tag:blogger.com,1999:blog-2335748440449035592.post586851017388833536..comments2008-06-15T21:32:53.226-04:00TraderMarkhttp://www.blogger.com/profile/06241756200482130281noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-2335748440449035592.post-56548664516584768422008-06-15T21:32:00.000-04:002008-06-15T21:32:00.000-04:00Yes but the Shanghai Index is a closed system - can't invest from the outside so its a monopoly game to me. Stocks trade double or triple the valuation that they trade in Hong Kong for the same fare so its just useless as an indicator.<BR/><BR/>I wrote many pieces last fall about housewives sitting at home trading stocks, people quitting work to trade stocks, and all that. The exact same stories we heard in 99 in NASDAQ. They all end the same.<BR/><BR/>Inflation is a big issue in China as it is in most of the world. Central banks should be increasing rates to fight inflation. Only ours cuts rates. When rates rise in an attempt to fight inflation by slowing down the economy that means borrowing costs are higher and economy is slowing - not usually a recipe for a roaring market.<BR/><BR/>Chinese are not like Americans - they are huge savers. So stock market fall here would be different than there when most people here are leveraged to the hilt. There, people who are not dirt poor (rural especially) still have savings. So its not as big of an issue. Plus they are getting in many cases large wage increases whereas here the wage increases are not keeping up with inflation. So its hard to connect the situations NASDAQ crash and its affects and Shanghai crash. I'd say the main connection is the loss of confidence. Capital markets are being born in China and this is the first downturn most have ever experienced.TraderMarkhttp://www.blogger.com/profile/06241756200482130281noreply@blogger.comtag:blogger.com,1999:blog-2335748440449035592.post-79137381448520708442008-06-15T14:07:00.000-04:002008-06-15T14:07:00.000-04:00Hey Mark, <BR/><BR/>Did you notice the Shanghai Composite's 15% drop last week and hitting new lows? The index is down 40+% this year alone (and more than 50% from the peak last year). Its a little weird that we haven't heard more about this in the media, or how this is effecting consumers in China (remember it rivaled the U.S. Internet Bubble in terms of number of amateurs jumping onboard). Do you think this slide is foretelling anything about China's economy going forward? Will it have an effect on Chinese consumer spending?sdk_IVhttp://www.blogger.com/profile/06357215762477665878noreply@blogger.com