TUESDAY, 18/3/08
HONG KONG -- Stocks rallied across the board in Asia, relieved by an aggressive rate cut by the Federal Reserve and better-than-expected profit reports from U.S. investment banks.
Shares in the battered financial sector rose, led by Mitsubishi UFJ Financial Group in Tokyo, Australia & New Zealand Banking Group in Sydney and Industrial & Commercial Bank of China in Hong Kong.
Shanghai-listed stocks snapped a five-day losing streak, shrugging off the central bank's decision to raise commercial banks' credit requirements by half a percentage point to a record high of 15.5%.
"I think the markets will stabilize after the recent shock. Confidence is still weak in the marketplace, but there should be a turnaround in the short term. A lot of bad things have happened already," said Dale Tsang, managing director at Imperial Dragon Asset Management Co. in Hong Kong.
Japan's Nikkei 225 Average climbed 2.8% to 12,292.73 and the broader Topix index gained 3% at 1,198.67.
In Hong Kong, the Hang Seng Index advanced 3% to 22,032.19 and the Hang Seng China Enterprises Index, or H share index, soared 4.7% to 11,595.21.
China's Shanghai Composite jumped 2.8% to 3,771.47, relieved that the much-anticipated move had been announced. Shares in Shanghai as well as China-related shares in Hong Kong had suffered steep losses in the past few days on worries the People's Bank of China would hike banks' reserve requirements as well as interest rates to control rising inflation.
Elsewhere in the region, Australia's S&P/ASX 200 soared 3.4% to 5,257.50, New Zealand's NZX 50 index added 1.2% at 3,460, South Korea's Kospi climbed 2.4% to 1,626.93, Taiwan's Weighted index rose 2.1% to 8,228.11 and Singapore's Straits Times index advanced 2.2% to 2,896.38.
Banking, insurance and brokerage shares led the charge, shaking off the weakness they have displayed recently in the wake of the global credit market crisis. Shares of Citigroup Inc. soared 12.5% and Mitsubishi UFJ jumped 4.3% in Tokyo. Shares of ANZ Banking Group advanced 5.6% and Macquarie Group surged 11.1% in Sydney.
Industrial & Commercial Bank of China (HK1398) jumped 5.2% in Hong Kong, United Overseas Bank gained 2.9% in Singapore, Cathay Financial Holding Co. added 3.9% in Taipei and Seoul-listed shares of Kookmin Bank advanced 2%.
Shares of China Merchants Bank Co. surged 9.1% in Hong Kong, after its profits more than doubled in the second-half of 2007 from a year-ago, beating estimates.
Shipbuilding shares led the gains in Seoul, aided by reports that Daewoo Shipbuilding and Marine Engineering Co.'s monthly operating profit more than quadrupled in February from a year-ago. Daewoo stock climbed 6.8%, while STX Shipbuilding Co. rallied 5.1%.
In Tokyo, shares of Takeda Pharmaceutical Co. (HK4502) gained 2.9%. The drug maker was in advanced talks to buy out Abbott Laboratories stake in their 50-50 joint venture, TAP Pharmaceutical Productions Inc., according to a Nikkei business daily report.
Crude oil for April delivery fell $1.02 to $108.40 a barrel in electronic trading, after closing up $3.74 at $109.42 a barrel on the New York Mercantile Exchange.
In the U.S. yesterday, the Federal Reserve slashed the Fed funds rate by 75 basis points to 2.25% from 3% -- its lowest level since December 2004 -- to jump-start the sagging U.S. economy and boost confidence in the U.S. financial system.
The rate cut, while expected, added fuel to investor sentiment, along with better-than-expected earnings reports from Goldman Sachs Group and Lehman Brothers Holdings Inc. That helped the Dow Jones Industrial Average notch its biggest single-day point gain in five years, finishing 420.41 points higher at 12,392.66. The S&P 500 index climbed 54.11 points to 1,330.71, while the Nasdaq Composite gained 91.25 points at 2,268.26.
Tuesday, March 18, 2008
Fed cuts rates by 75 basis points & Dow Jones surged 420 points
Battling Wall Street's biggest crisis since the Depression, the Federal Reserve slashed its key lending rate by 75 basis points Tuesday to jump-start the sagging economy and boost confidence in the U.S. financial system.
The Dow Jones Industrial Average ended the day with a gain of 420 points, the biggest one-day point gain in more than five years, after earnings from Goldman Sachs and Lehman Brothers prove better than expected and a rate cut by the Federal Reserve.
But there's more reason for the bulls to cheer than the magnitude of the day's point gain. Tuesday's action also was strong enough to trigger a bullish technical event known as a "Double Nine-To-One" signal.
This indicator is based on the volume of all NYSE-listed stocks that go up on a given day, expressed as a percentage of the total volume of all stocks that rose or fell on that day. On a day when rising stocks' volume is the same as declining stocks' volume, for example, this ratio would be exactly 50%.
The central bank's action, which drops the federal funds rate target down to 2.25% from 3% -- its lowest level since December 2004 -- was the latest in a series of extraordinary moves carried out by the Fed in the last week against a background of turmoil and crisis.
In its official statement on the decision, the rate-setting panel said the size of the cut was enough to promote growth, but left the door open to future cuts. Wall Street had expected the Fed to cut rates by a full percentage point, which would have been the largest cut since 1982.
Fed signaled that today's policy action, combined with those taken earlier, including measures to foster market liquidity, should help to promote moderate growth over time and to mitigate the risks to economic activity. But, uncertainty about the inflation outlook has increased.
The market had expected more of a rate cut, but the reaction was not so negative.
Fed said downside risks remain, and was not upbeat about the economic outlook, saying that economic activity had weakened further, consumer spending had slowed and labor markets had softened.
"Financial markets remain under considerable stress and the tightening of credit conditions and the deepening of the housing contraction are likely to weigh on economic growth over the next few quarters," the statement said.
At this point, many analysts thought that the three-quarters of one percent cut represented a compromise between some who pushed for a larger move and those that would go along with only a half-point move.
Bernanke said the Fed signaled in the statement that it could to cut rates at any time when it said "the FOMC will act in timely manner" to promote growth and price stability.
The Fed has slashed interest rates by a cumulative two percentage points so far this year, ranking it among the most abrupt rate-cutting sprees in the modern history of the U.S. central bank.
The Dow Jones Industrial Average ended the day with a gain of 420 points, the biggest one-day point gain in more than five years, after earnings from Goldman Sachs and Lehman Brothers prove better than expected and a rate cut by the Federal Reserve.
But there's more reason for the bulls to cheer than the magnitude of the day's point gain. Tuesday's action also was strong enough to trigger a bullish technical event known as a "Double Nine-To-One" signal.
This indicator is based on the volume of all NYSE-listed stocks that go up on a given day, expressed as a percentage of the total volume of all stocks that rose or fell on that day. On a day when rising stocks' volume is the same as declining stocks' volume, for example, this ratio would be exactly 50%.
The central bank's action, which drops the federal funds rate target down to 2.25% from 3% -- its lowest level since December 2004 -- was the latest in a series of extraordinary moves carried out by the Fed in the last week against a background of turmoil and crisis.
In its official statement on the decision, the rate-setting panel said the size of the cut was enough to promote growth, but left the door open to future cuts. Wall Street had expected the Fed to cut rates by a full percentage point, which would have been the largest cut since 1982.
Fed signaled that today's policy action, combined with those taken earlier, including measures to foster market liquidity, should help to promote moderate growth over time and to mitigate the risks to economic activity. But, uncertainty about the inflation outlook has increased.
The market had expected more of a rate cut, but the reaction was not so negative.
Fed said downside risks remain, and was not upbeat about the economic outlook, saying that economic activity had weakened further, consumer spending had slowed and labor markets had softened.
"Financial markets remain under considerable stress and the tightening of credit conditions and the deepening of the housing contraction are likely to weigh on economic growth over the next few quarters," the statement said.
At this point, many analysts thought that the three-quarters of one percent cut represented a compromise between some who pushed for a larger move and those that would go along with only a half-point move.
Bernanke said the Fed signaled in the statement that it could to cut rates at any time when it said "the FOMC will act in timely manner" to promote growth and price stability.
The Fed has slashed interest rates by a cumulative two percentage points so far this year, ranking it among the most abrupt rate-cutting sprees in the modern history of the U.S. central bank.
Thursday, March 13, 2008
Dow Jones Surged Biggest Daily Gains Since March 2003
U.S. stocks rallied more than 3 percent on Tuesday (11 March), giving the S&P 500 its best advance since October 2002, after the Federal Reserve said it would add up to $200 billion to strained credit markets in a coordinated effort with other central banks.
The Dow and Nasdaq rang up their biggest daily percentage gains since March 2003.The Dow Jones industrial average (DJI) soared 416.66 points to 12,156.81.
The Fed said it was expanding a lending program and will accept a broader base of securities as collateral, including mortgage bonds whose value has declined as the housing bubble burst.Shares of mortgage-related companies and banks led the way, helping the market recover after three days of losses. Stocks had been close to their lows for the year as recession fears mounted.
An extended rally hinges on the health of the beleaguered credit markets.
The key to any sustainable rally is going to be an improvement on the credit side.
The Fed's making a major effort to get liquidity and credit into the cracks and crevices of the financial system that need it the most.Meanwhile, the dollar rose sharply following the Fed's move as concerns about a deepening credit crisis and U.S. recession abated.
The brief surge in U.S. crude oil futures prices to a record high above $109 a barrel helped shares of Exxon Mobil Corp, rise 5.1 percent to $86.68, making the oil company's stock the top gainer in the S&P 500.
Wednesday, March 12, 2008
Basic & Defination For Beginners - Warrants
Hi, my dear readers :
Here are some of the “keywords” commonly used in warrants.
(1) WARRANTS :: are securities issued by a company. They give holders the right to purchase shares in the company at a specific price at a specific date in future. Warrants are tradable and the value will go up and down as the price of the shares to which they relate (the underlying share or mother share) goes up and down. Warrants have no right to dividends and no voting rights.
(2) OUT OF THE MONEY :: If the underlying share price is below the exercise price, the warrants are “out of the money” and are deem worthless.
(3) IN THE MONEY :: If the underlying share price rises above the exercise price, the warrants are “in the money” and worth something.
(4) PREMIUM :: measures the amount (in %) an investor is willing to pay for a warrant in excess of the market value of the underlying securities to enjoy the returns by buying the warrant.
Premium = <(Warrant Price + Exercise Price) – Underlying Share Price> / Underlying Share Price
(5) GEARING :: measures the ratio (or units) of warrants one can purchase with an investment in the underlying security or mother share. It is a ratio of mother share price over warrant price.
Gearing = Underlying Share Price / Warrant Price
(6) EXPIRY DATE :: After this date, the warrant holder loses the rights to purchase or sell the underlying security.
(7) EXERCISE PRICE :: The predetermined price that the warrant holder is entitled to purchase or sell the underlying security.
(8) EXERCISE RATIO :: The number of warrants required to exercise into one share of the underlying security.
Here are some of the “keywords” commonly used in warrants.
(1) WARRANTS :: are securities issued by a company. They give holders the right to purchase shares in the company at a specific price at a specific date in future. Warrants are tradable and the value will go up and down as the price of the shares to which they relate (the underlying share or mother share) goes up and down. Warrants have no right to dividends and no voting rights.
(2) OUT OF THE MONEY :: If the underlying share price is below the exercise price, the warrants are “out of the money” and are deem worthless.
(3) IN THE MONEY :: If the underlying share price rises above the exercise price, the warrants are “in the money” and worth something.
(4) PREMIUM :: measures the amount (in %) an investor is willing to pay for a warrant in excess of the market value of the underlying securities to enjoy the returns by buying the warrant.
Premium = <(Warrant Price + Exercise Price) – Underlying Share Price> / Underlying Share Price
(5) GEARING :: measures the ratio (or units) of warrants one can purchase with an investment in the underlying security or mother share. It is a ratio of mother share price over warrant price.
Gearing = Underlying Share Price / Warrant Price
(6) EXPIRY DATE :: After this date, the warrant holder loses the rights to purchase or sell the underlying security.
(7) EXERCISE PRICE :: The predetermined price that the warrant holder is entitled to purchase or sell the underlying security.
(8) EXERCISE RATIO :: The number of warrants required to exercise into one share of the underlying security.
(9) HISTORICAL VOLATILITY :: is a figure derived from the price action of the underlying security using statistical calculation.
(10) IMPLIED VOLATILITY :: is a figure derived from warrants pricing formula when we input the current warrant price and work backwards to derive the (implied) volatility figure. It represents current market expectations of the future volatility of the underlying security.
(11) DELTA :: represents the magnitude of the warrants price movement in theory in response to movement in underlying share price.
Delta = Change In Warrant Price / Change In Underlying Share Price.
(12) EFFECTIVE GEARING :: is a more accurate measure of a warrant's gearing. It adjusts for the Delta of the warrant.
(13) CALL WARRANT :: Holders of the call warrants have the right, but not obligation, to buy the underlying share (or security) from the issuer for a particular price at a future date based on terms of issue or to receive cash settlement based on the underlying share price and exercise price of the call warrant.
Tuesday, March 11, 2008
Sharp Losses In Hang Seng Index..
Share prices closed sharply lower last Friday following a Wall Street tumble as fresh credit market concerns and a spike in US home foreclosures heightened worries over the world's largest economy.
China stocks were under pressure as February inflation data will be released on the mainland next week, which could prompt new monetary tightening measures.
Trade was also cautious ahead of key US job data, while drops on Tokyo and Shanghai bourses and record oil prices also kept investors on edge. Also noted some hedge-fund selling to meet redemption pressure. The Hang Seng Index closed down 841.40 points at 22,501.33 or 3.6%. While the Hang Seng China Enterprise Index was down 459.06 points at 12,606.83 or 3.51%.
There's been all sort of negative news almost daily, such as subprime-related and recession fears in the US, large funds purportedly in trouble and more macroeconomic tightening measures on the mainland.
Besides, Thornburg Mortgage and Carlyle Group bond fund were the latest to reveal troubles with US mortgage-related investments, while Merrill Lynch said that it is closing down its subprime mortgage lending units.
Among large-caps, HSBC fell HK 4.10 to HK 117.40, China Mobile was down HK 4.80 at HK 110.10, HKEX was down HK 6.40 at HK 136.70 and China Life lost HK 0.90 at HK 28.35 .
Summary as :-
HKEX (0388) - HK 136.70
ICBC (1398) - HK 5.10
BANK OF CHINA (3988) - HK 3.14
CHINA CONSTRUCT BANK (0939) - HK 5.56
CHINA COAL (1898) - HK 14.52
CHINA COMMUNICATION (1800) - HK 19.58
CHEUNG KONG (0001) - HK 107.10
CHINA MERCHANTS HLDGS (0144) - HK 37.40
CHINA SHENHUA (1088) - HK 36.60
PETRO CHINA (0857) - HK 10.52
CHINA OVERSEA LAND (0688) - HK 13.26
China stocks were under pressure as February inflation data will be released on the mainland next week, which could prompt new monetary tightening measures.
Trade was also cautious ahead of key US job data, while drops on Tokyo and Shanghai bourses and record oil prices also kept investors on edge. Also noted some hedge-fund selling to meet redemption pressure. The Hang Seng Index closed down 841.40 points at 22,501.33 or 3.6%. While the Hang Seng China Enterprise Index was down 459.06 points at 12,606.83 or 3.51%.
There's been all sort of negative news almost daily, such as subprime-related and recession fears in the US, large funds purportedly in trouble and more macroeconomic tightening measures on the mainland.
Besides, Thornburg Mortgage and Carlyle Group bond fund were the latest to reveal troubles with US mortgage-related investments, while Merrill Lynch said that it is closing down its subprime mortgage lending units.
Among large-caps, HSBC fell HK 4.10 to HK 117.40, China Mobile was down HK 4.80 at HK 110.10, HKEX was down HK 6.40 at HK 136.70 and China Life lost HK 0.90 at HK 28.35 .
Summary as :-
HKEX (0388) - HK 136.70
ICBC (1398) - HK 5.10
BANK OF CHINA (3988) - HK 3.14
CHINA CONSTRUCT BANK (0939) - HK 5.56
CHINA COAL (1898) - HK 14.52
CHINA COMMUNICATION (1800) - HK 19.58
CHEUNG KONG (0001) - HK 107.10
CHINA MERCHANTS HLDGS (0144) - HK 37.40
CHINA SHENHUA (1088) - HK 36.60
PETRO CHINA (0857) - HK 10.52
CHINA OVERSEA LAND (0688) - HK 13.26
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