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To: ms.smartest.person who wrote (85)	1/15/2001 11:17:33 PM
From: ms.smartest.person	Read Replies (1) \| Respond to of 2248

Investor Diary: Running With The Bulls Hong Kong, January 15 /SHfn/ As the dragon gets ready to begin its 12-year hibernation, it is not only the snake that has begun to move about in preparation for the Lunar New Year. Last week the local bourse saw relatively heavier volumes and volatile price action. While we may not be able to call this the Lunar New Year rally, at least there is some activity out there. Our e-mail box had a rally of its own as last week's column seems to have ignited a flurry of comments (both positive and negative) and queries from readers which I will deal with here. First I would deal with the tone of my column with one reader telling me I was far too bullish, especially with a headline like "The only way is up". Well it was a bullish piece (the headlines are actually written by sub-editors, not me) but I stand by it. The old saying "you cannot fight the Fed" works both ways. When they cut rates this serves as a foundation for market rallies. A look at past turning points in the interest-rate cycles during the past 10 years clearly demonstrates this. Every time the Fed moves to an easing, markets begin big upward movements. In fact the best moves are in the beginning of the cycle when the Fed make its first rate cuts. So while Wall Street, and Exchange Square for that matter, have not yet resoundingly slayed the bear the sniff of bull is not far away. Take the Nasdaq Composite Index, which epitomises the bear with its dismal performance last year. Having dropped about 50 per cent from its highs the index seems to be finding some stability again and is attracting United States' buyers flush with cash in the new year. Many of the big name technology stocks such as Intel, Microsoft and EMC have found support levels from which they are now rebounding. While there are some sceptics still out there, and there needs to be otherwise it is hard to kick-start a rally, things are turning around. For believers in the Nasdaq a purchase of the Nasdaq index is possible by buying the New York-listed counter "QQQ", which acts akin to a tracking stock on the Nasdaq 100 index. Yes, corporate earnings in the US will be dismal for another quarter or two but the market has in most cases discounted this and will be looking past them. As long as the Fed chairman continues his mark down of interest rates we are sitting pretty and it is definitely safe to go back into the water again. Other readers asked me why I did not come out stronger for property developer stocks given the "usual run" these shares have once interest rates drop. Well, this time it is different! The structure of the Hong Kong property market, coupled with the Government's land policies, preclude a big upward move in the sector. The "good old days" are long gone. The Government is all over the market making sure it will not run up too fast. This is particularly true in the mass residential market. Finally, another reader asked us to pick our best red-chip stock for this year besides portfolio member Cosco Pacific. I would choose China Resources, which is in middle of what looks to be an attractive and successful restructuring. By KL Law eng.stockhouse.com.hk