Asian News

[Ichiro]

28feb-Yen Volatility Rises as Investors Cut Bets Currency to Decline

By Liz Capo McCormick

Feb. 27 (Bloomberg) -- Volatility on options on the yen climbed to the highest in more than a week after investors exited bets the currency would decline.

The yen surged against major currencies, including rallies of more than 2 percent versus the New Zealand dollar and South African rand, after International Monetary Fund Managing Director Rodrigo de Rato said carry trades, where investors borrow in Japan and buy higher-yielding assets, may cause ``exchange-rate misalignments'' and worsen global imbalances.

``It's the unwinding of the carry trade,'' said Michael Holmes, a currency options trader in London at Australia & New Zealand Banking Group Ltd. ``Implied volatility on the options is reacting to the move in the spot market.''

Implied volatility on one-week dollar-yen options jumped to 9 percent, from 6.8 percent yesterday, and reached the highest since Feb. 16. It's the biggest jump in volatility in a month. Traders quote implied volatility, a gauge of expected swings in exchange rates, as part of setting option prices.

Implied volatility on one-week Australian dollar-yen options was 8.625 percent, and also touched the highest since Feb. 16.

The yen rose 1.6 percent to 118.74 per U.S. dollar at 11:17 a.m. in New York, and 1.8 percent to 94.07 per Australian dollar. It surged 2.5 percent against the New Zealand dollar and 3.2 percent versus the rand.

Volatility Watch

Japan's benchmark lending rate is 0.5 percent, compared with 5.25 percent in the U.S., 6.25 percent in Australia, 7.25 percent in New Zealand and 9 percent in South Africa.

``If dollar-yen moves below the 118 level, I'd expect one- month implied volatility to rise to 8.5 percent,'' said Holmes. ``If the Australian dollar weakens by another percent versus the yen, I'd expect one-month implied volatility to rise by about 0.5 percentage points.''

info:
http://www.bloomberg.com/apps/news?pid=20601083&sid=aXMAx30p5mE0&refer=currency

 

[Ichiro]

28feb-Yen Gains Most Since 2005 Versus Dollar as Traders Unwind Bets (The fED may be cutting the interest rate by Aug of 2007)

By Min Zeng

Feb. 27 (Bloomberg) -- The yen rose the most in more than 19 months against the dollar amid a sell-off in U.S. stocks and as investors shunned emerging-market assets, prompting an unwinding of trades betting on a decline in the Japanese currency.

Japan's yen also gained against the British pound and euro after International Monetary Fund Managing Director Rodrigo de Rato said carry trades, where investors borrow in Japan and buy higher-yielding assets, may cause exchange-rate misalignments. The Swiss franc, another funding currency for the carry trade, rose the most in almost three months.

``There is a perfect storm brewing against yen carry trade,'' said Paresh Upadhyaya, who helps manage $29 billion in currency assets at Putnam Investments in Boston. ``The yen has further scope to appreciate as people cut back their short yen positions.'' A short position is a bet on a currency's decline.

Japan's currency climbed 2.35 percent, the most since a gain of 2.4 percent on July 21, 2005, to 117.96 against the dollar at 3:23 p.m. in New York, from 120.66 yesterday. The yen touched 117.49 per dollar, the strongest since Dec. 15. It also gained to 156.21 per euro from 159.13, rebounding from an all-time low of 159.65 on Feb. 23.

The yen also advanced 5.6 percent against the Turkish lira, 4.7 percent versus the South African rand and 3.5 percent against Iceland's krona as investors shunned riskier assets in emerging markets following a rout in Chinese stock market shares.

Borrowing Costs

At 0.5 percent, Japan has the lowest borrowing costs in the industrialized world compared with 5.25 percent in the U.S. and U.K. Switzerland's benchmark is 2 percent, while the European Central Bank's rate is 3.5 percent.

One-month implied volatility on options on the dollar versus the yen rose to 8.01 percent, the highest since Feb. 1, from 7.2 percent yesterday.

The increase may discourage carry trades, as it implies wider exchange-rate fluctuation risk. The one-month implied volatility of yen against the euro and the pound also increased.

The dollar dropped to the lowest level in almost two months against the euro after a government report showed orders for durable goods fell 7.8 percent in January from a revised 2.8 percent gain a month earlier, raising speculation signs of slow growth may push the Federal Reserve to cut borrowing costs this year.

Interest Rate Bets

The odds the Fed will cut interest rates 0.25 percentage point by its meeting in August rose to 100 percent, from 42 percent yesterday, according to futures contracts.

info:http://www.bloomberg.com/apps/news?pid=20601083&sid=aERAFLr7NexE&refer=currency

 

[Ichiro]

28feb-Emerging-Market Stocks Slide Following Plunge in Chinese Shares

By Anne Pollak and Alexander Ragir

Feb. 27 (Bloomberg) -- Emerging-market stocks tumbled the most since June after a plunge in Chinese equities reduced investors' appetite for riskier assets.

The declines were sparked by the biggest drop in Chinese shares in a decade on concern the government may crack down on illegal investments that helped drive benchmarks to records. Russian stocks fell from an all-time high today. Turkey's stock index had its biggest decline since June. Mexico's Bolsa fell the most since Sept. 11, 2001. Latin American shares fell the most in eight years.

``I wouldn't buy'' in emerging markets, said Marc Faber, a Hong Kong-based investor who manages about $300 million and who predicted the U.S. stock market crash in 1987. ``Something has changed in the financial market: It's the time to sell rallies rather than buy dips.''

Emerging market stocks soared to records, partly on confidence that growth in China will fuel demand for exports such as copper, oil and steel. Before today, the Morgan Stanley Capital International's Emerging Markets Index climbed 20 percent in 12 months. The index's price to earnings ratio rose to 15.92, almost double the average for the past year.

Today the gauge erased its gain for the year today, falling 3.5 percent to 907.95 at 3:07 p.m. in New York, the biggest drop since June 13.

The Shanghai and Shenzhen 300 Index, which tracks yuan- denominated A shares listed on China's two exchanges, fell 250.18, or 9.2 percent, to 2457.49. Today's rout wiped out $107.8 billion from a stock market that doubled in the past year as 249 of the key index's 300 shares plunged by the 10 percent limit.

China Clamps Down

China's highest ruling body, the State Council, has approved a special task force to clamp down on illegal share offerings and other banned activities in the market, the government said. The group will provide advice on regulations and policy explanations of the securities market, according to a statement published Feb. 25 on the central government's Web site.

Stocks surged in China last year after a government plan to make more than $200 billion of state-owned stock tradable revived investor demand and paved the way for sales by some of the nation's biggest companies. The economy, which in 2005 overtook the U.K. as the world's fourth biggest, averaged annual growth of 9.6 percent in the past five years.

info:http://www.bloomberg.com/apps/news?pid=20601013&sid=aLRjJ1Muk6Ko&refer=emergingmarkets

 

[Ichiro]

28Feb- According to the 6 am Business News in Japan, the Nikkei may range today between 17,300 and 17,800 (close: 18,119) today (28 Feb) and the yen between 117.50 and 118.50 (close:117.97). The decline of the Nikkei will heavily depend on the China Stock Market this morning. If the China market drops another 10% or so, watch out! But, if it recovers, the drop will not be as bad. Also, we may see a few bankrucptcy of the hedge fund in the near future. Those that bet against the yen will be hurting... But, I think this is a temporary market correction... This is nothing compared to the black monday market decline of 25%.

 

[Aspiration]

Thanks for your continued coverage of the changes in the far east!

 

[Ichiro]

No problem!!!! But, I am glad that the market dropped now rather than at the latter part of the year because we are going to have a great year. I thought for sure that the Vietnam or India stock market would cause the market selloff in the near future. We just have to keep our eyes open for those emerging growth countries since they are high risk.... But, i am glad that the Chinese market stablized for the time being by appreciating 4%. The Japanese consumers are sure taking the hit since the BOJ recently raised the interest rate since most of the mortage loan rates are adjusted loan rates rather than fixed loan rates.

 

[Ichiro]

28Feb- AP-Stocks Bounce Back After Big Selloff
Wednesday February 28, 3:13 pm ET

By Tim Paradis, AP Business Writer

Stocks Rebound Fitfully Following Bernanke Comments, Economic Data, Dow Gains 55 Points

NEW YORK (AP) -- Wall Street rebounded fitfully Wednesday from the previous session's 416-point plunge in the Dow industrials as investors took comfort from comments by Federal Reserve Chairman Ben Bernanke but still showed signs of unease about the economy. In late afternoon trading, the Dow Jones industrials were up 55.76, or 0.46 percent, at 12,272.00.

Broader stock indicators were also higher. The Standard & Poor's 500 index was up 7.82, or 0.56 percent, at 1,406.86, and the Nasdaq composite index was up 9.57, or 0.40 percent, at 2,417.43.

Bernanke's remarks to Congress that he still expects moderate economic growth gave some investors confidence to look for bargains. A recovery in some overseas markets following a worldwide selloff Tuesday also lent some support to U.S stocks, but the advance lacked some conviction -- the major indexes fluctuated through the morning and into the afternoon, with the Dow rising as much as 137 points before pulling back and then advancing again.

The Fed chairman allayed some of the fears about a slowdown in the U.S. and Chinese economies that fed Tuesday's drop; remarks earlier in the week from former Fed Chairman Alan Greenspan warning that a U.S. recession could take hold later this year contributed to Tuesday's declines.

Investors were parsing a series of economic reports out Wednesday, hoping to glean a direction for stocks.

The market took some solace from a Commerce Department report that the U.S. economy grew at an annual rate of 2.2 percent in the fourth quarter. The gross domestic product reading was slightly below expectations, but didn't come in as low as some investors feared. The reading was more than a percentage point below the initial estimate of 3.5 percent made a month ago.

Bernanke's comments and the GDP report helped depressed stock prices look a little more attractive.

info:

http://biz.yahoo.com/ap/070228/wall_street.html?.v=68

 

[Ichiro]

28Feb- AP-Economy Grows Slower Than Expected in 4Q

Wednesday February 28, 12:21 pm ET

By Jeannine Aversa, AP Economics Writer

Economy Grows at a 2.2 Percent Pace in Final Quarter of 2006, New Home Sales Plunge

WASHINGTON (AP) -- The economy grew at a sluggish 2.2 percent pace in the final quarter of last year, the government reported Wednesday in one of the steepest downward revisions in years. In another report, new-home sales plunged in January by the largest amount in 13 years.



The pair of reports released Wednesday by the Commerce Department came a day after stocks on Wall Street and around the globe took a nosedive.

The new reading on gross domestic product showed the economy in a considerably weaker state than the government first estimated. It had initially reported the expansion in the last three months of 2006 to be at a 3.5 percent pace. The principal reason for the new, significantly lower estimate: Businesses tightened their belts amid fallout from the troubled housing and automative sectors.

The fresh look at the housing market was sobering. New-home sales plummeted by 16.6 percent in January from the previous month. That was the largest decline since January 1994 when sales slid by 23.8 percent.

The decline in January -- much steeper than analysts were anticipating -- left sales at a seasonally adjusted annual rate of 937,000, the lowest level since February 2003. Sales fell sharply in all parts of the country.

Home prices were down from a year ago. The median sales price of a new home -- where half sell for more and half for less -- dropped to $239,800 in January, a 2.1 percent decline from the same month last year.

The new GDP figure for the October-to-December quarter was a tad slower than the 2.3 percent growth rate economists were forecasting and clearly less sunny than that original estimate. The GDP, which measures the value of all goods and services produced within the United States, is the best overall barometer of economic health.

Although the fourth quarter's showing marked a slight improvement from the third quarter's mediocre 2 percent growth rate, it didn't alter the overall picture that economic activity in both quarters was restrained by the housing slump and the ailing automotive sector.

for info:
http://biz.yahoo.com/ap/070228/economy.html?.v=11

 

[Ichiro]

28feb-U.S. Stocks Rebound From Plunge; P&G, Sprint, Merck Lead Gains (Time to buy some of my favorite stocks)

By Eric Martin

Feb. 28 (Bloomberg) -- U.S. stocks rebounded from their biggest plunge in four years as Federal Reserve Chairman Ben S. Bernanke reassured investors the economy is poised to grow and strategists advised investors against selling equities.

Shares of consumer, telephone and health-care companies, whose earnings are less reliant on swings in the economy, led the advance. Procter & Gamble Co. climbed the most in seven months for the best performance in the Dow Jones Industrial Average. Sprint Nextel Corp. rose after its sales beat analysts' estimates, while Merck & Co. gained on a higher profit forecast.

European and Asian stocks slumped, while emerging markets had their steepest two-day drop in eight months in the wake of yesterday's U.S. selloff. In all, more than $1 trillion of global stock market value was wiped out over the last two days. The Dow average is headed for its worst month since April 2005.

``People are poking around amidst the rubble of yesterday's market collapse, looking for good things to buy,'' said John Carey, who manages about $12 billion at Pioneer Investment Management in Boston. ``The consumer economy here in the U.S. is still pretty strong. The longer-term picture continues to be encouraging.''

The Dow industrials added 48.47, or 0.4 percent, to 12,264.71 as of 2:56 p.m. in New York. The Standard & Poor's 500 Index rallied 6.98, or 0.5 percent, to 1406.02. The Nasdaq Composite Index increased 9.42, or 0.4 percent, to 2417.28.

http://www.bloomberg.com/apps/news?pid=20601103&sid=aFQqtmJtex.E&refer=news

 

[Ichiro]

28feb-Dollar Advances as Bernanke Expects Economy to Gather Momentum

By Min Zeng and Ye Xie

Feb. 28 (Bloomberg) -- The dollar advanced from a 10-week low against the yen and rose from the weakest since January versus the euro after Federal Reserve Chairman Ben S. Bernanke said it is ``reasonable'' to expect stronger growth in midyear.

The U.S. currency also benefited as the nation's stock markets rebounded after the biggest drop in four years yesterday following a sell-off in emerging market assets. The yen's decline started in Asian trading after reports in Japan showed declines in industrial production and retail sales.

``The market takes Bernanke's comment as hawkish,'' said Michael Malpede, a senior currency analyst in Chicago at Man Global Research. ``People are buying the dollar.''

The dollar rose to 118.42 yen at 2:06 p.m. in New York from 117.93 yesterday. It reached 117.49 yesterday, the weakest since Dec. 15. The dollar traded at $1.3227 per euro from $1.3242 yesterday when it touched $1.3259, the lowest since Jan. 3.

Gains in the dollar were limited as U.S. reports showed the world's largest economy in the fourth quarter grew less than initially forecast, a gauge of U.S. business activity shrank this month and new-home sales dropped in January.

http://www.bloomberg.com/apps/news?pid=20601083&sid=aI_77MPnCePo&refer=currency

 

[Ichiro]

28feb-U.S. Economy: Home Sales Tumble, Growth Revised Lower (Update3)

By Courtney Schlisserman and Joe Richter

Feb. 28 (Bloomberg) -- New-home sales in the U.S. tumbled last month by the most in 13 years and fourth-quarter economic growth was less than previously estimated, dousing speculation that the worst of the slowdown is over.

January new-home purchases fell 16.6 percent, the most since 1994, the Commerce Department said today in Washington. The department in a separate report said gross domestic product, the sum of all goods and services produced, grew at an annual rate of 2.2 percent, compared with the 3.5 percent reported on Jan. 31, and the 2 percent the previous quarter.

Federal Reserve Chairman Ben S. Bernanke played down the figures, saying the growth revision is in line with his estimates and predicting a rebound later this year. His remarks helped lift stocks after the biggest slide in four years.

``One by one, various growth indicators for the U.S. economy are tipping to the downside,'' said Avery Shenfeld, a senior economist at CIBC World Markets Inc. in Toronto. ``The housing market still looks decidedly in a downtrend. The Fed appears to be somewhat late in adjusting its views.''

A separate report showed a national business activity index unexpectedly dropped this month. The National Association of Purchasing Management-Chicago said its business barometer fell to 47.9 this month, the lowest since October 2002, from 48.8 in January. A reading lower than 50 signals contraction.

For all of last year, the economy grew 3.3 percent, compared with 3.2 percent in 2005.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aK9Q01ZUMmp0&refer=worldwide

 

[Ichiro]

28feb-SE Asia stocks-Markets stage biggest falls since 1997 crisis
Tue Feb 27, 2007 11:11pm ET19 (from Yahoo singapore)

By Wee Sui Lee

SINGAPORE, Feb 28 (Reuters) - Most Southeast Asian stocks suffered their biggest one-day declines since Asia's 1997 financial meltdown, as investors sold off shares in a panic, following the slump in global markets.

Singapore's benchmark Straits Times Index <.STI> fell 5.63 percent by 0341 GMT and Malaysian shares tumbled 5.95 percent.

The Philippine index lost 7.3 percent, while Indonesian stocks fell 3.22 percent. Thai shares were down 1.64 percent.
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Dealers said the selloff in Southeast Asian markets followed a near 9-percent plunge in Chinese stocks on Tuesday.

"China's the culprit. We have a lot of listed Chinese companies, so we're dependent on China," said a dealer with a regional brokerage in Singapore.

Singapore-listed Chinese companies -- which make up more than 100 of about 700 listed firms on the city-state's bourse -- sank sharply on Wednesday.

Shipbuilding and repair firm Cosco Corp. (COSC.SI: Quote, Profile , Research), controlled by China's top shipping firm, plunged 8.9 percent, which reduced its market cap to below US$ 4 billion.

info:

http://yahoo.reuters.com/news/artic...2-28_04-10-59_SIN237543&type=comktNews&rpc=44

 

[Ichiro]

28feb- AP-Stocks Rebound Fitfully After Selloff
Wednesday February 28, 4:09 pm ET
By Tim Paradis, AP Business Writer
Stocks Rebound Fitfully Following Bernanke Comments, Economic Data, Dow Gains 60 Pts

NEW YORK (AP) -- Wall Street rebounded fitfully Wednesday from the previous session's 416-point plunge in the Dow industrials as investors took comfort from comments by Federal Reserve Chairman Ben Bernanke but still showed signs of unease about the economy.

Bernanke's remarks to Congress that he still expects moderate economic growth gave some investors confidence to look for bargains. A recovery in some overseas markets following a worldwide selloff Tuesday also lent some support to U.S stocks, but the advance lacked some conviction -- the major indexes fluctuated through the morning and into the afternoon, with the Dow rising as much as 137 points before pulling back and then advancing again.

The Fed chairman allayed some of the fears about a slowdown in the U.S. and Chinese economies that fed Tuesday's drop; remarks earlier in the week from former Fed Chairman Alan Greenspan warning that a U.S. recession could take hold later this year contributed to Tuesday's declines.

Investors parsed a series of economic reports out Wednesday, hoping to glean a sense of where stocks were headed. Bernanke's comments and a gross domestic product reading that mostly met expectations helped bring out some buyers. Nevertheless, investors remained cautious and didn't rush headlong into stocks and discount the possibility of a further shakeout.

"It's typical that you get a bounceback the next day," said Joseph V. Battipaglia, chief investment officer at Ryan Beck & Co. "Now we're essentially flat on the year. Can we go up from here or down? That sorting-out process will continue now."

A recovery in China's Shanghai Composite Index, which had fallen nearly 9 percent Tuesday, also helped boost U.S. stocks, although other Asian markets and European exchanges saw declines of more than 1 percent.

http://biz.yahoo.com/ap/070228/wall_street.html?.v=70

 

[Ichiro]

1mar-Thursday March 1, 2:46 AM
World stocks mixed after Tuesday rout

LONDON (AFP) - European and Asian stocks mostly struggled on Wednesday, but Wall Street rebounded as leading figures in the world economy rushed to reassure markets after the previous day's sharp global sell-off.

Stock markets in Frankfurt, London and Paris finished Wednesday with losses in excess of 1.0 percent on concerns over slowing economic growth in the United States and a possible overheating on the Chinese stock market, dealers said.

From Tokyo to Sydney, Hong Kong to Mumbai, most share prices fell heavily in Asia on Wednesday.

However, Wall Street opened higher, rebounding from the worst fall since the September 11, 2001 attacks.

In Washington, US Federal Reserve chairman Ben Bernanke told lawmakers that his economic outlook remains unchanged and that financial markets were functioning "normally" following the slump.

In China, Shanghai stocks recovered nearly four percent in a technical rebound on Wednesday, after their biggest one-day fall in 10 years.
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Chinese Premier Wen Jiabao meanwhile appealed for stability and reform of the financial markets, as share prices clawed back ground.

In European closing deals, London's FTSE 100 index of leading shares finished 1.82 percent lower at 6,171.50 points and in Paris the CAC 40 ended 1.29 percent down at 5,516.32 points.

Frankfurt's DAX 30 index slid 1.53 percent to close at 6,715.44 points.

"What we are seeing is the echo of the fall in the Chinese market (on Tuesday) and more importantly the fall that we saw in the US equity market overnight," said Glenn Maguire, chief economist for Asia at Societe Generale.

"I don't think these moves significantly change the macroeconomic outlook for China which remains relatively firm at this stage," he added.

In Shanghai, share prices closed with a rally of 3.94 percent on Wednesday, one day after slumping 8.8 percent -- which was their biggest single day loss since 1996.

Many market watchers took the view that the recent falls were a necessary correction in an upward market trend.

"I think giving up a few percentage points isn't a big deal, in the context of things, when we've had four great years of rising stock markets," said Mike Lenhoff, chief strategist at Brewin Dolphin Securities in London.

info:
http://asia.news.yahoo.com/070228/afp/070228184409top.html

 

[Aspiration]

It sounds like you really have your eye on a lot of the widowmakers hanging up in the trees. I had some clue in to the impending Chinese threat a couple weeks ago from reading http://billakanodoodahs.com/ (I think this was the site), but I had no idea there were other markets in danger out there. I wish I had seen the Chinese thing as a more imminent threat than I did - I had thought nothing would happen before March. Guess I shouldn't quit my day job to become a fortune teller eh?

Anyways, I think I have had my eyes opened with this event. Again, thanks for all the great reading links. Good luck with your trading!

 

[Ichiro]

Aspiration,

When the Chinese stock market dropped 9% recently, none of the Asian stock market really took a hit that day. So, what happened? When the US government announced the surprisingly weak manufacturing report that day, it was the major trigger along with the drop in Chinese Stock market as the reasons for the meltdown. This meltdown was going to happen sooner or later. It is good that it happened now since the FEDs will probably reduce the interest rate by late August which will be good for the stock market. I will be adding more $$$ to my ETFs this week.

 

[Ichiro]

1mar-yahoo singapore-business

Thursday March 1, 4:31 PM
Asian stocks wobble as aftershocks continue

Asian investors sweated Thursday as the aftershocks from the recent global stock market rout reverberated around the region, pushing Tokyo and Shanghai back into negative territory.

Markets waited nervously to see if selling pressure would ease -- as many analysts predict -- or whether the recent signs of stabilisation in many markets are merely the eye of the storm before a further selloff.

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Analysts have been quick to point out that the Asian economies remain in good shape, but after the sharp falls of recent days nerves were still frayed.

After clawing back some of their massive losses on Wednesday, Chinese share prices turned lower again, closing down 2.91 percent as the rollercoaster ride continued following Tuesday's worst selloff for a decade.

Dealers said investors remained jittery despite a turnaround of nearly four percent Wednesday and volatility was expected to continue given the Chinese market was up more nearly 130 percent over the last 12 months.

"Investors are still wondering if the storm is actually over or not," said Masatoshi Sato, a senior strategist at Mizuho Investors Securities in Tokyo.

"Aftershocks in some markets, where prices are overvalued, may be seen from now on. Volatile and sensitive trading is likely to continue at least until mid-March," he said.

In Tokyo the benchmark Nikkei-225 index closed down 0.86 percent as an overnight rebound on Wall Street helped to reassure nervous investors after the index slumped 2.85 percent on Wednesday.

Hong Kong was also down almost one percent in late trade and Sydney ended 0.38 lower, while New Zealand shares eked out a gain of 0.29 percent and Manila closed up 4.0 percent.

"I don't think people are panicky but they're nervous the correction may have further to go," said Ric Klusman of Aequs Securities.

"They fear the rise on Wall Street may turn out to be the dead cat bounce."

Federal Reserve chairman Ben Bernanke told US lawmakers that financial markets are functioning "well" and "normally" a day after the worst one-day drop in US stocks since the aftermath of the September 11, 2001 attacks.

Despite the fresh losses in parts of Asia, many market watchers remained optimistic that the worst of the recent rout would soon be over.

"The impact of the global stock slump is expected to wane soon as a lot of players still bet that this is a temporary phenomenon," said Kenichi Azuma, a senior broker at Cosmo Securities.

info:
http://sg.biz.yahoo.com/070301/1/46zr0.html

 

[Ichiro]

1mar-yahoo singapore--business

Thursday March 1, 4:27 PM
Chinese shares close 2.91 percent lower as jitters pervade

Chinese share prices closed 2.91 percent lower Thursday as jittery investors sold blue-chip holdings after the biggest one-day decline in a decade earlier in the week, dealers said.

They said investors remained concerned the market was still substantially overbought despite stock prices falling 8.84 percent on Tuesday, dismissing Wednesday's recovery of nearly four percent as a technical rebound.

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Premier Wen Jiabao's comments on Wednesday calling for financial stability had only marginally eased fears, and more volatility was expected to continue as the market remained up 120 percent over the past 12 months, they said.

Investors nevertheless still plunged into Ping An Insurance, China's second biggest insurer, which saw its share price rise nearly 40 percent on debut.

The benchmark Shanghai Composite Index, which covers both A- and B-shares listed on the Shanghai Stock Exchange, closed down 83.88 points at 2,797.19, after moving between 2,760.91 and 2,878.36.

Turnover rose to 106.61 billion yuan (13.7 billion dollars) from 95.42 billion in the previous session.

The Shanghai A-share Index ended down 87.99 points or 2.91 percent at 2,937.76 on turnover of 105.84 billion yuan, while the Shenzhen A-share Index was down 18.02 points or 2.35 percent at 749.33 on turnover of 50.39 billion yuan.

"The market was still influenced by Tuesday's fall while yesterday's rebound was just a technical correction," said Shen Jun, an analyst with Shangzhenglian consulting based in Shanghai.

"You're starting to see more of a consensus that the market is in a correction, as we see most blue chips stocks, like Industrial Bank of China, Bank of China and China Life Insurance falling sharply.

"At the same time institutional investors are also cashing out."

Tuesday's hefty sell-off was blamed partly on rumours the government would start levying taxes on capital gains made on stock investments, but was quickly denied by officials in local media the following day.

Their comments, along with Wen's promise "to promote the "safe and steady" reform of the country's financial sector and to push capital market reforms to a "new stage", helped the bourse to a short-lived recovery.

Trade on Thursday was highly volatile with the key Shanghai Composite index falling nearly four percent in the afternoon before clawing back more than one percent in the closing minutes of trade.

info:

http://sg.biz.yahoo.com/070301/1/46zzd.html

 

[Ichiro]

1mar-WHAT'S BEHIND THE GLOBAL STOCK MARKET SHAKE OUT?

by Gary Dorsch
Editor, Global Money Trends Magazine
February 28, 2007

In a keynote speech on February 2nd, in the northern Italian city of Turin, Bank of Italy chief Mario Draghi, warned global stock market operators not to assume that present favorable conditions would last. “It is not realistic to expect that the current orderly market conditions will last forever, we do not know where the next crisis will come from, we must do everything to be prepared,” he said.

“Market pricing does not currently incorporate the full range of potential risks. Financial market participants need to take into account in their risk analyses, the full implications of a possible reversal of the current benign conditions, including the possibility of less liquid markets,” he warned.

But Draghi is the “Boy who Cried Wolf”, and few hedge fund or stock traders heeded his warnings. Central banks, including Draghi’s ECB, are flooding the global money markets with liquidity, encouraging rampant speculation in financial markets. On Jan 29th, the ECB’s Klaus Liebscher admitted, “Liquidity levels continue to be enormously accommodative, driven by high borrowing due to low interest rates,” he said. The Euro M3 money supply is exploding at a 9.8% annual clip, it’s fastest in 17-years!

info:

http://www.[[financialsense.com/fsu/editorials/dorsch/2007/0228.html

 

[Ichiro]

1mar-fsu-Tuesday's Market Plunge by Michael A. Nystrom
BullNotBull.com
February 28, 2007

At it's worst level, the Dow was down today over 540 points in a global selling spree that started overnight in China. By the end of the day, it had recovered somewhat, but still closed down over 400 points. The real story was the volume: 2.3 million advancing shares advanced, versus 2.3 billion decliners in what could be the most lopsided selling day in history! In other words, 99% of today's share volume was down!

After hearing this news, many people's first instinct is to ask "What caused it?" The next question people are concerned about is, "Will it continue?" And finally, "What should I do?" I'll do my best to answer those questions in this article.

What Caused It?

It's hard to say exactly what single event, if any, "caused" today's market meltdown, but we do know that it was a global selloff that began overnight in China. The Shanghai index fell a whopping 9% the very day after it reached an all time high. Remember, this market had risen over 130 percent last year, so this was obviously a market driven by speculation, similar to the 1929 US market, and the 2000 Nasdaq market. The parabolic rise made a correction inevitable, and jittery, speculation-driven markets such as these can sell off on the slightest hint of rumor.

"Traders said the slide did not appear to be triggered by concrete news," but instead was fed by various fears. The linked article goes on to discuss a number of rumors that fluttered through the crowd. Westerners are much more likely to ascribe the cause of the plunge to Greenspan's speech to a business group in Hong Kong, in which he stated the US economy was likely headed for a recession by the end of the year. Greenspan is no longer head of the Federal Reserve, and holds no official position, but his words and opinions obviously still have considerable sway. Apparently he's still the Maestro.

This morning's bad news didn't end with the markets. Early risers also learned that a suicide bomber struck the main gate of the compound Dick Cheney was visiting in Afghanistan, in an apparent attempt on the VP's life. Later the Commerce Department reported that durable-goods orders fell 7.8 percent in January, including the biggest slide in business equipment demand in three years.

It was a morning of bad news. Markets are emotional and all the pessimism took its toll. The fact that consumer confidence was announced to have risen to a 5-1/2 year high did nothing to help the morning sentiment. I'm not sure what drugs consumers are smoking these days - or maybe it's the people doing the surveys - because things sure don't look that great to me!

So to get back to what "caused" the plunge - conditions were ripe, and there were a number of triggers. Before we go on, let's take a look at some charts:

Dow down 3.29%, S&P 500 down 3.4%, Nadaq down 3.86%. This is not crash territory by any stretch of the imagination, (though you woulndn't know that from CNBC's breathless reporting of the plunge). It just feels like it because we haven't seen any substantial pullbacks over the past 5 years. These were in fact the worst market drops since September 2001.

The technical situation with the Dow, S&P 500 & Nasdaq are similar, so lets focus on the S&P 500. The eight-month uptrend on the daily chart has clearly been broken. The trend line that served as support for the past eight months now serves as overhead resistance. Today's action also plunged prices below both the 50-day and 100-day moving averages. Not a good sign for the bulls.

info:
http://www.[[financialsense.com/fsu/editorials/nystrom/2007/0228.html