China stocks to take off again on 08.08.08?

[newguy05]

Quote from joesan:

And yes, the market is extremely volatile , even more volatile than Hong Kong.

The stock index futures will be launched after Olympics, a cash cow indeed.

Joesan, do you know if shorting/daytrade is allowed on the index futures once they come out? also is there any date when the options will come out. They been talking about it for a while, but nothing ever happened.

The olympics opening ceremony will not be live as it's too early for the US. It will be on nbc and nbc hd at 7:30 PM EST tonight. I bought a 1080p projector for it, so can watch it on a 100" screen with friends

 

[Jayford]

yeah, read that article. Great mag. I read it cover to cover weekly.

problem is that a huge percentage of the job "growth" in china is directly or indirectly dependent on exports (40% of an entire economy is still a BIG number), even if domestic consumption is way up. If china doesn't have a 10% growth rate, then they have unemployment issues with all the people entering the market each month.

they will also be forced to raise their currency whether they want to or not. Eventually, global pressure to do so will overwhelm anything they can do about it if they still want trade, and there goes their comparative advantage.

I'm not saying they will be destitute, just that the 10% juggernaut will come to a halt, and it will get ugly for awhile. Don't even get me started on their banking system, which is completely propped up by their government. Add the pathetic US banking system into the equation, and things just get worse.

If I was going to invest in China, i'd wait for the next rally to fizzle out, and then a lower low, or double bottom some place. even though its way off now, I wouldn't be placing long term money there at this time.

This is just my opinion of course. i tend to disagree with most economists on most issues. most of them are lemmings.

Quote from richardyu301:

Most ppl here may not be able to read the Chinese but the table on left hand side shows the 10 top exports... 9 of them are machinery/electronic goods. The table on the right shows the top imports (1st: crude oil @$9.4B, 2nd: CPU/MCU @$5.8B, LCD panel @3.5B, etc)

http://www.jdonline.com.hk/content_new/detail_new.php?news_id=35469

As you can see frm the Economist article mentioned above, China GDP growth in last 2 yr (driven from export) comes not from growth in gross amt of export growth, it comes rather by a much less rapid increase in import so the import/export gap widens.

 

[richardyu301]

Export is 40% of GDP. The problem is that the figure "export" here is a gross figure. Actual net GDP contribution is much less.

When the economists estimate the net GDP contribution, they hv already included below things:
- worker income
- company earnings
- tax to government

So the articles above hv already taken your reasoning into consideration.

The real issue here is that... China's mix of export has changed a lot over last few years. It no longer relies so much on "processing trade" which give little domestic value added (eg, textile, toys). >60% of the export is now electronics/machinery goods. So for factories like Foxconn/Flextornics (mfgrs for Nokia, Dell, etc), salary doesn't contribute a big % of their cost. What really makes up most of their cost is semiconductors/parts imported from Japan/US/Europe.

By buying more of these parts from domestic companies, they can cut the import amt significant. As a result, it is possible that the gross GDP drops but the domestic value added actually increases as import drops even more.

So it is all about the mix of the import/export trade.

In these EMS, salary just accounts for 10% of their cost, semiconductors acount for >50%.

However, it is also true to say that keeping the export strong is important.... not b'coz the economy will collapse without it but rather that China real unemployment rate is extremely high. China needs these a lot of these low-pay USD150/mth shit jobs to keep the ppl busy for something.

Personally I would rather say that the major risk with China is that it is too reliant on investment (60% of GDP). These are for infrastructure and real properties. But how much value do they really contribute. It can be, first, over-built, and second, overvalued. By keeping everyone busy at building roads, homes and factories, these may give artificial growth and look good on paper value but are actually a waste of economic resources, driving inflation rate up at the same time.

 

[Jayford]

Quote from richardyu301:



Personally I would rather say that the major risk with China is that it is too reliant on investment (60% of GDP). These are for infrastructure and real properties. But how much value do they really contribute. It can be, first, over-built, and second, overvalued. By keeping everyone busy at building roads, homes and factories, these may give artificial growth and look good on paper value but are actually a waste of economic resources, driving inflation rate up at the same time.

good point.