China Bubble Analysis

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China's Bubble Will Burst. And Painfully
2009-04-30 03:10:00
From Business InsiderOne more bubble, please. After the bubbles in technology, housing, and commodities, we saw the mother of all bubbles: the one in global liquidity. The world economy seemed to require bubbles for its continued functioning.I get the distinct feeling that investors’ prayers are now being answered: There's a new bubble now - or an old one is being re-inflated, depending on your perspective even as I type this. I’d like to call it the Troubled China Revival Program (TCRP).Why start reserving bubble-naming rights? Well, I recently received an email from a friend that had the following subject line: “China … Record Loan Addition, Record Money Supply, Record Auto Sales, Record Imports of Copper, Iron Ore, and Coal, Strong Property Sales.”I checked every figure (the hyperlinks above are mine), and every single one checked out. I couldn't quite believe what I was reading. I had thought China was in a spiraling-down recession. But even the decline in electricit...
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China Confronts the Global Meltdown
2009-01-03 18:16:00
Guatemala TimesBEIJING - For three decades, China has been growing at an average annual rate of 9.8%. For most of this time, world markets were favorable, with no major global economic or financial crisis or slowdown. Yes, there were regional crises such as Southeast Asia's financial turmoil of 1997-1998 or the collapse of Japan's housing bubble in 1990 and America's high-tech bubble in 2000. But none of these proved a serious obstacle to China's long boom.The past three months, however, have seen a significant slowdown in China's exports, domestic investment, industrial output, and tax revenues. A major slowdown seems to be looming. Will China's rapid growth persist?I believe it will. Within China, the current slowdown is mostly homemade. Since 2004, China's government has sought to cool an overheating economy by bringing the growth rate down from 12% to a more sustainable 8-9%. It even began to tax exports in order to reduce the trade surplus.Of course, if Chinese policymak...
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Chinese workers protest at closed toy factory
2008-10-17 20:11:00
From International Herald TribuneDONGGUAN, China: Hundreds of workers protested Friday for a third straight day outside a large toy factory that closed in southern China amid a global slowdown that has begun hurting Chinese manufacturers.About 500 workers were milling around outside the factory in the city of Dongguan as police looked on. The laborers are demanding unpaid wages from the factory's Hong Kong owner, Smart Union Group (Holdings) Ltd., which had three factories in Dongguan in Guangdong province.The factory closed Wednesday, the same day the company issued a notice to Hong Kong's stock market saying it was suspending trading of its shares pending the release of an announcement. Calls made to the company's Hong Kong main office were not answered.The Southern Metropolis Daily, one of the most popular mass-market dailies in Guangdong, reported on its Web site Thursday that workers were shocked that the factory had closed. Unidentified laborers were quoted as saying the pl...
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Global market woes cast chill on China fund-raising
2008-10-17 20:09:00
From ReutersSHANGHAI (Reuters) - Listed Chinese firms put more than $1 billion of fund-raising plans on ice on Friday as the global credit crisis and falling share prices begin to cast a chill over China 's fast-growing economy.Chinalco, China's largest aluminum producer, and its listed unit, Chalco (601600.SS) (2600.HK), put on hold the planned issue of a combined 8 billion yuan ($1.2 billion) worth of five-year corporate bills. Traders said the move could be related to the failure of Lehman Brothers or linked to potential production cuts the company was planning.Sichuan Hongda (600331.SS), which makes zinc oxide and other chemicals, said it had canceled a 2 billion yuan share placement while power generation equipment maker Lanzhou Great Wall Electrical (600192.SS) called off a placement worth 367 million yuan."The weakness in the stock market is now spreading to the real economy, and the government still appears not to be doing enough," said Jin Dehuan, senior economist at the S...
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Buffet bets on Chinese maker of hybrid batteries
2008-10-16 22:15:00
From Shanghai DailyLEGENDARY investor Warren Buffet has agreed to buy stakes in a private company in China.In the midst of the financial meltdown in Wall Street, MidAmerican Energy Holdings Co, a subsidiary of Warren Buffet's investment vehicle Berkshire Hathaway Inc, announced late last month it will purchase 225 million shares of Shenzhen-based BYD Co Ltd, representing around 10 percent interest.The investment is valued at HK$1.8 billion, or about US$230 million.Normally people in the business world would listen when Buffet talks, especially when he talks with his wallet.But the message delivered with BYD this time seems, on the surface, to contradict what he has been preaching ?? invest in name-brand companies with good cash flows at a good price for the long run.For example, these include companies like Wells Fargo Bank and American Express in which he has been holding large positions for decades.Warren Buffet rarely invests in high-tech companies, as he once famously said that...
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Can China's banks survive the financial storm?
2008-10-16 22:12:00
From ReutersBy Michael Flaherty and Samuel Shen - AnalysisHONG KONG/SHANGHAI (Reuters) - With signs of cracks appearing across China's credit system, concerns are growing that the country's banks may be ill-equipped to handle a drop in the Chinese economy.Corporate collapses and defaults in the last few weeks, together with a tightening interbank lending market, show that China's banks are hardly in the clear when it comes to negotiating their way through the global financial turbulence.Some of the country's financial groups, including large, state-run institutions such as ICBC and China Merchants Bank, have the benefit of government ownership and relatively small exposure to the West's subprime mortgage mess.The main concern is focused on smaller commercial banks, whose regional concentration makes it harder to withstand a downturn than the larger, more diverse state-run banks.There are around 8,500 rural financial institutions and 125 city commercial banks, with Bank of Shang...
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From boom to bust, China stocks casino loses golden luster
2008-09-22 20:47:00
From The China PostBEIJING -- China's middle-class moms and blue-collar pensioners were among the world's most avid andwindow.google_render_ad();successful investors last year. Now their record is one of lost fortunes, broken families and protest.China's stock market is down nearly two-thirds in eleven months and the anger of millions of ordinary citizens has unnerved the country's stability-obsessed government.Beijing launched an unprecedented rescue package that drove up most stocks the maximum permitted 10 percent on Friday.Yet amateur investors have been badly burnt and may think twice before venturing back into the casino-like market."It's good the government has come in to rescue the market, but I'm afraid that we haven't hit rock bottom yet," said Zhan Ye, a driver for a property company who used to order stock trades from his car as he listened to the radio news."As soon as people see prices falling, they'll just get scared and pull their money out again," he said.Ch...
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Why China Won't Come to the Rescue
2008-09-21 19:25:00
From TimeIf "once burned, twice shy" isn't an old Chinese proverb, it probably should be. As Gao Xiqing, the chief investment officer of China 's $200 billion sovereign wealth fund, meets in New York City this week with Morgan Stanley CEO John Mack to discuss increasing the Chinese government's stake in the venerable — and flailing — investment bank, he bears an obvious burden. Last December, the CIC (the China Investment Corp.) invested $5 billion for a 9.9% stake in Morgan Stanley (for which the bank must pay CIC a 9% annual dividend until 2010). On paper, that investment is now down more than 25%. Worse, Beijing paid $3 billion for a piece of the Blackstone Group just ahead of the private-equity firm's initial public offering last June — an investment that occurred about a nanosecond before the so-called subprime crisis began annihilating value on Wall Street and beyond. Fairly or not, the Blackstone stake has since become the symbol in China of a naive bunch of foreigne...
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Asian countries halt Chinese milk imports
2008-09-21 19:20:00
From Radio Netherlands WorldwideBrunei, Malaysia and Bangladesh have halted imports of Chinese milk products following a similar move by Singapore earlier this week. The measures are the result of the melamine scandal which has claimed the lives of four babies in China. More than 6,000 babies fell ill after drinking formula milk contaminated with the industrial chemical melamine.The Chinese authorities are trying to limit the damage by strict inspections and massive recalls. The European Union has introduced additional inspections although no suspect Chinese milk products are being sold there. The US authorities are also concerned about possible public health risks. Adults are less likely to be affected.[Read more]
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Chinese stock markets sink despite rate cut
2008-09-16 20:12:00
From The Australian BusinessThe Shanghai stock exchange's benchmark index fell by 4.47 per cent, crashing past the 2000 points barrier to close at 1986.64.The market is thus worth less than a third of its value at its peak in mid-October last year, when it reached 6395.76. This marks the most rapid decline of any major market, even in such an internationally gloomy year.The People's Bank of China, the central bank, had signalled on Monday evening -- the day was a public holiday in the Chinese world, for the Mid Autumn Festival -- a new priority: stimulating growth.Fighting inflation -- which reached 8.7 per cent in February -- and "overheating" had been its previous focus, as it increased interest rates six times in 2007.But the PBOC cut its benchmark interest rate by 27 basis points on Monday to help stimulate the economy, to 7.2 per cent, and also cut financial institutions' reserve ratio requirement by one percentage point to 16.5 per cent from September 25 -- although this wi...
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GM Executive Sees China Auto Market Growing 11%-12% This Year
2008-09-16 20:11:00
From CNNBEIJING -(Dow Jones)- General Motors Corp. (GM) Asia Pacific President Nick Reilly on Tuesday cut his prediction for this year's growth in China 's auto market to 11% to 12%, down from the 12% to 15% growth he predicted in March.China vehicle sales in August fell 6.3% from a year earlier, marking a reversal for a market that has been a bright spot for global automakers. Reilly said he expects those figures to bounce back soon.Vehicle sales in the first eight months of this year rose 13.94% from the same period in 2007 to 6.48 million units, according to the China Association of Auto mobile Manufacturers.Reilly attributed the downturn in the auto market to the Beijing Olympics in August, a sharply declining Chinese stock market, and an increase in fuel prices in June, but he added that "underlying demand is still there."Reilly said he expects vehicle sales to return to double-digit growth this month or next.He said he expects China's auto market to maintain 10% to 15% growth...
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AIG's fate hangs in balance as talks break down
2008-09-16 20:08:00
From TelegraphThe fate of global insurance giant American International Group hung in the balance after talks aimed at raising a $75bn lifeboat loan appeared to have broken down.Talks between senior bankers and US financial regulators over the banks raising some form of loan for AIG have now ended, although the situation remains fluid and talks could resume, The Daily Telegraph understands.Should the talks not resume, AIG's only option appears to be if the US government changes tack and agrees to some form of public solution to the insurer's funding gap.To date, both the US Treasury and the Federal Reserve have been adamant that taxpayers money will not be used to save AIG - but given the implications for the markets if the company were to collapse, it remains to be seen whether that position might change.AIG's problems worsened overnight after a series of damaging credit downgrades jeopardised the company's ability to raise new money, with the company having to deal with a $14....
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HK shares hit 23-mth low on Lehman downfall, AIG worries
2008-09-16 20:05:00
From ForbesHONG KONG, Sept 16 (Reuters) - Hong Kong's shares tumbled 5.4 percent to a near two-year low on Tuesday after Lehman Brothers sought bankruptcy protection and fears about the U.S. financial system knocked equity markets down across the world.Financial plays tumbled after Lehman failed to find a rescuer, insurer AIG struggled for survival and Merrill Lynch was snapped up by Bank of America all of which unleashed a wave of global stock selling on Monday, when Hong Kong markets were closed for a holiday.Analysts said fears over the U.S. financial system would carry on plaguing the market and drag it yet lower as long as investors remain unsure whether U.S. markets have hit bottom.'There's a lot of issues investors need to deal with over the next few weeks-- first of all, what's going to happen to AIG?' said Alex Tang, research director at Core Pacific-Yamaichi International.AIG, thrown a $20 billion life-line by New York state, came under renewed pressure as ratings age...
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Chinese economy where to go post-Olympics
2008-09-03 19:20:00
From China ViewBEIJING, Aug. 28 (Xinhua) -- As the 2008 Beijing Olympics ended in a splendor of fireworks, concerns over a post-Games downturn for the Chinese economy re-emerged.History shows that some host countries had experienced post-Olympic declines because investment dropped, such as Tokyo and Seoul.Japan witnessed a drastic fall in growth the year after the 1964 Games, down to 5.2 percent from the year-earlier 13.1 percent. The Republic of Korea saw the rate slip from 10.6 percent to 6.7 percent in 1989.Will China follow the same pattern? The world ponders.WORRY OVER POST-GAMES ECONOMY JUSTIFIED OR NOT? The capital's gross domestic product (GDP) was expected to register an average annualized 11.8 percent growth between 2005 and 2008, when the city was investing for the Games, said Chen Jian, the Beijing Olympic Economy Research Association deputy head.The expected growth was, on average, 0.8 percentage points higher than the average rate for the five-year period from 2001 to...
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Noted Chinese official: Chinese economy not in downturn, but adjustments ne
2008-09-03 19:18:00
From China View BEIJING, Sept. 3 (Xinhua) -- China is experiencing a temporary economic slowdown rather than a downturn, said Cheng Siwei, former vice chairman of the Standing Committee of the National People's Congress, raising the prospect that adjustments might be necessary. "The domestic inflation, severe winter weather, devastating earthquakes and the weakening global economy in the first half year have pushed the country's economy to the edge of decline, but it is getting better", Cheng said in a China Central Television talk show aired on Tuesday night. He said according to the business cycle theory, any economy develops in cycles, and 10 years constituted a cycle for China's economy. The decade from 1990 to 2000 saw about a 14 percent growth of gross domestic product (GDP) in the first two or three years and then a slowdown to about 8 percent in the remaining period. Economic growth continued rising from about 7.3 percent per annum in 2001 to 11.4 percent in 20...
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Everyone Wants the Commodity Bubble To Be Pricked
2008-08-02 18:23:00
From Seeking AlphaCrude Oil has corrected over 15% from the top. Gold, Silver, Copper, Wheat and other commodities have also retreated from their respective highs. The heavy selling witnessed in the last few days has raised concerns that the air is leaking from the Commodity bubble and that a multiyear bull market might end soon.It has been well established of late that the commodity market has exhibited many of the characteristics of a bubble. Thus we may be very well at the beginning of a bursting asset bubble. Historically, price bubbles have been destined to burst under their own weight, and at a moment's notice. As the charts of the dot-com and housing bubbles show, the fall can be just as dramatic as the climb.Now, when the bubble in the commodity space is showing signs of collapse, an analysis of various factors that inflated the same will make for an interesting study. Now, when the bubble in the commodity space is showing signs of collapse, an analysis of various factors t...
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Dramatic buildings sprout in Beijing
2008-08-02 18:21:00
From San Francisco Chronicle(08-01) 04:00 PDT Beijing -- It rises next to the Stalinist stolidity of the Great Hall of the People like a huge, glass egg. Subversive in form, French architect Paul Andreu's audacious creation, which opened last winter, is utterly traditional in function: It is China's new National Center for Performing Arts.Visitors enter the building by going down an escalator, passing under an artificial lake that can be seen through clear screens, and funnel themselves into the cavernous complex, which includes an opera hall, a concert hall and a theater. It is said to be the largest performing arts center in the world.Andreu's egg, probably the best-known new non-Olympic building in central Beijing, is just one among hundreds of big, new construction projects - shopping malls, hotels, high-rise apartments, office towers, four new subway lines - that have sprouted all over the Chinese capital. Beijing is determined to hurtle into the modern age as fast as possib...
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China and freedoms
2008-08-02 18:18:00
From Times OnlineSir, Did Jonathan Fenby (Opinion, July 31 ) genuinely believe that China would improve its human rights record once it got the Olympic Games? Of course, quite the reverse has happened. Being awarded the Games was a sign to China’s Communist rulers that the democratic world wasn’t serious about challenging their political oppression of its people and Tibet. So, it is no surprise that further clampdowns are being introduced to ensure that nobody spoils the show that China wants the world to marvel at. Like despotic regimes before them, they believe that good PR will blot out the murky reality.Unfortunately, the ability to prick the propaganda bubble is limited and is perhaps confined to the competitors. What I would long to witness is for one of the winners to make a stance for democracy. This year’s Games take place on the 40th anniversary of the Mexico Games. The memory of Tommie Smith and John Carlos demonstrating their solidarity with the Civil Rights moveme...
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China banks tank on fears of US mortgage lender fallout
2008-07-15 18:43:00
From ReutersHONG KONG, July 15 (Reuters) - Shares in top Chinese lenders tanked on Tuesday, with the nation's biggest bank ICBC (1398.HK: Quote, Profile, Research) falling over 5 percent, as investors fretted over their likely exposure to the beleaguered U.S mortgage lenders.Shares in ICBC and Bank of China (3988.HK: Quote, Profile, Research) fell the most in a month after other banks in the region were seen to be invested in troubled Fredie Mac (FRE.N: Quote, Profile, Research) and Fannie Mae FNMN>. Other Asian financial stocks also headed south on Tuesday.But analysts said Chinese banks were only invested in the safer option of agency bonds issued by the U.S. mortgage lenders and did not have any equity exposure."Shame on institutional investors who can not differentiate between bonds and equity. It is really unjustified to say that Chinese banks will be badly impacted by this latest crises. This is nothing like the subprime mortgage crisis," said Samuel Chen, an analyst with JP ...
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U.S. subprime mortgage crisis hits Discount and Leumi too
2008-07-15 18:41:00
From HAARETZShares of Israel Discount Bank and Bank Leumi had a very bad time last week - Discount fell about 12% and is now down 33% from the start of the year, the worst performance by any of the five large banks. Leumi dropped 10% and is now down 17% this year.The pressure on the two stocks comes from overseas. The huge losses racked up by the semi-governmental U.S. mortgage lenders Freddie Mac and Fannie Mae have brought these U.S. firms near the verge of bankruptcy, said a number of senior U.S. government officials at the end of last week. Fannie Mae shares have plunged 74% since the start of the year, and 85% over the past 12 months. Freddie Mac shares performed even worse: down 77% since the start of the year, 87% over the past 12 months.And what does that have to do with Leumi and Discount? Discount has a large investment in the two firms' mortgage-backed securities, and if as feared Fannie and Freddie have to raise a total of $75 billion in the near future - a near-impossi...
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China stats bureau economist warns on economic slowdown
2008-07-13 05:30:00
From QuamnetFUZHOU, China (MNI) - China's economy is in its most difficult position in five years, a senior official with the government statistics agency said Friday, warning of a looming slowdown on the back of shrinking external demand and rising costs.National Bureau of Statistics chief economist Yao Jingyuan said that GDP will likely grow at around 10 pct this year - higher than the average 9.7 pct expansion rate of the last 30 years - but warned of the risks posed to the economy that are rooted in the US subprime crisis and record oil prices."China's economy is facing the most difficult and complex conditions, both domestically and globally, in the past five years," he told a conference FridayYao's comments come less than a week before the scheduled release of first half economic data which analysts expect will show a pronounced slowdown from 2007's torrid 11.9 pct expansion.Trade numbers released Thursday showed a bigger-than-expected fall in export growth, raising concer...
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Eurozone economy losing momentum
2008-07-13 05:26:00
From China ViewBRUSSELS, July 12 (Xinhua) -- The eurozone economy is losing momentum after two years of strong recovery, with clear signs of marked slowdown mainly due to long-lasting financial turmoil and soaring oil prices.In its spring economic forecasts released in April, the European Commission described the eurozone economic outlook as being "extremely uncertain," but a sharp slowdown was almost certain despite an out-of-expectation performance at the beginning of this year.The latest figures from Eurostat, the European Union (EU)'s statistics office, showed the economy of the 15 countries sharing the euro grew by 0.7 percent in the first quarter of 2008 over the previous three months, up from 0.4 percent in the last quarter of 2007.Although the eurozone economy managed to remain resilient in face of financial turmoil and record high oil prices, Luxembourg Prime Minister Jean-Claude Juncker, who also chairs the euro group, warned earlier this week that the economic growth in ...
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Fed Sees Turmoil Persisting Deep Into Next Year
2008-07-09 18:50:00
From The New York TimesWASHINGTON — Federal policy makers have concluded that the turmoil plaguing the housing and financial markets is likely to spill deep into 2009, becoming one of the most significant domestic problems to confront the next president when he steps into the White House in January.Ben S. Bernanke, the chairman of the Federal Reserve, publicly indicated on Tuesday that he believes the problems will persist into next year when he outlined a series of steps the Fed is considering in the coming months.One such step would extend low-interest lending programs to Wall Street’s largest investment banks into next year. The programs, one of which was set to expire in September, can continue only if the Fed issues a finding that there are “unusual and exigent circumstances” that justify them.Mr. Bernanke also recommended that Congress grant the Fed broader authority to monitor and supervise the financial markets to assure greater stability in the future. But with time...
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Taiwan says companies had $1.4 bln subprime losses
2008-07-09 18:49:00
From ReutersTAIPEI, July 9 (Reuters) - Taiwan financial firms have suffered losses of T$42.572 billion ($1.4 billion) since August 2007 in investments related to U.S. subprime products, the island's top financial regulator said on Wednesday.Of the total, banks took a hit of T$34.172 billion and insurance companies lost T$8.4 billion, the Financial Supervisory Commission (FSC) said in a statement.Subprime problems in the United States have pushed global financial markets lower over the past year, including Taiwan shares, although the island's financial firms had relatively limited exposure."The total impact on the financial industry was limited," Gordon Chen, chairman of the commission, told a news conference."The FSC will supervise financial companies to improve their risk control," he said.Chen's comments came after Taiwan's stock market closed on Wednesday. The island's financial sub-index closed down 0.72 percent, underperforming the broad market , which ended 0.05 percent l...
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Three Stocks to Double Your Money in the Next Asian Market Bubble
2008-07-05 05:49:00
From Daily WealthFlights between China and Taiwan start this weekend. The first plane will fly from Taiwan to China on Saturday morning and then return one hour later. China Airlines, the largest Taiwanese carrier, will operate the flight.Saturday's flight will mark the first direct scheduled flight between China and Taiwan in 59 years.In 1949, Taiwan banned direct flights with China. Taiwan used to be part of China. But in the 1940s, China had a communist revolution. The losers of the war – the business and intellectual elite – fled to Taiwan and broke ties with mainland China. Officially, China and Taiwan are still at war.In March, a new president won power in Taiwan. This new president wants to mend Taiwan's relationship with China... and eventually unify the two countries. This was the basis of his election platform. Restoring transport links between the two countries was his first step.Starting on Saturday, 36 flights will connect Taiwan and China every weekend. Several a...
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India and China Housing Markets on the Bubble
2008-04-25 19:40:00
From NUWIRE InvestorHousing woes in the U.S. have been a hot topic of late, but two of the world's most populous countries may be in for a housing crisis worse than what the U.S. is experiencing.Both China and India are watching real estate prices soar, leading many to question how long the market will last.China for example, is boasting prices that would be considered absurd in the U.S. Three-bedroom apartments in cities such as Guangzhou or Shanghai are running for upwards of $300,000. These prices are especially high considering that the average salary in China is $160 per month, according to BusinessWeek.In Shanghai, some one million residences were under construction in 2006, which was just half the amount of new construction in the entire U.S. in 2004, according to the Houston Chronicle. With Shanghai representing almost 20 percent of China’s property value, the bubble is seriously on edge, with many homes remaining empty. Shanghai’s property vacancy rate is roughly 25 pe...
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What's Behind the Oil Bubble
2008-04-25 07:32:00
From Washington PostTech stocks, real estate... crude oil? Has the oil market become the latest of a series of financial bubbles, fueled by low interest rates and cash sloshing around in search of quick returns? Probably.But even a bubble can keep floating for a while if enough people keep pumping it up, and it looks like that is what individual investors and financial wizards at pension funds are doing by injecting more and more money into commodity funds. Guessing when oil prices might fall back to earth is a treacherous business; Wall Street is littered with analysts who said prices would drop $20, $30 or $40 ago.Crude oil topped $119 a barrel on the New York Mercantile Exchange yesterday, up more than 25 percent this year and more than double what the price was just 14 months ago. That's astonishing given that 1) there has been no new disruption in supplies, 2) the world's largest oil market - the United States - has been relatively stagnant amid economic slowdown, 3) the pros...
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Don’t Let China’s Stock Market Slump “Decouple” You From its Massiv
2008-04-25 07:30:00
From Money MorningTHE PEOPLE’S REPUBLIC OF CHINA: When Asia expert Keith Fitz-Gerald first returned to this country a week ago, he was overwhelmed by a single impression."This place is one big construction site," Fitz-Gerald said. "You cannot turn around without finding scaffolding, piles of materials, construction equipment and the like [no matter where you look] here."With the U.S. economy suffering its worst downturn in years, and China’s stocks down more than 40% in the past six months, the bustle of construction-related activity in this Asian giant seems incongruous - if not downright contradictory.Surprisingly, it’s neither. This divergence between China’s ailing stock market and its still-spunky economy is an early manifestation of "economic decoupling" - an emerging trend being fueled by the globalization of worldwide markets.In fact, China’s ability to maintain its frenetic growth rate of nearly 11% per annum while the U.S. market could well be mired in a recessio...
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Tax cut boosts China stocks
2008-04-25 07:27:00
From Los Angeles TimesThe Shanghai index rises 9.3% after Beijing reduces a levy on transactions. It's the biggest daily gain in seven years.SHANGHAI -- After months of stock market declines that saw Shanghai's composite index fall nearly 50% in half a year, China 's government has stepped in and given investors a boost.Officials cut the stock transaction tax to 0.1% from 0.3%, a long-awaited move that rolls back the so-called stamp tax to the rate it was a year ago, when Beijing raised it to cool what was then a heady market. The cut came on the heels of a separate government measure to limit sales of large blocks of shares to off-market transactions.On Thursday, the Shanghai index surged 9.3%, the biggest daily increase in seven years, to close at 3,583. That's still a long way down from a record high of 6,092 in mid-October, but now some investors and analysts think China's great bear market is over. The index was up 0.3% at midday today.The Shenzhen composite index, associat...
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A study in pain: The Chinese stock market
2008-04-05 21:24:00
From Los Angeles TimesChina’s stock markets were closed for a holiday on Friday, and many Chinese investors may be thankful: That was one less trading session in which to lose money.As the nation’s stock bubble continues to deflate there are more calls for the government to take action. But it isn’t clear what authorities could do, even if they were willing.China’s once red-hot markets have been among the world’s worst performers this year. The Shanghai composite index is down 34.5% year to date and down 43% from its all-time high reached in October.U.S. investors in the iShares FTSE/Xinhua China-25 exchange traded fund haven't fared quite as bad. The fund, which is supposed to track the performance of the 25 largest Chinese stocks, is down 33% from its October peak.Still, the losses in Chinese stocks make the slump in the U.S. market look amateurish by comparison. The U.S. Standard & Poor’s 500 index is down 12.5% from its October record high.China’s experience i...
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