TAIPEI (AFP) - - Taiwan on Thursday announced that it will relax restrictions on financial investments in China and Hong Kong by local firms amid improving ties between the rivals.
The government will scrap a rule that requires local brokerages to own at least a 25 percent stake in the mainland companies they invest in, said Susan Chang, deputy chairwoman at the Financial Supervisory Commission, the island's top financial regulator.
In addition, securities firms will be allowed to invest an equivalent of up to 20 percent of their net worth in China, doubling the current ceiling of 10 percent, Chang told reporters after a weekly cabinet meeting.
Under the new rules, Taiwan will open the domestic market to listings of Hong Kong exchange-traded funds, and also plans to allow Taiwanese ETFs to list in Hong Kong, she added.
Hong Kong-listed companies, except those that are at least 20 percent-owned by Chinese investors or based in China, would be able to list shares in Taiwan.
The cabinet will also remove a regulation that requires foreign mutual funds investing in Taiwan to prove that they are not funded by Chinese investors.
"The relaxation (of the rules) will be conducive to rejuvenating Taiwan's capital market and will make it more international," Chang said. "The opening will also allow Chinese investors to invest in our stocks, indirectly."
The new rules, which will take effect within a week, come amid thawing tensions across the strait following the presidential victory of Ma Ying-jeou of the China-friendly Kuomintang earlier this year.
The commission gave the go-ahead in April for Fubon Financial Holding Co. to acquire a 20 percent stake in Xiamen City Commercial Bank for 34 million US dollars through its Hong Kong subsidiary -- the first time a local bank has been allowed to invest in the mainland.
The investment proposal is under review by Chinese financial authorities.
Taiwan's economic ministry is also reportedly mulling raising the cap on local corporate investment in China to 50 percent of a company's net worth from the current 40 percent starting in August.
Thursday, June 26, 2008
Tuesday, June 24, 2008
China's securities watchdog to better regulate listed companies operation
BEIJING, June 24 (Xinhua) -- China's securities regulator has vowed to better protect investors after naming and shaming two listed companies for misappropriating capital, Tuesday's China Securities Journal has reported.
Fan Fuchun, vice chairman of the China Securities Regulatory Commission(CSRC), said on Monday that the CSRC would intensify investigations into capital misappropriation by large shareholders.
Fan said two companies -- the Shenzhen-listed Zoje Sewing Machine Co., Ltd and the Shanghai-listed Shandong Jiufa Edible Fungus Co., Ltd -- had been referred to the police for further investigation into alleged misappropriation.
Click here for full report
Monday, June 2, 2008
Factors Affecting or Influencing Share Prices
Share prices are dependent on many factors. So, it is quite hard to point out just one or two factors that affect or influence the shares prices. As you know, shares prices are extremely vulnerable to market volatility, coming off badly when the stock market dips.
There are so many factors that affect the prices of stocks like market news / rumours, company failed to repay hugh debts (usually in billions of US$ dollars as a guideline) when deadline is dued, broker's recommendations, market analyst's reports, listed companies / firms added or removed from MSCI Index, dual-listing, economy reports (GDP, Jobs data ...), company announcements (e.g. price-sensitive information), inflations (CPI), interest rates, election results, domestic political turmoils, riots, revolts, military coups, anti-government street protests, strikes, war, tensions and confrontation between countries, terrorism, crude oil or energy prices...Just too many to named it here.
Obviously, foreign investors or institution fund managers with big funds will dump their portfolios if negative news continues. Their action impact quite a lot to shares prices fall or rise.
Regardless of these factors, the price of stocks is quite liquid and it's determined by how much buyers are willing to buy and how much sellers are willing to sell for their shares.
Take note that an in-depth study into this subject is beyond the scope of this blog. Nevertheless, allow me to share with you although most of it are common sense.
Here are some factors (not in the order of importance) are my personal views.
- Market Sentiment
Many investors are taking one day at a time depends on current situation, they will make their investment decisions based on current market sentiment about the global economies, regional crisis, interest rate, recession, soaring inflation, crude oil prices, supply and demand...depends on what they hear, watch and read. Our feelings change frequently whenever latest news surfaced. So, investors are normally watch and see and try to sort things out daily. This impacts shares prices daily.
- Investors' Confidence of the Health of the Economy
Confidence here does not refers to blind faith about any data accuracy or completeness. I'm referring to the confidence in an economy. The stronger the economy, the stronger or more stable its currency. The higher the shares prices.
Strength about any economy can be estimated or projected from the leading economic indicators such as GDP(Gross Domestic Product) growth, Consumer Price Index (CPI), employment data, government policies changes, trade balance, current account balance, productivity...
Companies have good balance sheet, favorable financial ratios(assuming not window-dressed) like P/E, P/B, earning per share, impressive profit after tax..., budget surplus, consistently making profits despite bad economy...
Investors will likely to invest their money for listed-companies with histories of strong earnings track records like blue-chips and push up these companies shares prices.
However bear in mind that a company has made profits in the past not necessary mean it will continue to do so. Sometimes, the company may defending an upcoming big legal lawsuit, employees may threaten to go on strike or quit, profit margin has shrunken but generally the percentage of such things from happening are quite low. 5 per cents?
Judging from uncertainties ahead, risk-averse investors will most likely to put their investments to listed-companies with a steady cash flow and long history of earning track records.
- Local and World Economic Trends
An uptrend like anticipated business growth or economy recovery whilst a downtrend like a world recession. Generally, when US is in recession, this will impact global countries and push the shares prices down. Likewise, when US announced a better-than-expected growth or confirmation of out-of-recession, the global shares prices will likely follow-up with good news.
Therefore, investors will take their cue form key US economic data and acted on it.
- Regional Crisis
We have learned from sub-prime debacle, it started out just a domestic US mortgage problem but the effect spread so fast across the global like tsunami, this crisis triggered sell-offs in Asian equity market. Regional currency crisis back in July 1997 also caused similar problem in Asian equity markets.
- Inflation
Investors generally are concerns or worry about soaring inflation spurred by rising crude oil or high energy prices, combined with continues slowdown in the US economy will have a significant impact on regional economies and in turns the shares prices.
If government announced a harsher-than-expected tightening of monetary policy to fight inflation, this will further impact the shares market.
- Human Psychology
Human greed generally pushes up the shares price and fear of uncertainties and panic selling will generally pushes it down. Take note, greed can turns into grief if one do not take the opportunities to take profits when market is overheating. Bull run never last. Take the profits if the prices of the stocks are reasonably high within a short period. Likewise, reconsider accumulate good fundamentals stocks like blue-chips if prices fall unreasonable low within a short period. Consult your consultants when necessary.
- Market Rumours/Speculation
Generally it will drive the shares up or down depends on whether it is positive or negative news, novice investors or beginners should stay out of market rumours or speculations simply it is usually involves with a lot of uncertainties or risks.
Most of the time, rumour-mongers are up to something to achieve their motives, unfortunately this are true. When market rumours become too hot, these stocks become hot-stocks and people get burnt especially it has already passes down to many levels and it finally becomes distorted. Beware, blindly chasing the last passed-out rumours is as risky as playing with Russian's roulette. Amateur investor should minimize the market risks by not following the crowds.
Do your own research and understand companies fundamentals. Better relies on reliable information than rumours.
- Dividends Payout/Dividend Policy
When combined with low fixed/saving interest rate and inflation, shrinking dollars will likely to cause investors to park their money on high-paying dividends stocks or bonds to enjoy better return of their investments. Although the yield may not be high enough to shout about but it does provides a credible return under the current quiet market conditions. So, as long as the dividend return or yield is much higher than current bank interest or inflation rate, investor looking for regular returns will likely to invest these companies' shares and in turn pushes up these shares prices.
- Crude Oil Pricing.
By now, we probably heard enough of this, soaring crude oil prices had already pushed up inflation higher and cause essential household items to rise. When inflation level reaches to a critical stage, this will trigger trickle-down effect on goods and services, the opposition and ordinary people will vent their frustrations to their government, anti-government street protests will cause country to go chaotic and affect the sentiment of investors and affect shares prices.
Skyrocketing fuel prices will hurt almost all companies especially so to transport-related companies like airlines businesses because of higher operating costs, fuel accounts for more than 30 per cent of an airline's operating costs, which means most low-cost budget carriers already operating without much fat, so there is little left for them to trim. They will likely announce a significant drop of bottom-line figures, may even turn into big loses. Without doubt, this will affect their shares prices. Not surprisingly, most investors already dump these listed-companies' shares.
- Syndicates
Although it's pretty hard to pin-point who are they. They generally push penny stocks to astronomic heights and make it a 'hot-stock' with 'news' like company receiving big contracts, bonus issue, stock split, take-over or acquisition news but only to sell down later to make profits from unwary investors and finally the shares prices collapsed when the fact is out and small investors get caught with holding this high P/E penny stocks they purchased.
Beware of stocks suddenly traded record high volumes of activities without valid and satisfactory explanation. Don't follow the crowds.
- Interest Rates
Interest rates changes generally will impact sectors that are price-sensitive to their kind of business like banks and real estates, this in turn will affect their shares prices.
A big rise in interest rate will generally cause a sell-off/plunge of shares prices if all things are equal. The reverse is also true.
- Substantial Shareholders Transaction
When you see heavy 'insiders' buying/selling through price-sensitive announcements or 'intelligence' information, this is a strong buy/sell signal. Likely, the shares prices will go up/down even if the information is not acted on for a couple of months. Success investment is about how 'intelligence' is put to use. Some people are privileged to know what is about to happen. They make use of this 'intelligence' legally or illegally to their advantage. This is what happen in the stock market when the market 'insiders' get to know ahead of the public that certain company ‘will soon come to the primary market’ to raise money. In a bid to take full advantage of the discounts of the public offers, they will push the market price appreciably before technical suspension is imposed on the shares price.
- Buying/Selling Patterns of Institutional Investors
Institutional investors backed by big investment companies generally have big funds to change the course of action on a particular shares. Be it foreign funds, pension funds, mutual funds, unit trusts... Their buying/selling patterns in particular stocks are generally make stock prices rise or fall. Therefore, the amount of stocks they owned or dumped are generally a key factor investors should never overlook.
- Cutting-Edge Technology
One example is Apple's iPhone, Apple's shares price has gone up quite a bit when they announced this latest technological products last year.
- Holiday Sentiment
People do needs money to celebrate special festive seasons like Christmas, New Year celebration, long vacation holiday... So, in order to raise money to celebrate with this occasions, investors may sell some of their stocks into the market for sale. If majority of holiday makers do the same things, this may cause the shares prices to drop a bit, simply there are more sellers than buyers. This might explain why market tends to drop when long holiday is near.
Whatever the outcomes, be psychological prepared, a big rise in shares prices during the bull run may be a good time to unload especially penny stocks and turn paper gains to real profits, a dip in shares prices during bear run may be a good opportunity to pick-up bargains stocks like blue-chips left by those who have panicked.
By the way, stock markets up/down are cyclical. No one can accurately 'predict' the market. If anyone who claims to is either a charlatan or naive. Although the market is quite cautious at the moment, I think one still can make money in the stock market during this periods, but one may have to climb a wall of worries and uncertainties to do so. Be a contrarian but cautiously beware the risks involved.
All the best with your investments!
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There are so many factors that affect the prices of stocks like market news / rumours, company failed to repay hugh debts (usually in billions of US$ dollars as a guideline) when deadline is dued, broker's recommendations, market analyst's reports, listed companies / firms added or removed from MSCI Index, dual-listing, economy reports (GDP, Jobs data ...), company announcements (e.g. price-sensitive information), inflations (CPI), interest rates, election results, domestic political turmoils, riots, revolts, military coups, anti-government street protests, strikes, war, tensions and confrontation between countries, terrorism, crude oil or energy prices...Just too many to named it here.
Obviously, foreign investors or institution fund managers with big funds will dump their portfolios if negative news continues. Their action impact quite a lot to shares prices fall or rise.
Regardless of these factors, the price of stocks is quite liquid and it's determined by how much buyers are willing to buy and how much sellers are willing to sell for their shares.
Take note that an in-depth study into this subject is beyond the scope of this blog. Nevertheless, allow me to share with you although most of it are common sense.
Here are some factors (not in the order of importance) are my personal views.
- Market Sentiment
Many investors are taking one day at a time depends on current situation, they will make their investment decisions based on current market sentiment about the global economies, regional crisis, interest rate, recession, soaring inflation, crude oil prices, supply and demand...depends on what they hear, watch and read. Our feelings change frequently whenever latest news surfaced. So, investors are normally watch and see and try to sort things out daily. This impacts shares prices daily.
- Investors' Confidence of the Health of the Economy
Confidence here does not refers to blind faith about any data accuracy or completeness. I'm referring to the confidence in an economy. The stronger the economy, the stronger or more stable its currency. The higher the shares prices.
Strength about any economy can be estimated or projected from the leading economic indicators such as GDP(Gross Domestic Product) growth, Consumer Price Index (CPI), employment data, government policies changes, trade balance, current account balance, productivity...
Companies have good balance sheet, favorable financial ratios(assuming not window-dressed) like P/E, P/B, earning per share, impressive profit after tax..., budget surplus, consistently making profits despite bad economy...
Investors will likely to invest their money for listed-companies with histories of strong earnings track records like blue-chips and push up these companies shares prices.
However bear in mind that a company has made profits in the past not necessary mean it will continue to do so. Sometimes, the company may defending an upcoming big legal lawsuit, employees may threaten to go on strike or quit, profit margin has shrunken but generally the percentage of such things from happening are quite low. 5 per cents?
Judging from uncertainties ahead, risk-averse investors will most likely to put their investments to listed-companies with a steady cash flow and long history of earning track records.
- Local and World Economic Trends
An uptrend like anticipated business growth or economy recovery whilst a downtrend like a world recession. Generally, when US is in recession, this will impact global countries and push the shares prices down. Likewise, when US announced a better-than-expected growth or confirmation of out-of-recession, the global shares prices will likely follow-up with good news.
Therefore, investors will take their cue form key US economic data and acted on it.
- Regional Crisis
We have learned from sub-prime debacle, it started out just a domestic US mortgage problem but the effect spread so fast across the global like tsunami, this crisis triggered sell-offs in Asian equity market. Regional currency crisis back in July 1997 also caused similar problem in Asian equity markets.
- Inflation
Investors generally are concerns or worry about soaring inflation spurred by rising crude oil or high energy prices, combined with continues slowdown in the US economy will have a significant impact on regional economies and in turns the shares prices.
If government announced a harsher-than-expected tightening of monetary policy to fight inflation, this will further impact the shares market.
- Human Psychology
Human greed generally pushes up the shares price and fear of uncertainties and panic selling will generally pushes it down. Take note, greed can turns into grief if one do not take the opportunities to take profits when market is overheating. Bull run never last. Take the profits if the prices of the stocks are reasonably high within a short period. Likewise, reconsider accumulate good fundamentals stocks like blue-chips if prices fall unreasonable low within a short period. Consult your consultants when necessary.
- Market Rumours/Speculation
Generally it will drive the shares up or down depends on whether it is positive or negative news, novice investors or beginners should stay out of market rumours or speculations simply it is usually involves with a lot of uncertainties or risks.
Most of the time, rumour-mongers are up to something to achieve their motives, unfortunately this are true. When market rumours become too hot, these stocks become hot-stocks and people get burnt especially it has already passes down to many levels and it finally becomes distorted. Beware, blindly chasing the last passed-out rumours is as risky as playing with Russian's roulette. Amateur investor should minimize the market risks by not following the crowds.
Do your own research and understand companies fundamentals. Better relies on reliable information than rumours.
- Dividends Payout/Dividend Policy
When combined with low fixed/saving interest rate and inflation, shrinking dollars will likely to cause investors to park their money on high-paying dividends stocks or bonds to enjoy better return of their investments. Although the yield may not be high enough to shout about but it does provides a credible return under the current quiet market conditions. So, as long as the dividend return or yield is much higher than current bank interest or inflation rate, investor looking for regular returns will likely to invest these companies' shares and in turn pushes up these shares prices.
- Crude Oil Pricing.
By now, we probably heard enough of this, soaring crude oil prices had already pushed up inflation higher and cause essential household items to rise. When inflation level reaches to a critical stage, this will trigger trickle-down effect on goods and services, the opposition and ordinary people will vent their frustrations to their government, anti-government street protests will cause country to go chaotic and affect the sentiment of investors and affect shares prices.
Skyrocketing fuel prices will hurt almost all companies especially so to transport-related companies like airlines businesses because of higher operating costs, fuel accounts for more than 30 per cent of an airline's operating costs, which means most low-cost budget carriers already operating without much fat, so there is little left for them to trim. They will likely announce a significant drop of bottom-line figures, may even turn into big loses. Without doubt, this will affect their shares prices. Not surprisingly, most investors already dump these listed-companies' shares.
- Syndicates
Although it's pretty hard to pin-point who are they. They generally push penny stocks to astronomic heights and make it a 'hot-stock' with 'news' like company receiving big contracts, bonus issue, stock split, take-over or acquisition news but only to sell down later to make profits from unwary investors and finally the shares prices collapsed when the fact is out and small investors get caught with holding this high P/E penny stocks they purchased.
Beware of stocks suddenly traded record high volumes of activities without valid and satisfactory explanation. Don't follow the crowds.
- Interest Rates
Interest rates changes generally will impact sectors that are price-sensitive to their kind of business like banks and real estates, this in turn will affect their shares prices.
A big rise in interest rate will generally cause a sell-off/plunge of shares prices if all things are equal. The reverse is also true.
- Substantial Shareholders Transaction
When you see heavy 'insiders' buying/selling through price-sensitive announcements or 'intelligence' information, this is a strong buy/sell signal. Likely, the shares prices will go up/down even if the information is not acted on for a couple of months. Success investment is about how 'intelligence' is put to use. Some people are privileged to know what is about to happen. They make use of this 'intelligence' legally or illegally to their advantage. This is what happen in the stock market when the market 'insiders' get to know ahead of the public that certain company ‘will soon come to the primary market’ to raise money. In a bid to take full advantage of the discounts of the public offers, they will push the market price appreciably before technical suspension is imposed on the shares price.
- Buying/Selling Patterns of Institutional Investors
Institutional investors backed by big investment companies generally have big funds to change the course of action on a particular shares. Be it foreign funds, pension funds, mutual funds, unit trusts... Their buying/selling patterns in particular stocks are generally make stock prices rise or fall. Therefore, the amount of stocks they owned or dumped are generally a key factor investors should never overlook.
- Cutting-Edge Technology
One example is Apple's iPhone, Apple's shares price has gone up quite a bit when they announced this latest technological products last year.
- Holiday Sentiment
People do needs money to celebrate special festive seasons like Christmas, New Year celebration, long vacation holiday... So, in order to raise money to celebrate with this occasions, investors may sell some of their stocks into the market for sale. If majority of holiday makers do the same things, this may cause the shares prices to drop a bit, simply there are more sellers than buyers. This might explain why market tends to drop when long holiday is near.
Whatever the outcomes, be psychological prepared, a big rise in shares prices during the bull run may be a good time to unload especially penny stocks and turn paper gains to real profits, a dip in shares prices during bear run may be a good opportunity to pick-up bargains stocks like blue-chips left by those who have panicked.
Do analyze the market when investing. The market is your best teacher for shares investment, it is an instant feedback mechanism. If you make a mistake in shares investment and lose money, ask yourself "Where did my analysis go wrong? If each time you use 1 per cent of your investment money, you can afford to make 100 mistakes, instead of being wiped out by the first mistake. You should nibble in small amounts instead of committing large reserves.
Remember higher returns are accompanied by higher risks. Be prudence about your investments!By the way, stock markets up/down are cyclical. No one can accurately 'predict' the market. If anyone who claims to is either a charlatan or naive. Although the market is quite cautious at the moment, I think one still can make money in the stock market during this periods, but one may have to climb a wall of worries and uncertainties to do so. Be a contrarian but cautiously beware the risks involved.
All the best with your investments!
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