Standard Chartered Bank (2888.HK)

Obama is proposing a list of new restrictions that basically shut down a number of major profit sources of big banks. No prop desk, no 'sponsoring' of hedge fund...
Does it mean JPMC, ML, GS need to stop their prime brokerage business?

Back to Asia, all markets dropped as a result of the big drop happened in US last night.

Standard Chartered Bank (2888.HK) dropped by 5.5% this morning and I see this a good opportunity to accumulate this stock.

Standard Chartered Bank is not a US bank, its business mainly concentrate on emerging market in Asia, and more and more hedge funds are coming to Asia (most recently Soros), if US banks cannot provide prime brokerage service, the hedge funds guy can to to Asian banks and Standard Chartered Bank will benefit with it strong presence in HK and Singapore, and growing presence in China. In fact, it has just been granted a market maker license in China in the bond market, which itself is a fast growing sector in China.

I will start accumulating this stock, half day closed at HK$108.6, which is even lower than the point when Dubai crisis broke out.

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Consumer Credit in China

An interesting news I picked up today to share with you...

Government is indeed doing whatever it takes to boast domestic consumption in China...
But I doubt the actual effect it will produce. The saving rate in China is over 40%, people do have money to spend but just they don't spend it, how can credit help?

Besides, the pilot project will be in Shanghai where the GDP is among the highest in China, do people there really need credit to accelerate domestic spending?

City tapped to pilot consumer finance by -- SHANGHAI will be among the first cities in China to launch consumer finance companies under a draft plan released yesterday by the nation's banking watchdog.

"Shanghai has been studying a plan for consumer finance...

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why CAF traded at a very high premium vs. 2823.HK A-50

Latest NAV for each ETF:

CAF: US$390M
2823 A-50: US$4000M

And the 3-mth average daily trading volume:

CAF: 300K shares (ie, US$11M traded daily based on yesterday closing price, which is close to nothing versus the total daily transaction in NYSE)

2823 A-50: 122M shares (ie, US$183M traded daily based on yesterday closing price, which is around 1.5% of total transaction traded in HK Stock Exchange, though it is not a big % but is still siginificant given there are over 2000 stocks listed in HK )

My interpretation is:

1) both listed ETF are traded mainly by retail investor rather than institution from the size of the transaction we observed

2) for 2823, the 'price discovery' is more efficient from the transaction amount it traded in HK vs CAF in US

3) 2823 is a VERY popular ETF listed in HK, widely covered by financial media, that explains the trading volume, however, CAF I believe is not popular at all in US relatively speaking, that also explains the inefficient price dicovery process

So I would conclude if we want to invest rather than speculate the Chinese economy growth, 2823 is a better choice.

If we want to trade the volatility, CAF will be the right choice.

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