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HOT TOPIC Chinese stock market

T

TheGreatBear

Guest
Does anyone speculate that Chine looks like Japan of the 80's before they hosted the olympic games? Some also speculate that there is much corruption in China, for example building 12-13 olympic size sports stadiums, while they have no teams to utilize them after they are built, can anyone shed some light on this? Also 08/08/2008 should be considered a very lucky day in chinese culture as the number 8 is considered to be good luck, maybe many chinese will jump into the stock market ill-informed and then crash the market when they all lose their shirt due to lack of investment knowledge? Anyone else have any speculations, why is China a better investment country then Brazil or Russia, I think it is going to burst personally so I am not making any chinese investments - does anyone else feel the same?
FYI Japan held the Olympics in 1964. And yes, a large recession(worst in a decade since the Korean War) developed after the Olympics.
Korea hosted the Olympics in 1988, and yes, the economy went sour right after the Olympics.
I'll go into a more detailed discussion later on. I don't think that Chinese stocks are a good investment now, I am only covering them from a trader's point of view. Chinese stocks are highly overvalued even from a boom perspective. And of course you have accounting regulations changing in 2007 that allowed companies to mark-to-market their assets and that led to huge increases in "profits" reported.
I think I've mentioned the curse of the Olympics some time before, I'll elaborate later.
 

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T

TheGreatBear

Guest
Soybean acreage 74.8 million acres, I'm locked into a limit down position lol, that was a mistake. Soybeans will prolly hit excess supply this year.
Gold can't recover 50 day MA, looks like a speculative short.
Oil is crashing... Money is flowing out of commodities I guess.
 

Jbellefeuille

New Contributor
Sep 10, 2007
38
9
15
San Francisco
I guess I just showed my age. I think the lack of accounting regulations is the real weakness in addition to the corruption, I mean if Enron could happen here, then I bet there are at least 20 enron's in China.
 
T

TheGreatBear

Guest
I guess I just showed my age. I think the lack of accounting regulations is the real weakness in addition to the corruption, I mean if Enron could happen here, then I bet there are at least 20 enron's in China.

Well, a bull market doesn't help either. In a bull market, accounting that was never really up-to-scratch in emerging markets becomes inevitably worse.
Lots of profits reported from "investments" were due to the rising stock market. Now those profits are gonna turn into writeoffs this year.
Soybean oil seems to have hit ground zero. Open down 4% and currently up, we'll see how it closes. Chart looks bearish for soybeans but I think I'll hold for now. I won't add yet.
 
T

TheGreatBear

Guest
Chinese stocks were weak today, except for financials which did well. Breadth was terrible.
I'm quite tired out so I'll give my little speech on Olympics and bear markets later on, I have Friday off.
Gold looks to be sliding more. Holding beans for now, *shrugs*
EDIT: Looks like USD/JPY is finding some support....
 
T

TheGreatBear

Guest
Oil did pretty well despite surprise increase in oil inventories and held the $100 mark.
Gold might be attempting a bottom, no longer a short, speculative or not.
Agricultural products look pretty nice, I'm holding my soybeans. I'm hearing plenty of talk about how the bear market is coming in commodities and how people who are long lost a ton of money.(they went long at the top of course...) A few weeks ago when soybeans etc climaxed we were hearing stories about people going from 50k to millions. Just when the market started to peak lol...
US equities are interesting. S&P showing support at 50 day MA, doing well despite not so nice economic news. Bernanke starts admitting economic worries, and market rises. Perhaps we are out of troubles, perhaps we are not, perhaps the market is farseeing enough to know what's going on next, but anyway, the upward momentum looks like it'll continue for now.
 
T

TheGreatBear

Guest
On the Olympics:
On the upper-right section of the chart, the countries are as follows respectively(from left-to-right)
Greece Australia US(1984) US(1996) South Korea and Japan
The vertical axis is the GDP growth in each year of the horizontal axis
The red triangle is the year the country held the Olympics. The horizontal uses 0 as for the year the country hosted the Olympics, negative means pre-Olympics, positive means post-Olympics
As you can see, other than the US in 1996, each year a country has hosted the Olympics, it has experienced slower growth the next year. Of course the US economy was diversified enough and large enough to absorb such a "curse"
From what I've read about Japan hosting the Olympics in 1964:
"(1964)...manufacturing overcapacity...financial authorities tightening... rampant speculation in the stock market...And a sharp slowdown in the economy after the Olympics"(My book said recession but from this chart it only shows a hard landing, no recession)
It is ironic that both South Korea and Japan peaked momentarily after the Olympics. China will be the third country to host the Olympics...
It is also interesting to note that the Japan example is very scarcely mentioned. I went to do some googling, some even said "Japan emerged as a important international player after the Olympics"
So China may experience a sharp slowdown after Olympics? Or has the stock market already priced it in? After peaking in October last year, Shanghai has fallen from 6100 to 3446 as of now.
Ok so much for the historical empirical comparisons on the Olympics curse.
 

randallg99

Bronze Contributor
Aug 9, 2007
1,390
179
92
NJ
I read this post last night via my PDA on the way home from a party at some ambassador's house in NYC and I was most pleased that a light bulb flashed in my dim, tired and drunken world but at least I was flabbergasted at this excellent, excellent data++++

makes sense that a lot of their economy is surrounding the olympics... a whole lot of infrastructure is in the spotlight in front of the whole world and China hates embaressment.

by the way, I played the ags early and sold out way too early... used to hold MOS and POT but got spooked when they became parabolic and my trailing stops got too tight.
 
T

TheGreatBear

Guest
Looks like plenty of accumulation days. Western equities are gaining a firmer footing, and Chinese stocks look like they'll bounce for now.


Has there been signs of a slowdown? Profits of industrial companies grew about 16.5% in Jan/Feb comparing with 38% in Jan/Feb of 2007. Respective growth for each quarter in 2007 Yearonyear 43.78% 42.14% 37.02% and 36.7%.
I've read convincing reports that the pessimism in the last few months is rather "wrong." February gorwth in exports was only up 6.5% compared to 20.2% in Jan. However, if you take seasonal factors into account, growth in exports in Feb was 28%. So it's actually acceleration and not slowdown.
Plus, copper stockpiles are near historical lows.
So cautious bullish on Chinese equities and agri commodities. Long term I don't think the US has bottomed yet but I believe we will see higher stock prices in the next few weeks.
 
T

TheGreatBear

Guest
Crap!!! Shanghai down plenty today, ummm... maybe it is really a bear market and I shouldn't try to pick bottoms? Yea maybe.
Well commodities are up...
 

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T

TheGreatBear

Guest
Chinese export growth etc numbers tomorrow. I think they will surprise on the upside tomorrow and amidst the pessimism Chinese equities will rise. Today was a lackluster day, gain but low volume.
 
T

TheGreatBear

Guest
So cautious bullish on Chinese equities and agri commodities. Long term I don't think the US has bottomed yet but I believe we will see higher stock prices in the next few weeks.
Well yea, no bottom seen in Chinese equities yet. Agri commodities doing ok, we'll see if soybeans can break out of the double bottom being formed now. Metals are down, corn failed a rally over $6 for now.
US equities seem to have hit resistance.
Just gonna lay back and watch commodities mostly I guess, this hide and seek game with equities is a pain, I'll just forgo any substantial bounce.
EDIT: Chinese forex reserves rise to$1.68 trillion, huge amounts of hot money flowing in, USD/CNY hovering around 7.
 

randallg99

Bronze Contributor
Aug 9, 2007
1,390
179
92
NJ
wow - big report from china this morning - GDP only grew 10% and income 8%... holy crap!!!!
 
T

TheGreatBear

Guest
Yea the market is forward looking I guess.
New lows in Shanghai.
 
T

TheGreatBear

Guest
Gold falls...it bounced for a few days after I withdrew my bearish move.
I think it'll fall more now, chart suggests it, large drop today.
People are relieved and more money is going into equities. I don't think the worst is over yet, so gold will retrace for now, looking to establish long position at $800 or so.
 
T

TheGreatBear

Guest
Gold at $895 now, stilll heading downward imo.
Not sure if I should hold beans now, since money seems to be leaving gold&oil. Let's see how it affects agri commodities.
Sharp jump in Shanghai today... due to something really irrelevant I don't even feel like discussing in detail. In short, stamp tax for trading slashed to 0.1%. Insignificant move, but market participants know that lots of bottoms in the Chinese market are "policy bottoms". Though this is an irrelevant move, it shows will from the authorities to bolster the stock market. Or the participants think the authorities will follow up with more measures or whatver.
Looks like it might've soothed world markets, USD/JPY rising like crazy.
Are we seeing a correction in commodities? ... To be continued.
 
T

TheGreatBear

Guest
So,the result will be quite different:):smx2:
Yup, things change.
I don't know where the Chinese market will go now. I'll elaborate later, my understanding of the situation is ambivalent and does not show a clear buy.
Getting rid of agri, it appears commodities are buoyed by oil's rise on Nigeria news. The technicals suggest consolidation for soybeans and rice's limit down yesterday are not too supportive. Who knows, oil rises $3 and people start throwing money in commodities again ugh.
 
T

TheGreatBear

Guest
Yup, things change.
I don't know where the Chinese market will go now. I'll elaborate later, my understanding of the situation is ambivalent and does not show a clear buy.
Getting rid of agri, it appears commodities are buoyed by oil's rise on Nigeria news. The technicals suggest consolidation for soybeans and rice's limit down yesterday are not too supportive. Who knows, oil rises $3 and people start throwing money in commodities again ugh.
Pretty good, soybeans closed down nearly 2% after a flat open. Currently short sugar.
Gold/silver looks like downside is still there.
S&P is being propped up, prolly by asset inflation. Consumer confidence at 26 year low and stocks up so that's a sign of strength.
Shanghai... it's up. But it's sparked by the lowering of the stamp tax(from 0.3% per trade to 0.1%). Irrelevant, but it shows the will of the Chinese guv to intervene in the markets. Which has led market participants to anticipate more intervention and so they piled into the stock market.
Pessimism probably has been overdone, and the stock market in the US is buoyed, so Shanghai stock market may continue the bounce. Shrugs. Or the downtrend may continue... Dynamic P/E of Shanghai/Shenzhen top 300 companies is 27! High by US standards and the US has the world's best companies.(the few left are in Japan and Europe....)
Currently no position in nothing. Ok, a small speculative short sugar position established on Friday. Nothing else.

EDIT: Current situation in China is muddy. We see copper inventories at lows. House prices are still up in China year on year(even the latest data shows this), but there have been signs of a potential slowdown(slowdown in profit growth of industrial companies and growth of exports) I must say I've been deliquent in my study of the fundamentals... Sorta hard not to get lazy when the trend is down and a few bottom picking attempts failed. Currently immersed in Rome and loving it :).

EDIT2: I've read reports on US MNCs. Excluding those in the financial sector, the fundamentals for most large MNCs seem wonderful. Or in any case, better than you think with all the talk about worse bank crisis since 1930s.
But in the late 1970s the US economy was actually growing(after excluding inflation) but asset prices kept trending lower. Confidence is what matters, so the issue is pretty complicated. Good fundamentals by large MNCs may not necessarily mean we won't see lower stock prices. But I do recall in the past few weeks, we've see titles like "The Coming Financial Pandemic" and other doomsday articles in magazines like Foreign Policy, Economist etc. Which is usually a sign of extreme bearish sentiment and that does not bode well for bears. The crash on the day of Bear Stearns getting bought out for $2/share also smelt of panic.
So let's see how this plays out, I don't know what will happen, but if there's a definite trend in something I'll attempt to profit off it.
 

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T

TheGreatBear

Guest
I just read this report which I found amusing.
An official from the Ministry of Commerce in China is encouraging Chinese companies to invest in foreign assets "as our currency appreciates and because foreign assets are relatively cheap due to the subprime crisis"
I found it amusing, draw your own conclusions from it.
 
T

TheGreatBear

Guest
Strong bounce in Chinese market, technicals suggest further upside, I'm not buying into it.
Sugar is bouncing off support, so no more short sugar position. I like corn though, http://futures.tradingcharts.com/chart/CN/58 technically it's in an uptrend, it has strong
growth in demand from industrial usage/ethanol etc
US equities meeting with resistance, we'll see what happens, Buffett says recession worse than most expect...
 
T

TheGreatBear

Guest
Corn new highs, gold stronger than I expected. More commentary on the weekends.
 
T

TheGreatBear

Guest
I posted up a chart of the Chinese indices. It looks suspiciously bullish, but I'm not bottom picking.
Corn consolidating at new highs and soybeans are quite strong, perhaps due to Argentina strikes. Corn fell sharply a few days ago, McCain and others were taking a jab at it.
Gold appears to be attractive now that we have oil at $125 with no sign of easing yet. Though technically it broke an H&S by falling briefly below $870, we can't be too superstitious about our tea leaves. No long position yet, but it does appear things are improving for the bulls.
New data convinces me that we probably won't see a bottom too soon in US equities. http://suddendebt.blogspot.com gives excellent commentary, by his logic the current supply of homes on the market is 4 years worth of supply. That's not going to cause doom, but it'll weigh on the economy and housing market and equities.
And with so many pundits expecting a recovery by the second half it is almost ominous. Remember in early 2007 when the pundits say they expected a soft landing in housing in the second half of 2007? We've seen panic with Bear Stearns but we haven't seen the depths of despair... yet.
Citigroup says it'll dispose of $400 billion worth of assets, that might send markets down a little, that's one big seller in a not so hot market.
Copper inventories are holding still at 110000 tons, copper prices are easing and are unable to break above former highs.

So, sticking with a long corn position. From a rational perspective I am against ethanol, from a speculator's point of view, corn ethanol appears like it'll continue for long enough to keep prices high and corn inventories at historical lows for the forseeable future. I mean Mccain doesn't get into office till next January. That's over 6 months and 1.5 billion bushels of corn...
 
T

TheGreatBear

Guest
I've got to add though oil is $1.4 already as of now, I've been hearing way too much about oil in the media. Perhaps...
 
T

TheGreatBear

Guest
Gold appears to have bottomed.
Soybeans are exceptionally strong due to Argentinan strikes, I'm not buying into it.
Corn fell off new highs due to better than expected plantings, but supply still appears it will be tight, so I'm holding on tight, corn is at breakeven price for me right now.
S&P at 200 day MA resistance.
Funny thing in yahoo news today, http://biz.yahoo.com/ap/080516/economy.html
"Housing posts surprising rebound in April on apartment construction, outlook still shaky"
As all richdaders know, apt rents go up in recessions when people can't afford that big new shiny home. And that is "surprising".. lol
 
T

TheGreatBear

Guest
Chinese stock market weakens. The chart says all, no bottom yet, rating: avoid.
 
T

TheGreatBear

Guest
Gold appears to have bottomed. Report tuesday that worldwide demand for gold was down 16% in the first quarter, yet gold prices soared. Probably due to strong Euro and strong oil. Fundamentals no good but technicals are great.
 
T

TheGreatBear

Guest
Gold appears to have bottomed. Report tuesday that worldwide demand for gold was down 16% in the first quarter, yet gold prices soared. Probably due to strong Euro and strong oil. Fundamentals no good but technicals are great.
With oil appearing to bounce around madly all over the place and all the buzz over it and it actually falling today, I'll withdraw that prediction.
Dropping off corn as well at breakeven prices on the bounce yesterday.
China being one of the world's largest consumers of corn, 77% of it going to feeding livestock, and Sichuan, the area of the earthquake, has 51% of China's livestock.
Soybeans have bounced around largely due to Argentina's earthquake and weather obstructing planting. We'll see how much of the expected acreage will be planted. Third largest acreage since WWII is expected and if that materializes, I don't see how soybeans will not attain balance between supply and demand.
Bounce in Chinese indices yesterday, with a slight fall today. Not changing my stance.
So currently no positions except a small position shorting sugar in Chinese futures exchanges established a few days ago.
Basically a wait and see attitude, besides busy with some other stuff, including a business idea that is riskfree.
 

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