Wow, ringgit at 2.80 low. Shopping in Msia is great but how about those who bought Iskandar homes? Depends if they bought in cash, or took ringget loans.
as my Friend, John Chong, said If they took ringget loans at 90% financing, then their loss is minimal as they have not actually paid for 90% of the value of the property, and the payment is now chepaer in S$ terms.
Furthermore, with RM dropping like crazy, the property may even appreciate in RM terms. So in the end , they may even make a profit if they sell in a higher price.
But if they paid cash, they are screwed..
In our last Saturday's class, I mentioned that 3,500 on the Shanghai Composite was a good level to be looking at for the end of the current bloodshed market in Shanghai and HK. It would have represented a 50% retracement from 2005 in Jun 2014 to 5,166 in 12 Jun 2015.
I repeated this in my radio interview on Tuesday this week (MP3 soundtrack attached).
The Shanghai Composite closed at 3,507 yesterday, 7 points away from 3,500.
Today, it staged a welcome recovery of 202 points to close at 3,709 or up 5.76%.
The Chinese and HK markets ups-and-downs, thrills-and-spills are a great study of behavioural finance. From studies and analysis of past corrections, what is different is -
1. The pace and magnitude of the rises and falls - This is by far the sharpest by comparison.
2. The volumes are no longer much indicative as one-third of the stocks have been suspended, which I suspect would be progressively lifted as the market recovers
3. The unravelling of the margin finance trades of $379 billion x 3 hold the key to the extent of the market recovery
4. Key question now is - "Do you want to bet against the Chinese authorities" or is it better to "go with the flow"
5. As it is 90% driven by retail funds, the ups-and-downs are determined on a daily basis. I will be relying less on charts here.
It is just tremendous to be able to incorporate this episode in our knowledge pool as if your risk appetite is high, you have here a market to delve into, unlike the boring local market.
Check out China Aviation Oil. PE only 5-6 x for a solid monopoly and a govt well-backed entity.
Also, ISOTEAM, because its ventures in Myanmar and the region will be the big catalyst when its partner Nippon Paint clinches more painting jobs.