This Week’s Big News

Hong Kong shocked Asian investors this weekend with the announcement that they have entered their first recession since the deadly SARS epidemic. Hong Kong’s government economist, Helen Chan, said that demand for Hong Kong services have been "severely hit by the outbreak of the global financial tsunami that caused significant jitters in the local asset markets."

Economists predict Hong Kong’s downturn will be deep and will worsen next year. "This is only the beginning of the economic aftershock, and the territory will likely continue to suffer from tremors in the coming quarters," says DBS economist Connie Tse.

I have been telling you for months that we are not at the bottom of the stock market cycle yet — in China or the U.S. . This is one more sign that we are right.

Of course, the herd mentality on Wall Street would tell you the opposite. There seems to be a consensus that the U.S. market is near a low. You can turn on CNBC and hear this about every 10 minutes. Many folks that have remained long in stocks are acting so relieved that "the worst is over" there seems to be a compliancy about it. I am expecting that the market will continue to move lower through the fourth quarter with a possibility for a further 15 plus percent decline before it is all over.  

Opportunity amongst the Panic

This does not mean that we are not finding opportunity in this market. It was just three weeks ago we put out buy orders on 7 incredible large-cap China value stocks. When we sold these positions after a 10 day holding period our worst performer was up 9.3%, our best was up 42.81%.

To those who say you cannot make money in this market, I reply we have averaged an unbeatable 28.8% return on our 7 stock buys this month. The key to being successful in this environment though is not just knowing what to stocks buy but, more importantly, knowing exactly what to pay for them.

If you want to know what China stocks to buy to make money in this environment, and precisely when to buy them, then you can’t afford not to have your personal no-holds barred full access to our model portfolio. Subscribe Now and join us in making gains in spite of the ugliest bear market in 70 years. 

How Bad Is It… Really?

Actually, the situation looks much worse for Hong Kong than for the Mainland. Many of our long time China favorites will be reporting earnings this week and next.

For the most part, the news from the companies we track in the Mainland has been good so far. CTRIP, which we sold on November 5th, announced today that earnings are up 19% year over year. That’s great news for the company, but its success hasn’t helped the stock price which has fallen 30% since we sold it less than two weeks ago.

But, on the other hand, earnings news will likely be very bad for those companies depending on exports into the recession plagued economies in the West.

Suntech Power (NYSE: STP) is a perfect example of what I am talking about. Suntech has slashed its sales forecasts because the western countries that make up its customer base are using every dime in their national treasuries to try to avoid a deepening of the global financial crisis. Not much budget to start going green with taxpayer money in this environment.

I will follow up with a full round up on China earnings season in our next monthly issue.

The Secret Weapon that Works
in this Market

None of this really scares me. Why? Because we have a secret weapon so powerful it could even make James Bond look like a sissy. I’ll talk more about this in my next report. Look for my email on our China Secret Weapon.

Thinking about becoming a subscriber to my premium newsletter, China Stock Digest, soon? If so, let me give you a piece of advice: Click here and do it today! In this dangerous market environment you cannot afford to be standing out there unprotected in the market. You need an edge. Let us help you and I am sure you will be glad you did.

Committed to your PROFITS from China,

Jim Trippon,

Editor in Chief
China Stock Digest

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