Beware: China's Stock Bubble - Two
May 10th 2007 05:04
From the Financial Times to bloggers, the talk is on China's excessive stock market value driven by millions of individual retail investors withdrawing their massive savings and parked them in A-Shares, restricted to Chinese nationals only.
It was believed that billions were poured into the market for the past couple of weeks.
Many of the listed Chinese companies double float their shares, on mainland China and Hong Kong. While the mainland share prices soared, the Hong Kong counterparts or H-Shares did not enjoy any of the excessive upsurge. The H-Shares are only available for Hong Kong and international investors.
The disparity in the share prices of the essentially the same companies speak volumes and is self-explanatory that the fundamentals are simply not up that high. Somehow and someway it must come down. The problem is Timing.
From university students to cab drivers, the best casino now is the Shanghai and Shenzhen stock exchanges, and Macau, for the time being, has to stand aside and wait. No analysts or gurus could pacify the massive Chinese hordes of speculators, only the Central Government can do it.
The current frenzy is a pure case of efficient market hypothesis gone awfully awry.
Sorry, Mr. Fama.
Again, as a reminder, the problem is TIMING. With the February global stocks downturn originated from Shanghai still very piping hot in our memories, no reason to see why our legs are not wobbly.
---
For more background on China's stock market: The China Series
It was believed that billions were poured into the market for the past couple of weeks.
Many of the listed Chinese companies double float their shares, on mainland China and Hong Kong. While the mainland share prices soared, the Hong Kong counterparts or H-Shares did not enjoy any of the excessive upsurge. The H-Shares are only available for Hong Kong and international investors.
The disparity in the share prices of the essentially the same companies speak volumes and is self-explanatory that the fundamentals are simply not up that high. Somehow and someway it must come down. The problem is Timing.
From university students to cab drivers, the best casino now is the Shanghai and Shenzhen stock exchanges, and Macau, for the time being, has to stand aside and wait. No analysts or gurus could pacify the massive Chinese hordes of speculators, only the Central Government can do it.
The current frenzy is a pure case of efficient market hypothesis gone awfully awry.
Sorry, Mr. Fama.
Again, as a reminder, the problem is TIMING. With the February global stocks downturn originated from Shanghai still very piping hot in our memories, no reason to see why our legs are not wobbly.
---
For more background on China's stock market: The China Series
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