Got shares, stuck on my portfiolio and am stuck with a lot of paper value loss
Cut loss and now waiting to stay invested
Sold everything on the high and out
Last edited by raincool2005; 27th August 2007 at 12:30 PM.
Subprime problem is still there, cutting US Fed rate most likely only delay the problem....
Any comment on this?
China Construction Bank holds US$1.06b in sub-prime securities
Posted: 27 August 2007 1337 hrs
HONG KONG: China Construction Bank, the country's third largest lender, said Monday it held 1.06 billion dollar of securities backed by US sub-prime mortgages but added it will have limited impact on the group.
The lender said it has set aside 139 million yuan (18.3 million US) as provision for investments rated "AA" or above.
"These securities are expected to have limited impact on the group's operating results for the year," it said in a statement.
Last week, China's first and second-largest lender, Industrial and Commercial Bank of China (ICBC) and Bank of China (BOC), reported their holding of sub-prime related mortgage-backed securities of 1.23 billion and 9.65 billion dollars, respectively.
The magnitude of BOC's exposure to the troubled US sub-prime mortgage market, where massive defaults have triggered a wider credit market crisis and roiled global financial markets, surprised the market.
Most analysts have estimated that BOC's sub-prime related holdings amounted to between four billion and five billion US dollars. The news prompted them to slash their recommendations on the stock on concerns over a profit squeeze for the full financial year.
It also sent BOC shares down more than five percent last Friday although they have rebounded 3.36 percent to 4.0 dollars in mid-morning trade on Monday.
Meanwhile, China Construction Bank reported a 47 percent increase in net profit to 34.22 billion yuan in the six months to June on the back of a 37 percent increase in net interest income and a 102 percent surge in net fee and commission income.
The profit was in line with analysts estimate for a net profit of 32.31 to 35.65 billion yuan.
It said its net interest income rose to 89.21 billion yuan from 65.29 billion yuan a year earlier, while net fee and commission income more than doubled to 12.66 billion yuan from 6.27 billion a year earlier.
Interest income grew to 130.9 billion yuan from 100.48 billion yuan.
Watch out for China...bside US subprime.
Recession seems near.
Fed: Don't panic. We're here
Bernanke & Co. didn't appear too worried about the credit crunch at their Aug. 7 meeting but said they were ready to cut rates, if needed.
By Paul R. La Monica, CNNMoney.com editor at large
August 28 2007: 4:19 PM EDT
NEW YORK (CNNMoney.com) -- When the Federal Reserve met on Aug. 7 and decided to leave a key interest rate alone, the central bank didn't appear overly concerned that problems in the subprime mortgage market would have a major impact on the broader economy, according to minutes of the meeting released Tuesday.
"Credit conditions for investment-grade businesses and prime households were relatively little affected by the market turbulence," the Fed noted in the minutes, adding that it "saw moderate economic expansion in coming quarters."
Of course, the Fed changed its tune a bit just 10 days later, as the credit crisis deepened. The Fed, on Aug. 17, cut the rate it charges banks for loans by half a percentage point, citing financial markets that had "deteriorated" as well as "tighter credit conditions and increased uncertainty." The so-called discount rate is a less powerful lever than the central bank's fed funds rate, which affects rates on many consumer loans and so far remains untouched.
Read the August 7 minutes
But the Fed also acknowledged in the minutes from the Aug. 7 meeting that it might be forced to cut rates.
"The recent strains in financial markets posed additional downside risks to economic growth. Members expected a return to more normal market conditions, but recognized that the process likely would take some time, particularly in markets related to subprime mortgages," the Fed said.
"However, a further deterioration in financial conditions could not be ruled out and, to the extent such a development could have an adverse effect on growth prospects, might require a policy response. Policymakers would need to watch the situation carefully," the Fed continued.
With all that in mind, what's the most likely next move for the Fed?
Some have argued that the cut to the discount rate, combined with an injection of billions of dollars of cash into the banking system in recent weeks, have helped to stabilize financial markets.
That said, most investors still expect the central bank to cut the fed funds rate when it next meets on Sept. 18. The fed funds rate is an overnight bank-to-bank lending rate that affects rates on credit cards, home equity lines of credit and other consumer loans.
"My guess is that there will be increased pressure on the Fed to cut rates but it sounds like they may be reluctant to do that," said Phil Dow, director of equity strategy with RBC Dain Rauscher in Minneapolis. "But if credit problems prevail for some time, there is no question it will impact the economy."
Crunch time for bloodied banks
The Fed has held the fed funds rate steady at 5.25 percent for its past nine meetings. But according to fed funds futures traded on the Chicago Board of Trade, investors are betting that a quarter-point rate cut is all but certain at the Sept. 18 meeting. What's more, investors are pricing in the strong likelihood of a second quarter-point cut before the end of the year.
Stocks, which were trading sharply lower before the minutes were released, fell further after they came out. The Dow wound up falling more than 280 points, or 2.1 percent, while the Nasdaq and S&P 500 each declined by about 2.4 percent.
Chris Probyn, chief economist with State Street Global Advisors in Boston, said the market might have surged based on what was in the Fed minutes, particularly the language about a possible "policy response," if the Fed had not already cut the discount rate. In other words, the minutes are kind of old news in light of the discount rate cut.
"Had it not been for the new policy statement issued on Aug. 17, which kind of makes this ancient history, this would have caused a stir. The market would have reacted more positively," Probyn said.
Nonetheless, Probyn thinks the Fed will cut rates at both its September and October meetings. In fact, Probyn said he would not be surprised if the Fed cut rates by a half of a percentage point in September in order to reassure Wall Street.
James Glassman, a senior economist with J.P. Morgan Chase, also said the Fed might need to cut rates more aggressively.
"I think the issue now is not a rate adjustment but what's the style and how many. This is a historic event and it may require a forcible response by the Fed," Glassman said.
Fed bends rules to help two big banks
Another economist said that investors might be disappointed by the minutes since they showed that the Fed did not truly understand how drastic credit problems were.
"The committee misjudged the severity of the financial storm that they were in the middle of. They saw signs of distress but not to the degree that has transpired," said Mark Zandi, chief economist Moody's Economy.com.
As such, Zandi predicted the markets probably won't regain confidence in the Fed until it cuts the fed funds rate, even though he thinks the Fed made the right move cutting the discount rate.
"The Fed has acted appropriately since the Aug. 7 meeting and they have proven since then that they do understand the problem. But investors won't feel good until we get a rate cut," he said.
Glassman agreed that even though the market is already widely banking on a rate cut, investors are not going to be satisfied until it actually happens.
"Days like today are a reminder that every time you think things are settled down, they are not. The markets not going to be able to settle down until investors understand where the Fed is heading," he said.
But even a rate cut might not be enough to soothe investors. The Conference Board reported Tuesday that its consumer confidence index posted its biggest monthly drop in nearly two years.
What's more, another report released Tuesday showed that housing prices nationwide dipped more than 3 percent in the second quarter from a year ago.
"The signal from stocks is that maybe the economy is going to slow down," said Steve Van Order, chief fixed income strategist with Calvert Funds in Bethesda, Md. "The markets could be concerned that a rate cut may be too little too late. The market is certainly sending a message that it is very worried right now."
Don't cut rate...fast nose-dive.
Cut rate...slow pain.
Haha, with bank share prices plunging, it's time to catch the BBB virus!!!!:P
right now, it is time to collect marine oil and gas, crude oil will be rising to new highs
Last edited by raincool2005; 30th August 2007 at 11:59 AM.
Those who took this opportunity to buy the blue chips have made handsome profits for the last 2-3 weeks.
Just look at STI, it has continued to power up. Those who are pessimistic are all wiped out.
Traders only care about short gains, not long term. They have all made huge profits by buying cheap quality stocks when those who are pessimistic and sold them.
One of my friends has managed to pick up OCBC at lelong price last 1-2 week. This counter paid dividend somemore. Bec of sub-prime rumour, OCBC went down to $7.65. After a few days, it went back to $8.70. My friend has made at least $1,000 excluding the dividend paid out.
Trading and investing are different.
Iran announced last week that it intends to activate a uranium conversion facility near Isfahan (under IAEA safeguards), a step that produces the uranium hexafluoride gas used in the enrichment process. Sources tell Time the IAEA has concluded that Iran actually introduced uranium hexafluoride gas into some centrifuges at an undisclosed location to test their ability to work. That would be a blatant violation of the Nuclear Non-Proliferation Treaty, to which Iran is a signatory. ... TIME
Will this lead a confrontation in the coming weeks?..... Is Bush playing a bluff? ... Unless you have excess funds, dont think it's wise to take the gamble now .... probably a big fall is coming soon (hope not)...
always the Light, .... always.
Yah, quite agreed with you.
Some stocks are meant for long....but some of them for speculative plays..just for the excitment.
But i don't think STI will continued going north in the coming months.
Looking yesterday Chart....you see a huge surge in the afternoon...just bcoz of a rumour that Fed will cut rates.
I still think this is temporarily bull.
A reverse thinking strategy...when average investors thought there will be a crash down...the BB would reverse the market...and probably the next few days....the rally will go on...
and average investors will think the subprime issue had contained, solved, gone..watever they called it...and start to dump into buying.
when everyone into buying...and voila...the price will comes down again.
Fast and furious.
What i observed from the chart analysis, it is still a downtrend sign.
and looking at the volumes.....which is extremely thin...suggested that investors are not confident yet.
Of coz, me no guru.
Might be totally wrong.
Trade with caution.