(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]

Looking at this with outsider's ignorant eyes, I don't think it's ever going to "stop."

The reason is that the Chinese have a violent allergy to sudden change. An allergy so violent they will call out tanks and shoot their own children (students) rather than risk it happening. Therefore what I believe will happen is that when the run rate needs to come down word will be passed quietly that those who wish to continue to enjoy their lucrative government contracts will wind down their activities according the the following reasonable and gentle schedule. Those who don't play ball will find themselves on the receiving end of unpleasantly detailed corruption investigations, or will find their ability to partner with Chinese companies suddenly mired in red tape. Everyone makes (some) money, nobody goes to jail, and the bubble slowly deflates. No sudden changes.

[achinhibitor.livejournal.com]

What could possibly go wrong???