China Literature Limited’s (772.HK) share price surged on debut trading after its IPO and even rose to HK$110 at one point, which was twice its offer price of HK$55 per share.
Retail investors entered a state of frenzy but most investors, including the institutional ones, cashed out when the stock was riding high. At the end of the day, China Literature’s share price only rose by 86%.
The Hang Seng Index (HSI) fell by 0.3% to 29,000 points despite its previous gain.
Even the “King of Stocks” Tencent Holdings Ltd (700.HK) fell after its rise—the stock started adjusting after hitting its highest point of HK$ 398.6, and closed at HK$385.6.
From these, we can see that arbitrage pressures were high too when stocks were riding high.
A large amount of money went southbound on Wednesday (8 Nov), and yet, the overall market still went on a downtrend.
Perhaps the power of money from the mainland was still weaker than that of international “financial crocodiles”.
The importance of holding cash
Warren Buffett’s company Berkshire Hathaway has not been performing so well lately.
Some think that this is because Buffett has been rather conservative recently by holding a gigantic amount of cash.
As cash does not rise in value, those who choose to hold cash might lose out to speculators who dare to buy stocks at a risk.
But the Oracle of Omaha is not the only one who appears to be hoarding cash.
Hong Kong business magnate, Li Ka-Shing, too was said to hold about 100 billion yuan in cash, which was obtained through selling a lot of property.
The actions of both Warren Buffett and Li Ka-Shing are worth a reference. Do remember Buffett’s famous quote:
“You never know who’s swimming naked until the tide goes out”.
China could use money to “make friends”
Link REIT (823.HK) reported its interim fiscal 2018 results, with the interim distribution per unit up 8.7% from a year ago, which was better than expectations.
Unfortunately, market sentiments were not favourable on Wednesday, which resulted in LINK REIT closing flat.
However, unlike the greater market that fell after rising, LINK REIT registered repeated ups and downs. Even though it has closed flat, it still showed a stronger trend than that of the market.
Besides, it closed at HK$66.4, which was not far from its previous historical high of HK$66.8, and thus there is a high chance that it would hit a new record high.
On a side note, Trump’s visit to China should be beneficial to both parties, especially when it comes to business prospects.
Now that China is getting rich, it can “acquire the friendship” of the US through money, and businessman Donald Trump should be receptive to such an approach.
I believe that the global stock market stands to benefit from China’s friendship with the US too. In that case, investors can look forward to the growth of infrastructure stocks and IT stocks.
This article was translated from Chinese to English by Chen Xushuang. Click here to read the original article.