June 27, 2008
Curtains for Shanghai?
Investment advisors and analysts -- Howard Gold and Nicholas Vardy are but two examples -- are warning not to "put a dime into Chinese stocks" at least until the bottom is reached in Chinese stock markets. Since 2008 began, Shanghai A and B shares have lost 40% or more and are down even further compared to Shanghai's peak in October 2007. The Shanghai Composite was down over 5% today alone.
Last May I pondered if the Shanghai Composite would end up like the NASDAQ or Nikkei bubbles -- watch my video on YouTube. I was surprised to see Shanghai go up all the way past 6,000 later in the year. Many analysts now believe the index will need to sink all the way to between 1,000-2,000 to hit bottom.
But I think comparison to the far more mature NASDAQ and Nikkei markets is simplistic. There are too many variables with Shanghai and its latest incarnation goes back only to 1990. Will foreign buyers be allowed into the A market? Will A and B shares finally merge? Will outflows by individual Chinese retain investors be extended to every investor? I think it is entirely too premature to dismiss Chinese stocks as important and long position investments, particulary in new technology (green & alternative energy) sectors.
Labels: b shares, china, chinese stocks, equity, investment, shanghai composite, shares, stock market
June 10, 2008
China Shares Nosedive
Chinese stock prices collapsed June 10 with the worst showing since the February 2007 pop of the bull run. Chinese financials, banks specifically, were hard hit and the spin on the crash is that markets are nervous about inflation and Beijing's action to raise, for the 5th time in a year, the reserve ratio requirement for banks. But the reserve hike was expected and only the timing could be a surprise. So was the recent improvement just a bear market rally?
Some numbers: benchmark Shanghai Composite closed June 10 just above 3,000 at 3,072.33 down 7.73% back to the level of last spring - CSI 300 Index sank over 8% - and B shares are down almost 7.5% in Shanghai losing almost all of their recent gain - ShenZhen Bs mirror Shanghai's bad performance.
Labels: b shares, china, chinese stocks, csi 300, shanghai composite, shares, shenzhen
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