His reason? It had dropped over 80% since it's IPO and he believes it is high time for it to rebound. Most importantly, he happily told me: "I don't think it can drop further."
Well, I can't bear to tell him that almost any stock at a given price can drop another 99% before it reaches $0.005.
Why is China New Town (CNT) sinking like nobody's business? I believe it has go to do with it's fundamentals.
Or rather, the lack of it.
CNT FY 07 reported a turnover of RMB$363m. Not a bad figure, except that profits after expenditure is a loss of RMB$290m.
No dividend was declared (obviously).
Basically it's selling point is still the sexy story it sold during its IPO. I caution my readers to be careful about buying such speculative stocks.
Again, you will have a better chance putting your money on Croatia (against Turkey).
In fact, I am worried that my colleague actually makes money from CNT. It will foster his belief that stocks that have sinked more than 80% is a good deal. I hope he did not have to pay much to understand investment basics!