China Stock Market – an update
Further to my post earlier this week, where I essentially said that the performance of the Shanghai stock market (the 9 point drop, rather) was nothing to worry about and just a correction:
1. General info from an Associated Press story about the day after. Note the headline that mentions "China Recovers" and the quote "It’s a correction that’s been seven months coming."
2. Dan Harris at China Law Blog: "Well, okay, it has to mean something. But I truly think it does not mean much." Succinct, and I couldn’t agree more.
3. Fons at China Herald, with the headline: "And up she goes: the Shanghai stock market" I like it. Nice criticism of the media, too, which I bashed a bit this week myself.
4. Excellent article as usual in Asia Times, with this nice bit:
The correction in the Chinese market was not associated with any fundamental problems. China’s level of economic activity is sound. Exports are strong. International reserves are high. The banking system is improving. Inflation is under control, and the political environment is stable. So what’s the problem?
The problem is that, after lying dormant for more than five years, the Chinese equity market went into a tear last year – rising more than 170% in the space of 14 months.
I think we’ll put this topic to rest for the time being.
Shanghai stock market has wiped out all the gains it gained on wednesday. So there is still a fear and panic among the investors.
OK, maybe we won’t close this topic out quite yet. Yes, after a 9 point drop, there was a 4 point gain and then another 3 point drop. If the watchword on Tuesday was “correction”, then by now it probably should be “volatility” I suppose.
However, “fear and panic”? Well, perhaps some fear, but I would not agree with panic. Global markets are sorting all this out at the moment, but fundamentals here are still strong, a correction was necessary by all accounts, and until I see some dramatic change, I’ll stick with my story.