Learning to fly

                                             I'm learning to fly, but I ain't got wings

                                             Coming down is the hardest thing

                                             Well the good ol' days may not return

                                             And the rocks might melt and the sea may burn ---

                                             I'm learning to fly, around the clouds 

                                             But what goes up must come down ---

                                                         
                                                         Quoted from song lyrics – Learning to fly

                                                         Performed by Tom Petty

Bears held the sentiment edge at a time filled with EU financial troubles, slower pace of US economic growth and pent-up selling pressure from commodity bugs. Even while these phrases turned into cliché in ordinary media use, global stock investors gave them increasing attention.

Bulls still get swatted

The US GNP was pruned for 2nd time last week by FED, citing reasons from those long-running issues including persistence of US inflation, sluggishness in housing market and stifling consumer spending. These headwinds faced by the US will be still monitored closely, and in a worse case will likely drag on into 2012. However, depending on who you ask, the Fed message is either important or a non-event as it's likely the Fed will keep the fed funds rate at close to zero since Dec. 2008. One upshot is that bulls will be on the hot seats, albeit not going to be hit as hard as in 2008, when things are coming down. Adding to the layer of uncertainty lately came from worsening financial health in EU as reflected by downgraded Italian banks, and retreating oil price which is helpful to contain inflation, but inevitably will put a damper of global high-yield funds exposed heavily to oil-rich developing nations. Redemption frenzy has emerged, hinting of heightened odds for a chain reaction that exerts extended downward vortex for global stock markets.

Taiwan stock market - Window-dressing effect on tap; Industrials should hit their strides this week

It might sound like a long shot for the index, sagging to 8,532 last week, to snap back over 9,000 soon, but a short-lived retest over the previous 2-month-long support line of 8,700 is in store this week. A case of significantly shrinking volume should serve as signs of simmering spring-back. Anticipation was swirling for TSE to regain its footings by shovel-ready buying spree spurred by local funds and listed conglomerates to spruce up their books for 1H11. Investors this week are also slated to receive NTD140 bn cash dividend, though the ex-dividend trades will strip about 45 points of TSE index. That sizable dividend is widely seemed as source to stave off negative showing of M1b money supply growth which skidded to 8% in May, a low since Apr. 2009 and 3rd straight month of slump.              

For the rest of June sessions, most speculated industrials will shine and the pits sieged by foreign bulls will likely slip. In June so far, local big institutionals have been keen in scooping up stocks in traditional industrials such as cement, auto, rubber and retailing. The most salient exception is the 4 main shares in petrochemical FPG group (led by FPC, 1301) which had spoken of 20-30% slippage in 2H11 sale. Taiwan Cement (1101) and Asia Cement (1102) last week both showcased ambitious schemes to double annual output capacity within 5 years in China turf, with the first up from current 50 mn tons, and the latter, 25 mn tons. Asia Cement spread its footholds into China in 1996, while Taiwan Cement lagged behind in 2004 but saw its shoots sprouting sturdier there. As reported, Taiwan Cement was at No. 6 spot in China top-notch cement makers in 1Q11.

Financials also speculated to call the shots for TSE

Taiwan and China have stricken more bank cooperation deals under the ECFA pact. Salivating at hugeness of China market, Taiwan banks respectively stepped up efforts to sign MOU with China counterparts in droves. Meanwhile, Fubon Financial Holding (2881) made a splash after sprinting higher than Cathay Financial (2882) to spearhead the sector. At its shareholder meeting Friday, Fubon stressed importance of strengthening its capital base and got a stamp of investor approval for its study about whether to raise fund of NTD40 bn by DR or right issue. Shrugging off the fact that it is now the financial highest flyer, the bank spelled out plan to snap up its own stocks in a bid to share with its workers. That self-assured stance signals its necessarily bullish sense in order to soak up larger cash inflow in future share offering fixed at splendid price. Strong cash spigots might serve them in good stead while flying by the seats of their pants in China.

In spite of being regarded as sister companies, both have squared off each other in domestic bank, insurance and securities stages. Fubon spread out its bet on online sales and telecom (Taiwan Mobile 3045); Cathay has been spectacular in operations of hospital and construction. A spurt of growth sent Fubon squeezing out other listed financial peers as it squeaked out NTD1.59 EPS in first 5 months of 2011, while Cathay sputtered due to FX suffering in offshore investment. Cathay shot to NTD94 in July 2007, the highest score among financial holding corporations which were sanctioned to be set up in 2002 amid Taiwan 1st round of financial system reshuffling. (related report - Wild Wild West in Apr.)

Comparison between Fubon & Cathay (Unit for close, NAV, EPS: NTD)

TSE Code	Name	Close (24 June)	Common Shares (1bn)	Assets (NTD1 bn)	Employee No. (1k)	Client Base (1mn)	Mkt Share,  Insurance Policy (%)	NAV Per Share	EPS (Jan-May ’01)	EPS (2000)
2881	Fubon	42.85	8.57	3.410	20.67	9.0	21.50	25.61	1.59	2.33
2882	Cathay	42.65	10.15	4.780	38.00	11.7	28.40	20.96	0.35	0.42

No silver lining yet for cloud surrounding techies

Tech stocks, though not of all stripes, got squashed of late, with their own slimmer profit predictions for 2H11 spawning shivers among foreign houses which shaved the sector rating amid suspicion about its strength to stack up against traditionally peak season in 3Q. Looking ahead, the sector may continue spooked by familiar news spotlights, such as stubbornly firm local currency and subdued demand from EU and China, with chances for a successive downward spiral not ruled out in short term. TSMC (2330), TSE biggest cap, was smashed to NTD72.90 last Friday, following its target price was slammed by a long-term solidly-supportive foreign house to NTD65 on assumption the global-caliber IC foundry runner will stumble to secure orders from Apple Inc. for A5/A6 chip processor. The slash of price, first one after TSMC shareholder meeting in early June, will surely set the stage of selling storm for TSMC, steepening the slide of tech sub-index.

Delta Electronic (2308), TSE highest play that 74.31%-owned by foreigners, also failed to strut its stuff. Settling at NTD100 Friday, the firm tried to soothe foreigners, stating that its sale is still set to steam ahead, with 2011 sale portion between the spells of 1H and 2H scaled back to 45%:55% versus earlier 40%:60%. However, the relation among Delta and foreign houses seemingly is straddled in an increasingly-strangled stalemate as Delta scolded them about scathing views for Delta smarting over slowdown of growth stamina and nearly 24% target price cut to NTD102. Meanwhile, Yageo Corp. (2327), Taiwan standout in the sphere of passive component, last week shed NTD3.10 WoW to NTD11.90 on surprising news that its schedule to say goodbye to TSE by delisting hit a snag by the government strict yet scrumptious scrutiny. (related report – The final countdown in Apr.). In short, after recent swoons, this summer is shaping up to be even trickier to techies, and it is partly because of their skittish future suggestion.

It’s a well-perceived wisdom that what goes up must go down, - the hardest rule for anyone to learn and struggle with. Those trite, déjà vu and recurring headlines are simply excuses squaring with anything that is coming down. It may be not so smart at present to up stake for a swift and sustainable rebound. Slicing and dicing of when stock markets will fly again is not specifically imperative.  
  
Good Luck !                           
Link to Learning to fly – http://www.youtube.com/watch?v=s5BJXwNeKsQ&feature=related

I really like the sketch drawn as I was a junior in college. It was in the midnight that I finished it and I still keep it.... It's a flashback to my youth, whenever I take a look at it ....