August 15, 2007 – stlplace

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Last Updated on August 27, 2008 by stlplace

These days it’s not easy for investors who hold US stocks, because the market has been in declining mode after the sub-prime woes. Do you still remember the DOW 14,000? That was July 19, as I wrote a post “IS Dow 14000 relevant“. Well, relevant or not, the Dow has retreated and it’s now under 13,000.

As individual investors we can not precict the market, nor should we fight against the market. But as general market declines, usually there are some good stocks go on sale. For examples, the Crocs (CROX) and Mindray (MR). Both companies reported good earnings, got a pop, and now went back to the pre-earning price. Some possible explanations: CROX got dragged down by the weak US consumer sentiment, Heelys HLYS’ crash; for Mindray, I really could not find a good reason other than short term investors move money to WuXi Pharma Tech (WX). Both companies (CROX and MR) had some insider sell activities too.

Who is benifit from China real estate market?

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Last Updated on August 15, 2007 by stlplace

The first, Chinese banks. They are making money from two sides: the developer, and the home buyer. The developers borrow from the banks; they will pay interest and principle (hopefully) later on. The home buyers borrow from the bank, and pay mortgage (interest and principle).

The second, developers. It’s not hard to understand, as the market booming, the developer can charge more for the same apartment or villa.

Last but not least, the local goverment. The land in China are owned by the goverment, the developer will pay more for the new land as the housing price go up. The goverment wants its fair share of the profit too. In addition to the land, the goverment will collect more tax and fees as the housing price go up. So, as much as the (central) goverment wanted to control the housing price (we all want a harminious society, right?), the local goverment don’t think so, at least from economy side.