And so we come to the end of the longest week (so far) in the lives of Messrs Paulson and Bernanke. The collapse of Lehman Brothers, the desperate sale of Merrill Lynch and especially the Fed’s takeover of AIG might suggest that unfettered capitalist roaderism has lost some of its luster. All around the world, governments are rushing in to prop up the markets, and China is no exception.
As everyone knows, the SCI fell below 2,000 points on Tuesday, the government’s interest rate and reserve requirement ratio cuts notwithstanding. Then Industrial and Commercial Bank of China (ICBC, 601398.SH) and other Chinese banks announced they had some – very limited – exposure to Lehman Brothers. In ICBC’s case, that exposure was equal to about 0.01% of assets, but no matter: Investors trampled each other in the rush to the exits.
After the markets closed on Thursday, Beijing took stronger action, eliminating stamp duty and announcing that investment arm Central Huijin would buy into ICBC, Bank of China and China Construction Bank.
Past stamp duty cuts have led to significant short-term rallies, and we were hoping for the same thing this time around. Add to that the government’s focus on banking stocks, and we decided to increase our holdings in ICBC. Another 200 shares would have brought our total up to 400.
Except we clearly weren’t the only ones looking to make a quick buck off the government’s move. (As capitalist roaders, we may not approve of the long, dark hand of The Government playing with the markets, but as the old saying goes: when life gives you stamp duty cuts, cast aside ideological principles and try to make money.)
When we tried to buy more ICBC this morning, we found ourselves late to the party. Trading was suspended when it jumped the daily limit of 10% just after the market opened.
Ah, well. It was worth a shot.
Still, it’s nice to see positive numbers across the board this morning. Even Anhui Conch (600585.SH) is up about 9.5% as of this writing.