Candy Law Lam's Photoshoot

Candy Law Lam,  a mother of 3, released her photoshoot book ... and first run of 3,000 copies sold out immediately. A model and sometime actress 25 years ago... she has made her comeback in movies in two memorable movies recently. She had her divorce finalised two years ago. Oh, by the way she is 50 years old ... stunning!!!

Countries Stock market's Capitalisation As A % Of GDP

Someone twitted to us during our BFM show about the veracity of the figures of a country's stock market as a percentage of GDP. Why is the figure important ... if you can strip out foreign listings and non related listings (inclusive of SPACs) and maybe some REITs that are foreign or regional in nature, you get a good grasp of how much of your economy is listed. 


The higher the figure, the higher the importance of the stockmarket in feeling and shrinking economic activity. IN a super bull, Malaysian domestic economy would flourish as most people will see a lot of funds swishing around, the same when its a bear market when restaurants business dwindles sharply. The higher the figure, the more attention will the central banks and authorities pay to major fluctuations in share markets.

China, though has a lowly figure of GDP that is listed, is important this time owing to the exuberant amount in leverage/margin.






http://data.worldbank.org/indicator/CM.MKT.LCAP.GD.ZS/countries


The latest figures were for 2012. There are still discrepancies because many markets have "outside interests" being listed as well on their markets. It could be REITs, foreign listings, etc...

Bahrain  52%
Belgium 60.2%
Bolivia 27%
Brazil 51%
Canada 110%
Chile 118%
China 43.7%
Colombia 71%
Denmark 69%
France 68%
Germany 42%
Greece 18%
HK 421%
India 69%
Indonesia 43%
Ireland 49%
South Korea 96%
Malaysia 156%
Mexico 44%
Holland 79%
Philippines 105%

Russia 43%
Singapore 143%
South Africa 154%
Spain 73%
Thailand 104%
UK 115%
USA 115%
Vietnam 21%

Loyalty, Tolerance, Empathy, Leadership

There was a king. He had 10 wild dogs...
He used them to torture and eat all the ministers who made mistakes.

Once, one of the ministers gave an opinion which was wrong, and which the king didn’t like at all… 
So he ordered for the minister to be thrown to the dogs.

So the minister said, 
"I served you 10 years and you do this..?

Please give me 10 days before you throw me in with those dogs!"
So the king agreed… 

In those 10 days the minister went to the guard that was guarding the dogs and told him he wants to serve the dogs for the next 10 days… 

The guard was baffled… 
But he agreed… 
So the minister started feeding the dogs, cleaning them, washing them, providing all sorts of comfort to them.

When the 10 days were up… 

The king ordered that the minister be thrown in to the dogs as his punishment. 

But when he was thrown in, 

Everyone was amazed at what they saw..
They saw the dogs licking the feet of the minister!

So the king, baffled at what he saw, said:” what happened to my dogs. !!!” 

The minister then said;” 
I served the dogs for 10 days and they didn’t forget my service…
Yet I served you for 10 years and you forgot all on the first mistake!”… 

China's Baby Steps Into Capitalism

There is market support practiced by most countries financial authorities, usually with things such as circuit breakers, etc... but what the Chinese authorities have been doing is tantamount to meddling, acts of desperation, runs afoul of free market principles or proper capitalism. 

Here are the things China has done for the past 10 days to stop the sell down:

1) drop interest rat


es by 75 basis points
2) ban IPOs
3) ask state own firms not to sell shares
4) ask securities firms to buy shares (this one is so puzzling)
5) allow companies who wish to suspend their own shares, for basically any reason ... now its close to 50% of all listed companies in China having requested and being suspended from trading
6) restricted short bets on index futures

as if thats not enough, today they announce that anyone holding at least 5% shares in any listed company CANNOT sell their shares for 6 months.

BUT ... wait for it ... this one takes the cake ..."Under new rules announced last week by the country’s securities regulator, real estate has become an acceptable form of collateral for Chinese margin traders, who borrow money from securities firms to amplify their wagers on equities. That means if share prices fall enough, individual investors who pledge their homes could be at risk of losing them to a broker." To allow punters to literally bet the house on it ... soon securities firms will be the biggest house owners!!!

The ChinaSecurities Regulatory Commission has done more than what is deem proper in order to prop up the market. But markets are in panic mode and is fuelled mainly by passions and not rational thinking. Two things guide markets trend, FEAR & GREED. There is now too much panic and fear, and every additional step taken by CSRC are being viewed of acts of desperation and add fuel to fear.

The cascading effects of China's correction lies not with just punters betting on the markets but rather companies themselves using their shares as collateral for margin lines to play the market themselves. Much of the funds has gone to manipulate, support or push their own share prices higher, and/or bet on other companies. The cascading effect is due to margin facilities being cut, stop or collateral being sold down.

However when you can willy nilly suspend your counter to evade a sell down, the selling can only build up, not abate.

China isn’t the only market with a history of state intervention. During the Asian financial crisis in 1998, Hong Kong’s government bought shares worth $15 billion to prop up the market. In the U.S., the Securities and Exchange Commission temporarily banned short selling on some shares during the global financial crisis in 2008.

Xi Jinpeng has a bigger vested interest to prop up the markets. Thanks to his anti corruption drive, and a deliberate move to divert hot money from property, he has fast tracked the popular HK Connect which allows China investors to buy HK shares and vice versa. In a way, its also a good way to channel hot or laundered money out of the country. This was seen as an OK signal from the government to the public that its OK to buy shares. The anticipation that the HK Connect train would also apply to Shenzhen shares soon cause massive speculation especially in Shenzhen's already frothy and more speculative market.

The Grexit situation was a good reason for some big players to start taking chips off the table, what was unexepected was the domino effect and the many banks and financial firms holding collateral shares acted first, to start the dump rolling. With foreign investors exiting as they regard more and more intervention sound like a really iffy stock market place - they sold and sold with little intention to come back anytime soon.

Lessons here - recognise bubble when it is bubbling. Central banks must make sure banks are well capitalised and their exposure have limited consequences. Margin limits must be enforced religiously. Then bubbles will still burst, but we want to minimise the downside effects as much as we can. 

Welcome to the world of capitalism. Live and learn.

Brave New World

Brave new world ... or just platforms masking as the middlemen, bringing buyer and seller of services on the one platform.