Chinese Market Implosion

Remember most non-Chinese have had to play this game through Hong Kong via H-share IPO's for better returns (IPO's that double :D - greed ?), only to swallow a 20% + depreciation in the Hong Kong Dollar (tricky to hedge as well). The bigger boys with deeper pockets(£100mil +) have been doing convertible bond deals with mid sized firms in N.East China(places like Dalian) all the way down to Xiamen and Guangdong province. Its an interesting story since most are due for conversion(cash or preIPO allotments) from early 2008 to mid 2009. Also of note is that most government institutions are putting money on Shenzhen and Shanghai bourses behind Communist Party bosses and also there have been a few firms who after their own IPO's saw it better to buy stocks in other firms that use the proceeds as it offered better returns ( why build another factory when you can make double on the stock market ?). As it currently stands about 65% of monies are institutional, so more lemmings needed before they head for the cliffs. Compare them with other BRIC ( Brazil,Russia,India and China) indices either by rebasing prices or valuations(e.g. PE ratios) then it looks less bubbly...

Personally l would not mind if it shoots more or tanks on Monday when we are asleep.

But if this baby tanks its not only young bored & frustrated Chinese housewives* that will lose a few cents....



*yes l have thing about young (20's) Asian babes
 
Quote from Cygnus Atratus:

Remember most non-Chinese have had to play this game through Hong Kong via H-share IPO's for better returns (IPO's that double :D - greed ?), only to swallow a 20% + depreciation in the Hong Kong Dollar (tricky to hedge as well). The bigger boys with deeper pockets(£100mil +) have been doing convertible bond deals with mid sized firms in N.East China(places like Dalian) all the way down to Xiamen and Guangdong province. Its an interesting story since most are due for conversion(cash or preIPO allotments) from early 2008 to mid 2009. Also of note is that most government institutions are putting money on Shenzhen and Shanghai bourses behind Communist Party bosses and also there have been a few firms who after their own IPO's saw it better to buy stocks in other firms that use the proceeds as it offered better returns ( why build another factory when you can make double on the stock market ?). As it currently stands about 65% of monies are institutional, so more lemmings needed before they head for the cliffs. Compare them with other BRIC ( Brazil,Russia,India and China) indices either by rebasing prices or valuations(e.g. PE ratios) then it looks less bubbly...

Personally l would not mind if it shoots more or tanks on Monday when we are asleep.

But if this baby tanks its not only young bored & frustrated Chinese housewives* that will lose a few cents....



*yes l have thing about young (20's) Asian babes
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*yes l have thing about young (20's) Asian babes :D :D :D
 
Did we implode yet? I was just wondering?

Mon 28 May 2007 | 3:58 AM ET
Shanghai Composite Index 03:15 AM 4,272.11 +92.34 +2.21%
 
The lowest point of Shanghai index last year was around 900 points, a great bull market will rise 1000%, so it will not be strange if the same index go to 9000-10000 points sometime next year. Bubble ? never mind, the market will correct itself. US stock market has experienced .com madness but nowadays it is healthy again. I am a futures trader and personally do not invest in stocks, but I encourage people I know to hold tight their stock positions, after all, technically speaking, the trend is awesomely healthy, and remember, this may be the greatest bull they will ever see !!



attached is the weekly chart of the shanghai index
 

Attachments

No, no, not yet. Read this :

The CSI 300 rose 2.2 percent to 4072.58, the biggest advance among regional benchmarks.

Households are shifting funds in to the stock market, seeking better returns than they can get on bank deposits. The central bank's benchmark one-year deposit rate, a ceiling for deposit rates offered by commercial banks, is 3.06 percent, little more than the nation's 3 percent inflation rate.

Investors opened 362,719 new accounts at brokerages on May 24, the fifth straight day the tally has exceeded 300,000, according to figures on the China Depository & Clearing Corp.'s Web site.

``There is lots of liquidity flowing in to the market,'' said Fan Dizhao, who helps manage about $1.8 billion at Guotai Asset Management Co. in Shanghai. ``Even fund mangers dare not sell their shares at this stage, as no one knows when the rally will be over.''
 
It has that clear trend of too much money chasing too few stocks - like a big institution buying a snall cap.

Think ofall the value managers who were fired for not buying into the tech boom - these things always go on much longer than when it has obviously left fundamentals behind.

China has a wild card in the form of the Government's soft attempt to control things being ignored - it seems inevitable to me that market crashing measures will follow if a couple more soft measures are innefectual, this will have as much to do with authority not tolerating being defied as it will for concern their professed concrn regarding damage to peoples savings.

Another wild card is no use of leverage and it is all peoples savings so on the one hand it probably won't crash as hard as might be thought, but if it crashes enough to seriously damage peoples savings it will be a Loooooong time in recovering just as before, as rebuilding savings will be the priority - will take much longer than the 18-24 month bereavement period.
 
p/e in china over 50. but overvaluation itself will rarely cause a crash. there must be a trigger an then the blame is on overvaluation
 
Quote from john12:

p/e in china over 50. but overvaluation itself will rarely cause a crash. there must be a trigger an then the blame is on overvaluation
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agreed.. overvaluation is not a good predictor of a crash, at least it hasn't been in the US.
 
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