Chinese Market Implosion

Discussion in 'Trading' started by Spectre2007, May 22, 2007.

  1. Any measures of volatility being used to track chinese market?

    Chinese market can continue to rally, the only thing that can stop it is profits dwindling or a tax measure instituted by the government.

    And profits are being fueled by the global liquidity spurt. When world starts pulling back the liquidity, the chinese market will implode.

    BOJ very hesitant to raise rates, and the carry trades continue. And FED is suppose to be cutting rates at the end of this year. The FED will start cutting when evidence surfaces that our economy is slowing.

    So slowdown in profits would have to occur here first with a impending recession. Then profits overseas should slow too. So a chinese event wouldnt start unless, a tax measure is introduced or profits start slowing.
     
  2. warning signs:

    1) chinese capital gains tax
    2) dollar/yuan appreciation
    3) protectionism/tariffs on chinese goods
    4) non friendly US administration
    5) BOJ serial rate increase
    6) US recession
    7) profits dwindling
     
  3. Mvic

    Mvic

    Company profits and Yen carry trade have nothing to do with China bubble which is fueled by Chinese reatil taking their money out of everything else and throwing it in to the stock market like some drunk poker player saying "all in" with his life savings.

    https://www.thefuturestrader.us/archiveTA/tedbits-May18-07.pdf

    The rising yuan is killing profits along with rising commdity prices. Rates in China are so low that the Yen carry trade doesn't work there.

    I wonder how many people here realize that in order to put money in to your Chinese brokerage account from your Chinese bank you need to actually take your savings out of your bank in cash and then physically take that cash over to your brokers office. They don't use checks. Also, you need to justify to the bank why you are withdrawing your funds. We are talking about a very unsophisticated sytem and even more unsophisticted investors who are only going to come out of this unscathed if their government allows them to.
     
  4. thanx for the link that was a good read.
     
  5. The well connected individuals will start a rumor about a tax, and it will cause a run on the bank/casino. The well connected will start liquidating before the rumor is started.

    Hang Seng Futures Open Interest spike on a downward move. People in the know positioning.


    Results:

    US Treasury spike initially
     
  6. The may be NO china bubble

    has that ever occurred to anyone?

    Look at the Dow..it has risen from 1000 to 10000 in the span of a decade and it didnt implode
     
  7. It's human nature to declare anything that doubles within a lifetime to be a bubble. It just looks expensive so it's a bubble. Of course, could never be that something was previously mispriced and just appreciated to "fair value", no, it's always a bubble :p
     
  8. I would define a bubble as when outsiders (i.e. non market professionals) leave their job to make a living speculating full time. Markets where the inexperienced can make money easily are a temporary phenonema.
     
  9. and ultimately painful as the learning phase occurs.
     
    #10     May 23, 2007