Wednesday, February 28, 2007

The Chinese Contagion

Global markets were all roundly routed today after Chinese stocks sold off by 9% yesterday. Asian markets such as Japan, Korea, Malaysia, India and Singapore all tumbled more than 2% in its worst slide since the Sept 11 attacks in 2001. Markets further away in India, Canada and South America were not spared either.

Volatility returned to the market when the VIX spiked to 19 in early morning trade. The VIX was up almost 50% from the day before. MOS last described VIX in our last posting. As evident from recent posts, MOS has been preaching the theme of cautious investing of late. The choppiness of the market today underscores our warning.



Anonymous Anonymous said...

Dear Mr Market, very thoughtful analysis. In which case I'm sure you read about the potential pre-arbitrage opportunity with Henderson Investments from Third Avenue Management?


9:37 PM  
Anonymous Anonymous said...

Apologies, above comment meant for your latest piece on Wheelock. Rorrim.

9:41 PM  
Blogger Mr Market said...

Hi Rorrim

Thank you for being a frequent reader of the blog and for leaving comments. It is much appreciated.

Despite a third takeover attempt not occuring, Third Avenue has probably profited tremendously from its stake in Henderson Investments (HI). Going forward, the only reason which investors will continue to hold onto HI is because it gives cheaper exposure to the underlying HK & China Gas (HKCG). Mr Lee Shau Kee may also make an attempt to delist HI in future as it makes no economic sense to have a duplicating structure to hold HKCG which in itself is also listed.

Feel free to share your views.

12:11 PM  

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