Wednesday, August 19, 2009

Shanghai sell-off continues

The Shanghai stock market's rally (up about 100% from the lows) was a major factor in helping to pull our own stock market up from it's lows in March. But, as more people grow cynical about China's growth prospects post-stimulus their markets have started waving the white flag.

Remember on 8/5 I said:

"Despite the nearly unprecedented run in the US stock market (the best since 1933 - hmm, wasn't that smack in the middle of the Great Depression?) it pales in comparison to the computerized lotto games going on in Asia. In particular, China's stock market is up about 100% THIS YEAR as investors have rushed back in hoping that their stimulus will lead to a robust recovery.

However, one of the best analysts on the Chinese market basically said this week that their market has become little more than a ponzi scheme....."Chinese stock and property markets have bubbled up again. It was fueled by bank lending and inflation fear. I think that Chinese stocks and properties are 50-100% overvalued."

Well, the Shanghai market is now down about 20% in two weeks and shows no signs of turning around. If the Chinese market pulled us up from the depths in March, will they lead us back down? Something to watch.

1 comment:

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