China Moving To The Big Stage

Jan. 9 (Bloomberg) -- China took a “big step” toward opening its capital markets by approving stock index futures, paving the way for increased investment in the world’s fastest- growing major economy.



The China Securities Regulatory Commission said yesterday it may take three months to complete preparations for index futures, agreements to buy or sell an index at a preset value on an agreed date. The government also approved margin trading and short selling, when investors seek to profit from declines in shares, according to a commission statement on its Web site.

“They’re taking a big step forward in developing their capital markets and allowing people to express their positive and negative views on stocks,” Invesco said in a statement. Invesco, which invests in China as part of its Asia Pacific business that had $26.8 billion of assets as of Sept. 30. “You’ll have more people participate in the market and thus greater efficiency.”

Increased investment in Chinese equities may help narrow the gap between prices of shares traded in both Hong Kong and the mainland. Companies in China’s benchmark Shanghai Composite Index trade at 33.9 times 12-month trailing earnings compared with 20.9 times for the Hang Seng China Enterprise index in Hong Kong. A potential long-term development is more clarity in the market now that there’s more liquidity in the market for the true valuations of the companies that are dual listed.

China, whose economy grew 8.9 percent in the third quarter of 2009, currently bars overseas investors from trading yuan- denominated stocks and bonds on the mainland except through a so-called qualified foreign institutional investors program, which has approved 94 international firms. Foreign ownership of fund management companies is restricted to 49 percent.

Index futures may help ease fluctuations in the world’s third-largest equity market by value after the Shanghai Composite Index doubled in 2007, then slumped 65 percent in 2008 before rebounding 80 percent last year. Until now, Chinese investors could only profit from gains in equities.

China is going to the direction of freedom for its markets and more flexibility for its investors so it’s good news. More liquidity in the futures leads to more investors as you have a bigger pool of tools. You can be long on the future and short on the stock.



Allowing short-selling in China probably will spur the start of more hedge funds in Asia. Short selling is when investors sell borrowed stock in the hope of profiting by buying the securities later at a lower price and returning them to the shareholder.

Rules for the index futures will deter participation by retail investors, said JPMorgan Chase & Co. Investors will be required to put up 10 percent of a contract’s value to buy, sell or short CSI 300-based futures as collateral, according to rules published on China Financial Futures Exchange’s Web site in 2007. The bourse has been conducting mock trading in the securities since October 2006. The value of the futures contracts will be points of the CSI 300 multiplied by 300 yuan, according to the trading rules the exchange set.

Investors will need to spend 105,000 yuan ($15,379) to buy a single futures contract when the CSI 300 is at the 3,500 level, establishing a “cost barrier to retail participation. These initiatives will provide tools for institutional investors to hedge risks and should reduce market volatility in the long-term. Citic Securities Co., China Merchants Bank Co., Ping An Insurance Group Co., Industrial Bank Co. and Shanghai Pudong Development Bank Co. are the most-heavily weighted stocks on the CSI 300.

Comments: The article basically says it all. As things stand, with so much restrictions on foreign funds participation, coupled with a monolithic broking business (i.e. relatively benign equity margin business and minimal leverage by participants) - China equity markets is already very huge. The combined daily turnover for China exchanges is nearly US$25bn.

In comparison, HK's figure is around US$5.7bn. Seoul's figure is US$3.2bn. Taiwan's at US$3.7bn. Can you imagine when markets in China opens up a little bit more to foreign participation??!! HK is getting a lot of attention from large companies wanting to list overseas because their legal infrastructure and transparency are a lot better and is of global standard. You and I know that China will take a looong time to do both well. To companies, HK is as good as listing and tapping into China funds swell.

Back home, the smaller exchanges have to carve out their own niche. I have said this for the umpteenth time, let investors do day-trading short selling - meaning they have to cover by end of day or face buying in consequences. What's so bad about that? I think it will boost daily turnover by at least 20% on Bursa. What is so bad about selling first, since that same person will have to cover by end of the day. It is not the same as short selling and holding that short for an extended period of time, which presents a higher risk to the markets.


p/s photos: Sharon Xu

What Could Endanger The Markets In 2010

What could cause problems in 2010, these are all IFs. Pays to keep track. If Bernanke gets itchy and push down 10-year US Treasury yields again, that could put more oomph to the already excessive liquidity in the system. Bernanke could be scared into doing so if jobless numbers do not show signs of improvement. The funds will try to play the liquidity game yet again, piling into crude oil, gold and this could really create a swift liquidity bubble again.

Japan is the best bet for calamity in 2010. Things may suddenly turn focus on their huge fiscal measures and their imbalances with respect to their public debt. Already the public debt is at a staggering 225 per cent of GDP. What could start the cascade is a big dip in the value of the yen, which may require stabilisation by raising interest rates. Any kind of rates rise will push debt service costs up the roof. The country will flip from deflation to early bouts of hyperinflation. The yen may crash to 130 yen to the dollar ... which will wreck their bonds market but actually sustain interest in Japanese exporters.

China may find that it is the only engine for growth, and shouldering global demand alone may reach its peak. Wild credit growth can mask the weakness of its export model for a while but only at the price of an asset bubble. Beijing must hit the brakes this year or store up serious trouble. What will Beijing do? Prick the asset bubble, the shares will also tumble, and its effects will be felt all across emerging markets.

The EU could be placed under attack as some nations complain bitterly for having to shoulder the weak ones. The weak ones complain that they need to revive their country's employment and wants the Euro much weaker and rates a lot lower. When rich nations spending power is under threat, the union may start to wobble. Rallies and protests may rage across Europe.

These are all IFs, but they could emerge as realities swiftly, hence its best to be on our toes.


p/s photos: Zhang Zhiyi

This Is Really Funny Stuff!!! Kudos To Zach Galifianakis

"Funny or Die" is a web comedy portal launched by Will Ferrell and Adam McKay. Its been getting good viewership thanks to some of its "exclusive" content. As the founders know a lot of people in the comedy business, they have no problem getting many of them to put their stuff up or even create original content for the site.

The funniest stuff is a series of interviews conducted by Zach Galifianakis. In the sketch-talk show, he is the self-absorbed, politically incorrect, with deviant sexual fantasies, awkward, insensitive and rude talk-show host. The guests he interviewed were smashing as well, basically they too have to act brilliantly as "themselves on a talk show". The end result: magic.

Those who are easily offended, go to another site now.

Zach interviews Michael Cera (from Superbad and Juno):

http://www.funnyordie.com/videos/e8e4424115/between-two-ferns-with-zach-galifianakis-from-between-two-ferns-zach-galifianakis-michael-cera-and-comedy-deathray?rel=auto_related&rel_pos=1

Zach interviews Natalie Portman and her dog, Whiz (even Natalie cannot help but laugh in the middle of her sketch):

http://www.funnyordie.com/videos/5ef1adb57b/between-two-ferns-with-zach-galifianakis

Zach's pissed off interview with Conan O'Brien, plus Andy Richter and Andy Dick:

http://www.funnyordie.com/videos/03b4a86265/between-two-ferns-with-zach-galifianakis?rel=auto_related&rel_pos=6

Easily, the best of the lot, Zach's interview with Charlize Theron. Charlize showing why she is one of the top actresses in the world as she more than delivers, even for this mini-sketch. Fall off the chair funny!!!

http://www.funnyordie.com/videos/d14fdef4f2/between-two-ferns-with-zach-galifianakis?rel=auto_related&rel_pos=5


p/s photo: Isari Yanti

Wait For It - Shaolin Temple IPO!!!???

Its started out as a media scoop when some of the international media agencies started reporting of an IPO by Shaolin Temple.

HONG KONG, Dec 31 (Reuters) - China's fabled Shaolin Temple, the birthplace of kung fu immortalised in countless martial arts films, may help drive home a Hong Kong IPO soon. The government of Dengfeng -- home to a mainstay of kung fu films for decades -- plans to float shares in local tourism assets ranging from hotels to a cable-car service, many of which thrive on the monastery's fame, the South China Morning Post reported on Monday.

But the monastery itself -- known in the West as the training ground for David Carradine's character Kwai Chang Caine, or "grasshopper", in the 1970s hit television series "Kung Fu" -- doesn't plan a listing in the short term for fear of besmirching its reputation, the newspaper said.

"To become involved in such a highly risky business is against the spirit of Buddha," abbot Shi Yongxin was quoted as saying. And we have adequate money to support what we want to do."

Indeed, Shaolin has embarked on a number of commercial ventures in past years, from kung fu shows to film production and a reality TV search for the next kung fu star. Monks from the temple, in the central province of Henan, have embarked on world tours to perform super-human feats of agility and balance.

Monastery executive director Shi Yanlin told the newspaper admission fees and donations amounted to about 50 million yuan ($6.9 million) this year, versus last year's 32 million yuan. But the temple came under fire in 2006 after a senior Chinese monk was awarded a luxury sports car for services to the local tourism industry, stirring up heated debate on the Internet.

Dengfeng's government has set up a listing vehicle, the Songshan Shaolin Tourism Group, that it wants to debut in Hong Kong, the newspaper quoted tourism official Pei Songxian as saying in Dengfeng without offering details or a timeframe.

Tourism accounts for a third of the city's gross domestic product; some 4.13 million tourists visited the city last year, a rise of 29 per cent, with the temple a main draw. Pei added that Dengfeng's government wanted to open a chain of vegetarian restaurants across China next year.

Maybe it was from the barrage of criticisms, now the local government in charge of Shaolin Temple has denied the report that it is pushing to offer shares in an IPO in 2011.

Reuters Jan 07: The city of Dengfeng, in Henan province, had signed a deal with Hong Kong-listed China Travel International to set up Shaolin Culture and Tourism and list it in 2011, the paper said, citing documents that have not been made public.

“The report about Shaolin Temple’s IPO and ‘selling state assets at a low price’ is absolutely untrue,” the government of Dengfeng, where the temple is based, said in a statement on Xinhua news agency’s website. Dengfeng acknowledged that it was negotiating with China Travel International on a new tourism joint venture in the Songshan mountains, home to the Shaolin Temple, but said no formal agreement had been made.

‘Sixteen cultural relics at national and provincial levels, including the Shaolin Temple, in the area will not be managed by the new joint venture,’ it said in the statement.

Heywood Ho, the general manager of China Travel International’s investment department, confirmed negotiations with Dengfeng but added: “We have not signed any definitive agreement...It is premature to say anything about the deal.” The Oriental Morning Post’s report said the Dengfeng city government transferred the rights to temple ticket revenues valued at 49 million yuan (RM34 million) in return for 49 per cent ownership in the new company.

Shaolin has developed into a lucrative business enterprise, raising controversy among some who disapprove of the commercialism of the temple’s business-savvy abbot, Shi Yongxin. Since taking over as abbot in the 1990s, he has moved aggressively to promote and protect the Shaolin brand, threatening to sue companies that use the temple’s name or image without permission and serving as executive producer for martial arts films centred on the temple. Its Hong Kong branch has urged the local government to allow construction of a Shaolin theme park in the former British colony.

I think there were commercialisation intentions by all involved but they had to backtrack when faced with the barrage of criticisms. What is commercialisation? Shaolin is first and foremost a temple, and then a place where martial arts are honed to the highest quality. The martial arts is more for a sense of personal discipline and maturity, and to have control over your physical and mental abilities. I am not a Buddhist but certainly doing a commercial venture would probably force the temple to "accommodate a lot of fresh demands" in pursuit of margins and EPS growth.

Imagine a slew of new extravagant shows: Cirque du Shaolin in Las Vegas running for 3 years, followed by a new Cirque du Shaolin & Chinese Fairytales in London, followed by Elton John being roped in to do Shaolin's Circle of Life, The Musical ... which will be so successful that a second musical will be written as well ... The Missing 18 Bronzemen, A Dance Extravaganza. A new theme park based on Shaolin Temple will be built in HK, followed by in Sentosa.

A new line of street-cred clothing line named "Shaott" will be unveiled with guest designer Sean Coombs. A new line of fragrance will come out ... brand name: SWEAT - the natural energy of Shaolin, musty, woody... But the best seller has to be Shaolin Sweat - the energy drink!!! The next best seller has to be the book in its umpteenth edition: Shaolin For Dummies!!! .. which will be quickly followed by a motivational book.. Tuesdays With Shaolin.

A bank will be set up across all Asia, naturally called Shaolin Bank, but all interest on deposits will be paid as dumplings. Naturally, the Shaolin Eye ferris wheel will be the new major attraction just outside of the temple. Lastly, a super duper hit reality show will hit the airwaves, Growing Up With 12 Shaolin Teenagers ... which will be followed in a TV joint venture Shaolin-Knockdown-WWF ... need I say more?

Asset Class Returns As At 31 December 2009

REITs have continued to climb, a sure sign of sustained bottom fishing, which may explain the still subdued recovery in real estate in the US. This kind of sustained bottom fishing is important as it will enable funds to tap new investors or old ones to put in fresh capital to take advantage of a recovering sector. As in any recovery, you need to see fresh capital re-emerging. Uptrend boosts confidence, and a bit of confidence is a lot more powerful than a spreadsheet or power point presentation.

Emerging markets equity closed off the year very well. Developed markets equity continue to suffer from a perception of delayed recovery, and subsequently a lack of fresh funds flowing into those markets. What was surprising, or not really, was the sell off in US bonds and emerging market bonds. This is a strong indicator - it shows that risk aversion has continued to ease, and more importantly investors are preparing funds to obtain higher returns in the first quarter of 2010 (i.e. equity).

p/s photos: Mona Chopra

Marketocracy Portfolio Update - 6 January 2010

Further updates to Salvador Dali Mutual Fund at Marketocracy. Beating the S&P500 by 44.9percentage points for the last 12 months.

SMF m100 S&P 500 DJIA Nasdaq

recent returns vs. major indexes
		Beating Today MTD QTD YTD SMF 1.61% 1.10% 1.10% 1.10% S&P 500 0.31% 1.61% 1.61% 1.61% DOW -0.11% 1.50% 1.50% 1.50% Nasdaq 0.01% 1.73% 1.73% 1.73%

Symbol Price Value Portion of Fund Today Current Return BDD $18.29 $91,450.00 7.05% 0.72% 67.03% F $10.96 $109,600.00 8.45% 6.61% 46.05% Details MGM $10.50 $99,750.00 7.69% 7.91% 42.16% Details NVDA $18.76 $93,800.00 7.23% 1.41% 40.47% Details NYB $14.46 $86,760.00 6.69% 0.28% 31.99% Details PLD $13.75 $111,622.50 8.60% -0.36% 24.64% Details MIDDLE QSII $64.98 $97,470.00 7.51% 2.25% 24.19% SNV $2.22 $55,500.00 4.28% 5.71% 5.43% LOW $22.92 $80,220.00 6.18% -1.04% 5.38% GE $15.53 $62,120.00 4.79% 0.52% 4.87% NATH $15.10 $75,500.00 5.82% 0.67% 4.49% KBW $28.06 $126,270.00 9.73% 0.29% 3.35% Details JNPR $26.75 $53,500.00 4.12% -1.58% 1.09% Details PSQ $43.03 $129,090.00 9.95% -0.05% -4.96% Details

recent returns
		RETURNS Last Week 0.16% Last Month 3.98% Last 3 Months 3.81% Last 6 Months 33.21% Last 12 Months 69.50% Last 2 Years N/A Last 3 Years N/A Last 5 Years N/A Since Inception 27.71% (Annualized) 18.38% S&P500 RETURNS Last Week 0.49% Last Month 2.58% Last 3 Months 7.98% Last 6 Months 30.09% Last 12 Months 24.54% Last 2 Years N/A Last 3 Years N/A Last 5 Years N/A Since Inception -6.57% (Annualized) -4.58% RETURNS VS S&P500 Last Week -0.33% Last Month 1.40% Last 3 Months -4.16% Last 6 Months 3.11% Last 12 Months 44.96% Last 2 Years N/A Last 3 Years N/A Last 5 Years N/A Since Inception 34.28% (Annualized) 22.96%

all closed tickets
		Close Date Type Symbol Shares Net Avg. Price Net Dec 17, 2009 Buy NATH 5,000 $14.4507 $72,253.68 Dec 4, 2009 Buy MES 0 $0 $0.00 Dec 4, 2009 Buy SNV 25,000 $2.1057 $52,641.40 Nov 23, 2009 Sell STAR 3,500 $34.3252 $120,138.11 Nov 17, 2009 Buy PSQ 3,000 $45.2734 $135,820.10 Nov 17, 2009 Sell JEC 1,500 $39.996 $59,994.03 Nov 9, 2009 Sell STEC 3,000 $13.3704 $40,111.10 Nov 9, 2009 Buy STEC 0 $0 $0.00 Oct 29, 2009 Buy GE 4,000 $14.8093 $59,237.25 Oct 29, 2009 Buy GE 0 $0 $0.00 Oct 27, 2009 Buy NVDA 0 $0 $0.00 Oct 27, 2009 Sell OXBT 600 $0.4465 $267.89 Oct 27, 2009 Buy NVDA 2,000 $12.71 $25,419.90 Oct 27, 2009 Buy MGM 5,000 $10.0673 $50,336.52 Oct 26, 2009 Buy OXBT 600 $0.4673 $280.35 Oct 26, 2009 Sell PHM 8,000 $9.6629 $77,303.50 Oct 22, 2009 Sell AGEN 30,000 $1.1976 $35,927.99 Oct 8, 2009 Sell STEC 0 $0 $0.00 Oct 8, 2009 Sell KEY 10,000 $6.1856 $61,856.36 Oct 5, 2009 Buy NVDA 3,000 $13.7859 $41,357.75 Oct 5, 2009 Buy JNPR 2,000 $26.4611 $52,922.20 Oct 5, 2009 Buy KEY 10,000 $6.2516 $62,515.55 Sep 24, 2009 Buy STEC 3,000 $29.101 $87,302.90 Sep 21, 2009 Sell BDD 0 $0 $0.00 Sep 21, 2009 Sell MGM 1,500 $12.9497 $19,424.49

Google's Nexus One vs iPhone3GS

Well, just as I am in line to eagerly get my hands on my iPhone32GS, along comes the new Google phone. Its like you are running Pixar, and then suddenly there is this old guy Jimmy Cameron reinventing the whole platform with Avatar. As much as I dislike posting articles from other sites, I had to cause I do not know enough about phone software or hardware to make intelligent commentary.

WSJ: Google this week is taking two dramatic steps to try to catapult devices using its Android mobile operating system into stronger competition with Apple's iPhone and Research in Motion's BlackBerry in the battle for supremacy in the super-smart-phone category.

First, the search giant is bringing out a beautiful, sleek new Android phone, the Nexus One, built to its specifications. Second, it has decided to offer the new phone—and future models—to consumers directly, unlocked, via the Web, and then invite multiple carriers to compete to sell service plans and subsidized versions of the hardware.

Google

The Nexus One has a larger screen than Apple's phone, and is a bit thinner, narrower and lighter—if a tad longer. And it boasts a better camera and longer talk time between battery charges.

The company also plans to sell the costlier, unsubsidized version to consumers in the U.K., Hong Kong and Singapore immediately. Like Americans who buy this unlocked version, these customers will have to purchase carrier service separately, something they should be able to obtain right away by just buying and inserting a SIM card from a carrier with compatible technology. (This initial unlocked phone won't work with Verizon or Sprint in the U.S., nor on AT&T's 3G network, only the latter's slower network.)

I've been testing the Nexus One for a couple of weeks and I like it a lot. It's the best Android phone so far, in my view, and the first I could consider carrying as my everyday hand-held computer. It is a svelte gray device with a 3.7-inch, high-resolution screen; a thin strip of buttons underneath for home, back, menu and search; and a trackball.

The Nexus One finally has the right combination of hardware and software to give Android a champion that might attract more people away from their iconic iPhones and BlackBerrys. It has a larger screen than Apple's phone, and is a bit thinner, narrower and lighter—if a tad longer. And it boasts a better camera and longer talk time between battery charges.

The iPhone still retains some strong advantages. It boasts well over 100,000 third-party apps—around 125,000 by some unofficial estimates—versus around 18,000 for the Android platform. And it has vastly more memory for storing apps, so you can keep many more of them on your phone at any one time. On the Nexus One, only 190 megabytes of its total 4.5 gigabytes of memory is allowed for storing apps. On the $199 iPhone, nearly all of the 16 gigabytes of memory can be used for apps.

In fact, the $199 iPhone 3GS has roughly four times as much user-accessible memory out of the box, though the memory on the Nexus One can be expanded via memory cards. Apple also has a more-fluid user interface, with multitouch gestures for handling photos and Web pages.

As for the BlackBerry, its user interface looks older and clumsier with each passing day, but it has a beautiful physical keyboard many users love, while the Nexus One has a virtual, onscreen keyboard.

Google

The Nexus One is packed with its own tricks. Its version of Android is essentially the same improved edition as the one that appeared on the Motorola Droid back in November. But it has a few new features, including an experimental dictation capability. You just press a microphone icon on the keyboard and start talking, and the words appear. In my tests, this worked only adequately at best, and very poorly at worst, but Google insists it will learn and improve.

The phone also has handsome new visual features, including "live wallpaper," with waving grass or pulsing colored lines; and a new zooming effect when you want to view icons that aren't on your main screens. In addition, you can now view miniatures of your five main screens to help you navigate to the one you want.

The Nexus One also has all the key software features introduced in the Droid, including free turn-by-turn voice-prompted navigation.

In my tests, overall, the Nexus One worked very well. The latency I had seen in earlier Android phones is gone, due to a slicker version of the operating system and faster chips. The phone feels good in the hand and the screen is magnificent, with much greater resolution than the iPhone's.

I like very much the way social-networking information, including status messages, is integrated into the contacts app. One tap on a person's picture in Contacts lets you quickly choose whether to call, email or message her, or map her address—all without opening the contact card itself.

I also liked the pictures and videos I was able to take with the five-megapixel camera and flash, which I preferred to my iPhone's camera. You can even view a photo slideshow or listen to music when the phone is in the optional desktop dock.

But there are some downsides to the Nexus One. Like all Android phones, it relies too much, in my view, on menus that create extra steps, including some menus that have a built-in "more" button to display a secondary menu of choices.

I also found the four buttons etched into the phone's bottom panel sticky and hard to press. In addition, although the Nexus One claims seven hours of talk time versus five hours for the iPhone, most of its battery-life claims for other functions are weaker than Apple's.

For instance, Google claims just 6.5 hours of Wi-Fi Web use per charge, versus nine for the iPhone, and 20 for music playback versus 30. Google claims this is because, unlike Apple, it allows the simultaneous use of third-party apps, which can drain the battery faster.

In addition, the Nexus One, and other Android devices, still pale beside the iPhone for playing music, video and games. The apps available for these functions aren't nearly as sophisticated as on the Apple devices.

Finally, the iPhone is still a better apps platform. Not only are there more apps, but, in my experience, iPhone apps are generally more polished and come in more varieties.

But, with its fresh phone and bold business model, Google is taking Android to a new level, and that should ramp up the competition in the super-smart-phone space.

Feature	Google Nexus One	Apple iPhone 3GS
U.S. carrier	T-Mobile at launch, Verizon later.	AT&T
Price	$529 unlocked; $179 with T-Mobile contract	$199 or $299 with AT&T contract, depending on memory
User-accessible memory	4 gigabytes, expandable to 32 gigabytes	16 or 32 gigabytes, fixed
Minimum monthly service fee*	$79.99	$69.95
Available 3rd-party apps	Around 18,000	Over 100,000
Memory for application storage	190 megabytes	Nearly the full capacity of phone
Syncs media files with PC or Mac	No, manual copying only	Yes, iTunes
Multitasking of apps	Yes	Only Apple apps
Screen size	3.7 inches	3.5 inches
Screen resolution	480 x 800	480 x 320
Removable battery	Yes	No
Camera	5 megapixel, flash	3 megapixel, no flash
Length	4.68 inches	4.5 inches
Width	2.35 inches	2.4 inches
Thickness	.45 inches	.48 inches
Weight	4.58 ounces	4.8 ounces
Claimed voice-calling battery life on 3G	7 hours	5 hours
Claimed Internet battery life on Wi-Fi	6.5 hours	9 hours
Claimed music-playback battery life	20 hours	30 hours
Claimed video-playback battery life	7 hours	10 hours

Sources: Google, Apple, T-Mobile, AT&T

*Nexus One plan on T-Mobile includes 500 voice minutes, unlimited data and unlimited text messaging. IPhone plan on AT&T includes 450 voice minutes and unlimited data, but no text messages, which cost at least $5 a month extra.