Allen: Yes, I read about this over the weekend. Many said the red chips were being stamped down because Peregrine would be forced to liquidate at any price. Even today, CHL was down, despite the strength
in HK & U.S. markets. I've searched every nook & cranny, every gopher hole I know of on the WEB looking for specifics on Perrigrine's holdings. No luck 8-(.
While I absolutely HATE to owe anyone money, the incredibly low prices
caused me to break one of my own rules. I bought a few more shares of selected companies using margin. (Not much margin, perhaps 3-5% of my
portfolio value). Some companies were trading below their NAV. Others, like CITIC, China Everbright, HSBC, and even my favorite Stone, were all, IMO, too cheap too ignore. This is NOT advice! I am wrong very often. HSBC was initially reported to have loans to Peregrine approaching $US 1 Billion. The TRUTH is they have about
$HK 230 million. That is a huge difference by anyone's standards!
I may be blind as an old Ox, but I still do not see a fundamental problem with many HK & Red chip companies. They have kept foreign borrowing to a minimum, if at all. When you borrow foreign money
AND your currency devalues, your interest rate goes up geometrically.
Not so if you borrow within your own country.
Regards,
Doug |
