Thailand's Economy And China

[sonicdragon]

A few points on this very interesting debate:

1. It does not make sense to convert inflation adjusted returns of the US market into another currency. I guess it could make some sense to do so versus a trade-weighted basket of currencies.

2. Comparisons between the nasdaq boom/bust and the chinese market are not very useful because there are too many differences, not least the fact that the nasdaq boom was built mainly on thin air (remember those valuations of internet content companies based on site visits ?), whereas the chinese market bubble is based on (stretched) valuations of a real economic boom in a rapidly expanding industrialising manufactutring economy with an extremely high savings rate, low stock market participation, growing middle class and more factors that support high valuations. I don't disagree that the chinese economy has weaknesses and that the markets there are due for a correction, but comparisons with the nasdaq are quite misleading.

[VegasVic]

A few points on this very interesting debate:

1. It does not make sense to convert inflation adjusted returns of the US market into another currency. I guess it could make some sense to do so versus a trade-weighted basket of currencies.

2. Comparisons between the nasdaq boom/bust and the chinese market are not very useful because there are too many differences, not least the fact that the nasdaq boom was built mainly on thin air (remember those valuations of internet content companies based on site visits ?), whereas the chinese market bubble is based on (stretched) valuations of a real economic boom in a rapidly expanding industrialising manufactutring economy with an extremely high savings rate, low stock market participation, growing middle class and more factors that support high valuations. I don't disagree that the chinese economy has weaknesses and that the markets there are due for a correction, but comparisons with the nasdaq are quite misleading.

You are certainly correct that a direct comparison between the current bubble in China and the NASDAQ bubble of 2000 is partially invalid and misleading. The point I was making is that the bubble type valuations both in chinese equities currently and the NASDAQ back in 2000 are very similiar(50-60+ PE for the chinese market and around 45 PE for the NASDAQ at its bubble top). The main difference of course is that in the U.S. a company must be profitable in order for it to survive (and of course many of the dot coms were more promise than profit) where as in China there are many of the large listed companies that are not profitable but instead are subsidized or patially owned by the central government. I definately agree with you that in the long run over the next 25-50 years that China will beccome an economic giant if it can really become a true free market economy, however in the short run there will be some pain when this bubble colapses but knowong the chinese they will probably recover just as fast as the U.S. markets did after the dot com crash if not faster because they won't have a 9-11 situatation to deal with(hopefully). I do think that the one point that you are perhaps misinformed about is when you say the "low stock market participation", this is a very misleading statement on your part. The participation of the cihinese people in their equity markets is not only substantial but approaching a mania, while at the same time equity redemtions from funds in the U.S. have been growing recently. The chinese are an extemely intelligent people and I think that they will learn from this coming crash and will ensure that it will not happen again(unlike the U.S. which seems to make the same mistakes over again every other generation). Best of luck in your investments, if you do have some investments in Shanghai or Hong Kong I hope that you get good executions when you decide to sell.

[sonicdragon]

A few points on this very interesting debate:

1. It does not make sense to convert inflation adjusted returns of the US market into another currency. I guess it could make some sense to do so versus a trade-weighted basket of currencies.

2. Comparisons between the nasdaq boom/bust and the chinese market are not very useful because there are too many differences, not least the fact that the nasdaq boom was built mainly on thin air (remember those valuations of internet content companies based on site visits ?), whereas the chinese market bubble is based on (stretched) valuations of a real economic boom in a rapidly expanding industrialising manufactutring economy with an extremely high savings rate, low stock market participation, growing middle class and more factors that support high valuations. I don't disagree that the chinese economy has weaknesses and that the markets there are due for a correction, but comparisons with the nasdaq are quite misleading.

You are certainly correct that a direct comparison between the current bubble in China and the NASDAQ bubble of 2000 is partially invalid and misleading. The point I was making is that the bubble type valuations both in chinese equities currently and the NASDAQ back in 2000 are very similiar(50-60+ PE for the chinese market and around 45 PE for the NASDAQ at its bubble top). The main difference of course is that in the U.S. a company must be profitable in order for it to survive (and of course many of the dot coms were more promise than profit) where as in China there are many of the large listed companies that are not profitable but instead are subsidized or patially owned by the central government. I definately agree with you that in the long run over the next 25-50 years that China will beccome an economic giant if it can really become a true free market economy, however in the short run there will be some pain when this bubble colapses but knowong the chinese they will probably recover just as fast as the U.S. markets did after the dot com crash if not faster because they won't have a 9-11 situatation to deal with(hopefully). I do think that the one point that you are perhaps misinformed about is when you say the "low stock market participation", this is a very misleading statement on your part. The participation of the cihinese people in their equity markets is not only substantial but approaching a mania, while at the same time equity redemtions from funds in the U.S. have been growing recently. The chinese are an extemely intelligent people and I think that they will learn from this coming crash and will ensure that it will not happen again(unlike the U.S. which seems to make the same mistakes over again every other generation). Best of luck in your investments, if you do have some investments in Shanghai or Hong Kong I hope that you get good executions when you decide to sell.

I agree with most of what you said (the point about learning from the coming crash is very good one), but I still strongly feel that comparisons with the NASDAQ are invalid. You mention similar PEs. I have not checked the data, but I assume you mean historic or current PEs, rather than forward PEs. Again, the differences are critical - in general, the chinese make things for which there is a real demand for which forecasts can be made. Obviously the market can still trade at crazy PEs and forecasts can be overly optimistic, but ultimately there is something tangible that supports valuations (albeit at lower than current levels) whereas with the NASDAQ it was almost all thin air. It's also worth noting that the NASDAQ is nowhere near reaching it's old highs 7 years on.

I am invested in the chinese market, because I believe in the long term story. Recently I have been scaling back, and will continue to do so and I will be a very big buyer when the fall comes.

As for the stock market participation statement I made, it is based on the fact that the total market capitalisation of shanghai and shenzhen is around 15% of GDP, which is very low by comparison to developed markets, and low compared to many other developing markets. I accept that there can be other measures -what is your statement of it being "not only substantial but approaching a mania" based on ?

Edited June 25, 2007 by sonicdragon

[VegasVic]

A few points on this very interesting debate:

1. It does not make sense to convert inflation adjusted returns of the US market into another currency. I guess it could make some sense to do so versus a trade-weighted basket of currencies.

2. Comparisons between the nasdaq boom/bust and the chinese market are not very useful because there are too many differences, not least the fact that the nasdaq boom was built mainly on thin air (remember those valuations of internet content companies based on site visits ?), whereas the chinese market bubble is based on (stretched) valuations of a real economic boom in a rapidly expanding industrialising manufactutring economy with an extremely high savings rate, low stock market participation, growing middle class and more factors that support high valuations. I don't disagree that the chinese economy has weaknesses and that the markets there are due for a correction, but comparisons with the nasdaq are quite misleading.

You are certainly correct that a direct comparison between the current bubble in China and the NASDAQ bubble of 2000 is partially invalid and misleading. The point I was making is that the bubble type valuations both in chinese equities currently and the NASDAQ back in 2000 are very similiar(50-60+ PE for the chinese market and around 45 PE for the NASDAQ at its bubble top). The main difference of course is that in the U.S. a company must be profitable in order for it to survive (and of course many of the dot coms were more promise than profit) where as in China there are many of the large listed companies that are not profitable but instead are subsidized or patially owned by the central government. I definately agree with you that in the long run over the next 25-50 years that China will beccome an economic giant if it can really become a true free market economy, however in the short run there will be some pain when this bubble colapses but knowong the chinese they will probably recover just as fast as the U.S. markets did after the dot com crash if not faster because they won't have a 9-11 situatation to deal with(hopefully). I do think that the one point that you are perhaps misinformed about is when you say the "low stock market participation", this is a very misleading statement on your part. The participation of the cihinese people in their equity markets is not only substantial but approaching a mania, while at the same time equity redemtions from funds in the U.S. have been growing recently. The chinese are an extemely intelligent people and I think that they will learn from this coming crash and will ensure that it will not happen again(unlike the U.S. which seems to make the same mistakes over again every other generation). Best of luck in your investments, if you do have some investments in Shanghai or Hong Kong I hope that you get good executions when you decide to sell.

I agree with most of what you said (the point about learning from the coming crash is very good one), but I still strongly feel that comparisons with the NASDAQ are invalid. You mention similar PEs. I have not checked the data, but I assume you mean historic or current PEs, rather than forward PEs. Again, the differences are critical - in general, the chinese make things for which there is a real demand for which forecasts can be made. Obviously the market can still trade at crazy PEs and forecasts can be overly optimistic, but ultimately there is something tangible that supports valuations (albeit at lower than current levels) whereas with the NASDAQ it was almost all thin air. It's also worth noting that the NASDAQ is nowhere near reaching it's old highs 7 years on.

I am invested in the chinese market, because I believe in the long term story. Recently I have been scaling back, and will continue to do so and I will be a very big buyer when the fall comes.

As for the stock market participation statement I made, it is based on the fact that the total market capitalisation of shanghai and shenzhen is around 15% of GDP, which is very low by comparison to developed markets, and low compared to many other developing markets. I accept that there can be other measures -what is your statement of it being "not only substantial but approaching a mania" based on ?

The PE's for the chinese markets were forward PE's and the PE for the NASDAQ was approximately 45 at the top of the dotcom bubble. As far as the mania with the chinese people investing in their own market there are many widely published reports of families selling all their gold and borrowing money against real estate in order to not miss out on the great chinese market boom. Personally I know of stories of chinese working overseas and sending all their wages back to be invested in the stock market over there. If any of these reports that I have read about or heard about are indeed not factual then I wonder where all the money is coming from to be pumped into the chinsese markets to form such a bubble, because as I have stated many of the large western funds are stating to make redemtions in the chinese markets and others that are locked in to investment vehicles for another 6months or a year are wishing that they could take their profits off the table at this time. The current market over there is priced for something that might occur 5 years out in a perfect world, and of course we all know that the world is not only not perfect but is unpredictable as well. This run in chinese equities could very well go on for another 6 months or a year(certainly the chinese government does not want the market to crash before the Olympics next summer as they feel they would lose face in the worlds eyes) but it will come tumbling down at some time sooner or later (my hunch is sooner) and I hope that you have pared your exposure down by that time. Best of luck in any event, it will be interesting to see how things play out in the next year not only in China but Thailand as well.

[sonicdragon]

A few points on this very interesting debate:

1. It does not make sense to convert inflation adjusted returns of the US market into another currency. I guess it could make some sense to do so versus a trade-weighted basket of currencies.

2. Comparisons between the nasdaq boom/bust and the chinese market are not very useful because there are too many differences, not least the fact that the nasdaq boom was built mainly on thin air (remember those valuations of internet content companies based on site visits ?), whereas the chinese market bubble is based on (stretched) valuations of a real economic boom in a rapidly expanding industrialising manufactutring economy with an extremely high savings rate, low stock market participation, growing middle class and more factors that support high valuations. I don't disagree that the chinese economy has weaknesses and that the markets there are due for a correction, but comparisons with the nasdaq are quite misleading.

You are certainly correct that a direct comparison between the current bubble in China and the NASDAQ bubble of 2000 is partially invalid and misleading. The point I was making is that the bubble type valuations both in chinese equities currently and the NASDAQ back in 2000 are very similiar(50-60+ PE for the chinese market and around 45 PE for the NASDAQ at its bubble top). The main difference of course is that in the U.S. a company must be profitable in order for it to survive (and of course many of the dot coms were more promise than profit) where as in China there are many of the large listed companies that are not profitable but instead are subsidized or patially owned by the central government. I definately agree with you that in the long run over the next 25-50 years that China will beccome an economic giant if it can really become a true free market economy, however in the short run there will be some pain when this bubble colapses but knowong the chinese they will probably recover just as fast as the U.S. markets did after the dot com crash if not faster because they won't have a 9-11 situatation to deal with(hopefully). I do think that the one point that you are perhaps misinformed about is when you say the "low stock market participation", this is a very misleading statement on your part. The participation of the cihinese people in their equity markets is not only substantial but approaching a mania, while at the same time equity redemtions from funds in the U.S. have been growing recently. The chinese are an extemely intelligent people and I think that they will learn from this coming crash and will ensure that it will not happen again(unlike the U.S. which seems to make the same mistakes over again every other generation). Best of luck in your investments, if you do have some investments in Shanghai or Hong Kong I hope that you get good executions when you decide to sell.

I agree with most of what you said (the point about learning from the coming crash is very good one), but I still strongly feel that comparisons with the NASDAQ are invalid. You mention similar PEs. I have not checked the data, but I assume you mean historic or current PEs, rather than forward PEs. Again, the differences are critical - in general, the chinese make things for which there is a real demand for which forecasts can be made. Obviously the market can still trade at crazy PEs and forecasts can be overly optimistic, but ultimately there is something tangible that supports valuations (albeit at lower than current levels) whereas with the NASDAQ it was almost all thin air. It's also worth noting that the NASDAQ is nowhere near reaching it's old highs 7 years on.

I am invested in the chinese market, because I believe in the long term story. Recently I have been scaling back, and will continue to do so and I will be a very big buyer when the fall comes.

As for the stock market participation statement I made, it is based on the fact that the total market capitalisation of shanghai and shenzhen is around 15% of GDP, which is very low by comparison to developed markets, and low compared to many other developing markets. I accept that there can be other measures -what is your statement of it being "not only substantial but approaching a mania" based on ?

The PE's for the chinese markets were forward PE's and the PE for the NASDAQ was approximately 45 at the top of the dotcom bubble. As far as the mania with the chinese people investing in their own market there are many widely published reports of families selling all their gold and borrowing money against real estate in order to not miss out on the great chinese market boom. Personally I know of stories of chinese working overseas and sending all their wages back to be invested in the stock market over there. If any of these reports that I have read about or heard about are indeed not factual then I wonder where all the money is coming from to be pumped into the chinsese markets to form such a bubble, because as I have stated many of the large western funds are stating to make redemtions in the chinese markets and others that are locked in to investment vehicles for another 6months or a year are wishing that they could take their profits off the table at this time. The current market over there is priced for something that might occur 5 years out in a perfect world, and of course we all know that the world is not only not perfect but is unpredictable as well. This run in chinese equities could very well go on for another 6 months or a year(certainly the chinese government does not want the market to crash before the Olympics next summer as they feel they would lose face in the worlds eyes) but it will come tumbling down at some time sooner or later (my hunch is sooner) and I hope that you have pared your exposure down by that time. Best of luck in any event, it will be interesting to see how things play out in the next year not only in China but Thailand as well.

The trouble with what you are saying is that it isn't backed by economic figures (or at least you are not providing them). It's all anecdotal - stories about grannies investing their life savings are all very interesting and great for selling newspapers. Stories like this abound in all markets all over the world if you look hard enough for them. Don't forget that china's personal savings are huge (I mean savings in banks) - something like 1 trillion US$ if I'm not mistaken (I might be). Give me some actual hard figures/economic stats to support what you are saying and we can have a proper discussion about it. I would really like to. As a matter of fact I am reducing my exposure to the chinese market further this week. There just seems to be much more downside potential than upside at the moment.

And as for market valuations/PE's, how do you explain the japanese markets ?

[LaoPo]

The PE's for the chinese markets were forward PE's and the PE for the NASDAQ was approximately 45 at the top of the dotcom bubble. As far as the mania with the chinese people investing in their own market there are many widely published reports of families selling all their gold and borrowing money against real estate in order to not miss out on the great chinese market boom. Personally I know of stories of chinese working overseas and sending all their wages back to be invested in the stock market over there. If any of these reports that I have read about or heard about are indeed not factual then I wonder where all the money is coming from to be pumped into the chinsese markets to form such a bubble, because as I have stated many of the large western funds are stating to make redemtions in the chinese markets and others that are locked in to investment vehicles for another 6months or a year are wishing that they could take their profits off the table at this time. The current market over there is priced for something that might occur 5 years out in a perfect world, and of course we all know that the world is not only not perfect but is unpredictable as well. This run in chinese equities could very well go on for another 6 months or a year(certainly the chinese government does not want the market to crash before the Olympics next summer as they feel they would lose face in the worlds eyes) but it will come tumbling down at some time sooner or later (my hunch is sooner) and I hope that you have pared your exposure down by that time. Best of luck in any event, it will be interesting to see how things play out in the next year not only in China but Thailand as well.

Easy VegasVic.

Stick to facts and not newspaper articles about grannies investing their money into the Chinese stockmarkets.

Facts:

1. just 5% of the total Chinese -private- savings are in the stock markets. That's it.

2. 100 Million Chinese have special 'stock-accounts; not more. That's about 7% of the total population and most of them are small-time investors; not big players.

3. Stock markets bubbled-up ? Yes, they are, and the decline is going on already now, this week, for 3 days. A healthy correction IMHO and there will be more coming. Nothing dramatic since the listed stock market-companies will not suffer from the decline of their stocks.

Just the (major and normal) stockholders. But it's just for a period of time, exactly like in the West.

They [factories] just produce and make profits, huge profits; that the 'people' are speculating is nothing new; 'we' did that also pre-2000/01 in the west, remember ?

Markets go up...or...extremely up (bubble) and you get correction(s).

Old news.

LaoPo

[bingobongo]

bubble bubble.....toil and trouble....

China Fines Six Banks for Lending to Stock Purchases

http://www.bloomberg.com/apps/news?pid=206...&refer=asia

[LaoPo]

bubble bubble.....toil and trouble....

China Fines Six Banks for Lending to Stock Purchases

http://www.bloomberg.com/apps/news?pid=206...&refer=asia

Good!

``This sends a strong signal that the authorities are serious about cooling the stock market,'' said Chi Lo, director of investment research at Ping An of China Asset Management. ``It's part of government efforts to clean up the assets market, both stocks and real estate.''

The investigation into banks' lending for stock investment ``is still going on,'' said the regulatory commission's spokesman Xia Lingwu after the statement was released. ``It's part of our daily work.''

They should [and will] punish the responsible bank officers.

LaoPo

[ArranP]

I decided to stay partially in china equities.

40% china equity

40% world mining equity

20% property direct (non equity)

On the basis the 20% property direct (non equity) provides my income for a 3 to 5 years horizon, this I'm hoping should carry me through any short term fluctuation there maybe in china and/or world mining equity.

[bingobongo]

this correction will be oh so painful.......the quote below sounds very familar.....the gullibility of the masses is astounding.......watch the 4351 resistance level on the Shanghi index............it has already failed to break thru twice....next stop is down

China at 45 Times Earnings Fed by `Herd Mentality,' Government

``I'm not afraid,'' says Guan, tightening her clutch on a pink Mickey Mouse wallet. ``Our economy is doing so well; nothing could possibly go wrong, right?''

Xu says: ``There's no way the government would let the stock market crash.''

http://www.bloomberg.com/apps/news?pid=206...&refer=home

Edited June 28, 2007 by bingobongo

[LaoPo]

I decided to stay partially in china equities.

40% china equity

40% world mining equity

20% property direct (non equity)

On the basis the 20% property direct (non equity) provides my income for a 3 to 5 years horizon, this I'm hoping should carry me through any short term fluctuation there maybe in china and/or world mining equity.

Please enlighten me what you mean by "40% china equity".

Are these the investments on the NYSE/NASDAQ or HK markets or mainland ?

I hope you're not in B-shares.....(anymore)

LaoPo

[ArranP]

I decided to stay partially in china equities.

40% china equity

40% world mining equity

20% property direct (non equity)

On the basis the 20% property direct (non equity) provides my income for a 3 to 5 years horizon, this I'm hoping should carry me through any short term fluctuation there maybe in china and/or world mining equity.

Please enlighten me what you mean by "40% china equity".

Are these the investments on the NYSE/NASDAQ or HK markets or mainland ?

I hope you're not in B-shares.....(anymore)

LaoPo

40% china equity is via the "First State China Growth" mostly listed on the Hang Seng "H Shares"

[j_cheung]

Here's a few additional contributions to note for this interesting dicussion on Chinese equity markets:

1) Mainland urban residents are increasingly messmerised by the dizzying heights reached by the Shanghai & Shenzhen bourses -- Stocks had become their top investment option (http://www.chinadaily.com.cn/bizchina/2007-06/21/content_899593.htm).

2) The mainland central monetary authorities are considering the halving or possibly the eventual abolishment of the interest tax levied on saving accounts presently charged at 20%. (http://www.chinadaily.com.cn/china/2007-06/27/content_903794.htm). Authorities are attempting to reverse the noticable drop in household savings against funding their local "casinos" no doubt (http://www.chinadaily.com.cn/bizchina/2007-06/13/content_893527.htm).

3) As of July 5, mainland fund companies are now allowed operate directly in the HKEX bourse which probably will coincide with the outpouring of excess funds from the mainland markets to "cheap" HK H shares & Red-Chips (http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20070629:MTFH12335_2007-06-29_10-49-52_SHA329841&type=comktNews&rpc=44). Hold on, it's gonna be a bumpy ride!

4) Note the massive monetary tribute to placate "grandstanding" politicians and envious "special interests" in their largest market. Give or take a few billion invested in the upcoming private equity IPOs -- initially, The Blackstone Group (http://www.marketwatch.com/News/Story/Story.aspx?guid={18E19242-4742-460C-B01E-A851A96E69AC}) & naturally their counterparts, KKR & the Caryle Group later on.

Now, what about the original topic of how Thailand's economy will be affect by all this from China? What about any desire to tap into Thailand's natural resources, tourism and/or even complementary aspects as a manufacturing hub?

[j_cheung]

A few points on this very interesting debate:

1. It does not make sense to convert inflation adjusted returns of the US market into another currency. I guess it could make some sense to do so versus a trade-weighted basket of currencies.

2. Comparisons between the nasdaq boom/bust and the chinese market are not very useful because there are too many differences, not least the fact that the nasdaq boom was built mainly on thin air (remember those valuations of internet content companies based on site visits ?), whereas the chinese market bubble is based on (stretched) valuations of a real economic boom in a rapidly expanding industrialising manufactutring economy with an extremely high savings rate, low stock market participation, growing middle class and more factors that support high valuations. I don't disagree that the chinese economy has weaknesses and that the markets there are due for a correction, but comparisons with the nasdaq are quite misleading.

You are certainly correct that a direct comparison between the current bubble in China and the NASDAQ bubble of 2000 is partially invalid and misleading. The point I was making is that the bubble type valuations both in chinese equities currently and the NASDAQ back in 2000 are very similiar(50-60+ PE for the chinese market and around 45 PE for the NASDAQ at its bubble top). The main difference of course is that in the U.S. a company must be profitable in order for it to survive (and of course many of the dot coms were more promise than profit) where as in China there are many of the large listed companies that are not profitable but instead are subsidized or patially owned by the central government. I definately agree with you that in the long run over the next 25-50 years that China will beccome an economic giant if it can really become a true free market economy, however in the short run there will be some pain when this bubble colapses but knowong the chinese they will probably recover just as fast as the U.S. markets did after the dot com crash if not faster because they won't have a 9-11 situatation to deal with(hopefully). I do think that the one point that you are perhaps misinformed about is when you say the "low stock market participation", this is a very misleading statement on your part. The participation of the cihinese people in their equity markets is not only substantial but approaching a mania, while at the same time equity redemtions from funds in the U.S. have been growing recently. The chinese are an extemely intelligent people and I think that they will learn from this coming crash and will ensure that it will not happen again(unlike the U.S. which seems to make the same mistakes over again every other generation). Best of luck in your investments, if you do have some investments in Shanghai or Hong Kong I hope that you get good executions when you decide to sell.

Vic,

In whole part, I'll agree with you on the long run prospects of China.

Regarding the frequent flickleness of the markets and the unchanging extremes of human nature, I think that the mainland Chinese will have to undergo the same dramatic ups and downs of a genuine mixed market economy as their compatriots on HK, Macau & Taiwan. At present, many mainland investors have adopted the same "chao-jia" mentality of a newbie day trader -- always listening in for stock tips & rumours and grasping on the outbreak patterns on their candlestick charts. I once asked a local finance professor on how he forecasts his annual earnings estimates and he just amicably replied: "Just take the latest quarter & multiply that by 4"! At that point, my mind kind of went numb.

HK & Taiwan had to undergo several very harsh & dramatic economic smackdowns back in '73 & '91 espectively to get to where they are presently. Likewise, the mainland markets will have to go through similar "woodshed" experiences before becoming another economic giant.

Thanks for an enlightening discussion.

[ArranP]

Here's a few additional contributions to note for this interesting dicussion on Chinese equity markets:

1) Mainland urban residents are increasingly messmerised by the dizzying heights reached by the Shanghai & Shenzhen bourses -- Stocks had become their top investment option (http://www.chinadaily.com.cn/bizchina/2007-06/21/content_899593.htm).

2) The mainland central monetary authorities are considering the halving or possibly the eventual abolishment of the interest tax levied on saving accounts presently charged at 20%. (http://www.chinadaily.com.cn/china/2007-06/27/content_903794.htm). Authorities are attempting to reverse the noticable drop in household savings against funding their local "casinos" no doubt (http://www.chinadaily.com.cn/bizchina/2007-06/13/content_893527.htm).

3) As of July 5, mainland fund companies are now allowed operate directly in the HKEX bourse which probably will coincide with the outpouring of excess funds from the mainland markets to "cheap" HK H shares & Red-Chips (http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20070629:MTFH12335_2007-06-29_10-49-52_SHA329841&type=comktNews&rpc=44). Hold on, it's gonna be a bumpy ride!

4) Note the massive monetary tribute to placate "grandstanding" politicians and envious "special interests" in their largest market. Give or take a few billion invested in the upcoming private equity IPOs -- initially, The Blackstone Group (http://www.marketwatch.com/News/Story/Story.aspx?guid={18E19242-4742-460C-B01E-A851A96E69AC}) & naturally their counterparts, KKR & the Caryle Group later on.

Now, what about the original topic of how Thailand's economy will be affect by all this from China? What about any desire to tap into Thailand's natural resources, tourism and/or even complementary aspects as a manufacturing hub?

Just heard on bloomberg, historically over the 6 months leading up to previous elections in Thailands, stocks in Thailands rose by 10-15%.

[LaoPo]

Now, what about the original topic of how Thailand's economy will be affect by all this from China? What about any desire to tap into Thailand's natural resources, tourism and/or even complementary aspects as a manufacturing hub?

Hmmmm...not sure what you mean.

You think China sees Thailand as a possible manufacturing hub ....?

LaoPo

[present]

China is a case apart.They do extremely well, because of the very low salaries and no social security system as we know it in Belgium for example. Nobody can compete because they don't follow any economical or social rules.Of course,no-one really protests as the market with millions of consumers( that is how we are called today;we are no longer people but potential consumers) very attractive for the west. But there will come a time that people will no longer be happy with working for 50 dollar in month.Look what happened in Europe and Japan. So,I wouldn't worry to much about China,their time of stagnation and social unrest will come. The Thai gouvernment doesn't seem aware of the global economy, or are just afraid to loose their power and influence,not to mention the big money.We face this problem in Belgium and germany too.Politicians have made the wrong politics by restricting the coming of "farangs " due to the influence of extreme right politicians.What we now face is that our economy is very good but suffers in growt because many jobs can't be filled in, we need urgently welders and metal workers, so why not exchange Thai metal workers who can work in Europe and Europeans can work in Thailand? No bureaucracy but simple and fast handling.We would all benefit of such projects. Every economy benefits from fresh blood and fresh ideas,and we can all learn from each other. Global economy should lead to global politics.Protection(nationalistic) politics are bad news for a relative small country as Thailand. What Thailand need is a more open minded politic with simple visa and working rules. Even more easier rules for retired people and the economy would boom again.Belgium for example is one of the richest countrys in the world,and I don't mean the gouvernment. If you take a close look at our history,you will see that we benefited a lot from "Farangs".They always gave fresh injections to the economy. A simple example is a rockband. At a certain point a band runs out of creativity, and a new member can give a new sound and new inspiration. The only rules we need ( we do this in Belgium and some other countries as well) is that people remain neutral on the workfloor.Religions and politic opinions should stay at home, and "farangs" should learn to speak the language of the country where they work and live.

China is BOOMING as one who has lived there for many years has seen.The Chinese don't like to blow their horn case of the "Crouching Tiger,Hidden Dragon" and don't forget it's still a 'closed' country.In terms of the property market prices are continully rising and Shangers has got to be home to 20% of the world's cranes.Why would do many foreign companies set up shop in China,Buik,Voltzwagen,GM to name a few if the economy wasn't great?

Now the US is putting pressure on the yuan and corrections etc. but China is here to stay in terms of a great economy,continually getting stronger.

[LaoPo]

China is a case apart.They do extremely well, because of the very low salaries and no social security system as we know it in Belgium for example. Nobody can compete because they don't follow any economical or social rules.Of course,no-one really protests as the market with millions of consumers( that is how we are called today;we are no longer people but potential consumers) very attractive for the west. But there will come a time that people will no longer be happy with working for 50 dollar in month.Look what happened in Europe and Japan. So,I wouldn't worry to much about China,their time of stagnation and social unrest will come. The Thai gouvernment doesn't seem aware of the global economy, or are just afraid to loose their power and influence,not to mention the big money.We face this problem in Belgium and germany too.Politicians have made the wrong politics by restricting the coming of "farangs " due to the influence of extreme right politicians.What we now face is that our economy is very good but suffers in growt because many jobs can't be filled in, we need urgently welders and metal workers, so why not exchange Thai metal workers who can work in Europe and Europeans can work in Thailand? No bureaucracy but simple and fast handling.We would all benefit of such projects. Every economy benefits from fresh blood and fresh ideas,and we can all learn from each other. Global economy should lead to global politics.Protection(nationalistic) politics are bad news for a relative small country as Thailand. What Thailand need is a more open minded politic with simple visa and working rules. Even more easier rules for retired people and the economy would boom again.Belgium for example is one of the richest countrys in the world,and I don't mean the gouvernment. If you take a close look at our history,you will see that we benefited a lot from "Farangs".They always gave fresh injections to the economy. A simple example is a rockband. At a certain point a band runs out of creativity, and a new member can give a new sound and new inspiration. The only rules we need ( we do this in Belgium and some other countries as well) is that people remain neutral on the workfloor.Religions and politic opinions should stay at home, and "farangs" should learn to speak the language of the country where they work and live.

Why you bring Belgium into this discussion -Thailand's Economy and China- puzzles me.

I think Belgium has it's own problems...huge problems. Belgium rich ? Yes, Flanders is rich (Vlaanderen) but Wallonie, the French speaking part, is deadly poor.

And, Sir, bringing Thai metal workers to Europe, in exchange for Farangs working in Thailand is one of the most absurd things I've read in ages....

Europe has a huge supply of would-be workers, more than enough, from the former Eastern European countries; millions and millions of them.

LaoPo

[JimsKnight]

I agree with LaoPo although what the poster mentioned about China not following the rules is spot on. China does its own thing in many ways. China pollutes the fck out of the world and can pretty much stick two fingers up at everyone else. Europe, on the other hand, seems to have a perverse penchant for self flagellating itself over emissions targets. China, therefore is on top.

Immigrants are a fine thing in small doses, if they inter-marry / integrate into the native populace, chill out the religious vibe and fully RELOCATE to the country of work then its a success story.

Thailands tough visa laws are excellent for keeping Thailand for the Thais and restricting foreigners from fcking up the demographics.

In the west, in this day and age, cheap labour that fills a richer countrys shortfall usually doesn't do this. They send their money back home and insulate themselves fully from the locals.

[j_cheung]

Now, what about the original topic of how Thailand's economy will be affect by all this from China? What about any desire to tap into Thailand's natural resources, tourism and/or even complementary aspects as a manufacturing hub?

Hmmmm...not sure what you mean.

You think China sees Thailand as a possible manufacturing hub ....?

LaoPo

I was thinking more in terms of how the Chinese may:

1) Secure valuable source of raw material imports, such as rubber, timber, etc. from northern & southern Thailand respectively;

2) Provide a potential flood of tourists during the winter seasons despite their err, let's say, ill-reputed manners (e.g. hocking phlegm); and

3) Utilize the ready-made hubs around Chonburi & Rayong as a mid & final assembly & value-added point for Chinese exports of semi-manufactured parts & products to target markets in the West & beyond to avoid any protectionist measures.

Hope that clarifies my question.

[LaoPo]

Now, what about the original topic of how Thailand's economy will be affect by all this from China? What about any desire to tap into Thailand's natural resources, tourism and/or even complementary aspects as a manufacturing hub?

Hmmmm...not sure what you mean.

You think China sees Thailand as a possible manufacturing hub ....?

LaoPo

I was thinking more in terms of how the Chinese may:

1) Secure valuable source of raw material imports, such as rubber, timber, etc. from northern & southern Thailand respectively;

2) Provide a potential flood of tourists during the winter seasons despite their err, let's say, ill-reputed manners (e.g. hocking phlegm); and

3) Utilize the ready-made hubs around Chonburi & Rayong as a mid & final assembly & value-added point for Chinese exports of semi-manufactured parts & products to target markets in the West & beyond to avoid any protectionist measures.

Hope that clarifies my question.

I see what you mean:

1. China is doing that; buying their needed commodities, worldwide, including from Thailand.

2. Tourists: Chinese outbound tourism is rising including to LOS; the average Chinese tourist however is a tour-tourist/package tourist (pre-paid in China) on a maximum 1 week trip without [having the money] spending too much in LOS itself.

3. I can't comment on that but at this stage I don't see the areas you mentioned as a value-added point for 'semi-manufactured products since Chinese labour is still cheaper than in LOS; so, why bring those parts to LOS...?

LaoPo

[chinthee]

Now, what about the original topic of how Thailand's economy will be affect by all this from China? What about any desire to tap into Thailand's natural resources, tourism and/or even complementary aspects as a manufacturing hub?

Hmmmm...not sure what you mean.

You think China sees Thailand as a possible manufacturing hub ....?

LaoPo

I was thinking more in terms of how the Chinese may:

1) Secure valuable source of raw material imports, such as rubber, timber, etc. from northern & southern Thailand respectively;

2) Provide a potential flood of tourists during the winter seasons despite their err, let's say, ill-reputed manners (e.g. hocking phlegm); and

3) Utilize the ready-made hubs around Chonburi & Rayong as a mid & final assembly & value-added point for Chinese exports of semi-manufactured parts & products to target markets in the West & beyond to avoid any protectionist measures.

Hope that clarifies my question.

I see what you mean:

1. China is doing that; buying their needed commodities, worldwide, including from Thailand.

2. Tourists: Chinese outbound tourism is rising including to LOS; the average Chinese tourist however is a tour-tourist/package tourist (pre-paid in China) on a maximum 1 week trip without [having the money] spending too much in LOS itself.

3. I can't comment on that but at this stage I don't see the areas you mentioned as a value-added point for 'semi-manufactured products since Chinese labour is still cheaper than in LOS; so, why bring those parts to LOS...?

LaoPo

Yes, that's true most mainland Chinese tourists in Thailand are on all-inclusive low-end tours. You rarely, if ever, see them in any restaurants spending money, etc., so they do have value for tourism but not as much as might be expected. Conversely, the many Chinese with money you see on a trip to Macau, they will drop thousands without batting an eye on gambling, and at the same time, go over to Hong Kong and spend more thousands ($) on shopping before returning home. I think the Chinese tourist just views a Thai vacation in a different light.

There might be some value-added potential in auto and other industries, but I too, don't see it yet, especially if the product is then re-exported at current exchange rates, it would make the product relatively uncompetitive with a purely chinese produced one.

Maybe someone in the industry can add something here.

[j_cheung]

Now, what about the original topic of how Thailand's economy will be affect by all this from China? What about any desire to tap into Thailand's natural resources, tourism and/or even complementary aspects as a manufacturing hub?

Hmmmm...not sure what you mean.

You think China sees Thailand as a possible manufacturing hub ....?

LaoPo

I was thinking more in terms of how the Chinese may:

1) Secure valuable source of raw material imports, such as rubber, timber, etc. from northern & southern Thailand respectively;

2) Provide a potential flood of tourists during the winter seasons despite their err, let's say, ill-reputed manners (e.g. hocking phlegm); and

3) Utilize the ready-made hubs around Chonburi & Rayong as a mid & final assembly & value-added point for Chinese exports of semi-manufactured parts & products to target markets in the West & beyond to avoid any protectionist measures.

Hope that clarifies my question.

I see what you mean:

1. China is doing that; buying their needed commodities, worldwide, including from Thailand.

2. Tourists: Chinese outbound tourism is rising including to LOS; the average Chinese tourist however is a tour-tourist/package tourist (pre-paid in China) on a maximum 1 week trip without [having the money] spending too much in LOS itself.

3. I can't comment on that but at this stage I don't see the areas you mentioned as a value-added point for 'semi-manufactured products since Chinese labour is still cheaper than in LOS; so, why bring those parts to LOS...?

LaoPo

1) I understand that but what gives Thailand the needed edge to beat out competition elsewhere around the region (say for rubber imports from Thailand vs. M'sia)?

2) Alright but there's a rising middle class in the major metropolitan cities here that may wish to take a breather away from the blistering cold during winter. Thailand is one of better destinations for affordable oriental gastronomical treats (e.g. Shark-fin, Abalone, Swallow's nest, etc.) Any promotional plans geared for that market?

3) Although chinese labor is still cheaper, they are always the convenient target for any overseas protectionist measures. Why else would Textile firms still continue to use Thailand, South Asia & other ASEAN countries as their supplementary base of operations?

As a side note, the BKK Post mentioned today that the Government is actively encourage SME to venture into the Chinese market (See http://www.bangkokpost.com/Business/04Jul2007_biz44.php ). Any thoughts?

Edit: added the side note & check the spelling.

Edited July 4, 2007 by j_cheung

[VegasVic]

A few points on this very interesting debate:

1. It does not make sense to convert inflation adjusted returns of the US market into another currency. I guess it could make some sense to do so versus a trade-weighted basket of currencies.

2. Comparisons between the nasdaq boom/bust and the chinese market are not very useful because there are too many differences, not least the fact that the nasdaq boom was built mainly on thin air (remember those valuations of internet content companies based on site visits ?), whereas the chinese market bubble is based on (stretched) valuations of a real economic boom in a rapidly expanding industrialising manufactutring economy with an extremely high savings rate, low stock market participation, growing middle class and more factors that support high valuations. I don't disagree that the chinese economy has weaknesses and that the markets there are due for a correction, but comparisons with the nasdaq are quite misleading.

You are certainly correct that a direct comparison between the current bubble in China and the NASDAQ bubble of 2000 is partially invalid and misleading. The point I was making is that the bubble type valuations both in chinese equities currently and the NASDAQ back in 2000 are very similiar(50-60+ PE for the chinese market and around 45 PE for the NASDAQ at its bubble top). The main difference of course is that in the U.S. a company must be profitable in order for it to survive (and of course many of the dot coms were more promise than profit) where as in China there are many of the large listed companies that are not profitable but instead are subsidized or patially owned by the central government. I definately agree with you that in the long run over the next 25-50 years that China will beccome an economic giant if it can really become a true free market economy, however in the short run there will be some pain when this bubble colapses but knowong the chinese they will probably recover just as fast as the U.S. markets did after the dot com crash if not faster because they won't have a 9-11 situatation to deal with(hopefully). I do think that the one point that you are perhaps misinformed about is when you say the "low stock market participation", this is a very misleading statement on your part. The participation of the cihinese people in their equity markets is not only substantial but approaching a mania, while at the same time equity redemtions from funds in the U.S. have been growing recently. The chinese are an extemely intelligent people and I think that they will learn from this coming crash and will ensure that it will not happen again(unlike the U.S. which seems to make the same mistakes over again every other generation). Best of luck in your investments, if you do have some investments in Shanghai or Hong Kong I hope that you get good executions when you decide to sell.

Vic,

In whole part, I'll agree with you on the long run prospects of China.

Regarding the frequent flickleness of the markets and the unchanging extremes of human nature, I think that the mainland Chinese will have to undergo the same dramatic ups and downs of a genuine mixed market economy as their compatriots on HK, Macau & Taiwan. At present, many mainland investors have adopted the same "chao-jia" mentality of a newbie day trader -- always listening in for stock tips & rumours and grasping on the outbreak patterns on their candlestick charts. I once asked a local finance professor on how he forecasts his annual earnings estimates and he just amicably replied: "Just take the latest quarter & multiply that by 4"! At that point, my mind kind of went numb.

HK & Taiwan had to undergo several very harsh & dramatic economic smackdowns back in '73 & '91 espectively to get to where they are presently. Likewise, the mainland markets will have to go through similar "woodshed" experiences before becoming another economic giant.

Thanks for an enlightening discussion.

J. cheung, I enjoy your posts, you seem to be extremely well informed and you understand how out of wack that chinese equity markets are and can recognize the coming crash that is about to occur. I think tha Lao Po is a little sensitive about this coming event and I have a feeling that he had one of the super moderators (astral) delete my posts on the "Thai baht rising to record levels forum" in the news clippings section today. These deletions occured right after Lao Po made comments about keeping on topic, its sad to see censorship here on Thai Visa but I do understand that you guys are under a military dictatorship over there right now. I guess that living in the U.S. I take the freedom of speech and the free exchange of ideas for granted. Anyway, in the future I will be aware to always stay on topic and to try and not interject too many facts into the discussion, in order not to offend some of these guys and their fantasy theories. Thanks for an enlightening discussion as well, I hope I can contiue exchange ideas here!

[LaoPo]

J. cheung, I enjoy your posts, you seem to be extremely well informed and you understand how out of wack that chinese equity markets are and can recognize the coming crash that is about to occur. I think tha Lao Po is a little sensitive about this coming event and I have a feeling that he had one of the super moderators (astral) delete my posts on the "Thai baht rising to record levels forum" in the news clippings section today. These deletions occured right after Lao Po made comments about keeping on topic, its sad to see censorship here on Thai Visa but I do understand that you guys are under a military dictatorship over there right now. I guess that living in the U.S. I take the freedom of speech and the free exchange of ideas for granted. Anyway, in the future I will be aware to always stay on topic and to try and not interject too many facts into the discussion, in order not to offend some of these guys and their fantasy theories. Thanks for an enlightening discussion as well, I hope I can contiue exchange ideas here!

Mr. VegasVic:

1. thank you for being concerned about my sensitiveness [or not]. I assure you that I'm not in respect to "this coming event".

I am realistic -not sensitive- and I am extremely well informed about the stock markets in China and it's various types of stocks. As a matter of fact I see/read the daily financial news as well as the individual stock prices AND their P/E's and earnings since I have access to this info -realtime online- via my wife and we just returned from China 2 days ago.

"Coming crash", as you describe it: I said on various topics that it would be not more than healthy if a lot of small time investors would realize that it is unhealthy for them to invest in stocks which have P/E's above 15-20...so it's easy to understand that there will be more corrections in the coming months and that's normal during the circumstances since I saw P/E shares with crazy ratings.

But, there are still very good opportunities, believe me, so don't worry about me and the Chinese stock markets, ok?

But a crash like you describe it -overnight-, like in the late '20s last century in the US will not happen; a strong cooling down market ? Yes, but that's 'on the road' already for some time so nothing new here.

China will be fine in the end, just like the western countries suffered a lot, coming out of the 19/20th centuries after many stock market crashes, wars and conflicts, including America.

That will be the same for Thailand, but in a different way than China; Thailand will convert more and more into a mixed economy of industry/agriculture and a service-minded country in tourism and healthcare.

But they will not be able to compete with China or Vietnam, simply because of the enormous difference in mentality; apart from that Thailand represents just 5% of the total population of China.

2. Your suggestion that I had a Moderator delete your post(s) is a false accusation since I have had NO contact whatsoever with any Moderator since a long time.

LaoPo

[shochu]

Ms. VIC,

To borrow from one of your posts - it appears - we are seeing your true colors.

I can not but reply when you state you have provided facts - when all you have done is regurgitate daily news. Please try and re-apply some of this with your own astute knowledge of financial matters and then - we will give you a wee bit of credit - but only if you offer us something that alludes to some modicum of above 2-digit intelligence regarding financial matters.

And your knowledge of gold is - how shall I say this - textbook!

[LaoPo]

Let's forget our different views on Thailand, China and US for a moment....

I am extremely worried about this:

Economist foresees US launching trade sanctions against China

Excerpts from American [Morgan Stanley's Chief Economist] Stephen Roach:

"In its rush to impose trade sanctions on China, the US congress risks making a policy blunder of monumental proportions," Roach said.

"We don't have a bilateral problem with China. We have a multilateral problem here. Blaming deficits on China won't fix anything," Roach said.

The United States registered US$836 billion in trade deficit last year. The Chinese bilateral deficit of US$232 billion represented the largest portion - 28 percent - of America's overall multilateral trade gap but the deficits with other partners were three times as much, he explained.

"The United States runs trade deficits not because it is victimized by unfair competition from China or anyone else but because it suffers from a chronic shortfall in domestic savings," Roach said.

America's net national saving rate plunged to a record low of one percent of the national income for the 2004-2006 period, leaving the United States no choice but to accumulate trade deficits to attract foreign capital.

"Such actions could lead to higher US inflation and quickly impact the rest of Asia [and thus Thailand also! LP], which has become increasingly integrated into a China-centric pan-regional supply chain," Roach warned.

The economist attributed the protectionism of the US Congress to a lack of knowledge of China. "They need to understand that 30 years ago China was on the brink of collapse. They need to understand China now faces a lot of problems and challenges. China needs our help and presents bigger opportunities than threats."

To remedy the situation, Roach suggested that the United States save more and train workers to face global competition and that China adjust its economic structure and be more aggressive in intellectual property rights protection.

"China needs to know the policy of Washington is very difficult. If you don't want to move aggressively in currency, that's fine. But arguments won't end if both sides don't agree to make a change," he said.

Source: Chinadaily.com.cn

Scary scenario for the World Economy and Asia in particular.

LaoPo

Edited July 4, 2007 by LaoPo

[VegasVic]

J. cheung, I enjoy your posts, you seem to be extremely well informed and you understand how out of wack that chinese equity markets are and can recognize the coming crash that is about to occur. I think tha Lao Po is a little sensitive about this coming event and I have a feeling that he had one of the super moderators (astral) delete my posts on the "Thai baht rising to record levels forum" in the news clippings section today. These deletions occured right after Lao Po made comments about keeping on topic, its sad to see censorship here on Thai Visa but I do understand that you guys are under a military dictatorship over there right now. I guess that living in the U.S. I take the freedom of speech and the free exchange of ideas for granted. Anyway, in the future I will be aware to always stay on topic and to try and not interject too many facts into the discussion, in order not to offend some of these guys and their fantasy theories. Thanks for an enlightening discussion as well, I hope I can contiue exchange ideas here!

Mr. VegasVic:

1. thank you for being concerned about my sensitiveness [or not]. I assure you that I'm not in respect to "this coming event".

I am realistic -not sensitive- and I am extremely well informed about the stock markets in China and it's various types of stocks. As a matter of fact I see/read the daily financial news as well as the individual stock prices AND their P/E's and earnings since I have access to this info -realtime online- via my wife and we just returned from China 2 days ago.

"Coming crash", as you describe it: I said on various topics that it would be not more than healthy if a lot of small time investors would realize that it is unhealthy for them to invest in stocks which have P/E's above 15-20...so it's easy to understand that there will be more corrections in the coming months and that's normal during the circumstances since I saw P/E shares with crazy ratings.

But, there are still very good opportunities, believe me, so don't worry about me and the Chinese stock markets, ok?

But a crash like you describe it -overnight-, like in the late '20s last century in the US will not happen; a strong cooling down market ? Yes, but that's 'on the road' already for some time so nothing new here.

China will be fine in the end, just like the western countries suffered a lot, coming out of the 19/20th centuries after many stock market crashes, wars and conflicts, including America.

That will be the same for Thailand, but in a different way than China; Thailand will convert more and more into a mixed economy of industry/agriculture and a service-minded country in tourism and healthcare.

But they will not be able to compete with China or Vietnam, simply because of the enormous difference in mentality; apart from that Thailand represents just 5% of the total population of China.

2. Your suggestion that I had a Moderator delete your post(s) is a false accusation since I have had NO contact whatsoever with any Moderator since a long time.

LaoPo

Lao Po, If indeed you were not involved in any way in the cesorship of those posts, then of course you have my sicerest apologies. As for the chinese market and what will happen to it in the coming months we will have to agree to disagree on that issue. What happens in the U.S. relationship with China most definatly affects Thailand and its currency, just as the cheap money coming out of Japan pushing markets to unrealistic levels in China, Thailand and elseware in the pacific rim will have a direct effect on the Thai economy and the baht. In the future I will attempt to make my posts more consise and directly on topic as well as I will try my best to refrain from replying to those few posters here who consistantly show their ignorance and are just looking for a fight, like the poster who posted his usual nonsense just following this post of yours.

[Mid]

Chinese shares down sharply

Asian indexes were broadly higher Thursday, with Japan's Nikkei 225 index lifted by shares of exporters such as Sony Corp. and Hong Kong's Hang Seng Index led by more gains in China-related stocks but shares in mainland China fell sharply on likely fund outflows, traders said.

"The market is expecting overseas investments by Chinese investors to narrow the gap between (China's) A shares and (Hong Kong's) H-shares," said Y.K. Chan, strategist at Philip Capital Management in Hong Kong. "There is speculation that some mainland funds are reducing the size of their portfolios."

China's Shanghai Composite index fell 2.7% to 3,712.38. The Dow Jones China 88 index, which tracks the largest and most liquid 88 stocks in yuan-denominated shares listed in both Shanghai and Shenzhen, fell 5% to 315.37.

beursplaza.com

opps .......

[LaoPo]

Chinese shares down sharply

Asian indexes were broadly higher Thursday, with Japan's Nikkei 225 index lifted by shares of exporters such as Sony Corp. and Hong Kong's Hang Seng Index led by more gains in China-related stocks but shares in mainland China fell sharply on likely fund outflows, traders said.

"The market is expecting overseas investments by Chinese investors to narrow the gap between (China's) A shares and (Hong Kong's) H-shares," said Y.K. Chan, strategist at Philip Capital Management in Hong Kong. "There is speculation that some mainland funds are reducing the size of their portfolios."

China's Shanghai Composite index fell 2.7% to 3,712.38. The Dow Jones China 88 index, which tracks the largest and most liquid 88 stocks in yuan-denominated shares listed in both Shanghai and Shenzhen, fell 5% to 315.37.

beursplaza.com

opps .......

Yes, I'm following the news realtime/online. I expect more corrections which is necessary to take the heat out of the markets.

This is a chart year-to-date: (SHANGHAI SE COMPOSITE IX)

There are however 11 different indexes in China so it's not completely representative for individual stocks.

Example: One of the largest mining companies in China raised US$ 816 Million yesterday. The IPO was oversubscribed 244 times. (!) P/E was low and now about 20.

There are many more IPO's coming up on the Shanghai listing (with low P/E's, so very interesting for people to grab the chances), including China Mobile, the worlds largest mobile company by numbers of subscribers.

So, it's not all bad news; there are still lots of opportunities; the trick is where and how to find them....

But, the cooling period is continuing as the number of subscribers for a stock account is declining also. Which is good since more and more people are either standing on the sidelines or -partly- cashing out and take their profits...or losses.

In May some 350.000 people opened a stock account and is down now to 100.000 new subscribers. Those figures are per day...

All-in-all I'd say it's good news since the overheating situation is cooling down now rapidly but it will take some more time to come back to normal.

But, WHAT is normal in China with all these huge, huge numbers ?

LaoPo