The China bubble has already burst?

Discussion in 'Economics' started by turkeyneck, Mar 27, 2008.

  1. I wonder what Jim Rogers has to say about this?


    SAN FRANCISCO (MarketWatch) -- China's already battered stock markets could tumble further against a darkening economic backdrop ahead of August's Olympics Games, as the U.S. recession begins to take its toll and China further tightens its monetary policies to combat runaway inflation.

    http://www.marketwatch.com/news/sto...533-4705-8DFD-973FA38AE8D9}&dist=MostReadHome
     
  2. You know, if you look at the SSEC, from its top to where it ended up last night, it has declined over 40%. (granted, its up about 500% since its low) That is pretty indicative of a bear market to me.

    Its my understanding that it is fairly difficult to gain access to the A&B shares in china. This has been discussed previously on ET. You can do so through one of the closed-end funds on china, typically CAF, which is what I chose. FXI is composed of other share classes, so it is less of a 'pure' china play in my opinion although it probably tracks its index more accurately as an ETF than a CEF (particularly one which has fluctuated from a 15% premium to a 30% discount).

    CAF has been at a 30% discount to NAV recently (during the market sell offs) and has halved in price since september (with a large distribution in December). While I have no idea if this is the bottom, I have taken a small position and may accumulate more depending on market conditions. Main reason to do so (aside from price appreciation) is an indirect renmibi play if there is Chinese decoupling from the USD. I don't think its a probable event, but it serves a useful function in the portfolio as a relative hedge.

    Consult your investment advisor, attorney, CPA, etc... post for entertainment purposes, blah blah blah...I am not an expert...yadda yadda

    Full disclosure: Long CAF
     
  3. You are stupid.
    China's stock market is not closely
    correlated to China's economy.


     
  4. Rogers has said he's "never sold a China share"... wonder if he has now...
     

  5. It might be a good trading tool then, but who in their right mind would want to invest in a stock market that was not tied to the economy.
     
  6. Just for chits and giggles:

    Take a peek at the USD/CNY (yuan) chart for the last year or so. Pretty much like falling off a cliff with a parabolic component.
    So, if you get burned on the equity component of chinese equities by buying at the wrong time, at least the FX component should bail you out somewhat.

    You can figure it out for yourselves.
     

  7. Of course he has. He sold every share at the top, as he'd like to have you believe.

    How else would he get on Bloomberg and CNBC so often?

    He's a genius!!
     
  8. the interest rate for CNY is currently (negative)12.0/(negative)11.0
     
  9. OK, point taken.
     
  10. their bubble will burst after the Olympics and all the projects that have national pride and justifcation for all their spending and devleopment and building efforts. Most of the projects are already well along their way to completion of the major construction efforts.

    after that, well, this year, 2008 was China's coming out party....

    here she is, Miss China....
     
    #10     Mar 27, 2008