Wednesday, January 24, 2007

Investor Relations "Fundamentals"

When the market goes up and down but not based on the company fundamentals, there are usually some bubble in. Seems Hong Kong and mainland markets are doing so these days. The same company may have different valuation in two markets, while finance-related stock seems so hot among investors.

But one thing Amy always believes is the fundamentals, not only the fundamentals on the financla report, but the "fundamental" for a company to treat its investors, both big ones and small ones. I just wonder how many percent of HK investors, excited on the mainland's financial stock these days, have really called the investor relations offices for mainland financial companies, such as banks, insurers. etc. The response from the difference company will at least give them the credit being a good or bad listed firm.

The only way for individuals to beat the institutional investors is to believe in the fundamentals. And I always believes so.


marcel ekkel said...

Hi Amy,

So what do you think will happen as a result of this air in valuations?

Will a crash similar to the dotcom crash be an option?


Marc van der Chijs said...

Amy, are there no arbitrage opportunities here?

Amy or koala said...

Marc, there are of course arbitrage opportunities, but the person who could get the opportunities is the one who knows when to quit. But currently, so many people line in and I don't think more of them know the answer. They may make a small profit in the short term, but a delay in the quit will make a huge loss.

Marcel, I don't think the China bubble is not as big as Internet bubble, as there are really several good ones, say a few in banks and real estate, making a good money. But seems the fund managers valued those companies same as other companies. So we always see a sudden rise in banking sector one day, and a sudden decrease in real estate another day. That's not a good thing. It means the investors are still talking China in the sense of a general sector, without paying attention to the different character of individual companies.