(no subject)

[randomness]

I missed this post when it came out. The Chinese stock markets are really booming. It's like 1929! or 1999.

Deutsche Bank, quoted in FT Alphaville:

Bubble watchers point out median earnings multiples for Chinese technology stocks are twice US peer valuations at their dot.com peak. More worrying perhaps is a health-goods-from-deer-antlers producer on 70 times, the seamless underwear manufacturer on 90 times or those school uniform and ketchup makers on 330 times!

From the same article in Alphaville:

It seems everyone in the country is racing to open a brokerage account – 1.67m new accounts in the latest week, according to the China Securities Depository and Clearing Co. That sounds a lot, although it is growth of only about 1 per cent a week in the total of new accounts: China, remember is big.

They go on to make some comparisons between the current state of the Shenzhen and Shanghai markets and that of the Russell 2000.

"Past performance is no guarantee", etc. I wonder when the music's going to stop?

Comments

[drwex]

the Hong Kong authorities, with 25 years of hindsight, basically managed to pull it off

My point exactly. We used to mock the Chinese declarations that they could censor the entire Internet, too. It's true that Hong Kong is smaller than China, but it's not smaller than the number of players in the market (I guesstimate).

I understand the point FT is trying to make, but I think it's unwise to underestimate the ability of Beijing to socially engineer solutions.

[r-ness.livejournal.com]

We used to mock the Chinese declarations that they could censor the entire Internet, too. It's true that Hong Kong is smaller than China, but it's not smaller than the number of players in the market (I guesstimate).

You're factually incorrect on both of those points. For the first point, have a look at chinasmack.com sometime. For the second point the linked report from the China Securities Depository and Clearing Co. shows more brokerage accounts in each of the Shanghai and Shenzhen exchanges than there are people in Hong Kong.

But no matter. We'll see how it all comes out by and by.

I think it's unwise to underestimate the ability of Beijing to socially engineer solutions.

I think the Chinese authorities can do many things, including mitigate the effects of a market crash in ways Western governments can't. What they can't do is prevent a market crash itself. which is what I (and I think the FT) are actually talking about. On that score I think you're talking about a completely different issue than I am.

As I said, we'll see.