TFN eNews 10/07/2009: Will China stocks explode on Monday?
Published via e-mail broadcast on October 7, 2009
In today’s TFN eNews:
* Shanghai noon siesta
* Army green giant
* Sirius insiders are dumping shares like there’s no tomorrow
Dear TFN eNews reader,
Watching our Chinese ADRs over the last couple of days has been a bit like observing the tail tip of a lizard, dropped in hasty retreat from a perceived predator. There’s considerable wriggling involved, but it’s occurring without the synaptic input from central control.
Because of National Day of the People’s Republic of China, Shanghai shares haven’t traded since Sept. 30. The market will remain closed until next Monday, giving brokers, dealers, traders, and investors a chance to march in the streets, waving red flags and remembering the 60th anniversary of Mao’s revolution.
(Much less ado will be made of the fact that, between 1949 and 1987, Mao and his successors dispatched 76 million Chinese to their maker. The cost of doing communist business…)
The Shanghai Composite index has lost almost 20% since it peak in early August. Still, it’s still up over 50% for the year — mainly on Beijing’s 4 trillion yuan stimulus package.
China’s intent was to use the global crisis — and its not inconsiderable stash of currency — to wean itself off its dependence on exports and strengthen its economy by beefing up domestic consumption.
Of course, creating an artificial consumption bubble is never a surefire recipe for lasting success. (I point at the “cash for clunkers” programs in both Germany and the States, which boosted sales temporarily, only to plunge car makers back into the red the moment the money ran out.)
But China has now surpassed the U.S. as the largest market. Chinese car sales alone were up by 90% in August 2009 from a year ago. And there’s no indication that China will stop pumping dollars into its domestic economy: After all, the Obama Administration’s ruthless fiscal policy makes large-scale loss of valuation for the dollar inevitable… forcing China to make most of its hoard before the money isn’t worth the paper it’s been printed on.
Since Shanghai went on vacation, Hong Kong’s Hang Seng index has added a rather steep 1,000 points. With any luck, the bullish trend will last until Friday. I anticipate a strong boost for the Shanghai exchange — and of course our China holdings — come Monday, when 10 day’s worth of pent-up trading energy will be put to good use.
*** I love when a stock I picked for its “green” technology is raking in new orders… from its khaki divisions!
Now, Arotech Corporation (NASDAQ:ARTX) — which I recommended to HSC members as “Bonus Pick” on August 27 — combines four distinct businesses. All are geared toward providing the world’s militaries with top-of-the-line combat gear. Among them the battery packs that qualified them as my “alternative energy” pick of choice.
The latest share price boost was generated when the ARTX armor division unveiled its new Light Protected Vehicle. It’s called the Tiger. Based on a commercial off-the-shelf Dodge RAM 5500 platform, the MDT Tiger is a cost effective, highly armored Light Protected All Terrain Vehicle for a crew of 6-9. It’s mine and blast protected, with various add-on armor options, including reactive armor. The Armor Division just signed an agreement with Israel Military Industries Ltd (IMI) to jointly market another armored vehicle, the MDT David. in markets worldwide.
We’re up between 12-16% so far.
The positive thing about this stock is that even “small” orders — less than $2 million worth of equipment — can provide instant boosts to the share price!
How to become a Hot Stock Confidential member, you ask? Just go here: http://www.todaysfinancialnews.com/HSC/ridic/EHSCK904.html
*** “Sirius XM Radio (NASDAQ:SIRI) never had the good fortune of needing a black pen to scribble out its bottom line,” writes TFN’s resident stock pundit Andrew Snyder today. “Accordingly, the company has been forced to compensate its executives’ ‘good’ work by issuing them piles of stock.
“Even as the guys that run the company look at this kind of ‘bonus’ like a fifth grader looks at T-bill from his Grandma: They sell it to the first sucker they can find. Sirius insiders are selling like crazy. And when the captain abandons ship, you should follow. If not, you could be stuck in a deadly whirlpool.
“They must be giving away the stock at county fairs, beauty pageants and used car dealerships these days. Everywhere I look, somebody’s claiming ownership to at least a handful of SIRI shares. Getting your hands on the overpriced stock is more like buying membership into a cult than any sound investment.
“That is why the smart money is selling.
“Now, I’ll be the first to admit a bit of insider selling here and there is nothing to worry about. Investors have all sorts of reasons to unload their shares, from diversification to cash flow demands. But when no corporate insider has bought shares in over a year and the dumping is measured in millions of dollars, it is a situation worth noting.
“Before I go any further, let me make this clear: I have no financial stake in Sirius. Never have. Never will. The only reason I write about its future demise is to warn investors about the Siren call of this hype-filled, ultra-speculative play…”
Finish Andrew’s article here!
*** Northeastern University’s Master of Science in Finance: fully online, 16 months, AACSB accredited. Visit http://onlinemsf.neu.edu/finance-online
*** Quote of the Day:
“Today’s leftists, socialists and progressives would bristle at the suggestion that their agenda differs little from Nazism. However, there’s little or no distinction between Nazism and socialism. Even the word Nazi is short for National Socialist German Workers Party. The origins of the unspeakable horrors of Nazism, Stalinism and Maoism did not begin in the ’20s, ’30s and ’40s. Those horrors were simply the end result of long evolution of ideas leading to consolidation of power in central government in the quest for ’social justice.’ It was decent but misguided earlier generations of Germans, like many of today’s Americans, who would have cringed at the thought of genocide, who built the Trojan horse for Hitler to take over.”
– Walter E. Williams, Creators.com
Recommended Reading:
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Telomerase technology: Good for a Nobel… and for Geron Corporation (GERN)
Q4 Update: TFN Complete Guide to Stem Cell Stocks under $10
The 3 Best Stocks under $3 to Buy NOW!
Today’s Top 3 Financial News Stories:
CNNMoney.com – Australia hikes interest rates “Australia’s central bank raised its key cash rate by 25 basis points to 3.25% on Tuesday and heralded more to come, saying it was safe to row-back on stimulus now that the worst danger for the economy had passed.”
Bloomberg.com — Emerging-Market Stocks Reach 13-Month High, Commodities Rally “Emerging-market stocks rose to a 13- month high and currencies of commodity producers strengthened as the global economic recovery prompted investors to seek higher- yielding assets. Gold climbed to a record and oil rallied.”
YahooFinance.com — Beware the gold bubble “When you look at supply and demand, gold loses some of its luster. Gold miners have poured more than $40 billion into new projects since the bull market began in 2001, according to Montreal-based bullion dealer Kitco. Like Big Oil explorations started earlier this decade amid rising energy prices, new gold projects are now bearing fruit.”
Cordially yours,
J. Christoph Amberger
Executive Publisher, TodaysFinancialNews.com
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