Don't fish the bottom - Hang Seng Index falling to 10,000 is still expensive!

The stock market in Hong Kong will still be expensive even if the Hang Seng Index falls to 10,000 pts. If you guys could recall, in Aug 2007 our Hang Seng Index peaked at about 18,000. Then owing to the spread of false rumors that all the capital in Mainland China would be permitted to transfer to the Hong Kong stock market to buy stocks, speculators drove the Hang Seng Index to 32,000 pts. This is absolutely unbelievable but it happened and then the crazy bubble burst.

So when you value the Hong Kong Stock Casino, you should use 18,000 pts as the peak and NOT 32,000! Assuming we would close at 15000 today, there is only a retreat of 3000 pts from 18000, i.e. a correction of 16% and this is really peanuts when compared with the downfall in other stock markets such as in Europe and America. Looking from this angle, the Hong Kong Stock Casino is still expensive and nowhere near the bottom!

When the local government of HKSAR purchased 5% shares of the Hong Kong Stock Exchange in or about this time last year, the average price per share was HK$155. Now the market value of those shares is around HK$80. So even if you are using such government valuation as a reference, the drop is still less than 50%! This is still far behind the usual drop of 60% or more in other stock markets. So the Hong Kong stock market is still far from the bottom.

What is encouraging is that the Hong Kong Stock Casino is still strong compared with other markets. That means speculators and genuine investors can still hold on to some values in stocks here.

But the obvious risk is that the Hong Kong Stock Casino is the place where you can still withdraw money by selling off shares that may still be of some values. That may make it very difficult for Hong Kong to bottom out!

Dear comrades, save yourselves and don't fish for the bottom now!