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Danger Will Robinson Danger! (China Version)

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December 08, 2014 – Comments (3) | RELATED TICKERS: YINN

5 Year chart of Shanghai Composite Index, pay particular attention to the end of the chart.

http://quotes.morningstar.com/indexquote/quote.html?t=0P00006NNM

 

The quotes below are just snippets from the article linked below, I recommend reading the whole thing.

http://finance.yahoo.com/news/china-hopes-economy-rebound-ignite-101546256.html

In a new sign of economic weakness, customs data Monday showed China's imports fell 6.7 percent in November compared with a year earlier instead of recording the small gain forecasters expected. Exports grew by an unexpectedly weak 4.7 percent, down from October's 10.6 percent rate.

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Buoyed by hopes for an economic rebound combined with outright cheerleading by the state press, the market benchmark has soared 49 percent since June, including 8 percent last week alone
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"China needs a magnificent bull market," said the China Securities Journal on Monday.

It said robust stock markets are required as part of the Communist Party's plans to make the economy more market-oriented and efficient.

China's communist-era stock market dates to 1990, when the Shanghai Stock Exchange began trading shares of a handful of state-owned companies in a crowded hotel room.

Despite their free-market image, the Shanghai exchange and a smaller second exchange in Shenzhen, near Hong Kong, have so far been used mostly to raise money for state industry.
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Cash-rich state companies also pay little in dividends despite repeated promises by the ruling party to make them share more of their wealth with the public. That means profits for investors have to come from other traders buying their shares at a premium, which adds to incentive for schemes to inflate share prices.

"We note that price manipulation and other illegal activities are on the rise in the stock market," a spokesman for the securities regulator, Deng Ge, said Friday.
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BEIJING (AP) -- Gong Bin, a marketing employee in Shanghai, watched Chinese stock prices gallop upward for months before he finally gave in and put the equivalent of 2½ months' salary into the surging market

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I've been in the Chanos Camp on China since he made his call about a half decade ago and it's looking like the big pay off for his bet is getting close. For the critics who want to dwell on the timing of his call look at the Shanghai Composite chart up to the last 6 months.

3 Comments – Post Your Own

#1) On December 08, 2014 at 1:53 PM, EnigmaDude (58.05) wrote:

So even though you don't really say it, you seem to think that the Chinese stock market is being propped up by the government and it's due to crash. (I don't know why you could not just state that in your post). Apparently the writers at Fortune agree:

http://fortune.com/2014/12/08/slowing-growth-housing-bust-why-is-chinas-stock-market-soaring/

 

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#2) On December 08, 2014 at 2:51 PM, MKArch (99.81) wrote:

The market and the economy are being propped up by the goverment and due to fall in my opinion. I figured I'd let the article and my selected quotes speak for themselves, although my reference to Chanos at then end of my post did speak to my personal opinion.

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#3) On December 08, 2014 at 11:39 PM, valunvesthere (23.04) wrote:

At 1:28 government stimulus talks not similar to 2008 financial crisis stimulus packages or A.K.A. bail out packages.

China's trade data weak

CNBC 12-8-2014 

People are not buying enough smartphones after the iPhone 6 launch, says CNBC's Eunice Yoon reporting on China's recent economic data. 

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