While this blog is not in the business of giving out investment advice, it should come as no surprise to anyone that China’s stock markets (or those of any emerging market) can be volatile. It is common knowledge.
Not to mention the fact that the Chinese government made it known (see “Bubble Trouble ”) that the market was overheating in January (when the market fell by 4.9 percent). So it seems a few well-placed words from the mouth of government can be just as powerful as a bucket of new regulations. A useful “market” management tool for Beijing this communications thing!
The main surprise from Shanghai’s 9 percent fall last week seems to be that the rest of the world took such notice. After all China’s financial markets are still somewhat apart from the rest of the world, and growth last year was massive by comparison (around 130 percent in 2006, according to reports). It is also worth noting that the Chinese markets (which have been largely populated by government quota rather than commercial diligence) do not accurately reflect the wider economy.
Well, the world still seems to be turning. China is still producing and consuming. And the markets seem to be settling.
Anyway, the issues have already been covered in plenty of detail elsewhere, and interested readers can see more analysis on these sites:
And what about other bubbles, such as property? I can’t say. However a friend of mine in Shanghai did ask me today whether he should sell his apartment there. I was not able to tell him one way or the other but, as he claims to have tripled his investment in just two years, I think it safe to say that there needs to be a pretty catastrophic crash before he will get any sympathy from round here!