I think this post is worth bookmarking, all of the sudden the hottest market in the world is now less likely to affect the global markets....hmmmm!!!!!
Chinese tumble unlikely to affect global markets
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Published: 07:00 Saturday 05 May 2007
By: Alan O'Sullivan, Funds Reporter
The China Syndrome: is the top about to blow off? - Comment here
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20-03-2007:
Investment manager Williams De Broe has said that any future fall in the Chinese stock market is unlikely to affect global markets even though there is a high level of demand domestically for equity investment.
The Chinese stock market rose by 130% in 2006 and is 44% higher so far this year as measured by the Shanghai exchange. In Shenzhen the market rose 98% last year and is 93% up so far in 2007.
Yet even though the manager admits that the continuing domestic clamour for equity is turning Chinese equities into a bubble, it dismisses any further falls as an âaberrationâ similar to the one-day 9% in Shanghai at the end of February.
Williams De Broe head of research Jim Wood-Smith said: âAll bubbles ipso facto go pop⦠But does this signal the end of the four year bull market or a huge buying opportunity? There are strong odds in favour of the latter. China currently accounts for 0.7% of the capitalisation of the FTSE All World Index, roughly half that of Hong Kong, so the global scale of a halving of prices is minimal.â
He believes that the evidence from February and March is that there are lots of potential buyers looking for any chance to buy cheap shares.
âIt is also logical that the valuation differential between Shanghai and Hong Kong should close,â he said. âIt seems harsh to say so, but the fall out from a Chinese crash is not likely to be significant, rather a small storm in a gaiwan [Chinese covered teacup].â
Chinese tumble unlikely to affect global markets
Printable Version
Email A Friend
Published: 07:00 Saturday 05 May 2007
By: Alan O'Sullivan, Funds Reporter
The China Syndrome: is the top about to blow off? - Comment here
Related News Articles
20-03-2007:
Investment manager Williams De Broe has said that any future fall in the Chinese stock market is unlikely to affect global markets even though there is a high level of demand domestically for equity investment.
The Chinese stock market rose by 130% in 2006 and is 44% higher so far this year as measured by the Shanghai exchange. In Shenzhen the market rose 98% last year and is 93% up so far in 2007.
Yet even though the manager admits that the continuing domestic clamour for equity is turning Chinese equities into a bubble, it dismisses any further falls as an âaberrationâ similar to the one-day 9% in Shanghai at the end of February.
Williams De Broe head of research Jim Wood-Smith said: âAll bubbles ipso facto go pop⦠But does this signal the end of the four year bull market or a huge buying opportunity? There are strong odds in favour of the latter. China currently accounts for 0.7% of the capitalisation of the FTSE All World Index, roughly half that of Hong Kong, so the global scale of a halving of prices is minimal.â
He believes that the evidence from February and March is that there are lots of potential buyers looking for any chance to buy cheap shares.
âIt is also logical that the valuation differential between Shanghai and Hong Kong should close,â he said. âIt seems harsh to say so, but the fall out from a Chinese crash is not likely to be significant, rather a small storm in a gaiwan [Chinese covered teacup].â
