Anyone have any insights on china/hong kong market ? Especially to devaluation of yuan in response to the slowing down of the Chinese Economy?
hmm. is lawtan just pa feeding himself a thread? just saying.
^ Haha, it’s not my clone I promise.
Do a search, I called this as “the year of China” back in Nov '14, and have like a million posts on the topic since.
Not sure what the specific question is? I do not agree the RMB depreciation had anything to do with “the slowing industrial sector and making trade competative”. The most logical conclusion was to take what Beijing said as exactly what they meant “a one time correction, we expect it more or less stable going forward”. They needed to go freer float for IMF reserve currency decision this month, and I think it was also a monetary/political message to the West, influence Yellen/Obama to support RMB inclusion in SDR, or CN screws up their planned rate-hike and sells treasuries to defend RMB. Personally I see no depreciation in Nov since there will be a positive IMF result this month. And post-IMF, why would it depreciate? They are running a huge trade surplus, now there will be more holders of RMB, and they have infinite reserves. I’m super confused by the (so far horribly wrong) predictions for massive depreciation.
Well, if you had held CNY over dollar for the past say, 2 years, you would have lost money. The currency is definitely subject to depreciation under the right circumstances.
Anyway, to OP: I would not say exchange rate volatility is the primary risk in China. The exchange rate is subject to a still rather narrow trading band. Even in the October drop, CNY depreciated by “only” 2.5%. The trading range this year has been within 4.5%. Now, compare that to Chinese stock indexes that have moved up to 35% this year. I would say that political risk, lack of transparency, and overcrowding, are the main risks in China at the moment.
Or if you had held it for “say the past 3 years” you would have been flat. Let’s not start cherry picking holding periods. The currency is definitely subject to appreciation under the right circumstances.
I am not PA, haha its my first post .
Yes. It could go up or down. Your initial post refuted the scenario in which the CNY depreciates. I was pointing out that it can depreciate.
Since everyone in it, what kind of model/evaluation method would you use for a Power company in China( Listed in hongkong " 01071:HK HUADIAN POWER" for example. Would a DCF valuation works best with a PE mulitples.
P.S i am still trying to learn. Thanks.
P.S any efficient sites to learn how to do monte carlo will be much appreciated.
also look out for the country of incorporation, many chinese companies listed in HKEX are incorporated in the Cayman Island, Bermuda, etc… affects tax, bankruptcy protection, etc.
monte carlo for me = youtube
HKE trades more or less rationally (unlike SSE), so you can use normal fundamental analysis tools. P/E is 5.6X, P/B is 1.2X, at a one year low. Earnings have been growing fast for the last 5 years, and the last 5 quarters. Stuff like that. My guess on HK stocks is they go lower just prior to the fed decision? The H-share is cheaper than the A, as usual, but people who keep betting the Hs will outperform, keep losing on that bet.