Ok, "toing toing" HK/China and EM

Brazil (EWZ) is down 28% in a month -- what's going on? Where to start. The core reasons for the recent run are hardly new themes. There is also a thread that goes through these factors. As we noted yesterday, President Dilma's popularity ratings are at lows (30%) while her team and party look to be very vulnerable in the 2014 November elections. All of this is weighing on the Brazilian real, which is 16% lower against the dollar in the current slide.

The real's slide is a function of the political uncertainty and the lack of clarity on what they intend to do with both monetary and fiscal policy. The currency is also weak because the economic data coming out of Brazil suddenly looks recessionary in the next couple quarters if there is not a reversal in trend. Yesterday's IP release was dismal and missed consensus estimates.

Another major factor is one that hits investors closer to home with disappointing corporate governance and earnings. The Eike Batista empire was selling billions of dollars (or real) of stock to investors willing to bet on his commodity and infrastructure empire. This all seemed to be part and parcel with the Brazilian success story and a party that would reap big returns for investors. The problem is that investors were sold companies that had levered balance sheets in a declining commodity market, with underlying assets that either were not as impressive as advertised, or flat out not worth the money they were sold for.

As the Chinese liquidity crunch enters its third week with even more worrying reports about cash shortages at domestic and foreign banks, it is worth taking a look at the fundamental problems plaguing credit markets in China. The People's Bank of China (PBOC) has a good reputation in technocratic circles. Though they answer to their political masters, they are considered well educated, competent, and knowledgeable about risks in the Chinese economy and financial markets. The PBOC understands as well as anyone the enormous risks of a potential banking crisis driven by the enormous expansion in public and private credit markets in China. This is what makes the recent liquidity staredown between the PBOC and the Chinese banking system so noteworthy.

Over the past two weeks as Chinese interbank rates passed 25% it was at first believed to signal fundamental problems in Chinese banks. Then as it became clear that the PBOC was not providing overnight liquidity to banks opinion swung and it was viewed as a punitive measure targeting smaller banks or trying to convince the big four state banks to rein in credit growth. When the PBOC pumped liquidity into banks, the markets breathed a sigh of relief believing the worst was over and that this merely marked an insignificant intra-Chinese spat. These are the wrong lessons to learn from PBOC liquidity actions.

There are a number of very important lessons to be learned from the PBOC liquidity drain. First, the PBOC is signaling that it is enormously worried about the rapid expansion in credit growth in China since 2009. As already noted, credit growth tripled in 2009 from the previous year and it has continued to expand unofficially ever since. Chinese technocrats are if nothing students of history and having witnessed the 2008 financial crisis, they see a frightening number of similarities specifically in the credit markets. If the PBOC is so openly concerned about credit markets in China, this should concern you.

Still got room for more Asia ex-Japan in my portfolio, but room for GEM is already maxed

18,000? My portfolio sure will kaboom. Jangan la

Another red red day foreseen

u bukan say now is "toing toing toing" meh? "Pong!" again?

Ok, tonite I go home try to spot a cat near the stairs, then kick it down

WHY? 

Today's market index drop a lot?!  I been avoiding looking at the market

Hi guys, any of you holding AmPrecious Metal, and keep buying it when it getting low?

I am holding since last year December, keep pump it until now. Start losing confident...

Hi guys thanks for the reply. Yea I am noticed about collapse of mine companies. In long run, I think gold will be short of supply. & that probably is the time for rebound.

About -20% till now...

IMHO, if a fund has a sound track record for many years, and then it plunges 20 %, it's OK and you should ride the bumpy weather. But it shouldn't be said for a fund with shady/not so good/just ok  past performance. If myself, i have a rule, minus 8-10 % is the point you should take your losses and exit. Use the money to invest in some other better fund, instead of waiting for the shady fund to recover, which may never happen or may take a long long time.

Hide everything except the closing balance?

U not consider "leaving Malaysia" meh? Can take out 100%

I lagi teruk.. dun have KWSP account at all =X

Just work here about 1 1/2 years. If apply now sure rejected.. they have tightened the requirement. Unless marry singaporean amoi.. then can get =p

Haiyo, even shares that I bought myself also increased since April lo.

Annualised return 30%++, u want me to manage your money?

Tehnical matters pls PM Pink Spider directly, click blue PM button on side of the screen. They should be still online at any hour, u will get IMMEDIATE reliable reply.

I'm slowly building up my stocks portfolio, aim to eventually Stocks 50:50 UTs. Currently Stocks 50:100 UTs.

But once u go deep red...  

I still prefer mixture of stocks+UTs for diversification

Gark, Pink.. I don't get the fuzz over GAB on the other thread. But no one answer my doubt. What am I missing? I did a BAT vs, GAB dividend yield calculation.