so far the japan quake/tsunami has the sort of 'end-of-the-world' look to it. definitely fortunate that major population center (i.e. tokyo) was not epi-center. given the population/industry/biz concentration in and around tokyo ... would have been more than ouch.
theatlantic.com
below just in in-tray, per FEAR n greed
More evidence of the reality of China’s current policy-induced credit crunch inclines GREED & fear to cut the weighting in Australia by a further two percentage points and Korea by a further one percentage point with the money added to China (see Figure 4). The view here is that the more China monetary policy gets traction, the sooner the government can declare victory over the over-hyped inflation threat.
The impact of the credit squeeze on the metal sector is highlighted today by CLSA’s Shanghaibased commodity strategist, Ian Roper (see CLSA research Asia Rocks: Commodities analysis, 11 March 2011). The key point he makes is that traders, who have been hoarding inventory, are being forced into liquidating their holdings. This is probably being exacerbated by official pressure on banks to pull credit lines to those who have been engaged in such practices.
While it will be argued that this is just a short-term blip, the reality is that the price of copper remains well above its fundamental support level in terms of the marginal cost of supply. Roper estimates this at no more than US$2.50/lb. The price today is US$4.17/lb, down from a peak of US$4.61/lb reached in mid February (see Figure 1). Remember in 2008 the copper price collapsed by 67% from US$3.96/lb to US$1.29/lb. It is also worth noting that the price of iron ore appears to have made a double top, relative to the 2008 peak, and is already down US$20/tonne from its mid-February high with, according to Roper, another US$30 to go (see Figure 2).
The reason to add to China again is that the more the credit data slows the greater likelihood that headline inflation peaks in the second quarter, in line with the government’s base case, though it could even be earlier. On this point, the headline CPI rose by 4.9%YoY in February, the same as in January. Still it is widely assumed that headline inflation will be above 5% in March due to the base effect. It is also the case that the government will probably want to see
headline inflation decline for two or three months in a row before declaring victory.
Still the A share market should anticipate all this and, in an encouraging signal, is already up 11% since the recent low reached in late January (see Figure 3). This is why GREED & fear would now rather own China domestic stocks than Australia dollar denominated commodity stocks in an Asia Pacific ex-Japan portfolio. It is also why GREED & fear will today introduce an investment in the Hong Kong-quoted A share tracker fund, the iShares FTSE/Xinhua A50 China Tracker, in the long-only portfolio (see Figure 5). On this point, GREED & fear is assuming the long-only portfolio does not have QFII capacity (i.e. cannot own A shares direct). GREED & fear
will pay for this by taking profit in Sintek Photronic which is up 41% in US dollar terms since its inclusion on 9 September 2010.
GREED & fear may be selling this stock too early given the boom in so-called “tablets”. But given the lack of expertise in technology here, there is a natural temptation to exit a winning trade. As for the A share tracker fund, while it is at a 8.6% premium, it is at least below the peak premium of 15.6% seen in January. Clearly, it normally trades at premium.
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