July 20, 2009

Shanghai Bubbly

Beijing's decision to uncork the IPO genie may be hindering the sale of short term debt. Three times in the past 2 weeks or so China's Finance Ministry has failed to sell all its 6-months bills despite higher yields. The Wall Street Journal rightly, I think, attributes the auction shortfalls to IPO frenzy. What remains to be seen is whether renewed excitement in Shanghai shares will inflate another bubble. Already the Shanghai Composite is back up above 3,000 for the first time in over a year....

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