China BULL Stock market is made up of first timmers trading in a capitalsitic stock market environment. There newbies ! A 1,000,000 plus new accounts trading stocks every year or month ( cant remember ). When this crowd goes for the gate, watch out !!!
More than one-10th of China's 90 million-plus stock accounts were opened this year, compared with just 5.2 million opened in all of 2006, while turnover in Shanghai's A shares hit a record 202.7 billion yuan on Tuesday, 10 times the year-ago level.
Are any Chinese indexes optionable? If so would any of these newbie Chinese investors be smart enough to insure their positions?
The rate of new account opening is increasing exponentially . Number of New A-share Account Opened 2005: 850k 2006: 3.08 millions 2007 Jan to Mar: 5 million 2007 April: Average 1 million weekly 2007 May: Expect the rate to rise above 2 million weekly China has 1.3 billion populations, only 90 million have share trading accounts. As long as record high number of new entrant keep buying the stocks, the share price will not have any chance to come down. Unlike USA negative saving rate, China still have huge amount of savings in the banks. There is simply too much liquidity in the banks. 3 Month Shibor 2.95% is lower than Mar CPI 3.3%. People start to realize that their savings account interest rate is too low and begin to transfer their money to stocks market. Even primary school student use their parents account to trade, street cleaner join the long queue to open account too, the party is just too hot to miss.
Doesn't anyone understand that China isn't lke Detroit, St. Louis, or even New Orleans? You can't just say that because the population is 1.3 billion and there are only so many accounts open there are limitless bounds for more to be open...that's fucking mentally retarded. You're using apples to measure oranges. True, the Chinese historically have a penchant for gambling and might have some savings. You're not even looking at age dispersion, let alone wealth dispersion: http://www.census.gov/cgi-bin/ipc/idbpyrs.pl?cty=CH&out=s&ymax=300
To compare China with Detroit or any city in US is simply the most silly idea. Shanghai growth rate alone can even exceed the total growth rate of New York + Chicago + Los Angeles. China has around 700 million people age between 20-60, we just need 20% (around 150 million or half of US population) to be rich enough to drive the stock market. Currently, only 91 million has account. You can see that the new account open party still can last for a while. US market is already mature with limited new entrant. Well Shanghai market is still young and energetic which has weekly 1 million (still increasing) new entrant. Assume they just invest 10k(of course they can afford much more than 10k), everyweek Shanghai stocks market will have 10 billion fresh funds from retail players chasing limited supply of shares. We don't need to look at age/wealth dispersion to know that. Only the mentally retarded dont understand this.
You also can't get it too. You need to understand not all 1.3billion is poor. Income gap is very huge, the top 20% is all we need to drive the market.