Stockbee: Revisiting Float

Ursa Minor romps in China? Current conditions are suggestive of an attack by Ursa Minor, or a minor bear market, in China. In China alone, the boutiqueprices are down 16% from their March highs, but the value created by that selloff comes with big risks attached. The response to the wave of stock fraud in the US and Hong Kong has not been to crack down on the perpetrators of the stock fraud (so to make markets work better). Among all markets in the region, China’s Predicted Surprise is -2%, second only to that of Sri Lanka, which comes in with a -2.8% Predicted Surprise. For now, it doesn’t matter as the markets have interpreted the move as a stay of execution – as the cycle of crisis and rescue continues. The “Predicted Surprise” – for earnings – the percentage difference between StarMine’s SmartEstimate, which puts more weight on recent forecasts and top-ranked analysts, and the mean estimate of all analysts – for emerging Asian markets earnings as a whole, currently stands at -1.6%. China is a mafia state – and Bo Xilai is just a recent public manifestation.

Now, a new analysis of the most recent data suggests that the picture doesn’t appear likely to change any time soon. There was a dump of economic data over the weekend and most of the numbers came in below expectations. There are different areas in the stock market where you can start investing. In particular, there are four explanations that I have heard from value investors for what were wrong during the last decade, and I will list them in their order of consequence for value investing practices, from most benign to most consequential. However, we believe that a cut in the lending rate will only have limited impact in stimulating investment. A Hong Kong based investment banker informs me that HSBC is not thought of as a good gauge of the risks to the Chinese financial system as the bank had diversified its exposure. Cam Hui is a portfolio manager at Qwest Investment Fund Management Ltd. stocks trading heavy volume with low floats tend to carry higher Supply/Demand ratings.