Market is irrational

Despite all the analyst and tycoon keep saying that China market is in bubble stage now, the China stock index keep going up. As long as people think that it still has legs to run, the current euphoria would continue. So does the China stock on SGX, which has been keep rising. I sincerely hope that the correction would come to keep the market healthy.
Waiting for the GSS now. Great Stock Sale. Before that, we need to write down the buy list. Here is my take.

• China Hongxing - China consumer play towards Beijing 2008
• MIDAS - China railway play as they expanding the rail network
• Sino Env - China environment play. Strong trend + good technology
• China Enersave - China waste to energy play
• Ascott Group - Global serviced residence play
• Guoco Land - Singapore and Asia property play
• Tiong Woon - Crane play which is steady and expanding
• FJ Benjamin - Singapore tourism play towards two integrated resort

Let's wait for the correction to go in. Maybe I would set up a model portfolio here to see how this portfolio would perform in 3 years time.

Ignoring risk

Today STI is down a bit. Last week, we still see people much enthusiastic about buying and pushing up share. Just a week's time, the sentiment has changed a bit.
However, certain China play still keep going up after the quarter result announcement. Analyst keep calling a buy pegging the share at 24x of FY08 earning etc. It looks to me, the possibility of going further up is limited, but the downside risk is greater. Let's assume China bubble burst suddenly, people would pull out from the rich valued share to cash. Assume you bought the stock at its peak, what is left to you is the short term paper loss. Furthermore, do we really can see into the future? If the thing does not really turn out well as it should be. There are just too many similiar cases before, beware!

Sell in May and Go Away

The Singapore stock market has another great run this year. Recover from the mini slump in end Feb and reach new high @4 May. STI is at another historical high. As the index hitting new high, the potential upside is limited, but the down side is pretty much bigger. Coming to May, the traditional weak month for stock market, the situation could take a turn quickly.

Risks on the horizon:
1. US economy slow down and housing market problem
2. China big stock market bubble
3. Unwinding of yen carry trade

Global liquidity might drive the stock performance for quite a while. However, if some events happen, the liquidity could disappear overnight. Fund withdrawal couple with hedge fund selling, we could have another big drop waiting for us. Of course, we cannot foresee the future, it might just keep going up. Market PE at 25 for Singapore, 50 for China? You never know.

Trimming my portfolio, as I hope the correction do come. So I can pick up some good stock. Currently, still holding on to

Capital Retail China Trust
Celestial
FJ Benjamin
Hongguo
Orchard Parade

Hope they would turn up well in next 3 years time. Meanwhile, waiting for chance to add new position to some interesting stocks.