Thursday, September 6, 2012

A Tale of Two Markets


I arrived in Hong Kong exactly two years and one week ago. I decided then to take most of my capital with me and invest it and all future earnings in Hong Kong. Let's see how that decision turned out after two years...

Hong Kong Recession Risk May Increase On Exports, Tsang Says (Sep 3, 2012)

Hong Kong’s risk of a “technical recession” may increase after declines in exports and a slowdown in retail sales, Financial Secretary John Tsang said.

Hong Kong’s economy shrank 0.1 percent in the second quarter from the previous three months as the sovereign debt crisis in Europe capped export demand. China’s slowdown is dragging on trade, weighing on confidence and encouraging the million of mainlanders who visit each month to spend less on luxury goods.

The benchmark Hang Seng Index (HSI), down about 10 percent from this year’s high in February, was little changed as of 10:19 a.m. local time. Hong Kong’s retail sales grew in July at the slowest pace since the global financial crisis. The city’s exports fell 3.5 percent from a year earlier.

Performance of the Hang Seng Index in the past two years: -6.90%

Philippine Bourse Stock Sales Poised To Pick Up (Sep 3, 2012)

Philippine Stock Exchange Inc. (PSE) Chief Executive Officer Hans Sicat said share sales are poised to surpass the bourse’s full-year target as transactions accelerate toward the end of 2012.

Sicat sees three more initial public offerings being completed this year, he said in an interview last week, declining to name the companies. That would take the annual total to six, compared with five listings in 2011. There are enough funds in the stock market to absorb new IPOs or share sales by listed companies, he said.

Overseas investors have bought a net $2.15 billion of Philippine equities this year to Aug. 30, compared with $1.33 billion of purchases for all of 2011, amid optimism about the nation’s economic growth prospects. Philippine stock trading has averaged 6 billion pesos a day this year, compared with the 2011 average of 4.82 billion pesos, data compiled by Bloomberg show.

The Bangko Sentral ng Pilipinas cut its benchmark interest rate to a record-low 3.75 percent this year to spur spending and counter faltering global demand. The $225 billion economy grew 5.9 percent in the second quarter, faster than the 5.5 percent median prediction in a Bloomberg economist survey. Standard & Poor’s raised the Philippines’ debt rating in July to BB+, one step below investment grade and the highest level since 2003.

Performance of the PSEi in the past two years: +44.48%

It was not as bad as it seems, though. In the past two years, I bought in and out of the Hong Kong stock market a couple of times and was able to break even in that period. It's a bit disheartening to miss the incredible performance of the Philippine stock market in the past two years, but I'm definitely happy for those of you have benefited from the run. I don't regret my decision, not one bit; after all (and I'm sure someone already said this somewhere sometime), regret is for the weak.

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