---------- Forwarded message ----------
From: Ashok Samtani <ashoksamt
...@gmail.com>
Date: Sun, 31 Jan 2010 13:15:35 +0800
Subject: 31.1.2010
To: Ashok Samtani Emperor - HK <ashok.empe
...@live.com>
*Dear All,*
*Good day, how are you ? *
**
China Investment Update
Chinese stocks have sold off in recent weeks as the financial media reported
that some Chinese banks had been ordered to stop lending altogether. To
some, this confirmed the most dire fears: China has a lending bubble that's
about to destroy it's economy and send stocks plummeting lower.
But these fears couldn't be farther from the truth.
China's banking regulator actually told lenders to "...step up scrutiny of
property loans while pledging to satisfy "reasonable" financing needs..."
Again, that's a far cry from earlier reports that China had completely shut
down lending.
China is making the right move by slowing lending. And I expect investors
will respond by sending Chinese stocks higher. The recent sell-off for
Chinese stocks has left Chinese bank price-to-book valuations the same as
they were in early 2009.
Asian markets finally put in a strong move to the upside, putting an end to
several days of selling. I expect the bullishness will carry over to Chinese
stocks listed in the U.S.
***There's another misconception about Chinese lending that needs to get
straightened out. On the surface, Chinese efforts to keep its economy
growing look similar to those in the U.S. But the U.S. is adding massive
debt to the system. The Treasury has to sell bonds to fund spending.
China, on the other hand, has two things that make its stimulus policies
much less disruptive.
One, it maintains a trade surplus and has $3 trillion in cash reserves. And
two, it has an unbelievably high savings rate, around 39%.
In other words, much of China's lending is backed by cash. In the U.S.,
lending is often backed by assets, and the value of those assets can fall.
That's exactly how the housing market brought down our entire banking
system.
***The simple fact is: China’s stimulus efforts were more effective because
of their cash reserves, their debt situation is better. And now, China is
moving to to ensure "price stability"
China has a communist government. But it's the most capitalist country I've
ever seen. It seemed like everyone I met was focused on making money and
raising their standard of living. That's why China just became the biggest
automobile market in the world. It's why retail sales in China grew 16.9%
last year. It's why China will likely become the 2nd largest economy in the
world in 2010.
And it's why Warren Buffett said "The 21st century belongs to China...invest
accordingly."
China and India are the two best areas to be invested in right now. China is
wide open and in India, Tata Motors since March 2009 have a 400 percent
increase.”
* *“The only place to be invested is where people have money to spend.
Demographically
China and India have the largest growing middle class.
Asia also has the largest manufacturing base. The best gains will be in
those companies that produce products and materials for these growing
giants.”
* *
“Brazil, China and India are the best areas for growth ... as well as
resource stocks, oil, gas, minerals [Canada and Australia] and water
resources. Also the demand for food will grow, so add fertilizers.”
* *
“Peru is one of the strongest of the South American economies and is
frequently overlooked as most focus on Brazil and Argentina. Peru has
massive natural resources — lots of gold, silver, oil and natural gas.”
*Why You Should Ignore New ETF Filings*
The old saying says, "Don't believe everything you read." While this is good
advice, investors today have a bigger problem: News that is accurate but *
irrelevant*.
Sometimes the excitement about unique new ETFs gets out of hand. I'm as
happy as anyone to have so many different ways to get involved in different
market niches. On the other hand, the news about "filings" is not always
very useful. Today I'll explain why.
* *
*How An ETF Is Born*
In the U.S., ETFs are regulated by the Securities and Exchange Commission.
Every new ETF must be registered with the SEC before it is offered to the
public. The process is not automatic, nor is it necessarily quick.
Here's what happens: Lawyers for the firm that wishes to launch a new ETF
prepare a draft prospectus and assorted other materials for the SEC staff to
review. This is filed electronically on a computer system called EDGAR.
EDGAR is open to the public. This means that when someone files an
application for a new ETF, anybody who wishes can read all about it. Keep in
mind, no one can actually *buy* the new ETF yet, but as soon as the filing
hits EDGAR the cat is out of the bag. Specialized research firms will
usually pick up the news within minutes and broadcast it to the world.
The financial press likes to report new filings, especially if they are
unique and interesting — and sometimes just to fill up space on slow news
days. I don't get too excited when I see these stories. Why not? Here are a
few of my reasons ...
* *
*Reason #1:* The mere fact that an application for a new ETF has been filed
does not mean it will ever come to market. Why get all excited about
something you may never be able to buy?
The fact is, at least recently, most new ETF filings never go anywhere. Just
look at last year. As 2009 opened there were 525 "active" filings at the
SEC. By the end of the year only 49 had left the launch pad — less than 10%!
By the way, it's important to remember that the SEC does not "approve" any
ETFs or mutual funds. They just "grant registration," which simply means
they don't see anything illegal in the prospectus. It does *not* mean they
think the ETF will be a good investment. Making that call is your job, not
theirs.
* *
*Reason #2:* You can wait a long, long time before that new ETF you read
about is available. The original filing for ProShares ETFs was made in June
2002, but it was another four years before the funds reached the market in
2006!
Why should you care? Because these delays can tempt you into
procrastination. People sit on the sidelines because "something better" is
right around the corner. Then when the new ETF finally shows up — if it ever
does — they may have missed out on good opportunities in the meantime.
* *
*Reason #3:* There's no added benefit to being one of the first to buy a new
ETF. It's not like a stock IPO where early investors can enjoy a first-day
surge. ETF price movement is based more on the underlying market than on the
number of people who want to buy the particular ETF.
In fact, you can actually hurt yourself by jumping in too soon. How? New
funds often take time to attract interest, and in the interim can be highly
illiquid. That means extra transaction costs for you. If the new ETF flops,
you could have a hard time getting out at a decent price.
* *
*Reason #4:* An ETF idea that sounds great on paper may turn out to be not
so wonderful in real life. A good example is the MacroShares Major Metro
Housing bullish (UMM) and bearish (DMM) instruments that came to market with
great fanfare last year — only to quietly flop and be delisted in December.
In retrospect, UMM and DMM had fatal flaws from the very beginning. I saw
this and avoided them. Unfortunately, some investors didn't see it coming
and found themselves holding the bag. These are four good reasons I've found
to ignore ETF filings. Way too many of them turn out to be "vaporware," to
use a term I learned back in my IBM engineer days. They can be fun to
anticipate but may never turn into anything you can actually use.
Best wishes
**
**
*Kind regards*
*Ashok Samtani*
***Business Manager*
*IB No. 82AS168/E82AS168*
*
Tel : (852) 62717893 / (86) 13530911867
E-Mail : ashoksamt...@gmail.com
MSN : ashok.empe...@live.com
*
*Emperor Financial Services Group*
*Emperor Bullion Investements (Asia) Ltd.*
***23/F., Emperor Group Centre,*
*288, Hennessy Road. Wanchai. *
*Hong Kong.*
*www.egoldsilver.com* <http://www.egoldsilver.com/>
*www.emperorforex.com* <http://www.emperorforex.com/>
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--
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