As I was talking about Celestial last week, I realised there was 1 news that was leaked on friday, which resulted in the fall in most of the china stocks. It was on China which is going to increase the bank reserve ratio of 1 more percent and this triggered the heavy selling on china stocks in STI and affected HSI as well.
As quoted:
Bank reserve ratio raised by 1% (Xinhua/chinadaily.com.cn) Updated: 2007-12-08 16:30
China will raise the reserve requirement ratio by one percentage point for commercial banks in an effort to cool the booming economy, the central bank announced Saturday. The move, which will take effect on December 25, will push the ratio to a new high of 14.5 percent, after it reached a ten-year high of 13.5 percent on November 26. The central bank statement said the ratio hike is meant to echo to the tight monetary policy for the coming year, adopted at the three-day economic work conference that ended in Beijing on Wednesday. The tight monetary policy was a shift from "prudent" policy, an approach it has followed for the last ten years. This is the country's tenth time to raise the reserve requirement ratio this year, which aimed at "strengthening liquidity management in the banking system and checking excessive credit growth", the People's Bank of China said in a statement posted on its Web site. It is the first time China has raised the reserve requirement ratio by as much as one percentage point since September, 2003. The other nine rises this year were half a percentage point each. It means that a tighter monetary policy has been adopted, said Song Guoqing, Professor of the Peking University. The move, launched at the end of the year, is also to prevent a boom in credit, which usually rebounds at the beginning of a year, he said. China's economy is in its fifth straight year of double-digit growth, reaching 11.5 percent in the third quarter this year.
Even the signs are clear to buy, unfortunately, I missed out this news and the market reacted to this news negatively. However, From this year, this occurred quite a few times already and investors should understand that this overselling will be over soon and undervalued companies will probably bounce back again.
Other information:
Currently, YEN/USD at 111.67-111.73 + 0.45, which is looking good as compared to last week.
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