IMPORTANT NEWS: National Electric Vehicle Sweden has agreed to buy the assets of Saab Automobile and the sale is expected to be finalized during the summer.

Tuesday, May 17, 2011

Forget the experts, listen to the market

Yesterday Spyker-Saab and Pang Da Automobile Trade Co (also known as Power Diversity Automobile Trade Co) announced that they had signed a MoU for a partnership in distribution and manufacturing of Saab cars in China. As always when there are news about Saab, there are dozens of skeptics in the media. But what is more interesting to see, is that the  Pang Da shares, which are publicly traded on the Shanghai Stock Exchange, has risen in value after the MoU was announced!

 Power Diversity Automobile Trade Co. share price

So what does that mean? Well, the simple answer is that the demand for Pang Da shares has been greater than the supply. And so those who bought Pang Da shares after the deal was announced, have paid a higher price for each share than they could have paid before the deal. And why would people do that? Because they believe that this deal will lead to higher incomes for Pang Da in the future! In other words, selling Saab cars in China and later on becoming a part owner of Saab, is seen by the market as being a financially good move by Pang Da! And the people who have bought Pang Da shares after the deal was announced hope to gain by selling their newly acquired shares with a profit or buy getting future dividend payments on their shares.

So forget about the automobile analysts, the business journalists and the self-proclaimed experts who are skeptical to the deal. Listen to the market who actually thinks there is money to be earned in this deal!