New China fund to invest in singapore listed china companies?

Why did some stocks listed on SGX, especially china stocks go crazy last Friday?

I was told that another QDII fund from China called Jiashi Fund Management Co. was approved last week. The word is, this QDII fund is allowed to invest in Chinese companies listed in SGX and US, where at least 50% of the revenue comes from China. After seeing what happened to the Hong Kong stock market when it was previously announced that QDII funds could invest in Hong Kong, no wonder some investors went ballistic last Friday.

When we look at the Hang Seng index, it is already up more than 30% from the recent sub-prime crisis low and hitting record high, even before a single dollar from the QDII is invested. Apparently, the amount that is being talked about is USD48 bil !!! The money is expected to start flowing into chinese stocks listed in Hong Kong, Singapore and US from 2008 onwards.

So far, the Singapore listed Chinese companies, known as S-shares have underperformed both STI and even more so those Chinese companies listed in Hong Kong. Assuming 10% of the USD48 bil ie USD4.8bil comes to Singapore, that should give a nice boost to S-shares in SGX. Looking at the market reaction last Friday, SGX may have more upside if we look at the Hang Seng market reaction recently. When it comes to “expectations” it is always harder to measure then PE or PEG……….even for high PE stocks, the stock price will continue to rise if investors or the market “expect” it to go higher for whatever reasons. So what do you expect after hearing this piece of info ?