September 17, 2010
Shanghai Back Below 2,600
The Shanghai Composite, China's bell-weather stock index, is back below 2,600 after a hefty sell-off at the end of the week. Commenters variously credit rising real estate values and tightening lending standards (for 2nd and 3rd homes only) or the tension with US Treasury Department over currency as the cause for the drop. However, as I have pointed out before the impact of China's week-long national holidays may be at play. At Chinese New Year there is what I call a "hong bao" or "lai see" effect - that is selling stocks for cash gifts. The week-long National Day holiday is coming up soon and the sell-off could be in preparation for the holiday. National Day holiday is also a big occasion to travel, visit family, shop, and party....
Labels: chinese stocks, shanghai composite
March 26, 2010
Shanghai Starts Index Futures, Short-Selling Next
Trading in stock index futures will begin April 16 in Shanghai according to Reuters. The Shanghai Financial Futures Exchange will offer futures contracts on the CSI 300 index (made up of 300 leading shares from Shanghai and ShenZhen exchanges). Initial capital requirements will be hefty (500,000 Yuan or over $73,000 US dollars) and margin requirements around 15%. Coming soon short-selling in stocks will be allowed on 40 shares of the Shanghai Composite Index (which 40 shares is unavailable at this time - if you have insight, please let me know) and margin trading is promised as part of a plan to slowly liberalize Shanghai's capital markets...
Labels: csi 300, financial news, futures, shanghai composite
August 18, 2009
Shanghai Surpise?
Hardly. After gaining almost 100% this year (at least in terms of B Shares), the Shanghai Composite has fallen 16% this month including two big drops Monday and last Friday that shocked watchers. The question is though why were so many shocked? Roller coaster rises and dips are to be expected with Shanghai where most of the action is domestic anyway. The top Qualified Foreign Institutional Investors that are allowed to own and trade domestic Shanghai shares - the bulk of the market - have invested around $11 billion only in an exchange valued in the trillion$. Many analysts now believe Shanghai will sink again. If so I think the Shanghai Composite could settle back to the 2K to 3K range. Overall though, not good news for the global economy....
Labels: chinese stocks, shanghai composite
July 29, 2009
CSEC Tests Shanghai High
The giant IPO of China State Construction Engineering Corporation (CSEC) tested investor appetite for domestic shares on the Shanghai Securities Exchange today and while CSEC's stock gained over 50% on its initial trading day the benchmark Shanghai Composite Index dropped 5% overall in late trading. Before the close the Shanghai Composite fell as far as 3,174 testing its new highs. Observers must remember that a 5% drop is not unusual for the often very volatile Shanghai exchange....
Labels: chinese stocks, shanghai composite
March 22, 2009
Ed note: Light posting; Sinomania! on assignment
Sinomania! is back East to our national capital on an important matter...back soon. Meanwhile, keep your eye on the Shanghai Composite....
Labels: shanghai composite
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
April 24, 2008
Beijing Fixes Shanghai Flat
After months of hints and vague promises, Beijing came to the rescueof Chinese shares in a surprise announcement last night on national TV that the duty on stock trading would be reduced to just one tenth of one percent, repealing last May's increase that aimed at curbing short term speculation and reducing volatility. Volatility however is here to stay given high inflation and commodities values.
Values shot up across all boards with the Shanghai Composite gaining over 9% to close at 3,583. Many observers had claimed3,600 as a sustainable level with current earnings andperformance. As always, I'll update the markets on each episode ofThe Sinomania! Show.
Labels: bubble, chinese stocks, index, inflation, shanghai composite, shares
March 27, 2008
Shanghai Collapse
The Shanghai Composite Index, a benchmark of Chinese shares owned inside and outside China, fell again today to its lowest level in almost a year. The index closed down almost five and half percent March 27 to 3,411 representing a loss now of well over 30% probably close to 40% from its peak last year.
Labels: bear market, china, crash, finance, shanghai composite, stocks
January 22, 2008
Shanghai Composite Around 4,600 As Predicted
Viewers of my Sinomania! broadcasts will remember that back in May 2007 my prediction that the Shanghai Composite would be around 4,600 at the start of 2008. Even with the big profit bubble of last summer here we are - the Shanghai Composite Index fell over 7% in last trading and closed January 22 at 4,559.75. Now, where to go from here?
"Corrections" of this magnitude are consistent with two of my forecasts for Chinese stocks this year: the hot scenario and the flat. Either way, the roller coaster ride is just beginning!
"Corrections" of this magnitude are consistent with two of my forecasts for Chinese stocks this year: the hot scenario and the flat. Either way, the roller coaster ride is just beginning!
Labels: bubble, china, crash, shanghai composite, shares, stocks
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