From: http://www.minyanville.com/articles/Fed-China-Correlation-Credit/index/a/12859 "The reason correlations are creeping up is that the rally is not being led by investors buying individual stocks, it is being led by index buying. I see a large and unnatural buyer (the buyer wants to pay the highest price possible) in indexes every day. I suspect it is the Bank of China buying U.S. stocks with sterilized trade dollars. Stocks that want to go down because investors deem the fundamentals deteriorating are eventually dragged up with the rest of the market because of the index buying. Index buying infers that participants just want exposure to stocks regardless of fundamentals. This increases risk. When trade slows down (as it is), there will be less trade dollars to recycle. When debt gets too high there will be less sterilization and lending to buy stocks." Can't be china buying US stocks. All these great analysts say there is no relation between Chinese financial markets and US financial markets.
Are any of you clucking hens invested in the Shanghai market? No? Ok then, stop your clucking, it is irrelevant.
China doesn't matter, it's way way over valued. With today's drop, it's still 50% above the last peak
I'm glad it is tanking..let those Chinese experience a real sell off for once... As long as I'm making money in the market **** em'. Let em' eat cake. The US markets don't go up 1% every day so why should theirs without recourse? I hope it falls to 3000..a great reality check
The earlier China drops seriously and corrects and weeds out the most insane speculation the better. The higher that market will go and the more people it sucks in, the worse the fall. The biggest risk here probably is it could drive their entire economy into a recession if there is a massive consumer credit default after they all blow up their leveraged trading accounts. No idea how realistic that is (trading account $$$ vs GDP $$$) but that would be the only way I could see a real world spill-over to happen. .
The Chinese government just allocated $300 bil. out of some $1 tril. of their trade surplus to diversify their portfolio (i.e. have you noticed US bonds going lower while indices worldwide are getting incessant bids?) to compensate for their strengthening RMB. It has nothing to do with the Chinese markets and their participants.
I understand this argument, but I don't buy that a crashing of the market ultimately has no effect on our market. Our markets and economies are strongly intertwined. From: http://www.usnews.com/usnews/biztech/capitalcommerce/070530/is_america_at_chinas_mercy.htm "what would happen to America if there were a hard landing in China?" "Will Hutton, author of The Writing on the Wall: Why We Must Embrace China as a Partner or Face It as an Enemy: Because the country has been so open to imports, has been the single most important stimulus to the Asian and, thus, world economy over the past five years, China's stagnation would trigger a global slowdown, maybe even recession. On the plus side, oil and commodity prices would fall. On the negative side, there would be all the ills of a slowdown, but on top there would be major financial implications. The World Bank estimates that if China's growth rate fell by just 2 percent, up to 60 percent of China's bank loans would become nonperformingâso threatening both China's and, via Hong Kong, Asia's financial system. The flow of saving to finance the U.S.'s deficit would dry up, probably forcing U.S. interest rates upâso worsening the economic slowdown." "Kenneth Rogoff, economics professor at Harvard University: A sharp slowdown in Chinese growth represents the single biggest risk to U.S. and global growth today.... The immediate impact on the United States would be through a sharp rise in interest rates and market volatility, and a concomitant drop in equity and housing prices. The U.S. may not export a lot of goods to China, but it sure exports a lot of treasury bills and other bonds. Over time, if the meltdown persisted, the U.S. would suffer because globalization, and China in particular, has been a major factor in helping spur innovation and productivity growth."