The Hong Kong stock market is jumping, having added just 1,175 points in its first two days. Obviously this is a trend which cannot last forever, because as the stock index, the Hang Seng Index, would need to rise to 250,000 if it were to continue at this rate for the 200 odd working days of this year, and that is quite impossible.
I also would very much doubt that if the index can reach a level above 20,000 during the course of this coming year that would still be very acceptable, and that would mean an average daily gain of just 25 points each working day. That target of 20,000 would put the market back on a prospective P/E of around 15 times potential 2009 earnings, although that is pure guesswork as it cannot be calculated without much more definite indications.…
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