Buffett urges caution on China stocks

Billionaire Warren Buffett said investors should be “cautious'' about China's stocks after the country's benchmark index more than doubled this year.
“We never buy stocks when we see prices soaring,'' Buffett said yesterday in Dalian, north-eastern China, where he is visiting a subsidiary of his Berkshire Hathaway Inc. “We buy stocks because we're confident of the company's growth. People should be cautious when they see prices rising.''

Buffett has sold shares in PetroChina Co, which has risen 76% this year to become the world's second biggest company by market value. China's benchmark CSI 300 stock index has climbed 48% since May 17, when Li Ka-shing, Asia's richest man, said there “must be a bubble''.
“Buffett is right about China stocks, whose valuations are too high,'' said Wang Zheng of Everbright Securities Co in Shanghai. “It doesn't make sense any more to still play in such a market. It's about time to pull out of it.''
Buffett said he was “appreciative'' of PetroChina's performance and that he was doubtful he could find another stock like it. Berkshire owned more than 10% of PetroChina's publicly held shares as of the end of last year. It owned 3.1% of the publicly held shares as of Sept 30, according to disclosures. The company has sold all of its holding, Buffett said in a Fox Business Network interview on Oct 18.
Buffett, 77, and chairman of Berkshire Hathaway, transformed the company over four decades from a failing textile maker into a US$200bil investment and holding company with businesses ranging from ice cream and underwear to insurance and corporate jet leasing. His investments are followed worldwide. The company's stock has risen 16% this year.
Buffett said he was seeking to invest in large Asian companies with businesses he understood. He denied Chinese media reports that Berkshire had invested in China Life Insurance Co.

Only qualified investors can trade in Chinese shares on the mainland. Some companies, such as PetroChina, trade in Hong Kong and can be bought and sold by any investor.
“If you understand a business and buy at a reasonable price, there's no risk,'' Buffett said. “We've never realised a loss because we understand the businesses that we buy into.''

Tracking the Dow on Wednesday(24/10/07)---Mid-week(pivot)

Overnight spinning top at the close really cost the bull to topple over this mornin' and has to seek physician treatment before conditions stabilised between 11:15am till 2:15pm.At the close,2 powerful advancing soldier with a small bearish inverted hammer...a temporary pause before it move forward further.

These pair of candlestick,bullish engulfing!!!

A "dragonfly doji" on Wednesday depicted that the bulls have overwhelm the bears.The closing above the MAV line is forward looking.In the event of bearish reversal,the long shadow (tail) of the dragonfly candlestick will be filled so it will be ranged bound only.http://www.litwick.com/indicators/1110.html

Another mid-week panic by Merill Lynch report.

Merrill Lynch & Co., the U.S. securities firm that pushed into subprime lending last year, will add about $2.5 billion of writedowns to the $5 billion it disclosed earlier this month, the New York Times reported.

Merrill, the third-biggest securities firm, is the only one of Wall Street's five largest to report a loss from the credit contraction. Investor flight from subprime mortgage bonds and related debt left the company with inventories of loans and securities that had to be written down to depressed market prices.

``The news report on Merrill Lynch caused risk reduction, triggering stock sales and the unwinding of the yen carry trade

In carry trades, investors get funds in a country with low borrowing costs and invest in one with higher interest rates, earning the spread between the borrowing and lending rate. The risk is that currency moves erase those profits.

Japan's interest rate of 0.5 percent is the lowest among major economies and compares with a key rate of 8.25 percent in New Zealand and 5.75 percent in the U.K. South Africa's borrowing costs are 10.5 percent.

Yuan Advances Past 7.5 for First Time Since End of Dollar Link

Jim Rogers, chairman of Beeland Interests Inc. and a former partner of George Soros, said yesterday the yuan may quadruple in the next decade.
The yuan is ``the best currency to buy right now,'' Rogers told investors in Amsterdam, adding that he is shifting all his assets out of the dollar and into yuan. China is ``going to be the most important country in the 21st century.''

U.S. Treasury Secretary Henry Paulson said a call for faster yuan gains was the ``biggest change'' in the communique after the G-7 met in Washington on Oct. 19.

China should allow the yuan to rise faster in the short term, and let markets set the currency's value in the medium term. China must also become less reliant on exports and heavy industry, he said in a conference speech in Washington.

Premier Wen Jiabao said in September that China's top priority was to prevent the economy from overheating. Consumer prices rose 6.5 percent in August from a year earlier, twice the central bank's target. The nation has built up $1.4 trillion in foreign-exchange reserves while managing its currency to keep exports competitive.

Tracking the Dow Movement on Tuesday 23/10/2007

Overnight spillover of bulls lasted for about an hour of trading before it was wipe-off totally again by 11:15am.Seems that profit-taking has been a norm at this time of hour for the DJIA where the currency market also react in tandem with it.

At the close noticed a doji-star spinning on top of the bulls head!It might have a hangover and drop immobilised tomorrow.Just a little bit of migraine and headache.Should be able to be back on its footing again after swallowing its bitter pill.

well,these pair of double white candlesticks looks promising for a bullish market but I don't quite like the long shadows(tail) of both the candlestick.They can be depicted as "hammers" & "hangman" So I predict we are going to have a rough ride through the market square these few days.But the bulls are still holding to its horns.

This Day in History, October 24
On October 24th, 1929, "Black Thursday" marked the beginning of the Wall Street Crash of 1929.