Hong Kong stocks still very expensive!

Some devils try to persuade me to buy Hong Kong stocks. Why hold cash? I am always prepared to consider buying low but once again, the price of Hong Kong stocks look very expensive to me.

I look at the bluest of blue chips, HSBC. My God, it is around HKD110! The P/E is much higher than other international financials, though it is argued that HSBC has shown to be less hit by the US financial crisis. I like HSBC stocks but unfortunately, I have grave doubts about its share price:

The financial and housing crises spreading from US to the whole world are not receding yet.

Even if the situation in US may become a little more stable, the situations in other parts of the world including EU, emerging markets, etc., won't be encouraging. HSBC has exposures to all these markets particularly emerging markets like China, Latin America, etc. Think about its business prospects in these countries and you may easily imagine how good the bank's results could be! Yes, earnings or decrease in earnings or even losses are a major problem.

HSBC in Hong Kong has significant exposures to local housing market. It is well-known that the Hong Kong real property market had again turned into a huge property bubble after 2003 owing to the local administrative policies dictated by the big landlords and banks in Hong Kong. That bubble has burst and is now blowing all property owners, investors and speculators into the dead zone again like what happened to them in the Asian financial crisis in 1997-98. Well, these people never learn and this time, they cannot shift the responsibilities to our ex-Chief Executive, Mr. Tung. You can easily imagine what will happen to HSBC in face of the rapidly sliding of land prices in Hong Kong. Mortgage defaults will certainly rise as a result of the collapse of the local stock market and the burst of the real property bubble. This is just a repeat of history, of what happened to Hong Kong in 1997-98.

The local economy of Hong Kong is so bad that there are several cases of suicides, business failures, layoffs and bankruptcy, etc., reported in the recent months. Despite the political propaganda put up by the local administration, I don't see any help to the despair emerging in many people. Well, these guys never learn; they are the poor speculators in the local stock and property casinos.

Where is the positive note about HSBC? Show me one when you find it. Why should HSBC be selling at a value much higher than other international financials? No reason? If so, isn't it still expensive or very expensive?

You may apply similar principles to assess the price of other Hong Kong stocks and see whether they are still expensive. I think they are!