Archive

While looking at the recent correction of the market, I came across some archive emails in March 2009. Even on looking back, they remain illuminating.

********************************

Dear Szeto,

I have glanced through the report of 5 and do some simple calculations on the right issue.

Although the “actuarial” earning of 2008 is much better than reported (YOY down 30% rather than 70%) and the right issue will ultimately be a very bargain one in 5 years time, the projected figures are in fact extremely unfavorable in the coming 2-3 years.

That means, if I accept the right issue of HSBC, the opportunity cost will be very high because I will miss the chance of having at least 30% equity + dividend growth through investing on China Construction Bank in the same period (modest estimate of 1.5 times of GDP= 1.5 x 6.5% in the next 3 years).

So I will decline the offer and put the same amount of money to CCB instead.

Warren

********************************

Dear Warren,

I sold most of my HSBC some time ago and the remaining ones yesterday; I did not have time to go through its report but I made the decision for some different reasons. Sincerely,

Szeto

PS. For more updated opinion, I would agree with my friend TW. See http://hk.myblog.yahoo.com/cal-culator/article?mid=156