Shanghai 4000
WSJ:
China’s benchmark index ended above the key 4000 level for the first time, amid a strong demand for blue-chip stocks that outweighed profit-taking pressure…The Shanghai index more than doubled last year and has risen another 50% so far this year, analysts said. Attracted by the strong performance of the stock market and the potential for high investment returns, retail investors have been pouring into the market in the past months.
Investors opened 4.79 million new Class A-share accounts in April, compared with 3.08 million for the whole of 2006, the state-run Shanghai Securities News reported Wednesday. Large-capitalized blue chip Industrial & Commercial Bank of China rose 5.5% and Bank of China gained 7.8%. Baoshan Iron & Steel rose 4.7% and China Yangtze Power gained 2.9%.
Former Morgan Stanley chief Asian economist And Xie warned that Shanghai was in a bubble at the beginning of 2007 — and that was before that market rose another 50%.
Readers would be well advised to look into the book The Go-Go Years, a tale of the stock market that begins on the first Earth Day, April 22, 1970, the day that Ross Perot lost $450 million of his net worth (a lot of money at that time) in the amount of time it took to fly from Dallas to New York. You will be perhaps surprised to see how the foolish preoccupations of that time resemble those of our own; you will be perhaps surprised to see just how much the go-go 60’s and its roaring stock market resemble our era.
May 10th, 2007 at 7:49 am
Former Morgan Stanley chief Asian economist And Xie warned that Shanghai was in a bubble at the beginning of 2007 — and that was before that market rose another 50%.
If a speculator had reacted by putting down a dollar as collateral for a short position in the Shanghai market, the net position would be worth fifty cents less than six months later.
Obviously there is a pile of money to be made by identifying the high, but the Chinese market is not a train I’d care to stand in front of, be it headed uphill or down.