgotten that 1980s conglomerates like Hanson were the forerunners of the private equity players. They fell apart because they had to chase bigger and bigger deals to maintain momentum. The remnant of the group that still bears the Hanson name last week fell to a German predator. The mood in corporate Britain is uncertain. Profit warnings among quoted companies in the first quarter of this year leapt 17 per cent, according to accountant Ernst and Young, taking the number above 100. Companies are worried about interest rates and the strong pound, but another cause for concern is the cutback in public spending that will happen early in Brown's premiership. Bank of England governor Mervyn King said last week that women were already dropping out of the workforce because of a falling-off in public sector employment growth. With about 30 per cent of the working population employed either by the government directly or by firms heavily dependent on government contracts, firms are right to be jittery.

The Observer - Sunday May 20, 2007 - Heather Stewart

Is China's trick cycle on the turn?


China's stock market boom has all the classic signs of a bubble: taxi drivers poring over the markets pages, homeowners remortgaging to pile into equities, 30 million share-trading accounts opened in the last 12 months. The burgeoning middle classes have caught the trading bug, and their enthusiastic buying spree has sent prices rocketing. China-watchers are already asking how soon the boom will turn to bust; and how damaging the fallout could be for the rest of the world. 'The Chinese stock market is just a gambling pit,' says John Calverley of American Express, author of Bubbles and How to Survive Them. He says the anecdotal tales of ordinary investors rushing to stake their savings on shares are clear evidence of 'irrational exuberance', as former Federal Reserve chairman Alan Greenspan once called it. The authorities in Beijing are keen to bring share prices under control, and have already raised interest rates and bank reserve requirements several times, most recently last Friday; but as Greenspan himself discovered, bringing about a soft landing in these circumstances is never an exact science. 'The challenge confronting the Beijing authorities is to find the happy medium between doing too much and too little,' explains Stephen Lewis of Insinger de Beaufort. 'If they are heavy-handed, the danger is they will precipitate a financial crisis as the bubble bursts. If, however, their response is too gentle, the bubble could well go on inflating. This would reduce the chances of a soft landing for China's asset markets.'

When prices dropped 9 per cent in February it triggered sell-offs from Tokyo to New York, as anxious investors fretted that China could be the first domino to fall in an emerging-markets shake-out. Since then, Shanghai has bounced back - prices are now 45 per cent higher than they were in February - but another wobble could shake global confidence. 'It's just the perception that it's the first bubble to burst,' says Julian Jessop of Capital Economics. 'The next correction, when it happens, will probably be a bit bigger than the last, so I think it will be a shock.'

A frothy stock market is not China's only problem. In fact, some economists believe it is just one symptom of a much broader issue: with a cheap currency, a vast trade surplus and low interest rates, they argue that China's long-running growth spurt is unsustainable. 'It's clearly the case that the Chinese economy is overheating at the moment, and this is resulting not only in accelerating wage inflation, and China exporting inflation, but also in these bubbles; you have ample liquidity sloshing around,' says Diana Choyleva, a director at Lombard Street Research. She fears that the government has waited too long to act, and will have to clamp down hard to bring the stock market, and wider inflation, under control.

I heard (or possibly read) last week that we aren't at a market top yet, because that normally happens when all the retail investors pile in. Ironic given the activity in China at present. The statement rather made me wonder if the institutions are actually hoping the retail investor will pile in, to carry the can when it all goes pear shaped. I remember an article in January 06 though saying the retail investor was leaving the markets enmass, presumably learning the lessons of the tech market bubble.

Interesting times ahead I feel, and it could make for a good show if the doom sayers are correct.

Personally I've never been happier to have my cash in the bank.

Strawbs.

Chinese people are putting all their savings and worldly possessions into a very quickly overheating stock market. This, coupled with the inability of the Chinese (communist) government to adequately organise its financial structure, is going to lead to a massive economic crash which, in turn, could lead to nationwide rioting. This could quite easily overturn the present communist regime and bring about the installation of a new capitalist regime. For sure, the market is a bubble which just surely has to burst and the longer it balloons the greater the crash.

Markets will never spot the black swan

Interesting article (and book to which it refers).

I wonder what the global markets black swan will turn out to be......and the wonders of hindsight that'll explain how we should've seen it coming.

Strawbs.

It can only be a matter of time before the bubble bursts.

Very good thread. People will do well to take note.

Sunday Telegraph - 21/05/2007 - By Liam Halligan, Economics Editor

When China falls ill, it's acupuncture all round


For much of the past decade, fast-growing China has been the world's economic juggernaut. More recently, the People's Republic has accelerated anew and is now a run-away train. Is China's boom becoming dangerous? Figures released last week show the economy grew by an astonishing 11.1 per cent during the first quarter of this year. Consumption was up 13 per cent, investment 25 per cent. China's breakneck development - the biggest and most rapid industrial revolution the world has ever seen - is ringing alarm bells in the West. For instance, the country's rampant expansion has generated a near-insatiable demand for commodities. The resulting price rises, particularly for oil and gas, have changed the world economy for ever. The West has benefited from imports of cheap Chinese goods - yes. But is the emergence of this new economic superpower really good news for the rest of us? The answer - in the short-term at least - depends largely on what happens to China's stock market bubble. If shares fall sharply, there could be shock waves across the globe.

Earlier this month, the Shanghai Composite Index roared through the 4,000-mark, having passed 3,000 less than two months before. China's combined markets have just posted daily trading volumes greater than the rest of Asia combined - including Japan - and exceeding London too. The Shanghai and smaller Shenzhen exchange recorded trades of 24.6bn in a single day. And on Wednesday, the closely aligned Hong Kong market generated record volumes too. Having climbed more than 300 per cent in less than two years, there are now fears Chinese shares could crash. Given the widening inequalities in the People's Republic, and lack of political representation, tumbling shares could cause genuine social unrest. This is an issue of global significance too. Western investors - and pension funds - have gorged themselves on Chinese stocks. And, only a couple of months ago, we saw how a wobble in Shanghai could cause angst on markets elsewhere.

So, what can be done to bring the market back under control? Well, the main reason for the recent surge has been the flood of retail money now entering the market. Incredibly, small investors are opening more than 300,000 share dealing accounts every day. This share-buying frenzy is being driven by the restrictions imposed on Chinese savers. Having built up billions of dollars worth of savings, they earn very low interest rates from state-controlled banks, and are unable to invest abroad due to capital controls. With the average Chinese bank deposit yielding less than 3 per cent, and inflation now at 3.4 per cent, savers are struggling to maintain the real value of their money. That's why, when shares in Shanghai are buoyant, the money piles in. The authorities have reacted not so much by trying to talk the market down, as to shout it down. State-controlled newspapers and television channels regularly warn investors that "many of you will lose your money". And last week, Beijing raised interest rates and bank's reserve requirements in its latest bid to reduce liquidity and curb asset price growth.

All this is being watched with pursed lips in Western capitals. There is a common view that the Chinese have no hope of taming their stock market - and reducing the risks it poses to share prices elsewhere - unless they rein in their trade surplus first. Data published last week beggars belief. China's overall trade surplus reached $250bn on an annualised basis during the first three months of this year - more than double last year's total. This aggressive export performance, bolstered by an undervalued currency, contributes mightily to what Lombard Street Research has dubbed China's "savings glut". All that liquidity has to go somewhere. And one of the places it is showing up in spades is China's dangerously overheated stock market.

When Chinese vice premier Wu Yi meets Hank Paulson in Washington later this week, the US Treasury Secretary will no doubt enquire when China will let the yuan appreciate, so making its exports less competitive. That would take some pressure off US manufacturers, saving American jobs, and helping to stem the slide in President Bush's popularity. Beijing has just widened the band in which its currency is allowed to trade. But no one really believes China will abandon its mercantilist stance. Until quite recently, it has been easy to dismiss US demands for a higher yuan as nothing more than parochial, American carping. But given the role of China's over-inflated trade surplus in pushing up its over-inflated stock market, maybe the US has a point. Economists used to say that when the US sneezes, the rest of the world catches a cold. China, too, is now so important to the global economy, perhaps it needs an aphorism all of its own.

In 20 years or so, or even less, China will usurp the States and become the world's biggest economy. But even now, if China's stock market comes off the rails, the rest of the world will get caught in the wreckage.

China currently has no equity derivatives such as stock options and futures.
Short-selling stocks - betting that the price will go down - is also banned.

This means people can only make money in a bull market - by buying shares which they hope will keep on rising.
They will have no choice but to sell off and try to cut their losses when prices tumble.

When everyone rushes for the exits, shares will go into a frenzied tailspin.

e t

Why do you keep cutting, pasting and highlighting the downside? You shorting the whole Chinese stock market?

pt, ah - you haven't read the last post which tells you it isn't possible to short stocks in China.    Indeed, that's one of the problems, for if you could do so it would introduce balance into the scheme of things. Just watch what the consequence of that will be once the market starts to fall.
Good luck if you're holding.

Mon May 21, 2007 - By Herbert Lash

China's stock market becomes a proxy for risk


NEW YORK (Reuters) - Investors hunting for a bellwether for risk appetites are increasingly looking to China, whose frothy stock market has become a canary in a coal mine of sorts.

Investors fear a blow-up in Chinese stocks could again roil world markets and cause a global pullback like the one sparked by a plunge on the Shanghai stock market on February 27.

China is "both a proxy for risk appetites, which are relatively robust ..., and as a proxy for global economic growth," said strategist David Joy of RiverSource Investments, a unit of Ameriprise Financial Inc. "And maybe that equity market movement straight upward is a little bit of concern that bares watching."


-----------------------------------------

That last line just has to be number one contender for the understatement of the year !!!!

My local stockbroker, who is a wily old boy who has seen many boom & bust eras, has recently been to China to see what the fuss is all about.
To summarise, the "Shanghai Shuffle" (the feb '07 9% fall) was bound to happen & will happen again, but the demand for raw matierials, in particular minerals, is continuing & it is nonsense to speak about the end of the chinese boom at present. Their demand for minerals is ongoing & is expected to continue, particularly with the building boom taking place ready for the 2008 olympic games.
He does point out that the communist government (members of which appear regularly in the press concerning fraud & corruption charges) retains large stakes in all quoted companies & that only chinese nationals can deal in domestic stocks, which means that when the crunch comes the chinese themselves are going to take a big hit.
Don't forget the feb drop was exacerbated by the march 9th drop due to the trouble in the sub-prime lending market in the U.S. which made that period look worse due to the double whammy effect.
It is notable though, that there is not one chinese company in his list of stock recommendations, so he obviously considers them too risky for his clients.

Introducing the China IPO indicator

Heres a sober chart tracking the boom in Chinese new issues quite frightening, isnt it?

Tracking mainland Chinese companies that go public on the Shanghai, Shenzhen and Hong Kong stock exchanges, this newly launched China IPO indicator advanced 6.6 points, or 2.7 per cent, in April. Fourteen equities were added to the indicator during the month, including CITIC Bank, which raised $5.4bn. Of 93 stocks included in the March and April indicators, 21 fell during the period, while 72 rose.

Year-on-year, the indicator is up 36.3 per cent.

And the Renminbi Pressure indicator

Another timely chart from Xinhua Finance and The Milken Institute - an indicator showing the upward pressure on Chinas currency.



The Renminbi Pressure Indicator is compiled using the monthly percentage change in Chinas spot exchange rates, the percentage change in foreign exchange reserves and the change in domestic interest rates. A base of 100 was set for January 1, 2000, since when upward pressure has doubled.

In February 2007 (the most recent data), the RPI jumped 1.75 per cent - from 196.6 to 200.1 - the largest month-to-month rise since the renminbi was revalued in July 2005. That mainly reflected a $52.7bn rise in foreign exchange reserves to $1,160bn during the month and also a 0.47 per cent appreciation of the yuan against the dollar.

OSLO (Reuters) - European stocks are overvalued and could fall by at least 10 percent within three to six months, a Morgan Stanley equity strategist said on Thursday. "Tactically, we are neutral equities and overweight cash, seeing a correction of at least 10 percent," Vice President for European Equity Strategy Ronan Carr told an investor conference in Oslo. "We are not calling for the end of the bull market, which typically runs from one recession to the next," Carr said. "We are cautious short term."

Morgan Stanley have preferred cash over equities and have been underweight in bonds since January 22 this year, he added. "Our biggest concern is valuation," Carr said, adding that the investment bank preferred stocks with large capitalisations because of their relatively cheaper valuation and stronger balance sheets compared with small-caps. Morgan Stanley was overweight in banks, pharmaceuticals, oil, materials and technology sectors, and underweight in autos, investment banks, real estate and consumer staples, he said.

Market timing models were also giving Morgan Stanley short-term "sell" signals. "It's a bit mixed at the moment, but the sentiment is increasingly too bullish," Carr said. "The most worrying is the ratio between 'put' and 'call' options. People have given up buying protection on their portfolios." Carr also pointed to an element of froth in credit markets, as shown by the emergence of "covenant light" bonds with less investor protection. A market pullback could be triggered by wobbles in the credit markets or an inflation scare, Carr said. "Bond yields have risen in the U.S. up to a level where you often see market pullbacks. You could also have an inflation scare, although were not worried on a structural basis."

A spill-over from troubled parts of the U.S. housing market and an overheating Chinese economy, were other possible triggers, he said. "The property markets are looking stretched globally. Nobody talks about the U.S. subprimes anymore, but the full repercussions have not played out yet," Carr said. "If the U.S. has a hard landing, the rest of the world is unlikely to survive unscathed."

"heads"   and   "sand"   come all too easily to mind !

FT (Capital markets) - Helen Thomas - May 30th

What are the real risks of a China stock market bust?


There were 385,000 new share trading accounts opened in china on Monday alone, taking the total past the 100m mark. The previous week the number of new accounts was about 1.5m. On Wednesday, Chinas benchmark index took another nosedive, closing down 6.5 per cent, after Beijing took its most decisive step yet to slow its runaway train of a stock market, tripling the stamp duty tax on share transactions. Even after the fall, that still leaves the index up around 50 per cent this year. But after the 9 per cent fall in the Shanghai Composite triggered falls in stock markets around the globe back in late February and early March, received wisdom is now that investor sentiment globally should be more resilient to the machinations of the notoriously volatile, and still relatively undeveloped, Chinese market.

What about the real economy? Would a serious plunge for Chinas toppy stock market have knock-on effects in its economy, with broader global repercussions? Presciently, Qing Wang and Denise Yam on Tuesday considered just that question at the Morgan Stanley Global Economic Forum. On examination of household and corporate exposure to the stock market, we conclude that the negative wealth effect on consumption would be moderate and financing conditions for corporate investments would be unlikely to deteriorate significantly should the A-share market plunge by 30% from current levels, they argue. We believe that the direct economic impact would be manageable in the event of such a burst. Hence, the fear of a complete economic meltdown in China as a result of a potential burst of the stock market bubble is unwarranted at the current juncture, in our view. Nevertheless, a major correction of the A-share market could well result in significant contagion to global markets, as seen during Februarys short-lived correction. However, to the extent that any such global sell-off were driven by concerns about a stock-market-correction-triggered-recession in Chinas real economy, it would likely prove overdone, in our view.

But theres a warning. They think that should the current trends continue the potential severity of the fallout from a stock market bust increases significantly. Should the value of households stock holdings double from current levels to 40-50% of GDP, the potential negative wealth effect on consumption would increase and the negative impact of a major stock market correction on consumption and overall growth would become more significant. More importantly, with potential returns from investing in the stock market substantially and persistently higher than those from traditional investment activity, not only households but also the corporate sector could be tempted to leverage up with money borrowed from the banks to invest in the stock market. That would leave the banks more exposed to the stock market, and the impact of a major correction magnified through the credit channels of the banking system.

South China Resources PLC
29 May 2007

South China Resources plc ('the Company')

Withdrawal from Danfeng Joint Venture



South China Resources plc today announces it has decided to terminate its
involvement in the Danfeng Project ('the Project') and the Joint Venture Company
established to develop the Project, the Shang Lou City Zhongbei Minerals and
Mining Development Company Ltd.

Although exploratory drilling conducted over the last 18 months has largely
confirmed the presence of copper mineralisation, further to continued analysis
of the drilling to date, the Board believes that the Project unfortunately does
not meet the development criteria of the Company in terms of potential scale and
projected returns on a fully risked basis.

The Company is however continuing to make positive progress with respect to
advancing all its other business activities in Tibet and elsewhere in China.

The Company will update the market on its current activities and any other
future investments as and when they are contractually finalised.

------------------------------------------------

............and why are we not surprised ????

China's Stocks Post Record Drop; Extend Rout Past $350 Billion

By Zhang Shidong

June 4 (Bloomberg) -- China's key stock index plunged by a record number of points after the government's main securities daily signaled officials won't try to halt a slump that's erased more than $350 billion of market value in four days.

The CSI 300 Index dropped 292.52, or 7.7 percent, to close at 3511.43. The measure, which doubled in the past six months, has plunged 16 percent from its May 29 peak after the government tripled the tax on share trades to 0.3 percent.

The speed that stock prices soared by was ``extremely unusual'' and highlighted ``structural bubbles'' in the market, the state-owned China Securities Journal wrote in an editorial.

More than half of the stocks included in the CSI 300 plunged by the 10 percent daily limit, including Huaneng Power International Inc., the nation's largest electricity producer, and Air China Ltd., the biggest international carrier.

``There's panic selling,'' said Yan Ji, an investment manager at HSBC Jintrust Fund Management Co. in Shanghai, which manages about $517 million. ``Investors are convinced the government won't do anything to support the market.''


Read full article

Thousand-point crash warning for Footsie !!!

Read full article





Morgan Stanley issues triple sell warning on equities !!!!

Read full article





Bond turmoil raises rate rise fears !!!!

Read full article





BOE May Need to Move Faster on `Sticky' Inflation

Read full article





Stocks sell as dealers seek safe havens

Read full article







                           ..............ever get that feeling the roof is about to fall in ??

et
;-)

http://business.timesonline.co.uk/tol/business/economics/article1905841.ece

zsscrooge
here's a considered view of your approach to investing
you're an ostrich with your head firmly stuck in the sand

Fed chief reignites 'stagflation' fears !!!

Read full article

...if the market begins to price in odds of a Fed rate increase, bond yields could go higher -- perhaps to 5.5%

Read full article

Storm clouds are gathering !!!

Read full article

you'll be right eventually

Financial markets are poised for another turbulent week with the risk of further aggressive selling

Read full article





The whiff of panic is in the air as equity strategists - the experts who predict market movements - say there are more falls on the way.

Read full article





Global investors look set for another nervous few days

Read full article

Treasury Bulls Routed as Dealers See Rising Yields, No Rate Cut

Read full article

Independent - 15 July 2007

Profit warnings at highest level since dot-com crash -By Andrew Murray-Watson

Profit warnings among the UK's listed companies are running at the highest level since the dot-com crash, adding to growing fears that the economy is weakening. Research to be issued tomorrow by Ernst & Young reveals that in the first half of 2007, 191 profit warnings were issued by UK-quoted companies, 13 per cent up on the first half of 2006, which saw 169 profit warnings.

A "shortfall in sales" was blamed for the warnings by 43 per cent of the companies, while 22 per cent cited "difficult trading conditions" and 17 per cent gave "delayed or discontinued contracts" as their primary reason for failing to meet market expectations. Keith McGregor, corporate restructuring partner at E&Y, said: "We are a long way from the economic climate at the start of 2001 that saw more than 230 profit warnings.

Nevertheless, the 191 profit warnings are a reminder that segments of UK plc are struggling. Expectations that interest rates will remain elevated for some time have added weight to a plethora of warnings against casual lending tendencies and complex debt instruments."

The highest warning sectors were software and computer services with 17, support services with 12, and general retail 10. The high-street sector had double the number this quarter, compared to the second quarter of 2006.

HI e t-I WONDER IF YOU ARE SHORT ON F.T/////////////////////////////

I guess you don't need me to ask "who told you so??" - so I won't.

This is a long term business. The MMs don't make their living from long-term wise guys - but from those light-headed panicky types who try to cut and run at the first sign of volitility, often leaving a percentage behind.

Next week will be the time to start mopping up.

zscrooge (post 50) .....any comments??

please re-read my post (43).

I've been telling you since May (see post 3) how clear and obvious it is that big trouble is on the way. I will now add to this saying the FTSE 100
has a long way down to go yet before it will gain recovery mode. It will test the 5000 mark before it is in a position to start climbing again.



MELTDOWN - Stock markets went into meltdown as shares plunged across the world

Read full article here



The markets are in a critical halfway house where the chance of it falling to the low 5000s is looking increasingly likely.

Read full article here



History says bear market may have begun.

Read full article here

How to sell a newspaper with an attention seeking headline!
What he actually says is " The FTSE 100 will either hold at 6000 or go into a fully fledged crash." Which covers just about every angle but doesn't tell us anything.
As for "Meltdown"............If he had written "Market correction" would you have read the article?

nothing to do with the ftse , its the dow which you have to watch and unless it breaks 12k there is no bear market!

'head' and 'sand' come to mind, as do 'horse' and 'water'.

You have to do as you see fit - but if you still cannot see the signs (that are all too clearly writ large for all to see) then - well, 'hope' and 'no' spring all too quickly to mind.

A region close to 5000 beckons for the FTSE 100 so I'd be very VERY careful if I were you.

6000 on FTSE is key, but quite right to advise great caution

I agree with E T on this one and reckon the footsie is fast heading downwards towards the 5000 range. I can see the footsie dropping by another 400 points this week - probably on monday-tuesday. The sub-prime situation has a long way to run yet and there's a whole lot of heartache ahead for those investors holding on for better times. It just makes sense to sell now and wait for the market to finish dropping before buying back in again.

Read the articles in the next posting as they give a good insight into the present situation.

I've been telling you since May (see post 3) that huge market problems are clearly on the way.
I'll add to this saying the FTSE 100 still has a long way down to go yet - and that it will test
the 5000 mark before finding itself in a position to start climbing again.




US loan crisis set to claim fresh victims
Read full article here


Hedge fund panic was behind global stock markets collapse
Read full article here


Don't plunge back in until Warren says it's safe
Read full article here


We have seen a lot of small fish brought to the surface, but we are waiting for the whale.
That will mark the low point. I would like to see one final shake-out.
Read full article here

certainly only the very brave or foolish (time will tell which) will jump back in tomorrow or even next week ...... for sure there are bargains to be had, but cheap can be expensive and you won't know which until well after the event.

Word is that once the market does eventually hit bottom it will take several years to fully recover.
On that basis it may well be prudent to search out those "bargains" only after great deliberation.

real word is that no one has any idea what will happen at all ...... if we knew that, we could all make the correct decisions and retire tomorow!

Heard the one about the two bulls at the top of a hill.
Little bull says to big bull  "Why don't we charge down to that field and take a couple of those cows"
.......to which big bull answers  "Nah, we'll just slowly stroll down - and then we can take the lot!"

Am only interested in resouce stocks junior mining & oil. CEY, GFM , ZOX, AFR, AFE, KYS, KMR ........ Gold must be a good buy in these markets

As someone wrote a short while ago: If you are going to panic... panic early !

'Rocket scientist' behind Barclays' complicated debt deals quits and disappears as his boss tries to shrug off City fears of a damaging credit crunch...
Read full article here


Bank of China shares fall on sub-prime concern
Read full article here


``The BOE is either going to stay on hold or raise rates, but it's definitely not going to cut,''
Read full article here


FTSE 100   to plunge another 10%   as year-long bear market looms
Read full article here


Record numbers face debt meltdown
Read full article here


Markets fear there is more to come
Read full article here


"...it would be naive to think the worst is behind us."
Read full article here


Hedge funds braced for more pain
Read full article here


History says bear market may have begun.
Read full article here



-----------------------------------------------------------------------------------



The last time the FTSE100 reached the heady heights of 2006 was in 2000.
The chart below shows what happened then. It took the best part of 3 years before it finally hit rock bottom.
From this, you may well deduce that this months downturn could well be the beginnings of something that will last a while yet.
My own feeling is that the FTSE100 won't begin to recover again until it has first breached 4800 - sometime next year.

Recession risk looms large for US
Read full article here

why don't we rename this thread as the "Doom Mongering" thread, in RED!

e t should rename him/her self the Grim Reeper.

It's sensationalist rubbish & overdone, imo. The odd red headline attracts the casual reader. Loads of red headlines means they're all the same & the effect is lost. Attention seeking rubbish. (imo).

US could be heading for recession - Last Updated: 12:05am BST 28/08/2007


Ex-Treasury Secretary Summers warns of risks 'greater than any since aftermath of 9/11', reports Ambrose Evans-Pritchard

Former US Treasury Secretary Larry Summers warned that the United States may be heading into recession as the biggest victim to date of the sub-prime mortgage debacle was humiliatingly sold for a token sum in Germany.

Traders are braced for another week of turmoil after the near breakdown of America's $2,200bn (1,100bn) market for commercial paper.

"It would be far too premature to judge this crisis over," Mr Summers said. "I would say the risks of recession are now greater than they've been any time since the period in the aftermath of 9/11."

In Germany, it emerged that the state-bank SachsenLB may have accumulated $80bn of exposure to risky assets through a set of Irish funds kept off balance sheet.

The regional government of Saxony agreed yesterday to sell the East German bank - the biggest victim so far of the worldwide credit rout - for a token 300m (204m) to the Landesbank Baden-Wttemberg in Stuttgart (LBBW), ending a three-week saga that has revealed the extent of German involvement in the some of the most treacherous areas of US sub-prime debt.

Georg Milbrandt, prime minister of Saxony, said the sale of state-owned lender was the only viable option.

"Given the market turbulence and the pressures on the bank, it could not have gone on without a partner. We want to get our ship off the high waves and into a safe port," he said.

Sachsen LB, founded in 1992 after the fall of the Berlin Wall, was rescued two weeks ago in a state orchestrated bail-out. A consortium of banks agreed to provide a 17.3bn credit lifeline, but only on the understanding that it agreed to be sold to a stronger player.

It allegedly used no fewer than five Irish 'conduits' (off-balance sheet vehicles) to invest in collateralised debt obligations (CDOs) and other high-risk instruments, according to German newspaper Sdeutsche Zeitung.

The biggest losses stemmed from structured investment vehicles (SIVs) which involve using short-term credit to buy longer-term assets, creating a mismatch in maturities.

The rescue deal comes as investors waited to learn whether the US Federal Reserve would succeed in stabilising the US commercial paper market, the latest - and biggest -domino to fall in the spreading contagion from sub-prime debt. Investors have suddenly lost trust in this form of debt, fearing it may be tainted by exposure to CDOs.

Stock markets rallied strongly late last week on the belief that the Federal Reserve would start to cut its key lending rate in September, and that the European Central Bank would refrain from further tightening. Goldman Sachs said any hint the banks may prove more hawkish could quickly dampen investor spirits again, warning it was too early to give "all clear" on equities.

Federal Reserve data shows that the outstanding stock of US commercial paper has fallen by $255bn over the last three weeks, a sign that borrowers have been unable to roll over huge amounts of debt. The fall is comparable to the sudden shrinkage that occurred at the onset of the dotcom bust, and may have the effect of draining liquidity.

I don't think this will help sentiment tomorrow!!

"I have authorised our military commanders in Iraq to confront Tehran's murderous activities," he (George Bush) said.

The BBC's Justin Webb, in Washington, says this looks like a conscious effort by the White House to elevate the tension between Washington and Teheran to a new level.

Such an effort might be designed to avoid the need for armed conflict or might equally be an effort to bring that conflict about, our correspondent says.

http://news.bbc.co.uk/1/hi/world/americas/6967502.stm

Maybe Bush will divert attention to Iraq from the credit crunch...LOL.

Regarding yesterdays fall. No chart ever goes in a straight line and the FTSE100 had a similar fall in May 2006. Look what happened over the next year.

It has been quite an interesting week on the market - anyone any views on where it may go this week??

It has been quite an interesting week on the market - anyone any views on where it may go this week??

Don't say you weren't warned!!!!!


The last time the FTSE100 reached the heady heights of 2006 was in 2000.
The chart below shows what happened then. It took the best part of 3 years before it finally hit rock bottom.
From this, you may well deduce that this months downturn could well be the beginnings of something that will last a while yet.
My own feeling is that the FTSE100 won't begin to recover again until it has first breached 4800 - sometime next year.

"...few dawns have proved as false at that of January 3, 2001.
That was the last occasion on which the Federal Reserve cut US interest rates by half a point.
Wall Streets response was euphoric: the Dow Jones industrial average surged 300 points, or 2.8 per cent.
But only two months later it had lost nearly 1,600 points, or 14.2 per cent.
Over the same period, the FTSE 100 fell exactly in line."

Read full article here

Your all fun and games e t, you must be great fun to live with.

Sorry jimmy but it doesn't get any better I'm afraid.


Wolseley, the FTSE 100 builders' merchant, has warned that there are no signs of an improvement in the US housing market.

Read full article here