China Bubble Analysis

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In China, Plans to Calm Markets Could Rev Up Futures Brokerages
2007-11-12 18:06:00
From Wall Street JournalSHANGHAI -- With the introduction of stock-index futures -- derivatives products that may cool down the broader Chinese stock market -- looking ever more imminent, there are several companies in one sector whose fortunes could be helped: futures brokerages.Such trading houses, whose main business has been limited to handling local trading of futures on physical commodities like soybeans and copper, stand to see a boost in revenue from the resulting trading activity that stock-index futures would bring. By at least one prediction, the futures industry could take in more than three billion yuan, or about $405 million, in commissions annually within three years.Chinese regulators have been promising the advent of stock-index futures for about a year, but the plan has been delayed as officials hash out details and work through concerns. Now, analysts say there are signs the indexes may be introduced to China 's market as early as next month.Stock-index futures ar...
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Editorial: Here comes oil at $100 a barrel
2007-11-08 17:37:00
From NewsadayReady for $100-a-barrel oil? Despite a stall yesterday in oil's steep price climb, that symbolic milestone could be here by Thanksgiving. So what can we do to reverse the surge in prices, or at least soften its impact? Not much.Long Islanders are wincing every time they fill up their cars' tanks. They should at least understand what's driving prices to such levels.To start, forget the usual suspects - the mess in Iraq or oil shortages. Instead, look first at traders in the futures markets of New York, London and Tokyo, where oil is just another commodity. When the subprime mortgage markets imploded, big investors looked elsewhere to find profit. They found it in oil. Not only did they see soaring demand in China and India, which more than make up for a drop in U.S. consumption. They also heard rumblings of war with Iran. And there's nothing better than war with a major oil producer - or even rumors of war - to excite the futures markets.Even the sharp cuts in intere...
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Time for the sound of popping bubbles
2007-11-08 16:23:00
From China DailyOn his recent visit to Uzbekistan, Premier Wen Jiabao said the Chinese government would prevent bubbles from forming in the capital market and dramatic fluctuations from harming the stock market.He said the government is bound to establish a transparent and fair market, in which the interests of businesses and the investors are protected. The soundness of the stock market is crucial to both investors and the prosperity of the national economy. He also said the government will rely only on market-oriented means to achieve this goal.These were Premier Wen's first public remarks about the stock market since it entered a bullish period in 2005. The timing of his remarks reflects the authorities' concern over possible bubbles in the stock market and the economy.Property prices have followed a steep trajectory upward in recent years. That momentum soon spread to stock prices. The interaction between the two helped sustain the boom over the years.The prices of property an...
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Investment plan delay fails to leash Hang Seng
2007-11-08 16:21:00
From Report On BusinessOn Monday, the high-flying Hong Kong stock market suffered its biggest single-day drop since 9/11 but the next day, the market was on a tear again, continuing a rally that is making some market watchers increasingly nervous.Hong Kong's benchmark Hang Seng stock index fell 5 per cent on Monday as investors reacted to comments made over the weekend by Chinese Premier Wen Jiabao. He told reporters that several conditions must be met before mainland Chinese citizens would be allowed to invest directly in the Hong Kong market in a program called the Independent Investing Scheme (IIS).The Hang Seng index, half of whose market capitalization is in shares of companies based in mainland China, is up more than 45 per cent since Aug. 20, when the IIS was first announced. Investors have pushed stocks up sharply in expectation of the capital inflows such a move is expected to attract. Also contributing to the recent gain is global investors' love of all things Chinese.Th...
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China's Alibaba soars in HK debut
2007-11-06 17:53:00
From Al JazeeraShares in Alibaba .com, China's largest e-commerce firm, have risen 122 per cent at their trading debut in Hong Kong, a day after shares in oil giant Petrochina tripled on their opening in Shanghai.bodyVariable350="Htmlphcontrol1_ lblError";Tuesday's debut for Alibaba.com shares easily beat market expectations, with its opening price set at HK$30, compared with an initial public offering (IPO) price of HK$13.50.bodyVariable300="Htmlphcontrol2_ lblError";With its shares hitting HK$33.00 by midday on Tuesday, Alibaba.com was valued at roughly $21.4bn, making it the fifth most valuable internet firm in the world.Petrochina meanwhile saw its stocks slip back early in Tuesday's trade on the Shanghai exchange, a day after it became the first company in the world with a market value exceeding $1 trillion.Demand for IPOs in both companies easily outstripped supply, indicating that investors are paying little heed to warnings that the China bubble is set to burst eventually.Al...
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BRIC market looks safer even as worry of a bubble lingers
2007-11-06 17:51:00
From India TimesNEW YORK: For all the concern about stock-market bubbles in Brazil, Russia, India, China, the biggest emerging markets still may have more promise than anything in the developed world. The simple math of comparing the value of companies with their countries’ combined gross domestic product shows the so-called BRIC markets total $1.71 trillion, or 25% of their GDP.US equities available for trading, by contrast, are worth $13.98 trillion, or about the same as comparable GDP, according to data compiled by Morgan Stanley. Stocks in all industrialised nations account for 81% of GDP.That helps explain why the BRICs are “in the early stages of the rally,� said Jeffrey Kleintop, who helps oversee $163 billion as chief market strategist at LPL Financial Services in Boston and is adding to his ‘overweight’ in developing-nation stocks by selling shares in industrialised countries. “You’re seeing a lot of areas run up, but it’s not gotten to the point where it is...
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China pricks bubble in Hong Kong market
2007-11-06 17:50:00
From ihtHONG KONG: Hong Kong 's blue chip stocks plunged Monday after China 's prime minister raised uncertainties about a proposal to allow mainland citizens to invest directly in the city's listed securities.The Hang Seng index shed 1,526.02 points, or 5 percent, to close at 28,942.32, the largest drop since the terrorist attacks of Sept. 11, 2001. High-flying oil issues led the losses, including PetroChina, even though its price more than doubled on the Shanghai exchange at one point Monday after its shares were listed there for the first time, reaching a peak of 43.96 yuan, or $5.89, compared with an initial price of 16.70 yuan. On the Hong Kong exchange, PetroChina dropped 1.60 Hong Kong dollars, or 8.2 percent, to 18 dollars, its biggest decline since November 2000.China-related companies, which had risen sharply on the possible direct investment plan, fell sharply. The Hang Seng China Enterprises index, which tracks the shares of 43 Chinese companies traded in Hong Kong, los...
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PetroChina tops trillion-dollar mark
2007-11-06 17:48:00
From Los Angeles TimesIt's a world milestone as shares of China's largest energy producer begin trading on the Shanghai stock exchange.By Dawn C. Chmielewski, Los Angeles Times Staff Writer November 6, 2007SHANGHAI -- PetroChina Co. became the world's first company valued at more than a trillion dollars Monday, catapulting over U.S. energy titan Exxon Mobil Corp. as eager Chinese got their first shot at investing in the oil giant when its stock began trading on the Shanghai exchange.Shares of PetroChina nearly tripled as investors scrambled to get in on the offering. The stock opened at the equivalent of $2.24 and traded as high as $6.52 before closing at $5.90.That price, plus the value of shares traded on the New York and Hong Kong exchanges and those held by the company's government-controlled parent, gave PetroChina a total market value of $1.1 trillion -- more than double Exxon Mobil, at $486 billion.[Read more]
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Predicting when the Chinese bubble will burst
2007-11-06 17:47:00
From ihtPARIS: Blowing bubbles is fun, until you have to scrape the chewing gum off your face.For more than a year, investors in Chinese stocks have been wondering when that day will come. Inflation, economic growth and historical equity valuations would suggest that the skeptics have longer to wait than they think, even if all bubbles burst eventually.Last week, Alan Greenspan, former chairman of the Federal Reserve, called the Chinese stock market a speculative bubble that would break "when you don't expect it." The remarks reiterated sentiments he expressed in May, when he cautioned that the rally in Chinese equities "is clearly unsustainable" and might undergo a "dramatic contraction." A week earlier, Li Ka-shing, the wealthiest person in Asia, voiced similar concerns.Even so, China's CSI 300 stock index has surged 40 percent since Greenspan spoke in May and 45 percent since Li's comments.Want to see what a bubble looks like? The CSI 300 has almost quadrupled in the past 12 m...
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Is PetroChina a sign that the Chinese bubble is ready to burst?
2007-11-06 17:45:00
From National PostPetroChina’s much-publicized achievement of becoming the first company in history to top US$1-trillion in market capitalization has many wondering if this is a good reflection of China’s ascent on the global stage or merely a bubble that is due to burst any day now.China now accounts for four of the world’s top ten companies (also China Mobile, China Petroleum and Industrial and Commerical Bank), as well as seven of the globe’s 16 biggest names, Northern Securities points out in a note to clients.The Chinese market may be in an extremely speculative phase, the firm said, adding that while the its market cap used to be only a fraction of its GDP, the US$3.8-trillon in value for Chinese stocks now exceeds the nation’s estimated GDP of US$3.25-trillion by 17%.How does this compare with other emerging nations or the United States?It is significantly above Brazil, India and Russia, and is almost on par with the U.S. market’s valuation, Northern Securities sa...
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Alibaba.com opens sesame to investor demand
2007-11-04 12:27:00
From AFP GoogleHONG KONG (AFP) — After weeks of hype and with demand exceeding the share allocation more than 150-fold, China's largest-ever Internet IPO will finally list Tuesday, illustrating the insatiable demand for Chinese equities.Alibaba .com, the online business-to-business marketplace, will be the biggest Internet initial public offering since Google in 2004 when it appears on the Hong Kong market.Investor s have been attracted by the company's rare potential to tap both the mainland's thriving manufacturing and Internet sectors.Further encouraged by the scorching performance of the Hong Kong bourse in recent months, retail investors queued up to get their hands on the firm's prospectus.The company has already hinted it will comfortably raise the 1.5 billion dollars it was aiming for, but the reported scale of the rush for shares has left experienced onlookers flabbergasted.Demand for the 375-million-dollar retail tranche of shares was 58 billion dollars, while the inst...
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On Asia: China's bubble flies own course
2007-11-04 12:26:00
From Euro2DayIs it a man? Is it a plane? No, it's . . . Japan. Few analysts, it seems, can resist the temptation to draw parallels between the Japanese bubble of the late 1980s and today's go-go Chinese markets.And no wonder. Valuations may still have a way to go in China (at 50 times forward earnings they are still comfortably below the 70-times multiple of Japan's bubble years) but there are plenty of other similarities.Strong economic growth? Check. Loose monetary policy? Check. Exporting capital? Okay, so the stakes taken in recent weeks in US and South African banks don't quite rank alongside Japan's trophy deals of the 1980s, but they certainly pass muster.The Shanghai market has more than doubled this year and China is now home to four of the world's 10 most valuable companies. At current rates it may well nab the top slot before too long: less than $50bn separates PetroChina from Exxon Mobile.Two decades ago, Japan ruled supreme. In 1988, according to Business Week ran...
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Air still going into China's bubble
2007-11-04 12:24:00
From The Sydney Morning HeraldBLOWING bubbles is fun, until you have to scrape the gum off your face.For more than a year investors in Chinese stocks have been wondering when that day will come. Inflation, economic growth and historical equity valuations would suggest the sceptics have longer to wait than they think, even if all bubbles burst eventually.Last Tuesday the former Federal Reserve chairman Alan Greenspan called China's stockmarket a speculative bubble that will break "when you don't expect it". The remarks reiterated sentiments he expressed in May, when he cautioned that the rally in Chinese equities "is clearly unsustainable" and might undergo a "dramatic contraction". A week earlier Li Ka-shing, Asia's wealthiest individual, voiced similar concerns.Even so, China's CSI 300 Index has surged 43 per cent since Greenspan spoke in May and 48 per cent since Li's comments, offering evidence that financial manias can last a long time.Want to see what a bubble looks like? ...
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Greenspan Says China's Stock-Market Bubble May Burst
2007-11-01 17:35:00
From BloombergOct. 30 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan said China's stock market is a speculative bubble that will burst.Asked if China was in a state of ``irrational exuberance,'' a phrase Greenspan made famous in 1996, the former chairman said, ``I think so,'' speaking to a conference of insurance executives in Boston today. ``When you don't expect it, it breaks,'' Greenspan said of the bubble.His comments reprise remarks from May, when Greenspan said he was concerned Chinese equities might undergo a ``dramatic contraction'' after its main stock index at the time had jumped more than 90 percent since the start of the year.Greenspan's latest words of concern come at a time when investors are increasing bets on Chinese equities. Yesterday, PetroChina Co. and Alibaba.com Ltd. sold stock valued at more than $10 billion.PetroChina, the world's second-largest company by market value, raised 66.8 billion yuan ($8.9 billion) in the biggest stock sa...
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Is China's stock rally about to burst?
2007-11-01 17:33:00
From BBCThe bull that stands outside the Shanghai stock exchange could not be more apt.The Chinese market has almost tripled in value this year as investors clamour for a slice of the world's fastest growing economy.And if the shares of PetroChina soar when it lists in Shanghai next week, there's a chance the Chinese oil giant could become the world's most valuable quoted company, stealing the crown from ExxonMobil.For some, this is a natural extension of China's economic rise.For others, it's evidence of a massive stock market bubble that parallels the height of the dotcom boom.Too hot?China's market is displaying many of the classic warning signs of a bubble.Cab drivers, college kids and Buddhist monks are making small fortunes in a frenzy of "chao gu" or stir frying stocks - Chinese slang for trading.Internet chatrooms are abuzz with investment tips and reports say that millions of stock trading accounts are being opened each month.Investment guru Warren Buffett, who recent...
More About: Stock , Rally , Burst

Makings of a bubble
2007-10-29 20:46:00
From Business StandardThe Sensex touched yet another milestone on Monday when it scaled the 20,000-point peak in intra-day trades ?a doubling of the level that prevailed 21 months ago. All the people who have been advising investors that Indian market valuations are rich, and that the market must be due for a correction or at best a period of stability, have been proved hopelessly wrong. Indeed, those who have stayed out of the market because they felt that prices had reached giddy levels have started feeling foolish about missing out on a quite incredible bull run, and even they have been rushing into the market in an effort to make up for lost opportunities. When people suspend judgement in this fashion and try to join the herd, the market has the makings of a bubble. The question is whether the bubble will get bigger before it ends the way all bubbles do.The latest bout of buying was set off by the US Fed rate cut a few weeks ago, and investors have simply ignored the real meanin...
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China after the CCP Congress – Part 2: �Risks and bubbles� in overhea
2007-10-29 20:44:00
From China WorkerThe Shanghai Composite Index, China’s main stock market index, soared past the 6,000 mark for the first time ever during the week-long congress of the ruling ’communist’ party (CCP) 15-22 October. With the congress signalling, �steady as she goes�, China’s rich and powerful are in celebratory mood.For working people and China’s still-poor majority it is another story:�Even their policies are made preferentially for rich people,� a Shanghai shopkeeper said of the congress. �What I see is people who have become rich through illegal means seeking ways to make their property legal. How? Through policies and laws,� this man told the International Herald Tribune (20 October). That newspaper’s veteran China correspondent, Howard French, discovered, �scepticism and outright disaffection� towards CCP leaders on the streets of Shanghai.�There is nothing I expect from this leadership,� a migrant construction worker in Beijing told Asia Times Onl...
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What If You Ignore Warren on China?
2007-10-29 20:41:00
From Barron'sNOT EVERYBODY'S READY TO TAKE Warren Buffett's lead in -- or rather out of -- China .Buffett, who has now famously exited an incredibly profitable investment in PetroChina (ticker: 0857.HK), last week told reporters in China that investors in that country should be proceeding with caution.But to some, caution and exit are very different things. And though these strategists and portfolio managers say they wouldn't be surprised by more volatility -- they aren't ready to stop investing in Chinese companies.Certainly there is cause for caution. The bubble analogies were neatly detailed in Barron's two weeks ago ("How High Can China Fly?"): Chinese companies are racing to the top of the world's market capitalization rankings -- a phenomenon seen in both Japanese and tech stocks before those bubbles burst. Valuations are stratospheric, and investors are so desperate to get a piece of the action that initial public offerings are reaping triple-digit one-day gains.It's w...

Sell China Before The Games
2007-10-27 21:03:00
From ForbesFrom its lows just below 1,000 in June 2005, the Shanghai Composite Index has risen 500% to above 6,000--perhaps the most parabolic rise of any major stock market in modern times.Let's compare it with the great Japanese boom of the 1980s.The Nikkei 225 rose almost 300% from its July 1984 lows to its bubble peak. It then began a 13-year slide and now trades at less than half its all-time high near 39,000.Finally here's our own NASDAQ Composite index during the great Internet mania.From its August 1998 low to its record highs above 5,000 in March 2000, the NASDAQ registered a 240% gain--less than half what Shanghai has posted in the last couple of years.Even the great bull market of the Roaring Twenties advanced less than 300% in the five years before September 1929.And although India and Brazil rallied more over a longer time, China appears to have registered a bigger advance in a shorter time than any major stock market I can think of in recent years.[Read more]
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If an economic bubble bursts in China, will anyone notice?
2007-10-27 21:00:00
From The Globe and MailChina in late 2007 has all the marks of a bubble economy. Construction cranes clutter the skylines of booming Chinese cities. Housing prices in Shanghai have doubled.The main index of the Shanghai stock exchange just passed 6,000 - up more than fivefold in two years.Stock values of leading Chinese companies have soared so high that last week a Chinese bank passed General Electric to become the world's second-biggest company by market valuation. China now has more companies worth over $200-billion (U.S.) than any other nation, a remarkable feat for what, for all its successes, is still a developing country.China has eight companies in the world's top 20 by market value, compared with seven for the United States, four for Western Europe and one for Russia. That makes no real sense, and it can't help bring to mind memories of Japan in 1989, just before its bubble burst. Japan had 14 companies in the top 20 back then.But what looks like a bubble is not always a...
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Asian Stocks Rise in Week on Earnings; China Mobile, Sony Gain
2007-10-27 20:59:00
From BloombergOct. 27 (Bloomberg) -- Asian stocks climbed this week after record customer growth boosted profit at China Mobile Ltd. and Sony Corp. reported earnings that topped analyst estimates.China Mobile, the world's largest wireless-phone carrier by users, climbed to a record, and Sony, the second-biggest maker of consumer electronics, had its best week in two months. Posco led South Korea's Kospi index higher after a report showed the economy grew in the third quarter and billionaire investor Warren Buffett said the nation's shares are attractive.``Most of the results are pretty good and this is a reflection of the strong Asian economies,'' said Teng Ngiek Lian, who manages $3 billion at Target Asset Management in Singapore. ``I'm pretty happy.''The Morgan Stanley Capital International Asia-Pacific Index added 1.4 percent to 168.06 this week. India's benchmark led gains in the region. Japan, Australia, New Zealand, the Philippines and Pakistan were the only decliners...
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South Africa: Standard Bank Partners With World's Largest Bank
2007-10-27 01:52:00
From All Africa Standard Bank has announced a major partnership with the Industrial and Commercial Bank of China Limited (ICBC).ICBC is the world's largest bank by market capitalisation and will become a 20 percent shareholder in Standard Bank Group according to the deal, according to a Standard Bank press statement.This deal will result in a R36.7 billion ($5.5 billion) equity investment into Standard Bank, which is the largest foreign direct investment into the country and is a landmark transaction for Africa, South Africa and Standard Bank. Foreign ownership of Standard Bank, currently at around 25%, will increase to approximately 40 percent after the proposed transaction, leaving Standard Bank still majority South African-owned. The transaction is subject to the approval of the South African Registrar of Banks, the China Banking Regulatory Commission, the JSE, and Standard Bank and ICBC shareholders.ICBC is the People's Republic of China's leading commercial bank with a market...
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Soaring Chinese stocks too hot for Buffett
2007-10-27 01:48:00
From The Globe and MailBillionaire investor Warren Buffett warned investors yesterday to be "cautious" about the high-flying mainland Chinese stock market, saying its altitude is big reason he has sold off his stake in PetroChina Co. Ltd."We never buy stocks when we see prices soaring," Mr. Buffett told reporters in the Chinese city of Dalian, where he was visiting a factory of a company controlled by his Berkshire Hathaway Inc.While some Canadian investors agreed yesterday that the main domestic market in Shanghai is frothy, they are still finding attractive China plays in Hong Kong."It's definitely a bubble" in China because its domestic investors can't invest outside the country, said Lambros Piscopos, head of global equities at Montreal-based Natcan Investment Management Inc."They are forced to invest in the domestic market, and you have too much money chasing too few assets."Chinese domestic investors and a few select institutional managers can invest in the A shares of Chine...
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China Funds Lose Steam
2007-10-27 01:40:00
From Korea TimesWith a growing number of analysts cautioning against a bubble on the Chinese market, flows of fresh money in funds investing in China stocks are apparently slowing down, according to the Asset Management Association of Korea.Even billionaire investor Warren Buffett has warned investors to be cautious about the soaring mainland Chinese stocks during his visits to China and Korea.Growing concerns about a possible bubble in the China's equity market are making investors hesitant to put more money into the funds that target Chinese stocks. Some investors are moving to pull their money out of these funds mostly investing in Hong Kong H and red chip shares.Chinese stocks have also suffered steep correction this week on fears of further rate hikes to cool the economy. The slowdown in flows of fresh money into China funds is weighing on overseas stock funds, as funds investing in Chinese equities account for about 30 percent of the total.About 360 billion won has been poure...
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China Launches First Lunar Probe
2007-10-24 19:04:00
From New York TimesBEIJING, Oct. 24 — With a regional space race heating up in Asia, China launched its first lunar probe into space today as the Communist Party moved a step closer to fulfilling its ambitions of one day reaching the moon.The Chang’e-1 satellite, named after a mythical Chinese goddess who flew to the moon, lifted off at 6:05 p.m. Officials and tourists watched the launching at a site in Sichuan Province, while state television provided coverage to the rest of the nation.The probe is expected to remain in orbit for a year, providing lunar satellite images and other information as China prepares to launch a space vehicle to the moon by 2012 and then send an astronaut in 2020. Within an hour of blastoff the probe’s solar panels had been activated, and space officials declared the launch a success.“The launch was very successful, and everything is proceeding just as planned,â€� Wu Ji, director of the Space Science and Applied Research Center, told Xinhua, Chinaâ...
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Not the right way to manage the new China
2007-10-22 19:03:00
From Live MintThat China has leaped forward is plain. Communist poverty has been replaced by capitalist ambition. The world is acquiring a second superpower. Yet, politically, little has changed. The Communist Party remains the same. And in this mix of extraordinary economic vigour and political stasis lies danger.The five-yearly congress of the Communist Party, now being held in Beijing, is demonstrating that stasis all too well. The men in grey suits yawn their way through speeches about greater democracy and President Hu Jintao’s pet notion, “the scientific theory of development�. The lively business will be behind the curtain as the rivals to succeed Hu five years from now court favour.For investors, the question is whether this ideologically bankrupt and obsessively secretive organization can manage a modernizing economy. It is certainly trying, in an old-fashioned autocratic way.A crackdown on dissidents preceded the congress. The award of a medal to the Dalai Lama was s...
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China may use more, bigger rate moves to curb cash
2007-10-19 19:04:00
From India TimesChina will step up measures to curb excess cash in the economy and may use more or bigger rate increases to prevent overheating, central bank chief Zhou Xiaochuan said. “We don’t rule out steeper or more frequent moves if necessary,� Zhou, governor of the People’s Bank of China, said during an interview with reporters on Thursday at the Communist Party Congress in Beijing. Controls so far “haven’t been very effective�. The bank will keep using a mix of policy tools, including rate increases, higher reserve ratios and more bill sales, he said.The central bank is concerned with rising asset prices though that isn’t the sole driver of monetary policy, he said. The world’s fastest-growing major economy has doubled in size since president Hu Jintao succeeded Jiang Zemin five years ago. A surge in exports that helped drive growth now threaten to derail the expansion by flooding the economy with cash, stoking inflation and a possible stock market bubble.Th...
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Investors Expect Beijing To Mind Stock-Price Gap
2007-10-19 19:03:00
From The Wall Street Journal Stock s in Shanghai and Shenzhen fell sharply Thursday while Hong Kong shares rose, as investors bet that Beijing officials would take steps that close the large gap between prices of Chinese companies listed in the different markets.Triggering the share movements in part was a report by Bloomberg News that quoted China Securities Regulatory Commission Vice Chairman Tu Guangshao as saying the agency was studying how to introduce ways for investors to earn money based on the price differences between the markets, or arbitrage. Later, Jiang Chaoling, chairman of Shanghai-based Bank of Communications Co., told reporters his bank has been consulted about just such an idea.After the end of trading Thursday, a CSRC official said the original Bloomberg article was misleading without elaborating. An article on Bloomberg's Web site Thursday night reported that Liu Fuhua, a spokesman for the regulator, said Mr. Tu "misspoke" and declined to confirm whether such a ...
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Are Global Investors Flying Too High?
2007-10-19 19:00:00
From TimeMarket bubbles are not obvious when they are occurring. Even former U.S. Federal Reserve Chairman Alan Greenspan says he's unable to tell for sure when exuberance becomes irrational. While being questioned before Congress a couple of years ago about the 2000 tech-stock meltdown, Greenspan famously said: "As events evolved, we recognized that, despite our suspicions, it was very difficult to definitively identify a bubble until after the fact — that is, when its bursting confirmed its existence."In other words, investors sometimes find themselves driving down treacherous roads with only their rearview mirrors to guide them. This is a particularly discomfiting thought right now, when the word bubble is being bandied about to describe emerging markets. Stock markets from Mumbai to Shanghai have been hitting record highs with giddy regularity recently, in spite of dangers such as the murky outlook for the U.S. economy. The CSI 300, a benchmark index for China stocks, has nea...
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Fears of housing crash in red-hot China economy
2007-10-19 18:58:00
From The Sydney Morning HeraldSWEATING in the bright afternoon sun, the men and women stand on the sides of the roads like homeless people clutching wrinkled cardboard signs. Waving the boards, the real-estate agents call out to cars zooming by."Come take a look.""You're welcome to visit.""Over here."Surrounding the agents in this upmarket neighbourhood are swathes of empty apartments that a few months ago were selling for record high prices.The housing market in this city of 14 million adjacent to Hong Kong is among the first casualties of China 's efforts to cool an economy it fears may be overheating.Faced with surging inflation, shaky loans and a stockmarket bubble that has grown by more than 400 per cent in two years, the Chinese Government in recent months has been pulling all the policy levers at its disposal to control growth.Ther central bank has raised interest rates five times this year and increased reserve requirements for commercial lenders eight-fold. Last month the ...
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