The Koreans must be crazy

Korean investors “invest” or “trade” as per various themes.This takes momentum trading to a whole new level.

A MID-SIZED sized Korean semiconductor firm named DI makes products with distinctly un-sexy names like “Monitoring Burn-in Tester” and “Wafer Test Board”. It has lost money in each of the past four quarters. And there have been no changes to its fundamentals that might explain why its share price should shoot up from 2,000 to 5,700 won (from $1.80 to $5.12) in the space of just three weeks—including another 15% gain today.

But DI’s chairman and main shareholder, Park Won-ho is no ordinary mortal. He is the father of Park Jae-sang, better known as PSY (as in “psycho”). “Gangnam Style”, if you haven’t heard, is now number one in Britain’s pop charts and number two in America. Local retail investors—referred with the derogatory gaemi-deul (“ants”) by professionals—are piling into DI shares because of it.

Quite how they expect the horse-dancing YouTube phenomenon of 2012 to help DI sell more of its Wafer Test Boards is a mystery. But convoluted investor logic is of course not a new thing. DI is merely the latest example of Korea’s “theme stock”

One of the most common themes has been the marriage stock. When the son or daughter of a company owner weds a chaebol family member, an unusually generous wedding gift may arrive. Back in 2009, shares in a firm named Bolak ran up from 2,000 won to 9,000 won after the owner’s daughter married into the family behind LG. The effects were short-lived: Bolak shares now fetch a more earthly 3,110 won.

The upcoming presidential election has created another subcategory of theme stocks. Following Ahn Chul-soo’s emergence as a political force about a year ago, shares in his company, Ahnlab, ran up from about 20,000 won each to a peak of 167,200 won. Since he declared himself as a candidate, Ahnlab has been crashing: now each share fetches 82,000 won. Ahnlab’s price-earnings ratio is still 87, mind you.

from the Economist


We Indians were crazy too…anybody remember K10,Realty and Infra booms ?

The retail investor is dead.Long live the retail investor !!

As per Moneylife,

August was a terrible month for the mutual fund industry. Equity funds suffered massive redemptions amounting to Rs5,671 crore and with sales of just Rs3,385 crore, the net outflow of as high as Rs2,286 crore. This has been the highest outflow since February 2012 which saw an exodus of Rs2,809 crore.


In a recent article in BS, the national sales head of a large fund house bemoaned “Understanding investors’ sentiments is not easy. It has now become an every-month phenomenon, despite making all possible efforts to retain clients.”

So we have the retail investors deserting stocks and mutual funds in droves.

Now consider the recent press release of Godrej Properties dated Sep 12, 2012,

In a single day, the Mumbai-based real estate developer sold over 1 million sq. ft. of space in its residential project in Sector 104, Gurgaon.
Godrej Properties Ltd. (GPL) (BSE scrip id: GODREJPRP), the real estate development arm of the Godrej Group, today announced that it has sold the entire 1st phase of its residential project, Godrej Summit, in Sector 104, Gurgaon. The first phase of this project had 695 apartments across 1 million sq. ft. of space.


As can be seen from the pictures, there is a queue of investors waiting in line to give their cheques.With the current prices of around 5500 psf, Godrej Properties has booked sales of 550 Crores in one day !!

So I guess the retail investor is alive and kicking.

He prefers to stand in line for realty rather than call his broker for equity !!

Why forecasts don’t work?

Short Answer:There are too many unpredictables or “known unknowns” and “unknown unknowns”

This reminds me of another great poem by Cavafy called Nero’s deadline

Nero wasn’t worried at all when he heard
the utterance of the Delphic Oracle:
“Beware the age of seventy-three.”
Plenty of time to enjoy himself still.
He’s thirty. The deadline
the god has given him is quite enough
to cope with future dangers.

Now, a little tired, he’ll return to Rome—
but wonderfully tired from that journey
devoted entirely to pleasure:
theatres, garden-parties, stadiums…
evenings in the cities of Achaia…
and, above all, the sensual delight of naked bodies…

So much for Nero. And in Spain Galba
secretly musters and drills his army—
Galba, the old man in his seventy-third year.

A tale of two indices

The US S&P 500 is hitting four year highs while the Shanghai Composite Index is close to its 2009 lows.

So for all the talk of global coupling, we have very very different outcomes for the stock indices of two of the biggest economies of the world.

Another interesting fact is that most US fund managers looked at the Shanghai composite as a leading indicator for their own markets.

Just goes to show that all indicators work for a while and then they stop working.The trick is to know when !!

Maruti , Manesar & Modi

Statement of Maruti on Manesar:


We are deeply disturbed by the mob violence and arson at our Manesar Plant on Wednesday evening. Several executives, managers and supervisors were brutally attacked and injured, and nearly 100 of them had to be hospitalised.

We have also lost Awanish Kumar Dev, General Manager (HR) at Manesar Plant, who was burnt to death by the mob. Awanish was an outstanding professional and team member, compassionate, soft spoken and deeply committed to cordial industrial relations. In the past year, he had been instrumental in the Company taking far-reaching steps to enhance the well being and working conditions of workers at the Manesar Plant.

We are still assessing the total damage to property and facilities from the acts of arson. What is clear is that the office facilities have been burnt beyond repair, as have the main gate, security office and the fire safety section.

Both our plants in the Manesar campus were, of course, closed on Thursday. We will shortly announce our decision on the next steps with regard to resuming operations in these facilities. We request our customers and partners to bear with us in this extraordinary situation.

The top management team visited the injured colleagues in the hospitals in Gurgaon where they are admitted. Their experiences are shocking. A few of our colleagues remain serious. While the rest are recovering from the physical injuries, it will take them a while to come out of the trauma. The injured include two Japanese expatriates, including the plant manager of the Manesar Plant.

Sequence of the violence

The workers’ union was demanding reinstatement of a worker who had been suspended for beating up a supervisor. While negotiations were on with the senior management, the first act of violence by the mob was to forcibly shut the main gate and prevent managers from leaving the premises after working hours.

Thereafter, armed with iron rods and door beams of cars, the mob spread out in groups in the factory area and targeted supervisors, managers and executives. In simultaneous attacks in different parts of the factory, the mob beat the managers on their head, legs and back, rendering many of their victims bleeding and unconscious. They also ransacked offices, broke glass panes and wantonly damaged property. Finally, they set the offices on fire.

After being terrorized, abused and attacked in this manner by the mob, recovery for the injured will not be easy. We will ensure they continue to receive quality medical attention, and are extending whatever support is possible to the families as well.

By any account, this is not an “industrial relations” problem in the nature of management-worker differences over issues of wages or working conditions. Rather, it is an orchestrated act of mob violence at a time when operations had been normal over the past many months.

Such acts of violence – pre planned, unprovoked and gruesome – have implications beyond one company or region. They are negative trigger for existing companies and regions across the country, as also for prospective investors and job seekers.

We are extending full cooperation to the police and government authorities in identifying the guilty and taking suitable action.

From the company website

The actions by the workers is so violent and barbaric that they remind one of Naxalite methods.Earlier, there were reports of Naxalites infiltrating the unions in Tamil Nadu, looks like they have infiltrated ones in Manesar as well. This is a wake up call to the industry.

From Haryana’s perspective, this couldn’t come at a worse time.Already, entrepreneurs are shying away from Haryana and Punjab due to power shortages and the high cost of land.Violent unions will drive them away together just like they did in WB.

If Maruti shifts to Gujarat, then it would be a real coup for Narendra Modi.Then we also ought to do what Gujaratis have been doing for long : “Buy land in Gujarat and pray for the long life of Narendra Modi !!”