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China Bubble Analysis

China Bubble Analysis
Investing China is a hot topic all over the world but did you consider the risk of economic bubble ? You will find the news, analysis of China economic bubble. Besides, I would like to share your viewpoints here.

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Reponse to lindalinlin208 : My view on China bubble
2007-06-09 16:04:00
In my opinion, the stock market and property market are the potential crisis for China bubble.Firstly, the stock market P/E ratio is too high. The average P/E for China market is 37 while US market is only 16. I think 37 P/E ratio is not reasonable.Secondly, the China government's increased the interest, Bank reserve ratio and stamp duty but also approved the new mutual fund investing in the market and denied to impose other kinds of tax in the coming future. It is because the discontented emotion of retail stock investors. However, the retail investor will decrease the sense of risk by the imbalance policies.Thirdly, the China investors illegally investor Hong Kong stock market. Most of them believe that the stock market will not dramatically decrease before the Olympic Game 2008. It is very danager.However, the central market seems want to cool down the stock market by cooling down the property market. I think it is because the citizens uncontented the government cooling down the...
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Investment approval tightened
2007-06-09 16:02:00
From People's Daily OnlineA stricter approval process will be applied to foreign investment into China's real estate market, especially in the high-end sector, according to a notice jointly released by the country's two top regulators.According to the notice, all foreign real estate companies that have been approved by the local government must be put on the record of the Ministry of Commerce (MOFCOM) in the future.The notice, published by the MOFCOM and the State Administration of Foreign Exchange (SAFE), will give the MOFCOM the final say in deciding whether to approve a project. The notice will also give the MOFCOM a better idea of the scope in China's property market, experts say.Insiders said the note was sent to the MOFCOM and the SAFE's local bureaus last month.The notice also imposes a very strict threshold on foreign investors' application to set up real estate companies. Only those who have got land-use rights and own property can establish real estate firms.[Read more]
More About: Investment

China sees lowest number of newly-opened stock accounts since May 1
2007-06-09 16:00:00
From XinhuaBEIJING, June 5 (Xinhua) -- Chinese investors opened 197,000 new Chinese A-share accounts on Monday, dipping below the 200,000-mark for the number of new accounts for the first time since May 1, according to the China Securities Depository and Clearing Co. Ltd.The Shanghai- and Shenzhen-based stock markets witnessed a total of 240,500 newly-opened accounts on Monday including 2,656 B-share accounts and 40,844 fund accounts.By the close of trading on Monday, the total number of stock accounts in the two bourses stood at 102.5 million.The benchmark Shanghai Composite Index rose 2.63 percent on Tuesday, or 96.7 points to close at 3,767.10 points.[Read more]
More About: Stock , Opened , Count , Lowes

China's market capitalization down 1.35% following stock correction
2007-06-09 15:57:00
From China ViewSHANGHAI, June 9 (Xinhua) -- China's combined market capitalization slipped 1.35 percent last week to 17 trillion yuan (2.2 trillion U.S. dollars) by the close of the last trading day, following the government's trading tax hike to cool the overheated economy.The Shanghai stock exchange registered 13 trillion yuan in market capitalization on Friday, down 2.2 percent compared with that on June 1, while the smaller Shenzhen stock exchange totaled 3.9 trillion yuan, up 1.6 percent.Total market value, or value of total tradable shares, had reached 5.7 trillion yuan in the two bourses by June 8.Chinese stock markets have clawed back much of the ground lost when they plunged 8.26 percent on Monday. From Tuesday to Friday, they went up 2.63 percent, 0.23 percent, 3.03 percent and 0.57 percent.[Read more]
More About: Market , Stock , Mark , Capital , Rect

China's stock market: Too much of a good thing?
2007-06-09 15:50:00
From Bangkok PostNot so long ago Beijing was struggling to keep its market going. Now it would give anything to slow it down. So what's the deal?Up until last year, China had found itself in the odd position of having a booming economy but a sagging stock market that had been in decline for five straight years. At the time, the government tried hard to lift market sentiment and address structural weaknesses. It introduced significant reforms to allow formerly non-tradeable shares to enter the market; allowed foreign funds to invest in domestic stocks (albeit in a limited way); imposed a moratorium on new listings for over a year, and then followed with a number of blockbuster IPOs.The medicine worked, and after bottoming out in July 2005 at just over 1,000 points, the red-hot Shanghai Composite Index soared past 4,300 last month. Most of those gains were achieved in the past 12 months.Starting early in 2007, however, the prime minister, central bank governor and leading academics a...
More About: Stock Market , Market , Stock , Good , Mark

What Do Stocks Have To Do With The Price Of Pork In China?
2007-06-08 17:58:00
From Gold SeekBy tripling the tax on brokerage transactions, the Chinese government succeeded, at least temporarily, in restraining the surging Chinese stock market. But my expectation is that the correction will be short-lived. It's not that the Chinese stock market is not a bubble, as it clearly is, only that more air will likely inflate it further before it finally bursts. While Chinese concerns over a potentially bursting bubble are legitimate, their attempts to discourage further speculation can be compared to the captain of a sinking ship who dispenses teaspoons to his crew instead of fixing the gaping hole in the hull. The giant hole in the Chinese economy is the currency peg to the dollar. In order to maintain it, China must pursue a highly inflationary monetary policy which fuels the stock bubble. As long as they continue this policy, dispensing teaspoons will have little effect.The effects of inflation are not limited to stock prices. Pork prices in China, the prima...
More About: Stocks , Price , To Do

China's Economic Bubble Could Bring a Surge in Chinese Construction Materia
2007-06-08 17:54:00
From Building Team ForecastU.S. materials buyers have experienced brief periods of sharp price increases when Chinese exports were trimmed to meet rising domestic materials demand and brief price collapses when Chinese exports jumped as domestic demand growth ebbed or domestic supply ratcheted suddenly higher. See recent construction cost trends at RSMeans.Changes in Chinese domestic materials supply or demand can abruptly change world commodity prices and that fact is now built into U.S. construction pricing models, albeit imperfectly.Bubble Will Burst or At Least Leak HeavilyThe Chinese economy is now overheated, especially its construction and real estate markets. This bubble will inevitably burst or at least leak heavily, which could send a flood of Chinese products into the world market, depressing materials prices in the U.S.Will this happen? It is too soon to know. However, the risk is now substantial and increasing. The role of government fiats in the Chinese economy is stil...
More About: Construction , Economic , Surge

Chinese stocks tumble again, falling 8%
2007-06-05 18:52:00
From Los Angeles TimesIndex loses 8% Monday in rocky fulfillment of state aims. With throngs of new accounts, slide may stir social tension.SHANGHAI — The Chinese government wants to take some of the air out of the nation's stock market bubble. With another plunge in share prices this week, investors appear to be giving Beijing what it wants.Now the question is whether the sliding market can avoid a meltdown that could ravage millions of small investors' savings and threaten social and political upheaval.That could unnerve markets worldwide, given China's importance to the global economy."The risk of a sell-off in Shanghai is not just financial," said David Kotok, head of money manager Cumberland Advisors in Vineland, N.J. "It is in the political sphere. That is why it must be taken seriously."[Read more]
More About: Stocks , Fall

Crashing China and bubble bursting Indian stock markets lead the massive gl
2007-06-04 17:06:00
From India DailyChinese stock market is falling like a stone. The Indian stock market fueled by American and European financial institutions faces the biggest bubble burst in the history.The CSI 300 Index dropped 292.52, or 7.7 percent, to close at 3511.43. After the government tripled the tax on share trades to 0.3 percent, Chinese stick market has tumbled 16 percent from its May 29 peak.Indian and other emerging markets are in deep trouble too. The fuel there comes from American and European financial institutions who have gathered in the shore of Mumbai to reap apparent benefits of Indian economy after failing to gain much in their own respective turfs. The bubble burst will be known in the history as the biggest financial meltdown in the history Western financial infrastructure.[Read more]
More About: China , Markets , Stock , Mark

China Bubble Poses No Danger, Says Strategist
2007-05-31 18:27:00
From CNBCThe China bubble is no myth, says Michael Hartnett. But the global emerging markets strategist at Merrill Lynch says the global economy has nothing to fear -- yet. He joined "Squawk on the Street" to discuss China's "crazy" market and how far it still may go.On Wednesday, it was reported that Beijing is raising stock trading stamp duty to 0.3% from the current 0.1%, attempting to cool down the market as the Shanghai Composite Index climbed 62%.China's superheated economic growth constitutes "a bubble, no doubt about it," Hartnett said. In an interview with CNBC's Erin Burnett, he said the market showed key characteristics: "Greed, leverage and going crazy with valuations ... going crazy with gains." But he maintained that China's market now has more resilience than in the past, as investors have gotten inured to volatility: "The word 'crash' is oversimplified," Hartnett said.[Read more]
More About: Danger , Stra , Bubble , Rate

China Is at Risk of Asset Bubble
2007-05-29 18:32:00
From The Wall Street JornalHONG KONG -- The Hong Kong Monetary Authority, the Chinese territory's de facto central bank, added its voice to the growing chorus of concern about the risk of an asset bubble in China ."Excess liquidity may help create an asset-price bubble in China. The situation is worrying," the monetary authority said in a document it sent to the Legislative Council ahead of a meeting with legislators next week.The HKMA said while Hong Kong may be affected by fluctuations in the Chinese economy caused by monetary tightening, it believes Hong Kong can withstand the impact on its economy and consumer prices.China has been trying to curb asset and credit growth, most recently by raising interest rates and increasing the share of deposits banks must keep on reserve with the central bank, which limits their lending.[Read more]
More About: Risk , Bubble , Asset

The question of China
2007-05-29 18:30:00
From STL TodayHow important is China ? Well, America is pouring billions of dollars into the Chinese economy because its currency is cheap, making its goods inexpensive for consumers. And China is lending the U.S. government billions of dollars through the purchase of treasury securities, which has helped keep long-term interest rates extraordinarily low.Well, get ready, because China is about to export more than goods and currency to the rest of the world. It may soon be sending everyone an unwanted surprise.Let's back up for a minute. How much do you know about Li Ka-shing? Do you know that he's the richest man in Asia, according to Forbes? Listen, he's got some money, probably close to $20 billion, a nice round figure. He dropped out of high school, but he just keeps making money.[Read more]
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A bubble that's still built on a boom
2007-05-29 18:27:00
From The China PostWaiting for the end of the world as we know it hasn't worked well as an investment strategy the last few years.So how about this summer?Things have been positively wondrous for global stock markets in recent months, but equities began to falter late last week. Wall Street has been echoing with warnings of trouble ahead.Unfortunately, many of these warnings are little more than blinding glimpses of the obvious.Former Federal Reserve Chairman Alan Greenspan helped trigger the latest flutter in share prices, particularly in emerging markets, after he said of the wild rally in Chinese stocks, "There is going to be a dramatic contraction at some point."That 's an old economists' trick: Describe the event, but leave it open-ended. Someday you're bound to be right. Warnings about hot markets do serve a purpose, of course. They may keep people from becoming, well, irrationally exuberant and dumping all their money into one asset just before it collapses.[Read more]
More About: Boom , Bubble

Politicizing China's stock market bubble
2007-05-29 18:18:00
From Asia Times OnlineHONG KONG - In China, nearly everything can be easily politicized. The stock markets are no exception. As the stock-market bubble continues to inflate, some people are now tempted to make political interpretations.According to one theory, what keeps the retail investors and speculators bullish is their belief that the government won't take harsh measures to prick the bubble before or shortly after the 17th National Congress of the Chinese Communist Party (CCP) in the autumn, because Beijing wants to see people smiling during the all-important meeting of the party elite. On the other hand, a market crash would mean a big loss of face for the party, and in that case heads would roll, as some officials would be held responsible.It happens that Executive Vice Premier Huang Ju is in hospital suffering from pancreatic cancer, and he was rumored earlier to be dead. Hence his job of overseeing the country's financial and economic affairs, including the stock markets,...
More About: Stock Market , Market , Stock , Mark , Bubble

China comes into view around almost every corner
2007-05-28 17:28:00
From Financial TimesThere seems no getting away from China at the moment. On the one hand, former Federal Reserve chairman Alan Greenspan tells us the Chinese equity market is about to collapse. On the other, world markets are a-twitter over the prospect of China’s foreign exchange reserves being switched into global equities.As to the Chinese market, Mr Greenspan’s crystal ball is no better than anyone else’s. But the problem, as Charles Dumas of Lombard Street Research points out, is of the government’s making.Chinese interest rates are kept deliberately low, while households are effectively forbidden from investing overseas. So the stock market is the only place to go.For the rest of the world, the advantage of this is that Chinese household liquidity is effectively sealed off. So a market collapse should be self-contained – provided other world markets are not feeling fragile at the time. If they are, China could be as good a trigger as any.As for the switch in Chinese...
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A precarious moment for China's markets
2007-05-28 17:26:00
From IHTAlan Greenspan and Li Ka-shing may understand more than most what comedian Rodney Dangerfield meant when he said "I don't get no respect."Here you have Greenspan, the man often called the greatest central banker who ever lived, and Li, Asia's richest man, worrying aloud about asset bubbles in China. And yet, the benchmark CSI 300 Index closed only 0.5 percent lower last Thursday.That doesn't compare to the 9.2 percent plunge on Feb. 27. That one, oddly, became a buying opportunity for an index that has jumped 92 percent this year after more than doubling in 2006.Rational decision makers would normally quake at warnings about the casino mentality in Shanghai. Greenspan, after all, is a very cautious fellow who does not utter a word before considering what damage it might do. So when the former Federal Reserve chairman said on May 23 that stocks in China face a "dramatic contraction," he was probably far more concerned than he let on.Li, meanwhile, spoke volumes on May 17, ...
More About: Markets , Moment , Mark

iamfacingforeclosure.com
2007-05-27 19:42:00
iamfacingforeclosure.com is launched by Casey Serin who is 24 yr old "Would-be Real Estate Mogul", now "World's Most Hated Blogger" from Sacramento. In flipping 8 homes, made "10 Mistakes", with $2.2 million in debt, tried to stop foreclosure, looking to pay off debt, openly share mistakes and help others avoid foreclosure.You can visit it as a reference in China situation.
More About: Closure , Sure , Fore , Facing

China govt monetary policies not enough to control stock market bubble - re
2007-05-27 19:23:00
From ForbesBEIJING (XFN-ASIA) - The government's monetary policies alone will not be enough to effectively control the stock market bubble that has formed in the mainland, according to an interview in the 21st Century Business Herald with Yu Yongding, a former member of the central bank's monetary policy.'I don't think the stock market bubble can be effectively restrained by only relying on monetary policies,' said Yu Yongding, an economist at the Chinese Academy of Social Sciences.He said rate hikes would bring too strong an impact on the economy if raised too high, and that higher interest rates will attract huge capital inflows from abroad and therefore offset the intended effect of the rate hikes.On May 18, the People's Bank (nasdaq: PBCT - news - people ) of China raised interest rates and the reserve requirement ratio, as well as widening the yuan's daily trading band against the US dollar, which analysts said were intended to cool off the unchecked market enthusiasm.Ap...
More About: Stock Market , Market , Stock , Policies

Much at stake if Chinese bubble were
2007-05-27 19:20:00
From The NationThailand's impressive export performance is intrinsically linked to sustainable growth by its giant northern neighbourThe result of efforts by the People's Bank of China to slow down its sizzling economy may have an immense impact on the Thai economy, for which trade with China is an increasingly important factor in terms of export performance.China has already become Thailand's fourth-largest market, with exports last year accounting for 9 per cent of all the Kingdom's overseas trade, doubling from 4.4 per cent in 2001. This is a result of rapid export growth to China of 33.1 per cent on average over the past five years - far higher than the 14.9-per-cent growth of overall Thai exports.The fourth-largest global economy also has an important influence on Thai imports, with its products ranking second in value. While the Kingdom's total imports grew an average of 15.8 per cent per year from 2002-2006, those from China expanded by an annual 29.6 per cent in the sam...
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If it's a bubble, it's still built on a boom
2007-05-27 19:16:00
From Los Angeles TimesWAITING for the end of the world as we know it hasn't worked well as an investment strategythe last few years.So how about this summer?Things have been positively wondrous for global stock markets in recent months, but equities began to falter late last week. Wall Street has been echoing with warnings of trouble ahead.Unfortunately, many of these warnings are little more than blinding glimpses of the obvious.Former Federal Reserve Chairman Alan Greenspan helped trigger the latest flutter in share prices, particularly in emerging markets, after he said of the wild rally in Chinese stocks, "There is going to be a dramatic contraction at some point."That's an old economists' trick: Describe the event, but leave it open-ended. Someday you're bound to be right.Warnings about hot markets do serve a purpose, of course. They may keep people from becoming, well, irrationally exuberant and dumping all of their money into one asset just before it collapses.[Read more]
More About: Boom , Bubble

Second-hand property market to be oversupplied
2007-05-26 03:38:00
From CCTVBeijing's second-hand property market has shifted from being a hot seller's market to being oversupplied. At the city's spring second-hand property exhibition, sellers outnumbered buyers for the first time in recent years.Unlike in previously years when the price of second-hand housing usually spiked in spring, this year's prices remained steady during January to April. But the supply has grown by around twenty percent from the same period of last year."The growth rate of supply exceeded demand for the first time in April,"says a property agent."Because of the tax adjustment and booming stock market, there is now much less second-hand property demand and speculation,"says Ni Pengfei, PH.D of Chinese academy of social sciences.[Read more]
More About: Market , Property , Hand , Mark , Econ

Shanghai property tax signals general curb
2007-05-26 03:37:00
From The StandardShanghai has imposed a profit tax on property transactions, with immediate effect, which will significantly increase investors' transaction costs.Analysts generally see the move Thursday as part of the austerity measures intended to cool the overheated property market and expect it to spread to other areas of China.People selling properties in Luwan, Huangpu, Xuhui and Jingan districts in Shanghai are required to pay a profit tax amounting to 20 percent of the gain in property divestment, rather than the 1percent to 2 percent of the total consideration that applied in the past.The market believes the measures will be extended to other areas of Shanghai and to other provinces and cities in China if overinvestment in the property market and the stock market persist.[Read more]
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Chinese regulator to crack down on insider trading
2007-05-26 03:34:00
From Channel News AsiaSHANGHAI : China's securities regulator has unveiled new rules aimed at clamping down on insider trading and stock manipulation in the country's booming exchanges, state press reported on Wednesday.The rules will "maintain the order of the securities market, protect the interests of investors and effectively clamp down on illegal activities", the China Securities Journal said citing the securities regulators.The release was the latest instalment in a series of moves focused on cleaning up China's poorly regulated and corrupt exchanges.China's more than 100 securities companies are known for weak oversight practices, and are often accused of promising unrealistically high returns to clients or even stealing their money, usually after risky market bets go wrong.[Read more]
More About: Trading , Chinese , Crack , Insider

Greenspan fears Chinese bubble
2007-05-25 18:41:00
From Independent FORMER US Fed chief Alan Greenspan told a Madrid conference that recent rises in the Chinese CSI 300 Index of leading stocks in Shanghai and Shenzhen - which has surged by 90pc this year - were "unsustainable". Richard Hunter, head of equities analysis at Hargreaves Lansdown, said: "The perception is that the US economy is in a difficult place at the moment with China making up for that, so any bad news over China is going to hit markets." Although the Chinese stock market is smaller than most major exchanges, increasing numbers of businesses around the world now operate in China, as the country fuels its rapid economic rise with skills and materials from overseas. But the country's rapid growth has raised fears of a bubble developing that could burst in dramatic fashion. The Chinese government has made moves to try to bring its economy under control by raised interest rates last week in a bid to cool the economy. Fears over a Chinese stock collapse have already ad...
More About: Bubble , Ears

China and Blackstone, Perfect Bubble Buddies
2007-05-24 05:41:00
From The StreetThe word over the weekend was that China 's government was making a $3 billion investment in Blacks tone ; both factions stand to win in this deal.The Chinese get to invest in a devalued currency in exchange for roughly 8% of the U.S.' leading private-equity firm. With an IPO of Blackstone Group imminent, the Chinese will get an immediate markup -- probably 10% to 25% -- on their investment. These two factors -- acquiring assets of a depreciated currency and a likely ebullient initial response to the Blackstone IPO -- give the Chinese a reasonably good cushion on their investment.Blackstone, meanwhile, gets another $3 billion of capital to play with and expand its enterprise. It also serves to juice the already excitable marketplace regarding the future of private-equity -- after all, if the Chinese invest, you've got to be there. (Of course, few investors today are old enough to remember the Japanese purchase of the tony La Costa resort at a terribly inflated price n...
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QDII could help save China's bubble market
2007-05-24 05:40:00
From China ViewBEIJING, May 21 -- Since the QDII (qualified domestic institutional investor) plan launching last July, it has not been very popular in its test market, Hong Kong. The QDII plan will allow Chinese citizens to invest in overseas equities markets with designated foreign currencies. QDII works through qualified institutional investors such as fund management companies. A quota of 12.6 billion U.S. dollars has been allotted for the operation, but only 300 million dollars, or 2.4 percent, has been utilized. Obviously, when the domestic stock market is like a crazy bull and nobody cares about risks, who will bother with the seemingly low yielding overseas market. But things may be about to change. The number of players in China's stock market is now rapidly approaching 100 million, and the banks are still flooded with liquidity. The bubble is about to burst, and decision-makers have to do something fast. QDII is an obvious candidate on the short list of possibl...
More About: Market , Save , Mark , Bubble

China Bubble: Investors Ignore Stock Market Warnings
2007-05-22 19:05:00
From Daily ReckoningGovernment officials are worried. China s Securities Regulatory Commission posted this warning on its website: "Invest ors should be fully aware that there exists no stock on earth whose prices surge and never slump." At one time public warnings would have been enough to trigger a sharp sell-off in the market, but investors are now ignoring them. Fundamental valuations are ignored in a bubble. In other words we are in the realms of momentum investing, when traders follow and then accelerate an existing trend. And this momentum can be extraordinary when the participants are ordinary Chinese people who spot a chance to make some money. This is a far more virulent and dangerous speculative bubble than say the UK housing market...[Read more]
More About: Stock Market , Market , Stock

Investors ponder impact of China stock bubble on markets
2007-05-21 18:25:00
From USA TodayNEW YORK — The earmarks of a dot-com-style stock market mania are present in communist China .Cab drivers, housecleaners, college kids and Buddhist monks are opening brokerage accounts and speculating in stocks for the first time, says ChinaDaily.com.The Shanghai composite A index — open only to local Chinese investors — is up 245% since the end of 2005 and up 50% so far this year. Those are big gains compared with the few choices available to Chinese investors, such as bank deposits and 10-year government bonds yielding just 3%, says Alec Young, international stock analyst for Standard & Poor's.Signs of froth are prompting investors to debate the fallout that markets around the globe may experience if the bubble in China bursts.Whether mass selling in China infects other markets would depend on the reason for the sell-off, says Edmund Harriss, manager of Guinness Atkinson Asia Focus fund. If trouble in China is due to deteriorating economic conditions, selli...
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QDII could help save China's bubble market
2007-05-21 18:24:00
From People's Daily OnlineSend the crime scene investigators to China to investigate the CSI 300 index. The index is a combination of the yuan-denominated A-shares of the biggest firms on China’s two big exchanges, in Shanghai and Shenzhen. It’s up 88% this year, in dollar terms. It will probably crash soon.It’s not a crime scene yet. But just you wait. After the crash, there will be accusations of fraud, negligence and general misbehavior. If it’s a big enough crash, we would consider getting Foxtel to watch some of the riots on the street live. For smaller riots, we will stick with Youtube.Then again, no crime is committed when the market separates a fool from his money. In fact, it’s a kind of economic justice. Anyone fool enough to believe you can get something for nothing is going to have his lunch eaten sooner or later. “People get what they deserve, not what they expect,” so says Bonner’s Law of Perverse Outcomes.What’s most surprising at times like this is...
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