[Bobbybo]

Originally Posted by connecta

bobbybo's suggestion is very interesting, especially as the future of the USD/HKD is not very bright and it could happen easily that the purchasing power decreases a lot with your money fixed with traditional saving schemes. some speculate that if one day china is shifting it's huge foreign reserves from USD into EUR and gold, that the dollar would tumble and the HKD with it. the risk is very low, but not zero and that makes pulling out the money any time so interesting. but what's the minimum amount to be invested? is it the 1M to open such an off shore account or less as well?

The minimum balance is USD20,000.00 and maximum USD1million for the offshore account.
They also offer 4.3% for UK£ and 2.55% for Euro, I guess cause it's forecasted an exchange rate €1=US$1.28 by the end of the year (HSBC financial manager information of 2 weeks ago)

[freeier]

coolgirl > how did u get the ipo allocation in the first place ? you applied for it ? or someone gave it to you ? through which broker ? i am curious, not necessary i would do it but at least shld know the process for a foreigner.

connecta > the monthly purchase scheme is something people call 'dollar cost averaging'. maybe it is good, but assuming you have a large sum of 200k you want to invest then you are stuck with alot of cash sitting there doing nothing. 8-P

these days i'm less prone to do mutual fund as major allocation. because they are too market dependent. if you have the means, do take a look at hedge funds. despite all their bad names, alot of the hedge funds are good for stable investment return and overall portfolio hedging.

i am not bullish on USD> whereas HKD, once RMB goes beyond a certain level of appreciation we are going to see HKD pegged to RMB. HK is not going to let HKD depreciate together with USD and affect their own economy.

the problem with long term bond is this: you are stuck with the yield for up to the maturity of the bond. in the extreme example, if HKD interest rate would be to shoot up to 8%, the bond you bought would still pay you 5% until the maturity (maybe 10 years). so end up you lose around 3% p.a.
of course, the probability of that happening is low and i suppose you can just get a long term bond.

[beafan]

i have 1 allotment of BOC IPO too, am thinking about acquiring more but i think construction bank will have IPO later this year too? is that true?
anyway, i was reading up on P/E ratio to compare stock performance and i dont understand the concept.
could anyone please explain? thanks!~~

[chris_in_hk]

The 10% pa return average figure for the S&P 500 (excluding dividends) is the average of the rolling 10 year periods from the 1950's to 2005-ish time frame. I can't remember the exact dates and it could have gone back further.

Of course this is just an average. After 10 years you could end up with less, but then you could end up with more. I can't remember what the standard deviation is. But probability wise, the chances of beating a 3-4% pa time deposit rate over that period are in your favour. That's why I'm a long term investor. I've got money set aside for using so I don't have to touch my investments - so it means I won't be forced to sell when prices are low (touch wood). Well, that's the idea. I haven't been tested by a bear market but I've designed my portfolio to give a decent amount of dividends to supplement my income and help to tide me over.

By the way - I'm not suggesting you totally avoid time deposits or go all into stocks. I've got money in both types as they're for different uses and timeframes.

[chris_in_hk]

Beafan,

China Construction Bank has already listed in HK. I think you're talking about ICBC (Industrial and Commercial Bank of China) that is due to list in HK around September time.

P/E ratio simply put is the market value of the company divided by its earnings (per share).

Example: Bank A's market value (share price x total no. of shares) is $10 million and it earned $1 million last year, let's say. That gives it a PE of 10.

Bank B's market value is also $10 million but it earned $2 million last year giving it a PE of 5.

Obviously Bank B is better as it's the same size (market value) as Bank A but it earned more profit. So a lower PE is better when comparing companies from the same industry.

That's the really simplified version. It gets complicated by HK Accounting Standards and non-recurrent earnings, etc.

[freeier]

PE ratio is called price earning ratio.
for example, a company is valued at 100mil.
they split the shares of the company into 100mil shares, and the market pays 1$ per share for the company.

if the company earns 20mil per year, 20mil divided into 100mil shares means each share earns 20c for that year.
and the price earning ratio would be the current market trading price, i.e. $1, divided by 20c of earning, = 100/20 = 5.

depending on type of industry, growth or matured or dividend or sunset, etc.. the PER is different. tech stocks tend to have 20~50PER, during the bubble boom many companies had negative PER because they were not making money! those making bits of money is like PER = 700-1000.

generally the lower the PER the cheaper the company is. but this is general statement.

[beafan]

freeier + chris thanks for your reply.
where can i read up more about PE ratio (like what PE range to expect for banks, blue chips, insurance co., growth industries and growth markets)?
thanks alot!!!!!! super thanks!

[freeier]

chris > dun deny that what u said is correct. but it does not suit alot of ppl and u'd know how much hard work you put in to understand the basis of the market and the facts. most investors are just punting along without putting in effort, so tis better for those ppl to just stick to simple stuffs at lower returns.

[PDLM]

On the question of Bonds, HSBC has various USD and HKD bonds available for online purchase. The highest indicative yield I can find quickly is on PCCW-HKT bonds which mature in November 2011, carry a coupon of 8% paid semi-annually, and have an indicative price today of US$109.60. That gives an indicative annualised yield of 5.93%. Minimum investment is US$30,000 with US$10,000 increments.

US Government bonds appear to be available with annualised yields up to about 4.65%

[chris_in_hk]

Freeier,

That's part of the problem. The financial literacy of the general population is quite low and without learning to invest properly they are stuck with lower-end investment returns and the occasional punt on the market, which usually really doesn't amount to much in the big scheme of things. Or even worse, they invest in stuff they don't know.

That said, that was me several years back. I took over a year to learn what I have now (and am still learning) and to feel comfortable about putting my own money in the market. However, I'm now knocking months off my retirement age, which will turn into years the longer I invest and as I get better at this (market willing).

I think the whole point is that it's best for everyone to educate themselves so that they know what they're doing, the risks involved, and the potential reasonable gains they can get with the time and effort they're willing to put into it.

If I can earn X thousand extra dollars each month from putting in a small numbers of hours' 'work' I think it's worth it. And then there are strategies that need even less time commitment.